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 Federal  Communications  Commission  FCC  99-  238 
 1 
 Before  the 
 Federal  Communications  Commission  Washington,  D.  C.  20554 

 In  the  Matter  of  ) 
 Implementation  of  the  )  CC  Docket  No.  96-  98 
 Local  Competition  Provisions  ) 
 of  the  Telecommunications  Act  of  1996  ) 

 THIRD  REPORT  AND  ORDER  AND 
 FOURTH  FURTHER  NOTICE  OF  PROPOSED  RULEMAKING 

 Adopted:  September  15,  1999  Released:  November  5,  1999 
 Comment  Date:  January  12,  2000 
 Reply  Date:  February  11,  2000 
 By  the  Commission:  Commissioner  Ness  issuing  a  statement;  Commissioner 
 Furchtgott-  Roth  concurring  in  part,  dissenting  in  part  and  issuing  a  statement; 
 Commissioner  Powell  dissenting  in  part  and  issuing  a  statement. 

 TABLE  OF  CONTENTS 
 Paragraph 

 I.  INTRODUCTION...........................................................................................................................  1 
 II.  EXECUTIVE  SUMMARY............................................................................................................  16 
 III.  BACKGROUND...........................................................................................................................  17 
 IV.  FRAMEWORK  FOR  DECIDING  WHAT  NETWORK  ELEMENTS  MUST  BE 
 UNBUNDLED  PURSUANT  TO  SECTION  251  .....................................................................................  22 

 A.  OVERVIEW  ................................................................................................................................  22 
 B.  THE  NECESSARY  AND  IMPAIR  STANDARDS  OF  SECTION  251(  D)(  2)..........................................  30  1. 
 Application  of  the  necessary  and  impair  standards  to  proprietary  and  non-proprietary 
 elements  under  Section  251(  d)(  2)..................................................................................  30  a.  Background..........................................................................................................................................  30 

 b.  Discussion  ...........................................................................................................................................  32 
 2.  Definition  of  Proprietary  in  Nature....................................................................................  33 
 a.  Background..........................................................................................................................................  33 
 b.  Discussion  ...........................................................................................................................................  35 
 3.  The  Necessary  Standard  of  Section  251(  d)(  2)(  A)  ................................................................  42 
 a.  Background..........................................................................................................................................  42 
 b.  Discussion  ...........................................................................................................................................  45 
 4.  The  Impair  Standard  of  Section  251(  d)(  2)(  b)  ......................................................................  49 
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 a.  Background..........................................................................................................................................  49 
 b.  Discussion  ...........................................................................................................................................  52 
 C.  ADOPTION  OF  A  NATIONAL  LIST  OF  UNBUNDLED  NETWORK  ELEMENTS  .......................................  118  1. 
 Background.........................................................................................................................  118 
 2.  Discussion...........................................................................................................................  121 
 a.  Legal  Authority  ..................................................................................................................................  122 
 b.  Goals  of  the  Act  .................................................................................................................................  125 
 D.  MODIFICATION  OF  THE  NATIONAL  LIST  ......................................................................................  145  1. 
 Background.........................................................................................................................  145 
 2.  Discussion...........................................................................................................................  149 
 a.  Modification  of  the  National  List  by  the  Commission............................................................................  149 
 b.  Modification  of  the  National  List  by  the  States......................................................................................  154 

 V.  APPLICATION  OF  THE  STANDARD  TO  INDIVIDUAL  NETWORK  ELEMENTS....................  163 
 A.  LOOPS......................................................................................................................................  163  1. 
 Background.........................................................................................................................  163 
 2.  Discussion...........................................................................................................................  166 
 a.  Definition  ..........................................................................................................................................  167 
 b.  Proprietary  Concerns  Associated  with  the  Loop  ....................................................................................  181 
 c.  Unbundling  Analysis  for  the  Loop  in  General.......................................................................................  182 
 B.  THE  SUBLOOP...........................................................................................................................  203  1. 
 Background.........................................................................................................................  203 
 2.  Discussion...........................................................................................................................  206 
 a.  Definition  of  the  Subloop  ....................................................................................................................  207 
 b.  Proprietary  Concerns  Associated  with  Subloops  ...................................................................................  209 
 c.  Unbundling  Analysis  for  Subloops.......................................................................................................  210 
 d.  Technical  Feasibility...........................................................................................................................  221 
 C.  NETWORK  INTERFACE  DEVICES  (NIDS)......................................................................................  231  1. 
 Background.........................................................................................................................  231 
 2.  Discussion...........................................................................................................................  233 
 a.  Definition  of  the  NID..........................................................................................................................  234 
 b.  Proprietary  Concerns  Associated  with  the  NID.....................................................................................  237 
 c.  Unbundling  Analysis  .........................................................................................................................  238 
 D.  LOCAL  SWITCHING  ...................................................................................................................  242  1. 
 Local  Circuit  Switching........................................................................................................  242  a.  Background........................................................................................................................................  242 

 b.  Discussion  .........................................................................................................................................  245 
 2.  Packet  Switching  .................................................................................................................  301 
 a.  Background........................................................................................................................................  301 
 b.  Discussion  .........................................................................................................................................  303 
 E.  INTEROFFICE  TRANSMISSION  FACILITIES  ....................................................................................  319  1. 
 Background.........................................................................................................................  319 
 2.  Discussion...........................................................................................................................  322 
 a.  Dedicated  Transport............................................................................................................................  323 
 b.  Shared  Transport  ................................................................................................................................  370 
 F.  SIGNALING  NETWORKS  AND  CALL-  RELATED  DATABASES  ...........................................................  381  1. 
 Signaling  Networks..............................................................................................................  381  a.  Background........................................................................................................................................  381 

 b.  Discussion  .........................................................................................................................................  384 
 2.  Call-  Related  Databases........................................................................................................  401 
 a.  Background........................................................................................................................................  401 
 b.  Discussion  .........................................................................................................................................  403 
 G.  OPERATIONS  SUPPORT  SYSTEMS................................................................................................  422  1. 
 Background.........................................................................................................................  422 
 2.  Discussion...........................................................................................................................  425 
 a.  Definition  of  OSS...............................................................................................................................  426 
 b.  Proprietary  Concerns  Associated  with  OSS  ..........................................................................................  433 
 c.  Unbundling  Analysis  for  OSS  .............................................................................................................  434 
 H.  OPERATOR  SERVICES  AND  DIRECTORY  ASSISTANCE  ...................................................................  439 
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 1.  Background.........................................................................................................................  439 
 2.  Discussion...........................................................................................................................  442 
 a.  Definition  of  Operator  Services  and  Directory  Assistance......................................................................  444 
 b.  Proprietary  Concerns  Associated  with  OS/  DA  ......................................................................................  446 
 c.  Unbundling  Analysis  ..........................................................................................................................  447 

 VI.  MISCELLANEOUS  ISSUES........................................................................................................  466 
 A.  SECTION  271-  RELATED  ISSUES  ..................................................................................................  466  1. 
 Background.........................................................................................................................  466 
 2.  Discussion...........................................................................................................................  469 
 B.  COMBINATIONS  OF  UNBUNDLED  LOOPS  AND  TRANSPORT  NETWORK  ELEMENTS...........................  475  1. 
 Enhanced  Extended  Link......................................................................................................  476  a.  Background........................................................................................................................................  476 

 b.  Discussion  .........................................................................................................................................  479 
 2.  Use  of  unbundled  network  elements  to  provide  exchange  access  services................................  484 
 a.  Background........................................................................................................................................  484 
 b.  Discussion  .........................................................................................................................................  485 
 C.  NONDISCRIMINATION  OBLIGATIONS  OF  INCUMBENT  LECS  ..........................................................  491 

 VII.  FOURTH  FURTHER  NOTICE  OF  PROPOSED  RULEMAKING.................................................  493 
 A.  BACKGROUND  ..........................................................................................................................  493 
 B.  DISCUSSION..............................................................................................................................  495 

 VIII.  PROCEDURAL  ISSUES..............................................................................................................  498 
 A.  FINAL  REGULATORY  FLEXIBILITY  ANALYSIS..............................................................................  498  1. 
 Need  for,  and  Objectives  of,  the  Third  Report  and  Order........................................................  499 
 2.  Summary  of  Significant  Issues  Raised  by  the  Public  Comments  in  Response  to  the  IRFA..........  500 
 3.  Description  and  Estimate  of  the  Number  of  Small  Entities  to  which  Rules  will  Apply  ...............  501 
 4.  Description  of  Projected  Reporting,  Recordkeeping,  and  Other  Compliance 
 Requirements................................................................................................................................  506 
 5.  Steps  Taken  to  Minimize  the  Economic  Impact  of  this  Order  on  Small  Entities,  and 
 Alternatives  Considered  ................................................................................................................  507 
 6.  Report  to  Congress  ..............................................................................................................  510 
 B.  INITIAL  REGULATORY  FLEXIBILITY  ANALYSIS  (IRFA)  ................................................................  511  1. 
 Need  for,  and  Objectives  of,  the  Proposed  Rules....................................................................  512 
 2.  Legal  Basis..........................................................................................................................  514 
 3.  Description  and  Estimate  of  the  Number  of  Small  Entities  to  Which  the  Proposed  Rules 
 Will  Apply  ....................................................................................................................................  515 
 4.  Description  of  Projected  Reporting,  Recordkeeping,  and  Other  Compliance 
 Requirements................................................................................................................................  518 
 5.  Steps  Taken  to  Minimize  Significant  Economic  Impact  on  Small  Entities,  and  Significant 
 Alternatives  Considered  ................................................................................................................  519 
 6.  Federal  Rules  that  May  Duplicate,  Overlap,  or  Conflict  with  the  Proposed  Rules....................  520 

 IX.  ORDERING  CLAUSES  ...............................................................................................................  521 

 APPENDIX  A  --  LIST  OF  COMMENTERS 
 APPENDIX  B  --  TOP  50  METROPOLITAN  STATISTICAL  AREAS 
 APPENDIX  C  --  FINAL  RULES 
 APPENDIX  D  --  CURRENT  UNBUNDLED  NETWORK  ELEMENTS 
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 I.  INTRODUCTION 
 1.  In  this  proceeding,  we  respond  to  the  Supreme  Courts  January  1999 
 decision  that  directs  us  to  reevaluate  the  unbundling  obligations  of  section  251  of  the 
 Telecommunications  Act  of  1996  (1996  Act).  1  The  Supreme  Courts  decision  removed 
 many  of  the  uncertainties  surrounding  the  requirements  of  section  251  by  upholding  the 
 majority  of  the  Commissions  rules  implementing  that  section  of  the  Act,  including  the 
 Commissions  jurisdiction  to  implement  sections  251  and  252  of  the  Act,  the 
 Commissions  definitions  of  network  elements,  and  the  Commissions  rule  requiring 
 incumbent  local  exchange  carriers  (LECs)  to  offer  combinations  of  unbundled  network 
 elements  that  are  already  combined.  The  Court  has  directed  us,  however,  to  revise  the 
 standards  under  which  the  unbundling  obligations  of  section  251(  c)(  3)  are  determined. 
 Specifically,  the  Court  has  required  us  to  give  some  substance  to  the  necessary  and 
 impair  standards  in  section  251(  d)(  2),  and  to  develop  a  limiting  standard  that  is 
 rationally  related  to  the  goals  of  the  Act.  In  addition,  as  we  develop  the  necessary 
 and  impair  standards,  the  Court  has  required  us  to  consider  the  availability  of 
 alternative  network  elements  outside  the  incumbents  network.  2 

 2.  In  passing  the  1996  Act,  Congress  overhauled  many  aspects  of  federal 
 regulation  of  telecommunications  services  by  establishing  a  pro-  competitive  and 
 deregulatory  framework  designed  to  benefit  all  Americans  by  opening  all 
 telecommunications  markets  to  competition.  3  Two  of  the  fundamental  goals  of  the  1996 
 Act  are  to  open  the  local  exchange  and  exchange  access  markets  to  competition  and  to 
 promote  innovation  and  investment  by  all  participants  in  the  telecommunications 
 marketplace.  4  Congress  sought  to  foster  this  competition  by  fundamentally  changing  the 
 conditions  and  incentives  for  market  entry  and  by  attempting  to  open  any  remaining  local 
 service  bottlenecks.  5  As  a  result,  the  provisions  of  the  1996  Act  set  the  stage  for  a  new 
 competitive  paradigm  in  which  carriers  in  previously  segmented  markets  are  able  to 
 compete  in  a  dynamic  and  integrated  telecommunications  market  that  promises  lower 
 prices  and  more  innovative  services  to  consumers. 

 3.  Central  to  the  new  statutory  scheme  is  section  251  of  the  Act,  which  seeks 
 generally  to  reduce  inherent  economic  and  operational  advantages  possessed  by 
 incumbent  local  exchange  carriers.  Toward  this  end,  section  251  imposes  specific 

 1  Telecommunications  Act  of  1996,  Pub.  L.  No.  104-  104,  110  Stat.  56,  codified  at  47  U.  S.  C. 
   151  et  seq.  (1996  Act). 
 2  AT&  T  v.  Iowa  Utils.  Bd.,  119  S.  Ct.  721,  734-  36  (1999)  (Iowa  Utils.  Bd.). 

 3  Joint  Statement  of  Managers,  S.  Conf.  Rep.  No.  104-  230,  104  th  Cong.,  2d  Sess.,  at  1  (1996) 
 (Joint  Explanatory  Statement). 
 4  Joint  Explanatory  Statement  at  1. 

 5  See  BellSouth  Corp.  v.  FCC,  144  F.  3d  58,  61  (D.  C.  Cir.  1998)  (  The  1996  Act  rescinded 
 the  [Modified  Final  Judgment]  .  .  .  and  changed  the  entire  telecommunications  landscape.). 
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 market-  opening  mechanisms,  such  as  mandatory  interconnection,  unbundling,  and  resale 
 requirements  on  incumbent  LECs,  in  order  to  break  the  incumbents  control  over  local 
 facilities.  6  Congress  directed  the  Commission  to  implement  the  provisions  of  section  251, 
 and  to  specifically  determine  which  network  elements  should  be  unbundled  pursuant  to 
 section  251(  c)(  3).  7 

 4.  Pursuant  to  our  statutory  mandate  and  the  directives  of  the  Supreme  Court, 
 we  reevaluate  the  unbundling  obligations  of  incumbent  LECs,  pursuant  to  sections 
 251(  c)(  3)  and  251(  d)(  2).  The  new  standards  and  framework  we  adopt  in  this  Order  for 
 determining  which  network  elements  incumbent  LECs  must  make  available  on  an 
 unbundled  basis  will  remove  the  uncertainties  surrounding  the  incumbents  unbundling 
 obligations  since  passage  of  the  Act.  More  importantly,  however,  they  will  define  the 
 competitive  landscape  of  telecommunications  markets  for  the  foreseeable  future. 

 5.  The  standards  and  unbundling  obligations  that  we  adopt  in  this  Order  are 
 designed  to  create  incentives  for  both  incumbent  and  competitive  LECs  to  innovate  and 
 invest  in  technologies  and  services  that  will  benefit  consumers  through  increased  choices 
 of  telecommunications  services  and  lower  prices.  We  recognize  that  there  will  be  a 
 continuing  need  for  all  three  of  the  arrangements  Congress  set  forth  in  section  251  to 
 remain  available  to  competitors  so  that  they  can  serve  different  types  of  customers  in 
 different  geographic  areas.  8  We  continue  to  believe  that  the  ability  of  requesting  carriers 
 to  use  unbundled  network  elements,  including  various  combinations  of  unbundled 
 network  elements,  is  integral  to  achieving  Congress  objective  of  promoting  rapid 
 competition  to  all  consumers  in  the  local  telecommunications  market.  9  Moreover,  in 
 some  areas,  we  believe  that  the  greatest  benefits  may  be  achieved  through  facilities-  based 
 competition,  and  that  the  ability  of  requesting  carriers  to  use  unbundled  network  elements, 
 including  various  combinations  of  unbundled  network  elements,  is  a  necessary 
 precondition  to  the  subsequent  deployment  of  self-  provisioned  network  facilities. 

 6  47  U.  S.  C.    251(  c)(  3)  and  (d)(  2).  The  Act  also  encourages  new  entrants  to  construct  their 
 own  competitive  facilities.  In  particular,  it  requires  incumbent  LECs  to  interconnect  competitive  LECs 
 facilities  and  equipment  with  their  networks.  47  U.  S.  C.    251(  c)(  2). 

 7  Section  251(  d)(  2)  states  that  in  determining  what  network  elements  should  be  made 
 available  for  purposes  of  subsection  (c)(  3),  the  Commission  shall  consider,  at  a  minimum  whether  [the 
 elements  meet  the  necessary  and  impair  standards].  47  U.  S.  C.    251(  d)(  2)  (emphasis  added). 

 8  See  Implementation  of  the  Local  Competition  Provisions  of  the  Telecommunications  Act  of 
 1996,  CC  Docket  No.  96-  98,  First  Report  and  Order,  11  FCC  Rcd  15499,  15509,  para.  12  (1996)  (Local 
 Competition  First  Report  and  Order),  affd  in  part  and  vacated  in  part  sub  nom.,  Competitive 
 Telecommunications  Assn  v.  FCC,  117  F.  3d  1068  (8  th  Cir.  1997)  (CompTel  v.  FCC)  and  Iowa  Utils.  Bd.  v. 
 FCC,  120  F.  3d  753  (8  th  Cir.  1997)  (Iowa  Utils.  Bd.  v.  FCC),  affd  in  part  and  remanded,  AT&  T  v.  Iowa  Utils. 
 Bd.,  119  S.  Ct.  721  (1999);  Order  on  Reconsideration,  11  FCC  Rcd  13042  (1996),  Second  Order  on 
 Reconsideration,  11  FCC  Rcd  19738  (1996),  Third  Order  on  Reconsideration  and  Further  Notice  of  Proposed 
 Rulemaking,  12  FCC  Rcd  12460  (1997),  further  recons.  pending. 

 9  See  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15509,  para.  12. 
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 6.  Although  Congress  did  not  express  explicitly  a  preference  for  one  particular 
 competitive  arrangement,  it  recognized  implicitly  that  the  purchase  of  unbundled  network 
 elements  would,  at  least  in  some  situations,  serve  as  a  transitional  arrangement  until 
 fledgling  competitors  could  develop  a  customer  base  and  complete  the  construction  of 
 their  own  networks.  In  particular,  Congress  stated:  [  I]  t  is  unlikely  that  competitors  will 
 have  a  fully  redundant  network  in  place  when  they  initially  offer  local  service  because  the 
 investment  necessary  is  so  significant.  Some  facilities  and  capabilities  .  .  .  will  likely 
 need  to  be  obtained  from  the  incumbent  [LEC]  as  network  elements  pursuant  to  new 
 section  251.  10  Implicit  in  this  recognition,  and  in  section  271s  requirement  that  the  Bell 
 Operating  Companies  (BOCs)  provide  access  and  interconnection  to  their  network 
 facilities  in  accordance  with  the  requirements  in  the  competitive  checklist,  is  Congresss 
 expectation  that  new  competitors  would  use  unbundled  elements  from  the  incumbent 
 LEC  until  it  was  practical  and  economically  feasible  to  construct  their  own  networks.  11 

 7.  We  fully  expect  that  over  time  competitors  will  prefer  to  deploy  their  own 
 facilities  in  markets  where  it  is  economically  feasible  to  do  so,  because  it  is  only  through 
 owning  and  operating  their  own  facilities  that  competitors  have  control  over  the 
 competitive  and  operational  characteristics  of  their  service,  and  have  the  incentive  to 
 invest  and  innovate  in  new  technologies  that  will  distinguish  their  services  from  those  of 
 the  incumbent.  Unbundling  rules  that  encourage  competitors  to  deploy  their  own 
 facilities  in  the  long  run  will  provide  incentives  for  both  incumbents  and  competitors  to 
 invest  and  innovate,  and  will  allow  the  Commission  and  the  states  to  reduce  regulation 
 once  effective  facilities-  based  competition  develops.  12  Accordingly,  the  unbundling  rules 
 we  adopt  in  this  proceeding  seek  to  promote  the  development  of  facilities-  based 
 competition. 

 10  Joint  Explanatory  Statement  at  148. 
 11  See  47  U.  S.  C.    271(  c)(  2)(  B). 
 12  See  Promotion  of  Competitive  Networks  in  Local  Telecommunications  Markets,  Notice  of 
 Proposed  Rulemaking  and  Notice  of  Inquiry  in  WT  Docket  No.  99-  217  and  Third  Further  Notice  of  Proposed 
 Rulemaking  in  CC  Docket  No.  96-  98,  FCC  99-  141,  paras.  4,  23  (rel.  July  7,  1999)  (Competitive  Networks 
 Notice)  (  We  believe  that,  in  the  long  term,  the  most  substantial  benefits  to  consumers  will  be  achieved 
 through  facilities-  based  competition,  because  only  facilities-  based  competitors  can  break  down  the  incumbent 
 LECs'  bottleneck  control  over  local  networks  and  provide  services  without  having  to  rely  on  their  rivals  for 
 critical  components  of  their  offerings.  Moreover,  only  facilities-  based  competition  can  fully  unleash 
 competing  providers'  abilities  and  incentives  to  innovate,  both  technologically  and  in  service  development, 
 packaging,  and  pricing.  .  .  .  In  order  for  competitive  networks  to  develop,  the  incumbent  LECs'  bottleneck 
 control  over  interconnection  must  dissipate.  As  the  market  matures  and  the  carriers  providing  services  in 
 competition  with  the  incumbent  LECs'  local  exchange  offerings  grow,  we  believe  these  carriers  may  establish 
 direct  routing  arrangements  with  one  another,  forming  a  network  of  networks  around  the  current  system.  In 
 time,  it  is  likely  that  the  incumbent  LECs  will  cease  to  be  viewed  as  the  presumptive  primary  providers  of 
 interconnection,  and  indeed  they  will  begin  to  seek  interconnection  and  other  arrangements  with  their 
 challengers.  These  circumstances  would  strengthen  the  case  for  substantial  deregulation  of  the  incumbent 
 LECs.). 
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 8.  We  believe  that  the  necessary  and  impair  standards  we  adopt  below 
 address  the  Supreme  Courts  mandate  and  implement  the  statutory  language  and  goals  of 
 the  Act.  The  standards  we  adopt  take  into  consideration  alternatives  outside  the 
 incumbent  LECs  network,  and  whether  those  alternatives  are  actually  available  to  the 
 requesting  carrier  as  a  practical,  economic,  and  operational  matter.  We  consider  not  only 
 the  direct  costs,  but  also  other  costs  and  impediments  associated  with  using  alternative 
 elements  that  may  constitute  barriers  to  entry.  We  believe  the  Commission  must  assess 
 these  factors  to  determine  the  availability  of  alternatives,  and  whether  access  to  the 
 incumbents  network  element  thereby  satisfies  the  necessary  and  impair  standards  of 
 section  251(  d)(  2). 

 9.  The  unbundling  standards  we  adopt  in  this  Order  also  seek  to  encourage  the 
 rapid  introduction  of  competition  in  all  markets,  including  residential  and  small  business 
 markets.  They  seeks  to  create  incentives  for  both  incumbents  and  requesting  carriers  to 
 invest  and  innovate  in  new  technologies  by  establishing  a  mechanism  by  which  regulatory 
 obligations  to  provide  access  to  network  elements  will  be  reduced  as  alternatives  to  the 
 incumbent  LECs  network  elements  become  available  in  the  future.  In  addition,  the 
 standards  provide  reasonable  certainty  regarding  the  availability  of  unbundled  elements, 
 thereby  allowing  requesting  carriers  to  attract  investment  capital  and  move  forward  with 
 implementing  national  and  regional  business  plans  that  will  allow  them  to  serve  the 
 greatest  number  of  consumers 

 10.  To  date,  we  have  seen  the  development  of  facilities-  based  competition 
 among  providers  of  particular  services  in  certain  sectors  of  the  market.  For  example,  as 
 discussed  in  more  detail  below,  competitors  have  deployed  their  own  fiber  rings  and 
 approximately  700  circuit  switches  to  provide  local  exchange  and  exchange  access 
 services  primarily  to  medium  and  large  business  customers  in  high-  density  metropolitan 
 areas.  13  In  addition,  the  record  in  this  proceeding  suggests  that  a  growing  number  of 
 carriers  are  deploying  packet  switches  to  provide  data  services  in  a  number  of  markets, 
 particularly  for  end  users  with  substantial  telecommunications  needs.  14 

 11.  Other  local  markets,  however,  particularly  the  residential  and  small  business 
 markets,  and  geographic  markets  outside  of  major  metropolitan  areas,  have  seen  minimal 
 competition.  This  may  be  due  to  the  uncertainty  surrounding  the  ability  of  competitive 
 LECs  to  use  reasonably  priced  unbundled  network  elements  to  serve  these  areas  as  a 
 result  of  litigation  concerning  the  Commissions  unbundling  rules.  15  Because  unbundled 
 network  elements  have  not  been  made  fully  available  to  requesting  carriers  as  the 
 Commission  expected  in  1996,  we  do  not  yet  know  the  extent  to  which  competition  will 
 develop  once  all  of  the  unbundling  rules  are  actually  implemented  by  incumbent  LECs. 

