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*****************************************************
                            Before the  
                Federal Communications Commission
                      Washington, D.C. 20554

                                )
In the Matter of                )
                                )
Application of BellSouth Corporation,)  CC Docket No. 98-121
BellSouth Telecommunications, Inc., and)
BellSouth Long Distance, Inc., for Provision)
of In-Region, InterLATA Services )
in Louisiana                    )


                  MEMORANDUM OPINION AND ORDER 


   Adopted:  October 13, 1998           Released:  October 13, 1998

By the Commission:  Chairman Kennard and Commissioners Powell and Tristani issuing separate
statements; Commissioner Ness concurring in part and issuing a statement; and Commissioner
Furchtgott-Roth concurring and issuing a statement.


                        TABLE OF CONTENTS

                                                        Paragraph

     I.   INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . .  1

     II.  OVERVIEW. . . . . . . . . . . . . . . . . . . . . . . . .  6

     III. EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . .   11

     IV.  BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . . 12

     V.   COMPLIANCE WITH SECTION 271(c)(1)(A). . . . . . . . . . . 23

     VI.  CHECKLIST COMPLIANCE. . . . . . . . . . . . . . . . . . . 49
               A.   Analytical Framework . . . . . . . . . . . . . . . . 51
               B.   Examination of Pricing . . . . . . . . . . . . . . . 60
               C.   Checklist Items. . . . . . . . . . . . . . . . . . . 61
                         1.   Checklist Item 1 -- Interconnection . . . . . . 61
                         2.   Checklist Item 2 -- Unbundled Network Elements. 80
                                   a.   Operations Support Systems . . . . . . . . 82
                                   b.   Combining Network Elements . . . . . . . .161
                         3.   Checklist Item 3 -- Poles, Ducts, Conduits, and Rights-of-Way171
                         4.   Checklist Item 4 -- Unbundled Local Loops . . .184
                         5.   Checklist Item 5 -- Unbundled Local Transport .201
                         6.   Checklist Item 6 -- Unbundled Local Switching .207
                         7.   Checklist Item 7. . . . . . . . . . . . . . . .235
                                   a.   911 and E911 services. . . . . . . . . . .235
                                   b.   Directory Assistance/Operator Services . .239
                         8.   Checklist Item 8 -- White Pages Directory Listings252
                         9.   Checklist Item 9 -- Numbering Administration. .260
                         10.  Checklist Item 10 -- Databases and Associated Signaling266
                         11.  Checklist Item 11 -- Number Portability . . . .274
                         12.  Checklist Item 12 -- Local Dialing Parity . . .295
                         13.  Checklist Item 13 -- Reciprocal Compensation. .298
                         14.  Checklist Item 14 -- Resale.. . . . . . . . . .306

     VII. SECTION 272 . . . . . . . . . . . . . . . . . . . . . . .320
               A.   Background . . . . . . . . . . . . . . . . . . . . .320
               B.   Discussion . . . . . . . . . . . . . . . . . . . . .322
                         1.   Structural Separation, Transactional, and Accounting Requirements
               of Section 272 . . . . . . . . . . . . . . . . . . . . . . . .323
                         2.   Nondiscrimination Safeguards of Section 272 . .341
                         3.   Joint Marketing Requirements of Section 272 . .356

     VIII.     PUBLIC INTEREST. . . . . . . . . . . . . . . . . . .361

     IX.  PROCEDURAL MATTERS. . . . . . . . . . . . . . . . . . . .367

     X.   CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . .369

     XI.  ORDERING CLAUSES. . . . . . . . . . . . . . . . . . . . .370

                                                                 
APPENDIX    List of Commenters
I.   INTRODUCTION

     1.   On July 9, 1998, BellSouth Corporation, BellSouth Telecommunications, Inc., and
BellSouth Long Distance, Inc. (collectively, BellSouth) filed their second application for
authorization under section 271 of the Communications Act of 1934, as amended, to provide
interLATA services in the State of Louisiana.  Because BellSouth fails to satisfy the statutory
requirements established by Congress, we deny BellSouth's application.  We are, however,
encouraged that BellSouth demonstrates that it meets the requirements of six checklist items, and
one subsection of a seventh checklist item.  In those areas where BellSouth's application falls
short, we provide guidance as to what BellSouth must do to comply with the market opening
measures mandated by Congress.

     2.   Prior to the passage of the 1996 Act, the Modification of Final Judgment (MFJ)
prohibited the Bell Operating Companies (BOCs) from entering certain lines of business, including
interexchange service.  This restriction was based upon the theory that, if the BOCs were allowed
to enter the long distance market, they could use their bottleneck control in the local and
exchange access markets to obtain an unfair advantage in the long distance market.  In enacting
the Telecommunications Act of 1996, Congress established a new statutory framework designed
to benefit "all Americans by opening all telecommunications markets to competition."  

     3.   Central to the new statutory scheme of the 1996 Act are provisions designed to
open the local services market to competition and ultimately to permit all carriers, including those
that previously enjoyed a monopoly or competitive advantage in a particular market, to provide a
variety of telecommunications offerings.  Due to the continued and extensive market dominance
of the BOCs in their regions, Congress chose to maintain certain of the MFJ's restrictions on the
BOCs, until the BOCs open their local markets to competition as provided in section 271 of the
Act.  One such restriction is incorporated in section 271, which prohibits the BOCs from entering
the in-region, interLATA market immediately.  Congress recognized that, because it would not
be in the BOCs' immediate self-interest to open their local markets, it would be highly unlikely
that competition would develop expeditiously in the local exchange and exchange access markets. 
Thus, Congress used the promise of long distance entry as an incentive to prompt the BOCs to
open their local markets to competition.  Congress further recognized that, until the BOCs open
their local markets, there is an unacceptable danger that they will use their market power to
compete unfairly in the long distance market.   Accordingly, section 271 allows a BOC to enter
the in-region, interLATA market, and thereby offer a comprehensive package of
telecommunications services, only after it demonstrates, among other things, compliance with the
interconnection, unbundling, and resale obligations that are designed to facilitate competition in
the local market.  Congress has directed the Commission to determine whether the BOCs have
met these criteria.

     4.   In order to effectuate the will of Congress, we believe that it is vitally important to
make the section 271 application process as orderly and predictable as possible for all interested
parties.  We are encouraged that this application, the first since the Common Carrier Bureau
commenced a dialogue concerning the requirements of section 271 with representatives of the
telecommunications industry and other interested parties, demonstrates that significant progress
has been made toward reaching the goals of the Act.  We believe that the fruits of those
discussions have been reflected in an improved application in which we, for the first time, find that
an applicant satisfies multiple checklist items, and, but for deficiencies in its operations support
systems, would meet the requirements of several others.  We recognize the considerable steps that
BellSouth has taken in many areas, and we urge BellSouth and the other parties to continue to
resolve remaining disputes.   

     5.   While we commend BellSouth for making significant improvements over the past
eight months since we issued the First BellSouth Louisiana Order, BellSouth has filed a second
application for Louisiana without fully addressing the problems we identified in previous
BellSouth applications.  This problem is particularly evident in BellSouth's provision of operations
support systems.  Because BellSouth does not satisfy the statutory requirements, we are
compelled to deny its application for entry into the interLATA long distance market in Louisiana. 
In this regard, we caution that the Commission expects applicants to remedy deficiencies
identified in prior orders before filing a new section 271 application, or face the possibility of
summary denial.  

II.  OVERVIEW

     6.   In this Order we review all aspects of BellSouth's application.  While BellSouth
meets a number of the section 271 statutory requirements in this application, it fails to meet a
number of others.  In section V below, we discuss BellSouth's assertion that it satisfies the
requirements of section 271(c)(1)(A) (commonly referred to as "Track A").  Specifically, we
find that the studies that BellSouth relies upon to demonstrate that Personal Communications
Services (PCS) providers compete with wireline telephone exchange service are inadequate.  We
also discuss whether BellSouth demonstrates that it satisfies the requirements of Track A based
on its implemented agreements with wireline competitive local exchange carriers (LECs).

     7.   In section VI, we address checklist compliance.  BellSouth's compliance with
various items in the 14-point checklist appears to fall into three categories:  (1) BellSouth has met
the statutory requirements of some checklist items; (2) BellSouth has made significant progress
toward meeting the requirements of many other items; and (3) for one checklist item, major
problems still remain.  

     8.   With respect to the first category, we conclude that BellSouth successfully
demonstrates in this application that it complies with the following aspects of the checklist:  (1)
poles, ducts, conduits, and rights-of-way; (2) 911 and E911 services; (3) white pages directory
listings for competing LECs' customers; (4) telephone numbers for assignment to other carriers'
customers; (5) databases and associated signaling necessary for call routing and completion; (6)
services or information necessary to allow a requesting carrier to implement local dialing parity;
and (7) reciprocal compensation arrangements.  Thus, the next time BellSouth files for section
271 approval in Louisiana, BellSouth may incorporate by reference its prior showing for these
checklist items.  BellSouth must, however, certify in the application that its actions and
performance at the time are consistent with the showing upon which we base our determination
that the statutory requirements for these checklist items have been met.  We will only consider
arguments from commenters relating to new information that BellSouth fails to satisfy these
checklist items.

     9.   With respect to the second category, BellSouth has made significant progress
toward meeting the statutory requirements.  If not for deficiencies in BellSouth's operations
support systems (OSS), BellSouth would satisfy the requirements of the following two checklist
items:  (1) local transport; and (2) services available for resale.  Previously, we have determined
that OSS is a necessary component for providing access to network elements and resold
services.  We emphasize that nondiscriminatory access to a BOC's operations support systems is
crucial and that, once the deficiencies in BellSouth's OSS are resolved, the requirements of these
checklist items should be satisfied.  In addition, for the following checklist items, we have
identified other compliance problems: interconnection; local loop transmission; switching;
directory assistance services; operator call completion services; and number portability. 

     10.  With respect to the third category, we have identified one remaining checklist item
where major compliance problems still exist:  checklist item (ii) -- nondiscriminatory access to
network elements.  These shortcomings include:  (1) BellSouth's continued failure to provide
competing carriers with nondiscriminatory access to its OSS functions, and (2) BellSouth's failure
to demonstrate that it offers nondiscriminatory access to unbundled network elements in a manner
that satisfies the statutory requirements.  More specifically, we conclude that BellSouth's
application is deficient with regard to nondiscriminatory access to unbundled network elements
because BellSouth offers collocation as the only method for competitive LECs to combine
unbundled network elements. 

     11.  In section VII, we conclude that BellSouth does not demonstrate full compliance
with the requirements of section 272.  Finally, because BellSouth fails to meet a number of
statutory requirements, we need not address the issue of whether BellSouth has demonstrated that
the authorization it seeks is consistent with the public interest, convenience, and necessity. 
Nevertheless, in order to provide BellSouth and other interested parties with guidance concerning
the public interest standard we will apply in future applications, we set forth in section VIII our
views on the general framework we will apply in conducting the public interest inquiry mandated
by Congress.

III. EXECUTIVE SUMMARY

Department of Justice's Evaluation

         The Department of Justice recommends that BellSouth's application for entry into the long
     distance market in Louisiana be denied.  The Department of Justice concluded that,
     despite a number of encouraging improvements since its earlier applications in South
     Carolina and Louisiana, the Louisiana market is not fully and irreversibly open to
     competition, and that BellSouth has failed to demonstrate that it is offering access and
     interconnection that satisfy the requirements of the competitive checklist.

State Verification of Compliance with Section 271(c)

         The Louisiana Commission voted to approve and support BellSouth's second application
     to enter the long distance market in Louisiana.  Unlike the process it followed when
     BellSouth filed its first application, the Louisiana Commission did not compile an
     evidentiary record or conduct a formal proceeding to determine whether BellSouth's
     revised application complies with section 271 of the Act.  Thus, there is no record
     evidence submitted by the state commission to show whether BellSouth has implemented
     changes in response to our previous Louisiana order.  

Track A:  Broadband PCS and Wireline

         We conclude that the broadband PCS services at issue here satisfy the statutory definition
     of "telephone exchange service" for purposes of Track A, and therefore, may serve as the
     basis for a qualifying application under Track A.  Based on the facts presented in this
     application, however, BellSouth has not shown that broadband PCS is a substitute for the
     wireline telephone service offered by BellSouth in Louisiana.

         We also discuss whether BellSouth demonstrates that it satisfies the requirements of Track
     A based on its implemented agreements with wireline competitive LECs.

Checklist -- General

         We conclude that, in any future application for section 271 approval in Louisiana,
     BellSouth may incorporate by reference its prior showing on checklist items we deem
     satisfied in this Order and, with respect to these items, commenters may only raise
     arguments relating to new information.  BellSouth must also certify that its actions and
     performance at the time of any future application are consistent with the showing it
     incorporates by reference.  We hope this new certification option will enable BOCs to
     focus their energies on quickly satisfying the remaining statutory requirements and thereby
     expedite the local market-opening process by which BOCs may obtain approval to provide
     in-region long distance service.  Taken together with the evidentiary standards described
     in this and prior orders, as well as our continued willingness to work with BellSouth to
     clarify further its statutory obligations, this certification option demonstrates our ongoing
     commitment to ensuring that BellSouth and other BOCs hold the keys of their success
     with respect to section 271 approval in their own hands.

Checklist Item 1 -- Interconnection

         BellSouth does not satisfy the requirements of checklist item (i).  Pursuant to this checklist
     item, BellSouth must allow other carriers to link their networks to its network for the
     mutual exchange of traffic.  To do so, BellSouth must permit carriers to use any available
     method of interconnection at any available point in BellSouth's network.  For the reasons
     stated in the BellSouth South Carolina Order, we find BellSouth's collocation offering
     insufficient.  Furthermore, interconnection between networks must be equal in quality
     whether the interconnection is between BellSouth and an affiliate, or between BellSouth
     and another carrier.  BellSouth also does not show that it provides interconnection that
     meets this standard.

Checklist Item 2 -- Access to Unbundled Network Elements

         BellSouth does not satisfy the requirements of checklist item (ii).  The telephone network
     is comprised of individual network elements.  In order to provide "access" to an
     unbundled network element, for purposes of the checklist, BellSouth must provide a
     connection to the network element at any technically feasible point under rates, terms, and
     conditions that are just, reasonable, and nondiscriminatory.  To fulfill the
     nondiscrimination obligation under checklist item (ii), BellSouth must provide access to its
     operations support systems, meaning the information, systems, and personnel necessary to
     support the elements and services.  This is important because access to BellSouth's
     operations support systems provides new entrants with the ability to order service for their
     customers and allows new entrants to communicate effectively with BellSouth regarding
     such basic activities as placing orders and providing repair and maintenance service for
     customers.  BellSouth does not demonstrate that its operation support systems enable
     other carriers to connect electronically to its pre-ordering and ordering functions, thus
     placing those carriers at a competitive disadvantage relative to BellSouth's own retail
     operation.  Although BellSouth has made some progress in addressing deficiencies in its
     operations support systems, it has failed to address successfully other problems that we
     specifically identified in previous orders as critical for nondiscriminatory access.

         In addition, BellSouth must provide nondiscriminatory access to network elements in a
     manner that allows other carriers to combine such elements.  Other carriers are entitled to
     request any "technically feasible" method for combining network elements.  As we held in
     the BellSouth South Carolina Order,  BellSouth has failed to demonstrate that it can
     provide nondiscriminatory access to unbundled network elements through the one method
     it identifies for such access, collocation.
          
Checklist Item 3 -- Access to Poles, Ducts, Conduits, and Rights-of-Way

         BellSouth satisfies the requirements of checklist item (iii).  Telephone company wires must
     be attached to, or pass through, poles, ducts, conduits, and rights-of-way.  In order to
     fulfill the nondiscrimination obligation under checklist item (iii), BellSouth must show that
     other carriers can obtain access to its poles, ducts, conduits, and rights-of-way within
     reasonable time frames and on reasonable terms and conditions, with a minimum of
     administrative costs, and consistent with fair and efficient practices.  Failure by BellSouth
     to provide such access may prevent other carriers from serving certain customers. 
     BellSouth demonstrates that it has established nondiscriminatory procedures for access to
     poles, ducts, conduits, and rights-of-way.

Checklist Item 4 -- Unbundled Local Loops

         BellSouth does not satisfy the requirements of checklist item (iv).  Local loops are the
     wires, poles, and conduits that connect the telephone company end office to the
     customer's home or business.  To satisfy the nondiscrimination requirement under
     checklist item (iv), BellSouth must demonstrate that it can efficiently furnish unbundled
     loops to other carriers within a reasonable time frame, with a minimum level of service
     disruption, and at the same level of service quality it provides to its own customers. 
     Nondiscriminatory access to unbundled local loops ensures that new entrants can provide
     quality telephone service promptly to new customers without constructing new loops to
     each customer's home or business.  BellSouth does not provide evidence, such as
     meaningful performance data, that it can efficiently furnish loops to other carriers in a
     nondiscriminatory manner.

Checklist Item 5 -- Unbundled Local Transport

         But for deficiencies in its operations support systems, BellSouth would satisfy the
     requirements of checklist item (v).  Transport facilities are the trunks that connect
     different switches within BellSouth's network or those switches with long distance carriers'
     facilities.  This checklist item requires BellSouth to provide other carriers with
     transmission links that are dedicated to the use of that carrier as well as links that are
     shared with other carriers, including BellSouth.  Nondiscriminatory access to transport
     ensures that consumer calls travelling over other carriers' lines are completed properly. 
     Although BellSouth demonstrates that it provides transport on terms and conditions
     consistent with our regulations, it does not provide evidence, such as meaningful
     performance data, that it provides nondiscriminatory access to operations support systems
     for the purpose of providing transport facilities.  

Checklist Item 6 -- Unbundled Local Switching

         BellSouth does not satisfy the requirements of checklist item (vi).  A switch connects end
     user lines to other end user lines, and connects end user lines to trunks used for
     transporting a call to another central office or to a long-distance carrier.  Switches can
     also provide end users with "vertical features" such as call waiting, call forwarding, and
     caller ID, and can direct a call to a specific trunk, such as to a competing carrier's operator
     services.  We find that BellSouth does not satisfy the requirements of checklist item (vi),
     because BellSouth does not show that it provides all of the features, functions, and
     capabilities of the switch.  

Checklist Item 7 -- 911 and E911 Services, Operator Services, and Directory Assistance 

         BellSouth satisfies the requirements of checklist item (vii)(I), regarding 911 and E911
     services.  911 and E911 services transmit calls from end users to emergency personnel.  It
     is critical that BellSouth provide competing carriers with accurate and nondiscriminatory
     access to 911/E911 services so that these carriers' customers are able to reach emergency
     assistance.   We previously concluded in the BellSouth South Carolina Order that
     BellSouth met the requirements of this checklist item.  BellSouth demonstrates that it
     continues to meet the statutory requirements as described in the BellSouth South Carolina
     Order.  

         BellSouth does not satisfy the requirements of checklist item (vii)(II) and (vii)(III),
     regarding provision of nondiscriminatory access to directory assistance and operator
     services.  Customers use directory assistance and operator services to obtain customer
     listing information and other call completion services.  BellSouth does not demonstrate
     that it provides other carriers with the same access to these services that it provides to
     itself.  

Checklist Item 8 -- White Pages Directory Listings

         BellSouth satisfies the requirements of checklist item (viii).  White pages are the directory
     listings of telephone numbers of residences and businesses in a particular area.  This
     checklist item ensures that white pages listings for customers of different carriers are
     comparable, in terms of accuracy and reliability, notwithstanding the identity of the
     customer's telephone service provider.  BellSouth demonstrates that its provision of white
     page listings to customers of competitive LECs is nondiscriminatory in terms of their
     appearance and integration, and that it provides white page listings for competing carriers'
     customers with the same accuracy and reliability that it provides to its own customers.   

Checklist Item 9 -- Numbering Administration

         BellSouth satisfies the requirements of checklist item (ix).  Telephone numbers are
     currently assigned to telecommunications carriers based on the first three digits of the
     local number known as "NXX" codes.  To fulfill the nondiscrimination obligation in
     checklist item (ix), BellSouth must provide other carriers with the same access to new
     NXX codes within an area code that BellSouth enjoys.  This checklist item ensures that
     other carriers have the same access to new telephone numbers as BellSouth.  BellSouth
     demonstrates that, in acting as the code administrator, it has adhered to industry guidelines
     and the Commission's requirements under section 251(b)(3). 

Checklist Item 10 -- Databases and Associated Signaling

         BellSouth satisfies the requirements of checklist item (x).  Databases and associated
     signaling refer to the call-related databases and signaling systems that are used for billing
     and collection or the transmission, routing, or other provision of a telecommunications
     service.  To fulfill the nondiscrimination obligation in checklist item (x), BellSouth must
     demonstrate that it provides new entrants with the same access to these call-related
     databases and associated signaling that it provides itself.  This checklist item ensures that
     other carriers have the same ability to transmit, route, complete and bill for telephone calls
     as BellSouth.  BellSouth demonstrates that it provides other carriers nondiscriminatory
     access to its:  (1) signaling networks, including signaling links and signaling transfer
     points; (2) certain call-related databases necessary for call routing and completion, or in
     the alternative, a means of physical access to the signaling transfer point linked to the
     unbundled database; and (3) Service Management Systems.  

Checklist Item 11 -- Number Portability

         BellSouth does not satisfy the requirements of checklist item (xi).  Number portability
     enables consumers to take their phone number with them when they change local
     telephone companies.  BellSouth does not sufficiently demonstrate that it provides number
     portability to competing carriers in a reasonable timeframe.  A failure to provide timely
     number portability prevents a customer from receiving incoming calls for a period of time
     after switching from BellSouth to a competing carrier. 

Checklist Item 12 -- Local Dialing Parity

         BellSouth satisfies the requirements of checklist item (xii).  Local dialing parity permits
     customers to make local calls in the same manner regardless of the identity of their carrier. 
     To fulfill the nondiscrimination obligation in checklist item (xii), BellSouth must establish
     that customers of another carrier are able to dial the same number of digits to make a local
     telephone call.  In addition, the dialing delay experienced by the customers of another
     carrier should not be greater than that experienced by customers of BellSouth.  This
     checklist item ensures that consumers are not inconvenienced in how they make calls
     simply because they subscribe to a carrier other than BellSouth for local telephone service. 
     BellSouth demonstrates that customers of other carriers are able to dial the same number
     of digits that BellSouth's customers dial to complete a local telephone call, and that these
     customers do not otherwise suffer inferior quality such as unreasonable dialing delays
     compared to BellSouth customers.

Checklist Item 13 -- Reciprocal Compensation

         BellSouth satisfies the requirements of checklist item (xiii).  Pursuant to this checklist
     item, BellSouth must compensate other carriers for the cost of transporting and
     terminating a local call from BellSouth.  Alternatively, BellSouth and the other carrier may
     enter into an arrangement whereby neither of the two carriers charges the other for
     terminating local traffic that originates on the other carrier's network.  This checklist item
     is important to ensuring that all carriers that originate calls bear the cost of terminating
     such calls.  BellSouth demonstrates that it has reciprocal compensation arrangements in
     accordance with section 252(d)(2) in place, and that it is making all required payments in a
     timely fashion.  Louisiana has not reached a final determination on the issue of a BOC's
     obligation to pay reciprocal compensation for traffic delivered to Internet service
     providers (ISPs).  We do not, at this time, consider BellSouth's unwillingness to pay
     reciprocal compensation for traffic that is delivered to ISPs located within the same local
     calling area as the originating BellSouth end user in assessing whether BellSouth satisfies
     this checklist item.  Any future grant of in-region interLATA authority under section 271
     will be conditioned on compliance with decisions relating to Internet traffic in Louisiana.

Checklist Item 14 -- Resale

         BellSouth does not satisfy the requirements of checklist item (xiv).  This checklist item
     requires BellSouth to offer other carriers all of its retail services at wholesale rates without
     unreasonable or discriminatory conditions or limitations such that other carriers may resell
     those services to an end user.  This checklist item ensures a mode of entry into the local
     market for carriers that have not deployed their own facilities.  BellSouth demonstrates
     that it offers all of its retail services for resale at wholesale rates without unreasonable or
     discriminatory conditions or limitations.  BellSouth, however, does not show that it
     provides nondiscriminatory access to operations support systems for the resale of its retail
     telecommunications services.

Section 272 Compliance

         Although BellSouth has undertaken significant efforts to institute policies and procedures
     to ensure compliance with section 272, it does not meet all section 272 requirements.  In
     particular, it does not disclose all transactions with its section 272 affiliate, which means
     its affiliate has superior access to information about these transactions than unaffiliated
     entities.  In addition, it does not provide nondiscriminatory access to its operations
     support systems, and thereby discriminates in its provision of information to unaffiliated
     entities.

Public Interest Standard

         We reaffirm the Commission's prior conclusion that it has broad discretion to identify and
     weigh all relevant factors in determining whether BOC entry into a particular in-region,
     interLATA market is consistent with the public interest.  We reaffirm the Commission's
     prior conclusion that we consider as part of our public interest inquiry whether approval of
     a section 271 application will foster competition in all relevant markets, including the local
     exchange market, not just the in-region, interLATA market.

         In assessing whether the public interest will be served by granting a particular application,
     we will consider and balance a variety of factors in each case.  For example, we would
     consider a BOC's agreement to submit to enforcement mechanisms in the event it falls out
     of compliance with agreed upon performance standards.

IV.  BACKGROUND

     A.   Statutory Framework

     12.  In the 1996 Act, Congress conditioned BOC provision of in-region, interLATA
service on compliance with certain provisions of section 271.  Pursuant to section 271, BOCs
must apply to this Commission for authorization to provide interLATA services originating in any
in-region state.  Congress has directed the Commission to issue a written determination on each
application no later than 90 days after the application is filed.  In acting on a BOC's application
for authority to provide in-region, interLATA services, the Commission must consult with the
Attorney General and give "substantial weight," to the Attorney General's evaluation of the BOC's
application.  In addition, the Commission must consult with the relevant state commission to
verify that the BOC has one or more state-approved interconnection agreements with a facilities-
based competitor, or a statement of generally available terms and conditions (SGAT), and that
either the agreement(s) or general statement satisfy the "competitive checklist."

     13.     To obtain authorization to provide in-region, interLATA service under section
271, the BOC must show that:  (1) it satisfies the requirements of either section 271(c)(1)(A),
known as "Track A," or 271(c)(1)(B), known as "Track B;" (2) that it has "fully implemented the
competitive checklist" or that the statements approved by the state under section 252 satisfy the
competitive checklist contained in section 271(c)(2)(B); (3) the requested authorization will be
carried out in accordance with the requirements of section 272; and (4) the BOC's entry into the
in-region, interLATA market is "consistent with the public interest, convenience, and necessity." 
The statute directs that the Commission "shall not approve" the requested authorization unless it
finds that the criteria specified in section 271(d)(3) are satisfied.  

     B.   The Attorney General's Evaluation

     14.  Section 271(d)(2)(A) requires the Commission to consult with the Attorney
General before making any determination approving or denying a section 271 application.  The
Attorney General is entitled to evaluate the application "using any standard the Attorney General
considers appropriate," and the Commission is required to "give substantial weight to the
Attorney General's evaluation."  Section 271(d)(2)(A) specifically provides, however, that "such
evaluation shall not have any preclusive effect on any Commission decision."  In the Ameritech
Michigan Order, the Commission concluded it is required to give substantial weight not only to
the Department of Justice's evaluation of the effect of BOC entry on long distance competition,
but also to its evaluation of whether the BOC satisfies each of the criteria for BOC entry under
section 271.

     15.  The Department of Justice recommends that BellSouth's application for entry into
the long distance market in Louisiana be denied.  As summarized more fully below, the
Department of Justice concludes that, despite a number of encouraging improvements since its
earlier applications in South Carolina and Louisiana, the Louisiana market is not fully and
irreversibly open to competition, and that BellSouth fails to demonstrate that it is offering access
and interconnection that satisfy the requirements of the competitive checklist.

     16.  Evaluation of Openness of Market to Competition.  The Department of Justice
finds that the Louisiana local market is not "fully and irreversibly open to competition."  In
evaluating whether competition in a local market satisfies this standard, the Department of Justice
considers whether all three entry paths contemplated by the 1996 Act -- facilities-based entry
involving construction of new networks, the use of unbundled network elements, and resale of the
BOC's services -- are fully and irreversibly open to competition to serve both business and
residential consumers.  The Department of Justice examines the extent of actual local competition,
whether significant barriers continue to impede the growth of competition, and whether
benchmarks to prevent "backsliding" have been established.  Applying these standards, the
Department of Justice concludes that BellSouth still faces no significant competition in local
exchange service in Louisiana.  The Department of Justice notes, however, that in the nine months
since the first Louisiana application was filed, BellSouth has taken significant steps to improve its
wholesale support systems, and that there have been encouraging developments in competition by
facilities-based entrants and resellers, though the market penetration of those competitors is still
quite modest.  The Department of Justice further finds, as it did before in the first Louisiana
application, that the Louisiana market is not sufficiently open to competition because BellSouth
has not instituted performance measurements to ensure consistent wholesale performance, i.e., to
prevent "backsliding" once section 271 authority is granted.  In light of its conclusion that the
Louisiana market is not "fully and irreversibly open to competition," the Department of Justice
reaffirms its conclusion in its first Louisiana evaluation that the potential for competitive benefits
in markets for interLATA services does not justify approving this application.

     17.  The Department of Justice also reaffirms the finding it made in its first Louisiana
evaluation that there is still virtually no competition in Louisiana through the use of unbundled
network elements (UNEs).  In particular, the Department of Justice concludes that BellSouth has
maintained policies of physically separating critical pre-existing combinations of UNEs, as well as
policies which impose unnecessary costs and technical obstacles on competitors that seek to
combine UNEs.  The Department of Justice states that, "[c]ollectively, these policies seriously
impair competition by firms that seek to offer services using combinations of unbundled network
elements."  The Department of Justice finds that, "[a]lthough the [Louisiana Commission] has
generally adopted a pricing methodology that may permit competition, BellSouth's prices do not
consistently reflect the essential principles of that methodology, resulting in some prices for
unbundled network elements that could prevent efficient competitors from entering the market
and competing effectively."  The Department of Justice further finds that, "[d]espite a number of
improvements, BellSouth has failed to demonstrate that it has adequate, nondiscriminatory
wholesale support processes, including access to operations support systems, that would be
critical to competitors' ability to obtain and use unbundled elements."  The Department of
Justice concludes that, "taking BellSouth's current application as a whole, we find that there are
still significant barriers to competitive entry in Louisiana, and we cannot yet conclude that local
markets in Louisiana are fully and irreversibly open to competition."

C.   State Verification of BOC Compliance with Section 271(c)

     18.  Under section 271(d)(2)(B), the Commission "shall consult with the State
commission of any State that is the subject of the application in order to verify the compliance of
the Bell Operating Company with the requirements of subsection (c)."  In the Ameritech
Michigan Order, the Commission determined that, because the Act does not prescribe any
standard for Commission consideration of a state commission's verification under section
271(d)(2)(B), it has discretion in each section 271 proceeding to determine the amount of
deference to accord to the state commission's verification.  As the Court of Appeals for the D.C.
Circuit held, "[a]lthough the Commission must consult with the state commissions, the statute
does not require the FCC to give the State commissions' views any particular weight."  Although
the Commission will consider carefully state determinations of fact that are supported by a
detailed and extensive record, it is the Commission's role to determine whether the factual record
supports a conclusion that particular requirements of section 271 have been met.

     19.  The Louisiana Commission's Recommendation.  On September 5, 1997, by a vote
of three-to-two, the Louisiana Commission approved BellSouth's SGAT, subject to modifications,
and concluded that BellSouth's SGAT makes available to new entrants each of the items in the
competitive checklist.   BellSouth subsequently modified its SGAT to comply with modifications
ordered in the Louisiana Commission 271 Compliance Order and filed its revised SGAT on
September 9, 1997.  On April 30, 1998, BellSouth filed a second modification to its SGAT to
correct deficiencies that we identified in our First BellSouth Louisiana Order.  In that Order, we
concluded that BellSouth's refusal to provide its contract service arrangements for resale at a
wholesale discount is inconsistent with the requirements of the Act.  The Louisiana Commission
had previously determined that these discounted offerings should be made available for resale, but
with no additional wholesale discount as required by the Act and our rules.  On July 1, 1998, the
Louisiana Commission amended its order, in part, to adopt the revisions in BellSouth's second
modification to its SGAT and to require a wholesale discount until such time as the Louisiana
Commission could determine whether specific discounts are necessary.  
     20.  On July 15, 1998, the Louisiana Commission voted, by a vote of four-to-one, to
approve and support BellSouth's second application for Louisiana.   On July 28, 1998, the
Louisiana Commission submitted its comments to this Commission concerning BellSouth's
application.  Unlike the process it followed in the case of BellSouth's first application, the
Louisiana Commission did not compile an evidentiary record or conduct a formal proceeding to
determine whether BellSouth's revised application complies with section 271 of the Act.  In its
comments supporting BellSouth's application, the Louisiana Commission reiterated its view that
BellSouth should be granted interLATA authority, because it has satisfied the requirements of
section 271.  Indeed, the Louisiana Commission addresses only two checklist items in its
comments and refers to its comments of November 24, 1997 in the first BellSouth Louisiana
application for a discussion of the other twelve checklist items.   

     21.  We fully acknowledge and are sensitive to limitations on state commissions'
resources for purposes of developing their recommendation on a BOC's 271 application.  We
believe, however, that in making its recommendation on a BOC's section 271 application, a state
commission may assist us greatly by providing factual information.  When a BOC files a
subsequent application in a state, it is important for the state commission to provide the factual
information gathered and relied upon by the state commission concerning changes that have
occurred since the previous application was filed.  Thus, for subsequent applications, we
encourage state commissions to submit factual records, in addition to their comments,
demonstrating that: (1) the BOC has corrected the problems identified in previous applications;
and (2) there are no new facts that suggest the BOC's actions and performance are no longer
consistent with the showing upon which this Commission based any determination that the
statutory requirements for certain checklist items have been met.

     22.  In other areas, we note that the Louisiana Commission is making important strides
in promoting and advancing competition in the local exchange market.  For example, the
Louisiana Commission recently adopted service quality performance measurements, standards,
and evaluation criteria concerning incumbent LECs' success in opening their local markets.   We
applaud such actions by state commissions to measure and evaluate performance data in order to
ensure that BOCs are in fact complying with statutory requirements.

V.   COMPLIANCE WITH SECTION 271(c)(1)(A)

     A.   Background

     23.  In order for the Commission to approve a BOC's application to provide in-region,
interLATA services, a BOC must first demonstrate that it satisfies the requirements of either
section 271(c)(1)(A) (Track A) or 271(c)(1)(B) (Track B).  In the case of Louisiana, BellSouth
contends that it satisfies the requirements of Section 271(c)(1)(A) which provides:

          (A) PRESENCE OF A FACILITIES-BASED COMPETITOR -- A Bell operating
     company meets the requirements of this subparagraph if it has entered into one or
     more binding agreements that have been approved under section 252 specifying the
     terms and conditions under which the Bell operating company is providing access
     and interconnection to its network facilities for the network facilities of one or
     more unaffiliated competing providers of telephone exchange service (as defined in
     section 3(47)(A), but excluding exchange access) to residential and business
     subscribers.  For the purpose of this subparagraph, such telephone exchange
     service may be offered by such competing providers either exclusively over their
     own telephone exchange service facilities or predominantly over their own
     telephone exchange service facilities in combination with the resale of the
     telecommunications services of another carrier.

     B.   Discussion

     24.  We conclude that BellSouth does not demonstrate that it satisfies the requirements
of Track A based on its implemented interconnection agreements with PCS carriers in Louisiana. 
We do not conclude whether BellSouth demonstrates that it satisfies the requirements of Track A
based on its implemented interconnection agreements with competitive wireline LECs because
BellSouth fails to meet other requirements of section 271, e.g., the competitive checklist and
section 272.

          1.  Competition from PCS Carriers in Louisiana

     25.  BellSouth contends that it "is eligible for Track A relief based on the existence of
PCS carriers in Louisiana", and its implemented interconnection agreements with these PCS
carriers.  BellSouth also argues that it satisfies Track A through interconnection agreements with
wireline carriers.  In the First BellSouth Louisiana Order, the Commission concluded that
section 271 "does not preclude the Commission from considering the presence of a PCS provider
in a particular state as a 'facilities-based competitor.'"  BOCs, in filing section 271 applications,
can rely on the presence of broadband PCS providers to satisfy Track A.  The Commission has
emphasized, however, that a PCS provider on which the applicant seeks to rely for purposes of
section 271(c)(1)(A) must offer "service that both satisfies the statutory definition of 'telephone
exchange service' in section 3(47)(A) and competes with the telephone exchange service offered
by the applicant in the relevant state."  We conclude that the broadband PCS service offered by
the PCS providers at issue in this application, which provides two-way mobile voice service,
qualifies as telephone exchange service for purposes of Track A.  BellSouth has not shown,
however, that this broadband PCS service currently competes with the wireline telephone
exchange service offered by BellSouth in Louisiana.  Accordingly, we conclude that BellSouth has
not demonstrated that it satisfies the requirements of Track A based on the existence of these
broadband PCS carriers in Louisiana.
 
               a.   Telephone Exchange Service
     
     26.  Background.  In passing the 1996 Act, Congress provided alternative definitions
for the term "telephone exchange service" in section 3(47) of the Communications Act.  Section
271(c)(1)(A) incorporates the definition in section 3(47)(A) of the Act, which 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.  

     27.  Section 271(c)(1)(A) also specifically provides that the provision of "exchange
access" does not, by itself, qualify as the provision of telephone exchange service and establishes
that cellular telephone service may not be treated as telephone exchange service for purposes of
Track A.  The statutory language, however, does not address whether broadband PCS
constitutes "telephone exchange service." 

     28.  Discussion.  We conclude that the broadband PCS offerings at issue here satisfy
the statutory definition of "telephone exchange service" in section 3(47)(A).  The Act's definition
of "telephone exchange service" is not clear as to whether it includes broadband PCS service. 
At the time the 1996 Act was enacted, however, the Commission had interpreted the definition of
telephone exchange service to mean "the provision of two-way voice communications between
individuals by means of a central switching complex which interconnects all subscribers within a
geographic area," and Congress can be viewed as ratifying this pre-existing definition. 
Telephone service offered by a broadband PCS provider comes within this description. 
Subscribers within a PCS provider's geographic service area (generally either a basic trading area
(BTA) or a major trading area (MTA)) are interconnected to the public switched network by
means of a central switching complex, and thus are able to place and receive calls both to other
users of the PCS system and to users of other networks connected to the public switched
network.  While there are certain technical and functional differences between PCS and wireline
local exchange service, based on the current record, we conclude that these differences are not
sufficient to prevent PCS from fitting within the definition of telephone exchange service
discussed above for purposes of section 271.    

     29.  Moreover, in light of this unclear statutory definition and the evolving nature of
the provision of services in the telecommunications market, we believe a practical approach to
applying this definition in the section 271 context is in order.  In that vein, we agree with
BellSouth that the typical broadband PCS offering satisfies the definition of section 3(47)(A) by
offering "service over a radio-based equivalent to an ordinary wireline exchange," meaning the
service is "of the character ordinarily furnished by a single exchange."  Because section 271 is
intended to allow the BOCs into the long distance market only after they open the local market to
competition, we believe that Congress intended for the Commission to consider as "telephone
exchange service," for section 271 purposes, those services that permit customers to make local
calls that are functionally equivalent to the calls that customers make through their wireline
service.  This is so even though there may not be complete identity in technical configuration,
service characteristics, or charges for service between broadband PCS and traditional wireline
service.  Indeed, Congress' decision specifically to exclude cellular (but only cellular) from the
category of telephone exchange services that may satisfy Track A suggests that other commercial
mobile radio services (CMRS) offerings, such as broadband PCS, might qualify.  If Congress did
not believe that cellular providers were providing "telephone exchange service" within the
meaning of section 3(47)(A), the "carve out" of cellular providers would have been unnecessary. 
Because broadband PCS uses technology that is similar to cellular for providing telephone service,
it would appear that "carve out" language would also be necessary to exclude PCS from the
definition of telephone exchange service.         