 13  See  infra  Section  V(  D)(  1). 
 14  See  infra  Section  V(  D)(  2). 
 15  See  MCI  WorldCom  Comments,  Tab  1,  Decl.  of  Judith  R.  Levine/  Ronald  J.  McMurtrie,  at 
 para.  7. 
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 12.  Only  recently  have  incumbent  LECs  provided  access  to  combinations  of 
 unbundled  loops,  switches,  and  transport  elements,  often  referred  to  as  the  platform. 
 Since  these  combinations  of  unbundled  network  elements  have  become  available  in 
 certain  areas,  competitive  LECs  have  started  offering  service  in  the  residential  mass 
 market  in  those  areas.  For  example,  in  January  of  this  year,  Bell  Atlantic,  as  part  of  an 
 agreement  with  the  New  York  Public  Service  Commission,  began  offering  the  unbundled 
 network  element  platform  out  of  particular  end  offices  in  New  York  City.  As  a  result, 
 MCI  WorldCom  had  acquired  upwards  of  60,000  new  local  residential  customers  in  New 
 York  as  of  June  1999.  16  AT&  T  also  plans  to  serve  local  residential  customers  over  the 
 platform  in  Texas.  17 

 13.  For  effective  competition  to  develop  as  envisioned  by  Congress, 
 competitors  must  have  access  to  incumbent  LEC  facilities  in  a  manner  that  allows  them  to 
 provide  the  services  that  they  seek  to  offer,  as  contemplated  in  section  251(  d)(  2)  of  the 
 Act.  Despite  the  development  of  competition  in  some  markets,  incumbents  still  control 
 the  vast  majority  of  the  facilities  that  comprise  the  local  telecommunications  network, 
 giving  them  advantages  of  economies  of  scale  and  scope  not  enjoyed  by  competitive 
 LECs.  18  Because  competitors  do  not  yet  enjoy  the  same  economies  of  scale,  scope  and 
 ubiquity  as  the  incumbent,  they  may  be  impaired  if  they  do  not  have  access,  at  least 
 initially,  to  certain  network  elements  supplied  by  the  incumbent  LEC.  19  For  example, 
 without  access  to  unbundled  network  elements,  a  competitive  LEC  may  choose  not  to 
 enter  a  particular  market  because  the  cost  and  delays  associated  with  deploying  its  own 
 facilities  would  be  too  high  given  the  revenues  obtainable  from  that  market  and  the 
 relative  attractiveness  of  other  potential  new  markets.  Similarly,  a  competitive  LEC  may 
 decline  to  enter  a  market  because  certain  of  their  facilities  are  subject  to  economies  of 
 scale  and  scope  such  that  the  competitor  would  need  a  larger  market  share  than  it  is  likely 
 to  have  initially.  In  such  cases,  competitors  may  choose  to  enter  a  certain  market  if  they 
 can  obtain  access  to  particular  unbundled  network  elements  on  sufficiently  favorable 

 16  Id.  at  para.  17. 
 17  Letter  from  Frank  S.  Simone,  Government  Affairs  Director,  AT&  T,  to  Magalie  Roman 
 Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98,  Attachment  at  4-  5  (filed  June 
 25,  1999). 

 18  Local  Competition:  August  1999,  Industry  Analysis  Division,  Common  Carrier  Bureau, 
 Federal  Communications  Commission,  at  23  (August  1999)  (FCC  Local  Competition  Report)  (explaining  that 
 investment  analysts  estimate  of  total  switched  lines  owned  by  competitive  LECs  is  in  the  range  of  two  to 
 three  percent  of  nationwide  switched  access  lines).  See  also  Texas  PUC  Comments  at  14  (stating  that  in 
 Texas,  for  example,  incumbent  LECs  own  98  percent  of  all  access  lines  and  have  deployed  1538  switches 
 throughout  the  state). 

 19  See,  e.  g.,  MCI  WorldCom  Comments,  Tab  3,  Decl.  of  Mark  T.  Bryant,  at  paras.  2-  20 
 (describing  the  economies  of  scale  to  which  all  loop,  transport  and  switching  unbundled  network  elements  are 
 subject);  Covad  Comments  at  iii-  iv;  Prism  Comments  at  5-  6;  Qwest  Comments  at  8-  9;  AT&  T  Reply 
 Comments  at  45-  46. 
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 terms  that  such  scale  economies  are  overcome,  and  other  potential  markets  no  longer 
 appear  more  attractive. 

 14.  The  standards  and  rules  we  adopt  in  this  Order  seek  to  build  on  industry 
 experience  and  technological  changes  that  have  occurred  in  the  telecommunications 
 marketplace  since  the  1996  Act  was  enacted  three  years  ago.  Today,  both  incumbent 
 LECs  and  requesting  carriers  are  at  the  early  stages  of  deploying  innovative  technologies 
 to  meet  the  ever-  increasing  demand  for  high-  speed,  high-  capacity  advanced  services.  To 
 encourage  competition  among  carriers  to  develop  and  deploy  new  advanced  services,  the 
 marketplace  for  these  services  must  be  conducive  to  investment,  innovation,  and  meeting 
 the  needs  of  consumers.  Accordingly,  our  unbundling  rules  are  designed  to  facilitate  the 
 rapid  and  efficient  deployment  of  all  telecommunications  services,  including  advanced 
 services.  Specifically,  unbundling  rules  that  are  based  on  a  preference  for  development  of 
 facilities-  based  competition  in  the  long  run  will  provide  incentives  for  both  incumbents 
 and  competitors  to  invest  and  innovate,  and  should  allow  the  Commission  to  reduce 
 regulation  once  true  facilities-  based  competition  develops. 

 15.  The  unbundling  standards  we  adopt  in  this  order  also  are  designed  to  be 
 administratively  practical  and  respond  to  changes  in  the  marketplace  as  alternatives  to  the 
 incumbent  LECs  network  elements  become  available.  We  are  committed  to  reviewing 
 the  unbundling  obligations  in  three  years,  and  as  the  marketplace  changes  with  the 
 development  of  new  technologies  and  increased  facilities-  based  competition,  we  will 
 modify  the  list  of  unbundled  elements,  as  warranted. 

 II.  EXECUTIVE  SUMMARY 

 Section  251(  d)(  2)  s  Necessary  and  Impair  Standards.  Section  251(  d)(  2)(  A)  s 
 necessary  standard  is  a  stricter  standard  that  applies  to  proprietary  network  elements. 
 Section  251(  d)(  2)(  B)  s  impair  standard  applies  to  non-  proprietary  network  elements. 
 Applying  a  stricter  standard  to  proprietary  network  elements  is  consistent  with  Congress 
 intention  to  spur  innovation  and  investment  by  both  incumbent  and  competitive  LECs.  In 
 applying  these  standards,  we  look  first  to  what  is  occurring  in  the  marketplace  today. 

   Necessary.  A  proprietary  network  element  is  necessary  within  the  meaning  of  section  251(  d)(  2)(  A)  if,  taking  into  consideration  the  availability  of 
 alternative  elements  outside  the  incumbents  network,  including  self-provisioning 
 by  a  requesting  carrier  or  acquiring  an  alternative  from  a  third 
 party  supplier,  lack  of  access  to  that  element  would,  as  a  practical,  economic, 
 and  operational  matter,  preclude  a  requesting  carrier  from  providing  the 
 services  it  seeks  to  offer.  There  are  limited  circumstances  under  which  we  may 
 unbundle  proprietary  information  or  functionalities  even  if  those  elements  are 
 not  strictly  necessary,  as  long  as  the  impair  standard  is  met.  These 
 circumstances  are:  (1)  where  an  incumbent  LEC,  for  the  primary  purpose  of 
 causing  a  particular  network  to  be  evaluated  under  the  stricter  necessary 
 standard  in  order  to  avoid  its  unbundling  obligation,  implements  only  a  minor 
 modification  to  the  network  element  to  make  the  element  proprietary;  (2)  where 
 an  incumbent  LEC  cannot  demonstrate  that  the  information  or  functionality  that 
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 it  claims  is  proprietary  differentiates  its  services  from  its  competitors  services, 
 or  is  otherwise  competitively  significant;  or  (3)  where  lack  of  access  to  the 
 proprietary  element  would  jeopardize  the  goal  of  the  1996  Act  to  bring  rapid 
 competition  to  the  greatest  number  of  consumers. 

   Impair.  The  incumbent  LECs  failure  to  provide  access  to  a  non-  proprietary  network  element  impairs  a  requesting  carrier  within  the  meaning  of  section 
 251(  d)(  2)(  B)  if,  taking  into  consideration  the  availability  of  alternative  elements 
 outside  the  incumbents  network,  including  self-  provisioning  by  a  requesting 
 carrier  or  acquiring  an  alternative  from  a  third-  party  supplier,  lack  of  access  to 
 that  element  materially  diminishes  a  requesting  carriers  ability  to  provide  the 
 services  it  seeks  to  offer.  In  order  to  evaluate  whether  there  are  alternatives 
 actually  available  to  the  requesting  carrier  as  a  practical,  economic,  and 
 operational  matter,  we  look  at  the  totality  of  the  circumstances  associated  with 
 using  an  alternative.  In  particular,  our  impair  analysis  considers  the  cost, 
 timeliness,  quality,  ubiquity,  and  operational  issues  associated  with  use  of  the 
 alternative. 

 Goals  of  the  Act.  We  also  interpret  the  obligations  imposed  in  section  251(  d)(  2) 
 within  the  larger  statutory  framework  of  the  1996  Act.  Congress  apparently 
 contemplated  that  we  would  consider  additional  factors  by  directing  the 
 Commission,  in  section  251(  d)(  2),  to  consider  at  a  minimum  the  necessary  and 
 impair  standards.  The  Supreme  Court  decision  requires  us  to  apply  a  limiting 
 standard  rationally  related  to  the  goals  of  the  Act.  Accordingly,  in  addition  to  the 
 factors  set  forth  above,  we  may  consider  the  following  factors: 

   Rapid  Introduction  of  Competition  in  All  Markets.  We  may  consider  whether  the  availability  of  an  unbundled  network  element  is  likely  to  encourage 
 requesting  carriers  to  enter  the  local  market  in  order  to  serve  the  greatest 
 number  of  consumers  as  rapidly  as  possible.  We  also  note  that  Congress 
 required  Bell  Operating  Companies  to  demonstrate  that  they  are  providing 
 loops,  switching,  transport,  signaling  and  databases,  and  operator 
 services/  directory  assistance  in  order  to  obtain  in-  region,  interLATA  approval. 
 While  the  section  271  checklist  does  not  determine  definitively  which  elements 
 all  incumbent  LECs  are  required  to  unbundle  pursuant  to  section  251,  it  sheds 
 some  light  on  what  Congress  believed  was  required  to  open  local  markets  to 
 competition.  Accordingly,  we  believe  that  we  may  consider  whether  requiring 
 all  incumbent  LECs  to  unbundle  these  same  elements  would  promote  the  rapid 
 introduction  of  competition  on  a  nationwide  basis. 

   Promotion  of  Facilities-  Based  Competition,  Investment,  and  Innovation.  We  may  consider  the  extent  to  which  the  unbundling  obligations  we  adopt  will 
 encourage  the  development  of  facilities-  based  competition  by  competitive 
 LECs,  and  innovation  and  investment  by  both  incumbent  LECs  and  competitive 
 LECs,  especially  for  the  provision  of  advanced  services. 
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   Reduced  Regulation.  We  may  consider  the  extent  to  which  we  can  encourage  investment  and  innovation  by  reducing  regulatory  obligations  to  provide  access 
 to  network  elements,  as  alternatives  to  the  incumbent  LECs  network  elements 
 become  available  in  the  future. 

   Certainty  in  the  Market.  We  may  consider  how  the  unbundling  obligations  we  adopt  can  provide  the  uniformity  and  predictability  that  new  entrants  and 
 fledgling  competitors  need  to  develop  national  and  regional  business  plans.  We 
 also  consider  whether  the  rules  we  adopt  provide  financial  markets  with 
 reasonable  certainty  so  that  carriers  can  attract  the  capital  they  need  to  execute 
 their  business  plans  to  serve  the  greatest  number  of  consumers. 

   Administrative  Practicality.  We  may  consider  whether  the  unbundling  obligations  we  adopt  are  administratively  practical  to  apply. 

 Modification  of  the  National  List. 
   The  Order  recognizes  that  rapid  changes  in  technology,  competition,  and  the  economic  conditions  of  the  telecommunications  market  will  require  a 
 reevaluation  of  the  national  unbundling  rules  periodically.  In  order  to 
 encourage  a  reasonable  period  of  certainty  in  the  market,  the  Commission 
 expects  to  reexamine  the  national  list  of  unbundled  network  elements  in  three 
 years. 

   Section  251(  d)(  3)  permits  state  commissions  to  require  incumbent  LECs  to  unbundle  additional  elements  as  long  as  the  obligations  are  consistent  with  the 
 requirements  of  section  251  and  the  national  policy  framework  instituted  in  this 
 Order. 

   Removal  of  elements  from  the  national  list  on  a  state-  by-  state  basis  would  not  be  consistent  with  section  251  and  the  goals  of  the  Act. 

 Network  Elements  that  Must  be  Unbundled.  Applying  the  above  factors,  the 
 Order  concludes  that  the  following  network  elements  must  be  unbundled: 

   Loops.  Incumbent  local  exchange  carriers  (LECs)  must  offer  unbundled  access  to  loops,  including  high-  capacity  lines,  xDSL-  capable  loops,  dark  fiber,  and 
 inside  wire  owned  by  the  incumbent  LEC.  The  unbundling  of  the  high 
 frequency  portion  of  the  loop  is  being  considered  in  another  proceeding. 

   Subloops.  Incumbent  LECs  must  offer  unbundled  access  to  subloops,  or  portions  of  the  loop,  at  any  accessible  point.  Such  points  include,  for  example, 
 a  pole  or  pedestal,  the  network  interface  device,  the  minimum  point  of  entry  to 
 the  customer  premises,  and  the  feeder  distribution  interface  located  in,  for 
 example,  a  utility  room,  a  remote  terminal,  or  a  controlled  environment  vault. 
 The  Order  establishes  a  rebuttable  presumption  that  incumbent  LECs  must  offer 
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 unbundled  access  to  subloops  at  any  accessible  terminal  in  their  outside  loop 
 plant. 

   To  the  extent  there  is  not  currently  a  single  point  of  interconnection  that  can  be  feasibly  accessed  by  a  requesting  carrier,  we  encourage  parties  to  cooperate  in 
 any  reconfiguration  of  the  network  necessary  to  create  one.  If  parties  are  unable 
 to  negotiate  a  reconfigured  single  point  of  interconnection  at  multi-  unit 
 premises,  we  require  the  incumbent  to  construct  a  single  point  of 
 interconnection  that  will  be  fully  accessible  and  suitable  for  use  by  multiple 
 carriers. 

   Network  Interface  Device  (NID).  Incumbent  LECs  must  offer  unbundled  access  to  NIDs.  The  NID  includes  any  potential  means  of  interconnection  with 
 customer  premises  inside  wiring  at  the  point  where  the  carriers  local  loop 
 facilities  end,  such  as  at  a  cross  connect  device  used  to  connect  the  loop  to 
 customer-  controlled  inside  wiring.  This  includes  all  features,  functions,  and 
 capabilities  of  the  facilities  used  to  connect  the  loop  to  premises  wiring, 
 regardless  of  the  specific  mechanical  design. 

   Circuit  Switching.  Incumbent  LECs  must  offer  unbundled  access  to  local  circuit  switching,  except  for  local  circuit  switching  used  to  serve  end  users  with 
 four  or  more  lines  in  access  density  zone  1  in  the  top  50  Metropolitan  Statistical 
 Areas  (MSAs),  provided  that  the  incumbent  LEC  provides  non-  discriminatory, 
 cost-  based  access  to  the  enhanced  extended  link  throughout  zone  1.  (An 
 enhanced  extended  link  (EEL)  consists  of  a  combination  of  an  unbundled  loop, 
 multiplexing/  concentrating  equipment,  and  dedicated  transport.  The  EEL 
 allows  new  entrants  to  serve  customers  without  having  to  collocate  in  every 
 central  office  in  the  incumbents  territory.)  Local  circuit  switching  includes  the 
 basic  function  of  connecting  lines  and  trunks  on  the  line-  side  and  port-  side  of 
 the  switch.  The  definition  of  the  local  switching  element  encompasses  all  of  the 
 features,  functionalities,  and  capabilities  of  the  switch. 

   Packet  Switching.  Incumbent  LECs  must  offer  unbundled  access  to  packet  switching  only  in  limited  circumstances  in  which  the  incumbent  has  placed 
 digital  loop  carrier  systems  in  the  feeder  section  of  the  loop  or  has  its  Digital 
 Subscriber  Line  Access  Multiplexer  (DSLAM)  in  a  remote  terminal.  The 
 incumbent  will  be  relieved  of  this  obligation,  however,  if  it  permits  a  requesting 
 carrier  to  collocate  its  DSLAM  in  the  incumbents  remote  terminal  on  the  same 
 terms  and  conditions  that  apply  to  its  own  DSLAM.  Packet  switching  is 
 defined  as  the  function  of  routing  individual  data  message  units  based  on 
 address  or  other  routing  information  contained  in  the  data  units,  including  the 
 necessary  electronics  (e.  g.,  DSLAMs). 

   Interoffice  Transmission  Facilities.  Incumbent  LECs  must  offer  unbundled  access  to  dedicated  interoffice  transmission  facilities,  or  transport,  including 
 dark  fiber.  Dedicated  interoffice  transmission  facilities  are  defined  as 
 incumbent  LEC  transmission  facilities  dedicated  to  a  particular  customer  or 
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 carrier  that  provide  telecommunications  between  wire  centers  owned  by  the 
 incumbent  LECs  or  requesting  telecommunications  carriers,  or  between 
 switches  owned  by  incumbent  LECs  or  requesting  telecommunications  carriers. 
 State  commissions  are  free  to  establish  reasonable  limits  governing  access  to 
 dark  fiber  if  incumbent  LECs  can  show  that  they  need  to  maintain  fiber 
 reserves. 

   Incumbent  LECs  must  also  offer  unbundled  access  to  shared  transport  where  unbundled  local  circuit  switching  is  provided.  Shared  transport  is  defined  as 
 transmission  facilities  shared  by  more  than  one  carrier,  including  the  incumbent 
 LEC,  between  end  office  switches,  between  end  office  switches  and  tandem 
 switches,  and  between  tandem  switches  in  the  incumbent  LECs  network. 

   Signaling  and  Call-  Related  Databases.  Incumbent  LECs  must  offer  unbundled  access  to  signaling  links  and  signaling  transfer  points  (STPs)  in  conjunction 
 with  unbundled  switching,  and  on  a  stand-  alone  basis.  The  signaling  network 
 element  includes,  but  is  not  limited  to,  signaling  links  and  STPs.  Incumbent 
 LECs  must  also  offer  unbundled  access  to  call-  related  databases,  including,  but 
 not  limited  to,  the  Line  Information  database  (LIDB),  Toll  Free  Calling 
 database,  Number  Portability  database,  Calling  Name  (CNAM)  database, 
 Operator  Services/  Directory  Assistance  databases,  Advanced  Intelligent 
 Network  (AIN)  databases,  and  the  AIN  platform  and  architecture.  We  do  not 
 require  incumbent  LECs  to  unbundle  access  to  certain  AIN  software  that 
 qualify  for  proprietary  treatment. 

   Operations  Support  Systems  (OSS).  Incumbent  LECs  must  offer  unbundled  access  to  their  operations  support  systems.  OSS  consists  of  pre-  ordering, 
 ordering,  provisioning,  maintenance  and  repair,  and  billing  functions  supported 
 by  an  incumbent  LECs  databases  and  information.  The  OSS  element  includes 
 access  to  all  loop  qualification  information  contained  in  any  of  the  incumbent 
 LECs  databases  or  other  records,  including  information  on  whether  a  particular 
 loop  is  capable  of  providing  advanced  services. 

 Network  Elements  that  Need  Not  be  Unbundled.  The  following  network  elements  need  not  be  unbundled: 

   Operator  Services  and  Directory  Assistance  (OS/  DA).  Incumbent  LECs  are  not  required  to  unbundle  their  OS/  DA  services  pursuant  to  section  251(  c)(  3),  except 
 in  the  limited  circumstance  where  an  incumbent  LEC  does  not  provide 
 customized  routing  to  a  requesting  carrier  to  allow  it  to  route  traffic  to 
 alternative  OS/  DA  providers.  Operator  services  are  any  automatic  or  live 
 assistance  to  a  consumer  to  arrange  for  billing  or  completion  of  a  telephone  call. 
 Directory  assistance  is  a  service  that  allows  subscribers  to  retrieve  telephone 
 numbers  of  other  subscribers.  Incumbent  LECs,  however,  remain  obligated 
 under  the  non-  discrimination  requirements  of  section  251(  b)(  3)  to  comply  with 
 the  reasonable  request  of  a  carrier  that  purchases  the  incumbents  OS/  DA 
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 services  to  rebrand  or  unbrand  those  services,  and  to  provide  directory 
 assistance  listing  updates  in  daily  electronic  batch  files. 

   Shared  Transport  where  Circuit  Switching  is  not  Unbundled.  Incumbent  LECs  are  not  required  to  unbundle  shared  transport  where  they  are  not  required  to 
 offer  unbundled  local  circuit  switching,  as  described  above. 
   Packet  Switching.  Incumbent  LECs  are  not  required  to  unbundle  packet  switching,  except  in  a  limited  circumstance.  Competitive  LECs  are  actively 
 deploying  packet  switches  to  serve  high-  volume  customers,  and  are  not 
 impaired  in  their  ability  to  offer  service  to  such  customers  without  access  to  the 
 incumbent  LECs  facilities.  Competitive  LECs  are  impaired,  however,  in  their 
 ability  to  provide  services  to  small-  volume  users  without  access  to  unbundled 
 packet  switching.  Nonetheless,  we  consider  the  other  goals  of  the  Act  in 
 making  our  unbundling  determination,  and  conclude  that  given  the  nascent 
 nature  of  the  advanced  services  market  and  the  Acts  goal  to  provide  incentives 
 to  all  carriers  to  invest  and  innovate,  incumbent  LECs  are  generally  not  required 
 to  unbundle  packet  switching. 

 Section  271-  Related  Issues. 
   If  a  network  element  on  the  section  271  competitive  checklist  is  not  required  to  be  unbundled  pursuant  to  section  251(  c)(  3)  (i.  e.,  local  circuit  switching  and 
 shared  transport  in  certain  circumstances),  Bell  Operating  Companies  are  not 
 required  to  offer  unbundled  access  to  any  such  checklist  items  in  compliance 
 with  the  Commissions  pricing  rules.  Rather,  the  applicable  price,  terms,  and 
 conditions  for  that  element  are  determined  by  applying  sections  201(  b)  and 
 202(  a)  of  the  Act. 

 Combinations  of  Network  Elements. 
   Given  the  pendency  of  litigation  in  the  Court  of  Appeals  for  the  Eighth  Circuit,  the  Order  declines  to  define  the  enhanced  extended  link  as  a  separate  network 
 element,  nor  does  it  address  whether  an  incumbent  LEC  must  combine  network 
 elements  that  are  not  already  combined  in  the  network. 

 Further  Notice  of  Proposed  Rulemaking:  Use  of  Unbundled  NetworkElements 
 to  Provide  Exchange  Access  Service. 

   The  Further  Notice  seeks  comment  on  whether  there  is  any  basis  in  the  statute  or  our  rules  under  which  incumbent  LECs  could  decline  to  provide  entrance 
 facilities  (the  link  between  an  interexchange  carriers  point  of  presence  and  an 
 incumbents  switch  or  serving  wire  center)  at  unbundled  network  element 
 prices. 

   The  Further  Notice  also  invites  parties  to  refresh  the  record  on  whether  requesting  carriers  may  use  unbundled  dedicated  or  shared  transport  facilities  in 
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 conjunction  with  unbundled  switching  to  originate  or  terminate  interstate  toll 
 traffic  to  customers  to  whom  the  requesting  carrier  does  not  provide  local 
 exchange  service. 

 III.  BACKGROUND 

 16.  On  August  8,  1996,  the  Commission  adopted  the  Local  Competition  First 
 Report  and  Order,  implementing  the  local  competition  provisions  of  the  1996  Act.  In 
 that  order,  the  Commission  established  rules  governing  the  obligations  of  incumbent 
 LECs  to  open  their  local  networks  to  competition  pursuant  to  the  requirements  of  section 
 251  of  the  1996  Act.  Among  other  things,  the  order  adopted  rules  implementing  the 
 network  unbundling  requirements  of  sections  251(  c)(  3)  and  251(  d)(  2)  of  the  1996  Act. 
 Section  251(  c)(  3)  imposes  a  duty  on  all  incumbent  LECs  to  provide  to  competitors  access 
 to  network  elements  on  an  unbundled  basis.  20  Section  251(  d)(  2)  provides  that,  in 
 determining  which  network  elements  should  be  unbundled  under  section  251(  c)(  3),  the 
 Commission  shall  consider,  at  a  minimum,  whether  --  (A)  access  to  such  network 
 elements  as  are  proprietary  in  nature  is  necessary;  and  (B)  the  failure  to  provide  access  to 
 such  network  element  would  impair  the  ability  of  the  telecommunications  carrier  seeking 
 access  to  provide  the  services  that  it  seeks  to  offer.  21 

 17.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  applied 
 its  interpretation  of  the  necessary  and  impair  standards  of  section  251(  d)(  2)  to  the 
 unbundling  requirements  of  section  251(  c)(  3).  Specifically,  the  Commission  defined 
 necessary  to  mean  an  element  is  a  prerequisite  for  competition,  22  and  it  defined 
 impair  to  mean  to  make  or  cause  to  become  worse;  diminish  in  value.  23  The 
 Commission  also  determined  that  a  requesting  carriers  ability  to  offer  service  is 
 impaired  or  diminished  in  value  if  the  quality  of  the  service  the  entrant  can  offer, 
 absent  access  to  the  requested  element,  declines  or  if  the  cost  of  providing  the  service 
 rises.  24 

 18.  After  addressing  the  necessary  and  impair  standards,  the  Commission 
 adopted  rule  51.319,  which  sets  forth  the  network  elements  that  incumbent  LECs  were 
 required  to  make  available  to  requesting  carriers  on  an  unbundled  basis.  25  Section  51.319 
 of  the  Commissions  rules  required  incumbent  LECs  to  offer  unbundled  access  to  the 

 20  Certain  rural  telephone  companies  may  be  exempt  from  the  unbundling  provisions  of 
 section  251.  See  47  U.  S.  C.    251(  f). 
 21  47  U.  S.  C.    251(  d)(  2). 

 22  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15641-  42,  para.  282. 
 23  Id.  at  para.  285  (quoting  Random  House  College  Dictionary  665  (rev.  ed.  1984)). 
 24  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15643,  para.  285. 
 25  Id.  at  15683,  para.  366. 
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 Federal  Communications  Commission  FCC  99-  238 
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 following  network  elements:  (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.  26  Section  51.317  of  the  Commission's  rules  allowed  states  to  impose 
 additional  unbundling  requirements  pursuant  to  the  Commission's  interpretation  of 
 section  251(  d)(  2).  27 

 19.  Following  adoption  of  the  Local  Competition  First  Report  and  Order, 
 incumbent  LECs  and  state  commissions  filed  various  challenges  to  the  Commissions 
 rules;  these  appeals  were  consolidated  in  the  Eighth  Circuit.  The  Eighth  Circuit,  among 
 other  holdings,  rejected  the  incumbent  LECs  argument  that,  in  determining  which 
 elements  were  subject  to  the  unbundling  requirements,  the  Commission  had  not  properly 
 applied  the  necessary  and  impair  standards  of  section  251(  d)(  2).  28  Accordingly,  the 
 Eighth  Circuit  upheld  section  51.319.  The  Supreme  Court  granted  several  parties 
 requests  to  review  the  Eighth  Circuits  decision. 

 20.  In  its  January  25,  1999  opinion,  the  Supreme  Court  reversed  the  Eighth 
 Circuits  decision  on  this  issue,  stated  that  section  51.319  should  be  vacated,  and 
 remanded  the  matter  for  further  proceedings.  29  While  the  Court  affirmed  that  the 
 Commission  has  jurisdiction  to  implement  the  local  competition  provisions  of  the  1996 
 Act,  including  the  unbundling  requirements  in  section  251,  it  concluded  that  the 
 Commission  had  not  adequately  considered  the  necessary  and  impair  standards  of 
 section  251(  d)(  2).  30  The  Court  found,  among  other  things,  that  the  Commission,  in 
 deciding  which  elements  must  be  unbundled,  did  not  adequately  take  into  consideration 

 26  47  C.  F.  R.    51.319.  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15641-  42, 
 paras.  281-  83. 
 27  47  C.  F.  R..    51.317. 

 28  Iowa  Utils.  Bd.  v.  FCC,  120  F.  3d  at  808-  10. 
 29  Iowa  Utils.  Bd.,  119  S.  Ct.  at  733-  36.  As  already  noted,  the  Supreme  Court  upheld  all  but 
 one  of  the  local  competition  rules  that  had  been  challenged.  The  Supreme  Court  held  that  the  Commission 
 has  general  jurisdiction  to  implement  the  1996  Act's  local  competition  provisions,  and  that  the  Commission's 
 rulemaking  authority  extends  to  sections  251  and  252.  The  Court  further  found  that:  (1)  the  Commission's 
 interpretation  of  "network  element,"  as  including  operator  services  and  directory  assistance,  operational 
 support  systems,  and  vertical  switching  functions  such  as  caller  I.  D.,  call  forwarding,  and  call  waiting,  is 
 reasonable;  (2)  the  Commission  reasonably  omitted  a  facilities-  ownership  requirement;  (3)  the  Commission's 
 rule  51.315(  b),  which  forbids  incumbents  from  separating  already-  combined  network  elements  before  leasing 
 them  to  competitors,  reasonably  interprets  section  251(  c)(  3)  of  the  1996  Act;  and  (4)  the  Commission's  "pick 
 and  choose"  rule  that  requires  an  incumbent  LEC  to  make  available  to  any  requesting  carrier  any  individual 
 interconnection,  service,  or  network  element  arrangement  contained  in  any  state-  approved  agreement  "upon 
 the  same  rates,  terms,  and  conditions  as  those  provided  in  the  agreement"  is  a  reasonable  interpretation  of 
 section  252(  i)  of  the  1996  Act.  Id.  at  729-  34. 

 30  Id..  at  730-  36. 
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 Federal  Communications  Commission  FCC  99-  238 
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 the  availability  of  elements  outside  the  incumbents  network.  31  The  Court  also  faulted 
 the  Commissions  assumption  that  any  increase  in  cost  (or  decrease  in  quality)  imposed 
 by  a  denial  of  a  network  element  renders  access  to  that  element  necessary,    and  causes 
 the  failure  to  provide  that  element  to  impair  the  entrants  ability  to  furnish  its  desired 
 services.  .  .  32  In  addition,  the  Court  criticized  the  Commissions  interpretation  of  section 
 251(  d)(  2)  because  it  allows  entrants,  rather  than  the  Commission,  to  determine  whether 
 the  requirements  of  that  section  are  satisfied.  33  On  April  16,  1999,  we  released  a  Second 
 Further  Notice  in  this  docket  seeking  comment  on  the  appropriate  unbundling  standard, 
 and  which  network  elements  should  be  unbundled.  34 

 IV.  FRAMEWORK  FOR  DECIDING  WHAT  NETWORK  ELEMENTS  MUST 
 BE  UNBUNDLED  PURSUANT  TO  SECTION  251 

 A.  Overview 

 21.  In  this  section,  we  discuss  our  framework  for  determining  whether  a 
 particular  network  element  should  be  unbundled.  We  interpret  the  terms  necessary, 
 impair,  and  proprietary  in  section  251(  d)(  2)  in  a  manner  that  gives  substance  to  those 
 terms.  We  then  discuss  how  we  will  evaluate  alternative  elements  that  are  available 
 through  self-  provisioning  or  from  third-  party  suppliers.  In  considering  whether  to 
 unbundle  a  particular  network  element,  we  look  first  to  what  is  occurring  in  the 
 marketplace  today.  For  some  network  elements,  we  are  beginning  to  see  competitors 
 using  alternatives  in  discrete  situations.  In  order  to  determine  whether  these  alternative 
 sources  of  network  elements  are  actually  available  as  a  practical,  economic,  and 
 operational  matter,  so  that  incumbents  should  be  free  of  any  unbundling  obligations  for 
 that  element,  we  look  at  several  factors,  including  cost,  ubiquity,  quality,  timeliness,  and 
 operational  impediments. 

 22.  We  acknowledge  that  given  the  complexity  associated  with  a  competitive 
 LECs  decision  to  enter  a  certain  market,  it  is  extremely  difficult  to  identify  one  particular 
 factor  that  is  dispositive  of  whether  or  not  a  competitor  will  seek  to  offer  a  particular 
 service  in  any  given  market.  For  example,  even  where  a  competitive  LECs  costs  to 
 provide  a  service  may  be  comparable  to  the  incumbents  costs  to  provide  a  similar 
 service,  the  competitive  LEC,  because  it  cannot  enter  all  markets  simultaneously,  may 
 choose  not  to  enter  a  particular  market  at  a  particular  time  because  there  are  other  markets 
 that  are  relatively  more  profitable  to  serve.  The  competitive  LEC  might  also  be  dissuaded 
 from  entering  a  market  because  of  subsidy  distortions  or  other  regulatory  factors. 

 31  .  Id..  at  735. 
 32  .  Id. 
 33  .  Id. 
 34  Implementation  of  the  Local  Competition  Provisions  in  the  Telecommunications  Act  of 
 1996,  CC  Docket  No.  96-  98,  Second  Further  Notice  of  Proposed  Rulemaking,  FCC  99-  70  (rel.  Apr.  16,  1999) 
 (Notice).  A  list  of  parties  submitting  Comments  and  Reply  Comments  is  provided  in  Appendix  A. 
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 Conversely,  notwithstanding  the  fact  that  a  competitive  LECs  infrastructure  costs  in  a 
 particular  market  may  be  materially  different  from  the  incumbent  LECs  costs,  the 
 competitive  LEC  may  still  choose  to  enter  that  market  if  it  can  provide  more  services  over 
 its  network  infrastructure,  or  offer  marketing,  service,  or  technical  innovations  for  which 
 customers  will  pay  a  premium. 

 23.  Although  we  may  not  be  able  to  identify  with  precision  a  competitors 
 incentives,  or  lack  of  incentives  to  enter  a  particular  market,  we  nonetheless  find  that 
 evidence  demonstrating  the  lack  of  competition  in  certain  areas  of  the  country  and  among 
 certain  classes  of  customers  is  a  strong  indicator  that  there  may  exist  economic  and  other 
 types  of  barriers  that  may,  at  a  minimum,  impair  a  competitors  ability  to  compete  vis-  -vis 
 the  incumbent.  Accordingly,  based  on  evidence  provided  in  the  record,  we  use  our 
 administrative  judgment  to  identify  several  factors,  including  cost,  ubiquity,  quality, 
 timeliness,  and  operational  impediments,  that  we  find  particularly  helpful  in  explaining 
 whether  a  competitors  ability  to  provide  the  service  it  seeks  to  offer  is  impaired  without 
 access  to  a  particular  unbundled  network  element.  Based  on  the  actual  state  of 
 competition,  we  look  at  these  factors  and  their  relationship  to  alternative  sources  of 
 network  elements  to  determine  whether  the  alternatives  are  actually  available  as  a 
 practical,  economic,  and  operational  matter. 

 24.  In  particular,  we  examine  both  the  direct  and  other  costs  a  carrier  incurs  to 
 substitute  the  alternative  network  element  for  the  incumbent  LECs  network  element.  We 
 also  consider  whether  self-  provisioning  or  purchasing  a  network  element  from  a  third-party 
 supplier  would  prevent  a  requesting  carrier  from  entering  the  market  within  a 
 reasonable  time,  or  from  expanding  its  operations  to  meet  promptly  the  demand  of  its 
 customers.  In  addition  to  costs  and  delays,  we  consider  whether  using  alternative  sources 
 of  network  elements  introduces  quality  differences  or  operational  or  technical 
 impediments  that  may  impair  a  requesting  carriers  ability  to  provide  the  services  that  it 
 seeks  to  offer.  Specifically,  we  assess  whether  use  of  an  alternative  source  of  the  network 
 element  would  cause  a  requesting  carriers  customers  to  experience  degraded  service. 

 25.  We  also  consider  the  extent  to  which  a  requesting  carrier  can  compete  for 
 customers  on  a  wide-  spread  basis  using  alternative  sources  of  the  elements  outside  the 
 incumbents  network.  In  some  cases,  to  compete  effectively  with  the  incumbent  LEC  for 
 the  same  customers,  competitive  LECs  must  be  able  to  attain  similar  economies  of  scale 
 that  can  only  be  achieved  by  serving  a  broad  base  of  customers  within  a  geographic  area. 
 Although  theoretically,  all  or  part,  of  an  incumbent  LECs  network  can  be  replicated  at 
 some  cost,  as  a  practical  matter,  replication  of  elements  in  a  ubiquitous  manner  may 
 impair  a  requesting  carriers  ability  to  compete  vis-  -  vis  the  incumbent.  If  the 
 competitive  LEC  must  deploy  multiple  facilities  in  order  to  be  able  to  bring  competition 
 to  a  broad  base  of  customers  within  a  geographic  area,  the  costs  and  delays  associated 
 with  deploying  facilities  will  likely  be  magnified,  and  could  materially  diminish  that 
 competitors  ability  to  provide  the  services  that  it  seeks  to  offer. 

 26.  We  find  that  the  language  of  section  251(  d)(  2)  and  the  Supreme  Court 
 decision  suggest  that  we  should  consider,  in  addition  to  the  necessary  and  impair 
 standards,  the  overall  goals  of  the  1996  Act.  Section  251(  d)(  2)  states  that  the 
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 Federal  Communications  Commission  FCC  99-  238 
 19 
 Commission  shall  consider,  at  a  minimum,  the  necessary  and  impair  standards,  thus 
 leaving  the  Commission  free  to  consider  other  relevant  factors.  35  In  addition,  the 
 Supreme  Court  decision  requires  us  to  apply  a  limiting  standard  rationally  related  to  the 
 goals  of  the  Act.  Moreover,  as  a  policy  matter,  we  believe  that  we  may  consider 
 additional  factors  to  ensure  that  the  unbundling  requirements  promote  the  goals  of  the 
 Act. 

 27.  Accordingly,  we  may  consider,  in  addition  to  the  necessary  and  impair 
 standards,  whether  the  unbundling  obligations  we  adopt  are  likely  to:  (1)  encourage 
 competitive  LECs  to  rapidly  enter  the  local  market  and  serve  the  greatest  number  of 
 consumers;  (2)  advance  the  development  of  facilities-  based  competition  by  competitive 
 LECs,  and  encourage  investment  and  innovation  in  new  technologies  and  new  services  by 
 both  incumbent  and  competitive  LECs;  (3)  reduce  regulation  of  unbundled  network 
 elements  as  alternatives  to  the  incumbent  LECs  network  elements  become  available  in 
 the  future,  (4)  provide  certainty  in  the  marketplace  that  will  allow  new  entrants  and 
 fledgling  competitors  to  develop  national  and  regional  business  plans  and  bring  the 
 benefits  of  competition  to  the  greatest  number  of  consumers;  and  (5)  be  administratively 
 practical  to  apply.  We  conclude  that  these  important  policy  goals  can  only  be  furthered 
 by  adoption  of  a  national  list  of  unbundled  elements  that  takes  into  consideration,  where 
 appropriate,  discrete  geographic  and  product  market  variations  that  create  exceptions  to 
 the  incumbent  LECs  general  duty  to  unbundle  the  elements  on  the  list.  36 

 28.  We  do  not  assign  any  particular  weight  to  the  factors  we  identify  above. 
 Rather,  we  consider  the  relationship  among  the  various  factors  to  determine  whether  an 
 incumbent  LECs  network  element  should  be  unbundled.  Indeed,  there  may  be 
 circumstances  in  which  there  is  significant  evidence  that  competitors  are  impaired  without 
 unbundled  access  to  a  particular  element,  but  requiring  incumbent  LECs  to  unbundle  that 
 element  would  be  inconsistent  with  the  goals  of  the  Act. 

 B.  The  Necessary  and  Impair  Standards  of  Section  251(  d)(  2) 

 1.  Application  of  the  necessary  and  impair  standards 
 to  proprietary  and  non-  proprietary  elements  under 
 Section  251(  d)(  2) 

 a.  Background 

 29.  In  the  Local  Competition  First  Report  and  Order,  the  Commission 
 concluded  that  section  251(  d)(  2)  establishes  separate  standards  that  apply  to  proprietary 
 and  non-  proprietary  network  elements.  Specifically,  the  Commission  determined  that  the 
 necessary  standard  of  section  251(  d)(  2)(  A)  applies  to  proprietary  elements,  and  that  the 

 35  47  U.  S.  C.    251(  d)(  2). 
 36  See  infra  Section  V(  D). 
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 impair  standard  in  section  251(  d)(  2)(  B)  applies  to  non-  proprietary  elements.  37  In  the 
 Notice,  we  sought  comment  on  this  interpretation  of  section  251(  d)(  2).  In  particular,  we 
 asked  parties  to  comment  on  the  difference  between  the  necessary  and  impair 
 standards.  Noting  that  the  Act  employs  two  different  terms,  we  asked  if  the  Commission 
 must  apply  different  criteria  to  determine  whether  a  network  element  meets  these 
 standards.  38 

 30.  Only  a  couple  of  commenters  dispute  the  Commissions  previous  decision 
 to  apply  the  necessary  standard  to  proprietary  elements  and  the  impair  standard  to 
 non-  proprietary  elements.  39  In  particular,  Sprint  argues  that  the  necessary  and  impair 
 standards  apply  only  to  proprietary  elements  and  thus,  all  non-  proprietary  elements  must 
 be  unbundled.  40 

 b.  Discussion 

 31.  We  find  no  reason  to  change  our  framework  for  analyzing  network  elements 
 under  section  251(  d)(  2).  In  subpart  (A)  of  section  251(  d)(  2),  necessary  modifies 
 elements  that  are  proprietary  in  nature  while  in  subpart  (B),  impair  modifies  all  other 
 network  elements.  We  agree  with  the  majority  of  commenters  that  the  necessary 
 standard  of  section  251(  d)(  2)(  A)  is  a  higher  standard  that  applies  to  proprietary  network 
 elements  or  to  proprietary  functions  within  an  element.  41  We  believe  that  our  conclusion 
 that  section  251(  d)(  2)  establishes  a  higher  standard  for  proprietary  network  elements  than 
 for  non-  proprietary  elements  is  consistent  with  both  the  language  of  the  statute  and  the 

 37  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15641-  43,  paras.  283-  85. 
 38  Notice  at  para.  18. 
 39  Rhythms  Comments  at  5-  6;  Sprint  Comments  at  9-  12. 
 40  Sprint  Comments  at  11-  12.  See  also  Letter  from  Kathy  D.  Smith,  Acting  Chief  Counsel, 
 National  Telecommunications  and  Information  Administration  (  NTIA),  to  Magalie  Roman  Salas,  Secretary, 
 Federal  Communications  Commission,  CC  Docket  No.  96-  98,  Attachment  at  21  (filed  Aug.  2,  1999)  (  NTIA 
 Comments)  (  NTIA  agrees  with  Sprint  that  one  reasonable  construction  of  the  statutory  language  is  that  the 
 necessary  and  impair  standards  were  meant  to  apply  only  to  proprietary  network  elements.  We 
 nonetheless  recognize  that  the  Commission  adopted  (and  the  reviewing  court  implicitly  accepted)  a  different 
 construction  of  the  statute  in  the  Local  Competition  Report,  and  that  there  are  legitimate  reasons  why  the 
 Commission  would  be  reluctant  to  reject  that  construction  now.)  (citation  omitted). 

 41  See,  e.  g.,  Illinois  Commission  Comments  at  5;  Texas  PUC  Comments  at  8;  Ameritech 
 Comments  at  36-  40;  GTE  Comments  at  11-  12;  SBC  Comments  at  12-  14  (These  incumbent  LECs  agree  that 
 network  elements  with  proprietary  features  must  be  evaluated  under  the  necessary  standard,  but  state  that 
 the  impair  standard  applies  to  all  network  elements.  As  explained  herein,  we  adopt  two  distinct  limiting 
 standards  in  order  to  give  substance  to  Congress  use  of  the  term  necessary.);  ALTS  Comments  at  14-  15; 
 Cable  &  Wireless  Comments  at  16-  17;  Choice  One  Joint  Comments  at  11;  CompTel  Comments  at  16-  17; 
 Corecomm  Comments  at  13-  14;;  Cox  Comments  at  19-  20;  e.  spire  Joint  Comments  at  5;  Excel  Comments  at 
 4;  MCI  Comments  at  20;  NEXTLINK  Comments  at  9;  Pilgrim  Comments  at  6-  7;  TRA  Comments  at  15.  But 
 see  Sprint  Comments  at  9-  13,  Rhythms  Comments  at  5-  6  (arguing  that  the  impair  standard  applies  to  both 
 proprietary  and  non-  proprietary  rate  elements). 
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 Federal  Communications  Commission  FCC  99-  238 
 21 
 goals  of  the  1996  Act  to  encourage  incumbent  LECs  and  competitive  LECs  to  innovate 
 and  invest  in  new  technologies.  Specifically,  incumbent  LECs  will  have  an  on-  going 
 incentive  to  innovate  if  we  ensure  that  their  investment  in  the  proprietary  portions  of  their 
 network  is  protected.  While  competitive  LECs  will  have  access  to  the  incumbent  LECs 
 proprietary  network  elements  where  necessary,  they  will  not  have  unlimited  access  to 
 those  elements.  We  believe  that  this  balanced  approach  provides  competitive  LECs  with 
 an  incentive  to  innovate  and  invest  in  new  technologies  that  will  differentiate  their 
 services  from  the  incumbents  services.  We  note  that  applying  the  necessary  standard 
 to  proprietary  elements,  and  the  impair  standard  to  non-  proprietary  elements  is  also 
 consistent  with  the  Commissions  previous  interpretation  of  this  section  that  was 
 implicitly  adopted  by  the  Supreme  Court.  42 

 2.  Definition  of  Proprietary  in  Nature 
 a.  Background 

 32.  Section  251(  d)(  2)(  A)  states  that  [  i]  n  determining  what  network  elements 
 should  be  made  available  for  purposes  of  subsection  (c)(  3),  the  Commission  shall 
 consider,  at  a  minimum,  whether  .  .  .  .  access  to  such  network  elements  as  are  proprietary 
 in  nature  is  necessary.  In  the  Local  Competition  First  Report  and  Order,  the 
 Commission  referred  to  proprietary  network  elements  as  including,  for  example,  those 
 elements  with  proprietary  protocols  or  elements  containing  proprietary  information.  The 
 Commission  found  in  the  Local  Competition  First  Report  and  Order  that  for  most 
 network  elements  subject  to  the  unbundling  obligations  of  section  51.319,  parties  had  not 
 identified  any  proprietary  concerns.  For  those  network  elements  where  parties  did 
 identify  proprietary  concerns,  the  Commission  found  that  access  to  those  network 
 elements  was  necessary.  43 

 33.  In  the  Notice,  we  sought  comment  on  whether  we  should  consider  network 
 elements  as  non-  proprietary  if  the  interfaces,  functions,  features  and  capabilities  of  the 
 elements  sought  by  the  requesting  carrier  are  defined  by  recognized  standard-  setting 
 bodies  (e.  g.  ITU,  ANSI,  or  IEEE),  are  defined  by  Bellcore  requirements,  or  otherwise  are 

 42  Referring  to  the  Commissions  decision  to  limit  its  section  251(  d)(  2)  inquiry  to  the 
 incumbents  own  network,  the  Court  stated  that  that  judgment  allows  entrants,  rather  than  the  Commission, 
 to  determine  whether  access  to  proprietary  elements  is  necessary,  and  whether  the  failure  to  obtain  access  to 
 nonproprietary  elements  would  impair  the  ability  to  provide  services.  Iowa  Utils.  Bd.,  119  S.  Ct.  at  735 
 (emphasis  added). 

 43  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15694,  15697,  15710,  15720, 
 15739,  15744-  45,  15748,  15766,  15774,  paras.  388,  393,  419,  446,  481,  490,  497,  521,  539,  In  this  Order, 
 certain  parties  stated  that  channel  banks  and  remote  terminal  equipment  used  with  unbundled  loops  are  often 
 proprietary,  that  vertical  switching  features  are  proprietary,  and  that  there  are  proprietary  interfaces  associated 
 with  operations  support  systems.  The  Commission  found  that  the  proprietary  concerns  did  not  justify  denying 
 requesting  carriers  access  to  these  elements.  Several  parties  also  identified  proprietary  concerns  regarding 
 access  to  the  service  creation  environment  interface  and  service  management  system  used  in  the  incumbent 
 LECs  advanced  intelligent  networks.  The  Commission  concluded  that  access  to  advanced  intelligent 
 networks,  including  those  elements  that  may  be  proprietary,  was  necessary.). 
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 widely  available  from  vendors.  44  We  further  requested  comment  on  whether  the  term 
 proprietary  should  be  limited  to  information,  software,  or  technology  that  can  be 
 protected  by  patents,  copyright  or  trade  secret  laws.  45  There  is  general  agreement  among 
 the  parties  that  the  Commission  should  define  proprietary,  under  section  251(  d)(  2)(  A), 
 consistent  with  intellectual  property  categories.  46  Several  competitive  LECs  maintain  that 
 we  must  define  the  term  proprietary  narrowly  so  as  not  to  create  incentives  for 
 incumbent  LECs  to  attempt  to  deny  access  to  unbundled  network  elements  on  proprietary 
 grounds.  47 

 b.  Discussion 

 34.  In  this  Order,  we  adopt  a  limited  definition  of  the  phrase  proprietary  in 
 nature  that  tracks  the  intellectual  property  categories  of  patent,  copyright,  and  trade 
 secrets.  The  majority  of  parties  addressing  this  issue  support  using  intellectual  property 
 law  as  a  basis  for  defining  proprietary  in  nature.  48  We  agree,  and  find  that  the 
 intellectual  property  laws  governing  patent,  copyright  and  trade  secrets  find  a  common 
 purpose  in  Congress  intention  to  protect  proprietary  interests  under  section  251(  d)(  2). 
 The  intellectual  property  laws  are  designed  to  protect  the  incentives  of  authors  and 
 inventors  to  innovate.  49  Similarly,  Congress  recognized  that  an  incumbent  LECs 
 incentive  to  innovate  could  be  adversely  affected  by  requiring  incumbent  LECs  to 
 unbundle  proprietary  portions  of  network  elements  to  requesting  carrier-  competitors. 
 Congress  therefore  required  the  Commission  to  consider  whether  unbundling  in  such 
 instances  is  necessary.  50 

 44  Notice  at  para.  15. 
 45  Id. 
 46  See,  e.  g.,  Iowa  Comments  at  4;  Allegiance  Comments  at  4-  6;  ALTS  Comments  at  16; 
 Ameritech  Comments  at  40-  45;  MCI  WorldCom  Comments  at  21-  22;  NorthPoint  Comments  at  4;  SBC 
 Comments  at  11-  12;  Sprint  Comments  at  9-  10;  US  WEST  Comments  at  25;  Waller  Creek  Comments  at  12. 

 47  See  Cable  &  Wireless  Comments  at  17-  18;  Choice  One  Joint  Comments  at  11-  12;  CompTel 
 Comments  at  18;  Corecomm  Comments  at  14-  17;  KMC  Comments  at  11. 
 48  See  Ameritech  Comments  at  42;  ALTS  Comments  at  16;  CompTel  Comments  at  19;  GSA 
 Comments  at  8;  RCN  Comments  at  10;  SBC  Comments  at  12-  15. 
 49  See  Feist  Publications  v.  Rural  Telephone  Service  Company,  Inc.,  499  U.  S.  340,  348  (1991) 
 (arguing  that  the  primary  objective  of  copyright  is  to  compensate  authors  and  advance  the  progress  of 
 science  and  art.). 