     30.  We find that broadband PCS providers offer service "within a telephone exchange"
or "a connected system of telephone exchanges within the same exchange area" because section
3(47)(A) does not require a specific geographic boundary other than an area covered by an
exchange service charge.  We believe that traditional PCS home service areas (HSAs) constitute
local service areas for broadband PCS providers, and local broadband PCS providers generally
apply rates to calls originating and terminating within HSAs in a manner similar to the BOCs'
exchange service charge.  Moreover, we cannot agree with parties' suggestions that usage-
sensitive fees cannot be "exchange service charges."  Many wireline carriers providing telephone
exchange service charge message rates, which are usage-sensitive fees, or extended telephone
area service charges.  Thus, we find that broadband PCS service constitutes "telephone exchange
service" for purposes of section 271(c)(1)(A).   

               b.   Broadband PCS Carriers as Competing Providers

     31.  We believe that the BOC must show that broadband PCS is being used to replace
wireline service, not as a supplement to wireline.  In previous orders, the Commission has stated
"that the use of the term 'competing provider' in section 271(c)(1)(A) suggests that there must be
'an actual commercial alternative to the BOC.'"  To the extent that consumers purchase PCS
service as a supplement to their existing wireline service, the two services are not competing with
each other.  Evidence that broadband PCS service constitutes a competitive alternative could
include studies, or other objective analyses, identifying customers that have replaced their wireline
service with broadband PCS service, or would be willing to consider doing so based on price
comparisons.  Evidence of marketing efforts by broadband PCS providers designed to induce such
replacement are also relevant.  

     32.  The most persuasive evidence concerning competition between PCS and wireline
local telephone service is evidence that customers are actually subscribing to PCS in lieu of
wireline service at a particular price.  Actual customer behavior is more persuasive than price
comparison studies alone because of the advantages and disadvantages associated with PCS and
wireline telephone service.  For example, customers may be willing to pay a premium for PCS
service in light of the benefits of mobility.  At the same time, the willingness of customers to pay a
premium for PCS could potentially be affected by disadvantages such as the fact that wireline
telephone numbers are not presently portable to wireless carriers.  Thus, because the two services
offer different advantages and disadvantages, a price comparison study by itself would tend to be
less persuasive than a survey showing actual consumer behavior (i.e., the substitution of service at
a particular price).  At the same time, we recognize that price information is valuable when
presented in conjunction with information on consumer behavior.  We emphasize, however, that
the persuasive value of any study will depend in large part on the quality of the survey and
statistical methodologies that are used.

     33.  In the First BellSouth Louisiana Order, we noted that, in other contexts, the
Commission has "concluded that PCS providers appear to be positioning their service offerings to
become competitive with wireline service, but they are still in the process of making the transition
'from a complementary telecommunications service to a competitive equivalent to wireline
services.'"  In the Third Annual Report and Analysis of Competitive Market Conditions With
Respect to Commercial Mobile Services, the Commission stated that, "[w]hile many analysts
concur that a transfer of usage between wireline and wireless systems will occur, it is hard to say
exactly how long it will take or how much substitution will occur."  The Commission stated that
"one key variable is the sensitivities of consumer demand to the relative prices of wireless and
wireline telephone service as the difference in prices narrows."  

     34.  BellSouth argues that it "has demonstrated that Louisiana consumers are in fact
substituting PCS for traditional wireline service. . . ."  In support of its contention, BellSouth
relies primarily upon a market research survey by M/A/R/C Research (M/A/R/C study), an
economic study by the National Economic Research Associates (NERA study), and the
availability of AT&T's Digital One Rate Plan.  

               c.   BellSouth's PCS Evidence

                    i.  The M/A/R/C Study

     35.  We conclude that the M/A/R/C study is fundamentally flawed and that it cannot be
relied upon to demonstrate that broadband voice PCS is a substitute for traditional wireline
service.  In particular, we conclude that the M/A/R/C study contains the following significant
methodological deficiencies: (1) the sample group was not randomly selected; (2) the study is
not based on statistical analysis; and (3) the study disguises the complementary nature of the
services.  

     36.  BellSouth cites the M/A/R/C study in claiming that approximately 2,100 Louisiana
end users subscribed to PCS instead of wireline as their only service, and that another
approximately 1,750 end users eliminated wireline service and replaced it with PCS.  Although
BellSouth does not state so explicitly, it that appears BellSouth reaches this conclusion by
extrapolating the results of the M/A/R/C study and applying them to its estimated universe of
35,000 subscribers for all five PCS carriers in the state of Louisiana.  In April 1998, M/A/R/C
Research interviewed a total of 202 subscribers using the PCS services of PrimeCo and Sprint
PCS "in the New Orleans, Louisiana metro area to determine the extent to which customers
view PCS and wireline service as substitutes and, ultimately, competitive alternatives."  In order
to contact PCS subscribers, M/A/R/C ran advertisements in two newspapers in New Orleans
inviting PrimeCo and Sprint PCS subscribers to participate in a survey.  BellSouth contends that
the M/A/R/C study "shows that 26 percent of PCS subscribers (43 percent of business [PCS]
users and 10 percent of residential [PCS] users) currently rely on PCS as their primary telephone
service."  BellSouth further contends that a significant number of the PCS users subscribed to
their wireless service as a direct substitute for BellSouth's wireline service.  According to
BellSouth, the M/A/R/C study shows that, "6 percent . . . of PCS customers in Louisiana
subscribed to their PCS service instead of a wireline offering when initiating service."  BellSouth
contends that the M/A/R/C study further shows that "[f]ive percent more of PCS customers
eliminated wireline service and replaced it with PCS" and that "[f]ive percent of the PCS
subscribers (approximately another 1,750 customers) added PCS instead of a second wireline."

     37.  The first methodological problem is that the sample group was not randomly
selected.  Rather than use a random selection process, M/A/R/C placed advertisements in the
regional daily newspaper, The Times-Picayune, and a weekly entertainment publication, The
Gambit, inviting PrimeCo and Sprint PCS customers to call an 800 number to participate in the
survey.  Because the survey respondents were self-selected, rather than randomly selected, there
can be no assurance that the respondents or their responses to the survey questions are generally
representative of PCS customers in New Orleans.  Indeed, when MCI deposed William Denk,
author of the M/A/R/C study, on August 13, 1998, to question him about a parallel survey that
M/A/R/C conducted in Kentucky using the same methodology as the Louisiana survey, Mr. Denk
conceded that the survey sample was not necessarily representative of the universe of PCS users. 
Further, there is no evidence that the New Orleans respondents are similar to the state-wide PCS
user population.  These potential differences could make extrapolations from the self-selected
New Orleans interviews unreliable.  In order to be considered persuasive, future studies of this
type should use a random sample or explain why the study results are meaningful without a
random sample.  In addition, BellSouth provides no information to verify that 35,000 is a
reasonable estimate of the number of PCS users served by the five PCS carriers BellSouth relies
upon in Louisiana.  

     38.  Second, BellSouth fails to provide a statistical analysis of the M/A/R/C study data. 
In particular, BellSouth fails to provide confidence intervals or other statistical measures designed
to allow statistical inferences concerning the statewide PCS user population.  We believe that this
type of statistical analysis is critical to demonstrating the statistical significance of data such as
that in the M/A/R/C study. 

     39.  Third, the study's questions do not appear to be designed to distinguish clearly
between the substitution of PCS for wireline service and the use of PCS as a complement to
wireline service.  Sprint contends that the category of customers labeled "Subscribed to PCS for
Initial Service Instead of Wireline" appears to be broad enough to include users who merely
placed their PCS order shortly before they subscribed to BellSouth's wireline service.  For
example, Table 4a of the M/A/R/C study shows the length of time PCS users who subscribed to
PCS for initial service instead of wireline have maintained their PCS service and states "most have
had PCS for over three months, so it appears they have no intention of getting wireline service." 
We agree with Sprint that keeping PCS service by itself simply does not reveal whether the PCS
user also subscribes to wireline service.  In order to be persuasive, a survey such as this should
also include a question asking whether the respondent subscribes to wireline local exchange
service or otherwise verify that the subscriber does not have wireline local exchange service. 

                    ii.  The NERA Study

     40.  Based on the evidence submitted by BellSouth, we cannot conclude that any
significant number of wireline exchange customers is likely to consider switching to PCS service
based on price.  Relying upon a recent economic competitive analysis by Dr. Aniruddha
Banerjee for the National Economic Research Associates (NERA study), BellSouth contends that
"[a]t today's current prices . . . as many as 7 to 15 percent of BellSouth's local residential
customers in New Orleans could consider switching to PCS PrimeCo on price grounds alone." 
The NERA study purports to show, based on usage patterns, that PCS monthly charges are
equivalent to or lower than wireline charges for 7 to 15 percent of residential consumers in the
New Orleans area.  BellSouth states that the NERA study does not include business customers
and contends that, because business wireline rates are on average higher than residential wireline
rates, the NERA study's "numbers most likely underestimate the number of customers who could
reasonably substitute PCS for wireline service."  BellSouth states that the NERA study does not
consider the added one-stop-shopping convenience and mobility of PCS.

     41.  We conclude that the NERA study does not provide persuasive evidence that 7 to
15 percent of BellSouth's local residential customers in New Orleans would consider switching to
broadband PCS on the basis of price differences alone.  The NERA study claims that residential
customers with low to moderate local and toll usage of their telephones should find PCS to be a
reasonable substitute for BellSouth's wireline service based on the alleged minimal differences in
price.  We reject that claim, because the NERA study overstates the prices paid to BellSouth by
this group of customers for wireline service.  Because some PCS plans include five vertical
features within the regular monthly charge, the study added the BellSouth retail price for each of
these vertical features to the price of BellSouth's basic local service when comparing the charges
for PrimeCo's PCS and BellSouth's wireline services.  This results in an increase of more than
$13.00 in the monthly price of BellSouth monthly service used in the comparison with PCS
prices.  Thus, for purposes of determining whether consumers might substitute PCS for
BellSouth's wireline service, the NERA study uses a price for BellSouth's service that is more than
double the actual price of BellSouth's basic local service (1FR with Touchtone) of $12.64 per
month.  Statistics cited in the NERA study, however, show that residential customers with low
to moderate local and toll telephone usage -- precisely those customers that BellSouth claims
could pay less with PCS -- are likely to use no more than one vertical feature.  

     42.  Sprint's economists demonstrate that the NERA study shows that BellSouth
wireline service is materially less expensive than any PCS plan offered by Sprint PCS or PrimeCo
for any residential customer with more than 170 minutes per month (outgoing and incoming) in
combined local and intraLATA toll usage.  For example, PrimeCo offers a "Digital Choice 100"
plan which bundles five vertical features with 100 minutes of outgoing and incoming airtime for
$24.99.  Additional minutes are charged at $0.35 per minute.  At 170 minutes of airtime, the
PrimeCo package costs $49.99, just under the price of any other package available from either
Sprint PCS or PrimeCo.  In fact, Sprint's economists conclude that "fewer than one-half of 1
percent of BellSouth's wireline customers in New Orleans currently have a calling pattern and use
of vertical services that could be purchased more cheaply from a PCS provider."  Accordingly,
we conclude that the NERA study compares PCS and wireline prices based on the faulty
assumption that all wireline customers would buy a package of BellSouth's vertical services.  In
addition, the NERA study fails to account for the cost of PCS equipment.  The NERA study
notes that Sprint PCS has advertised its Samsung PCS phone at $99 after rebates and PrimeCo
has offered its dual mode PCS-and-cellular phones for $149 after rebates.  It is unlikely that
consumers with low to moderate local and toll telephone usage -- those BellSouth claims would
consider switching to PCS based on price -- would be indifferent to the high initial cost of PCS
equipment.    Thus, the NERA study does not demonstrate that PCS is a substitute for wireline
local telephone service.     

                    iii.  AT&T's Digital One Rate Plan
             
     43.  BellSouth contends that AT&T's new Digital One Rate Plan will accelerate
substitution of PCS for wireline local telephone service.  While AT&T's advertising attempts to
persuade customers to substitute AT&T's PCS service for wireline service, we conclude that there
is not sufficient evidence at this time to show that AT&T's Digital One Rate Plan will have any
significant effect in this regard.  BellSouth has not submitted evidence that its local customers
are likely to discontinue wireline service and substitute this broadband PCS plan.  Directed at
high-volume toll customers, this plan represents a package of local and toll calling at rates ranging
from approximately 11 to 15 cents per minute for all PCS voice communications up to prescribed
calling volume limits.  The plan also eliminates roaming charges when users are out of AT&T's
service areas.  Unlike BellSouth's wireline residential service, which offers unlimited local
calling for a flat rate of $12.64 per month (1FR with touchtone), AT&T's Digital One Rate Plan
offers a specified number of toll or local calling minutes for a flat monthly fee which is
significantly higher than BellSouth's wireline local service, with additional charges for each minute
that exceeds the allotted number.  Specifically, the AT&T Digital One Rate Plan offers three
options: 1400 minutes for $149.99 per month; 1000 minutes for $119.99 per month; and 600
minutes for $89.99 per month, with each option charging an additional 25 cents for every minute
in excess of the allotted number.  In addition, subscribers to AT&T's Digital One Rate Plan
must enter into an annual contract (with a cancellation fee of $10 per month remaining on the
contract) and purchase a digital multi-network phone from AT&T.  We recognize that PCS
service offer capabilities and features beyond those associated with basic wireline service, most
notably mobility, and that PCS pricing may not need to fall to wireline levels for substitution to
occur.  BellSouth, however, has not shown that its wireline customers, particularly residential
customers, are at all likely to switch to this service given the rate structure involved.

          2.   Competition from Facilities-Based Wireline Carriers

                              a.   Background

     44.  In order to qualify for Track A, the BOC must have interconnection agreements
with competing providers of "telephone exchange service . . . to residential and business
subscribers."  The Act states that "such telephone exchange service may be offered . . . either
exclusively over [the competitor's] own telephone exchange service facilities or predominantly
over [the competitor's] own telephone exchange facilities in combination with the resale of the
telecommunications services of another carrier."

     45.  BellSouth contends that "at least six wireline [competitive LECs] currently provide
facilities-based local telephone service in Louisiana."  BellSouth states that it has
interconnection agreements with these six competitive LECs that have been approved by the
Louisiana Commission, and "believes it is eligible for interLATA relief under Track A on the
strength of these carriers alone."  Of these six competitive LECs, BellSouth identifies only one -
- KMC -- that allegedly provides facilities-based service to residential customers.  KMC claims
that "[it] does not provide facilities-based service to any residential customers in Louisiana."  

               b.   Discussion

     46.  The language of section 271(c)(1)(A) is ambiguous on its face.  It is not entirely
clear whether the statutory language requires that the competitor or competitors offer
predominantly facilities-based service to each category of subscribers -- business and residential --
independently or to the two classes taken together.  In view of this, we look to the legislative
history for guidance.  The legislative history indicates that Congress believed facilities-based
competition was possible even in the residential market, and expected such facilities-based
competitive services to be offered to residential subscribers.  The Conference Report expressly
notes with approval that the House Report "pointed out that meaningful facilities-based
competition is possible, given that cable services are available to more than 95 percent of United
States homes."  The Conference Report adds that "[s]ome of the initial forays of cable
companies into the field of local telephony therefore hold the promise of providing the sort of
local residential competition that has consistently been contemplated."  Although this language
is illustrative of the type of competition Congress thought possible, the language of section
271(c)(1)(A) appears to stop short of mandating actual provisioning of competitive facilities-
based telephone exchange services independently to both business and residential subscribers.  

     47.  As noted, section 271(c)(1)(A) can be read as requiring the BOC to demonstrate
that it has entered into interconnection agreements with one or more competing providers of
telephone exchange service that are providing predominantly or exclusively facilities-based service
to both categories of customers, considered independently.  Under this reading of the statutory
language, BellSouth does not meet the requirements of Track A, because BellSouth has not
demonstrated by a preponderance of the evidence that KMC provides any facilities-based service
to residential subscribers.  KMC states that "it does not yet serve any residential customers on a
facilities basis" and that it "serves all of its residential customers using BellSouth's resold local
exchange service."  In addition, KMC states that "it currently provides service to less than 30
customers using its own network facilities in Baton Rouge and Shreveport combined" and that
"[a]ll of these customers are businesses."  In its Reply, BellSouth seeks to rebut KMC's
representation by stating that KMC "claims that it does not have residential 'customers,' without
saying whether it serves residential lines."  BellSouth adds that it cannot determine how KMC is
using the residential lines that KMC has ordered, whether KMC is billing residential end users, or
how KMC defines "customers."  Finally, BellSouth states that directory listings and ported
numbers indicate that KMC has activated residential lines in Louisiana.  BellSouth's rebuttal is
not persuasive because KMC has clearly stated that it does not provide facilities-based service to
any residential customers.  We find that the evidence submitted by KMC on the actual number
of residential customers it serves on a facilities basis is more reliable than the conclusory
statements made by BellSouth because KMC is in a better position to know what customers it
serves than BellSouth.  BellSouth effectively concedes that it cannot determine conclusively
how KMC is using these lines, and we note that KMC could be using them for testing.         

     48.  We note, however, that reading the statutory language to require that there must
be facilities-based service to both classes of subscribers to meet Track A could produce
anomalous results, and there appear to be overriding policy considerations that lead to a contrary
construction of the statutory language.  In particular, if all other requirements of section 271 have
been satisfied, it does not appear to be consistent with congressional intent to exclude a BOC
from the in-region, interLATA market solely because the competitors' service to residential
customers is wholly through resale.  In light of our conclusion below that BellSouth has not
satisfied the requirements of the competitive checklist and section 272, however, that is not the
case presented by this application.  Thus, we do not conclude whether BellSouth has satisfied the
requirements of Track A based on its implemented interconnection agreements with competitive
wireline LECs. 

VI.  CHECKLIST COMPLIANCE

     49.  We next consider whether BellSouth has fully satisfied the competitive checklist in
section 271(c)(2)(B).  In the sections below, we provide a detailed  analysis of BellSouth's
application with respect to each checklist item. 

     50.  As discussed above, we recognize that BellSouth has made considerable progress
in many areas to comply with the checklist requirements.  We urge BellSouth to continue this
work.  There are important areas, however, where BellSouth fails to satisfy the requirements
stated in the Commission's previous section 271 orders, including the BellSouth South Carolina
Order.  Each of our findings that BellSouth has not satisfied an individual item of the competitive
checklist constitutes independent grounds for denying this application.

     A.   Analytical Framework

     51.  The analytical framework we use to assess the application is consistent with the
approach established in the Commission's previous orders.  As a general matter, we re-emphasize
the Commission's conclusion in the Ameritech Michigan Order that the BOC applicant retains at
all times the ultimate burden of proof that its application satisfies all of the requirements of section
271, even if no party comments on a particular checklist item.

     52.  With respect to each checklist item, we first determine whether BellSouth has
made a prima facie case that it meets the requirements of the particular checklist item.  A BOC
must plead, with appropriate supporting evidence, facts which, if true, are sufficient to establish
that the requirements of section 271 have been met.  Once the applicant has made such a
showing, opponents must produce evidence and arguments to show that the application does not
satisfy the requirements of section 271 or risk a ruling in the BOC's favor.  Because the
Commission must accord substantial weight to the Department of Justice's evaluation of a section
271 application, if the Department of Justice concludes that a BOC has not satisfied the
requirements of sections 271 and 272, the BOC must submit more convincing evidence than that
proffered by the Department of Justice in order to satisfy its burden of proof.  We note that we
will look to the state to resolve factual disputes wherever possible.  When resolving factual
disputes, we use the "preponderance of the evidence" standard.  

     53.  We stress that, as an initial matter, we base our determination of whether a BOC
has satisfied a checklist item on the BOC's evidence supporting its prima facie case, and not on
the absence of comments opposing the BOC's showing on a particular issue.  Where a BOC
provides sufficient evidence to establish a prima facie case, however, commenters opposing the
application must provide evidence of their own to shift the burden of production back to the
BOC.  

     54.  To make a prima facie case that it is meeting the requirements of a particular
checklist item under Track A, a BOC must demonstrate that it is providing access or
interconnection pursuant to the terms of that checklist item.  The Commission has previously
concluded that, to establish that it is "providing" a checklist item, a BOC must demonstrate that it
has a concrete and specific legal obligation to furnish the item upon request pursuant to a state-
approved interconnection agreement or agreements that set forth prices and other terms and
conditions for each checklist item, and that it is currently furnishing, or is ready to furnish, the
checklist item in the quantities that competitors may reasonably demand and at an acceptable level
of quality.  

     55.  As indicated above, BellSouth bases its application on the presence of a Track A
competitor.  In our assessment of each checklist item, therefore, we first examine whether
BellSouth identifies an interconnection agreement with a competing provider of telephone
exchange service described in section 271(c)(1)(A) under which it has a legal obligation to furnish
that checklist item.  BellSouth states that it is legally obligated to provide all 14 checklist items
through both its state-approved interconnection agreements and its SGAT.  

     56.  We next consider, in our examination of each checklist item, whether BellSouth
has provided sufficient evidence to demonstrate that it is furnishing, or ready to furnish, each
checklist item as a practical matter.  The evidence necessary to demonstrate compliance will vary
depending on the individual checklist item.  In certain circumstances, the BOC's assertion in its
brief, supported by testimony from an officer of the company will suffice, whereas in other cases,
we examine actual commercial usage and relevant performance data.  In situations where no
actual commercial usage exists, we consider any carrier-to-carrier testing, independent third-party
testing, and internal testing.  In situations where BellSouth provides access to a particular
checklist item through a region-wide process, such as its OSS, we will consider both region-wide
and state specific evidence in our evaluation of that checklist item.  Although there is often
more than one type of evidence that an applicant can use to meet its burden of proof, we hope
that this order will assist future applicants by identifying particular types of evidence we find
persuasive in assessing whether the BOC has complied with the checklist.  

     57.  When considering commenters' filings in opposition to the BOC's application, we
look for evidence that the BOC's policies, procedures, or capabilities preclude it from satisfying
the requirements of the checklist item.  Mere unsupported allegations in opposition will not
suffice.  Although anecdotal evidence may be indicative of systemic failures, isolated incidents
may not be sufficient for a commenter to overcome a BOC's prima facie case.  Moreover, a BOC
may overcome such evidence by providing, inter alia, objective performance data demonstrating
that it satisfies the statutory nondiscrimination requirement.  We will also look favorably on BOC
measures designed to correct problems promptly and to prevent similar problems in the future. 
While we will not hold the BOCs to a standard of perfection, we require that the BOCs establish
methods to respond effectively to problems as they occur and to prevent similar failures in the
future.    

     58.  In this order, we conclude that BellSouth satisfies six checklist items and one
subsection of a seventh checklist item.  We conclude that BellSouth may incorporate by reference
its showing on these checklist items in any future application for section 271 approval in
Louisiana.  BellSouth must, however, certify in the application that its actions and performance at
the time are consistent with the showing upon which we base our determination that the statutory
requirements for these checklist items have been met.  We expect that commenters will direct
their arguments to any new information that BellSouth fails to satisfy these checklist items.

     59.  We emphasize that the evidentiary standards governing our review of section 271
applications are intended to balance our need for reliable evidence against our recognition that no
finder of fact can expect proof to an absolute certainty.  While we continue to demand that BOCs
demonstrate as thoroughly as possible that they satisfy each checklist item, the public interest and
other statutory requirements, we reiterate that BOCs need only prove each element by a
preponderance of the evidence, which generally means the "greater weight of evidence, evidence
which is more convincing than the evidence which is offered in opposition to it."  Moreover, we
emphasize that we are more concerned with the quality of information presented in an application
than the quantity of information that is filed.  While this and prior orders identify certain types of
information we would find helpful in our review of section 271 applications, we reiterate that we
remain open to approving an application based on other  types of evidence if a BOC can persuade
us that such evidence demonstrates nondiscriminatory treatment and other aspects of the statutory
requirements.  In addition, we underscore that we remain committed to working with the industry
to clarify further the guidance we have given regarding how the BOCs may obtain section 271
approval.  It is our firm belief that, by helping the industry understand what the BOCs must do to
satisfy section 271, we will achieve most efficiently Congress' goal of simultaneously opening the
BOCs' local exchange markets to competition while promoting long distance competition through
BOC entry into that market.

     B.   Examination of Pricing

     60.  We note that the Department of Justice, as well as other commenters, make a
number of arguments concerning whether the prices in BellSouth's SGAT and interconnection
agreements comport with the statutory standards in section 252(d) of the Act.  In its January
22, 1998 Mandamus Order, the United States Court of Appeals for the Eighth Circuit ordered the
Commission "to confine its pricing role under section 271(d)(3)(A) to determining whether
applicant BOCs have complied with the pricing methodology and rules adopted by the state
commissions and in effect in the respective states in which such BOCs seek to provide in-region,
InterLATA services."  The court suggested that the Commission could discharge this role by
"asking the state commission whether the applicant BOC has complied with the individual state
commission's pricing scheme applicable to it and in effect at the time of the application."  In this
case, the Louisiana Commission advises us that BellSouth's prices conform with its rules.  Thus,
consistent with the Eighth Circuit's order, with respect to pricing issues, our inquiry is complete.

     C.   Checklist Items

                    1.   Checklist Item 1 -- Interconnection

                              a.   Background

     61.  Section 271(c)(2)(B)(i) of the Act, item (i) of the competitive checklist, requires a
section 271 applicant to provide "[i]nterconnection in accordance with the requirements of
sections 251(c)(2) and 252(d)(1)."  Section 251(c)(2) imposes upon incumbent LECs "[t]he
duty to provide, for the facilities and equipment of any requesting telecommunications carrier,
interconnection with the local exchange carrier's network . . . for the transmission and routing of
telephone exchange service and exchange access."  Such interconnection must be:  (1) provided
"at any technically feasible point within the carrier's network;" (2) "at least equal in quality to
that provided by the local exchange carrier to itself or . . . [to] any other party to which the carrier
provides interconnection;" and (3) provided "on rates, terms, and conditions that are just,
reasonable, and nondiscriminatory, in accordance with the terms and conditions of the agreement
and the requirements of [section 251] and section 252."

     62.  The Commission concluded in the Local Competition Order that competing
carriers have the right to deliver their terminating traffic at any technically feasible point on the
incumbent LEC network.  The Commission further stated that, under section 251(c)(2), a
competing carrier may choose any method of technically feasible interconnection at a particular
point.  Technically feasible methods of interconnection include, but are not limited to, physical
collocation and virtual collocation at the premises of an incumbent LEC and meet point
interconnection arrangements.  In the BellSouth South Carolina Order, the Commission
concluded that the provision of collocation is an essential prerequisite to checklist compliance for
certain checklist items.  A BOC must demonstrate that it can furnish  collocation in order to
show compliance with checklist item (i).  In order to comply with its collocation obligations, a
BOC must have processes and procedures in place to ensure that physical and virtual collocation
arrangements are available on terms and conditions that are "just, reasonable, and
nondiscriminatory" in accordance with section 251(c)(6) and our rules implementing that
section.  Knowing the length of time required for an applicant to provision both physical and
virtual collocation in response to requests by competing telecommunications carriers is useful in
determining compliance with a BOC's collocation obligations.

     63.  In the Local Competition First Report and Order, the Commission concluded that
an incumbent LEC must design its "interconnection facilities to meet the same technical criteria
and service standards, such as probability of blocking in peak hours and transmission standards,
that are used [for the interoffice trunks] within [the BOC's own network.]"  Moreover, the
Commission concluded that the equal in quality obligation is not limited to consideration of
service quality as perceived by end users, and includes, but is not limited to, service quality as
perceived by the requesting telecommunications carrier.

     64.  The Commission held in the Local Competition First Report and Order that the
requirement that interconnection be provided on terms and conditions that are "just, reasonable,
and nondiscriminatory" means that the incumbent LEC must provide interconnection to a
competitor in a manner that is no less efficient than the way in which the incumbent LEC provides
the comparable function to itself.  For example, the Commission concluded that to satisfy the
requirement that interconnection be provided on terms and conditions that are "just, reasonable,
and nondiscriminatory" an incumbent LEC must accommodate a competitor's request for two-
way trunking where technically feasible.

               b.   Discussion

     65.  Based on our review of the record, we conclude that BellSouth does not
demonstrate that, as a legal and practical matter, it provides interconnection in accordance with
the requirements of sections 251(c)(2) and 252(d)(1), as incorporated in section 271. 
Specifically, BellSouth fails to make a prima facie showing that it can provide collocation on
terms and conditions that are "just, reasonable, and nondiscriminatory" in accordance with section
251(c)(6).  BellSouth's collocation offerings in Louisiana contain the same defects as the
collocation arrangements that the Commission found deficient in the BellSouth South Carolina
Order.  Furthermore, BellSouth fails to make a prima facie case that it provisions
interconnection trunks in a manner that is equal in quality to the way in which it provisions trunks
for its own services.  

     66.  Collocation.  We conclude that BellSouth fails to make a prima facie showing that
its collocation offering satisfies the requirements of sections 271 and 251 of the Act.  Specifically,
we find that BellSouth's SGAT fails to provide new entrants with sufficiently definite terms and
conditions for collocation.  Since BellSouth fails to include specific provisions regarding the
terms and conditions for certain aspects of collocation in a legally binding document, it cannot
demonstrate that it provides interconnection on rates, terms, and conditions that are just,
reasonable, and nondiscriminatory.  Because collocation is an essential means of allowing
competitive LECs to interconnect with BellSouth's network, we find that BellSouth's application
fails to satisfy the requirements of section 251(c)(2) as incorporated in section 271(c)(2)(B)(i).

     67.  The terms and conditions of BellSouth's collocation offerings are contained in
section II.B.6. of the SGAT.  This section states in full:

          Collocation.  Collocation allows CLECs to place equipment in BellSouth facilities. 
     Physical and virtual collocation are available for interconnection and access to
     unbundled network element [sic].  BellSouth will provide physical collocation for
     CLEC equipment unless BellSouth demonstrates to the [state] Commission that
     physical collocation is not practical for technical reasons or space limitations. 
     Detailed guidelines for collocation are contained in BellSouth's Handbook for
     Collocation.

     68.  The collocation offerings on which BellSouth bases its second section 271
application for Louisiana are virtually identical in all substantive respects to the collocation
offerings that the Commission found defective in the BellSouth South Carolina Order, and they
do not pass muster now.  As was true in the BellSouth South Carolina proceeding, the SGAT
lacks binding terms and conditions for collocation.  The SGAT refers to BellSouth's "Handbook
for Collocation," which BellSouth also refers to as the "Negotiations Handbook for
Collocation."  This handbook provides general explanatory information regarding the terms and
conditions, ordering process, provisioning and maintenance of BellSouth's collocation offerings,
and expressly states that it "does not represent a binding agreement in whole or in part between
BellSouth and subscribers of BellSouth's Collocation services."  Rather than establishing legally
binding terms and conditions, the Collocation Handbook is an explanatory manual to be used by
the parties in negotiating an actual collocation agreement.   The Collocation Handbook refers to a
Standard Physical Collocation Agreement (Standard Agreement) for the "actual Terms and
Conditions for BellSouth's Physical Collocation offering."  This Standard Agreement is a model
for new entrants to use in crafting an actual collocation agreement with BellSouth and does not
legally bind BellSouth to specific terms and conditions unless negotiated and adopted by both
BellSouth and the new entrant.  While BellSouth has provided information regarding terms and
conditions of its collocation offerings, it has not done so in a legally binding document.

     69.  As was the case in the BellSouth South Carolina Order, the omission from the
SGAT of any terms and conditions governing collocation prevents BellSouth from making a
prima facie case that it meets the requirements of this checklist item.  The SGAT's lack of binding
provisions regarding the terms and conditions for collocation deprives us of any basis for finding
that BellSouth is offering collocation on rates, terms, and conditions that are just, reasonable, and
nondiscriminatory" in accordance with the requirements of section 251(c)(2).  The SGAT
provides nothing more than a starting point from which new entrants are expected to negotiate
many of the terms for collocation.  Additional details provided by BellSouth's Collocation
Handbook, Standard Agreement, and affidavits are not binding on BellSouth and therefore cannot
fill the crucial gaps in the SGAT's terms.

     70.  In the BellSouth South Carolina Order, we specifically identified BellSouth's
failure to include in its SGAT binding installation intervals for collocation.  We found that
BellSouth's failure to include in its SGAT a commitment to installation intervals for collocation,
coupled with the evidence in the record concerning delays in installing physical collocation,
created concern that delays in the provisioning of collocation would impede competitive entry. 
Because BellSouth fails to include any collocation intervals in its SGAT and instead relies on its
Collocation Handbook, it has not corrected a deficiency identified in the BellSouth South
Carolina Order. 

     71.  In addition to the fact that BellSouth has not committed to provisioning intervals
for collocation in a legally binding document, we find that BellSouth has not demonstrated that
the intervals outlined in the Collocation Handbook are "just, reasonable, and nondiscriminatory." 
BellSouth's Collocation Handbook provides a 30 business day interval for response to an accurate
and complete application for physical collocation, and 20 business days for virtual collocation. 
The Handbook also states, however, that "[r]esponse intervals for multiple applications submitted
by a single customer within a 15 business day window must be negotiated."  The Collocation
Handbook states that BellSouth will complete construction of the physical collocation space
within 120 days of receipt of a complete and accurate Bona Fide Firm Order under "ordinary
conditions," or within 180 days under  "extraordinary conditions."  BellSouth's definition of
"ordinary conditions" is limited to situations where the "space [is] available with only minor
changes to network or building infrastructure."  By contrast, its broad definition of
"extraordinary conditions" "include[s] but [is] not limited to . . . multiple orders in excess of four
(4) from one customer per area/state."  Moreover, these intervals expressly "[e]xclud[e] the
time interval required to secure the appropriate government licenses and permits."  In addition,
although BellSouth's Collocation Handbook provides intervals for responding to virtual and
physical collocation requests and for constructing physical collocation space, it does not provide
intervals for installation of virtual collocation.  

     72.  In its reply, BellSouth argues that it has demonstrated its ability to provide
collocation in a timely fashion because it has accepted all collocation requests, its provisioning
intervals are "comparable to those available elsewhere in the industry," and its average interval of
117 days for construction of physical collocation space in Louisiana is within the time frame to
which it has committed.  We disagree with BellSouth that the appropriate standard for
evaluating its provisioning of collocation arrangements is other incumbent LECs' provisioning
intervals.  The Commission has previously stated that in determining whether a BOC is
providing an efficient competitor with a "meaningful opportunity to compete," we will consider
whether appropriate standards for measuring a BOC's performance have been adopted by the
relevant state commission or agreed upon by the parties in an interconnection agreement.  In
this application, BellSouth has taken significant steps towards developing performance
measurements for provisioning its collocation arrangements, and we commend BellSouth for its
efforts.  BellSouth's performance measurement report is still under development however. 
Moreover, the record lacks evidence that BellSouth's performance time intervals for providing
collocation arrangements have been adopted by the Louisiana Commission or that provisioning
intervals have been agreed upon by the parties in an interconnection agreement.  The only piece of
data provided by BellSouth is an average that was calculated using the actual provisioning times
of three completed physical collocation agreements.  The provisioning intervals for these three
collocation arrangements range from 69 days to 178 days.  Given the large interval range (from
just over two months to almost six months), BellSouth has not demonstrated that 117-day
average is representative of its commercial usage.  Nor has BellSouth provided an explanation as
to why either its 117-day actual average interval or its 7-month target interval is reasonable. 
MCI, for example, contends that the 7-month interval is inadequate.   We therefore have no
basis on which to conclude that BellSouth's proposed provisioning intervals for collocation meet
the nondiscriminatory requirements of section 251(c)(3). 

     73.  Several commenters also argue that BellSouth's SGAT is deficient because it does
not quantify collocation space preparation fees, but rather leaves these fees open to negotiation on
an individual case basis.  For the reasons discussed above, we have determined that BellSouth
fails to satisfy item (i) of the competitive checklist because it does not demonstrate that it offers
collocation on rates, terms, and conditions that are "just, reasonable, and nondiscriminatory" in
accordance with section 251(c)(2).  Accordingly, we do not rest our decision to deny
BellSouth's Louisiana application on its failure to include a rate for collocation space
preparation.

     74.  Nondiscriminatory Access to Interconnection Trunks.  BellSouth demonstrates
that it has a legal obligation to provide interconnection arrangements in accordance with our
rules.  BellSouth fails, however, to make a prima facie showing that it is providing
interconnection equivalent to the interconnection it provides itself.

     75.  BellSouth's interconnection agreements make available interconnection for the
exchange of local traffic between BellSouth and competitive LECs, as does BellSouth's SGAT. 
As of June 1, 1998, BellSouth had provisioned 5324 trunks interconnecting its network with the
networks of competitive LECs in Louisiana.  BellSouth asserts that it makes available trunk
termination points, trunk directionality, multiple trunk termination methods, and interconnection
billing on nondiscriminatory terms.  BellSouth also states that it has procedures in place for
ordering, provisioning, and maintenance of interconnection services.  BellSouth states that it
allows interconnection at the line-side or trunk-side of the local switch, as well as at trunk
interconnection points for tandem switches, central office cross-connect points, and out-of-band
signal transfer points.  BellSouth asserts that, through the bona fide request (BFR) process, it
will provide local interconnection at any other technically feasible point, including meet-point
arrangements.  BellSouth also states that it offers, as a standard arrangement, local tandem
interconnection for carrying traffic destined for BellSouth end offices that subtend a local tandem. 
BellSouth offers routing of local and intraLATA traffic over a single trunk group.  Access traffic,
as well as other traffic utilizing BellSouth's intermediary tandem switching function, is routed via a
separate trunk group.  BellSouth states that competitive LECs may order two-way trunks for the
exchange of combined local and intraLATA toll traffic at BellSouth end offices or access
tandems.  BellSouth, therefore, establishes that it has a legal obligation to provide
interconnection consistent with our rules.

     76.  BellSouth asserts that it provides competitive LECs with nondiscriminatory trunk
installation, and follows the same installation process for competitive LEC trunks that are used for
its own trunks.  BellSouth also asserts that trunk blockage data reflect that the service it
provides to competitive LECs meets or exceeds the service BellSouth provides its own retail
customers.  BellSouth also alleges that the speed of installation, due dates missed, and trunk
blockage are more favorable for competitive LEC trunk groups than for BellSouth trunk
groups.  Indeed, BellSouth has submitted performance data that indicate that BellSouth
generally provides trunks to competitive LECs in about the same timeframe as it provides trunks
to itself.  

     77.  BellSouth's performance data do not demonstrate that the service BellSouth
provides to competitive LECs is equal in quality to the service BellSouth provides to itself.  For
the months of March, April, and May, 1998, BellSouth's performance measurements seem to
indicate that trunk blockage on trunks provisioned to competitive LECs was worse than for
BellSouth's retail trunks.  A review of BellSouth's performance measurements for trunk
blockage during busy hours reveals a difference of 0.7 percentage points for May, 1.8 percentage
points for April, and 1.8 percentage points for March in favor of BellSouth.  Although the
differences in the percentage of trunk blockage appear relatively small, a more detailed
examination of the data indicates that competitive LECs experienced approximately twice as many
incidents of trunk blockage as BellSouth's retail customers.  Based on this, we conclude that
BellSouth does not show that it is providing interconnection "equal in quality" to what it provides
itself.  In order to demonstrate that it is providing interconnection that is equal in quality,
BellSouth could, for example, perform statistical analyses of its trunk blockage data to show
whether the disparity in trunk blockage is a result of random variations as opposed to other
underlying differences.  In future applications, we expect BellSouth to explain how it derives
and calculates its performance data, including trunk blockage data, and to demonstrate that it
meets the equal in quality and nondiscrimination requirements.

     78.  A number of parties raise additional issues with respect to BellSouth's provisioning
of interconnection trunks.  We disagree with commenters that isolated problems are sufficient to
demonstrate that BellSouth fails to meet the statutory requirements.  AT&T claims that BellSouth
has delayed providing interconnection trunks, has "shut down" AT&T trunks, and has failed to
route properly AT&T calls.  BellSouth acknowledges that some trunks had inadvertently been
removed from service, but states that service from these trunks was restored later in the day. 
Sprint likewise asserts that its customers have experienced call-routing problems "on numerous
occasions," although Sprint acknowledges that BellSouth has quickly corrected these
problems.  We conclude that AT&T's and Sprint's evidence is insufficient to demonstrate
systemic problems with BellSouth's provisioning of interconnection trunks.  Rather, this evidence
suggests that the inevitable startup problems are being resolved quickly for BellSouth's
competitive LEC customers.

     79.  Finally, we disagree with Sprint that, because BellSouth does not exchange
different kinds of traffic (local and intraLATA toll) over the same interconnection trunks groups, 
it fails to provide interconnection in a nondiscriminatory manner.  We note that the Louisiana PSC
ruled in the Sprint/BellSouth Arbitration that it is not technically feasible today to mix different
classes of traffic on the same interconnection trunks groups.  In the absence of compelling
evidence on the current technical feasibility of combining different classes of traffic on the same
interconnection trunks groups, we find no reason to disagree with the Louisiana PSC's finding at
this time.   

          2.   Checklist Item 2 -- Unbundled Network Elements

     80.  The nondiscriminatory provision of operations support systems (OSS) is an
integral part of the BOC's obligation to provide access to unbundled network elements as
provided in this section of the checklist.  The systems, information, and personnel encompassed
by OSS are vital to the use of unbundled network elements and the provision of resold services by
competitive LECs.  A competing carrier that lacks access to OSS that is equivalent to the OSS
the incumbent LEC provides to itself "will be severely disadvantaged, if not precluded altogether,
from fairly competing" in the local exchange market.  The ability of competing carriers to
combine unbundled network elements is also a critical aspect of access to these elements.  