 50  Implementation  of  the  Telecommunications  Act  of  1996:  Telecommunications  Carriers'  Use 
 of  Customer  Proprietary  Network  Information  and  Other  Customer  Information  and  Implementation  of  the 
 Non-  Accounting  Safeguards  of  Sections  271  and  272  of  the  Communications  Act  of  1934,  as  amended,  CC 
 Docket  Nos.  96-  115  and  96-  149,  Second  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  13 
 FCC  Rcd  8061  (1998)  (CPNI  Order),  on  recon.  FCC  99-  223  (rel.  Sept.  3.,  1999),  vacated  sub  nom.  US  West 
 v.  FCC,  File  No.  98-  9518  (10  th  Cir.,  Aug.  18,  1999). 
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 Federal  Communications  Commission  FCC  99-  238 
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 35.  We  find  that  if  an  incumbent  LEC  can  demonstrate  that  it  has  invested 
 resources  (time,  material,  or  personnel)  to  develop  proprietary  information  or  network 
 elements  that  are  protected  by  patent,  copyright,  or  trade  secret  law,  the  product  of  such 
 an  investment  is  proprietary  in  nature  within  the  meaning  of  section  251(  d)(  2)(  A).  This 
 definition  is  consistent  with  the  1996  Acts  policy  of  preserving  the  incumbent  LECs 
 innovation  incentives.  It  is  also  consistent  with  the  Commissions  conclusion,  in  the 
 Local  Competition  First  Report  and  Order,  that  in  some  instances  it  will  be  necessary 
 for  new  entrants  to  obtain  access  to  proprietary  elements.  51  Finally,  our  decision  to  define 
 interests  that  are  proprietary  in  nature  along  established  intellectual  property  categories 
 is  consistent  with  the  Department  of  Justice  and  Federal  Trade  Commission  Guidelines 
 for  the  Licensing  of  Intellectual  Property.  52 

 36.  Our  definition  excludes  elements  that  are  based  on  widely  accepted  industry 
 documents  or  on  standards  commonly  used  by  a  standards-  setting  body  (e.  g.  ITU,  ANSI, 
 IEEE)  or  by  vendors.  There  are  few  innovation  incentives  associated  with  elements  that 
 are  based  on  well-  recognized  standards  that  are  widely  available  in  the  market,  and  we 
 therefore  are  not  required  to  scrutinize  such  elements  under  the  higher  necessary 
 standard. 

 37.  Section  251(  d)(  2)  directs  the  Commission  to  consider,  at  a  minimum 
 whether  access  to  proprietary  elements  is  necessary.  53  As  discussed  below,  this 
 discretionary  language  permits  us  to  consider  other  factors,  in  addition  to  the  necessary 
 standard,  in  making  our  unbundling  determination.  We  find  that  there  are  several 
 circumstances  which,  if  they  exist  with  regard  to  information  or  functionalities  that  the 
 incumbent  LEC  claims  are  proprietary,  will  permit  us  to  order  unbundling  of  the 
 proprietary  information  or  functionalities  even  if  unbundled  access  to  the  element  is  not 
 strictly  necessary,  as  long  as  the  impair  standard  is  met.  The  first  circumstance  is 
 where  an  incumbent  LEC,  for  the  primary  purpose  of  causing  a  particular  network  to  be 
 evaluated  under  the  stricter  necessary  standard  in  order  to  avoid  its  unbundling 
 obligation,  implements  only  a  minor  modification  to  the  network  element  to  make  the 
 element  proprietary  in  nature.  54  Denying  a  requesting  carrier  access  to  the  element  in 
 this  circumstance  would  not  encourage  innovation  and  investment  by  the  incumbent  LEC, 

 51  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15641,  para.  282. 
 52  U.  S.  Department  of  Justice  and  Federal  Trade  Commission,  Antitrust  Guidelines  for  the 
 Licensing  of  Intellectual  Property  (issued  Apr.  6,  1995).  The  Guidelines  are  limited  to  patents,  copyrights  and 
 trade  secrets  and,  like  the  instant  rulemaking,  address  the  potential  anticompetitive  effects  that  may  accrue  to 
 holders  of  patents,  copyrights  or  trade  secrets. 

 53  47  U.  S.  C.    251(  d)(  2). 

 54  Some  commenters  have  expressed  concern  that  the  definition  of  proprietary  in  nature 
 should  not  provide  a  vehicle  for  incumbent  LECs  to  make  minor  modifications  to  network  technology  to 
 claim  that  the  element  must  then  be  analyzed  under  the  more  restrictive  necessary  standard.  See  Cable  & 
 Wireless  Comments  at  17-  18;  GSA  Comments  at  8. 
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 which  is  one  of  the  goals  of  the  1996  Act,  55  and  would  reduce  consumer  benefits  by 
 failing  to  facilitate  rapid  deployment  of  competitive  services.  The  second  circumstance  is 
 where  an  incumbent  LEC  cannot  demonstrate  that  the  information  or  functionality  that  it 
 claims  is  proprietary  differentiates  its  services  from  its  competitors  services,  or  is 
 otherwise  competitively  significant.  56  Information  or  functionalities  that  do  not 
 distinguish  an  incumbent  LECs  service  from  that  of  its  competitors  are  unlikely  to  be  the 
 focus  of  an  incumbent  LECs  efforts  to  innovate,  and  therefore  do  not  require  the  high 
 level  of  protection  normally  afforded  to  proprietary  elements  under  the  necessary 
 standard.  The  third  circumstance  is  where  we  find  that  lack  of  access  to  the  proprietary 
 element  would  jeopardize  the  goal  of  the  1996  Act  to  bring  rapid  competition  to  the 
 greatest  number  of  customers.  57  In  such  a  circumstance,  we  may  find  that  the  incumbent 
 LECs  asserted  proprietary  interest  is  outweighed  by  the  benefits  of  facilitating  more 
 rapid  deployment  of  competition  for  the  greatest  number  of  consumers.  Given  the 
 significance  of  the  incumbent  LECs  proprietary  interests,  and  our  commitment  to  do 
 nothing  to  discourage  innovation  and  investment  by  all  carriers,  we  do  not  envision, 
 outside  of  these  limited  circumstances,  unbundling  a  proprietary  network  element  unless 
 the  necessary  standard  is  satisfied.  Moreover,  we  cannot  imagine  a  situation  where  we 
 would  order  unbundling  of  a  proprietary  element  unless  the  impair  standard  has  been 
 met. 

 38.  We  agree  with  those  commenters  that  argue  that  proprietary  in  nature 
 applies  only  to  the  proprietary  interests  of  the  incumbent  LEC  and  not  to  proprietary 
 interests  of  third  parties.  58  Limiting  the  definition  of  proprietary  to  interests  held  by  the 
 incumbent  LEC  is  consistent  with  section  251(  d)(  2)(  A)  s  goal  of  preserving  the 
 incumbent  LECs  incentives  to  innovate.  Moreover,  sections  251(  c)  and  251(  d)(  2),  by 
 their  terms,  apply  only  to  the  proprietary  interests  of  those  parties  subject  to  the  Acts 
 unbundling  obligations  --  incumbent  LECs.  Thus,  section  251(  d)(  2)  only  indirectly 
 affects,  if  at  all,  the  innovation  incentives  of  third  parties.  59 

 55  Joint  Explanatory  Statement  at  1  (The  1996  Act  provides  for  a  pro-  competitive,  de-regulatory 
 national  policy  framework  designed  to  accelerate  rapidly  private  sector  deployment  of  advanced 
 telecommunications  and  information  technologies  and  services  to  all  Americans  by  opening  all 
 telecommunications  markets  to  competition.  .  .). 

 56  Significant  differences  in  the  incumbent  LECs  service  may  be  derived  from  characteristics 
 of  the  service  that  better  satisfy  consumer  preferences  in  terms  of  price,  quality  or  features  that  are  unavailable 
 elsewhere.  See  Lancaster,  Allocation  and  Distribution  Theory:  Technological  Innovation  and  Progress,  56 
 Amer.  Econ.  Rev.  :  Papers  &  Proc.  14,  20-  22  (1966).  See  generally  A  New  Approach  to  Consumer  Theory,  74 
 J.  Pol.  Econ.  132  (1966);  Tirole,  The  Theory  of  Industrial  Organization  99  (1988)  (discussing  Lancaster 
 approach  to  product  characteristics). 

 57  See  Joint  Explanatory  Statement  at  1. 

 58  ALTS  Comments  at  17-  18;  Qwest  Comments  at  37.  The  Commission  is  currently 
 considering  the  related  question  of  third-  party  proprietary  interests  in  a  separate  proceeding.  See  Petition  of 
 MCI  for  Declaratory  Ruling,  CC  Docket  No.  96-  98,  File  No.  CCBPol.  97-  4  (March  14,  1997)  (MCI  Petition). 

 59  Third-  party  innovation  investment  incentives  are  unlikely  to  be  adversely  affected  by 
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 39.  Finally,  we  reject  CompTels  argument  that  we  should  limit  the  application 
 of  proprietary  network  elements  to  those  circumstances  in  which  the  incumbent  LEC 
 discloses  proprietary  information.  60  CompTel  argues  that  if  unbundling  merely 
 provides  a  requesting  carrier  with  the  use  of  a  proprietary  methodology,  but  does  not 
 disclose  or  access  the  proprietary  information  itself,  the  element  is  not  proprietary.  61 
 We  find  that  the  use  or  disclosure  rationale  does  not  promote  the  goal  of  the  Act  to 
 encourage  investment  and  innovation,  and  thus  is  at  odds  with  our  decision  to  define 
 proprietary  along  intellectual  property  categories. 

 40.  Pursuant  to  patent  law,  patent  holders  trade  monopoly  rights  in  their 
 inventions  in  exchange  for  a  requirement  that  they  disclose  the  technical  details 
 underlying  the  patent.  Patent  holders  thus  recover  their  investments  by  obtaining  a 
 monopoly  on  the  use  of  their  protected  intellectual  property.  We  agree  with  Ameritech 
 that  limiting  the  definition  of  proprietary  to  requests  that  would  reveal  proprietary 
 information  would  turn  intellectual  property  law  and  incentives  to  innovate  on  their  head; 
 instead  of  granting  exclusivity  in  exchange  for  disclosure,  it  would  withhold  exclusivity 
 unless  needed  to  avoid  disclosure.  62  Similarly,  under  copyright  laws,  an  illegal  copy  or 
 use  of  a  protected  work  can  damage  an  authors  incentive  to  produce  the  work.  63  We 
 note,  however,  that  the  disclosure  of  sensitive  customer  information  contained  in 
 unbundled  network  element  must  be  consistent  with  the  requirements  of  section  222. 

 3.  The  Necessary  Standard  of  Section  251(  d)(  2)(  A) 
 a.  Background 

 41.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  defined  a 
 necessary  network  element  as  one  that  is  a  prerequisite  to  competition.  The 
 Commission  stated  that  in  some  instances  it  will  be  necessary  for  requesting  carriers  to 

 incumbent  LEC  sharing  of  proprietary  information  because  third  parties  recover  their  innovation  investments 
 through  fees  paid  to  them  by  the  incumbent  LEC.  Other  third  party  issues  are  addressed  in  the  pending  MCI 
 Petition. 

 60  CompTel  Comments  at  19.  See  also  RCN  Comments  at  10. 

 61  CompTel  Comments  at  19.  See  also  ALTS  Comments  at  16.  The  Commission  concluded 
 in  the  Local  Competition  First  Report  and  Order  that  concerns  about  the  proprietary  nature  of  a  network 
 element  would  arise  only  if  the  proprietary  information  would  be  revealed.  Specifically,  it  concluded  that 
 loops  are,  in  general,  not  proprietary  in  nature  because  parties  did  not  contend  that  proprietary  information 
 associated  with  certain  loop  equipment  would  be  revealed  if  loops  using  such  equipment  were  unbundled. 
 Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15694,  para.  388. 

 62  Ameritech  Comments  at  44. 

 63  Under  CompTels  proposal  (CompTel  Comments  at  19),  the  Commission  would  be 
 required  to  find  that  Ameritechs  incentive  to  create  proprietary  functionalities  like  Privacy  Manager  would 
 not  be  adversely  affected  even  though  Ameritech  would  be  subject  to  forced  sharing  of  Privacy  Manager,  and 
 requesting  carrier  customers  could  obtain  the  benefits  of  Privacy  Manager  without  appropriating  the 
 underlying  software. 
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 Federal  Communications  Commission  FCC  99-  238 
 26 
 obtain  access  to  proprietary  elements  (e.  g.,  elements  with  proprietary  protocols  or 
 elements  containing  proprietary  information)  because  without  such  elements,  the  ability 
 of  requesting  carriers  to  compete  would  be  significantly  impaired  or  thwarted.  64  It  also 
 acknowledged  that  prohibiting  incumbents  from  refusing  access  to  proprietary  elements 
 could  reduce  their  incentives  to  offer  innovative  services.  65  The  Commission  did  not 
 identify  any  proprietary  elements  subject  to  unbundling  in  the  Local  Competition  First 
 Report  and  Order,  except  that  it  acknowledged  the  claims  of  several  parties  that  access  to 
 the  incumbent  LECs  advanced  intelligent  network  (AIN)  may  raise  proprietary  concerns. 
 It  nevertheless  concluded  that  access  to  AIN  is  necessary  within  the  meaning  of  section 
 251(  d)(  2)(  A).  66 

 42.  In  the  Notice,  the  Commission  sought  comment  on  the  definition  of 
 necessary  for  the  purpose  of  determining  proprietary  network  elements  that  must  be 
 unbundled  pursuant  to  the  requirements  of  section  251(  d)(  2)(  A),  as  well  as  on  what 
 factors  or  criteria  the  Commission  should  apply  in  determining  whether  access  to  a 
 network  element  is  necessary.  67 

 43.  Several  competitive  LECs  assert  that  in  determining  whether  unbundling  of 
 a  proprietary  network  element  is  necessary,  the  Commission  must  evaluate  whether  the 
 requesting  carrier  can  obtain  comparable  functionality  from  an  alternative  network 
 element.  They  maintain  that  if  the  requesting  carrier  would  experience  a  material  loss  in 
 functionality  without  the  network  element  that  that  the  incumbent  LEC  claims  is 
 proprietary,  then  the  incumbent  LECs  network  element  is  necessary  within  the 
 meaning  of  section  251(  d)(  2)(  A).  68  The  incumbent  LECs  assert  generally  that  both  the 
 necessary  and  impair  standards  require  an  analysis  of  whether  lack  of  access  to  their 
 networks  elements,  taking  into  consideration  alternatives  outside  the  incumbents 
 network,  would  deny  an  efficient  competitor  a  meaningful  opportunity  to  compete.  These 
 commenters  argue  that  the  necessary  standard  requires  the  Commission  to  accept  a 
 higher  degree  of  proof  that  alternatives  to  the  element  are  not  available.  69 

 64  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15641,  para.  282. 
 65  Id.. 
 66  Id.  at  15748,  para.  497. 
 67  Notice  at  paras.  16,  20. 
 68  Cable  &  Wireless  Comments  at  19;  Net2000  Comments  at  9-  10.  See  also  NEXTLINK 
 Comments  at  11. 
 69  See,  e.  g.,  Ameritech  Comments  at  37-  40;  SBC  Comments  at  14;  US  West  Comments  at  23- 
 26. 
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 Federal  Communications  Commission  FCC  99-  238 
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 b.  Discussion 
 44.  We  conclude  that  a  proprietary  network  element  is  necessary  within  the 
 meaning  of  section  251(  d)(  2)(  A)  if,  taking  into  consideration  the  availability  of  alternative 
 elements  outside  the  incumbents  network,  including  self-  provisioning  by  a  requesting 
 carrier  or  acquiring  an  alternative  from  a  third-  party  supplier,  lack  of  access  to  that 
 element  would,  as  a  practical,  economic,  and  operational  matter,  preclude  a  requesting 
 carrier  from  providing  the  services  it  seeks  to  offer.  We  agree  with  NTIA  that  the  proper 
 focus  of  the  necessary  standard  is  whether  access  to  the  incumbent  LECs  proprietary 
 element  is  absolutely  required  for  the  competitors  provision  of  its  intended  service.  70  We 
 find,  therefore,  that  an  incumbent  LEC  must  provide  access  to  a  proprietary  element,  if 
 withholding  access  to  the  element  would  prevent  a  competitor  from  providing  the  service 
 it  seeks  to  offer.  In  other  words,  we  conclude  that  an  incumbent  LECs  proprietary 
 network  element  would  only  be  available  to  a  competitor  if  the  competitor  is  unable  to 
 offer  service,  without  access  to  the  element,  because  no  practical,  economic,  and 
 operational  alternative  is  available,  either  by  self-  provisioning  or  from  other  sources. 

 45.  The  standard  we  assign  to  the  term  necessary,  as  used  in  section 
 251(  d)(  2)(  A),  is  consistent  with  the  Supreme  Courts  decision  because  it  considers 
 alternatives  available  outside  the  incumbents  network  and  gives  substance  to  the 
 meaning  of  necessary.  Moreover,  insofar  as  the  standard  focuses  on  the  competitors 
 ability  to  furnish  a  desired  service,  and  not  merely  on  whether  profits  are  increased  by 
 using  the  incumbents  network,  the  standard  is  also  consistent  with  the  Courts  instruction 
 that  we  must  apply  some  limiting  standard,  rationally  related  to  the  goals  of  the  Act.  71 

 46.  This  necessary  standard  differs  from  the  impair  standard  we  adopt 
 below  because  a  necessary  element  would,  if  withheld,  prevent  a  carrier  from  offering 
 service,  while  an  element  subject  to  the  impair  standard  would,  if  withheld,  merely  limit 
 a  carriers  ability  to  provide  the  services  it  seeks  to  offer.  72  We  therefore  disagree  with 
 the  standards  proposed  by  ALTS  and  other  competitive  LECs  that  access  to  a  proprietary 
 element  is  necessary  if  the  entrant  would  experience  a  material  loss  in  functionality 
 without  access  to  the  element.  73  A  standard  based  on  a  test  of  material  loss  in 
 functionality  requires  only  that  the  competitive  LECs  ability  to  compete  be  materially 
 affected  in  some  way,  as  opposed  to  precluded,  and  ignores  the  higher  degree  of 
 protection  normally  afforded  intellectual  property  rights.  74  The  incumbent  LECs  argue 
 that  the  necessary  standard  is  a  higher  standard  that  is  intended  to  preserve  their 

 70  NTIA  Comments  at  27. 
 71  Iowa  Utils.  Bd.,  119  S.  Ct.  at  735-  36. 
 72  See  Vermont  PSB  Comments  at  10-  11;  CPI  Comments  at  7-  9. 
 73  ALTS  Comments  at  19.  See  also  Cable  &  Wireless  Comments  at  3-  4;  MCI  WorldCom 
 Comments  at  18-  19;  Net2000  Comments  at  9;  NEXTLINK  Comments  at  10-  12. 
 74  See  supra  Section  IV(  B)(  2). 
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 Federal  Communications  Commission  FCC  99-  238 
 28 
 incentive  to  invest  in  proprietary  protocols,  75  and  that  access  to  a  proprietary  element  is 
 necessary  only  if  lack  of  access  to  that  element  would  deny  an  efficient  competitor  a 
 meaningful  opportunity  to  compete.  76  We  agree  with  the  incumbent  LECs  concerns 
 regarding  the  preservation  of  their  investment  incentives.  We  believe  that  our  standard, 
 by  requiring  that  a  requesting  carrier  be  precluded  as  a  practical,  economic,  and 
 operational  matter  from  providing  service  without  access  to  the  proprietary  information, 
 sufficiently  protects  the  incumbents  proprietary  property  from  nonessential  access  by 
 competitors. 

 47.  We  reject,  however,  the  incumbent  LECs  proposal  to  base  the  necessary 
 standard  on  the  requirements  of  an  efficient  competitor.  As  we  explain  below  in  our 
 discussion  of  the  impair  standard,  we  do  not  affirmatively  base  our  unbundling  standard 
 on  an  efficient  competitor  because  we  conclude  that  the  marketplace  is  better  able  than 
 regulators  to  distinguish  efficient  competitors  from  inefficient  competitors.  77  We  also 
 note  that  GTE  and  SBC  state  that  few,  if  any,  network  elements  are  entirely  proprietary  in 
 nature.  78  Other  commenters  point  out  that  most  network  equipment  and  services  are  non-proprietary 
 because  of  the  need  for  interoperability  of  networks.  79  We  therefore  expect 
 that  the  necessary  standard  will  be  invoked  only  when  there  is  a  serious  question  of 
 whether  access  to  the  element  will  infringe  upon  the  incumbents  intellectual  property. 

 4.  The  Impair  Standard  of  Section  251(  d)(  2)(  b) 
 a.  Background 

 48.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  adopted 
 a  dictionary  definition  of  the  term  impair  that  means  to  make  or  cause  to  become 
 worse;  diminish  in  value.  The  Commission  stated  that  generally  .  .  .  an  entrants  ability 
 to  offer  a  telecommunications  service  is  diminished  in  value  if  the  quality  of  the  service 
 the  entrant  can  offer,  absent  access  to  the  requested  element,  declines  and/  or  the  cost  of 
 providing  the  service  rises.  80  In  particular,  the  Commission  interpreted  the  impair 
 standard  as  requiring  an  evaluation  of  whether  the  failure  of  an  incumbent  to  provide 

 75  See,  e.  g.,  GTE  Comments  at  26;  SBC  Comments  at  14. 
 76  See,  e.  g.,  Ameritech  Comments  at  37-  40;  SBC  Comments  at  14;  US  West  Comments  at  23- 
 26. 
 77  See  infra  Section  IV(  B)(  4). 

 78  SBC  Comments  at  12;  GTE  Comments  at  26. 
 79  See,  e.  g.,  Choice  One  Joint  Comments  at  11-  12;  KMC  Comments  at  11. 
 80  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15643,  para.  285  (citing 
 Random  House  College  Dictionary  665  (rev.  ed.  1984))  . 
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 access  to  a  network  element  would  decrease  the  quality,  or  increase  the  financial  or 
 administrative  cost  of  the  service  a  requesting  carrier  seeks  to  offer.  81 

 49.  In  the  Notice,  we  sought  comment  on  the  meaning  of  the  term  impair,  and 
 asked  whether  we  should  adopt  a  standard  under  which  we  examine  whether  the  new 
 entrants  ability  to  offer  a  telecommunications  service  in  a  competitive  manner  is 
 materially  diminished  in  value.  82  We  also  sought  comment  on  the  factors  or  criteria  we 
 should  adopt  to  determine  whether  failure  to  provide  access  to  the  incumbent  LECs 
 network  elements  would  impair  an  entrants  ability  to  provide  service  within  the  meaning 
 of  section  251(  d)(  2).  83 

 50.  The  incumbent  LECs  argue  generally  that  a  requesting  carrier  is  impaired  if, 
 after  taking  into  account  the  availability  of  elements  from  alternative  sources  outside  the 
 incumbents  network,  lack  of  access  to  the  requested  element  would  deny  a  competitor  a 
 meaningful  opportunity  to  compete.  This  standard  is  similar  to  the  standard  the 
 incumbent  LECs  propose  for  the  necessary  standard  under  section  251(  d)(  2)(  A).  84 
 GTE  argues  that  failure  to  provide  access  to  a  network  element  would  impair  a  requesting 
 carriers  ability  to  provide  service  only  where  the  element  is  essential  to  competition,  and 
 there  is  convincing  evidence  that  the  carrier  cannot  compete  effectively  using  an 
 alternative  network  element.  85  Several  incumbent  also  maintain  that  we  must  consider  all 
 available  alternatives,  including  those  available  from  other  suppliers  and  through  self-provisioning 
 by  the  requesting  carrier.  86  The  Texas  PUC  proposes  that  a  competitor  is 
 impaired  if,  looking  at  the  marketplace  as  a  whole,  lack  of  access  to  the  incumbents 
 network  element  causes  it  to  incur  an  increase  in  cost  such  that  the  competitor  does  not 
 have  a  meaningful  opportunity  to  compete.  87  The  competitive  LECs  and  the  Illinois 
 Commerce  Commission  propose  a  standard  by  which  a  carrier  would  be  impaired  if,  after 
 taking  into  account  the  availability  of  elements  from  alternative  sources  outside  the 
 incumbents  network,  lack  of  access  to  the  requested  element  would  materially  diminish 
 the  requesting  carriers  ability  to  provide  service.  88  The  difference  between  the  standard 

 81  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15643,  para.  285. 
 82  Notice  at  para.  17. 
 83  Id.  at  para.  20. 
 84  See,  e.  g.,  Bell  Atlantic  Comments  at  7-  9;  BellSouth  Comments  at  21-  22;  SBC  Comments  at 
 5,  14;  US  West  Comments  at  10-  11. 
 85  GTE  Comments  at  14-  20. 