     81.  This section addresses the operations support systems that are necessary to
provide access to all network elements as well as resold services since individual network
elements are addressed in other checklist items.  Previously, the Commission has discussed OSS
as a separate section.  In this order, however, we address OSS in two parts.  Under checklist item
(ii), we analyze the OSS interfaces, including the functionalities, BellSouth is relying on to meet
the requirement that it provide access to unbundled network elements and resale on a
nondiscriminatory basis.  Those functionalities include, for example, pre-ordering, ordering, and
maintenance and repair.  OSS issues related to specific checklist items are addressed in the
individual checklist items themselves.  This section also addresses the provision of network
elements in a manner that allows competing carriers to combine such elements.

                                   a.   Operations Support Systems

                                                            (1)  Background     

     82.  Section 271(c)(2)(B)(ii) of Act requires BellSouth to provide "nondiscriminatory
access to network elements in accordance with the requirements of sections 251(c)(3) and
252(d)(1)."  Section 251(c)(3) in turn requires the incumbent LEC to "provide, to any
requesting telecommunications carrier . . . 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 . . . ."  

     83.  In the Local Competition First Report and Order, the Commission identified the
following network elements, which must be provided on a nondiscriminatory basis pursuant to
section 251(c)(3):  (1) local loops; (2) network interface devices; (3) local switching; (4)
interoffice transmission facilities; (5) signaling networks and call-related databases; (6) operations
support systems; and (7) operator services and directory assistance.  The Commission also
required that incumbent LECs provide competing carriers with nondiscriminatory access to
OSS -- the systems, information, and personnel that support network elements or services
offered for resale.  The Commission consistently has found that nondiscriminatory access to
these systems, databases, and personnel is integral to the ability of competing carriers to enter the
local exchange market and compete with the incumbent LEC.  New entrants must be able to
provide service to their customers at a quality level that matches the service provided by the
incumbent LEC to compete effectively in the local exchange market.  For instance, if new
entrants are unable to process orders as quickly and accurately as the incumbent LEC, they may
have difficulty marketing their services to end users.

     84.  In the Local Competition First Report and Order, the Commission concluded that
the provision of access to OSS functions falls squarely within an incumbent LEC's duty under
section 251(c)(3) to provide unbundled network elements under terms and conditions that are
nondiscriminatory and just and reasonable, and its duty under section 251(c)(4) to offer resale
services without imposing any limitations or conditions that are discriminatory or unreasonable. 
In addition, the Commission determined that "operations support systems and the information
they contain fall squarely within the definition of 'network element' and must be unbundled upon
request under section 251(c)(3).  Thus, an examination of a BOC's OSS performance is
necessary to evaluate compliance with section 271(c)(2)(B)(ii) and (xiv)."  The duty to provide
nondiscriminatory access to OSS functions is embodied in other terms of the competitive checklist
as well.

     85.  In previous orders, the Commission has addressed the legal standard by which it
will evaluate whether a BOC's deployment of OSS is sufficient to satisfy this checklist item. 
The Ameritech Michigan Order provides that the Commission first is to determine "whether the
BOC has deployed the necessary systems and personnel to provide sufficient access to each of the
necessary OSS functions and whether the BOC is adequately assisting competing carriers to
understand how to implement and use all of the OSS functions available to them."  The
Commission next determines "whether the OSS functions that the BOC has deployed are
operationally ready, as a practical matter."  Under the second part of the inquiry, the
Commission examines performance measurements and other evidence of commercial readiness.

     86.  The most probative evidence that OSS functions are operationally ready is actual
commercial usage.  As in the BellSouth South Carolina Order and First BellSouth Louisiana
Order, we review the commercial usage of BellSouth's OSS in other states because BellSouth's
OSS are essentially the same throughout its region.  The Ameritech Michigan Order also
provides that the Commission will consider carrier-to-carrier testing, independent third-party
testing, and internal testing, in the absence of commercial usage, to demonstrate commercial
readiness.

     87.  The Ameritech Michigan Order specifies that a BOC must offer access to
competing carriers that is equivalent to the access the BOC provides itself in the case of OSS
functions that are analogous to OSS functions that a BOC provides to itself.  Access to OSS
functions must be offered such that competing carriers are able to perform OSS functions in
"substantially the same time and manner" as the BOC.  For those OSS functions that have no
retail analogue (such as ordering and provisioning of unbundled network elements), a BOC must
offer access sufficient to allow an efficient competitor a meaningful opportunity to compete.

     88.  As previously mentioned, BellSouth deploys the same operations support systems
throughout its nine-state region.  The BellSouth South Carolina Order includes a description of
BellSouth's operations support systems, which we incorporate by reference in this order. 
Below we describe some of the many modifications and enhancements BellSouth has made to its
operations support systems since adoption of the BellSouth South Carolina Order.  

     89.  In addition to the Local Exchange Navigation System (LENS) interface described
in the BellSouth South Carolina Order, BellSouth has made available two pre-ordering interfaces,
the Common Gateway Interface to LENS (CGI-LENS) and EC-Lite.  CGI-LENS is a
customized form of LENS and contains the same functionalities as LENS.  EC-Lite is a
machine-to-machine interface that BellSouth initially developed for AT&T and made available to
other requesting carriers in January 1998.

     90.  BellSouth provides an electronic interface utilizing the Electronic Data Interchange
(EDI) protocol to meet its obligation to provide nondiscriminatory access to competing carriers
for ordering and provisioning OSS functions.  BellSouth implemented version 7.0 of the EDI
interface in March 1998.  EDI version 7.0 supports electronic ordering of 34 resale services and
four unbundled network elements.  In addition, version 7.0 of EDI, unlike the EDI version in
use when the BellSouth South Carolina application was being considered, complies with industry
standards for electronic ordering of unbundled network elements.  BellSouth also provides
electronic error notices for a group of over 300 types of order errors through version 7.0 of
EDI.  When BellSouth's order processing systems encounter an order containing one of these
types of errors, version 7.0 is designed to return an electronic rejection notice to the competing
carrier containing an error code and an explanation of the error.  The competing carrier may
then correct the error and submit a supplemental order.  BellSouth's systems continue to
process other types of order errors as described in the BellSouth South Carolina Order.  Orders
containing such errors are sent to BellSouth's local carrier service center (LCSC) for manual
processing, where the error either will be corrected and the order resubmitted for completion, or
an error notice manually returned to the ordering carrier.  

                                             (2)  Discussion

     91.  We agree with the Department of Justice that BellSouth has made a number of
improvements to address the problems that we identified in the BellSouth South Carolina Order
and the First BellSouth Louisiana Order.  We conclude nonetheless that BellSouth does not
make a prima facie case that it satisfies the requirements of checklist item (ii).  As the preceding
review indicates, the Commission, through a series of orders beginning with the Local
Competition First Report and Order in August 1996, has provided clear guidance on the
standards and legal obligations for the provision of OSS.  We do not believe there is serious
dispute about most of these standards.  The issue in this proceeding is whether BellSouth is, in
fact, meeting these requirements.  We believe that the many enhancements and modifications to
BellSouth's OSS represent important progress toward meeting the statutory nondiscrimination
requirements.  At the same time, there are major deficiencies that BellSouth has not corrected. 
In particular, we find that BellSouth fails to demonstrate that it is providing nondiscriminatory
access to the pre-ordering function of OSS.  Furthermore, the performance measurements, for
example, flow-through rates, indicate that there are serious problems with BellSouth's OSS
ordering interface.  BellSouth must correct these problems in future applications.

     92.  In this Order, we focus our discussion of BellSouth's OSS on the major
deficiencies that we identified in the BellSouth South Carolina Order and First BellSouth
Louisiana Order where BellSouth still does not provide nondiscriminatory access.  These issues
form the basis of our conclusion that BellSouth does not demonstrate that it provides
nondiscriminatory access to its OSS.  In prior orders we have provided guidance on specific
performance measurements to determine if a BOC is meeting the requirements for OSS.  The
most critical aspect of evaluating a BOC's OSS is the actual performance results of commercial
usage or, in the absence of commercial usage, testing results.  In response, BellSouth provides a
number of performance measurements that can be used to evaluate its OSS and we applaud
these efforts.  We conclude that these measurements, for the most part, are calculated in an
appropriate and useful manner.  We note, however, that in the case of certain measurements,
BellSouth's failure to provide a sufficient level of disaggregation undermines the usefulness of
BellSouth's performance data.  We also recognize that BellSouth is developing further
measurements.  In addition, we note that there are no data for certain measurements.  It is unclear
if the lack of performance data reflects a lack of commercial usage or if BellSouth fails to include
the appropriate results.  In future applications, we expect BellSouth to resolve these deficiencies
in order to demonstrate that it is providing nondiscriminatory access to its OSS.

     93.  BellSouth's performance data on several critical OSS functions show a significant
disparity between BellSouth's performance in providing those functions for its retail customers as
opposed to its performance for competing carriers.  We share the Department of Justice's
concern that BellSouth fails to provide any explanation or analysis to demonstrate that its
provision of these functions is nondiscriminatory, despite the differences in measured
performance.  In a future application, BellSouth could, for example, seek to demonstrate
statistically that the differences in measured performance are the result of random variations in the
data, as opposed to underlying differences in behavior.  We encourage BellSouth, in the future,
to submit performance data in a way that permits statistical analysis, or otherwise explain how
its performance data demonstrate compliance with the statutory nondiscrimination mandate.  In
this regard, we note that the Louisiana Commission recently ordered BellSouth to perform
specific statistical analysis to compare its performance for competing carriers and for itself, using
several different statistical techniques.  Additionally, the Louisiana Commission directed
BellSouth to develop performance standards that it must meet when it is providing functions to
competing carriers that it does not provide to its retail customers.  We applaud the Louisiana
Commission for taking these steps, and we look forward to reviewing the results of this analysis in
BellSouth's next application for Louisiana.

                                                       (a)  Pre-Ordering Functions

     94.  Based on our review of the record, we conclude that BellSouth fails to make a
prima facie showing that it provides nondiscriminatory access to OSS pre-ordering functions. 
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."  Pre-ordering
generally includes the activities that a carrier undertakes with a customer to gather and verify the
information necessary to formulate an accurate order for that customer.  Pre-ordering includes
the following functions:  (1) street address validation; (2) telephone number information;
(3) services and features information; (4) due date information; and (5) customer service record
(CSR) information.  Competing carriers need access to this information to place orders for the
products or services their customers want.  

     95.  In previous applications, BellSouth only offered access to pre-ordering functions
through its LENS interface.  BellSouth now makes available to competing carriers its CGI-
LENS and EC-Lite interfaces, in addition to LENS.  BellSouth states that its LENS, CGI-
LENS, and EC-Lite interfaces each provide competing carriers with access to pre-ordering
functions in substantially the same time and manner as BellSouth's own retail sales
representatives.  BellSouth also states that it plans to deploy its Application Program Interface
(API) in the near future.  The Georgia Commission ordered BellSouth to do so by December
31, 1998.  BellSouth's proposed API Gateway will provide a pre-ordering interface and an
ordering interface, both of which will operate on a machine-to-machine basis, use a common
protocol, and therefore be more easily integrated with a competing carrier's own operations
support systems.  

                              (i)  Lack of Equivalent Access in General

     96.  BellSouth fails to demonstrate that its CGI-LENS and LENS interfaces provide
nondiscriminatory access to OSS pre-ordering functions.  In the BellSouth South Carolina Order,
we concluded that BellSouth "impeded competing carriers' efforts to connect LENS electronically
to their operations support systems and to the EDI ordering interface by not providing competing
carriers with the necessary technical specifications and by modifying the types of data provided
through the LENS interface."  As a result, "unlike BellSouth's retail operation which uses an
integrated pre-ordering/ordering interface, competing carriers [could not] readily connect
electronically the LENS interface to either their operations support systems or to BellSouth's EDI
interface for ordering, notwithstanding their desire to do so."  Instead, competing carriers
copied information from the LENS screen and reentered it manually into their own operations
support systems and into the EDI ordering interface.  In prior orders, we found that the
additional costs, delays, and human errors likely to result from this lack of parity "ha[ve] a
significant impact on a new entrant's ability to compete effectively in the local exchange market
and to serve its customers in a timely and efficient manner."  As a result of the failure to provide
nondiscriminatory access to OSS pre-ordering functions, we concluded in the BellSouth South
Carolina Order that BellSouth had failed to satisfy checklist item (ii).  BellSouth made a similar
showing in the first BellSouth Louisiana application and we reached the same result.

     97.  In making our previous determinations, we considered BellSouth's three proposals
for overcoming the problem of transferring data from LENS to competing carriers' operations
support systems and the EDI ordering interface:  (1) Computer Gateway Interface (CGI); (2)
development of a software program to extract the data underlying each LENS screen, a process
referred to as "hypertext markup language (HTML) parsing;" and (3) "cut and paste."  In our
previous orders, we concluded that BellSouth did not meet its obligation to provide updated and
complete specifications for CGI to competing carriers.  We found that this impeded the ability
of competing carriers to modify their systems to permit integration.  We also rejected the
HTML parsing and "cut and paste" methods because each failed to provide equivalent access.

     98.   We cannot agree with BellSouth's argument that it addresses the issues raised in
the BellSouth South Carolina Order and the First BellSouth Louisiana Order by making the
CGI-LENS specifications available so that a competing carrier may integrate pre-ordering and
ordering functions.  At the outset, BellSouth's current CGI-LENS offering, unlike its prior
version of CGI, is essentially similar to the HTML parsing that we rejected in the BellSouth South
Carolina Order and the First BellSouth Louisiana Order.  BellSouth states that, like HTML
parsing, the current CGI-LENS would require a competing carrier to deploy software that will
extract the desired pre-ordering data from the HTML presentation data stream underlying each
LENS screen.  As a result, competing carriers using CGI-LENS must "proceed through each of
the LENS presentation screens, just as a person using the [LENS] system would."  By contrast,
BellSouth's retail operation does not face this limitation because its pre-ordering and ordering are
already fully integrated.  In prior orders, we found with respect to HTML parsing that "[t]his
slower, less efficient process puts new entrants at a competitive disadvantage, because it can lead
to delays while the customer is on the line and may limit a new entrant's ability to process a high
volume of orders."   

     99.  BellSouth does not dispute that CGI-LENS uses the HTML that we have
previously found discriminatory; instead, BellSouth claims that our prior concerns with the use of
HTML are unfounded.  BellSouth states that its current CGI-LENS specification, even though
it relies on an underlying HTML data stream, provides competing carriers with nondiscriminatory
access to pre-ordering.  To support its claim, BellSouth asserts that a competing carrier,
OmniCall, has deployed CGI-LENS to obtain access to customer service record (CSR)
information.  BellSouth also submits a report by Albion International, a firm hired by BellSouth
to construct a prototype using CGI-LENS, to demonstrate that competing carriers can integrate
LENS pre-ordering functions with EDI ordering using information that has been made available
by BellSouth.  BellSouth asserts that the Albion project shows that a competing carrier "has
sufficient information to build a Common Gateway Interface to BellSouth's pre-ordering
systems," and that such a pre-ordering interface could:  (1) retrieve a CSR and parse elements of
that data; (2) validate a service address and retrieve that data in fully parsed form; (3) obtain and
reserve telephone numbers; (4) obtain and utilize interexchange carrier availability data for a
particular central office; (5) obtain and utilize features and services data for a particular central
office; (6) obtain the next available dispatch date from BellSouth's dispatch appointment
scheduling system; and (7) integrate all of these elements with other items input by a competing
carrier's service representative to build an EDI order.  BellSouth also submits a report by Ernst
& Young attesting to BellSouth's assertions concerning, among other things, the Albion
project.  

     100. In light of the deficiencies in using HTML parsing that we previously identified,
BellSouth must demonstrate that these deficiencies do not, in practice, "[put] new entrants at a
competitive disadvantage."  We agree with the Department of Justice that BellSouth fails to do
this.  In particular, BellSouth's evidence does not demonstrate that CGI-LENS is "operationally
ready, as a practical matter."  To evaluate operational readiness, we look to evidence of actual
commercial usage of an interface and, in its absence, evidence of carrier-to-carrier testing,
independent third-party testing, and internal testing.  With respect to actual commercial usage,
BellSouth provides no evidence that CGI-LENS has been commercially developed and used by
any competing carrier for a purpose other than the limited one of ordering CSR information. 
Although OmniCall and MCI have attempted to use CGI-LENS to obtain CSR information, it is
unclear whether this usage constitutes carrier-to-carrier testing or commercial usage.  Whether
viewed as testing or commercial usage, the record is clear that MCI and OmniCall's limited use of
CGI-LENS to obtain CSR information was not fully successful.  Attempts by competing
carriers to use CGI-LENS for the limited purposes of obtaining CSR information to populate
individual fields of an order and to load this information into their own operations support
systems databases have not been successful, because the competing carriers have had to re-key
information manually.  Moreover, no carrier has sought to integrate all five pre-ordering
functions with ordering using CGI-LENS.  

     101. We are not persuaded that CGI-LENS is operationally ready based on the Albion
report and the Ernst & Young report, which BellSouth submits in addition to evidence of
OmniCall's usage.  Neither report addresses the actual performance of the Albion prototype. 
There is no evidence in these reports that would enable us to determine, for instance, whether a
competing carrier is able to build an integrated interface using CGI-LENS, that is capable of
negotiating a service order in substantially the same amount of time as BellSouth's own integrated
systems.  Nor is there any evidence of volume testing of CGI-LENS.  In contrast to this,
BellSouth's detailed assertions concerning its operations support systems did address the
operational readiness of its LENS, EDI, and EC-Lite interfaces.  Evidence concerning the
performance of CGI-LENS is necessary to allow us to determine whether CGI-LENS enables
new entrants to negotiate a service order while a customer is on line, on the same competitive
footing as BellSouth's retail operations.  

     102. Moreover, the limited scope of the Albion prototype diminishes its potential
weight as third-party evidence that CGI-LENS provides nondiscriminatory access to pre-ordering
functions.  BellSouth contends that the Albion test shows that CGI-LENS provides competing
carriers a reasonably affordable option for integrating pre-ordering and ordering functions, stating
that Albion completed its project in eight weeks at a total cost of approximately $120,000.  The
Albion prototype, however, purports to integrate pre-ordering information with ordering
functions only for a single category of service order -- new, resale, residential service -- but does
not demonstrate how a similar prototype could be developed for other resale services or
unbundled network elements.  MCI asserts that a considerable amount of additional work would
be needed to develop CGI-LENS capabilities for all pre-ordering and ordering activities for
residential and business services.  Although BellSouth asserts in its reply that the Albion
prototype "could be easily and quickly adapted for other types of orders," BellSouth provides
no support for its statement.  We therefore do not consider the Albion report as showing that
competing carriers can integrate pre-ordering and ordering functions for other types of orders, for
example, those involving unbundled network elements.

     103.   We also reject BellSouth's reliance on the EC-Lite pre-ordering interface. 
BellSouth developed EC-Lite at the request of AT&T and made it available to other competing
carriers in December 1997.  We agree with the Department of Justice that "BellSouth does not
report at all on the performance of its EC-Lite system . . . . and thus we cannot evaluate whether
that interface is performing adequately."   

                                                                 (ii) Lack of Equivalent Access to Due Dates

     104. We find that BellSouth still fails to offer nondiscriminatory access to due dates, for
the reasons set forth in the BellSouth South Carolina Order and the First BellSouth Louisiana
Order.  In those orders, we found that BellSouth did not offer nondiscriminatory access to
competing carriers because competitors, unlike BellSouth's retail operations, cannot be confident
that the due date promised to their customers based on information obtained from LENS will be
the actual due date that BellSouth assigns to the order when it is processed.  We found that
competing carriers and BellSouth's retail operations obtained the actual due date at the same point
in the process -- after an order is processed in the Service Order Control System (SOCS).  This
fact did not lead to parity in access to due dates because of significant delays in processing
competing carriers' orders which were not experienced by BellSouth's retail operations. 
BellSouth's reliance on manual processing of orders and manual return of order error and
rejection notices led to delays in the delivery of firm order confirmation (FOC) notices to
competing carriers.  FOC notices, among other things, confirm the actual due date for
installation of service.  Although BellSouth did not provide data on the timeliness of its delivery
of FOC notices to competing carriers in its previous applications, evidence submitted by
competing carriers indicated that BellSouth's FOC performance was deficient.  For instance,
AT&T submitted data showing that, for 38 percent of the orders AT&T submitted in August
1997, BellSouth took longer than 24 hours to return a FOC notice.  As a result of such delays,
by the time competing carriers' orders are processed, the initial due date determined using LENS
may have passed or the relevant central office or work center may no longer be accepting orders
for that date.  In the BellSouth South Carolina Order, we also expressed concern about claims
that the method of calculating initial due dates in LENS, whether used in the inquiry or firm order
mode, is discriminatory, although we did not base our decision on this issue.

     105. As described in previous orders, BellSouth's systems do not provide competing
carriers using LENS, CGI-LENS, or EC-Lite, or BellSouth's retail operations, with actual due
dates until orders are processed in SOCS and a FOC notice is generated.  This fact does not
lead to parity of access because competing carriers still are experiencing significant delays in
receiving FOC notices.  As a result, just as stated in the BellSouth South Carolina Order and
the First BellSouth Louisiana Order, new entrants "cannot be confident that the due date actually
provided after the order is processed will be the same date that the new entrants promised their
customers at the pre-ordering stage."  By contrast, "BellSouth's retail service representatives
can be confident of the due dates they quote customers at the pre-ordering stage, because
BellSouth does not experience the same delays in processing orders."  As we explained in the
BellSouth South Carolina Order, "[t]o the customer, the new entrant may appear to be a less
efficient and responsive service provider than its competitor, BellSouth" as a result of this
disparity in access to due dates.

     106. As for the method by which due dates are calculated in LENS, CGI-LENS, and
EC-Lite, we acknowledge and commend the progress BellSouth has made in response to our
views in the BellSouth South Carolina Order.  First, BellSouth states that competing carriers
using LENS, CGI-LENS, or EC-Lite now may view the "Quickservice" and "Connect Through"
indicators and determine whether a technician must be dispatched to activate a customer's service
and, if not, whether the customer's service may be activated in a reduced interval.  Previously,
competing carriers were required to make this determination manually because the projected
service intervals provided to competing carriers using LENS assumed that a technician needed to
visit the premises to perform service installation.  We also note that, pursuant to an order by the
Georgia Commission, BellSouth will add an automatic due date calculation capability to LENS
and CGI-LENS beginning in November 1998.  Until then, LENS requires competing carriers to
calculate due dates manually.  Although we must confine our analysis in this order to
BellSouth's operations support systems at the time of the application, we will closely examine
BellSouth's automatic due date calculation capability in any future application.

                                                       (b)  Ordering and Provisioning Functions

                                                                 (i)  Order Flow-Through

     107. BellSouth fails to make a prima facie showing that it provides nondiscriminatory
access to OSS ordering and provisioning functions.  As in its previous applications, BellSouth
fails to demonstrate that it has achieved parity in order flow-through.  In the BellSouth South
Carolina and First BellSouth Louisiana Order, we determined that the "substantial disparity
between the flow-through rates of BellSouth's orders and those of competing carriers, on its face,
demonstrates a lack of parity."  A competing carrier's orders "flow through" if they are
transmitted electronically through the gateway and accepted into BellSouth's back office ordering
systems without manual intervention.  Although the Commission has not required a
demonstration of order flow-through in its previous decisions under section 271, the Commission
has found a direct correlation between the evidence of order flow-through and the BOC's ability
to provide competing carriers with nondiscriminatory access to the BOC's OSS functions.  

     108. We give substantial consideration to order flow-through rates because we believe
that they demonstrate whether a BOC is able to process competing carriers' orders, at reasonably
foreseeable commercial volumes, in a nondiscriminatory manner.  Evidence of flow-through
also serves as a clear and effective indicator of other significant problems that underlie a
determination of whether a BOC is providing nondiscriminatory access to its operations support
systems.  Our operations support systems analyses in the BellSouth South Carolina Order and
First BellSouth Louisiana Order linked order flow-through with a variety of other deficiencies in
a BOC's operations support systems, including:  (1) failure to provision orders in a timely
manner; (2) failure to provide order status notices electronically; (3) failure to provide
competing carriers with complete, up-to-date, business rules and ordering codes; and (4) lack of
integration between pre-ordering and ordering functions.

     109. Although we recognize and commend BellSouth's efforts to address the
deficiencies linked to its flow-through in previous Commission orders, we agree with the
Department of Justice that the substantial disparity between the flow-through rates for BellSouth's
orders and those of competing carriers, on its face, continues to demonstrate a lack of parity. 
BellSouth's data show that over 96 percent of BellSouth's residential orders and over 82 percent
of its business orders electronically flow through BellSouth's ordering systems and databases. 
By contrast, in May 1998, only 34 percent of competing carriers' orders submitted through EDI
flowed through BellSouth's system.  In April 1998, the EDI flow-through rate was 35 percent,
and in March 1998, it was 31 percent.  

     110. BellSouth's EDI flow-through performance has deteriorated since BellSouth filed
its previous Louisiana application.  The 1998 EDI flow-through figures listed above are lower
than the EDI flow-through figures for two of the three months cited in previous orders -- 54
percent for September 1997, 40 percent for August 1997, and 25 percent for July 1997.  The
deterioration in BellSouth's EDI flow-through performance is especially troubling because, as in
previous orders, these flow-through rates are primarily orders for resale of plain old telephone
services (POTS), "which should be among the easiest orders to submit and process."  Given
that these data represent the EDI flow-through performance for a relatively low number of orders,
we also believe that the problems BellSouth is experiencing will worsen as order volumes, and the
number of complex orders for services other than POTS, increase.  Although we noted in
previous orders that there may be limited instances in which manual processing is appropriate, we
also found that excessive reliance on manual processing, especially for routine transactions,
impedes the BOC's ability to provide equivalent access.

     111. Moreover, BellSouth does not respond in this application to certain flow-through
issues raised in previous orders.  BellSouth again presents aggregate flow-through data for both
EDI and LENS orders, even though, as in previous applications, BellSouth relies only on its EDI
interface to demonstrate that it provides nondiscriminatory access to ordering and provisioning. 
On reply, however, BellSouth provides disaggregated flow-through data for LENS and EDI. 
Although interested parties did not have an opportunity to comment, it appears that this data may
not represent a sound comparison of competing carriers' flow-through relative to BellSouth's
retail flow-through.  In the BellSouth South Carolina Order, we "urge[d] BellSouth . . . in
future applications, to sufficiently disaggregate its data to permit analysis of the performance of
those interfaces upon which it is expressly relying on in its application."  In addition, BellSouth
adjusts its flow-through data upward to account for competing carriers' errors based on its own
analysis of the error type and party at fault but provides no evidentiary support for its
conclusion.  BellSouth provides further data on carrier errors on reply.  Given the complexity of
this data and the fact that interested parties have not had an opportunity to address it, we exercise
our discretion to accord the information minimal weight.  We do not hold a BOC accountable
for flow-through problems that are attributable to competing carriers' errors.  In the BellSouth
South Carolina Order, however, we rejected BellSouth's assertion that competing carriers' errors
are the cause of its low EDI flow-through rates because BellSouth "d[id] not provide credible
evidence or explanation" to support its assertion.  In this application, BellSouth again fails to
provide supporting data or documentation to substantiate its conclusions until the reply round,
despite our directions in the BellSouth South Carolina Order that BellSouth provide such
information.  Moreover, the data previously filed in this proceeding show that all carriers using
the EDI interface are experiencing low flow-through rates.  As in previous orders, we are
unable to accept BellSouth's claims regarding competing carriers' errors in the absence of
persuasive evidence to support such claims.  

     112. BellSouth's own data indicate that in a significant number of cases, the failure of
orders to flow through BellSouth's order processing systems cannot be attributed solely to the
errors of competing carriers.  Even if we accept BellSouth's analysis of competing carriers'
errors, the data show that a significant number of EDI orders drop out for manual processing due
to other reasons.  We describe the flow-through data for one competing carrier, identified as
"Carrier No. 9," to illustrate.  BellSouth's flow-through data for May 1998 show that it received
622 EDI orders from competing carrier No. 9, 18 of which were automatically rejected.  These
18 automatically rejected orders are excluded from the flow-through calculation.  Of the
remaining 604 orders that BellSouth determined are "valid orders," 170 orders flowed through
BellSouth's systems and, according to BellSouth, 67 orders dropped out for manual processing
due to competing carriers' errors.  In other words, 367 of 604 valid orders dropped out for
manual processing for reasons other than the competing carrier's errors, producing a BellSouth-
calculated flow-through rate of 31.6 percent.  As noted above, the flow-through rates when
BellSouth representatives place an order for their own retail operations are 96 percent for
residential services and 82 percent for business services.  BellSouth itself attributes the
significantly lower flow-through rates for competing carriers to causes other than the competitors'
errors.  The reasons for manual processing could include BellSouth-caused errors or a decision
by BellSouth not to provide electronic processing for a particular order type.  In any event,
these 367 manually processed orders are a substantial factor in the low EDI flow-through rate
experienced by this particular carrier, and by BellSouth's own analysis, the manual processing of
these orders is not attributable to errors by the competing carrier. 

     113. BellSouth has failed to correct other deficiencies previously identified as factors
contributing to BellSouth's low flow-through rates.  As in prior orders, we are unable to
determine how many of the errors that BellSouth ascribes to competing carriers result from
BellSouth's underlying failure to provide adequate information, such as business rules, concerning
how BellSouth's internal systems process orders.  We are unable to make such a judgment
because, as noted above and in prior orders, BellSouth provides no evidence supporting its claims
regarding the causes of order errors.  

     114. In prior orders, we concluded that BellSouth's practice of returning order error
notices to competing carriers manually, rather than electronically via the EDI interface, is not
equivalent access because manual processes generally are "less timely and more prone to
errors."  Among other things, manual processes tend to lead to additional errors, and to lower
BellSouth's flow-through rates.  In its application, BellSouth states that it has developed a
mechanism to provide competing carriers with electronic error notification via EDI or LENS,
which includes a standard set of over 300 error messages.  As discussed below, however,
BellSouth's own data indicate that more than 80 percent of BellSouth's rejection notices still
require manual re-keying.  This does not constitute equivalent access.

     115.      We also found previously that the lack of integration between BellSouth's
interfaces for pre-ordering and ordering functions contributed to BellSouth's low flow-through
rates.  As discussed in the BellSouth South Carolina Order, "[t]his lack of integration requires
new entrants manually to re-enter data obtained from the pre-ordering interface into the ordering
interface, a process that reasonably can be expected to contribute to errors committed by new
entrants."  We note that the order flow-through rates for competing carriers using the LENS
interface, which provides integrated pre-ordering and ordering functions, generally are higher than
EDI flow-through rates, although BellSouth relies exclusively on EDI to show compliance with
the requirements of this checklist item.  As we conclude above, BellSouth still fails to provide
access to integrated pre-ordering and ordering interfaces.

     116. In any future application, we would find persuasive evidence showing that the
flow-through rates for competing carriers' orders for resale services at reasonably foreseeable
demand levels will be substantially the same as the flow-through rates for BellSouth's retail
orders.  In the absence of such evidence, BellSouth has the burden of showing why its ordering
systems for competing carriers nonetheless meet the nondiscriminatory standard, i.e., that its
systems provide competing carriers with access to OSS functions that is on par with that which
the BOC provides its own retail operations.

                                                                 (ii) Order Status Notices and Average
                                   Installation Intervals

     117. In this subsection we address BellSouth's performance results in providing access
to ordering functionality.  Specifically, we discuss BellSouth's performance in providing order
rejection notices, firm order confirmation notices, average installation intervals, completion
notices, and order jeopardy notices.  As discussed below, each of these measurements provides
information on the use of BellSouth's OSS for ordering by competing carriers.  For example,
when a competitive LEC submits an order, the order is either rejected or accepted.  If the order is
rejected, the competitive LEC receives a rejection notice from BellSouth.  On the other hand, if
the order is accepted, the competitive LEC receives a firm order confirmation notice.  The
timeliness of these notices, including order completion intervals, is crucial to the ability of new
entrants to compete effectively.

     118. Order Rejection Notices.  Timely delivery of order rejection notices directly affects
a competing carrier's ability to serve its customers, because such carriers are unable to correct
errors and resubmit orders until they are notified of their rejection by BellSouth.  In the
BellSouth South Carolina Order, we concluded that BellSouth's manual provision of order
rejection notices to competing carriers via facsimile failed to meet the standard of
nondiscriminatory access.  Under the process reviewed in previous orders, BellSouth
representatives examined the rejected order for errors and sent a written rejection notice back to
the competing carrier via facsimile.  In comparison, BellSouth provides its retail operations with
the equivalent of order rejection notices through electronic interfaces.  We found that
BellSouth's manual process for competing carriers led to untimely rejection notices and additional
delays and errors in ordering.  To address this, BellSouth states that it provides electronic
notification of order errors via EDI version 7.0.  BellSouth states that this process uses a
standard set of more than 300 error messages to allow competing carriers to identify errors, and
resubmit their corrected orders to BellSouth. 

     119. We commend BellSouth for its efforts to address the problems we previously
identified with its process for returning order rejection notices to competing carriers.  As the
Department of Justice points out, however, BellSouth's data demonstrate that its performance on
order rejections is deficient, and that our prior concerns with BellSouth's manual provision of
order rejection notices were well-founded.  Moreover, BellSouth offers no analysis of its data
or any reasoned claim that the data support a finding that BellSouth meets the nondiscriminatory
standard.  According to AT&T, BellSouth's data "suggest that more than 80 percent of
rejection notices [that should be returned electronically] are re-keyed [manually] by BellSouth
representatives and then transmitted to the [competing carrier]."  Moreover, BellSouth's
performance, in terms of the timeliness of rejection information returned to competitors, is worse
for these manually re-keyed rejection notices for electronically submitted orders, than for entirely
manual orders.  In May 1998, for electronically submitted orders for resale residential service,
on average region-wide, BellSouth returned a reject notice 1.96 days after it received the order, if
the notice was manually re-keyed.  Over 37 percent of such notices were returned beyond a 24-
hour interval.  For entirely manual orders for resale residential service, on the other hand, the
average reject notice interval region-wide is 1.61 days, and over 63 percent of such notices were
returned beyond a 24-hour interval.  The data also indicate that the average time for returning a
reject notice for an electronically submitted order for residential resale service was nearly eight
days in March and April 1998.  As noted above, BellSouth provides electronic notification of
order errors to its retail operations.  We will look closely at the evidence in any future
application to determine whether BellSouth has taken adequate steps to transition to an
automated error notice process, and whether BellSouth's performance has improved with respect
to the provision of timely and accurate error notices.  

     120. Firm Order Confirmation (FOC) Notices.  Timely return of a FOC notice is critical
because it informs the competing carrier of the status of its order by (1) confirming that the order
has been accepted, and (2) providing the due date for installation of service.  We concluded in
the BellSouth South Carolina Order that BellSouth failed to provide nondiscriminatory access to
operations support systems because it failed to provide data either for its delivery of FOC notices
to competing carriers or for its provision of equivalent information to its retail operations. 
BellSouth sends a FOC notice to inform a competing carrier that its order has been processed by
BellSouth's internal operations support systems and to provide the actual due date for installation
of service.  We stated that in any future application, we expected BellSouth to submit data to
enable a comparison of BellSouth's delivery of FOC notices to competing carriers with its
provision of equivalent information to its retail operations, including data for orders that are
manually processed.

     121. In its application, BellSouth submits performance data showing FOC timeliness,
disaggregated by:  (1) fully mechanized orders (i.e., orders that flow through); (2) partially
mechanized orders that are submitted electronically but require some manual processing; and (3)
manually submitted and processed orders.  After further consultation, BellSouth submits data
that allow us to calculate an overall FOC timeliness figure for mechanized orders.  

     122. Although we applaud BellSouth's efforts to address the problems that we
previously identified, we agree with the Department of Justice that BellSouth's FOC performance
continues to be deficient.  For the month of May 1998, for electronically submitted orders for
resale residential services, on average in Louisiana, BellSouth returned a FOC notice over 18
hours after it received a valid service order, and over 21 percent of such notices were returned
beyond a 24-hour interval.  The corresponding region-wide figures are 13 hours and over 13
percent.  For April and March 1998, BellSouth's FOC performance data are similar to its May
figures.  

     123. BellSouth again provides no data concerning its provision of equivalent
information to its retail operations.  We stated in the BellSouth South Carolina Order that "the
retail analogue of a FOC notice occurs when an order placed by the BOC's retail operations is
recognized as valid by its internal OSS."  Yet BellSouth fails to provide any data in this regard. 
As we have done in two previous orders, we reject the argument that a BOC does not have a
corresponding FOC notice for its retail operations.  We reiterate that, one way for a BOC to
demonstrate that it meets the nondiscriminatory standard is to provide data on the timing of its
provision of FOC notices to competing carriers and data on the time it takes its retail operation to
receive the equivalent of a FOC notice.  Because BellSouth has failed to provide data
comparing its delivery of FOC notices to competing carriers with how long it takes BellSouth's
retail operations to receive the equivalent of a FOC notice for its own orders, BellSouth has not
provided sufficient evidence to demonstrate that it is providing nondiscriminatory access.

     124. Average Installation Interval.  In the BellSouth South Carolina Order, we
concluded that in any future application, we expected BellSouth to provide performance data
showing the average interval from when BellSouth first receives an order from a competing
carrier to when BellSouth provisions the service requested in that order (average installation
interval).  In order to permit direct comparisons with BellSouth's retail performance, we also
asked BellSouth to provide analogous data for its retail operations.  

     125. These data are fundamental to a BOC's demonstration of nondiscriminatory access. 
As the Commission stated in the Ameritech Michigan Order, "[w]ithout data on average
installation intervals comparing [the BOC's] retail performance with the performance provided to
competing carriers, the Commission is unable to conclude that [the BOC] is providing
nondiscriminatory access to OSS functions for the ordering and provisioning of resale."  We
also believe that nondiscriminatory access means that a BOC must provide services to competing
carriers in substantially the same time that it provides analogous retail services.  This is
important because "it is likely, in a competitive marketplace, that customer decisions increasingly
will be influenced by which carrier is able to offer them service most swiftly."

     126. We commend BellSouth for providing average installation interval data in its
application.  BellSouth states that it measures the average installation interval "from [BellSouth's]
receipt of a syntactically correct order from the [competing carrier] to [BellSouth's] actual order
completion date."  BellSouth's measurement is similar to the measurement we proposed in the
Performance Measurements NPRM.  As the Department of Justice points out, however, the
data show that there is a significant disparity between the average installation intervals for
competing carriers and for BellSouth's own retail operations.  For resale residential service
orders that do not require dispatch of a service technician, for instance, BellSouth's region-wide
May 1998 average installation interval for competing carriers is 1.79 days, and for itself, 0.89
days.  Corresponding figures for April 1998 are 1.63 days for competing carriers and 0.80 days
for BellSouth, and for March 1998, 2.06 for competitors and 0.82 days for itself.  These data
consistently support a general conclusion that BellSouth provides service to competing carriers'
customers in twice the amount of time that it provides service to its retail customers.  This is
not equivalent access.

     127.   BellSouth provides other performance measurements that are designed to capture
more fully the total amount of time that BellSouth takes to provide service, from the perspective
of a competing carrier and that of its customer.  Three of BellSouth's performance measurements,
when added together, measure the total interval of time between BellSouth's receipt of a valid
service order and its issuance of a notice to the competing carrier that service has been installed: 
(1) FOC interval; (2) Average Installation Interval; and (3) Completion Notice Interval.  From
the customer's perspective, a service is provided when it is installed for the customer's use. 
Thus, we obtain a more complete representation of BellSouth's provision of service to a
competing carrier's customer by adding the first two measurements.  A competing carrier, on the
other hand, needs to know when it should begin billing the customer for the service.  From the
competing carrier's perspective, therefore, we obtain a more complete representation of
BellSouth's provision of service by adding all three measurements.  

     128. BellSouth does not provide analogous data on its retail operations for
measurements (1) and (3), however, for purposes of comparison.  We believe that these
analogous time periods are negligible for BellSouth's retail operations.  As a result, we expect that
the disparity in BellSouth's provision of service, from the perspective of a competing carrier and
that of its customer, may be significantly greater than suggested by the comparison set forth above
of measurement (2), the Average Installation Interval data.  We noted above that the average
interval for returning a FOC is over 18 hours and over 21 percent of FOCs are returned in excess
of 24 hours.  