 86  See,  e.  g.,  Ameritech  Joint  Reply  Comments  at  16-  17. 
 87  Texas  PUC  Comments  at  7-  8. 
 88  See,  e.  g.,  Ad  Hoc  Comments  at  4-  5;  Cable  &  Wireless  Comments  at  10-  14;  Choice  One 
 Joint  Comments  at  6-  7;  Excel  Comments  at  6-  8;  MCI  WorldCom  Comments  at  15-  18;  Northpoint  Comments 
 at  6-  10;  RCN  Comments  at  12;  TRA  Comments  at  19-  23;  Illinois  Commission  Comments  at  6-  7. 
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 proposed  by  the  competitive  LECs  and  the  standard  proposed  by  the  incumbent  LECs  is 
 essentially  the  difference  between  whether  lack  of  access  to  an  unbundled  network 
 element  denies  or  materially  diminishes  the  ability  of  a  competitor  to  provide  the 
 services  it  seeks  to  offer.  Many  competitive  LECs  also  assert  that  the  incumbent  LECs 
 failure  to  provide  access  to  an  element  would  impair  a  requesting  carriers  ability  to 
 provide  service  where  there  is  no  competitive  wholesale  market  for  the  requested 
 element.  89 

 b.  Discussion 
 (i)  The  Impair  analysis 

 51.  We  conclude  that  the  failure  to  provide  access  to  a  network  element  would 
 impair  the  ability  of  a  requesting  carrier  to  provide  the  services  it  seeks  to  offer  if, 
 taking  into  consideration  the  availability  of  alternative  elements  outside  the  incumbents 
 network,  including  self-  provisioning  by  a  requesting  carrier  or  acquiring  an  alternative 
 from  a  third-  party  supplier,  lack  of  access  to  that  element  materially  diminishes  a 
 requesting  carriers  ability  to  provide  the  services  it  seeks  to  offer.  We  find  that  a 
 materiality  component,  although  it  cannot  be  quantified  precisely,  requires  that  there  be 
 substantive  differences  between  the  alternative  outside  the  incumbent  LECs  network  and 
 the  incumbent  LECs  network  element  that,  collectively,  impair  a  competitive  LECs 
 ability  to  provide  service  within  the  meaning  of  section  251(  d)(  2).  90  We  therefore  agree 
 with  the  Illinois  Commerce  Commission  that  where  a  competing  LECs  ability  to  offer  a 
 telecommunications  service  in  a  competitive  manner  is  materially  diminished  in  value 
 without  access  to  that  element,  the  competitors  ability  to  provide  its  desired  services 
 would  be  impaired.  91 

 52.  We  believe  that  a  standard  that  includes  a  materiality  component  gives 
 substance  to  the  impair  standard  of  section  251(  d)(  2)(  B),  and  responds  to  the  Supreme 
 Courts  concern  that  we  apply  some  limiting  standard,  rationally  related  to  the  goals  of 
 the  Act.  92  A  standard  that  includes  a  materiality  component  preserves  requesting 
 carriers  ability  to  provide  service  using  unbundled  elements,  as  contemplated  by  the  Act, 
 and  encourages  them  to  invest  and  innovate.  As  envisioned  by  Congress,  requesting 

 89  See,  e.  g.,  Allegiance  Comments  at  8-  11;  Cable  &  Wireless  Comments  at  6-  10;  Covad 
 Comments  at  14-  18;  Excel  Comments  at  8-  10;  NorthPoint  Comments  at  6-  10. 
 90  See  Cable  &  Wireless  Comments  at  12-  14. 

 91  Illinois  Commission  Comments  at  6-  7.  Illinois  illustrates  the  standard  by  describing  the 
 circumstances  under  which  a  carrier  would  be  impaired.  According  to  the  Illinois  Commerce  Commission, 
 self-  provisioning  a  loop  would  impair  a  requesting  carriers  to  compete  because  it  would  incur  material  up-front 
 installation  costs  and  delays,  and  would  have  to  acquire  access  to  rights-  of-  way  and  undertake  other 
 labor-  intensive  activities  to  replicate  the  incumbents  loop  facilities.  Id. 

 92  We  note  that  courts  have  applied  the  standard  dictionary  definition  of  impair  as  [  t]  o 
 weaken,  to  make  worse,  to  lessen  in  power,  diminish,  or  relax,  or  otherwise  affect  in  an  injurious  manner. 
 See,  e.  g.,  Humana  Inc.  v.  Forsyth,  119  S.  Ct.  710,  717  (1999). 
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 carriers  may  need  each  of  the  three  separate  means  of  providing  service  (resale  of  the 
 incumbent  LECs  service,  use  of  unbundled  incumbent  LEC  network  elements, 
 deployment  of  self-  provisioned  facilities),  or  various  combinations  of  these  means,  in 
 order  to  serve  different  customer  classes  in  different  areas.  The  purchase  of  unbundled 
 network  elements  from  the  incumbent  should  serve  as  a  transitional  strategy  that  will 
 provide  requesting  carriers  with  the  ability  to  gain  a  sufficient  volume  of  business  to 
 justify  economical  deployment  of  their  own  facilities. 

 53.  Although  we  recognize  that  the  existence  of  some  significant  level  of 
 competitive  LEC  facilities  deployment  is  probative  of  whether  competitive  LECs  are 
 impaired  from  providing  service  within  the  meaning  of  section  251(  d)(  2),  we  decline  to 
 adopt  the  incumbent  LECs  position  that  the  presence  of  a  single  competitor  providing 
 service,  without  using  the  incumbents  unbundled  network  elements,  is  dispositive 
 evidence  that  a  competitors  ability  to  provide  service  generally  would  not  be  impaired 
 without  access  to  such  elements.  93  According  to  Bell  Atlantic,  if  an  efficient  competitor 
 can  and  does  provide  service  without  access  to  the  incumbents  network  element,  it  is 
 irrelevant  whether  a  less  efficient  competitor  might  claim  that  it  would  be  impaired 
 without  access  to  the  element.  94  We  find  that  the  efficiency  argument  raised  by  Bell 
 Atlantic  and  other  incumbent  LECs  is  more  relevant  to  the  length  of  time  a  competitor  has 
 been  in  business  than  to  the  efficiencies  created  by  the  competitors  inherent  capabilities 
 or  cost  structure.  More  importantly,  however,  we  agree  with  MCI  WorldCom  that  the 
 Act  is  not  calibrated  to  the  performance  of  the  company  whose  business  plan  allows  it  to 
 rely  the  least  on  the  incumbent  LECs  network  elements.  95  The  provisions  of  the  1996 
 Act  do  not  contemplate  that  either  the  incumbent  LEC  or  the  regulator  will  determine 
 whether  a  particular  carrier  is  efficient.  Rather,  the  Act  is  designed  to  create  a 
 regulatory  framework  that  requires  incumbent  LECs  to  make  network  elements  subject  to 
 the  unbundling  obligations  of  section  251  available  to  all  requesting  carriers,  subject  to 
 the  requirements  of  section  251(  d)(  2),  and  allows  the  marketplace  to  determine  ultimately 
 which  competitors  thrive  or  survive.  96 

 54.  Moreover,  the  ability  of  one  or  more  competitors  to  serve  certain  customers 
 in  a  particular  market  is  not  dispositive  of  whether  competitive  LECs  without  unbundled 
 access  to  the  incumbent  LECs  facilities  are  able  to  compete  for  other  customers  in  the 
 same  market  or  for  customers  in  other  markets.  In  some  markets,  particularly  those 
 markets  serving  high-  volume  business  customers,  it  may  be  practical  and  economical  for 
 competitive  LECs  to  compete  using  self-  provisioned  facilities.  In  other  markets, 

 93  Bell  Atlantic  Comments  at  14;  US  West  Comments  at  12. 
 94  Bell  Atlantic  Comments  at  9. 
 95  MCI  WorldCom  Reply  Comments  at  23-  24. 
 96  See  NTIA  Comments  at  5-  6,  n.  16  (  The  obvious  conclusion  [of  the  market  opening 
 provisions  of  the  1996  Act]  is  that  Congress  sought  to  foster  entry  by  multiple  firms  and  then  let  competitive 
 market  processes  distinguish  the  efficient  providers  from  the  inefficient  ones.). 
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 however,  typically  those  markets  consisting  of  residential  consumers  and  small 
 businesses,  the  delay  and  costs  associated  with  self-  provisioning  a  network  element  will 
 preclude  those  same  competitors,  or  others,  from  assuming  the  risk  of  entry,  unless  they 
 can  purchase  unbundled  elements  from  the  incumbent.  97  We  agree  with  the  commenters 
 that  point  out  that  we  cannot  evaluate  the  needs  of  every  potential  carrier  seeking  access 
 to  each  network  element  on  a  case-  by-  case  basis.  98  We  conclude,  however,  that  we 
 should  not  adopt  rules  that  would  deny  access  to  network  elements  to  all  competitors 
 based  on  the  presence  of  a  single  competitor  that  has  been  able  to  enter  without  the  use  of 
 a  particular  unbundled  network  element  from  the  incumbent  LEC. 

 55.  We  believe  that  Congress  rejected  implicitly  the  argument  that  the  presence 
 of  a  single  competitor,  alone,  should  be  dispositive  of  whether  a  competitive  LEC  would 
 be  impaired  within  the  meaning  of  section  251(  d)(  2).  For  example,  although  Congress 
 fully  expected  cable  companies  to  enter  the  local  exchange  market  using  their  own 
 facilities,  including  self-  provisioned  loops,  Congress  still  contemplated  that  incumbent 
 LECs  would  be  required  to  offer  unbundled  loops  to  requesting  carriers.  99  A  standard  that 
 would  be  satisfied  by  the  existence  of  a  single  competitive  LEC  using  a  non-  incumbent 
 LEC  element  to  serve  a  specific  market,  without  reference  to  whether  competitive  LECs 
 are  impaired  under  section  251(  d)(  2),  would  be  inconsistent  with  the  Acts  goal  of 
 creating  robust  competition  in  telecommunications.  In  particular,  such  a  standard  would 
 not  create  competition  among  multiple  providers  of  local  service  that  would  drive  down 
 prices  to  competitive  levels.  Indeed,  such  a  standard  would  more  likely  create  stagnant 
 duopolies  comprised  of  the  incumbent  LEC  and  the  first  new  entrant  in  a  particular 
 market.  An  absence  of  multiple  providers  serving  various  markets  would  significantly 
 limit  the  benefits  of  competition  that  would  otherwise  flow  to  consumers. 

 56.  On  the  other  hand,  we  are  not  persuaded  by  arguments  of  competitive  LECs 
 that  the  impair  standard  is  met  only  once  it  is  determined  that  a  wholesale  market  exists 
 for  a  particular  element.  100  We  agree  with  the  incumbent  LECs  that  that  basing  the 
 impair  standard  on  the  existence  of  a  wholesale  market  does  not  take  into  consideration 

 97  See,  e.  g.,  Qwest  Comments  at  18  (  The  fact  that  some  CLECs  are  engaging  in  self-  supply 
 of  network  elements  also  is  not  evidence  of  lack  of  impairment.  It  is  evidence  only  that  for  some  carriers,  in 
 some  instances,  for  some  customers,  during  particular  time  periods,  in  particular  geographic  areas,  they  are 
 able  to  cost-  justify  self-  supply.);  AT&  T  Reply  Comments  at  120,  123-  24  and  Tab  B,  Aff.  of  R.  Glenn 
 Hubbard/  William  H.  Lehr/  Janusz  A.  Ordover/  Robert  D.  Willig,  at  paras.  36-  38;  MCI  WorldCom  Reply 
 Comments  at  36-  37. 

 98  See  Ameritech  Comments  at  36;  Choice  One  Joint  Comments  at  12-  13;  CPI  Comments  at 
 13;  KMC  Comments  at  7;  MCI  WorldCom  Comments,  Tab  2,  Decl.  of  John  E.  Kwoka,  at  para.  38;  Prism 
 Comments  at  9-  10. 

 99  Joint  Explanatory  Statement  at  148  (recognizing  potential  of  cable  companies  to  become 
 facilities-  based  competitors  within  the  meaning  of  section  271(  c)(  1)(  A),  and  stating  that  competitors  will  still 
 need  access  to  the  incumbent  LECs  network.). 

 100  See,  e.  g.,  Allegiance  Comments  at  8-  11;  Cable  &  Wireless  Comments  at  6-  10;  Covad 
 Comments  at  14-  18;  Excel  Comments  at  8-  10;  NorthPoint  Comments  at  6-  10. 
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 self-  provisioning  as  a  viable  substitute  to  the  incumbent  LECs  network  elements.  101  The 
 Supreme  Court  decision  in  Iowa  Utils.  Bd.  expressly  faulted  the  Commissions  analysis  in 
 the  Local  Competition  First  Report  and  Order  for  not  comparing  use  of  the  incumbent 
 LECs  element  with  self-  provision  or  with  purchas[  ed  elements]  from  another 
 provider.  102  We  find  that,  in  order  to  thoroughly  evaluate  the  availability  of  alternative 
 elements  outside  of  the  incumbent  LECs  network,  we  must  consider  elements  available 
 from  all  sources,  including  those  elements  available  from  third-  party  suppliers  and 
 through  self-  provisioning.  103 

 57.  Several  of  the  incumbent  LECs  argue  that  our  standard  should  be  based  on 
 an  analysis  similar  to  the  one  used  by  courts  in  determining  whether,  according  to  the 
 essential  facilities  doctrine,  a  firm  must  share  its  facilities  with  competitors.  104  We 
 disagree.  Although  we  acknowledge  that  the  Supreme  Court  referred  to  the  possibility  of 
 adopting  a  limiting  standard  based  on  the  essential  facilities  doctrine,  105  we  find  nothing 
 in  the  legislative  history  or  statutory  language  of  the  1996  Act,  or  in  the  Courts  decision 
 that  requires  us  to  apply  that  doctrine  in  determining  which  network  elements  the 
 incumbent  LECs  must  unbundle.  Indeed,  the  Court  expressly  declined  to  decide,  as  a 
 matter  of  law,  whether  the  essential  facilities  doctrine  is  mandated  by  section  251(  d).  106 
 Further,  we  believe  that  the  standard  under  section  251(  d)  better  reflects  the  overall  goals 
 of  the  Act.  Accordingly,  as  discussed  more  fully  below,  we  describe  several  factors  that 
 should  be  considered  in  determining  whether  a  particular  network  element  must  be 
 unbundled  pursuant  to  section  251(  c)(  3).  107 

 58.  As  an  initial  matter,  the  legislative  history  and  statutory  language  of  the  Act 
 indicate  that  Congress  did  not  intend  to  codify  the  essential  facilities  doctrine  when  it 
 enacted  section  251(  d)(  2).  Specifically,  the  legislative  history  indicates  that  Congress 

 101  Ameritech  Joint  Reply  Comments  at  17. 
 102  Iowa  Utils.  Bd.,  119  S.  Ct.  at  735. 
 103  ALTS  points  out  that  although  new  entrants  always  have  the  potential  of  offering  service 
 using  self-  provisioned  elements,  the  Act  contemplates  more  immediate  entry  by  competitors  through  the  use 
 of  resale  and  unbundled  network  elements.  ALTS  Reply  Comments  at  19-  20.  The  unbundling  standard  that 
 we  adopt  does  not  allow  for  the  incumbents  unbundling  obligation  to  be  eliminated  based  merely  upon  a 
 showing  that  a  requesting  carrier  has  the  potential  to  self-  provision  or  acquire  facilities  at  some  indefinite  time 
 in  the  future.  This  would  be  inconsistent,  as  ALTS  suggests,  with  the  Acts  goal  to  encourage  for  all 
 consumers  rapid  deployment  of  competitive  alternatives.  The  unbundling  analysis  that  we  undertake 
 considers  instead  the  current  facts  in  the  marketplace. 

 104  See,  e.  g.,  Ameritech  Comments  at  28-  32;  GTE  Comments  at  14-  20;  US  West  Comments  at 
 6-  7. 
 105  Iowa  Utils.  Bd.,  119  S.  Ct.  at  734. 

 106  Id. 
 107  See  infra  Sections  (IV)(  B)(  4)(  b)(  ii)  and  (IV)(  C). 
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 was  aware  of  antitrust  principles  and  the  essential  facilities  doctrine,  in  particular,  when  it 
 considered  the  1996  Act.  At  least  since  1991,  the  Senate  had  considered 
 telecommunications  legislation  that  expressly  referred  to  essential  facilities.  108  Yet,  in 
 spite  of  its  awareness  of  this  doctrine,  Congress  did  not  adopt  an  essential  facilities  test 
 for  unbundling  of  network  elements.  Congress  chose,  instead,  to  adopt  unbundling 
 requirements  that  are  based  upon  the  necessary  and  impair  standards  of  section 
 251(  d)(  2).  Moreover,  section  601(  b)(  1)  of  the  Act  expressly  preserves  the  existing 
 antitrust  laws,  indicating  that  Congress  intended  for  the  Act  to  augment,  not  replace, 
 traditional  antitrust  rules.  109 

 59.  The  essential  facilities  doctrine  is  an  antitrust  doctrine  that  imposes  an 
 obligation  on  a  firm  that  controls  facilities  that  are  essential  for  the  existence  of 
 competition  between  itself  and  a  competitor  to  share  such  facilities  on  non-  discriminatory 
 terms.  110  The  doctrine  creates  a  narrow  exception  to  the  general  antitrust  presumption 
 that  a  single  firm  may  decline  to  deal  with  another  firm.  111  Under  the  essential  facilities 
 doctrine,  a  court  may  require  a  firm  possessing  monopoly  control  over  an  essential  input 
 to  deal  with  a  competitor,  if  it  is  shown  that  the  monopolist  is  misusing  control  of  an 
 essential  facility  to  foreclose  competition  in  a  downstream  market.  112 

 60.  Although  we  find  that  the  essential  facilities  doctrine  promotes  the  same 
 economic  and  policy  goals  embodied  in  the  1996  Act,  we  find  it  to  be  of  limited 
 assistance  in  our  analysis  of  the  unbundling  obligations  of  the  Act  because,  as  NTIA 
 explains,  the  Act  plainly  imposes  on  incumbent  LECs  a  broader  duty  to  deal  with 
 competitors  than  does  the  essential  facilities  doctrine.  113  In  particular,  the  essential 
 facilities  doctrine  differs  from  the  analysis  the  Commission  must  undertake  under  section 
 251(  d)(  2)  because  Congress  has  already  created  an  affirmative  obligation  for  incumbent 
 LECs  to  make  their  facilities  available  to  competitors.  114  Specifically,  section  251(  c)(  3) 

 108  MCI  WorldCom  Comments  at  35  (citing  137  Cong.  Rec.  S7054,  S7058  (daily  ed.  June  5, 
 1991)  (reading  S.  1200,  102d  Cong.    202  1991)). 
 109  47  U.  S.  C.    601(  b)(  1). 

 110  See  MCI  WorldCom  Comments  at  28-  29  (citing  Section  2  of  the  Sherman  Act,  15  U.  S.  C.   
 2;  MCI  Telecommunications  Corp.  v.  American  Tel.  &  Tel.  Co.,  708  F.  2d  1081,  1132-  33  (7  th  Cir.  1983))  (MCI 
 v.  AT&  T). 

 111  See  Phillip  Areeda,  Essential  Facilities:  An  Epithet  in  Need  of  Limiting  Principles,  58 
 ANTITRUST  L.  J.  841,  841  (1989);  Olympia  Equipment  Leasing  Co.  v.  Western  Union  Telegraph  Co.,  797 
 F.  2d  370,  376,  reh.  den.  802  F.  2d  217  (7  th  Cir.  1986). 

 112  See  MCI  v.  AT&  T,  708  F.  2d  at  1132-  33. 

 113  NTIA  Comments  at  14-  16. 
 114  See  NTIA  Comments  at  16  (  Indeed,  to  the  extent  that  Congress  considered  the  essential 
 facilities  doctrine  at  all,  it  concluded  that  (1)  the  ILECs  networks  are  essential  facilities  and  (2)  that 
 alternative  providers  must  have  broad  access  to  those  facilities  if  there  was  to  be  local  competition.) 
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 imposes  on  incumbent  LECs  a  general  obligation  to  provide  access  on  an  unbundled  basis 
 to  any  network  elements  that  the  Commission  identifies  under  section  251(  d)(  2).  This 
 obligation  is  not  limited  to  situations  in  which  the  incumbent  is  misusing  control  of  a 
 unique  facility  to  foreclose  competition  in  a  downstream  market.  Rather,  section 
 251(  d)(  2)  requires  incumbents  to  share  their  facilities  if  competitors  are  merely 
 "impaired"  in  their  ability  to  provide  services  they  seek  to  offer.  In  addition,  sections 
 251(  c)(  3)  and  251(  d)(  2)  require  incumbent  LECs  to  make  their  facilities  available  at  cost-based 
 rates,  whereas  the  essential  facilities  doctrine  allows  monopolists  to  continue 
 charging  monopoly  rates  for  use  of  their  facilities.  115 

 61.  It  is  particularly  notable  that  although  the  essential  facilities  doctrine  is 
 referenced  in  several  Supreme  Court  rulings,  the  Supreme  Court  has  never  explicitly 
 adopted  the  doctrine.  116  Moreover,  because  antitrust  jurisprudence  has  not  clearly  defined 
 the  contours  of  the  essential  facilities  doctrine,  the  doctrine  provides  limited  guidance  in 
 developing  a  limiting  standard  under  section  251(  d)(  2).  In  order  to  establish  liability 
 under  the  essential  facilities  doctrine,  a  plaintiff  must  establish  the  existence  of  five 
 elements:  1)  a  monopolist  controls  an  essential  facility;  2)  the  competitor  is  unable  to 
 practically  or  reasonably  duplicate  the  essential  facility;  3)  the  monopolist  denies  a 
 competitor  use  of  the  facility;  4)  the  monopolist  can  feasibly  provide  the  facility;  and  5) 
 there  is  no  legitimate  business  justification  for  denying  access  to  the  facility  the 
 monopolist  controls.  117  Although  the  second  prong  of  this  test  resembles  the  inquiry  the 
 Commission  must  undertake  to  evaluate  the  availability  of  alternative  elements  outside  of 
 the  incumbent  LECs  network,  it  does  not  establish  a  standard  by  which  the  Commission 
 can  measure  the  extent  to  which  the  cost  of  duplicating  the  element  is  economically 
 infeasible,  which,  as  described  below,  is  a  significant  part  of  the  our  unbundling  analysis. 

 (ii)  Factors  for  Determining  Availability  of  Alternative  Network  Elements 

 62.  In  order  to  respond  to  the  Supreme  Courts  decision,  we  consider  whether  a 
 requesting  carriers  ability  to  provide  the  services  that  it  seeks  to  offer  would  be 
 materially  diminished  if  it  were  required  to  use  an  alternative  element  available  outside 
 the  incumbent  LECs  network.  We  agree  with  those  parties  that  argue  that  we  must 
 consider  the  totality  of  the  circumstances  to  determine  whether  an  alternative  to  the 
 incumbent  LECs  network  element  is  available  in  such  a  manner  that  a  requesting  carrier 

 (emphasis  in  original). 
 115  See  Sprint  Comments  at  15-  16. 

 116  Areeda,  supra  note  111,  at  841  (Calling  the  essential  facilities  doctrine  a  so-  called 
 doctrine  because  the  cases  support  the  doctrine  only  by  implication  and  in  a  highly  qualified  way.  .  .  .  It  is 
 less  a  doctrine  than  an  epithet,  indicating  some  exception  to  the  right  to  keep  ones  creation  to  oneself,  but  not 
 telling  us  what  those  exceptions  are.). 

 117  MCI  v.  AT&  T,  708  F.  2d  at  1132-  33. 
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 can  realistically  be  expected  to  actually  provide  service  using  the  alternative.  118  We 
 therefore  take  into  account  alternatives  that  are  available  through  both  self-  provisioning 
 and  from  third-  party  suppliers,  119  and  we  consider  the  extent  to  which  these  alternatives 
 are  available  as  a  practical,  economic,  and  operational  matter. 

 63.  We  are  not  persuaded  by  the  incumbents  argument  that  we  must  look  at 
 each  element  in  isolation  to  determine  whether  or  not  that  element  independently  satisfies 
 section  251(  d)(  2).  120  Such  an  analysis  fails  to  reflect  the  manner  in  which  carriers 
 interconnect  their  networks,  and  ignores  factors  that  would  impair  a  requesting  carriers 
 ability  to  actually  provide  service,  which  is  the  focus  of  section  251(  d)(  2)(  B).  Even  if  a 
 particular  element  may  be  purchased  outside  of  the  incumbent  LECs  network  at 
 reasonable  prices,  other  factors,  including  the  costs  and  delays  associated  with  collocation 
 arrangements,  as  well  as  additional  costs  and  operational  impediments  associated  with  the 
 manual  processes  used  to  interconnect  certain  network  elements,  may  make  it  impossible 
 as  a  practical,  economic,  and  operational  matter  for  a  competitor  to  provide  services  in  the 
 local  market  quickly  and  on  a  wide-  spread  basis. 

 64.  We  acknowledge  that  some  of  the  factors  we  consider  in  our  analysis  may 
 implicate  other  proceedings  or  provisions  of  the  statute.  121  We  therefore  remain  open  to 
 the  possibility  that  issues  that  we  address  under  our  impair  analysis,  (e.  g.,  collocation), 
 could  be  addressed  in  other  contexts,  such  as  in  enforcement  proceedings. 

 65.  Although  we  recognize  that  the  factors  of  cost,  timeliness,  quality,  ubiquity, 
 and  operational  factors  are  only  some  of  the  factors  that  may  influence  a  carriers  decision 
 to  enter  a  particular  market,  we  agree  with  the  California  PUC  that  these  factors  are 
 relevant  to  an  inquiry  of  whether  alternative  sources  of  network  elements  are  reasonably 
 available  from  other  sources,  and  thus,  in  many  cases,  whether  requesting  carriers  are  able 
 to  actually  provide  service  using  the  alternative  element.  122  We  also  agree  with  the 

 118  See,  e.  g.,  McLeod  Comments  at  5  (stating  that  there  are  multiple  dimensions  associated 
 with  the  question  of  the  availability  of  a  particular  network  element  such  as  ubiquity,  economies  of  scale  and 
 scope,  constrained  capital  resources  and  lag  times  associated  with  new  construction);  RCN  Comments  at  12 
 (stating  that  the  Commission  should  consider  how  the  totality  of  the  circumstances  indicates  that  requiring 
 unbundling  of  an  element  would  promote  the  pro-  competitive  purpose  of  the  1996  Act). 