     129. Completion Notices.  In the BellSouth South Carolina Order, we directed
BellSouth to provide data showing the average interval from when BellSouth first receives an
order to when BellSouth sends an order completion notice to the competing carrier ("average
completion interval").  We believe that the "average installation interval" and the "average
completion interval" should not differ significantly.  As stated in the BellSouth South Carolina
Order, "[t]here should not be a material difference in time between the actual installation of
service and the competing carrier's receipt of an order completion notice."

     130. We agree with the Department of Justice that BellSouth's performance for the
provision of completion notices to competing carriers cannot be assessed at this time. 
BellSouth provides no data showing the "average completion interval," but states that it is
currently developing a performance measure for "average completion notice interval."  We
explained in the BellSouth South Carolina Order that "the receipt of order status notices,
including order completion notices, is critical to a competing carrier's ability to monitor orders for
resale service both for its own records and in order to provide information to end user
customers."  We agree with AT&T that, "[u]ntil the [competing carrier] receives a service order
completion notice, it does not know that the customer is in service, and it is unable to begin billing
the customer for service or to address maintenance problems experienced by the customer."  In
any future application, we expect BellSouth to show that it provides competing carriers with
order completion notices in a timely and accurate manner.

     131. Order Jeopardy Notices.  After a competing carrier has received a FOC notice with
a committed due date for installation of a customer's service, it is critical that the BOC provide the
competing carrier with a timely jeopardy notice if the BOC, for any reason, can no longer meet
that due date.  We found in the BellSouth South Carolina Order that BellSouth failed to meet
the nondiscriminatory standard for OSS functions because it provided no service jeopardies (i.e.,
jeopardy notices for delays caused by BellSouth) to competing carriers.  

     132. In its application, BellSouth states that it has implemented a process for returning
service jeopardies.  In this process, reports are run in the SOCS database to produce lists of
service jeopardies that are printed both in the BellSouth retail centers and, at the same time, in the
Local Carrier Service Center (LCSC).  For BellSouth retail, the representative may then call its
customer directly with the jeopardy information.  For competing carriers, the BellSouth LCSC
representative provides the jeopardy information to the competing carrier by facsimile or, if it is
near the time of installation, by telephone.  The competing carrier may then call its customer
with the jeopardy information.  

     133. We are pleased with BellSouth's progress in providing competing carriers with
service jeopardy notification, but the data are insufficient to enable us to determine whether
BellSouth is providing such notification in a nondiscriminatory manner.  BellSouth submits
performance data on its provision of jeopardy notices to competing carriers for only a limited
period, the month of May 1998.  We will examine any future application closely for sufficient,
reliable data to determine whether BellSouth provides jeopardy notices to competing carriers in a
timely and accurate manner.

                                                                                (iii)     Ordering Functionality for UNEs

     134. Background.  As stated in the Ameritech Michigan Order, a BOC must
demonstrate that it provides competing carriers with access to OSS functions for resale and
access to unbundled network elements.  A BOC therefore cannot obtain section 271 entry until
it shows that its OSS functions for use of unbundled network elements, as well as for resale,
comply with the nondiscrimination requirements.  As part of the nondiscrimination requirement
for ordering and provisioning of unbundled network elements that have no retail analogue, a BOC
must demonstrate that it offers access "sufficient to provide an efficient competitor a meaningful
opportunity to compete."  Previously, the Commission has stated that, in examining whether a
BOC is meeting this requirement, it would consider whether specific performance standards exist
for those functions.  The Commission further stated that performance standards established by
state commissions would be more persuasive than a standard unilaterally imposed by the BOC.

     135. In the BellSouth South Carolina Order, we identified a number of concerns
relating to BellSouth's OSS functions for ordering and provisioning of unbundled network
elements.  In particular, we were concerned with BellSouth's reliance on manual processing of
UNE orders and BellSouth's OSS for ordering and provisioning of UNE combinations.  We
made it clear that BellSouth should address these issues in any future application, even though
such issues did not form the basis of our decision in the BellSouth South Carolina Order.    

     136. Access to OSS Functionality for UNEs.  Although BellSouth has improved its
ordering systems for UNEs, we do not believe that it has made a prima facie case that its current
OSS for ordering UNEs is nondiscriminatory.  In its application, BellSouth states that its EDI
interface now supports fully mechanized ordering of four network elements, including flow-
through capability and return of FOCs and completion notices, and, since implementation of EDI
version 7.0 in March 1998, complies with industry standards.  The EDI version 7.0 interface
allows competing LECs to order four UNEs on a mechanized basis:  (1) unbundled loops; (2)
unbundled ports; (3) interim number portability; and (4) loop plus interim number portability. 
BellSouth's EDI version 7.0 also provides firm order confirmations and completion notices on a
mechanized basis for ordering of these UNEs.  BellSouth also states that directory listings can
be ordered electronically using EDI.  In addition, BellSouth offers the Exchange Access Control
and Tracking ("EXACT") interface.  BellSouth's EXACT interface allows competitive LECs
the ability to order "infrastructure elements, such as trunking" and is the same interface used by
interexchange carriers to order exchange access.

     137. We commend BellSouth for its continuing efforts to improve the efficiency of its
systems.  We believe that the additional ordering functionalities BellSouth has implemented
represent significant and important progress in its UNE ordering and provisioning capability.  We
find, however, that BellSouth fails to demonstrate that its OSS for ordering UNEs meets the
nondiscriminatory requirement as discussed below.  We also commend BellSouth for
implementing industry standards for ordering of UNEs.  We recognize the multiple benefits of
using industry standards for OSS such as providing nationally-based competing carriers with the
ability to have a single interface throughout their service territory, rather than have multiple
interfaces unique to a particular BOC.  We reiterate, however, that compliance with industry
standards may not meet the statutory requirement of providing nondiscriminatory access to OSS
functions.  Likewise, compliance with industry standards is not a requirement of providing
nondiscriminatory access to OSS functions, especially in situations where there is no industry
standard (e.g., pre-ordering).  In other words, a BOC must provide nondiscriminatory access to
its OSS functions irrespective of the existence of, or whether it complies with, industry standards.

     138. Manual Intervention  As discussed above, BellSouth fails to demonstrate that it
provides nondiscriminatory access to the ordering functionality over the EDI version 7.0 interface
for resale.  For the same reason, we find that BellSouth fails to demonstrate that it processes
orders for UNEs in a nondiscriminatory manner.  In particular, BellSouth does not disaggregate
competing LECs' flow-through orders for UNEs placed over the EDI interface.  This level of
disaggregation is necessary to evaluate whether BellSouth can process UNE orders placed over
the EDI interface.  In future applications, we expect BellSouth to address the degree of manual
intervention for UNE orders and whether BellSouth's ordering interface for UNEs meets the
nondiscriminatory requirement.

     139. In addition, we conclude that BellSouth has not adequately supported its claim that
its EDI interface has sufficient capacity to meet reasonably foreseeable demand.  In support of
that claim, BellSouth states that the EDI interface has undergone internal testing, which
incorporated recommendations by IBM, and carrier to carrier testing.   BellSouth also states
that it did not perform any internal testing of the EXACT interface because of the existence of
actual commercial usage by interexchange carriers.  It is unclear to what extent BellSouth's
internal testing and carrier-to-carrier testing of EDI was for ordering resale services versus
UNEs.

     140. BellSouth's internal testing results do not address whether the ordering
functionality for UNEs is nondiscriminatory.  In particular, BellSouth fails to provide any end to
end testing of its interfaces for UNEs.  Given the low volume of actual commercial usage, it is
crucial to have testing results that provide reliable and predictable results of how BellSouth's
systems would respond to actual commercial usage.  In the absence of evidence of either adequate
testing or commercial usage, we cannot conclude that BellSouth has demonstrated that its OSS
for ordering UNEs is in compliance with our rules. 

     141. UNE Combinations.  We agree with the Department of Justice that it is critical that
competitive LECs have the ability to enter the local exchange market through the use of
combinations of UNEs.  A number of parties comment that BellSouth does not accept orders
for combinations of UNEs even when the competitive LEC asks to perform the combining.  We
remain concerned that BellSouth does not provide competitive LECs the ability to order
combinations of UNEs where the competitive LEC performs the combining.  Based on this
record, it is unclear whether competitive LECs can order and designate the specific elements they
wish to combine.  In future applications, we expect BellSouth to explain clearly the method by
which competitive carriers can order UNEs that the competitive LECs plan to combine at cost-
based rates under section 252(d)(1). 

     142. Other UNE Ordering Issues.  We find that BellSouth fails to demonstrate that the
ordering process it offers to competitive LECs for interim number portability, complex directory
listings, and split accounts meets the nondiscriminatory requirement.  A number of commenters
argue that BellSouth has failed to provide nondiscriminatory access to the ordering function for
UNEs.  For example, AT&T claims that BellSouth has impeded its ability to enter the local
exchange market.  AT&T claims that BellSouth has impeded its entry through AT&T's Digital
Link ("ADL") by failing to provide a means for ordering effectively split accounts, complex
directory listings, and interim number portability.  Commenters assert, and BellSouth does not
dispute, that orders for UNE "split accounts" (i.e., orders that switch some, but not all, of a
customer's lines to a competing carrier) must be ordered manually.

     143. AT&T states that it currently must fax orders for "split accounts" and that this
"substantially hinders AT&T's market entry" for ADL service.  MCI estimates that "split
accounts" could amount to more than 50 percent of its orders when its begins ordering UNEs via
EDI.  BellSouth responds to AT&T's complaints regarding ADL by stating that it has provided
business rules to allow AT&T to order manually "subsequent partial migrations" beginning on
July 17, 1998.  In light of the evidence of substantial demand for UNE "split accounts," we
question BellSouth's ability to process anticipated volumes of such orders given its reliance on
manual processing.

     144. We expect that, in any future application, BellSouth will demonstrate that the
ordering process it offers to competitive LECs meets the nondiscriminatory requirement.  In
particular, BellSouth should provide evidence that it offers ordering functionality for UNEs,
including complex directory listings, split accounts, and number portability, that provides an
efficient competitor a meaningful opportunity to compete based on reasonably foreseeable
demand.

                         (c)  Maintenance and Repair

                              (i)  Background

     145. In addition to providing nondiscriminatory access to OSS capabilities for pre-
ordering, ordering, and provisioning, BellSouth is obligated to provide competing carriers with
nondiscriminatory access to its repair and maintenance systems.  BellSouth must furnish
competitors with equivalent access to all repair and maintenance OSS functions that BellSouth
provides to itself.  BellSouth must provide this access in a way that permits its competitors to
perform such OSS functions "in substantially the same time and manner" as BellSouth.    These
systems are necessary for competitive LECs to access network information and diagnostic tools
that allow them to assist customers who experience service disruptions.  Competitive LECs who
offer service via resale or unbundled components of BellSouth's network must have access to
BellSouth's repair and maintenance systems in order to diagnose and solve customer trouble
complaints.  Because problems with BellSouth's network appear to competitive LEC customers
as problems with the competitive LEC's network, a competitive LEC's inability to access and
utilize BellSouth's maintenance and repair functions would have a severe anticompetitive effect. 


                              (ii) Discussion

     146. We conclude that BellSouth has failed to demonstrate that it provides
nondiscriminatory access to repair and maintenance OSS functions.  BellSouth contends that it
offers three different interfaces in order for competitors to access its repair and maintenance
systems.  The repair and maintenance OSS functions used by competing carriers to access
BellSouth's systems are analogous to those functions used by BellSouth itself in its retail
operations.  BellSouth is thus obligated to provide competing carriers with access "equivalent to
the access [BellSouth] provides itself."  Because BellSouth itself accesses repair and
maintenance functions electronically, it is required to provide competitors with electronic access
as well.  The electronic access provided by BellSouth must allow competing carriers to perform
repair and maintenance OSS functions in "substantially the same time and manner" as BellSouth
performs such functions for its own customers.

     147. BellSouth has submitted performance measurements as evidence that it gives
competitive LECs nondiscriminatory access to its repair and maintenance systems.  These
measures do not, however, provide information on which of the three different repair and
maintenance interfaces offered by BellSouth are reflected in the measurements.  For example,
BellSouth contends that thirty competitive LECs have used the Trouble Analysis and Facilitation
Interface (TAFI), but it does not indicate which performance measures establish that competitors
are able to use TAFI to gain nondiscriminatory access to BellSouth's repair and maintenance
systems.  Moreover, we do not rely solely on the lack of adequate performance measures to
conclude that BellSouth fails to provide nondiscriminatory access to its repair and maintenance
OSS functions.  Rather, we are concerned that those performance measurements that BellSouth
does provide show "indications of poor performance" by those systems, suggesting that
competitors may not be gaining nondiscriminatory access.  For example, competitive LEC
resold business orders requiring dispatch of repair crews took nearly 40 percent more time to
complete than BellSouth's own retail business orders.  Because timely repair of a business's
telephone lines can be crucial to the ability of that business to operate, we consider the timely
resolution of competitive LEC business customer trouble reports to be extremely important.  This
measurement indicates that BellSouth is responding to its own customers' trouble complaints
more efficiently than it responds to complaints of competitors' customers.  In addition,
competitive LEC business customers had repeat trouble reports as much as 97 percent more often
than BellSouth's own business customers in the case of resold business lines.  This measure
indicates that BellSouth is providing inferior maintenance support in the initial resolution of
trouble reports.  

     148. BellSouth contends that it makes several different repair and maintenance
interfaces available to permit competitive LECs to interact with BellSouth's own system. 
BellSouth has not, however, satisfied its obligation to provide OSS access on a nondiscriminatory
basis, i.e., in a manner that permits competitive LECs to provide service to their customers at a
level that matches the quality of service provided by BellSouth to its own customers.  As we
discuss below, none of BellSouth's repair and maintenance interfaces provide competitors with
OSS functionalities equivalent to BellSouth's own capabilities.  

     149. TAFI.  First, BellSouth provides competitors with access to its Trouble Analysis
Facilitation Interface, or TAFI.  TAFI, the system used by BellSouth's own retail representatives
for business and residential repair and maintenance, is the most widely used by competing
carriers.  BellSouth contends that competitive LECs using TAFI are able to enter trouble
reports, obtain repair commitment times, and check on the status of previously entered reports "in
the same way BellSouth retail service representatives do."  We conclude that TAFI does not
provide nondiscriminatory access because it cannot be used for all types of services.  Commenters
also contend that TAFI is discriminatory because it does not offer competitors the ability to
integrate their own back office systems with the TAFI system.  TAFI is not an industry standard
interface, but rather a BellSouth proprietary interface.  

     150. BellSouth has not provided evidence that its TAFI interface permits competitors to
process customer repair and maintenance complaints for all types of services.  For example,
AT&T contends that TAFI can process only UNEs that have telephone numbers assigned to
them, such as ports.  TAFI can also process repair and maintenance requests for POTS resale. 
All other types of repair and maintenance inquiries, for unbundled loops for example, simply drop
out of the system.  MCI similarly contends that TAFI cannot be used for unbundled loops,
switching, transport, or dark fiber.  BellSouth itself has no such limitation on the types of its
services its TAFI system can process.  The effect of the limitation BellSouth places on its TAFI
interface is to force competitors using TAFI to build a second interface to handle order types that
TAFI is incapable of processing.  Because TAFI does not provide new entrants with the ability
to access BellSouth's repair and maintenance systems for all of the types of services that
BellSouth is able to access itself, BellSouth's TAFI interface does not satisfy BellSouth's
obligation to provide OSS parity to new entrants.

     151. We also note that BellSouth concedes that it derives superior integration
capabilities from TAFI than the capabilities offered to competitors.  BellSouth states that TAFI is
a "human to machine interface," meaning that new entrants using TAFI cannot integrate it with
the entrant's own back office systems.  As a practical matter, this requires competitors to take
information from the TAFI system and manually re-enter it into their own computer system, and
vice versa.  Thus, an MCI customer service representative taking a report of a service outage
from an MCI customer must complete a trouble ticket in MCI's own computer system, and then
duplicate the effort by completing a second trouble ticket in the TAFI system for submission to
BellSouth.  BellSouth, on the other hand, is able to take advantage of its own TAFI system's
capability of "automatically interacting with other internal systems as appropriate" and its
customer service representatives need not duplicate their efforts in the same way.  In other
words, TAFI is integrated with BellSouth's other back office systems.

     152. We do not here conclude that TAFI's lack of integration per se fails to constitute
nondiscriminatory access, although we do believe BellSouth would provide a more complete
opportunity to compete if it offered competitive LECs an integrated system with the same
functionalities available to BellSouth's own service representatives.  BellSouth's application and
supporting documents provide insufficient evidence that TAFI otherwise satisfies BellSouth's
obligation to provide nondiscriminatory access to its repair and maintenance OSS functions. 
Because BellSouth fails to provide sufficient evidence that its TAFI interface gives competitors
nondiscriminatory access to BellSouth's repair and maintenance capabilities, TAFI does not satisfy
BellSouth's checklist obligations.

     153. T1/M1 IXC Interface/EC-CPM.  Second, BellSouth contends that it makes the
same repair and maintenance interface used by interexchange carriers (IXC) available to
competitive LECs.  BellSouth's IXC trouble reporting system, the T1/M1 interface, is a machine-
to-machine interface that delivers trouble tickets to BellSouth's Work Force Administration
(WFA) system.  This interface works only for "designed," i.e., circuit ID-based, systems such as
complex private line services and interconnection trunking.  BellSouth contends that
competitive LECs can also use its Exchange Carrier-Common Presentation Manager (EC-CPM)
for designed (i.e. circuit-ID based) resale services and UNEs.  BellSouth notes that no
competitive LECs are using either of these interfaces.

     154. We conclude that BellSouth's T1/M1 interface does not provide new entrants with
nondiscriminatory access to BellSouth's OSS functions.  We agree with AT&T that the T1/M1
interface, which was not designed for local service, and provides no flow through into BellSouth's
legacy repair and maintenance systems, does not provide parity with the systems that BellSouth
uses itself.  As such, any trouble reports for retail services will fall out for manual processing,
because this interface can only handle access services.  Because the interface only works with
designed services, new entrants using this interface would be relegated to phoning BellSouth to
report trouble for a customer served by UNEs, whereas BellSouth would be able to use its legacy
system for electronic processing of trouble reports from its own retail customers.    

     155. In addition, EC-CPM does not satisfy BellSouth's obligation to provide a
nondiscriminatory repair and maintenance OSS interface.  Although BellSouth contends that
competitive LECs could use its EC-CPM interface for "designed resale and UNEs," it presents no
evidence that this interface offers competitors the ability to access the same repair and
maintenance functionalities as BellSouth provides itself.  BellSouth has also failed to provide
any evidence of either commercial usage or the operational readiness of this interface, and thus
has failed to demonstrate that EC-CPM provides nondiscriminatory OSS access.

     156. ECTA.  Third, BellSouth contends that its Electronic Communication Trouble
Administration (ECTA) interface offers nondiscriminatory access to BellSouth's OSS system. 
ECTA is a T1/M1 standard machine-to-machine interface for local exchange trouble reporting
and notification that supports both resale and UNEs.  BellSouth avers that ECTA supports both
telephone number and circuit-identified resold services and UNEs.  

     157. We conclude that ECTA as provided by BellSouth does not provide parity to
competitors seeking to access BellSouth's repair and maintenance OSS functions.  Although
BellSouth correctly points out that ECTA is a T1/M1 industry-standard interface, BellSouth
concedes that its own legacy TAFI system "is superior to the limited functionality supported by
the industry standard for trouble reporting."  Thus, for example, competitive LEC customer
service representatives using the ECTA interface cannot correct as many service problems while
on line with the customer as BellSouth's service representatives.  In addition, despite TAFI's
limitations described above, TAFI still permits customer service representatives to conduct a
larger number of line tests than ECTA.  The ability to correct trouble reports while on line with
the customer is a crucial competitive advantage, as revealed by BellSouth's own figures which
indicate that it corrects upwards of 85 percent of its own non-designed service trouble reports
while its customer is still on the line.  A new entrant that is unable to provide such
instantaneous trouble resolution services to its customers cannot compete effectively with
BellSouth which has the capability of resolving many trouble complaints while their customers are
still on the line.  As such, BellSouth has not satisfied its obligation to provide a nondiscriminatory
OSS interface for repair and maintenance functions.

                         (d)  Billing

     158. BellSouth's OSS obligations also extend to the provision of nondiscriminatory
access to billing functions.  Without access to billing information, competitors will be unable to
provide accurate and timely bills to their customers.  BellSouth is obligated to provide
competitors with complete and accurate reports on the service usage of competitors' customers in
the same manner that BellSouth provides such information to itself.

     159. In our discussion of unbundled local switching, we address deficiencies with
BellSouth's billing processes as they relate to switch functionalities.  In the context of billing
interfaces, MCI contends that BellSouth does not provide daily usage information for all of MCI's
customers.  Specifically, MCI contends that BellSouth provides usage information only for MCI's
measured-rate customers, i.e., those customers who are billed based on actual minutes of usage. 
MCI contends that it needs information on its non-measured rate customers "so that MCI will
know if a particular customer would be better off becoming a measured-rate customer and can
advise the customer of this fact."

     160. We conclude that BellSouth has failed to provide sufficient evidence that it has
complied with its obligation to provide competitors with nondiscriminatory access to billing
information.  We conclude, as MCI contends, that BellSouth is obligated to provide its
competitors with access to the information on customer usage that competitors request and that is
technically feasible to provide.  BellSouth is currently not providing carriers with usage data for
flat rate calls, which prevents competitors from marketing and offering calling plans based on
flat rate usage.  In addition, as discussed in further detail in our discussion of switching,
BellSouth did not, at the time it filed this application, provide access usage data to competitors
for exchange access, thus preventing competitors from billing IXCs for such services.  Finally,
BellSouth does not currently provide competitors with billing data for intrastate access services. 
Although BellSouth commits to provide such records by October 31, 1998, and to "work with
[competitive] LECs to develop an alternative compensation process" in the meantime, BellSouth
has not met its OSS obligations until such time as it provides these records to competitors. 
Competing carriers unable to provide their customers with complete and accurate bills for all
services they offer because of BellSouth's failure to provide complete and accurate billing
information are at a competitive disadvantage.  

                    b.   Combining Network Elements

                                   (1)  Background

     161. As previously stated, item (ii) of the competitive checklist, requires that a section
271 applicant show that it offers "[n]ondiscriminatory access to network elements in accordance
with the requirements of sections 251(c)(3) and 252(d)(1)."  Section 251(c)(3) requires the
incumbent LEC to "provide, to any requesting telecommunications carrier . . . 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 . . . ."  Section 251(c)(3) further
provides that an incumbent LEC "shall provide such unbundled network elements in a manner that
allows requesting carriers to combine such elements in order to provide such telecommunications
service."  

     162. In the Local Competition Order, the Commission concluded that, except where
technically infeasible, section 251(c)(3) requires incumbent LECs to provide new entrants with
access to network elements in a manner that is "at least equal-in-quality to that which the
incumbent LEC provides to itself."  The Commission held that "any requesting carrier may
choose any method of technically feasible . . . access to unbundled elements," including, but not
limited to, physical or virtual collocation.  The Commission also ruled that new entrants may
provide telecommunications services wholly through the use of unbundled network elements
purchased from incumbent LECs, without using any facilities of their own.  The Eighth Circuit
upheld these holdings and rules.  The court vacated the Commission's rules requiring incumbent
LECs to combine network elements for new entrants and barring incumbent LECs from
separating network elements that were already combined  in the incumbent LECs' networks. 
The court stated, however, that incumbent LECs must offer network elements in a
nondiscriminatory manner that allows new entrants to combine them to provide a finished
telecommunications service.

     163. In the BellSouth South Carolina Order, we held that, in order to satisfy item (ii) of
the competitive checklist, BellSouth had to demonstrate that, as a legal and practical matter, it
could make access to unbundled network elements available in a manner that allows competing
carriers to combine them.  The Commission found that BellSouth had failed to satisfy this
standard because BellSouth's SGAT lacked definite terms and conditions for collocation -- the
only method that BellSouth proposed for use by new entrants in combining unbundled network
elements.  The Commission further concluded that BellSouth had failed to demonstrate,
through either actual commercial usage or testing, that it could deliver unbundled network
elements in a timely fashion to new entrants' collocation space for the purpose of being combined,
and that the provision of those elements would be at an acceptable level of quality.  The
Commission also was concerned that BellSouth had failed to provide sufficient information on
whether it would provide virtual collocation in a manner that permits new entrants to combine
unbundled network elements.

                    (2)  Discussion

     164. Based on our review of the record, we conclude that BellSouth does not
demonstrate that, as a legal and practical matter, it can make access to unbundled network
elements available in a manner that satisfies the requirements of section 251(c)(3), as incorporated
in section 271.  BellSouth fails to make a prima facie showing that it can provide
nondiscriminatory access to unbundled network elements through the one method that it has
identified for such access -- collocation.  BellSouth's collocation offerings in Louisiana contain the
same defects as the collocation arrangements that the Commission found deficient in the
BellSouth South Carolina Order.  In addition, we find that BellSouth can not limit a competitive
carrier's choice to collocation as the only method for gaining access to and recombining network
elements.

     165. BellSouth contends that its physical and virtual collocation offerings satisfy the
requirement for nondiscriminatory access to network elements, and that section 251(c)(3) does
not require it to provide new entrants with any other method for combining elements.  For the
same reasons stated above in our discussion of BellSouth's collocation offering for the purpose of
interconnection, we find that BellSouth has not met its burden of proving that its collocation
offering satisfies the requirements of section 251(c)(3).  Specifically, BellSouth's SGAT does not
provide new entrants with the requisite definite, concrete, and binding terms and conditions for
collocation.  In addition, we concur with the Department of Justice and commenters that
BellSouth fails to show, through either commercial use or testing, that it can provide access to
network elements through collocation in a timely and reliable manner that would allow new
entrants to recombine network elements to meet reasonable foreseeable demand.  

     166. In demonstrating availability of a checklist item, evidence of actual commercial
usage of that item is most probative, but a BOC also may submit evidence such as carrier-to-
carrier testing, independent third party testing, and internal testing to demonstrate its ability to
provide a checklist item.  BellSouth makes no showing that there is actual commercial usage of
collocation anywhere in Louisiana or even in its region for the purpose of recombining unbundled
network elements as contemplated in section II.F. of the SGAT, nor does it submit any
evidence on any type of testing of its collocation offerings for this purpose.  As MCI observes,
BellSouth's bare statement that it anticipates no problem because its own loops are connected to
its switch by cross-connects is insufficient.  The process of combining network elements
through collocation would involve many more cross-connects and require BellSouth to accept,
coordinate, and deliver orders for various network elements in a rapid and reliable manner for
combination by new entrants at unprecedented volumes in order to accommodate widespread
competition.  To the extent BellSouth contends that it has no obligation to test the efficacy of
its collocation arrangement for the combination of network elements because it is the new entrant
rather than BellSouth that will accomplish the combination, BellSouth is incorrect.  BellSouth
must prove the efficacy of its collocation arrangement in order to demonstrate that, as a legal and
practical matter, BellSouth can "provide . . . unbundled network elements in a manner that allows
requesting carriers to combine such elements in order to provide such telecommunications
service" and in a manner that allows competitors to accommodate both current and projected
demand for unbundled network elements and combinations of unbundled network elements. 
BellSouth's refusal to heed the requirement, explicitly stated in the BellSouth South Carolina
Order, that BellSouth provide such proof through either commercial usage or testing is grounds
for denial of BellSouth's section 271 application.

     167. Accordingly, we conclude that BellSouth fails to demonstrate that, as a legal and
practical matter, it can make available access to unbundled network elements through collocation
in a manner that allows new entrants to combine network elements and provide competitive
service on a widespread basis.  BellSouth therefore does not satisfy the requirement of item (ii) of
the competitive checklist for nondiscriminatory access to unbundled network elements.

     168. In addition, BellSouth's offering in Louisiana of collocation as the sole method for
combining unbundled network elements is inconsistent with section 251(c)(3).  Competitive
carriers are entitled to request any other "technically feasible" methods of gaining access to and
combining unbundled network elements that are consistent with the holdings of the Eighth
Circuit.  In enacting sections 251(c)(3) and section 251(c)(6), Congress established two
separate provisions that impose distinct duties on incumbent LECs in providing access to their
networks.  Section 251(c)(6) imposes an obligation of incumbent LECs "to provide, on rates,
terms and conditions that are just, reasonable, and nondiscriminatory, for physical collocation of
equipment necessary for interconnection or access to unbundled network elements. . . [.]" Section
251(c)(6) was designed to clarify the authority of the Commission to require physical collocation
in light of an earlier decision by the court of appeals that the Commission lacked such authority. 
Section 251(c)(3) imposes a separate obligation on the incumbent LEC to provide
"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."  Section
251(c)(3) also specifies that incumbent LECs shall provide unbundled network elements "in a
manner that allows requesting carriers to combine such elements in order to
provide . . . telecommunications service."  Nothing in the language of section 251(c)(3) limits a
competing carrier's right of access to unbundled network elements to the use of collocation
arrangements.  If Congress had intended to make collocation the exclusive means of access to
unbundled network elements, it would have said so explicitly.  Instead, Congress adopted an
additional requirement under section 251(c)(3) that imposes different and distinct duties on
incumbent LECs.

     169. Our rules implementing sections 251(c)(3) also make clear that incumbent LECs
can not offer collocation as the sole method for gaining access to and combining unbundled
network elements.  Section 51.321 of the Commission's rules states that technically feasible
methods of access to unbundled network elements "include, but are not limited to," physical and
virtual collocation at the incumbent LECs' premises.  Similarly, in section 51.5, the Commission
defined "technically feasible" with reference to collocation "and other methods of achieving
interconnection or access to unbundled network elements."  The Eighth Circuit decision did not
disturb either section 51.5 or section 51.321, and these rules therefore remain in full effect.

     170. The Eighth Circuit decision also upheld the Commission's interpretation of section
251(c)(3) that allows requesting carriers to obtain the ability to provide finished
telecommunications services entirely by acquiring access to the unbundled elements of an
incumbent LEC's network.  Because collocation requires competitors to provide their own
equipment, it appears that BellSouth's collocation requirement may be inconsistent with the
Eighth Circuit decision insofar that it upheld our rules permitting competing carriers to provide
telecommunications services completely through access to the unbundled elements of an
incumbent LEC's network.  Accordingly, we find that an incumbent LEC can not limit a
competitive carrier's choice to collocation as the only method for gaining access to and
recombining network elements.

          3.   Checklist Item 3 -- Poles, Ducts, Conduits, and Rights-of-Way

               a.   Background

     171. Section 271(c)(2)(B)(iii) requires BOCs to provide "[n]ondiscriminatory access to
the poles, ducts, conduits, and rights-of-way owned or controlled by the [BOC] at just and
reasonable rates in accordance with the requirements of section 224."  In the Local Competition
First Report and Order, the Commission interpreted section 251(b)(4) as requiring
nondiscriminatory access to LEC poles, ducts, conduits and rights-of-way for competing
providers of telecommunications services in accordance with the requirements of section 224. 
In addition, we have recently interpreted the revised requirements of section 224 governing rates,
terms and conditions for telecommunications carriers' attachments to utility poles in the Pole
Attachment Telecommunications Rate Order.    

     172. Section 224(f)(1) states that "[a] utility shall provide a cable television system or
any telecommunications carrier with nondiscriminatory access to any pole, duct, conduit, or right-
of-way owned or controlled by it."  Notwithstanding this requirement, section 224(f)(2) permits
a utility providing electric service to deny access to its poles, ducts, conduits, and rights-of-way,
on a nondiscriminatory basis, "where there is insufficient capacity and for reasons of safety,
reliability and generally applicable engineering purposes."

     173. Section 224 also contains two separate provisions governing the maximum rates
that a utility may charge for "pole attachments."  Section 224(b)(1) states that the Commission
shall regulate the rates, terms, and conditions governing pole attachments to ensure that they are
"just and reasonable."  Notwithstanding this general grant of authority, section 224(c)(1) states
that "[n]othing in [section 224] shall be construed to apply to, or to give the Commission
jurisdiction with respect to the rates, terms, and conditions, or access to poles, ducts, conduits
and rights-of-way as provided in [section 224(f)], for pole attachments in any case where such
matters are regulated by a State."  As of 1992, nineteen states, including the state of Louisiana,
had certified to the Commission that they regulated the rates, terms, and conditions for pole
attachments.

               b.   Discussion

     174. We find that BellSouth demonstrates that it is providing nondiscriminatory access
to its poles, ducts, conduits, and rights-of-way at just and reasonable rates, terms and conditions
in accordance with the requirements of section 224, and thus has satisfied the requirements of
checklist item (iii).  Specifically, BellSouth makes a prima facie showing that it has established
nondiscriminatory procedures for:  (1) evaluating facilities requests pursuant to section 224 of the
Act and the Local Competition Order; (2) granting competitors nondiscriminatory access to
information on facilities availability; (3) permitting competitors to use non-BellSouth workers to
complete site preparation; and (4) compliance with state and federal rates.

     175. Based upon our review of the SGAT and interconnection agreements, we conclude
that BellSouth has a concrete and specific legal obligation to provide nondiscriminatory access to
poles, ducts, conduits and rights-of way.

     176. Evaluation of facilities requests.  First, BellSouth has established nondiscriminatory
procedures for evaluating facilities requests pursuant to section 224 of the Act.  Consistent with
the Commission's regulations implementing section 224, we conclude that BellSouth must provide
competing telecommunications carriers with access to its poles, ducts, conduits, and rights-of-way
on reasonable terms and conditions comparable to those which it provides itself and within
reasonable time frames.  Procedures for an attachment application should ensure expeditious
processing so that "no [BOC] can use its control of the enumerated facilities and property to
impede, inadvertently or otherwise, the installation and maintenance of telecommunications . . .
equipment by those seeking to compete in those fields."  Pursuant to the Commission's rules,
BellSouth must deny a request for access within 45 days of receiving such a request or it will
otherwise be deemed granted.  If BellSouth denies such a request, it must do so in writing and
must enumerate the reasons access is denied, citing one of the permissible grounds for denial
discussed above.

     177. BellSouth has made a prima facie showing of compliance with the requirements
set forth above.  BellSouth demonstrates that it utilizes a standard license agreement for access to
poles, conduits, ducts, and rights of way, which outlines specific terms and conditions.  BellSouth
also commits to inform competitors within 45 days if facilities are not available.  In addition,
BellSouth provides a "user's guide" to assist competitive LECs in preparing application forms, and
BellSouth handles all applications on a first-come, first served basis.  BellSouth further commits
to inform competitive LECs of the precise date when any necessary make-ready work can be
completed, and to complete the necessary provisioning work "in a nondiscriminatory manner . . .
."  

     178. BellSouth avers that it "does not and will not favor itself over other carriers when
provisioning access to poles, ducts, conduits and rights-of-way."  In its SGAT, BellSouth
commits to provide competitive LECs with "access to and use of such rights-of-way to the same
extent and for the same purposes that BellSouth may access or use such rights of way . . . ." 
BellSouth's SGAT further establishes definite technical specifications for competitive LECs to
follow in installing and maintaining their facilities.  Competitive LECs and BellSouth conduct
site surveys at mutually agreed upon times and locations, and BellSouth does not reserve space
for itself or give itself a preference when assigning space.  BellSouth further commits to
nondiscriminatory provisioning of competitive LEC requests and states that "[w]ork requested by
a [competitive] LEC is treated identically to work requested by BellSouth itself."  Based on this
information, we cannot accept Sprint's assertion that BellSouth's "first-come, first-served" policy
for acting on pole space requests allows BellSouth to put itself at the front of the line when
provisioning requests.  Finally, BellSouth avers that it will not charge competitive LECs for
"any changes that are made to meet BellSouth's needs."   BellSouth's SGAT and affidavits
provide a prima facie showing that BellSouth has nondiscriminatory application procedures in
place.  We note that no commenter contends that BellSouth discriminates against competitors in
the application process.  

     179. We reject Sprint's assertion that BellSouth cannot demonstrate compliance with
checklist item (iii) because BellSouth has only completed make-ready work for competitive LECs
in Louisiana, and no such LECs have yet occupied space on or in BellSouth's facilities. 
Contrary to Sprint's contention, BellSouth is not obligated to wait until competitive LECs have
finished the process of installing their equipment before BellSouth can demonstrate compliance
with checklist item (iii).  Rather, BellSouth has shown that it has the procedures and policies in
place to satisfy the requirements of this checklist item.

     180. Access to facilities information.  BellSouth has made a prima facie showing that it
provides competitors with nondiscriminatory access to information concerning its facilities.  In the
Local Competition First Report and Order, the Commission concluded that terms and conditions
imposed by BOCs on facilities access "must be applied on a nondiscriminatory basis."  In order
to comply with this requirement, BellSouth must give competitors nondiscriminatory access to
information about its facilities.  Access to maps and similar records is crucial for competitors who
wish to utilize BellSouth facilities and need information about the location and functionalities of
such facilities.  BellSouth commits in its SGAT to provide "access to relevant plats, maps,
engineering records and other data" upon receiving a bona fide request for such information. 
BellSouth further commits to providing competitive LECs with access to engineering records
within five business days of a competitor's request for such information.  We reject AT&T's
contention that a five business day waiting period for competitors is discriminatory, when
BellSouth has instant access to engineering information.  We believe this disparity in time is
reasonable in the specific context presented here, given that BellSouth needs to redact its records
to protect proprietary information.
 
     181. Choice of workforce.  BellSouth has satisfied its statutory obligation to permit
attaching parties to use the individual workers of their choice to perform any make-ready or other
work necessary for the attaching of their facilities, so long as those workers have the same
qualifications as BellSouth's own workers.  BellSouth permits competitive LECs to utilize their
own contractors, provided such contractors are "BellSouth-certified."  We interpret BellSouth's
statement that it allows "BellSouth-certified" contractors to do make-ready work to mean that
BellSouth will comply with the obligations established by the Commission in the Local
Competition Order that utilities allow competitors to utilize workers with "the same
qualifications, in terms of training, as the utility's own workers."  We expect that BellSouth will
not use its "certification" process to discriminate against competitors by delaying their ability to
commence facilities work.  

     182. Rates.  BellSouth has submitted prima facie evidence that its rates comport with
the requirements of the checklist.  Currently, BellSouth would satisfy its duty under checklist
item (iii) to provide nondiscriminatory access to its poles, ducts, conduits, and rights-of-way at
"just and reasonable" rates if it charges attaching entities a rate for pole attachments used in the
provision of telecommunications service that complies with the rate methodology set forth in
section 224(d)(1), and that is uniformly applied to all telecommunications carriers.  After February
8, 2001, however, a rate for pole attachments used to provide telecommunications service is just
and reasonable if the rate for such attachment complies with the Commission's regulations
implementing the requirements of section 224(e), and is uniformly applied to all
telecommunications carriers.  Thus, BellSouth may favor neither itself nor any particular attaching
entity in establishing the applicable rate for pole attachments. 

     183. BellSouth states that its fees for attachments are "consistent with Sections
224(d)(1) and (e) of the Act and the FCC rules promulgated thereunder, as well as the rates
established by the state commissions, and negotiated rates."  Given BellSouth's statement that
its rates comply with the requirements of section 224 of the Act, as well as rate decisions of the
Louisiana Commission, we conclude that BellSouth has satisfied the requirement of checklist item
(iii) that it provide just and reasonable rates.

                    4.   Checklist Item 4 -- Unbundled Local Loops

                                   a.   Background

     184. Section 271(c)(2)(B)(iv) of the Act, item (iv) of the competitive checklist, requires
that BellSouth offer "[l]ocal loop transmission from the central office to the customer's premises,
unbundled from local switching or other services."  The Commission has defined the loop as "a
transmission facility between a distribution frame, or its equivalent, in an incumbent LEC central
office, and the network interface device at the customer premises."  The definition includes
different types of loops, for example, "two-wire and four-wire analog voice-grade loops, and 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."

     185. The local loop is an unbundled network element that must be provided on a
nondiscriminatory basis pursuant to section 251(c)(3).  In order to provide nondiscriminatory
access to unbundled loops, the BOC must be able to deliver unbundled loops, of the same quality
as the loops that the BOC uses to provide service to its own customers, to the competing carrier
within a reasonable timeframe and with a minimum of service disruption.

     186. As described in the discussion of checklist item (ii), competing carriers must have
nondiscriminatory access to the various functions of the BOCs' OSS in order to obtain unbundled
loops in a timely and efficient manner.  One way that a BOC can demonstrate compliance with
this checklist item is by submitting performance data such as the time interval for providing
unbundled loops and whether due dates are met.

     187. A BOC must provide access to any functionality of the loop requested by a
competing carrier unless it is not technically feasible to condition the loop facility to support the
particular functionality requested.  In order to provide the functionality requested, such as the
ability to deliver ISDN or xDSL, the BOC may have to take affirmative steps to condition existing
loop facilities to enable requesting carriers to provide services not currently provided over such
facilities. The BOC must provide competitors with access to unbundled loops regardless of
whether the BOC uses integrated digital loop carrier (IDLC) technology or similar remote
concentration devices for the particular loop sought by the competitor.

     188. A BOC must provide cross-connect facilities between an unbundled loop and a
requesting carrier's collocated equipment on terms and conditions that are reasonable and
nondiscriminatory under section 251(c)(3).  The Commission also required incumbent LECs to
provide requesting carriers access to unbundled network interface devices so that the requesting
carrier may connect its own loop facilities at that point.

               b.   Discussion

     189. We find that BellSouth fails to demonstrate that it provides local loop
transmission, unbundled from local switching or other services in accordance with our rules. 
BellSouth demonstrates that it has a legal obligation to provide unbundled local loops on terms
and conditions consistent with our rules.  We conclude, however, that BellSouth fails to make a
prima facie showing that it offers unbundled local loop transmission in a nondiscriminatory
fashion.

     190. Based upon our review of the SGAT and interconnection agreements, BellSouth
has a concrete and specific legal obligation to provide nondiscriminatory access to unbundled
local loops.  BellSouth states that it makes local loop transmission available on an unbundled basis
in compliance with section 271 through its SGAT, including 2-wire, and 4-wire grade analog
lines, 2-wire ISDN lines, 2-wire ADSL lines, 2-wire and 4-wire HDSL lines, and 4-wire DS-1
lines, and 56 or 64 Kbps digital grade lines.  BellSouth states that other loop technologies may
be requested through the bona fide request process.

     191. In addition, BellSouth states that it provides access to unbundled loops at any
technically feasible point with access to all features, functions, and capabilities and without any
restrictions that impair use by competitive LECs.  BellSouth states that competitive LECs can
combine loops with other unbundled network elements.  BellSouth asserts that the unbundled
loops it provides to competitive LECs are equal in quality to the loops BellSouth uses in the
provision of its retail services, and are provided using the same equipment and technical
specifications that BellSouth uses itself.  BellSouth also states that it offers 2-wire and 4-wire
voice grade cross-connects as well as DS1 and DS3 cross-connects.  BellSouth asserts that it
can and will make all of its loops available to competitive LECs on an unbundled basis, including
those loops served by integrated digital loop carrier.  In addition to the unbundled loop,
competitive LECs may request loop feeder, loop distribution, loop cross connects, loop
concentration and channelization, and access to network interface devices.

     192. Provisioning of Unbundled Local Loops.  BellSouth fails to make a prima facie
case that it provides unbundled loops in a nondiscriminatory manner.  In particular, BellSouth fails
to demonstrate that it provides access for the provisioning and ordering of unbundled local loops
sufficient to allow an efficient competitor a meaningful opportunity to compete.  Furthermore,
BellSouth fails to demonstrate that it can provide loop cutovers based on reasonably foreseeable
demand in a timely and reliable fashion.

     193. In support of its claim of providing unbundled loops in a nondiscriminatory
manner, BellSouth states that, as of June 1, 1998, it had provisioned 18,749 unbundled loops to
competitive LECs in its nine-state region and 107 loops in Louisiana.  BellSouth also asserts
that it has conducted testing to verify that unbundled local loop transmission is properly
provisioned and billed to competitive LECs.  BellSouth asserts that its performance
measurements demonstrate that it offers access to unbundled local loops that allows an efficient
competitor a meaningful opportunity to compete.  BellSouth asserts that it has taken steps to
ensure that loop cutover orders are coordinated and can be done in a single order.  Finally,
BellSouth asserts that many of the competitive LECs' initial problems with loop cutovers were
due to BellSouth's inexperience in providing unbundled local loops.

     194. We find that the performance data that BellSouth has provided on the ordering and
provisioning of unbundled local loops does not demonstrate that it provides nondiscriminatory
access.  In support of its claim that it is offering loops in compliance with the terms of the Act,
BellSouth presents both performance data and the results of a study it conducted of loop cutovers
for a single competing carrier in Georgia.  BellSouth states that this study showed that 318 out of
the 325 loops that it had provisioned to a particular carrier were cut over within 15 minutes. 
BellSouth, however, provides no further information on how it conducted the study; nor does it
include the study as an attachment in its filing.  Without additional information, we have no way
of assessing the probative weight of the study.  For example, we do not know whether the
cutovers occurred when originally scheduled, or whether there were delays.  Carriers have
expressed concerns about scheduling delays which, they argue, have caused severe problems with
their customers.  Moreover, as we describe below, carriers using BellSouth's unbundled loops
have provided evidence that BellSouth has not completed loop cutovers in a timely manner.

     195. BellSouth's region-wide performance data also fails to demonstrate that
competitive LECs have nondiscriminatory access to unbundled loops.  In most cases,
disaggregated information is not yet available for unbundled loops.  Rather, unbundled loop
data are subsumed under broader categories ("UNE Design" and "UNE Non-Design"), which
include unbundled port and transport data.  Based on the manner in which BellSouth presents its
performance data, particularly the lack of any explanation of the data, we are unable evaluate
whether loop ordering and provisioning intervals demonstrate that BellSouth provides
nondiscriminatory access to unbundled loops.

     196. BellSouth states that its target installation interval for provisioning unbundled local
loops varies between seven and ten days, but BellSouth's May 1998 report indicates that the
average installation interval for "UNE Design" (which includes unbundled loops) is twelve days. 
We find that BellSouth's performance results for unbundled loops fail to demonstrate whether
BellSouth meets its target intervals.  As noted above, BellSouth does not provide disaggregated
information for unbundled loops, making it impossible for us to determine whether BellSouth is
meeting its target intervals.

     197. Finally, BellSouth provides performance data on "Coordinated Customer
Conversions" which indicates that, between March 1 and March 31, 1998, it took, on average, 5.8
minutes to cut over an unbundled loop.  This may well be an acceptable loop cutover interval. 
BellSouth, however, gives no explanation of how it derived this number.  Furthermore, BellSouth
fails to disaggregate the data according to whether the unbundled loop was provisioned with or
without number portability.  BellSouth simply asserts in a footnote that such disaggregation of
data is not available at this time.  In addition, competitors have complained of significant
cutover disconnection periods.  Thus, it is impossible for us to determine whether loops are
being cut over in a timely manner.

     198. Because the provisioning of unbundled local loops has no retail analogue,
BellSouth must demonstrate that it provides unbundled loops in a manner that offers an efficient
carrier a meaningful opportunity to compete.  In future applications, we expect BellSouth to
explain how it derives and calculates its data on loop provisioning and why its performance data
demonstrates that competitive LECs have nondiscriminatory access to unbundled loops. 
Furthermore, BellSouth should identify any performance standards that have been adopted by the
relevant state commission or agreed upon by the parties in an interconnection agreement or during
the implementation of such an agreement in order to serve as a basis for comparing BellSouth's
provisioning intervals.

     199. The reported experiences of BellSouth's competitors with unbundled loops suggest
that there may be problems with BellSouth's procedures for providing unbundled loops, even at
very low volumes.  BellSouth's loop provisioning procedures may be plagued by operational
flaws, which may have resulted in unexpected disconnects, late cutovers, and number portability
failures even with a very limited volume of orders.  New entrants have complained that BellSouth
has been unable to provide unbundled loops properly, and that their customers have been harmed
as a result.  Comments also raise concerns that competitors still do not enjoy nondiscriminatory
access to BellSouth's OSS for the provisioning of unbundled loops.

     200. If BellSouth had made its prima facie case that it provides unbundled loops in
accordance with the checklist, the anecdotal accounts of poor unbundled loop provisioning would
be insufficient, in and of themselves, to rebut BellSouth's prima facie case.  In fact, BellSouth has
responded to these allegations in its Reply Brief and supporting documents with its own accounts
of the incidents.  BellSouth notes that many of the alleged loop provisioning problems occurred
when BellSouth was still developing its loop cutover processes and merely indicate former
problems with BellSouth's procedures that have since been corrected.  We do not find it
necessary at this time to determine whether BellSouth's or the competitive LECs' accounts of
these incidents are more credible.  We advise BellSouth to respond, in future applications, with
verifiable information refuting competitive LEC allegations.  Likewise, we advise competitive
LECs to respond with verifiable information refuting BellSouth's assertions and evidence.  For
example, in response to Sprint's allegation that it has experienced "ongoing" problems with loops,
BellSouth asserts that between January 2, 1998 and August 14, 1998, only 1.3 percent of
unbundled loops provided to Sprint had problems resulting in missed due dates.  BellSouth adds
that during this same period it met 91 percent of its due dates.  Moreover, BellSouth claims that
97.5 percent of unbundled loop cutovers for Sprint were completed within the expected time
interval.  BellSouth's affiant, however, simply presents these figures without any supporting
documentation or analysis to allow the Commission, or other third-party observer, to verify the
numbers.

          5.   Checklist Item 5 -- Unbundled Local Transport

               a.   Background

     201. Section 271(c)(2)(B)(v) of the competitive checklist requires a BOC to provide
"[l]ocal transport from the trunk side of a wireline local exchange carrier switch unbundled from
switching or other services."  In the Local Competition First Report and Order, the
Commission concluded that incumbent LECs must provide interoffice transmission facilities, or
transport, on an unbundled basis, to requesting telecommunications carriers pursuant to section
251(c)(3).  The Commission further concluded that "interoffice transmission facilities" include
both dedicated transport and shared transport and set forth incumbent LECs' obligations with
respect to these types of transport.  In the Local Competition Third Reconsideration Order, the
Commission clarified its rules pertaining to shared transport.

               b.   Discussion

     202. We conclude that, but for deficiencies in its OSS functions described above,
BellSouth demonstrates that it provides unbundled local transport as required in section 271. 
Although the terms and conditions under which BellSouth provides interoffice transmission
facilities are consistent with our rules, we find that BellSouth has failed to make a  prima facie
showing that it provides nondiscriminatory access to OSS for the ordering and provisioning of
dedicated and shared transport facilities.  No commenter addressed this checklist item.

     203. Based upon our review of the SGAT and interconnection agreements, we conclude
that BellSouth has a concrete and specific legal obligation to provide local transport as an
unbundled network element on a nondiscriminatory basis.  

     204. Shared Transport:  BellSouth provides sufficient evidence that it meets the
requirements set forth in the Local Competition First Report and Order and Local Competition
Third Reconsideration Order with respect to shared transport facilities.  For example, BellSouth
represents that it offers to provide shared transport when a competitive LEC requests unbundled
local switching, and that the traffic of competitive LECs follows the same transmission path as
BellSouth's traffic does.  Moreover, BellSouth maintains that it offers shared transport
"between all BellSouth tandems and BellSouth switches that subtend those tandems."  We
interpret this statement to mean that BellSouth complies with the Commission's requirement that
it provide shared transport between end offices, between end office and tandem switches, and
between tandem switches.  BellSouth also asserts that it permits requesting carriers that purchase
unbundled shared transport to use the same routing table that is resident in BellSouth's switch. 
Finally, BellSouth contends that it permits requesting carriers to use shared transport to carry
originating access traffic from, and terminating access traffic to, customers to whom the
requesting carrier is providing local exchange service and to collect the associated access
charges.

     205. Dedicated Transport:  BellSouth provides sufficient evidence that it meets the
requirements set forth in the Local Competition First Report and Order with respect to dedicated
transport facilities.  Specifically, BellSouth states that it does not limit the facilities to which
dedicated facilities are connected, and offers dedicated transmission facilities  between all
BellSouth central offices, BellSouth end offices and BellSouth tandem central offices, and
BellSouth central offices and interexchange POPs.  We assume from this description that
BellSouth also provides, consistent with our rules, dedicated transport between its end offices and
SWCs, its SWCs and interexchange carriers' POPs, its tandem switches and SWCs, and its SWCs
and those of requesting carriers.  In addition, BellSouth represents that it makes unbundled
digital cross-connect capacity available through its unbundled channelization offering. 
BellSouth also submits evidence that it offers competitive LECs DS1 transport facilities, and that
a competitive LEC can request other forms of dedicated transport requiring higher levels of
capacity through the BFR process.  BellSouth maintains that the BFR process assures
competitive LECs timely access to such transport without unnecessary delays.  We will examine
any future applications to ensure that this BFR process does not impose unreasonable delays in
the provision of higher transmission capabilities such as DS3 and Optical Carrier levels.

     206. Operations Support Systems:  Although BellSouth demonstrates that it offers
shared and dedicated transport on terms and conditions that are consistent with our rules, it fails
to submit persuasive evidence that its OSS functions provide access to unbundled local transport
on a nondiscriminatory basis.  Accordingly, BellSouth has failed to persuade us that it provides
nondiscriminatory access to unbundled local transport.  BellSouth submits evidence in which it
aggregates its performance results for local transport with all "design circuit orders," which
includes unbundled loops.  We find this to be an insufficient measure of demonstrating that
BellSouth provides nondiscriminatory access to dedicated and shared transport.  Without
nondiscriminatory access to local transport, a competitive LEC will be unable to compete on a
level playing field.  Although we do not require a particular type of evidence to demonstrate
nondiscriminatory access, we believe that performance data specifically measuring the
provisioning of dedicated and shared transport facilities would be persuasive.  We also expect
BellSouth in future applications to demonstrate that its OSS functions provide competitors the
ability to order unbundled local transport in a nondiscriminatory fashion. 

          6.   Checklist Item 6 -- Unbundled Local Switching

               a.   Background

     207. Section 271(c)(2)(B)(vi) of the Act, item (vi) of the competitive checklist, requires
a BOC to provide "[l]ocal switching unbundled from transport, local loop transmission, or other
services."  In the Local Competition First Report and Order, the Commission concluded that
incumbent LECs must provide local switching as an unbundled network element.  The
Commission defined local switching to encompass line-side and trunk-side facilities, plus the
features, functions, and capabilities of the switch.  The features functions, and capabilities of the
switch include the basic switching function as well as the same basic capabilities that are available
to the incumbent LEC's customers.  Additionally, local switching includes all vertical features
that the switch is capable of providing, as well as any technically feasible customized routing
functions.  

     208. Moreover, in the Local Competition First Report and Order, the Commission
concluded that incumbent LECs must permit competing carriers to purchase unbundled network
elements, including unbundled local switching, in a manner that permits a competing carrier to
offer, and bill for, exchange access and the termination of local traffic.  In the Ameritech
Michigan Order, the Commission also concluded that measuring daily customer usage for billing
purposes requires essentially the same OSS functions for both competing carriers and incumbent
LECs, and therefore a BOC must demonstrate that it is providing equivalent access to billing
information.  Thus, the ability of a BOC to provide billing information necessary for a
competitive LEC to bill for exchange access and termination of local traffic is an aspect of
unbundled local switching.  Billing is also one of the primary OSS functions.  There is thus an
overlap between the provision of unbundled local switching and the provision of the OSS billing
function.  

     209. In the Ameritech Michigan Order, the Commission concluded that, to comply with
this checklist item, a BOC must also make available trunk ports on a shared basis, and routing
tables resident in the BOC's switch, as necessary to provide access to shared transport
functionality.  The Commission clarified that an incumbent LEC may not limit the ability of
competitors to use unbundled local switching to provide exchange access by requiring competing
carriers to purchase a dedicated trunk from an interexchange carrier's point of presence to a
dedicated trunk port on the local switch.  

          b.   Discussion

     210. BellSouth does not demonstrate that it is providing local switching unbundled from
transport, local loop transmission, or other services, and thus does not satisfy the requirements
of checklist item (vi).  BellSouth makes a prima facie showing that it provides, or can provide,
the line-side and trunk-side facilities of the switch, the basic switching function, trunk ports on a
shared basis, and unbundled tandem switching.  BellSouth fails to make a prima facie showing
that it provides vertical features, customized routing, and usage information for billing for
exchange access and reciprocal compensation in accordance with our rules.  As evidence of the
availability of unbundled local switching, BellSouth states it has provisioned two unbundled
switch ports in Louisiana and eighty in its region.

     211. As discussed in more detail below, BellSouth fails to demonstrate that it has a
concrete and specific legal obligation to provide all vertical features that the switch is capable of
providing.  BellSouth demonstrates, however, that it otherwise has a legal obligation to furnish
unbundled local switching to competitive LECs pursuant to the Act, our rules, and our decisions. 
We discuss below BellSouth's obligation to provide particular features, functions, and capabilities
of the unbundled local switch.

     212. Line-Side and Trunk-Side Facilities of the Switch.  BellSouth makes a prima facie
showing that it is meeting the requirements of our rules and the Local Competition First Report
and Order that it provide requesting carriers access to line-side, and trunk-side facilities.  In
its state-approved SGAT, BellSouth legally obligates itself to provide competing carriers with
access to such facilities in a nondiscriminatory manner.  BellSouth also sets forth prices and
other terms and conditions for providing unbundled local switching.  

     213. MCI claims that it is interested in obtaining trunk ports at BellSouth's end
offices.  To this end it contacted BellSouth in December of 1997, seeking information necessary
to order trunk ports at BellSouth's switches.  MCI claims that after exchanging E-mails and
letters, MCI and BellSouth finally met in July of 1998.  BellSouth responds that MCI never
raised the issue of trunk ports in arbitration, nor did MCI request them via the BFR process. 
Furthermore, BellSouth claims that MCI is constructing "a strained argument that BellSouth is
not providing unbundled switching in compliance with the Act" because requesting a "'trunk port'
without the necessary switching apparatus is nonsensical in that having only a trunk port would
not provide any usable functionality."

     214. We conclude that MCI's allegation is insufficient to overcome BellSouth's prima
facie showing because MCI's contentions are too vague.  If MCI's request for trunk ports simply
involves seeking access to the functions of the switch through the trunk side facilities of the
switch, we believe that such a request is encompassed in our definition of unbundled local
switching and BellSouth's failure to provide it would render it noncompliant.  On the other
hand, if MCI is seeking a trunk port unbundled from other switching functionality, as BellSouth
appears to contend, such sub-element unbundling of the switch has never been expressly provided
for in our rules.  Because we cannot determine on this record which of these two circumstances
exist, we conclude that MCI does not present sufficient evidence to overcome BellSouth's prima
facie showing.

     215. Basic Switching Function.  BellSouth demonstrates that it meets the requirements
of our rules and the Local Competition First Report and Order that it provide requesting carriers
access to basic switching functions.  In its state-approved SGAT, BellSouth legally obligates
itself to provide competing carriers with access to such facilities in a nondiscriminatory manner. 
BellSouth also has set forth prices and other terms and conditions for providing unbundled local
switching.  

     216. Obligation to Provide Vertical Features.  BellSouth fails to acknowledge that,
consistent with our rules, it is legally obligated to provide all vertical features "that the switch is
capable of providing."  Vertical features provide end-users with various services such as custom
calling, call waiting, three-way calling, caller ID, and Centrex.  According to BellSouth's
interpretation of this rule, it is only legally obligated to make available vertical features that it
currently offers to its retail customers.  We disagree.

     217. Our rules require BellSouth to provide all vertical features loaded in the software
of the switch, whether or not BellSouth offers it on a retail basis.  As the Commission has
previously explained, requiring BOCs to provide all vertical features that the switch is capable of
providing permits competing carriers using unbundled local switching to compete more effectively
by designing new packages and pricing plans.  BellSouth's interpretation would limit the end
user's choice of vertical features to those that BellSouth has made a business decision to offer, and
therefore, would stifle the ability of competing carriers to offer innovative packages of vertical
features.  

     218. BellSouth argues that requiring it to provide vertical features it does not offer to
its retail customers is tantamount to requiring it to provide superior service, in contravention of
the Eighth Circuit's decision.  We disagree.  Activating a vertical feature loaded in the software
of a switch, constitutes a modification to the BOC's facility necessary to accommodate access
to unbundled local switching.  Activating vertical features does not require a BOC to alter its
network substantially; instead, it merely requires the BOC to allow competing carriers to obtain
access to parts of its existing network that the BOC has decided not to use.  Consistent with this
analysis, we agree with BellSouth's claim that it is not obligated to provide vertical features that
are not loaded in the switch software, because this would require BellSouth to build a network of
superior quality.  

     219. A related issue concerning vertical features is the competitive LECs' ability to
order individual or packages of vertical features.  BellSouth currently limits the packages of
vertical features that purchasers of unbundled local switching may activate to the same packages
BellSouth offers its own customers.  We conclude that a BOC must activate any vertical feature
or combination of vertical features requested by a competing carrier unless the BOC can
demonstrate to the state commission, through "clear and convincing evidence," that activation of
that particular combination of vertical features is not technically feasible.

     220. We recognize that, before offering a vertical feature for the first time, a BOC will
want to ensure that the requested feature will not cause adverse network reliability effects. 
Furthermore, a BOC will need to modify its systems to accept orders for these new features, and
develop maintenance routines to resolve problems.  Therefore, we find that a BOC can require a
requesting carrier to submit a request for such a vertical feature through a predetermined process
that gives the BOC an opportunity to ensure that it is technically feasible and otherwise develop
the necessary procedures for ordering those features.  The process cannot be open ended and it
should not be used to delay the availability of the vertical feature.  A BOC must provide the
requesting carrier with a response within a reasonable and definite amount of time.  Furthermore,
a BOC must demonstrate that the access it provides to competing carriers satisfies its duty of
nondiscrimination.  

     221. Customized Routing.  BellSouth does not meet the requirements set forth in the
Local Competition First Report and Order and our rules that an incumbent LEC provide
technically feasible customized routing functions.  Customized routing permits requesting
carriers to designate the particular outgoing trunks that will carry certain classes of traffic
originating from competitors' customers.  Without customized routing, competing carriers will
be not be able to select the routes its customers' calls will take to reach their destination nor will
they be able to select the final destination.  For instance, if a competing carrier wants to establish
its own operator services or directory assistance services, it would need the ability to route its
customers' 0-, 0+, 4-1-1, (area code) 5-5-5-1-2-1-2 calls over trunks leading to its operator
services and directory assistance platform.  BellSouth has proffered two methods of providing
customized routing: Advanced Intelligent Network (AIN) and line class codes. 

     222. Upon implementation, BellSouth's proposed AIN solution has the potential to
meet the requirements of the Local Competition First Report and Order for providing customized
routing on a nondiscriminatory basis.  BellSouth concedes however, that AIN is not currently
being offered.  Although we are encouraged by BellSouth's continued development of its AIN
solution for customized routing, BellSouth's proposed AIN solution currently cannot be relied
upon to show compliance with the requirement for the provision of customized routing.

     223. BellSouth's use of line class codes would be an acceptable interim method of
providing customized routing.  However, BellSouth does not demonstrate that it can make
customized routing practically available in a nondiscriminatory manner due to the inability of
competitive LECs to order customized routing efficiently.  BellSouth claims that, when a
competitor "purchases unbundled local switching elements, the competitor's access will be
identical to that of BellSouth in the same switch."  BellSouth notes that it has been in
negotiations with AT&T concerning standard processes and forms for ordering line class codes. 
AT&T claims that BellSouth seeks to impose unnecessary and discriminatory "logistical hurdles
to commercial use of such codes for customized routing."  AT&T claims that BellSouth's
ordering procedure for customized routing is discriminatory because it requires AT&T to
determine, and then include, the correct line class code as part of the order it submits to
BellSouth.  AT&T argues that, in contrast, BellSouth's employees do not have to ascertain line
class codes when they submit orders for BellSouth retail customers.  BellSouth counters that
only AT&T knows how it wants its customers' calls routed, and therefore, AT&T must indicate
the appropriate line class code so BellSouth knows to provision the switch with that line class
code as well as the selective routing information corresponding to that line class code.

     224. We agree with BellSouth that a competitive LEC must tell BellSouth how to route
its customers' calls.  If a competitive LEC wants all of its customers' calls routed in the same way,
it should be able to inform BellSouth, and BellSouth should be able to build the corresponding
routing instructions into its systems just as BellSouth has done for its own customers.  If,
however, a competitive LEC has more than one set of routing instructions for its customers, it
seems reasonable and necessary for BellSouth to require the competitive LEC to include in its
order an indicator that will inform BellSouth which selective routing pattern to use.  BellSouth
should not require the competitive LEC to provide the actual line class codes, which may differ
from switch to switch, if BellSouth is capable of accepting a single code region-wide.  

     225. Furthermore, BellSouth must ensure that orders containing a code indicating the
desired routing of calls are efficiently processed.  AT&T contends that BellSouth's insistence on
adding routing information to customer orders causes AT&T's orders to require manual
intervention.  We have repeatedly recognized that manual intervention results in less efficient
processing.  In future applications, we expect Bellsouth to demonstrate that, if it requires
specific information for selective routing that results in manual intervention in the processing of
such orders, BellSouth will be able to process such orders in a timely manner and in volumes
reflecting reasonably foreseeable demand.  Of course, the easiest way for BellSouth to make this
demonstration is to ensure that orders that include selective routing information do not require
manual intervention.  

     226. MCI raises a separate challenge to BellSouth's customized routing offering.  MCI
claims that BellSouth will not "translate" its customers' local operator services and directory
assistance calls to Feature Group D signaling.  As a result, MCI cannot offer its own operator
services and directory assistance services to customers it serves using unbundled local
switching.  MCI, however, fails to demonstrate that it has requested Feature Group D signaling,
and BellSouth claims that it has never received such a request.  Thus, the record is inconclusive
as to this objection.  We believe, however, that MCI may have otherwise raised a legitimate
concern.  If a competing carrier requests Feature Group D signalling and it is technically feasible
for the incumbent LEC to offer it, the incumbent LEC's failure to provide it would constitute a
violation of section 251(c)(3) of the Act.  Our rules require incumbent LECs, including BOCs,
to make network modifications to the extent necessary to accommodate interconnection or access
to network elements.  

     227. In its reply comments, BellSouth claims that "the concept of using [Feature Group
D signaling] for operator services signaling appears to present significant problems that will
require technical investigation and testing."  As a result, "[s]hould this [Feature Group D
signaling] approach prove feasible, time would be needed to develop and implement switching
arrangements."  Although it will take time to determine technical feasibility, modify and adapt
its facilities, and establish ordering systems to allow the requesting carrier to offer new service, a
BOC should accomplish these in a swift, efficient, and businesslike manner that would give an
efficient competitor a meaningful opportunity to compete.

     228. Trunk Ports on a Shared Basis.  BellSouth demonstrates that it meets the
requirements set forth in the Local Competition Third Reconsideration Order and the Ameritech
Michigan Order that it provide trunk ports on a shared basis, and routing tables resident in the
BOC's switch, as necessary to provide nondiscriminatory access to shared transport facilities. 
BellSouth claims that "[l]ocal switching also provides access to additional capabilities such as
common and dedicated transport."  Because it is not possible to offer shared transport without
shared trunk ports, BellSouth by implication, is committing itself to providing shared trunk ports. 
To reach a shared trunk port to use shared transport, a routing table must "instruct" the call to
follow a specified path.  Therefore, BellSouth is obligated to provide shared trunk ports and the
routing tables necessary to get to the shared trunk port as a consequence of its legal obligation to
provide shared transport.

     229. Unbundled Tandem Switching.  BellSouth demonstrates that it meets the
requirements of our rules and the Local Competition First Report and Order that it provide
requesting carriers access to unbundled tandem switching.  BellSouth asserts that it satisfies the
Commission's unbundled tandem switching rules.  No commenter alleges that BellSouth is
unable to provide unbundled tandem switching.  Furthermore, in its state-approved SGAT,
BellSouth legally obligates itself to provide competing carriers with access to all the
functionalities of its tandem switches.

     230. Usage Information for Billing Exchange Access.  BellSouth does not demonstrate
that purchasers of unbundled local switching can provide exchange access service to
interexchange carriers through the use of the unbundled local switch as contemplated by our
rules, because it fails to demonstrate that it is able to provide these carriers with the usage
information necessary to bill for exchange access.  Purchasers of unbundled local switching may
assess exchange access charges to carriers for originating or terminating exchange access calls
using those elements.  For example, if an end user with MCI as its local service provider and
Sprint as its interexchange provider, makes an interexchange call, i.e., a toll call, to a customer
whose local service provider is Intermedia, MCI, as the originating exchange access provider, and
Intermedia, as the terminating exchange access provider, have the right to charge Sprint for
originating and terminating exchange access charges, respectively, even if MCI and Intermedia are
using unbundled local switching provided by BellSouth.  To assess such charges, the local service
providers must have either: (1) the actual usage information necessary to determine appropriate
access charges; or (2) a negotiated or state-approved surrogate for this information.  When the
local service providers are providing exchange access by purchasing unbundled local switching,
the BOC providing the unbundled local switching must provide this information to the purchaser
so that the purchaser obtains the right to provide all features, functions, and capabilities of the
switch, including switching for exchange access and local exchange service for that end user.

     231. BellSouth claims that it "provides bills to CLECs using the same systems it uses to
provide bills to its retail and interexchange access customers."  BellSouth however, concedes
that it did not begin providing AT&T with the necessary information until after it filed this
application.  BellSouth also acknowledges it is not currently providing usage information
necessary for competitors to bill BellSouth for terminating intraLATA exchange access traffic
where BellSouth is the intraLATA toll carrier, even though BellSouth has agreed that competitive
LECs may bill for such services.  Furthermore, BellSouth concedes that it has not developed an
alternative compensation process to calculate the charges for terminating intraLATA toll calls by
BellSouth.  We expect that when BellSouth next files a 271 application, it will have in place the
necessary billing procedures, and that it will show that competing carriers are provided timely and
accurate information necessary for competitive carriers to bill interexchange carriers, including
BellSouth, for interLATA and intraLATA exchange access services.

     232. Usage Information Necessary for Billing for Reciprocal Compensation.  BellSouth
does not meet the requirements set forth in the Act and our orders that it provide competitive
LECs with information necessary to bill for reciprocal compensation or, alternatively, that it have
in place other arrangements such as a surrogate.  Section 251(b)(5) requires all LECs "to establish
reciprocal compensation arrangements for the transport and termination of
telecommunications."  Without this information or other arrangements, competing carriers
purchasing unbundled local switching will not be able to bill and collect reciprocal
compensation.  

     233. We require, therefore, that a BOC provide a purchaser of unbundled local
switching with either: (1) actual terminating usage data indicating how many calls/minutes its
customers received and identifying the carriers that originated those calls; or (2) a reasonable
surrogate for this information.  Because we believe that installing equipment necessary to
measure local usage for purposes of providing billing information may impose an unreasonable
economic burden on an incumbent LEC, we find that a reasonable surrogate or agreed upon
arrangement is sufficient to meet the billing requirement for unbundled local switching.  The
Commission has previously allowed carriers to utilize usage factors or other surrogates as
substitutes for actual billing information.  We believe that the best approach would be for the
interested parties to agree on a surrogate for actual usage information.  We recognize, however,
that there may be circumstances where parties are unable to reach agreement.  In those situations
we will look to the respective state commissions to take the steps necessary to resolve the
remaining disputes. 

     234. BellSouth argues that it is not legally required to provide billing information for
terminating traffic because any reciprocal compensation payments due from BellSouth are offset
by payments due to BellSouth for the competitors' use of unbundled local switching to terminate
traffic.  We reject this argument.  We conclude that BellSouth's position ignores its obligations
under our rules requiring it to provide billing information to purchasers of unbundled local
switching.

          7.   Checklist Item 7 

                              a.   911 and E911 services

                                        (1). Background

     235. Section 271(c)(2)(B)(vii) of the Act requires a BOC to provide
"[n]ondiscriminatory access to -- (I) 911 and E911 services."  In the Ameritech Michigan
Order, the Commission found that "section 271 requires a BOC to provide competitors access to
its 911 and E911 services in the same manner that a BOC obtains such access, i.e., at parity." 
Specifically, the Commission found that a BOC "must maintain the 911 database entries for
competing LECs with the same accuracy and reliability that it maintains the database entries for its
own customers."  For facilities-based carriers, the BOC must provide "unbundled access to [its]
911 database and 911 interconnection, including the provision of dedicated trunks from the
requesting carrier's switching facilities to the 911 control office at parity with what [the BOC]
provides to itself."  The Commission applied these standards in the BellSouth South Carolina
Order, and found that BellSouth, through its SGAT, made a prima facie showing that it offered
nondiscriminatory access to 911 and E911.
  
                    (2).      Discussion

     236. BellSouth again demonstrates that it is providing nondiscriminatory access to
911/E911 services, and thus satisfies the requirements of checklist item (vii)(I).  BellSouth makes
a prima facie showing that it has a legal obligation to provide access to 911 services and that it
continues to meet the requirements described in the Ameritech Michigan Order and the BellSouth
South Carolina Order.  

     237. BellSouth has a concrete and specific legal obligation to provide access to
911/E911 services in its SGAT and interconnection agreements.  Moreover, BellSouth states
that:  (1) resellers are able to provide 911 service in the same manner that BellSouth provides this
service to its own customers; (2) facilities-based carriers are able to obtain trunks to BellSouth's
switch, and then either forward 911 calls and automatic number identification (ANI) to the
appropriate tandem, or, if a tandem is unavailable, route the call over BellSouth's interoffice
network using a 7-digit number; (3) BellSouth routinely monitors call blockage on E911 trunk
groups, and when necessary takes corrective action using the same trunking service procedures as
for its own E911 trunk groups; and (4) an independent third party manages the E911 database,
and corrects any errors in BellSouth records that fail validity edits, and, in the case of CLECs that
do not have a similar arrangement with the third party, errors are faxed back to the CLEC for
review, investigation, correction, and resubmission. 

     238. We reject the claim made by Cox Communications that BellSouth is not offering
nondiscriminatory access to these services because errors in BellSouth records are corrected
automatically, while errors in some CLEC records are instead faxed back to the CLEC.  Neither
Cox nor any other commenter alleges that this procedure has caused a problem with the accuracy
and integrity of the 911 database, and we conclude that no party has rebutted BellSouth's prima
facie case.  

                         b.   Directory Assistance/Operator Services

                                   (1). Background

     239. Section 271(c)(2)(B)(vii)(II) and section 271(c)(2)(B)(vii)(III) require a BOC to
provide nondiscriminatory access to "directory assistance services to allow the other carrier's
customers to obtain telephone numbers" and "operator call completion services," respectively. 
Section 251(b)(3) of the Act imposes on each LEC "the duty to permit all [competing providers
of telephone exchange service and telephone toll service] to have nondiscriminatory access to . . .
operator services, directory assistance, and directory listing, with no unreasonable dialing
delays."  The Commission implemented section 251(b)(3) in the Local Competition Second
Report and Order.  

     240. Given the similarity of the language in sections 271(c)(2)(B)(vii)(II) and
271(c)(2)(B)(vii)(III) to that in section 251(b)(3), we conclude that a BOC must be in compliance
with the regulations implementing section 251(b)(3) to satisfy the requirements of section
271(c)(2)(B)(vii)(II) and section 271(c)(2)(B)(vii)(III).  In the Local Competition First Report
and Order, the Commission concluded that, if a carrier requests an incumbent LEC to unbundle
the facilities and functionalities providing operator services and directory assistance as separate
network elements, the incumbent LEC must provide the competing provider with
nondiscriminatory access to such functionalities at any technically feasible point.  

     241. In the Local Competition Second Report and Order, the Commission held that the
phrase "nondiscriminatory access to directory assistance and directory listings" meant that "the
customers of all telecommunications service providers should be able to access each LEC's
directory assistance service and obtain a directory listing on a nondiscriminatory basis,
notwithstanding: (1) the identity of a requesting customer's local telephone service provider; or
(2) the identity of the telephone service provider for a customer whose directory listing is
requested."  The Commission concluded that nondiscriminatory access to the dialing patterns of
4-1-1 and 5-5-5-1-2-1-2 to access directory assistance were technically feasible, and would
continue.  The Commission specifically held that the phrase "nondiscriminatory access to
operator services" means that " . . . a telephone service customer, regardless of the identity of his
or her local telephone service provider, must be able to connect to a local operator by dialing '0,'
or '0 plus' the desired telephone number."

     242. There are various methods by which competing carriers can provide operator
services and directory assistance to their customers through the use of BellSouth's facilities,
personnel, and databases.  First, the competing carrier can use BellSouth's operator services and
directory assistance, i.e., when its customer dials 0, 4-1-1, etc., the customer is connected to
BellSouth's operator services or directory assistance that provides the requested service on behalf
of the competing carrier.  Pursuant to our rules, when a competing carrier uses this method of
providing operator services and directory assistance, it may request that the BOC brand its
calls.  Second, the competing carrier can use its own operator services or directory assistance
with its own personnel and facilities.  In this context, competing carriers must be able to obtain
directory listings of other carriers, either by obtaining directory information on a "read only" or
"per dip" inquiry basis from BellSouth's directory assistance database, or by creating its own
directory database by obtaining the subscriber listing information in the BOC's database.

                    (2). Discussion

     243. BellSouth does not demonstrate that it is providing nondiscriminatory access to
directory assistance and operator services as required by the Commission's rules pursuant to
section 251(b)(3) of the Act, and thus does not satisfy the requirements of this checklist item. 
BellSouth makes a prima facie showing that it has a concrete legal obligation to provide such
access, and that it provides access to its directory assistance database on a "read only" or "per
dip" inquiry basis.  BellSouth, however, fails to make a prima facie showing that it provides
nondiscriminatory access: (1) to BellSouth-supplied operator services and directory assistance;
and (2) to the directory listings in its directory assistance databases.  We note, however, that
many of the deficiencies we identify below should be readily correctable by BellSouth.  We review
BellSouth's compliance in relation to the methods of using BellSouth's operator services and
directory listings described above.  

     244. BellSouth legally obligates itself to provide competing carriers with
nondiscriminatory access to its operator services and directory assistance in its SGAT and
interconnection agreements.  In reaching this conclusion, we reject AT&T's argument that
BellSouth only obligates itself to provide directory assistance "on the same terms as they are
currently offered to other telecommunications providers."  AT&T contends that this is
insufficient because our rules require that BOCs must provide not only equality of access as
among competing carriers, but the access must be equal in quality to that which the BOC provides
itself.  Although we agree with AT&T's recitation of our standard, we disagree that BellSouth's
legal obligation is deficient.  When read in full, BellSouth's SGAT legally obligates BellSouth to
provide nondiscriminatory access to directory assistance on par with that which it provides itself. 

     245. Access to BellSouth-Supplied Operator Services and Directory Assistance. 
BellSouth does not demonstrate that it provides access to its operator services and directory
assistance in a nondiscriminatory manner.  BellSouth submits performance data purportedly
demonstrating nondiscriminatory access through two performance measurements: (1) the average
time it takes to answer a customer's call to "toll assistance" and directory assistance; and (2) the
percentage of calls answered within two time intervals, 30 seconds and 20 seconds.  Although
these are appropriate performance criteria to measure, BellSouth has not separated the
performance data between itself and competing carriers.  It may be that such disaggregation is
either not technically feasible or unnecessary given the method by which competing carriers'
customers access BellSouth's operator services and directory assistance.  In any future
application, if BellSouth seeks to rely on such performance data to demonstrate compliance, it
should either disaggregate the data or explain why disaggregation is not feasible or is unnecessary
to show nondiscrimination.  The absence of such an explanation in the record or any other
corroborative evidence that it is providing nondiscriminatory access precludes us from finding that
BellSouth is providing access to its operator services and directory assistance that is consistent
with our rules.

     246. BellSouth also fails to demonstrate that it complies with our rebranding
requirements.  When a competing carrier provides its customers with operator services and
directory assistance using BellSouth's facilities, personnel, and databases, BellSouth is required to
rebrand or unbrand these services, i.e., although BellSouth's employees or facilities would be used
to answer the call, BellSouth would either identify the service as being provided by the competing
carrier or not identify any carrier at all.  As noted above, under our rules, BellSouth must
rebrand or unbrand its operator services or directory assistance services when a competing carrier
uses BellSouth's facilities, personnel, and databases, and makes a reasonable request that
BellSouth rebrand or unbrand these services.

     247. BellSouth claims that it allows competitors to brand or to unbrand all operator
services and directory assistance services.  According to BellSouth, competing carriers can have
their operator services and directory assistance calls branded or unbranded by purchasing
dedicated transport trunks between each end office in which a competing carrier has customers
and BellSouth's operator services and directory assistance platform.  BellSouth contends that,
without trunks going into its operator services and directory assistance dedicated to specific
carriers, there is no way to identify which carrier is serving the calling customer in order to
properly brand the call.  BellSouth fails, however, to offer any explanation of why this method
of rebranding results in nondiscriminatory access.  In this regard, we note that MCI alleges that
BellSouth's rebranding solution imposes "an unreasonable requirement that would result in a
grossly inefficient and costly parallel network for each CLEC seeking branded operator
services."  In any future application, BellSouth must demonstrate that its method of providing
branding results in nondiscriminatory access.  It could accomplish this by showing, for example,
that the way it brands operator calls for competing carriers is the same as the way it provides
access to operator services for its own customers.