 119  In  this  Order,  when  we  refer  to  the  availability  to  a  requesting  carrier  of  an  element  from  a 
 third-  party  supplier,  we  are  referring  to  a  supplier  other  than  the  incumbent  LEC. 
 120  SBC  Comments  at  9-  11. 

 121  See,  e.  g.,  Deployment  of  Wireline  Services  Offering  Advanced  Telecommunications 
 Capability,  CC  Docket  No.  98-  147,  First  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  14 
 FCC  Rcd  4761  (1998)  (Advanced  Services  First  Report  and  Order  and  FNPRM);  Performance 
 Measurements  and  Reporting  Requirements  for  OSS,  Interconnection,  and  Operator  Services  and  Directory 
 Assistance,  CC  Docket  No.  98-  56,  Notice  of  Proposed  Rulemaking,  13  FCC  Rcd  12817  (1998)  (Performance 
 Measurements  Notice). 

 122  See,  e.  g.,  California  PUC  Reply  Comments  at  3-  8  (stating  that  the  Commission  should 
 evaluate  quality,  reliability,  geographic  scope,  quantity,  time,  cost  and  operational  factors  associated  with 
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 commenters  that  point  out  that  we  cannot  evaluate  the  needs  of  every  potential  entrant  for 
 every  network  element  on  a  carrier-  by-  carrier,  market-  by-  market,  week-  by-  week  (or  other 
 time  period)  basis.  123  We  therefore  will  not  analyze  the  availability  of  alternative 
 elements,  including  those  provided  through  self-  provisioning,  from  the  perspective  of  a 
 carrier  using  any  specific  competitive  strategy  in  a  particular  geographic  market. 

 66.  Although  we  find  it  reasonable  to  consider  cost,  time,  quality,  ubiquity,  and 
 other  factors  associated  with  self-  provisioning  or  acquiring  an  element  from  a  third-  party 
 provider,  we  do  not  base  our  decision  on  cost  models  or  on  the  theoretical  availability  of 
 alternatives  from  other  sources.  Rather,  we  find  the  marketplace  to  be  the  most 
 persuasive  evidence  of  the  actual  availability  of  alternatives  as  a  practical,  economic,  and 
 operational  matter.  As  the  Texas  PUC  stated,  the  Commission  and  the  states  should  base 
 their  decisions  on  marketplace  information,  while  recognizing  that  minor  increases  in  a 
 competitors  costs  must  be  weighed  against  other  factors  such  as  service  quality, 
 technological  innovation,  and  the  loss  of  efficiency  in  a  rapidly  changing  marketplace.  124 
 Discerning  the  practical,  economic,  and  operational  viability  of  self-  provisioning  or 
 obtaining  alternative  elements  from  third-  party  providers  is  technical,  complex,  and 
 subject  to  considerable  uncertainty.  We  believe,  however,  that  an  examination  of  the 
 factors  we  have  identified  provides  the  Commission  with  the  ability  to  identify,  through 
 the  exercise  of  its  administrative  judgment,  discernable  material  differences  between 
 using  the  incumbents  unbundled  network  elements  and  those  available  from  other 
 sources  that  ultimately  will  affect  a  requesting  carriers  ability  to  provide  the  services  it 
 seeks  to  offer. 

 67.  We  assign  little  weight  in  our  impair  analysis  to  the  ability  of  a  requesting 
 carrier  to  use  the  incumbent  LECs  resold  or  retail  tariffed  services  as  alternatives  to 
 unbundled  network  elements.  In  the  Local  Competition  First  Report  and  Order,  the 
 Commission  expressly  rejected  the  incumbent  LECs  argument  that  requesting  carriers 
 are  not  impaired  in  their  ability  to  provide  service  if  they  can  provide  their  proposed 
 service  by  purchasing  the  service  at  wholesale  rates  from  the  incumbent  LEC.  As  the 
 Commission  concluded  in  that  Order,  allowing  incumbent  LECs  to  deny  access  to 
 unbundled  elements  solely,  or  primarily,  on  the  grounds  that  an  element  is  equivalent  to  a 
 service  available  at  resale  would  lead  to  impractical  results;  incumbent  LECs  could 
 completely  avoid  section  251(  c)(  3)  s  unbundling  obligations  by  offering  unbundled 
 elements  to  end  users  as  retail  services.  125  In  other  words,  denying  access  to  unbundled 

 using  an  alternative  network  element.). 
 123  See  Ameritech  Comments  at  36;  Choice  One  Joint  Comments  at  12-  13;  CPI  Comments  at 
 13;  KMC  Comments  at  7;  MCI  WorldCom  Comments,  Tab  2,  Decl.  of  John  E.  Kwoka,  at  para.  38;  Prism 
 Comments  at  9-  10. 

 124  Texas  PUC  Comments  at  7-  8. 

 125  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15643-  44,  paras.  286-  87.  The 
 Eight  Circuit  agreed  that  while  subsection  251(  c)(  4)  does  provide  for  the  resale  of  telecommunications 
 services,  it  does  not  establish  resale  as  the  exclusive  means  through  which  a  competing  carrier  may  gain 
 access  to  such  services.  It  consequently  agreed  with  the  Commission  that  such  an  interpretation  would  allow 
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 elements  on  the  grounds  that  an  incumbent  LEC  offers  an  equivalent  retail  service  could 
 force  requesting  carriers  to  purchase,  for  example,  an  unbundled  loop  and  switching  out 
 of  an  incumbents  retail  tariff  at  a  wholesale  discount,  subject  to  all  of  the  associated  tariff 
 restrictions.  US  West  maintains  that  it  need  not  unbundle  local  transport  because 
 requesting  carriers  can  purchase  its  tariffed  special  access  services.  126  In  light  of  the  little 
 weight  we  assign  to  the  availability  of  resold  services  in  our  analysis,  we  reject  US  Wests 
 argument.  This  argument  would  foreclose  competitive  LECs  from  taking  advantage  of 
 the  distinct  opportunity  Congress  gave  them,  through  section  251(  c)(  3),  to  use  unbundled 
 network  elements.  127 

 68.  As  the  Commission  explained  in  the  Local  Competition  First  Report  and 
 Order,  using  unbundled  network  elements  and  resold  services  present  different 
 opportunities,  risks,  and  costs,  in  connection  with  providing  local  telephone  service. 
 These  differences  influence  the  entry  strategies  of  potential  competitors.  128  The 
 Commission  stated  that  carriers  using  unbundled  elements  will  have  greater  opportunities 
 to  offer  services  that  are  different  from  those  services  offered  by  the  incumbents.  More 
 specifically,  carriers  reselling  incumbent  LEC  services  are  limited  to  offering  the  same 
 service  an  incumbent  LEC  offers  at  retail.  129  While  competitive  LECs  using  unbundled 
 elements  may  have  greater  competitive  opportunities  than  carriers  offering  services 
 available  for  resale,  they  also  face  greater  risks.  A  carrier  purchasing  unbundled  elements 
 must  pay  for  the  cost  of  the  element,  pursuant  to  terms  and  conditions  agreed  to  in 
 negotiations  or  ordered  by  states  in  arbitrations.  Thus,  the  competitive  LEC  faces  the  risk 

 the  incumbent  LECs  to  evade  a  substantial  portion  of  their  unbundling  obligation  under  section  251(  c)(  3). 
 Specifically,  the  Eighth  Circuit  stated,  in  response  to  the  incumbent  LECs  argument  that  vertical  switching 
 features  were  services  subject  to  resale  and  therefore  need  not  be  unbundled,  that, 

 Simply  because  these  capabilities  can  be  labeled  as  services  does  not  convince  us  that  they  were 
 not  intended  to  be  unbundled  as  network  elements.  While  subsection  251(  c)(  4)  does  provide  for  the 
 resale  of  telecommunications  services,  it  does  not  establish  resale  as  the  exclusive  means  through 
 which  a  competing  carrier  may  gain  access  to  such  services.  We  agree  with  the  FCC  that  such  an 
 interpretation  would  allow  the  incumbent  LECs  to  evade  a  substantial  portion  of  their  unbundling 
 obligation  under  subsection  251(  c)(  3). 

 Iowa  Utils.  Bd.  v.  FCC,  120  F.  3d  at  809.  The  Supreme  Court  found  that  the  statutory  definition  of 
 network  element  does  not  include  only  the  physical  facilities  used  to  provide  local  phone  service,  but  also 
 includes  the  features,  functions  and  capabilities  that  are  provided  by  these  facilities,  such  as  vertical  switching 
 features.  Iowa  Utils.  Bd.,  119  S.  Ct.  at  734. 

 126  Letter  from  Melissa  Newman,  Vice  President    Federal  Regulatory,  US  West,  to  Magalie 
 Roman  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98,  at  1-  2  (filed  Aug.  18, 
 1999). 

 127  See  ALTS  Comments  at  23  (stating  that  the  Commission  should  not  consider  the 
 availability  of  resale  because  it  would  eviscerate  the  1996  Acts  bright  line  distinction  between  the  resale 
 and  UNE  methods  of  entry.). 

 128  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15667,  para.  331. 

 129  Id.  at  15667,  para.  332. 
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 that  end-  user  customers  will  not  demand  a  sufficient  number  of  services  to  allow  the 
 competitive  LEC  to  recoup  the  costs  it  incurs  using  the  unbundled  element;  a  carrier  that 
 resells  the  incumbent  LECs  services  does  not  face  the  same  risk.  130  The  1996  Act  grants 
 competitive  LECs  the  option  of  using  either  the  incumbent  LECs  unbundled  network 
 elements  or  resold  services,  thereby  allowing  the  competitors  to  balance  the  risks  and 
 opportunities  associated  with  each. 

 69.  In  addition,  even  if  we  agreed  with  US  West  that  an  incumbent  LECs  retail 
 tariff  provided  competitive  LECs  with  a  viable  alternative  to  the  incumbent  LECs 
 unbundled  network  element,  competitors  would  have  no  assurance  that  the  incumbent 
 LEC  would  not  change  the  tariff  in  such  a  manner  that  the  competitive  LEC  could  no 
 longer  rely  on  it  to  provide  the  services  it  seeks  to  offer.  Most  services  that  competitive 
 LECs  purchase  for  resale  are  contained  in  state  tariffs,  and  are  subject  to  the  states  tariff 
 approval  process.  Relying  on  these  state-  approved  tariffs  would  compromise  our  ability 
 to  determine  which  network  elements  must  be  unbundled  pursuant  to  section  251(  d)(  2) 
 because  we  would  not  be  able  to  evaluate  each  incumbent  LEC  retail  tariff  as  a  possible 
 alternative  for  every  network  element.  In  addition  to  being  administratively  unworkable 
 for  us  to  evaluate  every  state  tariff  filed  by  the  incumbent  LECs,  relying  on  these  tariffs  as 
 alternatives  to  the  incumbent  LECs  unbundled  network  elements  would  create 
 inconsistent  unbundling  rules  among  the  states,  a  result  that,  as  we  explain  further  below, 
 would  not  promote  the  development  of  competition  for  all  consumers. 

 70.  Moreover,  we  do  not  find  the  Supreme  Courts  decision  requiring  us  to 
 consider  the  availability  of  elements  outside  the  incumbent  LECs  network  to  be  at  all 
 inconsistent  with  our  decision  to  consider  alternatives  available  through  self-  provisioning 
 or  from  third-  party  suppliers.  The  Supreme  Court  required  us  to  compare  the  use  of 
 unbundled  network  elements  with  self-  provision,  or  with  purchase  from  another 
 provider.  131  If  we  were  to  construe  the  Supreme  Courts  opinion  in  the  manner 
 suggested  by  US  West,  we  would  have  to  consider  whether  an  incumbent  LECs  duty  to 
 unbundle  an  element  would  be  limited  by  the  existence  of  an  alternative  service  that  the 
 incumbent  LEC  provides  itself,  whether  or  not  there  are  other  competitively-  supplied 
 alternatives.  In  other  words,  under  US  Wests  argument,  the  existence  of  its  retail  tariffs 
 alone  would  be  sufficient  to  eliminate  its  obligation  to  unbundle  certain  elements.  The 
 Supreme  Courts  opinion  does  not  require  us  to  ignore  whether  there  are  other  non-incumbent 
 LEC  alternatives  to  the  incumbent  LECs  unbundled  network  elements, 
 proposed  by  US  West. 

 71.  We  believe  that  the  impair  standard  we  adopt  in  this  Order  will  encourage 
 the  development  of  facilities-  based  competition.  Specifically,  as  competitors  acquire 
 more  customers,  and  the  material  differences  in  cost,  time,  quality,  and  operational 
 impediments  diminish,  competitors  will  gradually  reduce  their  reliance  on  the  incumbent 
 LECs  facilities.  Competitors  will  also  deploy  more  of  their  own  facilities  as  it  becomes 

 130  Id.  at  15668,  para.  334. 
 131  Iowa  Utils.  Bd.,  119  S.  Ct.  at  735  (emphasis  added). 
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 practical  to  do  so.  As  the  material  differences  decrease,  the  Commission  will  be  able  to 
 apply  the  same  standard  to  remove  elements  from  the  national  unbundling  obligations. 

 72.  Cost.  In  addition  to  the  direct  cost  of  purchasing  the  element,  we  consider 
 all  of  the  costs  that  requesting  carriers  would  incur  using  an  alternative  element  to  provide 
 the  services  it  seeks  to  offer.  Although  not  dispositive,  the  costs  associated  with  self-provisioning 
 or  purchasing  alternative  elements  from  third-  party  suppliers  are  relevant  to 
 our  determination  of  whether  the  element  is  a  practical  and  economical  alternative  to  the 
 incumbent  LECs  unbundled  network  element. 

 73.  We  believe  that  an  impair  standard  based  on  cost  is  more  appropriate  than 
 a  standard  based  on  profitability,  because  profit  margins  for  both  new  and  existing 
 carriers  will  depend  on  the  degree  of  competition  that  exists  in  the  market.  If  the  cost  of 
 the  alternative  element  is  materially  greater  than  the  cost  of  obtaining  the  corresponding 
 element  from  the  incumbent,  the  requesting  carrier  will  not  be  able  to  provide  service  at 
 prices  that  are  competitive  with  the  incumbents  prevailing  retail  prices. 

 74.  In  determining  whether  the  cost  of  self-  provisioning  or  purchasing  an 
 element  from  a  third-  party  source  is  materially  higher  than  using  the  incumbent  LECs 
 unbundled  network  element,  we  evaluate  the  difference  between  the  cost  to  the  requesting 
 carrier  of  obtaining  the  unbundled  element  from  the  incumbent  LEC  at  forward-  looking 
 costs  and  the  cost  of  an  alternative  element.  Because  the  Commissions  rules  require  that 
 network  elements  be  priced  based  on  forward-  looking  economic  costs,  we  believe  that 
 forward-  looking  costs  are  the  appropriate  costs  to  consider  in  our  analysis. 

 75.  In  order  to  provide  service  using  its  own  facilities,  a  competitor  will  incur 
 the  costs  of  purchasing,  installing,  and  provisioning  the  equipment  it  needs  to  provide 
 service  using  its  own  loop  or  by  interconnecting  with  the  incumbents  network.  The 
 record  in  this  proceeding  addresses  several  types  of  costs  associated  with  using  an 
 alternative  element.  These  include  the  direct  costs  of  provisioning  the  element,  including 
 fixed  and  sunk  costs,  as  well  as  other  costs  that  are  likely  to  materially  affect  the 
 requesting  carriers  ability  to  provide  the  services  it  seeks  to  offer.  Fixed  costs  are  costs 
 that  do  not  vary  with  the  level  of  output.  132  A  sunk  cost,  on  the  other  hand,  is  a  cost 
 that,  once  incurred,  cannot  be  recouped  if  the  firm  ceases  production.  133  To  the  extent 
 that  a  competitive  LEC  incurs  significant  fixed  costs  or  sunk  costs  when  it  uses  its  own 
 facilities  or  acquires  facilities  from  a  third  party,  these  costs  can  disadvantage  the 
 competitor  relative  to  the  incumbent. 

 76.  Fixed  costs  are  frequently  associated  with  economies  of  scale.  Specifically, 
 where  a  firm  faces  both  a  fixed  cost  and  a  constant  or  declining  variable  cost,  the  firms 
 average  unit  cost  will  fall  as  output  increases,  and  the  firms  cost  structure  is  said  to 

 132  See,  e.  g.,  Dennis  W.  Carlton  &  Jeffrey  M.  Perloff,  Modern  Industrial  Organization  31 
 (1989). 
 133  See  id.  at  32. 
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 exhibit  economies  of  scale.  For  example,  the  cost  a  competitive  LEC  incurs  to  construct 
 its  own  fiber  transport  ring  would  constitute  a  fixed  cost,  because,  at  least  in  the  short  run, 
 this  cost  would  not  vary  as  the  competitive  LECs  output  changed.  134  If  a  competitive 
 LEC  incurs  significant  fixed  costs  when  it  uses  a  particular  facility,  in  its  early  stages  of 
 development  it  would  have  a  significantly  higher  average  unit  cost  than  the  incumbent 
 LEC,  which  has  a  significantly  larger  output  and  customer  base  over  which  to  spread  the 
 fixed  cost.  Since  the  Commissions  rules  require  unbundled  transport  to  be  priced  based 
 on  forward-  looking  costs  (a  form  of  long-  run  average  incremental  cost),  leasing  the 
 incumbents  unbundled  transport  facilities  is  likely  to  be  significantly  less  costly  than 
 deploying  ones  own  transport  facilities  when  the  competitor  has  a  relatively  small 
 volume  of  traffic,  and  thus  its  output  would  be  small  relative  to  that  of  the  incumbent.  135 

 77.  Certain  network  facilities  also  involve  sunk  costs,  because  the  facilities 
 cannot  be  easily  re-  deployed  or  sold  should  the  competitor  decide  to  cease  offering 
 service  over  those  facilities.  136  For  example,  the  cost  of  the  loop  serving  a  customers 
 home  is  largely  a  sunk  cost  because  it  cannot  be  recovered  if  the  carrier  ceases  serving  the 
 customer.  It  is  generally  recognized  that  the  need  to  incur  sunk  costs  can  constitute  a 
 barrier  to  entry.  137  Specifically,  where  an  incumbent  has  already  deployed  sunk  facilities 
 to  serve  all  customers,  a  competitive  LEC  may  be  unwilling  to  sink  the  costs  of 
 duplicative  facilities,  either  because  it  may  be  unable  to  lure  customers  away  from  the 
 incumbent  and  generate  enough  revenue  to  recover  these  sunk  costs,  or  because  resulting 
 competition  between  itself  and  the  incumbent  LEC  would  drive  prices  so  low  that,  even  if 
 the  competitive  LEC  won  a  significant  number  of  customers,  it  would  still  be  unable  to 
 recover  its  sunk  costs.  In  such  situations,  the  incumbent  has  a  first  mover  advantage.  138 

 134  Similarly,  a  competitor  that  purchases  its  own  switch  or  deploys  feeder  and  distribution 
 plant  will  incur  significant  fixed  costs. 
 135  Cf.  Applications  of  Ameritech  Corp.,  Transferor,  and  SBC  Communications.,  Inc., 
 Transferee,  for  Consent  to  Transfer  Control  of  Corporations  Holding  Commission  Licenses  and  Lines 
 Pursuant  to  Sections  214  and  310(  d)  of  the  Communicaitons  Act,  CC  Docket  No.  98-  141,  Description  of  the 
 Transaction,  Public  Interest  Showing  and  Related  Demonstrations,  at  49-  55  (filed  July  24,  1998)  (applicants 
 argue  that,  because  of  economies  of  scale,  they  must  merge  in  order  to  compete  in  areas  outside  of  their 
 regions). 

 136  See  MCI  WorldCom  Comments,  Tab  2,  Decl.  of  John  E.  Kwoka,  paras.  11-  12;  AT&  T 
 Reply  Comments,  Tab  B,  Aff  of  R.  Glenn  Hubbard/  William  H.  Lehr/  Janusz  A.  Ordover  /Robert  D.  Willig  at 
 para.  51.  The  total  costs  of  providing  telecommunications  services  include  sunk  costs  and  fixed  costs.  Sunk 
 costs  are  costs  that  the  entrant  must  incur  that  cannot  be  recovered  if  it  later  decides  to  exit  the  market,  such  as 
 non-  recurring  costs  for  collocation,  delays  associated  with  connecting  the  incumbents  loops  to  a  competitors 
 switch,  and  fees  required  by  municipalities  to  construct  rights-  of-  way.  Fixed  costs  are  those  costs  that  carriers 
 incur  which  do  not  vary  based  on  the  number  of  customers  that  they  serve. 

 137  See,  e.  g.,  William  J.  Baumol,  John  C.  Panzar  &  Robert  D.  Willig,  Contestable  Markets  and 
 The  Theory  of  Industry  Structure  290-  92  (1982). 
 138  See,  e.  g.,  Jean  Tirole,  The  Theory  of  Industrial  Organization  314-  15  (1988);  Richard  J. 
 Gilbert,  Mobility  Barriers  and  the  Value  of  Incumbency  in  1  The  Handbook  of  Industrial  Organization  491 
 (Richard  Schmalensee  and  Robert  D.  Willig,  eds.)  (1989) 
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 78.  The  non-  recurring  costs  of  collocating  equipment  in  the  incumbents  end 
 offices,  including  the  costs  of  connecting  the  incumbent  LECs  unbundled  loops  to  the 
 competitors  switch,  and  the  fees  required  to  obtain  rights-  of-  ways,  also  constitute  sunk 
 costs.  Unlike  the  costs  associated  with  purchasing  portable  equipment,  such  as 
 multiplexers  or  switches,  the  non-  recurring  costs  incurred  to  collocate  equipment  and 
 connect  network  elements  to  the  competitive  LECs  collocated  equipment  in  an 
 incumbents  central  office  are  sunk  costs  and  cannot  be  recovered  if,  for  whatever  reason, 
 the  carrier  exits  that  market. 

 79.  Additional  costs,  such  as  the  costs  a  competitive  LEC  incurs  to  connect  its 
 own  facilities  to  the  incumbent  LECs  unbundled  network  elements,  affect  the  extent  to 
 which  an  alternative  element  is  available  as  a  practical  and  economic  matter,  such  that  a 
 requesting  carrier  can  actually  use  the  element  to  provide  the  service  it  seeks  to  offer.  For 
 example,  when  a  competitive  LEC  deploys  its  own  switch  but  purchases  the  customers 
 unbundled  loop  from  the  incumbent,  the  competitive  LEC  may  incur  significant  costs  to 
 connect  the  customers  loop,  located  in  the  incumbent  LECs  central  office,  to  its  own 
 switch.  When  these  cutover  costs  are  added  to  the  costs  of  collocation,  a  competitors 
 ability  to  provide  service  in  an  efficient  manner,  when  using  its  own  switch  for  unbundled 
 switching,  could  be  materially  diminished.  We  thus  look  at  all  of  the  costs  a  competitor 
 must  incur  when  using  alternatives  to  the  incumbent  LECs  network  element. 

 80.  We  find  that  significant  fixed  and  sunk  costs  associated  with  using 
 alternatives  outside  the  incumbent  LECs  network  contribute  to  a  finding  that  lack  of 
 access  to  the  incumbents  unbundled  network  elements  impairs  the  requesting  carriers 
 ability  to  provide  the  service  it  seeks  to  offer.  This  is  particularly  true  for  a  new 
 competitive  LEC  that  has  few  customers  from  which  it  can  recover  these  costs.  Because 
 the  per-  customer  costs  decrease  as  the  number  of  subscribers  served  by  the  carrier 
 increases,  a  carrier  must  acquire  a  sufficient  customer  base  if  it  is  to  recover  substantial 
 costs  associated  with  deploying  its  own  facilities.  139  It  is  reasonable,  therefore,  that  a 
 competitive  LEC,  at  a  minimum,  would  want  to  serve  a  substantial  number  of  business 
 and/  or  residential  customers  within  a  particular  Metropolitan  Statistical  Area  (MSA).  140 

 139  In  addition,  the  per-  customer  costs  decrease  as  the  distance  required  to  reach  each 
 subscriber  decreases.  The  per-  subscriber  cost  of  service  will  be  lower  in  those  situations  where  carriers  can 
 aggregate  and  carry  large  volumes  of  traffic  over  short  distances  rather  than  small  volumes  of  traffic  over  long 
 distances.  See  MCI  WorldCom  Comments,  Tab  3,  Decl  of  Mark  T.  Bryant,  at  para.  11. 

 140  See,  e.  g.,  Covad  Comments  at  2  (business  plans  call  for  it  to  deploy  facilities  in  51  MSAs 
 by  the  end  of  1999);  USTA  UNE  Report  at  III-  3  (  Within  top  50  MSAs,  CLECs  have  deployed  nearly  30,000 
 miles  of  fiber).  An  MSA  is  also  a  reasonable  entry  market  because  number  portability  is  deployed  on  an 
 MSA  basis,  and  available  to  serve  a  requesting  carriers  customers  within  these  areas.  Telephone  Number 
 Portability,  First  Memorandum  Opinion  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  11  FCC  Rcd 
 8352,  para.  3  (1997)  (requiring  all  LECs  to  implement  long  term  number  portability  in  the  100  largest  MSAs 
 according  to  a  phased  deployment  schedule).  We  recognize  that  carriers  may  serve  areas  smaller  than  the 
 total  MSA.  If  we  make  a  determination  that  the  incumbent  need  no  longer  offer  an  unbundled  element 
 because  there  are  viable  alternatives  available  on  an  MSA  basis,  we  do  not  believe  that  such  a  carrier  would 
 be  impaired  because  the  alternatives  would  most  likely  be  available  to  serve  customers  located  in  smaller 
 areas  within  the  MSA. 
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 If  the  competitor  must  collocate  its  own  switches  in  multiple  central  offices  throughout 
 the  MSA  in  order  to  serve  those  customers,  the  costs  associated  with  collocation  may 
 impair  the  competitors  ability  to  provide  the  services  it  seeks  to  offer,  even  if  the  cost  of 
 purchasing  the  individual  equipment  hardware  is  not  excessive. 