     248. Access to BellSouth's Directory Assistance Databases.  As we explained above, a
competing carrier may wish to supply its own operator services and directory assistance.  When
this is the case, BellSouth must either provide access to BellSouth's directory database on a "read
only" or "per dip" basis, or provide the entire database of subscriber listings to be incorporated
into the competing carrier's directory assistance database.  BellSouth demonstrates that it meets
the requirements of the Local Competition Second Report and Order when it provides access to
its directory assistance database on a "read only" basis.  BellSouth provides such service
through its Direct Access Directory Assistance Service (DADAS), "which provides direct on-line
access to BellSouth's directory assistance database on a per inquiry basis."  No party challenges
this showing.

     249. BellSouth fails, however, to demonstrate that it meets the requirements of the
Local Competition Second Report and Order that it provide the subscriber listing information in
its directory assistance database in a way that allows competing carriers to incorporate that
information into their own database.  To comply with this requirement, a LEC, including a
BOC, must provide a requesting carrier with all the subscriber listings in its operator services and
directory assistance databases except listings for unlisted numbers.  

     250. BellSouth concedes that the database provided to competing carriers does not
contain all the listings that are in BellSouth's own directory assistance and operator services
databases.  It contends that it is precluded from providing the excluded listings because it has
contracts with certain independent companies and competitive LECs that prevent it from
including those carriers' subscribers' listings in the database.  BellSouth claims that it is actively
pursuing "contract modifications to permit it to provide all listings," and that it will provide
competing carriers or independent companies' listings in the database if such companies are
willing to waive the restrictive parts of their agreements.  It claims that, as a result of these
negotiations, most agreements now permit such listings.  Although we are encouraged by
BellSouth's progress in renegotiating its agreements, we find that, based on BellSouth's own
admission, BellSouth fails to demonstrate that it complies with section 51.217(c)(3)(i) of the
Commission's rules.

     251. We reject AT&T's assertion that BellSouth has not demonstrated compliance with
our rule requiring a BOC whose own database indicates that a particular telephone number is
unlisted to include a similar indication in the database it provides to competitors.  AT&T claims
that it is its "understanding [] that BellSouth does not provide CLECs with nonpublished listing
indicators in the 'extracts' it provides of its directory assistance database."  AT&T claims that
without such information a competitive LEC operator can only report that it cannot find a listing
whereas a BellSouth operator can inform a caller that the requested number is unlisted.  In reply
comments, BellSouth represents that its "record layout for the directory assistance database
provides the customers' name and a special indicator designating the customer's listing as
nonpublished."  Thus, a competitive LEC's operator could provide the same unpublished
number information as BellSouth's operator.  We conclude that BellSouth's reply dispels AT&T's
"understanding" to the contrary and that BellSouth has sufficiently demonstrated that it complies
with this requirement.

          8.   Checklist Item 8 -- White Pages Directory Listings

               a.   Background

     252. Section 271(c)(2)(B)(viii) requires a BOC to provide "[w]hite pages directory
listings for customers of the other carrier's telephone exchange service."  We note that section
251(b)(3) obligates all LECs to permit competitive providers of telephone exchange service to
have nondiscriminatory access to directory listings.  Given the similarity of the language in these
two sections of the Act, we believe it reasonable to conclude that the term "directory listing" as
used in section 251(b)(3) is comparable to "white pages directory listings" as used in section
271(c)(2)(B)(viii).  In the Local Competition Second Report and Order, the Commission
determined that, "[a]s a minimum standard . . . the term 'directory listing' as used in section
251(b)(3) is synonymous with the definition of 'subscriber list information' in section 222(f)(3)." 
In addition, the Commission has previously stated that "[a] white pages directory is a compilation
of the individual white pages listings."  The Louisiana PSC found that the BellSouth SGAT
complies with the white pages checklist requirement.

               b.   Discussion

     253. BellSouth has demonstrated that it is providing white pages directory listings for
customers of competitive LECs' telephone exchange service, and thus has satisfied the
requirements of checklist item (viii).  BellSouth makes a prima facie showing that:  (1) it provides
nondiscriminatory appearance and integration of white page listings to customers of competitive
LECs; and (2) it provides white page listings for competitor's customers with the same accuracy
and reliability that it provides its own customers.   

     254. Based upon our review of the SGAT and interconnection agreements, we conclude
that BellSouth has a concrete and specific legal obligation to provide white page listings to
competitors' customers.

     255. As an initial matter, we conclude that, consistent with the Commission's
interpretation of "directory listing" as used in section 251(b)(3), the term "white pages" in section
271(c)(2)(B)(viii) refers to the local alphabetical directory that includes the residential and
business listings of the customers of the local exchange provider.  We further conclude that the
term "directory listing," as used in this section, includes, at a minimum, the subscriber's name,
address, telephone number, or any combination thereof.

     256. Nondiscriminatory Appearance and Integration of White Page Listings.  We find
that, to comply with this checklist item, a BOC must provide customers of competitive LECs with
white page listings that are nondiscriminatory in appearance and integration, and that BellSouth
has adduced sufficient evidence to demonstrate that it is satisfying this requirement.  To compete
effectively in the local exchange market, new entrants must be able to provide service to their
customers at a level that is comparable to the service provided by the BOC.   Inherent in the
obligation to provide a white pages directory listing in a nondiscriminatory fashion is the
requirement that the listing the BOC provides to a competitor's customers is identical to, and fully
integrated with, the BOC's customers' listings.  We find persuasive BellSouth's evidence that
"[t]he listing for a [competitive] LEC customer looks identical to the listing for a [BellSouth]
customer," that competitive LEC customers "are not separately classified, or otherwise identified,
on the printed directory pages," and that competitive LEC customer listings "are included in the
same font and size as BST [BellSouth Telephone] customers and without any distinguishing
characteristics."  BellSouth further avers that for white page listings, "the exact same process is
performed in the same way and at the same time for the [competitive] LEC orders" as for its
own.  We note that no commenter argues that BellSouth's white page listings for competitive
LEC customers are not comparable to listings of BellSouth customers.

     257. Nondiscriminatory accuracy and reliability of white page listings.  We find that, to
comply with this checklist item, a BOC must also demonstrate that it provides white pages
directory listings for a competing carrier's customers with the same accuracy and reliability that it
provides to its own customers, and that BellSouth has submitted sufficient evidence to
demonstrate that it is satisfying this requirement.  A competitive LEC will be unable to compete
effectively in the local market if its customers cannot obtain white pages listings that are as
accurate and reliable as those provided to customers of the BOC.  We, therefore, require that, at a
minimum, a BOC have procedures in place that are intended to minimize the potential for errors
in the listings provided to the customers of a competing telecommunications service provider.  

     258. We find persuasive BellSouth's affidavit testimony that it provides listings to
competitive LEC customers that include "names, addresses and telephone numbers" with the same
degree of accuracy and reliability as BellSouth provides to itself.  We also find persuasive
BellSouth's affidavit evidence that it provides competing carriers with instructions for obtaining a
listing in the white pages directory, including a description of the procedures for submitting a
directory listing request, a description of the proper format for submitting subscriber listing
information, publishing schedules and deadlines, and procedures for updating the directory listings
database.  BellSouth also affords competing carriers a reasonable opportunity to verify the
accuracy of the listings to be included in the white pages directory.  In particular, we are
persuaded that BellSouth has a procedure in place for competing carriers to review, and if
necessary to edit, white pages listings prior to their publication in the directory.  None of the
commenters allege that BellSouth provides inaccurate white page listings for customers of
competitive LECs.

     259.  We reject AT&T's contention that BellSouth has not satisfied this checklist item
because it forces AT&T to use a BellSouth-assigned account number for each white page listing
order and does not process multi-line directory orders in the same fashion as single line orders. 
AT&T fails to demonstrate either how BellSouth's refusal to permit AT&T to submit single
telephone number white page listings and listings of multi-line customers on the same order form,
or how AT&T's use of a BellSouth-assigned account number, results in the discriminatory
provision of white page listings for customers of competitive LECs.

          9.   Checklist Item 9 -- Numbering Administration

               a.   Background

     260. Section 271(c)(2)(B)(ix) of the competitive checklist requires BellSouth to provide
"nondiscriminatory access to telephone numbers" for assignment to competing carriers' telephone
exchange service customers, "[u]ntil the date by which telecommunications numbering
administration guidelines, plan, or rules are established."  The Commission, interpreting section
251(b)(3) in the Local Competition Second Report and Order, concluded that "the term
'nondiscriminatory access to telephone numbers' requires a LEC providing telephone numbers to
permit competing providers access to these numbers that is identical to the access that the LEC
provides to itself."  The Commission further stated that, in assessing a BOC's compliance with
checklist item (ix), the Commission "will look specifically at the circumstances and business
practices governing CO [Central Office] code administration in each applicant's state."  

     261.      After the date by which numbering administration guidelines, plan, or rules are
established, BellSouth is required to comply with such guidelines, plan, or rules.  In accordance
with the Commission's NANP Order and industry guidelines, Lockheed Martin assumed the role
of CO code administrator for the area served by BellSouth as of August 14, 1998.  This transfer
of responsibility from BellSouth to Lockheed Martin constitutes the date upon which numbering
administration guidelines were established in BellSouth's territory.

               b.   Discussion 
          
     262. BellSouth demonstrates that it has provided nondiscriminatory access to telephone
numbers for assignment to other carriers' telephone exchange service customers, and thus
BellSouth has satisfied the requirements of checklist item (ix).  BellSouth makes a prima facie
showing that, in acting as the code administrator, it has adhered to industry guidelines and the
Commission's requirements under section 251(b)(3).  None of the commenters allege that
BellSouth has failed to meet this checklist item.

     263. Based on our review of the SGAT and interconnection agreements, we note that
BellSouth had a legal obligation to provide nondiscriminatory access to telephone numbers during
its tenure as the CO code administrator.  BellSouth also states that it will comply with number
administration guidelines pursuant to section 251(e) upon relinquishment of CO code
administration duties.

     264. BellSouth submits sufficient evidence to demonstrate that it is meeting the
requirements of checklist item (ix).  BellSouth states that it adheres to industry-established
guidelines.  Moreover, BellSouth demonstrates that it satisfies the requirements under section
251(b)(3): (1) as of the date of its application, it did not charge any fees for activating CO codes
to any carrier or group of carriers; and (2) it applied identical standards and procedures for
processing all numbering requests, regardless of the party making the request.

     265.      As noted above, Lockheed Martin assumed CO code administration
responsibilities in BellSouth's territory subsequent to the filing of this application.  In future
applications, therefore, BellSouth will be required to demonstrate that it adheres to the industry's
CO administration guidelines and Commission rules, including those sections requiring the
accurate reporting of data to the CO code administrator.

          10.  Checklist Item 10 -- Databases and Associated Signaling

               a.   Background

     266. Section 271(c)(2)(B)(x) of the competitive checklist requires BellSouth to offer
"[n]ondiscriminatory access to databases and associated signaling necessary for call routing and
completion."  In the Local Competition First Report and Order, the Commission identified
signaling networks and call-related databases as network elements, and concluded that LECs must
provide the exchange of signaling information between LECs necessary to exchange traffic and
access call related databases."  

               b.   Discussion

     267. BellSouth demonstrates that it is providing nondiscriminatory access to databases
and associated signaling necessary for call routing and completion and thus satisfies the
requirements of checklist item (x).  BellSouth makes a prima facie showing that it provides
requesting carriers nondiscriminatory access to:  (1) signaling networks, including signaling links
and signaling transfer points; (2) certain call-related databases necessary for call routing and
completion, or in the alternative, a means of physical access to the signaling transfer point linked
to the unbundled database; and (3) Service Management Systems (SMS).  None of the
commenters allege that BellSouth has failed to meet its obligations with regard to
nondiscriminatory access to databases and associated signaling.  

     268. Based upon our review of the SGAT and interconnection agreements, we conclude
that BellSouth has a concrete and specific legal obligation to provide databases and signaling. 

     269. Signaling Networks.  BellSouth provides sufficient evidence to demonstrate that it
meets the requirement set forth in the Local Competition First Report and Order requiring that it
provide nondiscriminatory access to signaling networks, including signaling links and signaling
transfer points.  Signaling networks enable the competitive LEC the ability to send signals
between its switches (including unbundled switching elements), between its switches and
BellSouth's switches, and between its switches and those third party networks with which
BellSouth's signaling network is connected.  BellSouth provides access to its signaling network
from switches that BellSouth uses for its own customers and in the same manner in which it
obtains such access itself.  BellSouth asserts that carriers that provide their own switching
facilities are able to access BellSouth's signaling network for each of their switches via a signaling
link between their switch and the BellSouth STP.  Competitive carriers are able to make this
connection in the same manner as BellSouth connects one of its own switches to the STP.

     270. Call-Related Databases.  BellSouth provides sufficient evidence to demonstrate
that it meets the statutory requirement that it provide, or offer to provide, nondiscriminatory
access to call-related databases that are necessary for call routing and completion.  Consistent
with the requirements explained in the Local Competition Order, BellSouth demonstrates that it
provides access to each of the following:  (1) line-information databases (e.g., for calling cards);
(2) toll-free databases (i.e., 800, 888); and (3) Advanced Intelligent Network databases. 
Access to these call-related databases is necessary for competitive LECs to remain competitive in
their ability to offer important call-related services to their customers.  Moreover, competitive
LECs would be greatly disadvantaged if they were required to develop immediately their own
databases for these services.  In affidavit testimony, BellSouth demonstrates that it offers access
to each of these databases on an unbundled basis.  BellSouth also asserts that it provides access
to its call-related databases by means of physical access at the signaling transfer point linked to the
unbundled database, and provides a requesting telecommunications carrier that has purchased
its local switching capability to use BellSouth's service control point element in the same manner,
and via the same signaling links, as BellSouth itself.  BellSouth's affiants also assert that
BellSouth allows a requesting telecommunications carrier that has deployed its own switch, and
has linked that switch to BellSouth's signaling system, to gain access to BellSouth's service
control point in a manner that allows the requesting carrier to provide any call-related, database-
supported services to customers served by the requesting telecommunications carrier's switch. 
Finally, BellSouth contends that it provides a requesting telecommunications carrier with access
to call-related databases in a manner that complies with section 222 of the Act.

     271. BellSouth is not yet required to implement long-term number portability in
Louisiana.  We do not require, therefore, that it demonstrate its ability to do so at this time. 
Furthermore, we find no basis in the record to conclude that it will not meet its obligation to offer
unbundled access to downstream number-portability databases in Louisiana once it does provide
long-term number portability in that state.  In any future application filed after BellSouth has
implemented long term number portability in Louisiana, however, we will expect BellSouth to
address this issue.  We note that the Commission has before it a petition for reconsideration of its
recent Long-Term Number Portability Cost-Recovery Order that raises issues regarding the
treatment of downstream number-portability databases as unbundled network elements.  We
will expect future applicants to demonstrate that they meet the requirements of any Commission
order on this matter to meet this checklist item.

     272. SMS.  BellSouth provides evidence supporting its claim that, consistent with the
Commission's rules and the Local Competition First Report and Order, it provides or offers to
provide nondiscriminatory access to service management systems.  Access to these systems is
important for competitive LECs, because the systems are used to create, modify, or update
information in call-related databases that are necessary for call routing and completion.  BellSouth
provides requesting telecommunications carriers with the information necessary to enter correctly,
or format for entry, the information relevant for input into the particular BOC SMS.  BellSouth
provides a requesting telecommunications carrier the same access to design, create, test, and
deploy AIN-based services at the SMS, through a service creation environment, that BellSouth
provides to itself.  BellSouth provides a requesting telecommunications carrier access to its
SMS in a manner that complies with section 222 of the Act.

     273. Nondiscriminatory Access to Signalling and Databases.  BellSouth demonstrates
that it provides nondiscriminatory access to signaling and call related databases.  BellSouth asserts
that it provides access to its signaling links, which in turn provide access to call related
databases, through its EXACT interface or through manual processing.  BellSouth further
states that, as of June 1, 1998, it was providing nine facilities-based CLECs in its region access to
its signaling service via interconnection with an interexchange carrier, and another ten CLECs
receive access using a third-party signaling hub provider.  No party in this proceeding addresses
BellSouth's assertion.  We conclude that BellSouth demonstrates through actual commercial
usage that it is providing access to signalling and call related databases.  

                    11.  Checklist Item 11 -- Number Portability

                         a.   Background

     274. To meet section 271(c)(2)(B)(xi) of the Act, item (xi) of the competitive checklist,
BellSouth must be in compliance with the number portability regulations the Commission has
promulgated pursuant to section 251 of the Act.  Congress enacted the number portability
provisions of section 251 because the inability of customers to retain their telephone numbers
when changing local service providers hampers the development of local competition.  Thus,
Congress added section 251(b)(2) to the 1934 Act, which requires all LECs, "to provide, to the
extent technically feasible, number portability in accordance with requirements prescribed by the
Commission."  Congress defines number portability as "the ability of users of
telecommunications services to retain, at the same location, existing telecommunications numbers
without impairment of quality, reliability, or convenience when switching from one
telecommunications carrier to another," and the Commission has incorporated this definition
into its rules.  To prevent the cost of providing number portability from itself becoming a
barrier to local competition, Congress enacted section 251(e)(2), which requires that "[t]he cost
of establishing telecommunications numbering administration arrangements and number portability
shall be borne by all telecommunications carriers on a competitively neutral basis as determined by
the Commission."

     275. Pursuant to these statutory provisions, the Commission requires local exchange
carriers (LECs) to offer an interim form of number portability through remote call forwarding
(RCF), flexible direct inward dialing (DID), or any other comparable and technically feasible
method, and to gradually replace interim number portability with a more sophisticated long-
term solution using a system of regional databases.  The Commission also has established
guidelines for the states to follow in mandating a competitively neutral cost-recovery mechanism
for interim number portability, and created a competitively neutral cost-recovery mechanism
that the Commission will administer for long-term number portability.  The decision of the U.S.
Court of Appeals for the Eighth Circuit in Iowa Utilities Board v. FCC did not affect these
pricing rules.

                         b.   Discussion

     276. BellSouth does not demonstrate compliance with checklist item (xi).  BellSouth is
legally obligated itself to provide interim and long-term number portability, and has provided
evidence that it is providing interim number portability and implementing long-term number
portability.  BellSouth fails, however, to make a prima facie case that it provides interim number
portability so that "users of telecommunications services [can] retain, at the same location,
existing telecommunications numbers without impairment of quality, reliability, or convenience
when switching from one telecommunications carrier to another."

                                        1.   Interim Number Portability

     277. Provision.  The Commission's rules require all LECs to provide interim number
portability through "Remote Call Forwarding (RCF), Flexible Direct Inward Dialing (DID), or
any other comparable and technically feasible method, as soon as reasonably possible upon receipt
of a specific request from another telecommunications carrier."  The plain language of the rule
indicates that LECs must provide any technically feasible method of interim number portability
that is comparable to RCF and DID; the references to RCF and DID were merely illustrative. 
Thus, to comply with our rules, LECs must furnish, on a transitional basis, any method of number
portability comparable to RCF and DID that a competing carrier requests, if such method is
technically feasible.  Subsequent to adoption of this rule, a number of state commissions have
ordered carriers also to provide Route Index-Portability Hub (RI-PH), Directory Number-
Route Index (DN-RI), and Local Exchange Routing Guide (LERG) Reassignment methods
of interim number portability, based on findings of technical feasibility.  We conclude that
LERG Reassignment at the NXX level, RI-PH, and DN-RI are technically feasible methods of
interim number portability comparable to RCF and DID.

     278. BellSouth submits evidence that it is providing interim number portability. 
BellSouth states that it has resolved earlier problems with interim number portability, and that
as of June 1, 1998, it has ported 61,094 business and 911 residential telephone numbers
regionwide.  More specifically, BellSouth reports that four competitive LECs in Louisiana have
ported a total of 1,537 business telephone numbers and one residential telephone number. 
BellSouth's SGAT legally obligates it to provide number portability "with minimum impairment of
functioning, quality, reliability, and convenience," and gives competitive LECs the option of
obtaining interim number portability through either RCF or DID.  The Louisiana Commission
found that BellSouth's SGAT complies with checklist item (xi), on the grounds "that it offers, on
an interim basis until an industry-wide permanent solution is adopted, number portability using
remote call forwarding and direct inward dialing trunks."  BellSouth states that it also offers the
RI-PH, DN-RI, and LERG Reassignment methods of interim number portability through the bona
fide request (BFR) process.  BellSouth has already entered into an interconnection agreement
with AT&T to provide RCF, RI-PH, DN-RI, and LERG Reassignment methods of interim
number portability in Louisiana.

     279. BellSouth does not demonstrate, however, that it is adequately coordinating
unbundled loops with its provision of number portability.  Consequently, it fails to demonstrate
that it provides interim number portability so that "users of telecommunications services [can]
retain, at the same location, existing telecommunications numbers without impairment of quality,
reliability, or convenience when switching from one telecommunications carrier to another." 
As discussed above in connection with checklist item (iv) on unbundled local loops, a BOC must
provide unbundled access to loops on a nondiscriminatory basis.  To meet this standard, a BOC
must be able to deliver within a reasonable timeframe and with a minimum of service disruption,
unbundled loops of the same quality as the loops the BOC uses to provide service to its own
customers.  In the context of checklist item (xi), we interpret this to mean that the BOC must
demonstrate that it can coordinate number portability with loop cutovers in a reasonable amount
of time and with minimum service disruption.

     280. BellSouth asserts that it has solved earlier problems with coordinated cutovers,
and coordinates number portability and loop cutovers "to the extent that it is technically feasible
to do so."  BellSouth states that, to minimize service disruption and prevent calls from being
misdirected, it does not provide number portability simultaneously with loop cutovers.  Instead,
it performs the loop cutover first, and then ports the number.  Until BellSouth completes the
interim number portability work, the customer will be unable to receive telephone calls because
the calls will not be forwarded to the new switch from the switch that previously served the
customer.  Thus, when a competitive LEC requests a coordinated cutover with interim number
portability for a customer previously served by BellSouth, the customer will be without incoming
service from the time BellSouth disconnects the customer's loop from the original switch to the
time BellSouth has both reconnected the loop to the new switch and completed provisioning the
interim number portability.

     281. In support of its claim that it meets this checklist item, BellSouth cites a study it
recently conducted that suggests on average it reconnects loops to the competitive LEC switch
approximately four minutes after it disconnects the loop from its own switch, and that
provisioning interim number portability takes on average 39 seconds.   But as the Department
of Justice points out, BellSouth does not make clear the period between the completion of the
loop cutover and the start of the interim number portability provisioning.  Without such
evidence, the Commission cannot determine the delay involved in providing interim number
portability with unbundled loops.  Consequently, BellSouth has not indicated how long the
customer is without service, including how long the customer is without the ability to receive
calls, and thus has not demonstrated whether it is coordinating cutovers with interim number
portability on a nondiscriminatory basis.  BellSouth also provides performance data designed to
show that it offers nondiscriminatory access to unbundled loops.  This data, however, is not
disaggregated to show performance for loops with number portability separately from loops
without number portability.

     282. BellSouth states in its reply comments that it did not attempt to demonstrate the
overall time it takes from the beginning of the cutover to the completion of the interim number
portability provisioning because some competitive LECs require both the loop cutover and interim
number portability but others require just the loop or just interim number portability.  This
suggests, however, only that BellSouth should disaggregate the data so that it can demonstrate
the time it takes to complete each type of order.  BellSouth also states that the interval between
completion of the cutover and the start of the interim number portability provisioning is likely only
a matter of seconds, and that both it and the competitive LEC share responsibility for this gap. 
If this is indeed the case, the interval should not be significant, and we see no reason for BellSouth
to omit this additional data.  Consequently, we see the overall time it takes from the start of the
cutover to the completion of the interim number portability provisioning as a relevant statistic.

     283. Thus, one method for BellSouth to demonstrate in future applications that it is
providing nondiscriminatory access to interim number portability is to indicate the average
coordinated customer conversion intervals for loop cutovers coordinated with interim number
portability.  BellSouth could further demonstrate nondiscriminatory access by providing
performance data on the average completion intervals for interim number portability ordered
without unbundled loops and the average completion intervals for interim number portability
ordered in conjunction with unbundled loops.  Such information would give the Commission a
means for determining the time that the customer is without service, as well as the overall time it
takes to complete orders for interim number portability.  This would, in turn, assist the
Commission in determining whether number portability is available in a nondiscriminatory manner
that does not hamper competition.

     284. We do not find probative e.spire's contentions that BellSouth is having difficulty in
New Orleans coordinating loops with interim number portability.  e.spire states that one of the
most prevalent loop cutover problems it is experiencing is BellSouth's failure to coordinate
successfully the number portability functionality.  e.spire does not quantify the number
portability problems, however.  It provides merely anecdotal evidence that two of its New Orleans
customers that ported lead numbers with hunt groups could receive calls only on the lead
lines.  Such anecdotal evidence provides us no basis for evaluating whether the specified
number portability problems are isolated instances or something more systemic.  Similarly, we do
not find probative MCI's anecdotes of problems with coordinated cutovers in Atlanta,
especially given that BellSouth states in its reply that it has resolved problems in Georgia.  If
BellSouth had made its prima facie case that it coordinates loop cutovers with interim number
portability, the allegations of e.spire and MCI would have been insufficient to rebut that prima
facie case.

     285. BellSouth also does not sufficiently demonstrate that competing carriers can access
BellSouth's operations support systems to order and provision interim number portability
efficiently.  As the Commission stated in the Ameritech Michigan Order, a BOC must
demonstrate that it "will provide nondiscriminatory access to OSS to support the provision of
number portability."  According to BellSouth, competitive LECs can currently order interim
number portability manually or through EDI.  BellSouth also states that competitive LECs can
use electronic interfaces for interim number portability maintenance and billing.  As discussed
in our section on checklist item (ii), however, BellSouth does not demonstrate that it offers
competing carriers nondiscriminatory access to its operations support systems.  Thus, we find
that BellSouth does not meet its burden of demonstrating that it is providing nondiscriminatory
access to its operations support systems for the provision of interim number portability.

     286. We do not find probative AT&T's conclusory allegations that BellSouth has
impeded the provision of RI-PH based interim number portability to AT&T customers by
revoking its prior commitment to provision RI-PH in six-month intervals, and refusing to test for
features conflicts or billing problems.  AT&T provides no specific evidence, such as
correspondence with BellSouth, to support its assertions.  Without more, we cannot draw any
conclusions regarding AT&T's allegations, especially in the face of BellSouth's contentions that it
met AT&T's deadlines in the only two requests for RI-PH that fit AT&T's description.

     287. Cost Recovery.  Section 52.29 establishes two competitive neutrality guidelines.  It
requires that any state mechanism for the pricing of interim number portability not "(a) [g]ive one
telecommunications carrier an appreciable, incremental cost advantage over another
telecommunications carrier, when competing for a specific subscriber   or (b) [h]ave a disparate
effect on the ability of competing telecommunications carriers to earn a normal return on their
investment."  The Commission has interpreted these guidelines as prohibiting the assessment of
all the incremental costs of providing interim number portability on competitive LECs.  The
Commission has also stated that the carrier forwarding a call under an interim number portability
arrangement and the carrier terminating the call shall share the terminating access revenue
generated in completing a call to a ported number.

     288. BellSouth states that it offers RCF and DID at nondiscriminatory rates, and that
the Louisiana Commission has approved these rates as consistent with the 1996 Act.  BellSouth
also states that the rates for RI-PH, DN-RI, and LERG Reassignment will be set through the BFR
process.  BellSouth's SGAT provides for the carriers to share terminating access revenues. 
According to MCI and Sprint, however, BellSouth is shifting all the incremental costs of interim
number portability to the competitive LEC, in violation of the Commission's competitive
neutrality guidelines.  Sprint also states that BellSouth is not sharing terminating access revenue
from calls to customers who have switched carriers through interim number portability.  In its
reply brief, BellSouth responds to the pricing allegations by contending that the statutory
definition of number portability does not encompass interim measures, and that the pricing of
interim number portability is beyond the Commission's jurisdiction.

     289. Notwithstanding BellSouth's assertions to the contrary, the Commission has
pricing authority over both interim- and long-term number portability.  As the U.S. Court of
Appeals for the Eighth Circuit observed, Congress specifically authorized the Commission to
issue regulations under section 251(e), which states that carriers shall bear the costs of number
portability "as determined by the Commission."  Furthermore, "the 1996 Act contemplates a
dynamic, not static, definition of technically feasible number portability" that includes both interim
and long-term methods.  It appears on the present record that BellSouth is engaging in, and the
Louisiana Commission has approved, practices that may not comply with the FCC's pricing rules
and competitive neutrality guidelines, such as assessing all the incremental costs of interim number
portability on the competitive LEC, and not sharing the terminating access revenue from calls to
ported numbers.  In any future application for in-region interLATA authority under section 271,
BellSouth must demonstrate that it is complying with the Commission's rules on the pricing of
interim number portability.

                                             2.   Long-Term Number Portability

     290. Implementation.  On the present record, we find that BellSouth is implementing
long-term number portability in compliance with the Commission's rules and regulations.  Under
the Commission's implementation schedule, LECs are to roll out long-term number portability in
the 100 largest metropolitan statistical areas (MSAs) in five phases by December 31, 1998, and
thereafter in switches outside the 100 largest MSAs within six months of a request by a
telecommunications carrier.  New Orleans and Baton Rouge are the only two Louisiana MSAs
among the nation's 100 largest, and fall within phases III and V of the Commission's
implementation schedule, respectively.  The deadline for phase III was June 30, 1998, but
BellSouth was granted an extension to October 31, 1998.  The deadline for phase V is
December 31, 1998.  Thus, BellSouth is required to provide long-term number portability in
New Orleans by October 31, 1998, and in Baton Rouge by December 31, 1998.

     291. BellSouth states that it is implementing long-term number portability consistent
with the standards of the FCC, the Louisiana Commission, and industry groups.  BellSouth also
states that competitive LECs can order long-term number portability manually or through EDI. 
Mere assertions that a BOC is complying with its long-term number portability implementation
obligations, however, are not sufficient to meet checklist item (xi).  As the Commission stated in
the Ameritech Michigan Order, an applicant must "provid[e] adequate documentation that it has
undertaken reasonable and timely steps to meet its obligations" with respect to long-term number
portability.  The Commission

          would expect to review a detailed implementation plan addressing, at minimum, the
     BOC's schedule for intra- and inter-company testing of a long-term number portability
     method, the current status of the switch request process, an identification of the particular
     switches for which the BOC is obligated to deploy number portability, the status of
     deployment in requested switches, and the schedule under which the BOC plans to
     provide commercial roll-out of a long-term number portability method in specified central
     offices in the relevant state.

     292. As a condition of the time extensions BellSouth has received, it has been filing
periodic status reports on its implementation of long-term number portability.  These reports were
not designed to demonstrate compliance with checklist item (xi), and focus primarily on areas
other than Louisiana.  Nonetheless, BellSouth attaches them as exhibits to its brief to demonstrate
compliance with its long-term number portability implementation obligations.  From these
reports it is possible to glean evidence, albeit sparse, that indicates the status in New Orleans and
Baton Rouge of: intra- and inter-company testing; the switch request process; deployment in
requested switches, and the roll-out in specified central offices.  In light of the fact that
BellSouth is not yet obligated to provide long-term number portability in Louisiana, we find this
evidence sufficient at this time to meet its obligations under checklist item (xi).  In the future,
however, we encourage section 271 applicants to provide more detailed information that more
clearly addresses the items indicated in the Ameritech Michigan Order, and that does so
specifically for the state that is the subject of the application.

     293.   AT&T alleges that BellSouth is refusing to let carriers test the EDI electronic
ordering interface before the change to long-term number portability.  Although meetings with
BellSouth and AT&T suggest that this dispute centers around the provision of EDI to order long-
term number portability in Georgia, the record is not clear.  As we said in our section on
checklist item (ii), we expect BellSouth to demonstrate in any future application that it has
implemented its operations support systems so that carriers can order number portability in a way
that they have a meaningful opportunity to compete.  That includes orders for long-term
number portability with and without unbundled loops.

     294. Cost Recovery.  In the Third Number Portability Order, we promulgated rules
allowing incumbent LECs to recover their long-term number portability costs in two federally
tariffed charges: (1) a monthly end-user charge to take effect no earlier than February 1, 1999,
that lasts no longer than five years, and (2) an inter-carrier charge for query-services that
incumbent LECs provide other carriers.  As discussed above, BellSouth's long-term number
portability implementation deadlines have not arrived.  Furthermore, BellSouth has recently filed
its long-term number portability query tariff, which is the subject of a pending Commission tariff
investigation, and any end-user charge it tariffs with the Commission will take effect no earlier
than February 1999.  In any future application for in-region interLATA authority under section
271, BellSouth must demonstrate that it is complying with the Commission's rules on the pricing
of long-term number portability.


          12.  Checklist Item 12 -- Local Dialing Parity

               a.   Background

     295. Section 271(c)(2)(B)(xii) requires a BOC to provide "[n]ondiscriminatory access
to such services or information as are necessary to allow the requesting carrier to implement local
dialing parity in accordance with the requirements of section 251(b)(3)."  Section 251(b)(3)
imposes upon all LECs "[t]he 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 services, directory
assistance, and directory listing, with no unreasonable dialing delays."  Section 153(15) of the
Act defines "dialing parity" to mean that:

                    . . .  a person that is not an affiliate of a local exchange carrier is able to      
          provide telecommunications services in such a manner that customers have the
          ability to route automatically, without the use of any access code, their
          telecommunications to the telecommunications services provider of the customer's
          designation from among 2 or more telecommunications services providers
          (including such local exchange carrier).  

               b.   Discussion

     296.  BellSouth demonstrates that it provides nondiscriminatory access to such services
as are necessary to allow a requesting carrier to implement local dialing parity in accordance with
the requirements of section 251(b)(3), and thus satisfies the requirements of checklist item (xii).  
BellSouth makes a prima facie showing that customers of competing carriers are able to dial the
same number of digits that BellSouth's customers dial to complete a local telephone call, and that
these customers otherwise do not suffer inferior quality such as unreasonable dialing delays
compared to BellSouth customers.  

     297. BellSouth demonstrates through its statements and appropriate supporting
evidence that it has met its burden of proof on satisfaction of this checklist item.  BellSouth is
legally obligated to provide local dialing parity pursuant to its SGAT and interconnection
agreements.  BellSouth states that "in its territory it does not impose any requirement or
technical constraint that requires CLEC customers to dial any greater number of digits than
BellSouth customers to complete the same call, or causes CLEC's local service customers to
experience inferior quality regarding post-dial delay, call completion rate, and transmission quality
as compared to BellSouth local service customers."  BellSouth further states that "it is not
aware of any complaints from CLECs or their customers regarding dialing parity."  We note
that no commenters allege that BellSouth fails to satisfy this checklist item.  We find that this
checklist item has been satisfied.

                    13.  Checklist Item 13 -- Reciprocal Compensation.

                                   a.   Background.

     298. Section 271(c)(2)(B)(xiii) of the Act (checklist item (xiii)) requires that a BOC's
access and interconnection includes "[r]eciprocal compensation arrangements in accordance with
the requirements of section 252(d)(2)."  In turn, section 252(d)(2)(A) states that "a State
commission shall not consider the terms and conditions for reciprocal compensation to be just and
reasonable unless (i) such terms and conditions provide for the mutual and reciprocal recovery by
each carrier of costs associated with the transport and termination on each carrier's network
facilities of calls that originate on the network facilities of the other carrier; and (ii) such terms and
conditions determine such costs on the basis of a reasonable approximation of the additional costs
of terminating such calls."

                              b.   Discussion.

     299. We conclude that BellSouth demonstrates that its access and interconnection
include reciprocal compensation arrangements in accordance with the requirements of section
252(d)(2), and thus, satisfies the requirements of checklist item (xiii).  BellSouth makes a prima
facie showing that it (1) has reciprocal compensation arrangements in accordance with section
252(d)(2) in place, and (2) is making all required payments in a timely fashion.

     300. Reciprocal compensation arrangements in accordance with section 252(d)(2). 
BellSouth provides sufficient evidence to demonstrate that it satisfies the requirement of the
statute that it have in place reciprocal compensation arrangements in accordance with section
252(d)(2).  BellSouth demonstrates that it has a concrete legal obligation to pay reciprocal
compensation.  Section XIII.A. of the SGAT states:  "BellSouth provides for the mutual and
reciprocal recovery of the costs of transporting and terminating local calls on its and competitive
LEC networks.  BellSouth's charges for transport and termination of calls on its network are set
out in Attachment A."  SGAT Attachment A incorporates prices that were adopted as part of the
Louisiana Commission's Pricing Order.

     301. With regard to BellSouth's reciprocal compensation arrangements with
interconnectors purchasing switching and transport UNEs, we are not persuaded by AT&T's
argument that such arrangements fail to meet checklist item (xiii) because BellSouth allegedly fails
to provide sufficient billing information.  Competitive LECs' reciprocal compensation rates are
based on BellSouth's reciprocal compensation rates.  BellSouth's reciprocal compensation rates
for competitive LECs purchasing UNEs are composed of a collection of UNE rates.  BellSouth
argues that, because it does not demand payment for competitive LEC usage of the UNEs used to
terminate traffic, no net payments are due to the competitive LECs because, it asserts, the
reciprocal compensation rates owed to competitive LECs are equal to the sum of corresponding
UNE rates that BellSouth would charge the competitive LEC.  We agree that, if BellSouth does
not, in fact, assess such UNE charges on competitive LECs and the sum of such charges is
identical to the reciprocal compensation rate, reciprocal compensation payments owed to the
competitive LEC would be offset by UNE payments owed to BellSouth and, thus, in this
particular instance, this financial arrangement would affect the requirements of checklist item
(xiii).  As discussed above, BellSouth has stated these conditions to be true, and no party has
presented evidence to the contrary.  In reaching this conclusion, we take no position on whether
reciprocal compensation rates should always be equivalent to the rates for corresponding UNEs. 
AT&T's argument that this arrangement does not provide it with information necessary to bill
reciprocal compensation to third-parties for whom BellSouth transits traffic to the terminating
competitive LEC concerns checklist item (vi), provision of local switching, not checklist item
(xiii), and is discussed in section (VI)(C)(6), above.

     302. Timely remuneration.  BellSouth provides sufficient evidence to demonstrate that
it satisfies the requirement of the statute that it make all required reciprocal compensation
payments in a timely fashion, with the exception of payments for traffic delivered to Internet
Service Providers (ISPs), discussed below.  BellSouth states that it "has honored and will
continue to honor all of its reciprocal compensation agreements."

     303. At this time, we do not conclude that BellSouth is failing to make required
reciprocal compensation payments in Louisiana on a timely basis.  The general issue of a LEC's
obligation to pay reciprocal compensation for traffic delivered to ISPs is pending in a number of
proceedings.  Neither this Commission nor the Louisiana Commission have reached a final
determination on this matter.  We do not, at this time, consider BellSouth's unwillingness to pay
reciprocal compensation for traffic that is delivered to ISPs located within the same local calling
area as the originating BellSouth end user in assessing whether BellSouth satisfies this checklist
item.  Any future grant of in-region interLATA authority under section 271 will be conditioned
on compliance with forthcoming decisions relating to Internet traffic in Louisiana.

     304.      We are not persuaded by e.spire's claims that BellSouth is refusing to pay it
reciprocal compensation fees for non-ISP-bound traffic.  e.spire does not provide evidence that
it terminates the majority of non-ISP-bound traffic that it exchanges with BellSouth.  Thus, e.spire
does not prove that it is, in fact, owed net reciprocal compensation payments for non-ISP bound
traffic, i.e., that BellSouth owes it more reciprocal compensation payments for non-ISP bound
traffic than it owes BellSouth for such traffic.

     305. Radiofone, a provider of cellular and paging service in Louisiana, argues that
BellSouth does not meet checklist item (xiii) because it refuses to pay Radiofone reciprocal
compensation pursuant to 51.717(b) of our rules.  This contention is not relevant under the
competitive checklist.  Section 271(c)(1)(A) requires BOCs to enter into binding agreements to
"provide access and interconnection to . . . one or more unaffiliated competing providers of
telephone exchange service" (emphasis added) and specifically excludes cellular service from
consideration as "telephone exchange service" for such purposes.  The Commission has
previously concluded that Radiofone's other service offering, paging service, is not "telephone
exchange service."  Section 271(c)(2)(A)(i) requires access and interconnection to be provided
pursuant to one or more agreements described in section 271(c)(1)(A) while section
271(c)(2)(A)(ii) requires "such access and interconnection" to meet the requirements of the
competitive checklist.  Thus, under the competitive checklist, we are to evaluate only access
and interconnection offered to unaffiliated competing providers of telephone exchange service,
not access and interconnection offered to cellular and paging service providers.  We therefore
conclude that Radiofone's argument is irrelevant to checklist item (xiii).

                         14.  Checklist Item 14 -- Resale.

                                   a.   Background.