 81.  In  addition,  we  find  that  the  type  of  customers  that  a  competitive  LEC  seeks 
 to  serve  is  relevant  to  our  analysis  of  whether  the  cost  of  self-  provisioning  or  acquiring  an 
 element  from  a  third-  party  supplier  impairs  the  ability  of  a  requesting  carrier  to  provide 
 the  services  it  seeks  to  offer.  Section  251(  d)(  2)(  B)  requires  us  to  consider  whether  lack  of 
 access  to  the  incumbent  LECs  network  elements  would  impair  the  ability  of  the  carrier  to 
 provide  the  services  it  seeks  to  offer.  Consistent  with  the  Act,  we  define  the  term 
 services  as  it  is  used  in  section  251(  d)(  2)(  B),  to  mean  telecommunications  service,  as 
 it  is  defined  in  section  153(  46)  of  the  Act.  141  Section  251(  c)(  3)  of  the  Act  places  an 
 affirmative  duty  on  the  incumbent  LEC  to  provide  unbundled  elements  to  any  requesting 
 telecommunications  carrier  for  the  provision  of  a  telecommunications  service.  142 
 Section  251(  d)(  2)(  B),  in  turn,  requires  that  a  requesting  carrier  should  not  have  access  to 
 unbundled  elements  unless  it  would  be  impaired  in  its  ability  to  provide  the  services  that 
 it  seeks  to  offer.  143  Different  types  of  customers  use  different  services  (e.  g.,  large 
 business  customers  order  different  services  than  residential  customers).  We  therefore 
 conclude  that  it  is  appropriate  for  us  to  consider  the  particular  types  of  customers  that  the 
 carrier  seeks  to  serve. 

 82.  Competitive  LECs  generally  seek  to  provide  service  to  residential  and  small 
 business  customers  and/  or  to  large  business  customers.  The  different  revenue-  generating 
 potential  of  these  different  customer  groups  will  often  determine  whether  or  not  a 
 competitive  LEC  can  afford  to  incur  the  costs  of  self-  provisioning  a  facility  or  of 
 acquiring  it  from  a  third-  party  supplier,  to  the  extent  that  it  is  available  from  a  third-  party 
 provider.  For  example,  a  model  submitted  by  MCI  WorldCom  that  compares  the  costs  of 
 serving  residential  customers  using  unbundled  elements  from  the  incumbent  LEC  with 
 the  costs  of  serving  the  customers  using  its  own  facilities  indicates  that,  at  low  market 
 penetration  levels,  the  costs  of  collocation  would  impair  a  competitive  LECs  ability  to 
 serve  residential  customers  using  its  own  facilities.  The  model  further  demonstrates, 
 however,  that  using  the  incumbent  LECs  unbundled  network  elements,  the  entrant  would 
 be  able  provide  service,  even  at  the  same  low  market-  penetration  levels.  144 

 83.  Although  the  model  submitted  by  MCI  WorldCom  is  clearly  not  dispositive, 
 we  note  it  to  illustrate  that  a  requesting  carriers  ability  to  serve  residential  and  small 

 141  47  U.  S.  C.    153(  46). 
 142  47  U.  S.  C.    251(  c)(  3). 
 143  47  U.  S.  C.    251(  d)(  2)(  B). 
 144  Letter  from  Lori  Wright,  MCI  WorldCom,  to  Magalie  Roman  Salas,  Secretary,  Federal 
 Communications  Commission,  CC  Docket  Nos.  96-  98;  95-  185  (filed  July  13,  1999). 
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 business  customers  may  be  materially  diminished  without  access  to  the  incumbent  LECs 
 network.  Larger  business  customers,  on  the  other  hand,  may  generate  sufficient  revenue 
 to  allow  the  requesting  carrier  to  serve  the  customer  using  certain  self-  provisioned 
 facilities  or  facilities  acquired  from  third-  party  sources. 

 84.  We  also  consider,  as  part  of  our  analysis,  the  economies  of  scale  and  scope 
 that  the  incumbents  have  due  to  their  ubiquitous  network.  The  record  demonstrates  that, 
 although  facilities-  based  competition  has  developed  in  particular  markets  (primarily  for 
 large  business  customers  in  high-  density  areas),  incumbent  LECs  continue  to  enjoy 
 significant  economies  of  scale  and  density  not  enjoyed  by  competitive  LECs.  145  Because 
 these  economies  lower  the  incumbents  per-  customer  costs  of  providing  service,  vis-  -  vis 
 their  competitors,  we  find  these  economies  relevant  to  our  inquiry  of  the  extent  to  which 
 costs  of  using  alternative  elements  impair  a  requesting  carriers  ability  to  provide  the 
 services  it  seeks  to  provide. 

 85.  We  are  not  persuaded  by  the  argument  of  BellSouth  and  other  incumbent 
 LECs  that  we  should  not  consider  the  impact  of  the  incumbents  economies  of  scale 
 because  competitors  are  capable  of  matching  or  exceeding  the  incumbent  LECs 
 economies  by  building  their  own  facilities.  146  The  Commission  has  concluded  previously 
 that  an  incumbent  LECs  existing  infrastructure  generally  enables  it  to  serve  new 
 customers  at  a  much  lower  cost  than  a  requesting  carrier  that  must  install  its  own 
 switches,  trunking,  and  loops  to  serve  its  customers,  and  that  Congress  has  addressed  this 
 problem  by  mandating  that  incumbent  LECs  share  their  economies  of  scale  and  density 
 with  competitors.  147 

 86.  We  continue  to  believe  that  one  important  purpose  of  the  unbundling 
 provisions  of  the  Act  is  to  permit  competitive  LECs  to  compete  with  the  same  economies 
 as  the  incumbents,  especially  in  the  early  stages  of  local  competition,  when  their  networks 
 are  limited  in  their  reach,  and  their  customer  bases  are  necessarily  small.  148  The 
 incumbent  LECs  still  enjoy  cost  advantages  and  superiority  of  economies  of  scale,  scope, 
 and  ubiquity  as  a  result  of  their  historic,  government-  sanctioned  monopolies.  These 
 economies  are  now  critical  competitive  attributes  and  would  belong  unquestionably  to  the 

 145  For  example,  MCI  WorldCom  describes  the  economies  of  scale  to  which  several  unbundled 
 elements  are  subject.  MCI  WorldCom  Comments,  Tab  3,  Decl.  of  Mark  T.  Bryant,  at  paras.  2-  24.  See  also 
 NTIA  Comments  at  30-  31  (  To  the  extent  that  the  inability  to  obtain  an  unbundled  element  from  an  ILEC 
 increases  a  CLECs  costs  (for  example,  by  forcing  it  to  purchase  a  more  expensive  substitute  or  by  denying 
 the  CLEC  the  economies  of  scale,  scope,  or  density  associated  with  the  ILEC  UNE),  the  resulting  diminution 
 in  profits  will  reduce  the  internal  funds  available  to  extend  and  upgrade  the  CLECs  network  and  service 
 offerings));  Qwest  Comments  at  20  (stating  that  the  incumbent  LECs,  themselves,  admit  that  the  ubiquity  of 
 their  networks  creates  unique  economies  of  scope  and  scale.)  (citation  omitted). 

 146  BellSouth  Reply  Comments  at  3-  5. 

 147  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15508-  09,  para.  10-  11. 
 148  Id.  at  15528,  15531,  15624,  paras.  56,  61,  242. 
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 incumbent  LECs  if  they  had  earned  them  by  superior  competitive  skills.  These 
 advantages  of  economies,  however,  were  obtained  by  the  incumbents  by  virtue  of  their 
 status  as  government-  sanctioned  and  protected  monopolies.  We  believe  that  these 
 government-  sanctioned  advantages  remain  barriers  to  the  requesting  carriers  ability  to 
 provide  a  range  of  services  to  a  wide  array  of  customers,  and  that  their  existence  justifies 
 placing  a  duty  on  the  incumbent  carriers  to  share  their  network  facilities.  Indeed, 
 Congress,  in  section  259  of  the  Act,  recognized  expressly  the  benefits  that  the  incumbent 
 LECs  have  as  a  result  of  their  economies  of  scale  and  scope.  Section  259  requires  the 
 Commission  to  ensure  that  incumbent  LECs  make  their  infrastructure  available  to 
 qualifying  carriers  on  terms  and  conditions  that  permit  the  qualifying  carriers  to  fully 
 benefit  from  the  economies  of  scale  and  scope  of  such  [incumbent]  local  exchange 
 carrier.  149  Although  section  259  of  the  Act  is  different  from  section  251  in  that 
 qualifying  carriers  obtaining  infrastructure  from  the  incumbent  LEC  pursuant  to  a  section 
 259  agreement  may  not  use  such  infrastructure  to  compete  with  the  incumbent  LEC  in  its 
 service  territory,  both  sections  make  the  incumbent  LECs  broad  economies  of  scale  and 
 scope  available  to  other  carriers  by  requiring  them  to  grant  other  carriers  access  to  their 
 networks.  150 

 87.  We  do  not  agree  with  Ameritech  that  competitive  LECs  are  not  impaired  in 
 their  ability  to  provide  service  because  they  have  cost  efficiencies  which  the  incumbent 
 LECs  do  not  have.  151  Although  we  agree  that  competitors  may  have  certain  cost 
 advantages,  we  find  that  these  advantages  are  likely  to  be  outweighed  by  other  costs  that 
 competitive  LECs,  but  not  incumbent  LECs,  incur  to  provide  service.  For  example,  many 
 competitive  LECs  are  likely  to  incur  higher  costs  than  the  incumbent  LECs  to  attract 
 customers,  because  unlike  the  incumbent,  many  competitive  LECs  must  establish  a  brand 
 name  and  develop  a  reputation  for  service  quality  before  they  can  overcome  the 
 incumbents  long-  standing  relationships  with  their  customers.  Similarly,  competitive 
 LECs  must  incur  the  initial  costs  of  setting  up  their  operations  and  developing  their  back-office 
 systems.  AT&  T  also  points  out  that  new  entrants  face  a  high  level  of  risk  when 
 they  enter  the  local  market,  because  they  enter  without  the  incumbent  LECs  knowledge 

 149  47  U.  S.  C.    259(  b)(  4). 
 150  Implementation  of  Infrastructure  Sharing  Provisions  in  the  Telecommunications  Act  of 
 1996,  CC  Docket  No.  96-  237,  Report  and  Order,  12  FCC  Rcd  5470,  5495,  5497,  paras.  50,  54  (1997) 
 (Infrastructure  Sharing  Order)  (stating  that  incumbent  LECs  must  make  the  same  network  facilities  and 
 functionalities,  including  unbundled  network  elements  and  resale,  available  to  qualifying  carriers  under 
 section  259  as  they  would  make  available  under  section  251).  The  Commission  also  found  in  the 
 Infrastructure  Sharing  Order  that  cost,  availability,  timeliness,  functionality  and  other  operational  aspects 
 associated  with  use  of  the  incumbent  LECs  infrastructure  determine  whether  or  not  the  qualifying  carrier 
 seeking  access  to  the  incumbent  LECs  network  under  section  259  fully  benefits  from  the  economies  of  scale 
 and  scope  of  the  incumbent  LEC.  Id.  at  5528,  para.  117.  These  are  some  of  the  same  factors  that  we  have 
 identified  here  as  being  relevant  to  whether  a  requesting  carrier  can  achieve  the  same  benefit  from  using  an 
 alternative  network  element  as  it  would  from  using  the  incumbent  LECs  network  element. 

 151  See,  e.  g.,  Ameritech  Comments  at  61;  Ameritech  Reply  Comments,  Att.  A,  Aff.  of  Debra  J. 
 Aron/  William  L.  Fitzsimmons/  Robert  G.  Harris,  at  16-  19. 
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 of  local  operating  costs  (e.  g.,  location  and  quality  of  outside  plant  facilities)  and  consumer 
 demand  (e.  g.,  peak  traffic  volumes  over  certain  facilities  and  demand  growth).  152 

 88.  We  recognize  that  a  new  entrant  in  many  industries  will  face  disadvantages 
 arising  from  economies  of  scale.  We  further  recognize  that,  even  after  competition  in 
 local  telecommunications  markets  is  well-  established,  and  the  Commission  can  eliminate 
 certain  unbundling  requirements,  smaller  competitors  will  be  at  a  disadvantage  to  the 
 extent  that  incumbent  LECs  continue  to  enjoy  significant  economies  of  scale  in  the 
 provision  of  local  telephone  service.  Nonetheless,  we  believe  that  the  existence  of 
 economies  of  scale,  as  well  as  sunk  costs,  are  relevant  factors  to  consider  in  our 
 assessment  of  whether  failure  to  provide  access  to  a  particular  unbundled  network 
 element  will  impair  a  requesting  carriers  ability  to  provide  the  services  it  seeks  to  offer. 
 Although  we  find  economies  of  scale  to  be  a  relevant  factor  in  our  analysis,  we  note  that 
 we  are  not  basing  our  determination  of  whether  competitive  LECs  are  impaired  within 
 the  meaning  of  section  251(  d)(  2)  solely  on  the  existence  of  scale  economies,  nor  do  we 
 assume  that  the  incumbent  LECs  scale  economies  are  insurmountable  in  all 
 circumstances. 

 89.  Timeliness.  We  also  conclude  that  the  time  associated  with  using 
 alternative  elements  is  relevant  to  a  determination  of  whether  a  requesting  carrier  would 
 be  impaired  in  its  ability  to  provide  the  services  it  seeks  to  offer.  A  thorough  evaluation 
 of  the  delays  associated  with  using  alternative  elements  requires  an  analysis  of  both  the 
 start-  up  time  required  for  a  competitor  to  enter  a  market  and  serve  a  substantial  number  of 
 customers  in  an  MSA,  as  well  as  the  time  it  would  take  a  competitor  that  has  already 
 entered  the  market  to  expand  its  operations  to  serve  more  customers.  We  conclude  that 
 delays  caused  by  the  unavailability  of  unbundled  network  elements  that  exceed  six 
 months  to  one  year  may,  taken  together  with  other  factors,  materially  diminish  the  ability 
 of  competitive  LECs  to  provide  the  services  that  they  seek  to  offer. 

 90.  We  recognize  that  the  deployment  of  alternative  elements,  whether  through 
 self-  provisioning  facilities  or  by  acquiring  them  from  third-  party  suppliers,  will  require  a 
 reasonable  amount  of  time.  The  delays  associated  with  using  alternative  network 
 elements  will  exist  whether  the  requesting  carrier  is  either  just  beginning  to  provision 
 service  or  whether  it  is  deploying  additional  facilities  to  expand  its  operations  to  serve 
 more  customers.  Commenters  differ  in  their  opinions  as  to  what  constitutes  a  reasonable 
 time  to  self-  provision  facilities.  153  There  is  considerable  evidence  in  the  record,  however, 
 that  indicates  that  it  takes  between  six  months  and  one  year  to  engineer,  furnish,  and 
 install  a  switch,  including  the  time  needed  to  obtain  collocation  space  in  the  incumbent 

 152  AT&  T  Reply  Comments  at  Tab  B,  Aff.  of  R.  Glenn  Hubbard/  William  H.  Lehr/  Janusz  A. 
 Ordover/  Robert  D.  Willig,  at  para.  65. 
 153  See  infra  section  V(  D)  (stating  that  some  incumbent  LECs  claim  that  a  switch  can  be  fully 
 provisioned  in  40  days  (BellSouth  Reply  Comments  at  29),  while  competitive  LECs  assert  that  it  can  take 
 between  six  months  and  two  years  (CompTel  Comments  at  39,  n.  89)). 
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 LECs  central  offices  where  the  switch  will  be  connected  to  unbundled  loops.  154  Also, 
 NTIA  argues  that  we  should  consider  as  nontrivial  any  delay  in  service  provisioning  in 
 excess  of  six  months  as  compared  to  the  time  it  would  take  for  a  competitive  LEC  to 
 begin  provisioning  a  service  using  an  incumbent  LECs  network  element.  155 

 91.  Based  on  the  record  before  us,  we  conclude  that  it  is  reasonable  to  expect 
 that  a  competitive  LEC  will  need  between  six  months  and  one  year  to  provide  service 
 using  a  self-  provisioned  facility  or  one  acquired  from  an  alternative  source.  The  local 
 telecommunications  market  grows  at  an  extremely  rapid  pace  for  many  products  and 
 services.  Indeed,  we  have  reported  that  the  demand  for  certain  services  has  increased 
 significantly  from  year  to  year  since  the  passage  of  the  1996  Act  156  and  that  we  expect 
 this  trend  to  continue,  particularly  for  advanced  services.  157  We  believe  that  any  delay 
 that  a  competitive  LEC  experiences  in  serving  this  fast-  paced,  high-  growth  market  can 
 impair  its  ability  to  provide  its  desired  services.  Although  we  cannot  quantify  precisely 
 how  much  of  a  delay  associated  with  an  alternative  network  element  will  materially 
 diminish  the  ability  of  a  competitor  to  provide  its  desired  services,  we  find  that  delays  that 
 exceed  six  months  to  one  year  may,  taken  together  with  other  factors,  materially  diminish 
 the  ability  of  a  competitive  LEC  to  provide  the  services  it  seeks  to  offer  because  it 
 prevents  the  competitive  LEC  from  responding  quickly  to  the  demand  for  its  services  in  a 
 rapidly  changing  market.  Moreover,  we  agree  with  NTIA  that  incumbent  LECs  can  take 
 advantage  of  delays  caused  by  the  unavailability  of  unbundled  network  elements  by  using 
 their  unique  access  to  most  customers  to  gain  a  foothold  in  new  markets,  and,  in  markets 
 where  services  may  be  offered  pursuant  to  long  term-  contracts  (e.  g.,  DSL  and  other 
 advanced  data  services),  to  lock-  up  customers  in  advance  of  competitive  entry.  158 

 92.  We  disagree  with  Ameritech  that  a  competitor  is  not  impaired  in  its  ability 
 to  provide  a  service  if  it  can  deploy  alternative  facilities  within  two  years  of  its  decision  to 

 154  See  nfra  Section  V(  D).  AT&  T  also  maintains  that  gaining  access  to  commercial  buildings 
 for  the  deployment  of  loop  facilities  often  involve  delays  of  up  to  six  months  while  the  competitor  attempts  to 
 negotiate  access  with  the  building  owner.  AT&  T  Reply  Comments  at  82. 

 155  NTIA  Comments  at  32. 

 156  For  example,  residential  customers  with  existing  telephone  service  purchased  over  two 
 million  additional  telephone  lines  for  their  homes  between  1996  and  1997.  Trends  in  Telephone  Service, 
 Federal  Communications  Commission,  Sept.  1999,  at  Table  20.4  (Trends  in  Telephone  Service).  The  number 
 of  cellular  telephone  subscribers  increased  by  nearly  14  million  subscribers  between  December  1997  and 
 December  1998.  Trends  in  Telephone  Service  at  Table  2.1. 

 157  Inquiry  Concerning  the  Deployment  of  Advanced  Telecommunications  Capability  to  All 
 Americans  in  a  Reasonable  and  Timely  Fashion,  and  Possible  Steps  to  Accelerate  Such  Deployment  Pursuant 
 to  Section  706  of  the  Telecommunications  Act  of  1996,  Report,  14  FCC  Rcd  2398,  2419-  20,  2428,  2445-  46, 
 paras.  42,  56,  90  (1999)  (706  Report)  (Report  finds  that  there  is  currently  rapid  demand  for  broadband 
 services  by  all  consumers,  particularly  residential  consumers,  and  that  such  demand  is  expected  to  grow.). 

 158  NTIA  Comments  at  31. 
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 do  so.  159  Congress  made  unbundled  elements  available  to  competitive  LECs  to  avoid  the 
 time  it  would  take  competitive  LECs  to  duplicate  the  incumbents  networks,  thereby 
 promoting  the  rapid  development  of  competition  for  all  consumers.  We  believe  that 
 requiring  consumers  to  wait  up  to  two  years  to  have  access  to  a  choice  of  competitive 
 service  offerings,  while  competitors  attempt  to  provide  service  without  access  to 
 unbundled  elements,  is  unreasonable  and  inconsistent  with  the  objectives  of  the  Act. 

 93.  We  also  disagree  with  US  Wests  claim  that  we  should  not  consider  the 
 amount  of  time  required  for  a  competitive  LEC  to  self-  provision  an  element  or  acquire  it 
 from  a  third-  party  supplier  because  there  are  always  inherent  provisioning  delays 
 associated  with  using  alternative  elements.  160  We  believe  the  amount  of  time  it  takes  a 
 competitive  LEC  to  self-  provision  an  element  or  acquire  an  alternative  from  a  third-  party 
 supplier  is  highly  relevant  to  its  ability  to  provide  the  services  it  seeks  to  offer.  In 
 particular,  we  agree  with  commenters  that  in  order  to  compete  effectively,  competitive 
 LECs  must  be  able  to  initiate  service  promptly  upon  the  request  of  their  customers.  161  We 
 also  agree  with  NTIA  that  delays  in  the  introduction  of  competitive  services  caused  by  the 
 unavailability  of  unbundled  elements  from  the  incumbent  LEC  would  give  the  incumbent 
 valuable  time  to  entrench  itself  with  existing  customers.  162 

 94.  Although  we  agree  with  US  West  that  self-  provisioning  or  acquiring 
 alternative  network  elements  from  third-  party  suppliers  involves  normal  delays  incurred 
 when  starting  or  expanding  a  business,  we  find  that  significant  delays  will  materially 
 diminish  a  requesting  carriers  ability  to  provide  the  services  it  seeks  to  offer.  In  addition, 
 we  have  accounted  for  the  inherent  provisioning  period  to  which  US  West  refers  by 
 determining  that  it  will  take  competitors  approximately  six  months  to  one  year  to  provide 
 service,  and  that  delays  that  exceed  that  time  period  would  materially  diminish  a 
 requesting  carriers  ability  to  provide  a  competitive  service. 

 95.  We  disagree  with  US  West  that  it  would  be  too  administratively  complex  to 
 consider  the  differences  between  the  time  it  would  take  a  competitor  to  obtain  an  element 
 from  the  incumbent  LEC  and  the  time  it  would  take  to  self-  provision  an  element.  163  We 
 do  not  find  it  to  be  too  administratively  complex  to  consider  whether  a  delay  associated 

 159  Ameritech  Comments  at  35. 
 160  US  West  Comments  at  22-  23. 
 161  See,  e.  g.,  AT&  T  Reply  Comments  at  45  (  The  delays  AT&  T  has  discussed    such  as  those 
 involved  in  obtaining  building  access  and  right-  of-  way  agreements  to  lay  fiber    are  substantial  delays  and 
 ones  that  would  be  imposed  on  a  recurring,  ongoing  basis  as  to  CLECs  that  have  already  entered  a  market 
 and  are  seeking  to  win  new  customers,  to  build  and  connect  facilities  for  those  customers,  and  to  compete  with 
 the  incumbent  LEC  in  offering  timely  commitments  for  due  dates  when  those  customers  are  choosing  a 
 carrier.);  MCI  WorldCom  Comments  at  18. 

 162  NTIA  Comments  at  31. 

 163  US  West  Comments  at  22-  23. 
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 with  using  an  alternative  network  element  exceeds  the  six  month  to  one  year  timeframe 
 we  identified  above.  As  we  stated  above,  the  impair  standard  does  not  mandate  precise 
 quantification;  nor  does  it  involve  an  analysis  of  the  delay  suffered  by  every  carrier.  It 
 requires  instead  a  consideration  of  whether,  as  a  general  matter,  there  is  an  identifiable 
 difference  in  the  amount  of  time  required  to  provide  service  using  an  alternative  element 
 and  the  amount  of  time  required  to  provide  service  using  the  incumbent  LECs  element, 
 such  that  the  delay  would  materially  diminish  the  competitors  ability  to  provide  the 
 services  that  it  seeks  to  offer. 

 96.  Quality.  We  also  conclude  that  the  quality  of  alternative  network  elements 
 available  to  the  competitive  LEC  is  relevant  to  a  determination  of  whether  a  requesting 
 carriers  ability  to  provide  service  is  impaired.  We  agree  with  the  California  PUC  and 
 other  commenters  that  a  material  degradation  in  service  quality  associated  with  using  an 
 alternative  element  will  materially  diminish  a  competitors  ability  to  effectively  provide 
 service.  164  Examples  of  diminished  quality  presented  in  the  record  include  greater 
 dialtone  delay,  higher  blocking  rates,  elevated  noise  on  a  telephone  line  and  increased 
 failure  rates.  165  These  types  of  quality  problems,  all  of  which  are  recognizable  by  the 
 end-  user  customer  may,  taken  together  with  other  factors,  materially  diminish  the  ability 
 of  the  competitor  to  provide  the  services  that  it  seeks  to  offer.  In  addition,  we  believe  that 
 the  type  of  service  a  competitor  seeks  to  provide  is  also  relevant  to  the  quality  factor.  For 
 example,  end  users  may  be  much  less  tolerant  of  problems  that  affect  data  services,  than 
 they  would  be  for  voice  service.  166 

 97.  Ubiquity.  We  conclude  that  we  should  also  consider  the  extent  to  which  the 
 competitive  LEC  can  serve  customers  ubiquitously  using  its  own  facilities  or  those 
 acquired  from  third-  party  suppliers.  We  agree  with  competitive  LECs  that  they  may  be 
 impaired  if  lack  of  access  to  an  unbundled  element  materially  restricts  the  number  or 
 geographic  scope  of  the  customers  they  can  serve.  167  For  example,  incumbent  LECs  own 
 98  percent  of  all  access  lines  in  Texas  and  have  deployed  1538  switches  throughout  the 
 state.  According  to  the  Texas  PUC,  if  a  competitive  carrier  seeks  to  provide  local 

 164  California  PUC  Reply  Comments  at  3.  See  also  Texas  PUC  Comments  at  7-  8;  Choice  One 
 Joint  Comments  at  6-  7;  Columbia  Comments  at  9;  Corecomm  Comments  at  17-  20;  KMC  Comments  at  5-  6; 
 Pilgrim  Comments  at  14-  15. 