     306. Section 271(c)(2)(B)(xiv) of the Act requires a BOC to make "telecommunications
services . . . available for resale in accordance with the requirements of sections 251(c)(4) and
252(d)(3)."  Section 251(c)(4)(A) 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."  Section 251(c)(4)(B) prohibits "unreasonable or discriminatory
conditions or limitations" on resale, with the exception that "a State commission may, consistent
with regulations prescribed by the Commission under this section, prohibit a reseller that obtains
at wholesale rates a telecommunications service that is available at retail only to a category of
subscribers from offering such service to a different category of subscribers."  Section
252(d)(3) sets forth the basis for determining "wholesale rates" as the "retail rates charged to
subscribers for the telecommunications service requested, excluding the portion thereof
attributable to any marketing, billing, collection, and other costs that will be avoided by the local
exchange carrier."

     307. In the Local Competition First Report and Order, the Commission established
several rules regarding the scope of the resale requirement and permissible restrictions on resale
that a LEC may impose.  Most significantly, resale restrictions are presumed to be unreasonable
unless the LEC "proves to the state commission that the restriction is reasonable and non-
discriminatory."  In the BellSouth South Carolina Order and First BellSouth Louisiana Order,
the Commission determined that BellSouth failed to comply with checklist item (xiv) by, inter
alia, refusing to offer contract service arrangements (CSAs) at a wholesale discount.

     308. Finally, in accordance with sections section 271(c)(2)(B)(ii) and section
271(c)(2)(B)(xiv), a BOC must demonstrate that it provides nondiscriminatory access to
operations support systems for the resale of its retail telecommunications services.

                              b.   Discussion.

     309. We conclude that, but for deficiencies in its OSS systems described above,
BellSouth demonstrates that it makes telecommunication services available for resale in
accordance with sections 251(c)(4) and 252(d)(3).  Thus, but for these deficiencies, BellSouth
satisfies the requirements of checklist item (xiv).  BellSouth makes a prima facie showing that it
(1) offers for resale at wholesale rates any telecommunications service that the carrier provides at
retail to subscribers who are not telecommunications carriers and (2) offers such
telecommunications services for resale without unreasonable or discriminatory conditions or
limitations.  BellSouth, however, fails to make a prima facie showing that it provides
nondiscriminatory access to operations support systems for the resale of its retail
telecommunications services.

     310. Availability of wholesale rates.  BellSouth provides sufficient evidence to
demonstrate that it has a concrete legal obligation to make available telecommunications services
at wholesale rates, as required by the statute.  Section XIV of BellSouth's SGAT provides that
"telecommunications services that BellSouth provides at retail to subscribers that are not
telecommunications carriers" are available at discount levels ordered by the Louisiana
Commission.  BellSouth's interconnection agreements have similar provisions.

     311. Since the issuance of the First BellSouth Louisiana Order, BellSouth has amended
its SGAT to state that wholesale discounts apply to CSAs.  The currently applicable wholesale
discount for CSAs is 20.72 percent, but may change at "such time as a CSA-specific wholesale
discount is determined."  BellSouth states that it will agree to contract language similar to the
SGAT CSA resale language with interested CLECs.  Moreover, we note that BellSouth permits
competing carriers to substitute the resale terms and conditions contained in the SGAT for that
carrier's interconnection agreement.

     312. Furthermore, we are not persuaded by KMC's claims that BellSouth should not be
considered in compliance with checklist item (xiv) unless it allows parties to amend their
agreements to include the CSA wholesale discount provision without accepting an entirely new
resale agreement.  We note that Section 24.0 of KMC's agreement requires it to elect an entire
resale provision of another agreement if it seeks to amend its preexisting agreement.  Moreover,
KMC is entitled to select the entire resale provision from BellSouth's SGAT, which, as discussed
above, we have found to meet the requirements of checklist item (xiii).  We observe, however,
that our conclusions regarding KMC's rights under its agreement might be affected by the pending
Supreme Court review of Iowa Utilities Board.

     313. Likewise, we disagree with MCI's claim that BellSouth's application is "premature"
until the Louisiana Commission determines the wholesale discount applicable to CSAs consistent
with section 252(d)(3) because, according to MCI, until such time, competitors are unable to
make business plans based on an uncertain level of wholesale discount.  As discussed above,
BellSouth's SGAT legally commits it to provide CSAs at some state-determined wholesale
discount, in conformance with section 251(c)(4) and the First BellSouth Louisiana Order.  We
are not persuaded at this time that the possibility that a state might change the level of the
wholesale discount for certain offerings necessitates a finding that BellSouth fails to comply with
271(c)(2)(B)(xiv) of the Act.

     314. Finally, we are not persuaded by TRA's argument that, because voice mail and
other voice messaging services are "telecommunications services," BellSouth's refusal to offer
these services for resale at wholesale rates constitutes a failure to meet checklist item (xiv).  
Checklist item (xiv) requires "telecommunications services," as defined by the 1996 Act, to be
made available at wholesale rates.  Contrary to the arguments of TRA, however, voice mail and
voice messaging services are information services, not telecommunications services, and, thus, are
not subject to this checklist provision.  Prior to the enactment of the 1996 Act, the Commission
classified voice messaging services as "enhanced" services.  More recently, the Commission has
determined that the definition of "information services" under the 1996 Act includes those
services previously classified as "enhanced services" and that "information services" are not also
"telecommunications services" because the two definitions under the 1996 Act are mutually
exclusive.  Accordingly, voice messaging services are not subject to the resale provision of
checklist item (xiv) because they are not telecommunications services.

     315. Resale conditions and limitations.  BellSouth states that it "does not impose
unreasonable or discriminatory conditions or limitations on the resale of its telecommunications
services in violation of section 251(c)(4) of the Act or the Commission's rules."  As discussed
below, we do not agree with arguments made by various parties claiming that particular BellSouth
resale restrictions are unreasonable or discriminatory.  Thus, we find there to be sufficient
evidence that BellSouth is satisfying the requirement in checklist item (xiv) that it have a concrete
legal obligation to offer its telecommunications services for resale in accordance with section
251(c)(4)(B) of the Act.

     316. We find unpersuasive claims made by AT&T and Sprint that BellSouth does not
comply with this checklist item because it limits the customers to whom a reseller may resell a
CSA.  BellSouth states that CSAs are available for resale to customers for whom the CSA was
not originally designed so long as the resale customer is similarly situated.  The Commission
concluded in the Local Competition First Report and Order that "the substance and specificity of
rules concerning which discount and promotion restrictions may be applied to resellers in
marketing their services to end users is a decision best left to state commissions, which are more
familiar with the particular business practices of their incumbent LECs and local market
conditions."  We see no reason at this time to change this conclusion.  We further note,
however, that limiting the resale of CSAs to similarly situated customers, on a general basis, may
be a reasonable and non-discriminatory resale restriction because it is sufficiently narrowly
tailored.  CSA offerings, by their nature, are priced to a specific set of customer needs, sometimes
based on a competitive bidding process.  To this extent, it is reasonable to assume that BellSouth's
ability to offer a particular CSA at a given price will be dependent on certain end user
characteristics.
  
     317. We are also unpersuaded by arguments made by AT&T and Sprint that BellSouth
unlawfully prohibits resellers from aggregating traffic of multiple customers to meet CSA volume
minimums.  We note that certain groups of end users might constitute an aggregation that is
similarly situated to the original CSA customer and, thus, BellSouth would be obligated to allow
the reseller to aggregate the volume of such end users under the CSA.  As discussed above, the
Commission determined in the Local Competition First Report and Order that the matter of
resale restrictions attached to promotions and discounts is best left to state commissions.  The
Commission created an exception to this determination, however, by concluding that it is
presumptively unreasonable for incumbent LECs to require individual customers of a reseller to
comply with incumbent LEC high-volume discount minimum usage requirements so long as the
reseller, in aggregate, under the relevant tariff, meets the minimal level of demand.  Thus, a
CSA resale restriction simply forbidding volume aggregation, without economic justification, is
presumptively unreasonable.  There may be, however, reasonable and non-discriminatory
economic justifications for certain narrowly-tailored volume aggregation restrictions such as, for
example, geographic limitations on the location of lines, when economically relevant.  These
would constitute exceptions to our conclusion regarding volume aggregation.  Because we have
not been presented with sufficient evidence regarding the specific nature and rationale of any
BellSouth volume aggregation prohibitions, we do not conclude at this time that BellSouth
imposes unreasonable volume aggregation prohibitions.  In future applications, however, to the
extent that concrete examples of BellSouth volume aggregation prohibitions, i.e., imposition of
discriminatory conditions in order that an aggregation of customers be deemed similarly situated,
are duly brought to our attention, we will require an affirmative showing by BellSouth that such
restrictions are reasonable.  Failure to make CSAs available for resale to aggregations of
customers similarly situated to the original CSA end user would unreasonably and discriminatorily
limit the benefits of volume discounts to BellSouth end users.

     318. In addition, we disagree with TRA's claim that it is discriminatory for BellSouth to
impose customer change charges when an end user switches from BellSouth to a reseller but does
not pay a reseller such charges when an end user switches from a reseller to BellSouth.  Based
on the record in this proceeding, we conclude that this asymmetry is not discriminatory. 
BellSouth does, in fact, incur costs in changing billing responsibility, while continuing to provide
wholesale service, but resellers do not incur such charges because the reseller no longer provides
wholesale or retail service to the end user.  We note that BellSouth does, however, charge an
end user that returns to BellSouth the same subscriber change charge (another type of charge)
that it applies to the reseller when the customer initially switched to its service.  We find this
practice to be nondiscriminatory and reasonable, but do not comment on the appropriateness of
the level of such charge as such charges are generally a matter of state jurisdiction.

     319. Although BellSouth demonstrates that it makes its telecommunications services
available for resale on terms and conditions consistent with our rules, it fails to demonstrate that
its operations support systems provide access to resold services on a nondiscriminatory basis.  We
identify in Section V.C.2.(a). above the specific deficiencies of BellSouth's operations support
systems with respect to the resale of services.  We, therefore, conclude that BellSouth fails to
demonstrate that it meets the requirements of this checklist item.

VII. SECTION 272

     A.   Background

     320. Section 271(d)(3)(B) requires that the Commission shall not approve a BOC's
application to provide interLATA services unless the BOC demonstrates that "the requested
authorization will be carried out in accordance with the requirements of section 272," which
sets forth structural, transactional, and other requirements.  The Commission set standards for
compliance with section 272 in the Accounting Safeguards Order and the Non-Accounting
Safeguards Order.  In the Ameritech Michigan Order, the Commission stated that compliance
with section 272 is "of crucial importance, because the structural and nondiscrimination
safeguards of section 272 seek to ensure that competitors of the BOCs will have
nondiscriminatory access to essential inputs on terms that do not favor the BOC's affiliate." 
The Commission stated that these safeguards "discourage, and facilitate detection of, improper
cost allocation and cross-subsidization between the BOC and its section 272 affiliate."  

     321. The Commission also explained in the Ameritech Michigan Order that section
271(d)(3)(B) requires "a predictive judgment regarding the future behavior of the BOC."  The
Commission stated that, in making this judgment, "the past and present behavior of the BOC
applicant" would be "highly relevant" because that behavior provides "the best indicator of
whether [the applicant] will carry out the requested authorization in compliance with the
requirements of section 272."  Thus, we will examine BellSouth's asserted compliance with
section 272 and evidence of violations of section 272 as indicators of BellSouth's future behavior. 


     B.   Discussion

     322. Although BellSouth makes a prima facie showing for many of the requirements of
section 272, we find that BellSouth does not demonstrate that it will comply fully with several of
the requirements of section 272 because BellSouth fails to disclose all of the transactions between
the BOC, BellSouth Telecommunications, Inc., and its section 272 affiliate, BellSouth Long
Distance, and does not demonstrate that it is providing OSS on a nondiscriminatory basis to other
carriers.  Therefore, BellSouth's request for in-region interLATA authorization does not satisfy
the requirement of section 271(d)(3)(B) that such a request would be carried out in accordance
with the requirements of section 272.  These findings constitute an independent ground for
denying BellSouth's application.  We examine these deficiencies in BellSouth's Application in
greater detail below.  Nevertheless, we are encouraged by BellSouth's substantial efforts to
institute policies, procedures, training and controls to ensure compliance with section 272's
requirements. 

                         1.   Structural Separation, Transactional, and Accounting Requirements
               of Section 272

     323. Section 272(a) -- Separate Affiliate.  BellSouth does not make a prima facie
showing or meet the burden of persuasion that it will comply with section 272(a), which requires
BOCs and their local exchange carrier affiliates that are subject to the requirements of section
251(c) to provide manufacturing activities and certain competitive services through separate
affiliates.  Specifically, the Commission concluded in the Non-Accounting Safeguards Order
that section 272 allows a BOC to engage in manufacturing activities, origination of certain
interLATA telecommunications services, and the provision of interLATA information services, so
long as the BOC does so through an affiliate that is separate from any operating company entity
that is subject to section 251(c), and so long as the affiliate meets the requirements of section
272(b).  Because, as explained below, BellSouth does not meet the requirement of section
272(b)(5), we find that BellSouth fails to satisfy the requirement of section 272(a).

     324.   BellSouth has established a section 272 affiliate, BellSouth Long Distance
(BSLD), which will provide in-region interLATA services once section 271 approval is
obtained.  BSLD is a Delaware corporation, which is the wholly-owned sole subsidiary of
BellSouth Long Distance Holdings, Inc. which is itself a wholly-owned subsidiary of BellSouth
Corp., the parent corporation of BellSouth Telecommunications, Inc. (BST).  BellSouth states
that BST and BSLD are separate entities and neither entity owns the stock of the other. 
BellSouth states that it may reorganize, merge, or otherwise change the form of BSLD or create
or acquire additional interexchange subsidiaries.  In this event, we expect, as BellSouth
represents, that any such subsidiaries designated as section 272 affiliates will meet all of the
requirements of section 272, including disclosure of past transactions pursuant to the requirement
in section 272(b)(5), and other applicable state and federal regulations.  
  
     325. Section 272(b)(1) -- Operate Independently.  BellSouth makes a prima facie
showing and meets the burden of persuasion that it will comply with section 272(b)(1), which
requires that the section 272 separate affiliate "operate independently from the Bell operating
company."  The Commission has interpreted section 272(b)(1) to impose four important
restrictions:  (1) no joint BOC-affiliate ownership of switching and transmission facilities; (2) no
joint ownership of the land and buildings on which such facilities are located; (3) no provision by
the BOC (or other non-section 272 affiliate) of operation, installation, or maintenance services
with respect to the section 272 affiliate's facilities; and (4) no provision by the section 272 affiliate
of operation, installation, or maintenance services with respect to the BOC's facilities.

     326. BellSouth states in its Application that, so long as BSLD is subject to the
requirements of section 272, it will operate in a manner that satisfies both section 272 and the
Commission's implementing regulations, including the Commission's "operate independently"
requirement.  BellSouth commits that BST and BSLD will not jointly own telecommunications
transmission or switching facilities or the land and buildings on which such facilities are located
while subject to this restriction under section 272.  BellSouth also asserts that BST employees
will not operate, install, or maintain BSLD's facilities, as long as they are prohibited from doing so
by section 272.  Correspondingly, BellSouth states that BSLD has not provided, is not
providing, and will not provide operating, installation, and maintenance services to BST in
connection with BST's facilities, subject to the sophisticated equipment exception set forth in the
Non-Accounting Safeguards Order.  

     327. We do not find persuasive Sprint's assertions that BellSouth does not intend to
comply fully with this requirement.  Sprint contends that BellSouth interprets the "operate
independently" requirement to require only that the BOC and the section 272 affiliate not perform
operating, installation, and maintenance activities on each other's switching and transmission
equipment, rather than applying this restriction to all facilities, as Sprint believes, the Non-
Accounting Safeguards Order requires.  We find this argument unpersuasive because the
Commission expressly limited the operation, installation, and maintenance restriction to switching
and transmission facilities in the Non-Accounting Safeguards Order.

     328. Section 272(b)(2) -- Books, Records, and Accounts.  Based on our review of the
record evidence, we conclude that BellSouth makes a prima facie showing and demonstrates that
it will comply with the section 272(b)(2) requirement that the section 272 separate affiliate "shall
maintain books, records, and accounts in the manner prescribed by the Commission which shall be
separate from the books, records, and accounts maintained by the Bell operating company of
which it is an affiliate."  In the Accounting Safeguards Order, the Commission determined that
the section 272 affiliates must maintain their books, records, and accounts in accordance with
Generally Accepted Accounting Principles ("GAAP").  Because BellSouth demonstrates that
BSLD uses a different chart of accounts than the BOC and that BSLD uses separate accounting
software maintained at a separate location, BellSouth provides sufficient assurances that BSLD's
books, accounts, and financial records are separate from BST's books and records.  BellSouth
asserts, and no commenter disputes, that BSLD maintains its books, records, and accounts in
accordance with GAAP.  To support its assertion, BSLD states that a regular audit program
ensures GAAP compliance and provides evidence of its internal controls.  We find that this
evidence provides sufficient assurances that BSLD maintains its books, accounts, and records in
accordance with GAAP.

     329. Section 272(b)(3) -- Separate Officers, Directors and Employees.  We conclude
that BellSouth makes a prima facie showing and establishes that it will comply with section
272(b)(3), which states that the section 272 separate affiliate "shall have separate officers,
directors, and employees from the Bell operating company of which it is an affiliate."  In the
Ameritech Michigan Order, the Commission emphasized that section 272(b)(3) requires the BOC
and its section 272 affiliate to have independent management.  The Commission concluded that
the BOC and its affiliate must appoint a board of directors if the corporations are wholly-owned
subsidiaries of the same parent corporation, and applicable state law imputes the responsibilities of
directors for the wholly-owned subsidiary to the shareholders of the parent corporation.

     330. BellSouth states that BSLD has separate officers, directors, and employees from
BST who will not serve simultaneously as officers, directors, or employees of BST.  We find
unpersuasive AT&T's assertion that BellSouth fails to meet the "separate officers, directors, and
employees" requirement in section 272(b)(3) because BellSouth does not adequately explain the
reporting structure of its officers.  We disagree with Sprint's contention that having one
director for BSLD is insufficient to satisfy the requirement of section 272(b)(3) because one
director cannot provide the collective oversight and consideration for the effective realization of
the Board of Director's substantial responsibilities.  Neither the statute nor our implementing
regulations require a BOC to outline the reporting structure of its affiliate's Board of Directors, or
establish a minimum number of Board members.  BellSouth demonstrates that BSLD and BST
have and will have separate officers as required by section 272(b)(3).  

     331. Section 272(b)(4) -- Credit Arrangements.  BellSouth makes a prima facie
showing and demonstrates that it will comply with the requirements of section 272(b)(4) that the
section 272 separate affiliate "may not obtain credit under any arrangement that would permit a
creditor, upon default, to have recourse to the assets of the Bell operating company."  In the
Non-Accounting Safeguards Order, the Commission interpreted the provision to prohibit a BOC,
the parent of a BOC, or a non-section 272 affiliate of a BOC from co-signing a contract or other
instrument with its section 272 affiliate that would permit a creditor recourse to the BOC's assets
in the event of default by the section 272 affiliate.  BellSouth states in its Application that
creditors of BSLD do not and will not have recourse to the assets of BST.  In addition,
BellSouth states that BSLD does not and will not make available to any creditor recourse to
BST's assets indirectly through a non-section 272 BellSouth affiliate.  Thus, BellSouth has
adequately demonstrated that it meets the requirements of section 272(b)(4). 

     332. Section 272(b)(5) -- Affiliate Transactions.  Section 272(b)(5) encompasses two
requirements regarding transactions between a BOC and its section 272 affiliate:  (1) that affiliate
transactions be publicly disclosed, and (2) that affiliate transactions be conducted on an arm's-
length basis.  We conclude that BellSouth does not make a prima facie showing and does not
meet the burden of persuasion that it will comply with either requirement of section 272(b)(5).  

     333. BellSouth does not demonstrate that it will comply with the public disclosure
requirement of section 272(b)(5), which requires all transactions between the BOC and its section
272 affiliate to be "reduced to writing and available for public inspection."  The section 272(b)(5)
public disclosure requirement consists of three components.  First, the section 272 affiliate must
provide, at a minimum, a detailed written description of the asset transferred or the service
provided in the transaction, and post the terms and conditions of the transaction on the company's
home page on the Internet within 10 days of the transaction.  Second, the descriptions "should
be sufficiently detailed to allow us to evaluate compliance with our accounting rules."  Finally,
the descriptions must be made available for public inspection at the BOC's principal place of
business, and must include a statement certifying the truth and accuracy of such disclosures.  

     334. In the Ameritech Michigan Order, the Commission concluded that Ameritech
failed to demonstrate that it would carry out the requested authorization in accordance with
section 272(b)(5) because of its failure to disclose publicly the rates for all of the transactions
between the BOC and its section 272 affiliate.  The Commission explained that "a statement of
the valuation method used, without the details of the actual rate, does not provide the specificity
we required in the Accounting Safeguards Order."  Moreover, it appeared that Ameritech and
ACI had not publicly disclosed all of their transactions.  Finally, the Commission stated that
BOCs were obligated to comply with the requirements of section 272 as of the date of its
enactment.  

     335. We find that BellSouth does not provide adequate assurances or demonstrate that
it makes publicly available all transactions between BST and BSLD as required by section
272(b)(5) and the Commission's rules, and therefore we are not convinced that the requested
authorization will be carried out in accordance with section 272(b)(5).  Our review of BellSouth's
Automated Reporting Management Information System ("ARMIS") filings, its cost allocation
manuals ("CAMs"), and its CAM audit workpapers revealed significant discrepancies between
these filings and BellSouth's section 272(b)(5) Internet disclosures.  During our review, we
found that BellSouth failed to disclose fully all transactions between BST and BSLD.  These
discrepancies, along with the lack of a definitive statement in BellSouth's Application to the effect
that all transactions are disclosed, which is necessary to make a prima facie showing, suggest that
BellSouth has failed to disclose all transactions between BST and BSLD as required by section
272(b)(5) and our rules.  Failing to disclose fully the details of the transactions between the BOC
and its section 272 affiliate is contrary to section 272(b)(5) because it impairs our ability to
evaluate compliance with our accounting safeguards and deprives unaffiliated parties of the
information necessary to take advantage of the same rates, terms, and conditions enjoyed by the
BOC's section 272 affiliate.

     336. We further conclude that BellSouth has not disclosed sufficient details of the
transactions posted on its Internet site in order to satisfy section 272(b)(5).  Many of BellSouth's
Internet postings do not contain the information needed by third parties to determine whether to
use similar services offered by BST.  For example, many of BellSouth's descriptions are overly
broad because such descriptions fail to state the substance, rates, terms, and conditions of the
transactions between BST and BSLD.  BellSouth's failure to disclose the rates charged for
certain services makes its impossible for an unaffiliated third party to make informed purchasing
decisions, and falls short of providing the information needed to assure compliance with our
accounting rules.  

     337. We disagree with BellSouth that our rules require a BOC to disclose only
summaries of its transactions with a section 272 affiliate.  In the Accounting Safeguards Order,
we stated that the section 272 affiliate must "provide a detailed written description of the asset or
service transferred and the terms and conditions of the transaction," and that such description
"should be sufficiently detailed to allow us to evaluate compliance with our accounting rules." 
In the Ameritech Michigan Order, we stressed that section 272(b)(5) requires BOCs to disclose
the rates, terms, and conditions of all transactions between the BOC and its section 272
affiliate.  In order to demonstrate compliance with the public disclosure requirement of section
272(b)(5) in future applications, BellSouth should disclose sufficient detail for all transactions
between BST and BSLD taking place after February 8, 1996.  The final contract price alone is not
sufficient for evaluating compliance.  Instead, such disclosures should include a description of the
rates, terms, and conditions of all transactions, as well as the frequency of recurring transactions
and the approximate date of completed transactions.  For asset transfers, BellSouth should
disclose the appropriate quantity and, if relevant, the quality of the transferred assets.  For affiliate
transactions involving services, BellSouth should disclose the number and type of personnel
assigned to the project, the level of expertise of such personnel, any special equipment used to
provide the service, and the length of time required to complete the transaction.  BellSouth should
also state whether the hourly rate is a fully-loaded rate, and whether or not that rate includes
the cost of materials and all direct or indirect miscellaneous and overhead costs, so that we can
evaluate compliance with our accounting safeguards.  BellSouth should consistently report its
transactions in its Internet disclosures, the information available at its principal place of business,
and its various accounting disclosures.  Finally, because we are concerned that BellSouth's
Internet posting procedures may not be sufficient, BellSouth should clearly state its Internet
posting procedures, including the anticipated duration of its posting, on its Internet site and in any
future section 271 application. 

     338. We disagree with AT&T that BellSouth is required to disclose publicly all
transactions between the section 272 affiliate and other nonregulated affiliates in its section 271
application.  Our rules require only public disclosures of transactions between the BOC and its
section 272 affiliate.  Instead, we view transactions between BSLD and BellSouth's other
nonregulated affiliates as the proper subject of the biennial audits, which require a thorough
examination of all affiliate transactions in order to evaluate compliance with the statute and our
rules.  We therefore decline to expand BellSouth's disclosure obligations in the manner suggested
by AT&T.
     
     339. Because BellSouth has failed to disclose all transactions between BST and BSLD,
we cannot evaluate fully BSLD's compliance with the second requirement of section 272(b)(5) to
"conduct all transactions with the Bell operating company of which it is an affiliate on an arm's
length basis."  In the Accounting Safeguards Order, we concluded that a BOC would satisfy
the arm's length requirement by following our Part 32 affiliate transactions rules.  The affiliate
transactions rules protect ratepayers and prevent improper cross-subsidization by requiring
incumbent LECs, including the BOCs, to record the costs of transactions between the carrier and
its nonregulated affiliates in accordance with a specific hierarchy of valuation methodologies. 
We do note, however, that BellSouth has provided evidence of internal controls and procedures,
such as its training programs and company memoranda, that appear to show that BST and BSLD
comply with the requirement to conduct transactions on an arm's length basis.  Although we
agree with AT&T that, under these facts, mere paper promises to comply are insufficient, we find
that BSLD appears to have provided information indicating compliance with the arm's length
requirement for those transactions disclosed on its Internet site.  BellSouth's corporate policies,
employee training, and internal compliance program appear to indicate that such affiliate
transactions are occurring at arm's length. 

     340. Section 272(c)(2) -- Accounting Principles.  Because BellSouth has failed to
disclose all transactions between BST and BSLD, we cannot fully evaluate BST's compliance with
section 272(c)(2), which states that "[i]n its dealings with its separate affiliate, a BOC "shall
account for all transactions with an affiliate described in subsection (a) in accordance with
accounting principles designated or approved by the Commission."  In the Accounting
Safeguards Order, we concluded that the existing affiliate transactions rules, with certain
modifications, generally satisfy the requirement under section 272(c)(2).  For those
transactions that BellSouth has disclosed, we find that BellSouth has made a prima facie showing
that BST accounts for such transactions are in accordance with our accounting rules.  BellSouth's
ARMIS and CAM information, internal corporate accounting policies, employee training, and
internal compliance program appear to indicate that the BOC is accounting for all transactions
with its section 272 affiliate in accordance with our accounting rules.  We disagree, however,
with BellSouth's claims that its ARMIS data conclusively proves that all transactions between the
BOC and its section 272 affiliate are conducted on an arm's length basis, and that all such affiliate
transactions are audited for compliance.  Although our rules require an independent audit of a
BOC's CAM and ARMIS filings, the independent audit involves testing only a sample of a BOC's
affiliate transactions for compliance with our accounting safeguards.  We likewise disagree
with AT&T regarding the significance we should attribute to BellSouth's past accounting
compliance problems that have been redressed and corrected.  For future section 271
applications, BellSouth should provide descriptions of corporate policies, evidence of internal
training on the accounting requirements, complete disclosures of all transactions between the
BOC and its section 272 affiliate, and an explanation of the appropriate valuation methodologies
applied for such transactions.     

          2.   Nondiscrimination Safeguards of Section 272

     341. Section 272(c)(1) -- Nondiscrimination.  We conclude that BellSouth does not
adequately demonstrate that it will comply with the nondiscrimination requirement of section
272(c)(1) which requires that a BOC in its dealings with its section 272 affiliate "may not
discriminate between that company or affiliate and any other entity in the provision or
procurement of goods, services, facilities, and information, or in the establishment of
standards."  In the Non-Accounting Safeguards Order, the Commission interpreted this section
to require a BOC to "provide to unaffiliated entities the same goods, services, facilities, and
information that it provides to its section 272 affiliate at the same rates, terms, and conditions." 
The Commission determined that "any discrimination with respect to a BOC's procurement of
goods, services, facilities, or information between its section 272 affiliate and an unaffiliated entity
establishes a prima facie case of discrimination under section 272(c)(1)."  

     342. The Commission also concluded that section 272(c)(1) extends to any good,
service, facility, or information that a BOC provides to its section 272 affiliate, including those
that are not telecommunications-related, and administrative and support services. 
Furthermore, the Commission interpreted the term "facilities" in section 272(c)(1) to include,
among other things, the seven unbundled network elements described in the Local Competition
First Report and Order.  In addition, the Commission concluded in the Non-Accounting
Safeguards Order that, if a BOC transfers ownership of its Official Services Network to its
section 272 affiliates, it must do so in a nondiscriminatory manner in accordance with section
272(c)(1), among other statutory provisions.  

     343.   BellSouth states that, subject to the joint marketing authority granted by section
272(g), BST does and will make available to unaffiliated entities any goods, services, facilities,
and information that BST provides or will provide to BSLD at the same rates, terms, and
conditions.  Despite this statement, we conclude that BellSouth does not make a prima facie
showing or meet the burden of persuasion that it fully meets the requirements of section 272(c)(1)
regarding nondiscriminatory provision of information.  In particular, BellSouth is not disclosing all
of the transactions that have occurred between BST and BSLD in accordance with section
272(b)(5); therefore, its affiliate has information about those transactions that unaffiliated entities
do not have.  In addition, BellSouth fails to provide nondiscriminatory access to its OSS and
thereby discriminates in the provision of information to unaffiliated entities.  BellSouth's specific
non-compliance with the requirement for nondiscriminatory provision of these goods, services,
facilities, and information is discussed supra in the relevant portions of this Order.  

     344. Despite BellSouth's failure to disclose all of its affiliate transactions and provide
OSS on a nondiscriminatory basis, we find, based on the record, that BellSouth adequately
demonstrates that BST does not and will not, for so long as the section 272 requirement applies,
discriminate with regard to protection of confidential network or customer information. 
AT&T argues that BellSouth will violate section 272(c)(1) because it will provide Customer
Proprietary Network Information (CPNI) to its section 272 affiliate in a discriminatory fashion. 
AT&T advanced a similar argument in the CPNI proceeding, which the Commission expressly
rejected.  We do not revisit that issue in this Order. 

     345. BellSouth also adequately demonstrates that it implements the appropriate
safeguards and employee training to comply with the nondiscrimination obligation in section
272(c)(1).  BellSouth states that each BST officer has sent or is preparing to send personal
correspondence to each employee in his or her organization concerning the requirements of
Section 272 and the Commission's interpretation.  BST has also established an "Ethics Hotline"
which allows employees to report anonymously suspected violations of law, including these
requirements.  Correspondingly, BSLD conducts educational sessions, attended by every
employee regarding the requirements of the Act.  In addition, all BellSouth employees are
bound by confidentiality requirements that constitute part of their employment obligations. 
Based upon BellSouth's training programs and safeguards, we find unpersuasive AT&T's and
MCI's concerns that the one-third of BSLD's employees, who are former employees of BST,
will serve as improper conduits of confidential information between BST and BSLD, and require
additional internal safeguards to satisfy section 272(c)(1).  

     346. Regarding network changes that will affect a competitor's ability to perform or
provide service or BST's interoperability with other telecommunications carriers, we find that
BellSouth adequately demonstrates that BST will continue to provide public notice on a
nondiscriminatory basis in compliance with section 272(c)(1).  BellSouth states that BST will not
inform BSLD or any other affiliated or unaffiliated carrier about planned network changes until
public notice has been given in accordance with Commission rules.  BellSouth also commits
that BST will continue to participate in public standards-setting bodies and will not discriminate in
favor of BSLD in the establishment of standards relating to interconnection or interoperability of
public networks.  Moreover, BellSouth affirms that BST will not discriminate, for so long as
the requirement is in place, between BSLD and unaffiliated interexchange carriers in the
processing of PIC change orders. 

     347. We also reject MCI's demands that BellSouth should affirmatively state in its
Application if any portion of its Official Services Network will be made available to BSLD, on
what terms, and through what processes.  BellSouth states that it will comply with the
Commission's prohibition in the Non-Accounting Safeguards Order against the BOC's use of its
Official Services Network to provide interLATA services, with the exception of grandfathered
and incidental interLATA services.  BellSouth acknowledges that the Non-Accounting
Safeguards Order prohibits the transfer of Official Services Networks to section 272 affiliates
except on a nondiscriminatory basis and it commits to comply with these requirements.  We
find these commitments to be sufficient.

     348. Section 272(e)(1) -- Fulfillment of Requests for Telephone Exchange and
Exchange Access.  We conclude that BellSouth does not make a prima facie showing and does
not demonstrate that it will comply with section 272(e)(1), which requires a BOC and any BOC
affiliate that is an incumbent LEC to "fulfill any requests from an unaffiliated entity for telephone
exchange service and exchange access within a period no longer than the period in which it
provides such telephone exchange service and exchange access to itself or to its affiliates."  In
the Non-Accounting Safeguards Order, the Commission concluded that "the term 'requests'
should be interpreted broadly, and that it includes, but is not limited to, initial installation request,
subsequent requests for improvement, upgrades or modifications of service, or repair and
maintenance of these services."  The Commission also concluded that, "for equivalent requests,
the response time a BOC provides to unaffiliated entities should be no greater than the response
time it provides to itself or its affiliates."  Furthermore, the Commission determined that, "the
BOCs must make available to unaffiliated entities information regarding the service intervals in
which the BOCs provide service to themselves or their affiliates."

     349. BellSouth states that BST will fulfill any request from unaffiliated entities for
installation and maintenance of telephone exchange and exchange access services within a period
no longer than the period in which it provides such services to BSLD.  We find BellSouth's
statement of compliance insufficient since it limits requests to installation and maintenance.  Also,
according to BellSouth, unaffiliated telecommunications carriers are able to transfer and receive
the data necessary to perform maintenance and repair functions through its OSS functions, and
repair dates are established for all carriers on a nondiscriminatory basis.  Contrary to
BellSouth's assertion, however, we have found that BellSouth fails to provide nondiscriminatory
access to its OSS; therefore, we conclude that BellSouth does not adequately demonstrate that it
will satisfy the requirement of section 272(e)(1). 

     350. We also decline to grant MCI's request that specific performance standards and
reporting requirements be set forth in this Order.  Though BellSouth promises to comply with
Commission monitoring and reporting requirements, MCI asserts that BellSouth has an
obligation to set comprehensive performance standards and reporting requirements, in the absence
of Commission requirements, in order to satisfy the nondiscrimination requirement in section
272(e)(1).  While we do not impose such an obligation here, we encourage BellSouth to
submit in future applications specific performance standards for measuring its compliance with the
requirements of section 272(e)(1).  

     351. Section 272(e)(2) -- Facilities, Services, or Information Concerning Exchange
Access.  We conclude that BellSouth does not make a prima facie showing and does not
demonstrate that it will comply with the requirement in section 272(e)(2) that a BOC and any
BOC affiliate that is an incumbent LEC "shall not provide any facilities, services, or information
concerning its provision of exchange access to the affiliate described in subsection (a) unless such
facilities, services, or information are made available to other providers of interLATA services in
that market on the same terms and conditions."  In the Non-Accounting Safeguards Order, the
Commission concluded that "the term 'providers of interLATA services in that market' means any
interLATA services provider authorized to provide interLATA service in the same state where the
relevant section 272 affiliate is providing service."  The Commission also concluded that only
telecommunications carriers are eligible to obtain facilities, services, or information pursuant to
section 272(e)(2).  

     352. BellSouth commits that BST will refuse to provide any facilities, services, or
information concerning its provision of exchange access to BSLD unless such facilities, services,
or information are made available to other providers of interLATA services in that market on the
same terms and conditions.  Nevertheless, despite this statement, we find that, because
BellSouth is not providing nondiscriminatory access to its OSS which is used in the provision of
exchange access, BellSouth has not made a prima facie showing and has not demonstrated that
BST will provide facilities, services, or information concerning its provision of exchange access to
BSLD on a nondiscriminatory basis as required by section 272(e)(2).     
     353. Section 272(e)(3) -- Amount for Access to Telephone Exchange and Exchange
Access.  BellSouth has made a prima facie showing and has adequately demonstrated that it will
comply with section 272(e)(3), which requires a BOC and any BOC affiliate that is an incumbent
LEC to "charge the affiliate described in subsection (a), or impute to itself (if using the access for
its provision of its own services), an amount for access to its telephone exchange service and
exchange access that is no less than the amount charged to any unaffiliated interexchange carriers
for such service."  In the Non-Accounting Safeguards Order, the Commission determined that
"a section 272 affiliate's purchase of telephone exchange service and exchange access at tariffed
rates, or a BOC's imputation of tariffed rates, will ensure compliance with section 272(e)(3)." 
In the Accounting Safeguards Order, the Commission concluded that, "where a BOC charges
different rates to different unaffiliated carriers for access to its telephone exchange service, the
BOC must impute to its integrated operations the highest rate paid for such access by unaffiliated
carriers."  The Commission further stated that the BOC may consider the comparability of the
service provided and may take advantage of the same volume discount purchases offered to its
interLATA affiliate and other unaffiliated carriers.  

     354.   BellSouth states that BST will charge BSLD rates for telephone exchange service
and exchange access that are no less than the amount BST would charge any unaffiliated
interexchange carrier for such service.  BellSouth also states that where BST uses exchange
access for the provision of its own services, BST will impute to itself the same amount it would
charge an unaffiliated interexchange carrier.  Therefore, BellSouth has adequately
demonstrated that it will comply with the requirement of section 272(e)(3).

     355. Section 272(e)(4) -- Provision of InterLATA or IntraLATA Facilities or Services. 
BellSouth has also made a prima facie showing and has adequately demonstrated that it will
comply with the requirement in section 272(e)(4) that a BOC and any BOC affiliate that is an
incumbent LEC "may provide any interLATA or intraLATA facilities or services to its interLATA
affiliate if such services or facilities are made available to all carriers at the same rates and on the
same terms and conditions, and so long as the costs are appropriately allocated."  BellSouth
commits that, to the extent that BST is permitted to provide interLATA or intraLATA facilities or
services to BSLD, BST will make such services or facilities available to all carriers at the same
rates, terms, and conditions and will record any transactions between BST and BSLD in the
manner prescribed in the Accounting Safeguards Order.  

          3.   Joint Marketing Requirements of Section 272

     356. Section 272(g)(1) -- Affiliate Sales of Telephone Exchange Services.  We conclude
that BellSouth does not make a prima facie showing and does not meet the burden of persuasion
that it will comply with section 272(g)(1) in one respect.  BellSouth demonstrates substantial
compliance with section 272(g)(1) with the exception that BellSouth makes no mention of
BSLD's marketing of information services.  Section 272(g)(1) states that "[a] Bell operating
company affiliate required by this section may not market or sell telephone exchange services
provided by the Bell operating company unless that company permits other entities offering the
same or similar service to market and sell its telephone exchange services."  In the Non-
Accounting Safeguards Order, the Commission interpreted the term "same or similar service" to
encompass information services, such that a section 272 affiliate may not market information
services and BOC telephone exchange services unless the BOC permits other information service
providers to market and sell telephone exchange services.  BellSouth commits in its
Application that BSLD will not market or sell BST's telephone exchange service unless BST
permits BSLD's competitors to do so as well.  BellSouth, however, makes no mention of
whether BSLD intends to market information services and whether BST will also permit other
information service providers to market and sell telephone exchange services.  We expect that
BellSouth can remedy this by specifically addressing information services in future applications.

     357. Section 272(g)(2) -- Bell Operating Company Sales of Affiliate Services.  We
conclude that BellSouth makes a prima facie showing and demonstrates, for purposes of this
Order, that it will comply with section 272(g)(2), which requires that "[a] Bell operating company
may not market or sell interLATA service provided by an affiliate required by this section within
any of its in-region States until such company is authorized to provide interLATA services in such
State under section 271(d)."  In the Non-Accounting Safeguards Order, the Commission
concluded that "BOCs must provide any customer who orders new local exchange service with
the names and, if requested, the telephone numbers of all of the carriers offering interexchange
services in its service area."  In the BellSouth South Carolina Order, the Commission
determined that, during inbound calls, BOCs may mention their section 272 affiliate, apart from
including that affiliate in a list of available interexchange carriers.

     358. We find unpersuasive Sprint's and AT&T's assertion that one of BellSouth's
proposed marketing arrangements exceeds the boundaries of acceptable joint marketing. 
Regarding section 272(g)(2), BST states that it has not and will not market or sell BSLD's
interLATA services in Louisiana until the Commission grants BellSouth in-region interLATA
authority for that State.  BellSouth also declares that, when authorized to offer long distance
service in Louisiana, BellSouth will use the same joint marketing/equal access approach set forth
in the BellSouth South Carolina Order.  Accordingly, when BST markets BSLD long distance
service during inbound calls, BST will offer to read, in random order, the names and, if requested,
the telephone numbers of all available interexchange carriers.  Sprint and AT&T, however,
argue that it would be inconsistent with section 272 for BSLD to provide sales tools to assist BST
sales personnel in providing customers with information upon request about how BSLD's services
compare with other providers' services.  We believe that BellSouth's provision of accurate
information to consumers upon request about the services available to them is a form of
acceptable joint marketing.  Should BellSouth misrepresent BSLD's services or mislead
consumers with false information, interexchange carriers have alternative methods of seeking
recourse through the Commission and through private litigation.  

     359. Section 272(g)(3) -- Joint Marketing and Sale of Services.  We find that BellSouth
makes a prima facie showing and adequately demonstrates that it will comply with section
272(g)(3), which states that "[t]he joint marketing and sale of services permitted under this
subsection shall not be considered to violate the nondiscrimination provisions of subsection
(c)."  In the Non-Accounting Safeguards Order, the Commission determined that activities
such as customer inquiries, sales functions, and ordering are permitted under section 272(g)(3),
because they involve only the marketing and sales of a section 272 affiliate's services, and
therefore are exempt from the nondiscrimination requirements in section 272(c).  The
Commission found, however, that planning, design, and development appear to be beyond the
scope of the section 272(g) exception to the BOC's nondiscrimination obligations, and thus are
subject to the nondiscrimination provisions contained in section 272(c).

     360.  BellSouth states that, to the extent BST engages in product development with
BSLD, it will do so on a nondiscriminatory basis with unaffiliated entities so long as it is required
to do so under section 272.  We note that AT&T is concerned that BellSouth's joint marketing
plans involve the development and creation of packages of services offered on an integrated
basis, and that BellSouth has not shown that it will make these services available on a
nondiscriminatory basis.  We expect, however, as BellSouth commits in good faith, that to the
extent BST is involved with planning, design, and development activities for BSLD, BST will
make these services available to other entities on a nondiscriminatory basis pursuant to section
272(c)(1).

VIII.     PUBLIC INTEREST

     361. In order to provide guidance for future applications, we take this opportunity to
address certain issues relating to our public interest inquiry.  BellSouth asserts that entry into a
particular in-region, interLATA market is consistent with the public interest requirement
whenever a BOC has implemented the competitive checklist.  BellSouth also asserts that our
responsibility to evaluate public interest concerns is limited narrowly to assessing whether BOC
entry would enhance competition in the long distance market.   Both of these arguments were
considered and rejected in the Ameritech Michigan Order, and BellSouth has given us no
reason to revisit the prior determinations on these issues here.   Therefore, we reaffirm the
Commission's earlier decision that section 271 relief may be granted only when:   (1) the
competitive checklist has been satisfied; and (2) the Commission has independently determined
that such relief is in the public interest.  We also reaffirm the decision that the Commission should
consider whether approval of a section 271 application will foster competition in all relevant
telecommunications markets (including the relevant local exchange service market), rather than
just in the in-region, interLATA market. 

     362. We note that the Commission stated in the Ameritech Michigan Order that we
have broad discretion to identify and weigh all relevant factors in determining whether BOC entry
into a particular in-region, interLATA market is consistent with the public interest.    In the
Ameritech Michigan Order the Commission also stated that, in making a case-by-case
determination of whether the public interest would be served by granting a section 271
application, it would consider and balance a variety of factors in each case, and that, unlike the
requirements of the competitive checklist, the presence or absence of any one factor would not
dictate the outcome of the public interest inquiry.

     363. For example, evidence that a BOC has agreed to performance monitoring
(including performance standards and reporting requirements) in its interconnection agreements
with new entrants would be probative evidence that a BOC will continue to cooperate with new
entrants, even after it is authorized to provide in-region, interLATA services.  Performance
monitoring serves two key purposes.  First, it provides a mechanism by which to gauge a BOC's
present compliance with its obligation to provide access and interconnection to new entrants in a
nondiscriminatory manner.  Second, performance monitoring establishes a benchmark against
which new entrants and regulators can measure performance over time to detect and correct any
degradation of service rendered to new entrants, once a BOC is authorized to enter the in-region,
interLATA services market.  

     364. We would be particularly interested in whether such performance monitoring
includes appropriate, self-executing enforcement mechanisms that are sufficient to ensure
compliance with the established performance standards.  That is, as part of our public interest
inquiry, we would inquire whether the BOC has agreed to private and self-executing enforcement
mechanisms that are automatically triggered by noncompliance with the applicable performance
standard without resort to lengthy regulatory or judicial intervention.  The absence of such
enforcement mechanisms could significantly delay the development of local exchange competition
by forcing new entrants to engage in protracted and contentious legal proceedings to enforce their
contractual and statutory rights to obtain necessary inputs from the incumbent.

     365. In sum, when conducting a public interest analysis of a section 271 application, we
will balance a number of factors in order to determine whether entry by a BOC to provide in-
region, interLATA telecommunications services will serve the public interest, convenience and
necessity.  In taking this approach, we recognize that Congress specifically chose to include the
public interest requirement of section 271 in addition to the checklist requirements.  At the
same time, we hope that a BOC which has satisfied all of the other statutory requirements for
entry under section 271 and ensured continued compliance with these requirements would also be
able to satisfy the public interest requirement.

     366.   In the preceding sections of this Order, we concluded that BellSouth has not
implemented fully the competitive checklist, and has not demonstrated that its authorization will
be carried out in accordance with section 272.  We, therefore, must deny BellSouth's application
for authorization to provide in-region, interLATA telecommunications services in Louisiana.  As a
result, we need not reach the further question of whether the requested authorization is otherwise
consistent with the public interest, convenience and necessity, as required by section
271(d)(3)(C).  

IX.  PROCEDURAL MATTERS

     367. AT&T filed a Motion to Strike asking that the Commission strike from the record
or disregard certain material in BellSouth's Reply and the supporting Reply Affidavits.  In support
of its request, AT&T asserts that this material covers periods after the Application was filed, is
not directly responsive to the Comments, or should have been filed with the original
Application.   BellSouth opposes the Motion, arguing that the material involved was properly
filed as part of its Reply.
     
     368. The special procedures the Commission has adopted for the processing of section
271 Applications are vitally important in light of the highly compressed time frame involved. 
Despite this, we decline to grant AT&T's Motion to Strike in the special circumstances of this
proceeding, even though some of the material cited by AT&T appears to have been improperly
filed by BellSouth in the reply phase.  We believe that consideration of this material will permit us
to provide BellSouth and the other BOCs with more complete guidance concerning their statutory
obligations under section 271.  In this regard, we emphasize that we do not rely on any of the
material cited by AT&T in its Motion to Strike when we conclude that BellSouth has
demonstrated compliance with a particular checklist item.  Thus, interested parties are not harmed
by this approach since they will have a full opportunity to address this material in the context of a
future application.  We emphasize that this approach is limited to the unique circumstances of the
present Order and note that section 271 applicants should be careful to follow our procedural
requirements in future proceedings or risk having the Commission "start the 90-day review
process anew or accord such material no weight in making our determination."
 
X.   CONCLUSION

     369. For the foregoing reasons, we deny BellSouth's application for authorization under
section 271 of the Act to provide in-region, interLATA services in the state of Louisiana.  We
find that BellSouth does not satisfy the competitive checklist in section 271(c)(2)(B) and section
272. 

XI.  ORDERING CLAUSES

     370. Accordingly, IT IS ORDERED that, pursuant to sections 4(i), 4(j), and 271 of the
Communications Act, as amended, 47 U.S.C.  154(i), 154(j), 271, BellSouth's application to
provide in-region, interLATA service in the State of Louisiana filed on July 9, 1998 IS DENIED.

     371. IT IS FURTHER ORDERED that AT&T Corp.'s Motion to Strike Portions of
BellSouth's Reply Evidence filed on September 17, 1998, IS DENIED.

     
                              FEDERAL COMMUNICATIONS COMMISSION



                              Magalie Roman Salas
                              Secretary

                             APPENDIX

 BellSouth Corporation's 271 Application for Service in Louisiana
                       CC Docket No. 97-231
                        List of Commenters


                             Comments
                                 

Alliance for Public Technology
American Council on Education, National Association of College and University Business 
     Officers, and Management Education Alliance
Ameritech
Association for Local Telecommunications Services (ALTS)
AT&T Corp. (AT&T)
Competition Policy Institute (CPI)
Competitive Telecommunications Association (CompTel)
Cox Communications, Inc. (Cox)
e.spire Communications, Inc.
Excel Telecommunications, Inc.
Hyperion Telecommunications, Inc. (Hyperion)
Intermedia Communications, Inc. (Intermedia)
Keep America Connected!
KMC Telecom Inc. (KMC)
Robert E. Litan and Roger G. Noll
Louisiana Public Service Commission
MCI Telecommunications Corporation (MCI)
OmniCall, Inc.
Paging and Messaging Alliance of the Personal Communications Industry Association (PCIA)
Radiofone, Inc.
Sprint Communications Company L.P. (Sprint)
State Communications, Inc.
Telecommunications Resellers Association (TRA)
Time Warner Telecom
Triangle Coalition for Science and Technology Education
U S WEST Communications, Inc.
WorldCom, Inc. (WorldCom)


                         Reply Comments


Ameritech
Association for Local Telecommunications Services (ALTS)
AT&T Corp. (AT&T)
Bell Atlantic
BellSouth Corporation
Competitive Telecommunications Association (CompTel)
Consumer Federation of America
e.spire Communications, Inc.
Hyperion Telecommunications, Inc. (Hyperion)
Intermedia Communications, Inc. (Intermedia)
KMC Telecom Inc. (KMC)
MCI Telecommunications Corporation (MCI)
Radiofone, Inc.
Sprint Communications Company L.P. (Sprint)
Telecommunications Resellers Association (TRA)
WorldCom, Inc. (WorldCom)

Separate Statement of Chairman Kennard on the FCC's Review of BellSouth's Second
Application to Provide In-Region, InterLATA Services in the State of Louisiana

     Today the Commission reaffirms the fundamental commitment of the Telecommunications
Act of 1996 Act -- to bring consumer choice to all telecommunications markets, including both
local and long distance.  Section 251 established specific market-opening obligations for all
incumbent local telephone companies.  Section 271 removes prohibitions against the local Bell
Operating Companies providing long distance once those companies meet a 14-point checklist of
market-opening requirements and show they will serve the public interest.

     The Act envisions a "win-win" for consumers -- more choice in local service and more
choice in long distance.  The Act does not seek merely to provide more choice in long distance at
the expense of maintaining the status quo in local service -- that would be "win-lose."

     Unfortunately, were we to grant the application before us today, it would still be a "win-
lose" result, not "win-win."  BellSouth has not yet fully opened its market to competition.  
  
     In today's order we review all 14 points of the checklist, this time in the context of
BellSouth's second application to provide long distance service in Louisiana.  This is by far the
most thorough analysis of a section 271 application that the Commission has ever conducted.  In
today's analysis we can see the fruits of the efforts on the part of the Commission and of all of the
stakeholders who have participated in our informal dialogue.  This dialogue has produced an
improved application and a better process.   I commend the efforts of Bell South and other Bell
Operating Companies, competitive local exchange carriers, state commissions, and others, that
have contributed to the success of this process.

     I also commend BellSouth for the progress it has made toward satisfying the statutory
requirements.  BellSouth has satisfied six checklist items and part of a seventh.  As to the
remaining items that BellSouth did not meet in this application, I believe BellSouth can and will
remedy the deficiencies we identify in our Order.  While the deficiencies that remain are
significant, they are not insurmountable.

     There are two major areas BellSouth must improve: operations support systems (OSS)
and access to combinations of network elements.  We previously identified these areas in our
order addressing BellSouth's first application to provide long distance service in Louisiana. 
OSS is critical to competition.  Through OSS, competitors purchasing interconnection, unbundled
elements, and resold services know what services and facilities they can order, place orders,
obtain confirmation of the orders and delivery dates, and receive delivery of the services.  If its
OSS does not work, a BOC is unable to provide interconnection, access to elements, or resold
services in the non-discriminatory manner required by the Act.

     Our concerns here are not new.  When we denied BellSouth's first application for long
distance entry in Louisiana, we noted that its OSS satisfactorily processed orders to move a
customer from BellSouth to a competitor only about half the time in the best cases (and
sometimes as low as 25%), while the "flow-through" rate for customers choosing BellSouth's
services was over 80%, and well over 90% in the case of residential customers.  We clearly stated
before that if BellSouth's OSS worked effectively only when customers wanted BellSouth's
service, but not when they wanted to switch to a competitor, we could not conclude the market
was open to competition.  BellSouth did not show improvement in these numbers in it second
application and, in fact, actual performance has worsened.

     Likewise, BellSouth's previous application demonstrated that when BellSouth seeks to
sign up new customers using its OSS, it can integrate the pre-ordering phase (when information
concerning the customer's name, location, and services are identified and collected) and the
ordering phase (when the order is actually place) by electronically transferring the pre-ordering
information with, essentially, the push of a button that places the order.  This integration is
efficient and eliminates errors that could arise if the data must be transferred manually, rather than
electronically.  By contrast, BellSouth's OSS does not provide its competitors with the ability to
perform an integrated transfer of data from the pre-ordering to ordering phase.  This slows down
a competing carrier and increases the risk of errors being committed that BellSouth can avoid
when signing up customers for itself.  Although we noted in our previous order that BellSouth
would have to correct this discriminatory condition, it has not done so in its second application.

     The second major area of concern relates to BellSouth's obligation to provide competing
carriers access to combinations of network elements through collocation on reasonable and non-
discriminatory terms and conditions.  In the past, BellSouth has failed to state the terms and
conditions on which it will provide such access, and we have therefore been unable to find that
BellSouth satisfies this requirement.  In the current application, BellSouth again fails to state the
terms and conditions of access, and thus again has deprived of us of a basis on which to analyze
its compliance with this obligation.
     
     While today's order identifies other areas of concern, it also identifies six checklist items
that are fully satisfied and other items that would be satisfied but for the problems with
BellSouth's OSS.  I strongly encourage BellSouth to concentrate on the remaining deficiencies,
because I fully believe they can and will be overcome.  Indeed, we will not require BellSouth to
resubmit its filing on the checklist items it already has satisfied, other than to certify in any
subsequent application that those items show no deterioration.  BellSouth has advanced the ball
considerably; the next time it takes the field, it should be able to start from where we leave off
today, by focusing on the deficiencies we identify today, rather than having to start all over again.

     As soon as BellSouth demonstrates that it has turned it attention to these issues in a
meaningful way, the people of Louisiana will see a whole new world of choice in local and long
distance service open up before them.
                                                  October 13, 1998

                                            
      SEPARATE STATEMENT OF COMMISSIONER MICHAEL K. POWELL


     Re:  Application of BellSouth Corporation et al. Pursuant to Section 271 of the
     Communications Act of 1934, as amended, to Provide In-Region, InterLATA Services in
     Louisiana (CC Docket No. 98-121).

     In this Order, we deny BellSouth's third application to provide in-region interLATA
service pursuant to section 271 of the Act.  I commend BellSouth for taking a number of steps
toward meeting the prerequisites for entry established by Congress under section 271.  Indeed,
BellSouth has successfully satisfied nearly half of the items identified in section 271's "competitive
checklist" and additional items would be satisfied but for deficiencies in BellSouth's OSS. 
Unfortunately, however, the instant application suffers from some of the same important
deficiencies we identified in BellSouth's South Carolina and initial Louisiana applications, and thus
we are compelled by the statute to reject it.

     Although BellSouth's performance has been less than perfect in satisfying the statute,
neither is this Order perfect, despite the valiant efforts of our talented but overworked Common
Carrier Bureau.  In particular, I wish we were able, in this Order, to give even more guidance to
BellSouth and the other Bell Operating Companies (BOCs) regarding how they may satisfy the
requirements of section 271.  Rather than dwell on how I wish we could improve the Order,
however, I write separately to highlight the bases upon which I vigorously support it.  

     First and foremost, I applaud our decision in this Order to discuss every element of the
competitive checklist, as well as the public interest.  I believe this decision constitutes a significant
step toward achievement of Congress' goal of simultaneously opening the BOCs' local exchange
markets to competition while promoting long distance competition through BOC entry into that
market.  Further, based on our internal discussions during the final stages of preparing this Order,
it is my expectation that Commission staff will continue to work closely with BellSouth to clarify
further the guidance we have provided in this and previous orders.  I sincerely hope that
BellSouth will take advantage of such guidance before filing another section 271 application; the
company's success in satisfying several elements of the checklist indicates that it has the
wherewithal and good faith to satisfy the statutory requirements and thereby obtain long distance
approval.

     Second, I am very pleased that we will allow BellSouth and future BOC applicants to
certify that they remain in compliance with checklist items they have satisfied in previous
applications.  In implementing this new certification option, the Commission must, of course, be
careful to remain receptive to entirely new arguments raised in subsequent applications that
parties had no reasonable opportunity to raise previously.  I believe, however, that it is entirely
appropriate for us to signal that we are strongly disinclined to revisit ground satisfactorily covered
in previous applications.  This approach will put more pressure on parties commenting on BOC
applications to level all available criticisms in the first application for any particular state.  This
approach also will enable BOCs to focus their energies on quickly satisfying the remaining
statutory requirements and thereby expedite the local market-opening process by which BOCs
may obtain approval to provide in-region long distance service.

     Third, I support this Order because it makes clear that the evidentiary standards governing
our review of section 271 applications are intended to prevent the perfect from becoming the
enemy of the good with respect to the showings BOCs must make to obtain interLATA approval. 
As the Order highlights, BOCs need only prove each statutory requirement by a preponderance of
the evidence, rather than some higher burden.  The Order makes clear, moreover, that a BOC is
not restricted to using only the types of evidence that we have identified as helpful in reviewing an
application if a BOC can persuade us that other types of evidence demonstrate nondiscriminatory
treatment and other aspects of the statutory requirements.  

     Fourth, I support this Order because it evidences at least some reluctance to allow our
public interest review of section 271 applications to sweep too broadly.  I believe this review
should be disciplined both by the statute's express prohibition against limiting and extending the
terms of the competitive checklist, 47 U.S.C.  271(d)(4), and by the likelihood that it will serve
the public interest to grant the application of any BOC that can satisfy every element of the
checklist.  I believe this likelihood is significant, in part, because of the continued rigor with which
this Commission and many state commissions have implemented the checklist.  This rigor makes
me increasingly skeptical that in many cases we would need, in essence, to require BOCs to
satisfy public interest factors in addition to the checklist to achieve the broad aims of section 271.

     In sum, this Order and the work leading up to it evidence a significant improvement in the
section 271 process from a year ago.  While I would have preferred that we give even more
detailed guidance as to the next steps BellSouth must take in order to obtain section 271
approval, I acknowledge the limitations imposed by the ninety-day statutory time frame, and I
recognize how far the Commission has come from the arms-length, generally reactive approach
that characterized our early implementation of section 271.  That approach, in my view, robbed
both applicants and other interested parties of a meaningful opportunity to help the Commission
translate complex and as-yet-uninterpreted statutory provisions into workable directives that
interested parties can understand and follow.  


     Regardless whether one believes the Commission's actions in this area have been "too
regulatory" or not, it is indisputable that BOCs, new entrants, members of Congress, state
commissions, consumer groups all have been clamoring for this Commission to give more
guidance -- not less -- as to the meaning of section 271's requirements.  All sides cry out for the
Commission to take steps to carry out Congress' vision of promoting long distance competition
while simultaneously opening local markets.  To ignore these pleas, and to ignore the express
directions of Congress to implement the statute, is less deregulation than derogation of duty. 
Thus, I am pleased that the Commission is well on its way to answering the call for more
guidance.

     By working with both BOCs and competing carriers over the past year to provide
guidance on the statutory requirements before and after section 271 application proceedings, we
have brought ourselves closer than ever to defining what BOCs must do to satisfy the statute.  I
believe this progress is considerable, especially in light of the intricate and conflicting evidence
presented in section 271 proceedings, as well as the inherent difficulties of coaxing incumbent
local and long distance providers to open their respective markets to competitors.  Clearly, we
have much more to do in this regard.  But I have every confidence that we can reach the light at
the end of the tunnel if we remain true to our commitment to work with the industry and other
regulators to achieve our collective goal of bringing more competition to local and long distance
markets. 

     Change is good.  But it is also messy.  I praise my colleagues, the industry and especially
the Commission's staff for their tremendous contributions in hashing through some of the messiest
issues raised by our implementation of the 1996 Act in this and other section 271 proceedings. 
We have found a promising path.  Now we must redouble our efforts to push forward along that
path.  It is my firm belief that, by working with the entire industry to help BOCs understand what
they must do to satisfy section 271, we will succeed in delivering on the promise of increased
local and long distance competition that the Act holds for the industry and for the American
public.
                                             October 13, 1998


                     Separate Statement of 
                  Commissioner Gloria Tristani


          In re:    Application of BellSouth Corporation, BellSouth Telecommunications, Inc., and
          BellSouth Long Distance, Inc., for Provision of In-Region, InterLATA Services in
          Louisiana.  Memorandum Opinion and Order.  CC Docket No. 98-121.


     Today's Order sets out a clear road map for BOCs to receive approval to offer long
distance service in their regions.  I am pleased that the Order carefully and thoroughly addresses
virtually all items on the 271 checklist.  I hope BellSouth will use this Order as a blueprint for a
future long distance application that I can support.

     It should be evident from today's Order that most of our findings break no new ground. 
Instead, the Order relies primarily on earlier Commission pronouncements, all of which were
available to BellSouth before it filed the current application.  In that respect, it is disappointing
that BellSouth elected to file another long distance application without heeding all of the specific
guidance contained in our prior decisions, particularly the Orders responding to BellSouth's two
previous 271 applications.  

     Nonetheless, I am pleased that BellSouth complies with six of the fourteen checklist items
(plus two additional items that are acceptable but for OSS deficiencies).  BellSouth has
demonstrated a willingness to work with Commission staff informally and to open its markets in a
number of respects.  I also credit BellSouth with focusing attention on the emerging question of
PCS as a competitor to wireline service.  I expect we will hear more about that issue in future 271
applications.  

     Finally, I commend the staff of the Common Carrier Bureau for their thoughtful and
tireless work in this proceeding.  Their dedication to their work is essential to fulfilling Congress's
vision of competitive local markets.


                              # # #October 13, 1998
                                
                                
                       Separate Statement
                               of
                   Commissioner Susan Ness, 
                       Concurring in Part


     Re:  Application of BellSouth Corporation et al. for Provision of In-Region, InterLATA
     Services in Louisiana

I strongly support today's decision.  It shows, once again, that the Commission remains
committed to enforcing the law as Congress wrote it.  We seek to enable Bell company
participation in the long distance market, but only after they have first fulfilled their responsibility
to open their local markets.  

To open the local telephone marketplace, as required by the Telecommunications Act, is proving
to be a very complex and difficult challenge.  Incumbents must do things that they have never
done before, and which are against their short-term self-interest to do.  But, upon those Bell
companies who meet this challenge, we will not hesitate to bestow the reward of long distance
entry, as Congress directed.  (Other incumbent telephone companies are also subject to market-
opening responsibilities, but their entry into long distance is not conditioned the way it is for the
Bell companies.)

The evidence before us reflects both that considerable progress has been made, and that more
work remains to be done, to open the local telephone marketplace in Louisiana.  I hope that
BellSouth will act on the detailed guidance we have provided, and file again only when it has fully
addressed all of the problems that have been identified.  And I hope that it will not be long before
at least one of the Bell companies presents us with a Section 271 application that demonstrates
full compliance with all the statutory standards.

Track A Analysis:  I respectfully concur in, rather than approve, one portion of the order.  It
concerns the following question:  is Section 271(c)(1)(A) -- often referred to as "Track A" --
fulfilled when facilities-based competitors are providing telephone exchange service
"predominantly over their own telephone exchange service facilities" in the aggregate, but are
using only resale of incumbent services to serve residential subscribers.  Although the majority
does not make a determination on this issue (and I am glad it does not), the order strongly hints
that the majority would resolve this question in the affirmative.  If so, I would disagree.  

In particular, I wish to disassociate myself from the two sentences at the beginning of Para. 48. 
My own view is that Congress intended Track A to be fulfilled only when both residential and
business subscribers, as two separate classes, are served by competitive providers of local
exchange service whose offerings to each separate class are delivered exclusively or
predominantly over a competitor's own telephone exchange service facilities.  This is the reading
most consistent with the language of the law, and with the legislative history.  

The words chosen by Congress indicate a strong desire for facilities-based competition in both the
business and residential markets.  Of course, colleagues that I respect deeply, as well as the
Justice Department, apparently read it differently than I do, so I do not maintain that the language
is unambiguous.  But the legislative history confirms what I believe to be the most natural reading. 


Tracks A and B were added to the statute by the House Commerce Committee, which described
facilities-based-competition as "the integral requirement of the checklist, in that it is the tangible
affirmation that the local exchange is indeed open to competition."  Given the preexisting (i.e.,
before the Telecommunications Act) presence of facilities-based competition in a number of
business markets, the foregoing statement makes no sense unless Track A is read to require
facilities-based residential competition as well.  This is further shown by the Conference Report's
express reliance on the House Report for the belief "that meaningful facilities-based competition is
possible, given that cable services are available to more than 95 percent of United States
homes."  The Conferees went on to observe that "[s]ome of the initial forays of cable
companies into the field of local telephony therefore hold the promise of providing the sort of
local residential competition that has consistently been contemplated."  For these reasons, I
believe that we can best effectuate Congress's intentions, and achieve Congress's purposes, by
construing Track A to require a showing that residential subscribers are in fact receiving
telephone exchange service from a competitive local exchange carrier that is providing service
"predominantly over [its] own telephone exchange service facilities."

The Track A issue is not decisional in this case, so there is no need for a full-blown discussion of
the legislative text, the statutory structure, legislative history, and congressional purpose of this
provision.  Nonetheless, I want to mention four considerations that attenuate the difficulties that
might be said to result for the Bell companies from my interpretation.  First, "unbundled network
elements" obtained from the incumbent count as the competitive entrant's "own" facilities,
making it easier to establish that facilities-based competition has emerged.  Second, when markets
are truly open, it is likely that entry -- including facilities-based offerings to the residential market
--  will quickly follow.  Third, the statute does not require that any particular number (or
percentage) of residential consumers be served by facilities-based competition; the legislative
history indicates that only "incidental, insignificant" competition should be overlooked. 
Fourth, concerns that Track A consigns the Bell companies to a form of unending "purgatory" are
addressed by the "escape hatches" provided in Track B.

CPNI:  On another matter, I want to note my continuing disagreement with the Commission's
ruling on the shared use by a Bell operating company and its Section 272 affiliate of "customer
proprietary network information," cited in Para. 344.  Nonetheless, I treat that ruling as being in
effect and do not object to the determination that BellSouth is complying with it. 
 
Finally, I want to express my gratitude toward, and confidence in, the very able staff of the
Common Carrier Bureau, which has worked so diligently not only on this order but also on the
intense multi-party dialogue that has provided all interested parties with detailed guidance on the
measures necessary to satisfy the requirements of Section 271.  I deeply respect the expertise and
diligence of the public servants who have spent countless hours working through the issues with
the incumbents, with the new entrants, and with the Commissioners.  I hope and expect that this
process will soon produce its intended results.                                        October 13, 1998

                CONCURRING STATEMENT OF COMMISSIONER HAROLD FURCHTGOTT-ROTH

     Re:  Application of BellSouth Corporation, BellSouth Telecommunications, Inc., and
     BellSouth Long Distance Inc., for Provision of In-Region, InterLATA Services in
     Louisiana; CC Docket No. 98-121.  

     I concur in today's decision to deny BellSouth's 271 application to provide long distance
service in Louisiana.  BellSouth has made substantial progress in Louisiana since its earlier
application, but I am still troubled by the absence of an unambiguous facilities-based competitor
for residential customers, a requirement under Section 271.  I commend my colleagues and the
FCC staff for their hard and sincere work on this proceeding, but I write separately to express my
concern with the Commission's framework for analyzing such 271 applications and to disapprove
explicitly of several aspects of this decision. 

Introduction

     Less than one month ago, Hurricane Georges moved across the Gulf of Mexico
menacingly towards Louisiana.  Hundreds of thousands of people were evacuated from homes
and businesses.  Faced with impending disaster, the people of Louisiana prepared themselves. 
They have survived, endured, and triumphed over worse.  

     Natural disasters have never broken the spirit of Louisiana.  There may, however, lurk a
greater challenge than mere hurricanes:  excessive regulation.  For most of the twentieth century,
the unnatural forces of government regulation have distorted telecommunications markets across
all 50 states, including Louisiana.

     Government regulation, at both the federal and state levels, not natural market forces,
prohibited competition.  Government regulation, not natural market forces, compelled
monopolists to set prices only coincidentally related to costs.  Government regulation, not the
natural progress of science and engineering, dictated the direction of technological change and
innovation, and more often the lack of it.  Government regulation, not consumers and competing
businesses, set the standards for markets.

     The dark humor of the former Soviet Union often involved three characters:  a well-
intentioned central planner in Moscow who dictated official prices in a certain market, and two
individuals actually in that market desperately trying to conduct a transaction. In later versions of
this humor, the centralized planner even had sophisticated computer models.  According to Soviet
economics, regulation and central planning were vastly superior to competition and markets. 
Under Soviet economics, planners were smarter than everyone else, and they knew what was best
for everyone; accordingly, the planners allocated resources and set prices.  Inevitably, in the
Soviet humor, the two individuals would be forced to ignore the official prices and the official
rules and would use a form of barter to make a transaction.  

The Telecommunications Act of 1996

     The Telecommunications Act of 1996 said that excessive regulation, like Soviet
economics, belonged in the ash heap of history.  Competition would replace excessive regulation. 
Market solutions would replace central planning solutions.  Technology would evolve as
demanded by consumers not dictated by regulators.

     Sections 251 through 253 are the core provisions of the 1996 Act that enable competition
in local telephony.  Section 251 lists the legal rights and obligations of telecommunications
carriers in a competitive market; Section 252 describes the State-administered processes to reach
commercial agreements on terms and conditions for the legal rights and obligations under Section
251; and Section 253 provides means to remove regulatory barriers to providing
telecommunications services.

     There are countless markets in the United States for different goods and services.  For
only a relatively small number of these markets are there detailed laws and regulations that restrict
entry, exit, and behavior in the market.  In these highly structured markets, excessive regulations
effectively restrict the market to one source, and indeed practically cause the market to cease to
function.  Sadly, for many decades, telecommunications markets were among these overregulated
markets.  

     Yet the vast majority of American markets operate effortlessly and competitively with few
if any regulations specific to that market.  Excessive regulation in markets is the exception in the
United States, not the rule.

     Competitive markets in the United States and elsewhere work best with clear and
consistent property rights and rules.  Where property rights are respected, and the legal system
treats transactions in a consistent manner, businesses can freely enter and leave markets.  Once in
markets, businesses vie for customers, customers can freely choose among them, and everyone
understands how disputes are likely to be resolved.  Mountains of detailed regulations are not
needed to allow such competitive markets to function; indeed, they would only get in the way.

     Sections 251 through 253, if properly interpreted, could provide for clearly understood
legal rights and obligations, clear bases for the easy entry and exit of businesses from markets, the
free choice by consumers among competitors, simple and predictable dispute resolution
procedures, and all with a minimum of regulations.  All of these results from Sections 251 and
253 could have provided for greater certainty in local telecommunications markets, not certainty
about market outcomes or market prices, but greater certainty about the contours of legal rights,
obligations, processes, and dispute resolutions.

     Sections 251 through 253 have not emerged as they might.  I believe that the Commission
has focused too much of its time, energy and resources on the competitive checklist under Section
271 to the detriment of the general LEC requirements of Section 251.  

     Some of the Commission's language implementing Section 251 has been tied up in courts.
Rather than refining language on the rights and obligations of telecommunications carriers under
251 in areas clearly permitted by the Courts, the Commission has allowed Section 251 regulations
to languish in a limbo of uncertainty ostensibly awaiting final court resolution.  In the meantime,
the uncertainty has had chilling effects, not only on local telecommunications markets directly, but
on the clear interpretation of Commission authority under other Sections of the law.  Section 253,
for example, which outlaws barriers to market entry, has largely remained dormant.  

     The implementation of Section 252 by the States, has proceeded apace even without clear
resolution of federal rights and obligations under Section 251.  Indeed, it is the States that have
handled the interconnection agreements and the disputes that have derived from them.

Section 271 and Overregulation Through the Competitive Checklist

     Section 271 contains two central provisions for allowing Regional Bell Operating
Companies ("RBOCs") to offer interLATA service.  One requires the presence of a facilities-
based competitor for both business and residential customers.  The second requires compliance
with the "Competitive Checklist," which is a listing of some, but not all, Section 251 obligations
for an incumbent local exchange carrier.  There are few if any requirements in the Competitive
Checklist that are not in Section 251.  The Commission cannot under Section 271 use the
Competitive Checklist to impose on an RBOC conditions that are not required of all incumbent
LECs under Section 251.

     The Commission in this Order, however, appears to be imposing on BellSouth, ostensibly
under the guise of the Competitive Checklist, specifications that are neither statutory under
Section 251, nor requirements that have been formally adopted by the Commission in a regulatory
proceeding under Section 251.  

     In this Order, the majority focuses much of its attention on deficiencies related to
BellSouth's operations support systems ("OSS").  In evaluating OSS, the majority looks to
specific performance measures to determine if a BOC is meeting the requirements for OSS. 
Indeed, much of its analysis of compliance with the competitive checklist focuses on performance
data relating to OSS functions; however, the Commission has not yet imposed such performance
criteria under Section 251.

     I hope that, in the not too distant future, this Commission will, based on the Commission's
earlier Section 251 Order and subsequent Court decisions, revisit Section 251 and clarify the
regulatory rights and obligations of carriers under that section, not just the RBOCs that apply
under Section 271.  Such a proceeding would both add a much needed degree of clarity and
certainty to the interpretation of Section 251, and a measure of transparency and certainty to the
proper application of Section 271.  Added benefits of clarifying Section 251 would be greater
certainty in the application of Section 252 by the States and Section 253 by the Commission.

     I believe that the approach the Commission has taken with respect to OSS is far too
regulatory.  The Commission initiated its OSS performance measures proceeding under Sections
251(c)(3) and (c)(4) of the Act. In light of the Eighth Circuit's decision in Iowa Utilities v.
FCC, it does not appear that the Commission has general authority to adopt any rules or
regulations regarding performance measures or standards for OSS under Section 251. 
Moreover, the Eighth Circuit held that section 251(d)(1) "operates primarily as a time constraint,
directing the Commission to complete expeditiously its rulemaking regarding [ ] the areas in
section 251."  It has been more than more than two years since the Telecommunications Act of
1996 passed.  Any further rulemaking under Section 251 should be to clarify existing rights and
obligations, not to create novel new ones.   

     Nor do I believe the Commission should be able to impose such performance measures
under Section 271.  I am not convinced that such performance measures are lawful under Section
271 because they would implicitly expand the checklist beyond the 14 specific criteria.  Moreover,
OSS requirements imposed only on RBOCs may be a discriminatory burden on one type of
ILECs.  Even if these performance criteria could lawfully be imposed under Section 271, I am not
convinced that the benefits of such criteria would exceed their harm.  Individual companies can
and have negotiated performance requirements for interconnection agreements under Section 252. 
These performance requirements may vary not only by State, but by agreement within each State. 
By imposing a single set of federal performance criteria, we would substantially remove by
government coercion the ability of private parties to negotiate the specific performance standards
or measures that they may seek.

     States, not the FCC nor the DOJ, are in the best position to determine the detailed, day-
to-day, compliance with Section 251, and thus with the Competitive Checklist.  It is the States,
not the FCC nor the DOJ, that review all agreements under Section 252 implementing and
resolving disputes under Section 251.  And the statutory language of Section 271 states that the
FCC must consult with States only on compliance with the Competitive Check List.


Uncertainty

     The current approach in which the Commission adopts standards or even reporting
measurements under each Section 271 application that are not required of incumbent local
exchange carriers under Section 251 adds enormous uncertainty to the Section 271 process. 
Neither applicants, States, the Department of Justice, nor third parties can have any certainty of
how the Competitive Check List will be interpreted in such a Section 271 process.  Flexible rules
under Section 271 invite suggestions for even greater flexibility in interpretations, and even
arbitrariness to the extent that different Section 271 applications could be held to different
standards, much less to the same standard applied to all incumbent carriers under Section 251.


Facilities-Based Competition

     The core of a Section 271 review should be the presence of a facilities-based competitor
for both business and residential customers.  Section 271 requires that, under Track A, at least
one competitor must serve business subscribers "predominantly over their own telephone
exchange service facilities," and at least one competitor must serve residential subscribers
"predominantly over their own telephone exchange service facilities."  In contrast, the majority
concludes that: 

          [R]eading the statutory language to require that there must be facilities-based
     service to both classes of subscribers to meet Track A could produce anomalous
     results, . . .  In particular, if all other requirements of section 271 have been
     satisfied, it does not appear to be consistent with congressional intent to exclude a
     BOC from the in-region, interLATA market solely because the competitors'
     service to residential customers is wholly through resale.  

The majority's reading, however, ignores Congress' strong desire for facilities-based competition
in both the business and residential markets, instead overemphasizing the FCC's ability to
"regulate competition" with the competitive checklist. 

     Compliance with the checklist should indeed be a mere formality that any incumbent LEC
could meet.  Indeed, an incumbent LEC that is not in compliance with the Competitive Check List
is by definition not in compliance with Section 251, part of the core of the Telecommunications
Act of 1996.  

     Surely, an incumbent LEC that is not in compliance with Section 251 must also be out of
compliance with the implementation of Section 251 by the States under Section 252.  The State of
Louisiana does not reach that conclusion for BellSouth, nor, according to the PSC, have any
parties lodged formal complaints at the PSC against BellSouth for non-compliance with any
aspect of Section 252.  Perhaps, alternatively, the Louisiana PSC has misapplied Section 252 to
the benefit of BellSouth and the detriment of other parties.  But no party has lodged such a
complaint with the FCC under Section 253.  As a formal matter, we have no record under
Sections 251 through 253 -- other than objections raised only within the narrow confines of this
specific Section 271 application -- of BellSouth's non-compliance with the Competitive Checklist.

     The hallmark of the Telecommunications Act of 1996 is competition, not regulation, and
the hallmark of Section 271 should also be competition, not regulation.  The statutory language
clearly provides for such a finding.  The central issue should not be more regulations as a means
of measuring compliance with regulations but rather the presence of competition as a means of
measuring compliance with the law.  Where competition has failed to take hold, compliance with
regulations is suspect.  Conversely, where competition exists, existing regulatory obligations
must be sufficient.

     It is a paradox of the majority's interpretation of facilities-based competition, taken to its
logical conclusion, that sufficient competition may already exist in Louisiana but that BellSouth
nonetheless is not in compliance with the competitive check list.  I would find such a conclusion
troubling; I am disappointed that the majority does not actually try to apply their interpretation of
the requirement for facilities-based competition and reach the issue of whether the competition in
Louisiana is sufficient to meet that test.  


Public Interest Standards

     Finally, I note that the majority raises the possibility that the "public interest" would be
served if a BOC has agreed to performance monitoring, including performance standards,
reporting requirements, and self-executing enforcement mechanisms.  I believe that even the
implication that such measures and enforcement mechanisms would be favored may add criteria to
the checklist beyond the 14 specific criteria in violation of the statute.  

     The bulk of the application, and the bulk of outside comments, focus on the Section 271
checklist.  Views on compliance or noncompliance with the checklist are based almost entirely on
measures of regulation rather than measures of competition.  The public interest is always best
served by focusing on competition, not further regulation.

Conclusion

     The long-suffering People of Louisiana have now witnessed two BellSouth applications.
They have seen proceedings within their State, and they have watched endless boxes of paper
move back and forth to Washington as if on a merry-go-round.  There is a remedy.  Some will
prescribe more paper, more proceedings, and more regulations, all monitored in great detail from
Washington.  

     There is a simpler remedy:  no more paper, just some simple competition in Louisiana.   
More regulations cannot create competition. It is coming despite and not because of all of the
paperwork.  I look forward to that day.