 165  TRA  Comments  at  23.  See  also  ALTS  Comments  at  21-  22  (  If  use  of  an  alternative  results 
 in  a  competitive  service  offering  with  greater  levels  of  signal  loss,  circuit  outage  or  mean  repair  time 
 compared  to  that  of  the  incumbent,  it  cannot  be  found  that  the  alternative  presents  the  requesting  carrier  with 
 an  element  that  consumers  will  accept  as  part  of  a  competitive  service  offering.). 

 166  See  TRA  Comments  at  23  (stating  that  a  competitive  LEC  is  impaired  if  the  substitute 
 element  would  prevent  it  from  offering  the  same  functionality  as  the  incumbents  service,  e.  g.,  stutter  dialtone 
 or  message-  waiting  indicator). 

 167  See,  e.  g.,  Cable  &  Wireless  Comments  at  11;  Prism  Comments  at  15;  TRA  Comments  at 
 23. 
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 telephone  service  throughout  the  state,  it  would  be  impractical,  if  not  impossible,  for  the 
 carrier  to  replicate  the  incumbents  networks.  168 

 98.  Although  we  acknowledge  that  not  all  competitive  LECs  will  want  to 
 provide  ubiquitous  service  across  broad  geographic  areas,  those  that  do  will  likely  be 
 disadvantaged  vis-  -  vis  the  incumbent,  especially  in  the  early  stages  of  deployment, 
 because  the  incumbent  LECs  still  enjoy  advantages  of  a  ubiquitous  network  that  provide 
 them  with  economies  of  scale  and  the  ability  to  reach  all  consumers  in  their  service 
 territories.  It  is  reasonable  to  expect  that,  in  many  cases,  competitors  would  want  to 
 provide  ubiquitous  service  in  order  to  achieve  similar  economies  of  scale  that  will  allow 
 them  to  spread  the  costs  of  construction,  equipment,  and  marketing  across  as  many 
 customers  as  possible.  It  is  also  reasonable  to  expect  that  in  some  cases,  the  ability  to 
 serve  ubiquitously  will  be  necessary  to  meet  consumer  demand  for  competitive 
 alternatives  in  broad  geographic  areas.  It  such  cases,  lack  of  access  to  the  incumbents 
 unbundled  network  elements  could  significantly  thwart  the  competitors  ability  to  respond 
 to  consumer  demand.  169  Denying  access  to  the  incumbents  unbundled  network  elements, 
 when  use  of  alternative  sources  would  materially  diminish  the  competitors  ability  to 
 serve  their  intended  geographic  area,  would  be  inconsistent  with  the  goal  of  the  1996  Act 
 to  bring  competition  to  the  greatest  number  of  customers.  Indeed,  the  inability  to  provide 
 service  ubiquitously  may  be  especially  important  for  competitive  LECs  seeking  to  serve 
 residential  and  small  business  customers  located  throughout  a  state. 

 99.  Impact  on  Network  Operation.  We  find  that  we  should  also  consider  how 
 self-  provisioning  a  network  element  or  obtaining  it  from  a  third-  party  supplier  may  affect 
 the  technical  manner  in  which  the  competitor  can  operate  its  network.  We  agree  with  the 
 Washington  Utilities  Commission  that  overall  network  performance  is  an  important 
 consideration  in  our  impair  analysis.  170  In  order  to  compete  with  the  incumbent, 
 competitive  LECs  must  be  able  to  connect  alternative  elements  either  to  their  own 
 networks  or  to  other  incumbent  LEC  elements  that  they  use  to  provide  service.  Thus, 
 material  operational  or  technical  differences  in  functionality  that  arise  from 
 interconnecting  alternative  elements  may  also  impair  a  requesting  carriers  ability  to 
 provide  its  desired  services.  171 

 100.  As  we  stated  above,  the  incumbent  LECs  relative  advantages  regarding 
 costs,  ubiquity,  timeliness,  and  quality  comprise  only  a  part  of  a  determination  of  whether 
 or  not  a  competitive  LECs  ability  to  provide  a  competitive  service  is  impaired.  Indeed, 
 as  stated  above,  competitive  LECs  may  have  reasons  for  not  entering  a  particular  market 

 168  Texas  PUC  Comments  at  14. 
 169  See  MCI  WorldCom  Comments  at  23-  24. 
 170  Washington  UTC  Comments  at  13. 
 171  See,  e.  g.,  ALTS  Comments  at  21;  Cable  and  Wireless  Comments  at  14-  16;  MCI  WorldCom 
 Comments  at  25-  26;  Qwest  Comments  at  22-  25. 
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 that  have  nothing  to  do  with  whether  lack  of  access  to  the  incumbents  network  would  or 
 would  not  impair  their  ability  to  offer  service  in  that  market.  For  example,  it  is  likely  that 
 not  all  competitive  LECs  intend  to  invest  in  their  own  facilities  to  serve  residential 
 customers.  Congress,  however,  clearly  intended  for  competition  to  develop  in  these 
 markets,  as  well  as  in  the  business  markets,  and  we  see  as  one  of  the  primary  goals  of 
 section  251,  to  facilitate  competition  in  these  markets.  Because  the  ground  work  for 
 competition  is  still  uncharted,  and  we  have  seen  very  limited  competition  in  the 
 residential  market  to  date,  we  seek  to  remove  economic  and  other  barriers  that  may 
 forestall  the  development  of  competition  for  these  consumers.  Accordingly,  we  unbundle 
 elements  in  a  manner  that  we  believe  will  have  the  desired  effect  of  promoting 
 competition  in  all  markets  as  quickly  as  possible. 

 (iii)  Other  Factors  to  Be  Weighed  in  Our  Unbundling  Analysis 

 101.  We  conclude  that,  in  addition  to  the  necessary  and  impair  standards, 
 section  251(  d)(  2)  permits  us  to  consider  other  factors  that  are  consistent  with  the 
 objectives  of  the  Act  in  making  our  unbundling  determination.  Section  251(  d)(  2)  states 
 that,  [  i]  n  determining  what  network  elements  should  be  made  available  for  purposes  of 
 subsection  251(  c)(  3),  the  Commission  shall  consider,  at  a  minimum  the  necessary  and 
 impair  standards.  172  This  language  implies  clearly  that  other  factors  may  be 
 considered  as  long  as  we  consider  the  necessary  and  impair  standards.  Moreover,  as 
 the  D.  C.  Circuit  has  held,  when  Congress  requires  an  agency  to  consider  several  listed 
 factors,  it  may  also  consider  additional  factors  in  making  its  decision.  For  example,  in 
 Central  Vermont  Railway,  Inc.  v.  Interstate  Commerce  Commission,  the  D.  C.  Circuit 
 found  that  the  language  of  a  statute  addressing  railroad  mergers  that  directed  the  Interstate 
 Commerce  Commission  to  consider  at  least  the  following  [factors],  also  allowed  the 
 agency  to  consider  factors  other  than  those  specifically  listed.  173  In  a  later  case  that  cited 
 Central  Vermont  Railway,  the  court  explained  that  an  agencys  duty  to  consider  specific 
 factors  means  only  that  it  must  reach  an  express  and  considered  conclusion  about  the 
 bearing  of  a  factor,  but  is  not  required  to  give  any  specific  weight  to  the  factor.  174 

 102.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  stated 
 that  it  agreed  with  several  incumbent  LECs  that  the  plain  import  of  the  at  a  minimum 
 language  in  section  251(  d)(  2)  requires  the  Commission  to  consider  the  standards 
 enumerated  there,  as  well  as  other  standards  we  believe  are  consistent  with  the  objectives 
 of  the  1996  Act.  175  The  Supreme  Court  did  not  dispute  this  determination.  In  fact,  it 

 172  47  U.  S.  C.    251(  d)(  2). 
 173  Central  Vermont  Ry.  v.  ICC,  711  F.  2d  331,  335  (D.  C.  Cir.  1983)  (Central  Vermont  Ry.  V. 
 ICC). 
 174  Time  Warner  Entertainment  Co.  v.  FCC,  56  F.  3d  151,  175  (D.  C.  Cir.  1995)  (quoting 
 Central  Vermont  Ry.  v.  ICC,  711  at  336). 
 175  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15641,  para.  280. 
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 directed  us  to  adopt  some  limiting  standard  rationally  related  to  the  goals  of  the  Act.  176 
 We  are  therefore  not  persuaded  by  the  argument  of  the  incumbent  LECs  that  we  may  now 
 require  unbundling  only  where  the  necessary  or  impair  standards  have  been  met.  177 
 If  Congress  had  intended  to  require  the  incumbent  LECs  to  unbundle  an  element  only 
 when  it  was  necessary  to,  or  would  impair  the  requesting  carriers  ability  to  provide 
 its  desired  service,  Congress  would  not  have  used  the  discretionary  phrase  consider  at  a 
 minimum.  Rather,  Congress  would  have  required  the  Commission  to  apply  the 
 necessary  and  impair  standard,  without  consideration  of  any  additional  factors. 

 103.  Accordingly,  in  addition  to  the  necessary  and  impair  standard,  we 
 conclude  that  we  may  consider  several  factors,  set  out  below,  that  further  the  goals  of  the 
 Act  in  accordance  with  the  Supreme  Courts  directive.  Two  fundamental  goals  of  the  Act 
 are  to  open  the  local  exchange  and  exchange  access  markets  to  competition  and  to 
 promote  innovation  and  investment  by  all  participants  in  the  telecommunications 
 marketplace.  178  To  further  the  goal  of  opening  the  local  market  to  competition,  we  may 
 consider  how  access  to  specific  unbundled  network  elements  will  encourage  the  rapid 
 introduction  of  local  competition  to  the  benefit  of  the  greatest  number  of  consumers. 

 104.  We  may  also  consider  how  the  unbundling  rules  we  adopt  will  promote 
 facilities-  based  competition  by  competitive  LECs.  We  believe  that  it  is  the  development 
 of  facilities-  based  competition  that  will  provide  both  incumbent  and  competitive  LECs 
 with  the  incentives  to  innovate  and  invest  in  new  technologies.  Such  innovation  and 
 investment  will  bring  greater  choices  of  telecommunication  services  and  lower  prices  to  a 
 greater  number  of  consumers.  We  may  also  consider  the  extent  to  which  we  can  reduce 
 regulatory  obligations  to  provide  access  to  network  elements  as  alternatives  to  the 
 incumbent  LECs  network  elements  become  available  in  the  future. 

 105.  We  may  further  consider  whether  unbundling  particular  network  elements 
 will  provide  certainty  in  the  market  so  that  competitive  LECs  can  attract  investment 
 capital  and  execute  their  business  plans.  We  may  also  take  into  account  how  we  can 
 make  the  unbundling  rules  administratively  manageable  for  the  Commission  and  the 
 states  to  apply.  The  adoption  of  administratively  workable  unbundling  rules  will  enable 
 the  Commission  and  the  states  to  implement  and  enforce  such  rules,  thereby  facilitating 
 the  ability  of  competitive  LECs  to  enter  the  market  as  quickly  and  efficiently  as  possible. 

 106.  We  do  not  give  particular  weight  to  any  of  the  factors  we  identify.  Rather, 
 we  consider  the  relationship  among  the  factors  we  take  into  account  for  a  particular 
 network  element,  and  determine  whether  the  sum  total  of  the  effect  of  the  factors  require  a 
 finding  that  the  element  must  be  unbundled.  Thus,  we  do  not  require  that  all  of  the 
 factors  be  met  before  we  decide  whether  or  not  to  require  incumbent  LECs  to  unbundle  a 

 176  Iowa  Utils.  Bd.,  119  S.  Ct.  at  734. 
 177  See,  e.  g.,  GTE  Comments  at  27-  28;  Ameritech  Joint  Reply  Comments  at  23-  25. 
 178  Joint  Explanatory  Statement  at  1. 
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 particular  network  element.  Indeed,  there  may  be  circumstances  in  which  there  is 
 significant  evidence  that  competitors  are  impaired  without  unbundled  access  to  a 
 particular  element,  but  that  unbundling  the  element  would  not  further  the  goals  of  the  Act. 
 In  the  final  analysis,  as  we  explain  in  more  detail  below,  we  consider  the  effect  of  these 
 factors  in  order  to  develop  unbundling  obligations  that  are  most  consistent  with 
 Congressional  intent. 

 107.  Rapid  Introduction  of  Competition  in  All  Markets.  Congress  has 
 emphasized  that  a  major  goal  of  the  1996  Act  is  to  accelerate  the  development  of  local 
 competition.  Indeed,  the  preamble  to  the  Act  states  that  it  provides  a  pro-  competitive, 
 de-  regulatory  national  policy  framework  designed  to  accelerate  rapidly  deployment  of 
 advanced  telecommunications  technologies  by  opening  all  markets  to  competition.  179 
 With  regard  to  unbundled  network  elements,  in  particular,  the  Eighth  Circuit  Court  of 
 Appeals  found  that  the  use  of  unbundled  elements  promotes  the  prompt  development  of 
 competition,  as  intended  by  the  Act.  The  court  stated  that  the  Act  provides  for 
 unbundled  access  to  incumbent  LECs  network  elements  as  a  way  to  jumpstart 
 competition  in  the  local  telecommunications  industry.  180  We  therefore  find  that  we  may 
 consider  whether  an  unbundling  obligation  is  likely  to  encourage  requesting  carriers  to 
 rapidly  enter  the  local  market  and  serve  the  greatest  number  of  customers.  Conversely, 
 we  may  also  consider  whether  the  failure  to  require  unbundling  will  cause  any  class  of 
 consumers  to  wait  unnecessarily  for  competitive  alternatives. 

 108.  We  also  note  that  Congress  specified  certain  network  elements  in  the 
 section  271  checklist  that  BOCs  are  required  to  unbundle  before  they  obtain  in-  region 
 interLATA  relief.  In  particular,  the  checklist  requires  BOCs  to  demonstrate  that  they  are 
 providing  loops,  switching,  transport,  signaling  and  databases,  and  operator 
 services/  directory  assistance.  181  Accordingly,  we  may  consider  whether  requiring  all 
 incumbent  LECs  to  unbundle  these  same  elements  would  promote  the  rapid  introduction 
 of  competition  on  a  nationwide  basis. 

 109.  We  agree  with  NTIA  that  there  is  a  common  purpose  between  sections  251 
 and  271  of  the  Act  of  opening  the  incumbents  monopoly  local  exchange  networks  to 
 competition.  182  We  believe  that  Congress  intended  section  251(  c)(  3)  of  the  Act  and  the 
 competitive  checklist  to  contain  similar,  if  not  identical,  obligations.  Although  we  do  not 
 conclude  that  the  checklist  determines  definitively  that  all  incumbent  LECs  are  required, 
 pursuant  to  section  251,  to  unbundle  the  items  enumerated  in  section  271,  we  find  that 
 section  271  sheds  some  light  on  what  elements  Congress  believed  should  be  unbundled  in 
 order  to  open  local  markets  to  competition.  We  may  therefore  consider  whether  an 

 179  Id. 
 180  Iowa  Utils  Bd.  v.  FCC,  120  F.  3d  at  811. 
 181  47  U.  S.  C.    271(  c)(  2)(  B). 
 182  NTIA  Comments  at  35-  40. 
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 element  is  among  the  elements  identified  in  the  competitive  checklist  as  we  make  our 
 determination  of  which  network  elements  incumbent  LECs  must  provide  on  an  unbundled 
 basis. 

 110.  Promotion  of  Facilities-  Based  Competition,  Investment,  and  Innovation.  A 
 fundamental  goal  of  the  Act  is  to  promote  investment  and  innovation  by  all  participants  in 
 the  telecommunications  marketplace,  and,  in  particular,  to  encourage  rapid  deployment  of 
 new  telecommunications  technologies.  183  As  the  Commission  has  stated,  the  construction 
 of  new  local  exchange  networks  will  not  only  lead  to  innovation  by  the  new  competitors, 
 but  should  also  spur  [the  incumbent  LECs]  to  upgrade  their  systems  and  offer  a  broader 
 array  of  desired  service  options  to  meet  consumers  demands.  184  By  promoting 
 innovation  both  by  the  incumbent  LECs  and  competitive  LECs,  the  Act  enables  these 
 carriers  to  produce  innovative  new  services  for  consumers.  Specifically,  consumers 
 benefit  when  carriers  invest  in  their  own  facilities  because  such  carriers  can  exercise 
 greater  control  over  their  networks,  thereby  promoting  the  availability  of  new  products 
 that  differentiate  their  services  in  terms  of  price  and  quality.  We  may  therefore  consider 
 the  extent  to  which  the  unbundling  obligations  we  adopt  will  advance  the  development  of 
 facilities-  based  competition  and  will  encourage  innovation  by  both  incumbent  and 
 competitive  LECs. 

 111.  We  seek  to  adopt  unbundling  requirements  that  are  broad  enough  to  provide 
 requesting  carriers  with  the  elements  they  need  to  ramp  up  towards  facilities  deployment. 
 At  the  same  time,  we  remain  cognizant  of  the  Supreme  Courts  mandate  against  granting 
 blanket  access  to  the  incumbents  network  in  a  manner  that  is  inconsistent  with  the 
 necessary  and  impair  standards  of  section  251(  d)(  2),  or  with  the  goals  of  the  1996 
 Act.  185  We  believe  that  the  standards  we  articulate  in  this  Order  will  strike  the 
 appropriate  balance  by  unbundling  only  those  network  elements  without  which  a 
 competitive  LECs  ability  to  provide  service  will  be  materially  diminished. 

 112.  We  agree  with  the  competitive  LECs  that  argue  that  unbundled  access  to 
 certain  incumbents  network  elements  will  accelerate  initially  competitors  development 
 of  alternative  networks  because  it  will  allow  them  to  acquire  sufficient  customers  and  the 

 183  Joint  Explanatory  Statement  at  1.  See  also  NTIA  Comments  at  15,  n.  42,  (citing  H.  R.  Rep. 
 No.  104-  204,  at  47-  48  (1995)(  For  decades,  U.  S.  telecommunications  policy  has  relied  heavily  on  regulated 
 monopolies  to  provide  telecommunications  service  to  business  and  consumers.  .  .  .  Technological  advances 
 would  be  more  rapid  and  services  more  widely  available  and  at  lower  prices  if  telecommunications  markets 
 were  competitive  rather  than  regulated  monopolies.);  141  Cong.  Rec.  S8015  (daily  ed.  June  8,  1995) 
 (statement  of  Sen.  Pressler)  (  if  we  had  done  what  we  are  trying  to  do  in  this  bill    that  is,  to  require 
 [incumbent  LECs]  to  unbundle  and  interconnect,  to  allow  for  local  competition,  .  .  .  the  whole  telephone 
 communications  industry  might  be  more  innovative  today  than  it  is.)). 

 184  Competitive  Networks  Notice  at  para.  23. 

 185  Iowa  Utils,  Bd.,  119  S.  Ct.  a  735.  See  also  NTIA  Comments  at  25  ([  The  Commission] 
 should  seek  so  far  as  possible  to  construe  [Section  251(  d)(  2)]  in  a  way  that  advances  the  procompetitive  goals 
 of  the  1996  Act,  including  the  promotion  of  facilities-  based  competition.) 
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 necessary  market  information  to  justify  the  construction  of  new  facilities.  186  Indeed, 
 many  commenters  in  this  proceeding  emphasize  that  they  plan  to  deploy  alternative 
 facilities  as  soon  as  it  is  technically  and  economically  possible  to  do  so  at  a  cost  that  is 
 close  to  the  incumbent  LECs  prices  for  network  elements.  187  According  to  these 
 commenters,  competitive  LECs  prefer  to  use  their  own  facilities  or  alternatives  outside  of 
 the  incumbents  network  when  they  are  able  to  do  so,  in  order  to  reduce  their  reliance  on  a 
 primary  competitor.  188  We  find  this  explanation  to  be  reasonable.  Use  of  the  incumbent 
 LECs  network  elements  requires  competitive  LECs  to  disclose  details  about  their 
 customers  to  their  chief  competitor.  Moreover,  it  is  reasonable  to  expect  that  competitive 
 LECs  would  prefer  to  have  direct  control  of  their  networks  to  ensure  the  quality  of  their 
 service  and  to  offer  products  and  pricing  packages  that  differentiate  their  services  from 
 the  perspective  of  end  users.  189 

 113.  Reduced  Regulation.  Another  goal  of  the  Act  is  to  deregulate  where  market 
 conditions  warrant.  190  We  may  therefore  consider  the  extent  to  which  we  can  reduce 
 regulatory  obligations  to  provide  access  to  network  elements  as  alternatives  to  the 
 incumbent  LECs  network  elements  become  available  in  the  future. 

 114.  Certainty  in  the  Market.  Among  other  things,  the  Act  seeks  to  promote 
 competition  by  eliminating  barriers  to  entry  into  the  local  market.  We  may  therefore 
 consider  how  the  unbundling  obligations  we  adopt  in  this  Order  facilitate  competitive 
 entry.  Accordingly,  we  find  that  the  unbundling  requirements  we  adopt  should  typically 
 provide  the  uniformity  and  predictability  new  entrants  and  fledgling  competitors  need  to 
 develop  and  implement  national  and  regional  business  plans.  In  addition,  uniform  and 
 predictable  unbundling  rules  will  provide  financial  markets  with  reasonable  certainty  so 
 that  competitive  LECs  can  attract  the  investment  capital  they  need  to  execute  their 
 business  plans.  Specifically,  uniform  and  predictable  unbundling  rules  reduce 
 substantially  competitive  LECs  risk  of  underutilized  investment  or  cash  flow  drain  by 
 providing  financial  markets  with  some  certainty  that  the  competitors  will  be  able  to 
 execute  their  business  plans. 

 186  See,  e.  g.,  AT&  T  Comments  at  11-  12,  21-  22  (stating  that  using  unbundled  network  elements 
 also  facilitates  the  transition  to  facilities-  based  competition  because  it  permits  entrants  to  gather  critical 
 information,  such  as  customers  calling  volumes  and  traffic  patterns,  that  they  need  to  plan  their  facilities 
 deployment);  MCI  WorldCom  Comments  at  8-  9;  Sprint  Reply  Comments  at  8. 

 187  See,  e.  g.,  AT&  T  Reply  Comments  at  33-  34;  CompTel  Comments  at  12;  MCI  WorldCom 
 Comments  at  8-  9,  26-  27;  Net2000  Comments  at  2;  Sprint  Comments  at  19-  21  (  Any  carrier  desiring  a 
 significant  market  presence  over  the  long  term  must  consider  self-  provisioning  as  the  most  desirable  business 
 strategy    indeed  the  only  strategy  that  can  ensure  that  a  carrier  is  the  master  of  its  own  fate.) 

 188  See  MCI  WorldCom  Comments  at  8-  9;  Sprint  Comments  at  20;  ALTS  Reply  Comments  at 
 23-  24;  MCI  WorldCom  Reply  Comments  at  19. 
 189  See  Competitive  Networks  Notice  at  para.  4;  Sprint  Comments  at  19. 

 190  Joint  Explanatory  Statement  at  1. 
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 115.  We  also  find  that  we  should,  whenever  possible,  adopt  unbundling 
 obligations  that  can  be  included  easily  in  interconnection  agreements  between  the 
 incumbents  and  the  competitive  LECs,  with  as  little  risk  of  subsequent  litigation  as 
 possible.  Litigation  over  the  incumbents  unbundling  obligations  requires  the  parties  to 
 these  agreements,  and  the  state  commissions  that  approve  them,  to  expend  vast  amounts 
 of  time  and  resources,  ultimately  impairing  the  ability  of  competitive  LECs  to  execute 
 their  business  plans. 

 116.  Administrative  Practicality  .  We  may  also  consider  whether  the  unbundling 
 rules  we  adopt  are  administratively  practical  to  apply.  Any  rule  adopted  in  an 
 administrative  proceeding  runs  the  risk  of  being  potentially  overinclusive  in  some 
 situations  and  under-  inclusive  in  other  situations.  A  rule  of  general  applicability  rarely 
 will  neatly  fit  all  situations.  Nonetheless,  administrative  agencies  are  entitled  to  proceed 
 by  rulemaking  as  well  as  by  adjudication.  191  In  addition,  the  goal  of  administrative 
 efficiency  has  widespread  support  from  diverse  segments  of  the  industry,  even  where  they 
 disagree  on  the  substantive  outcome  of  the  proceeding.  192  We  therefore  seek  to  adopt 
 unbundling  rules  that  provide  for  administrative  ease  in  addressing  the  incumbents 
 unbundling  obligations  today,  as  well  as  in  the  future,  as  alternatives  to  incumbent  LEC 
 network  elements  become  available.  We  believe  that  adopting  rules  that  are 
 administratively  practical  to  apply  will  also  enhance  certainty  in  the  marketplace  by 
 allowing  us  to  apply  the  rules  efficiently  to  respond  to  changes  in  the  marketplace. 

 C.  Adoption  of  a  National  List  of  Unbundled  Network  Elements 

 1.  Background 
 117.  In  the  Local  Competition  First  Report  and  Order,  the  Commission 
 concluded  that  identifying  a  specific  list  of  network  elements  that  must  be  unbundled, 
 applicable  in  all  states  and  territories,  would  best  further  the  national  policy  framework 
 Congress  established  to  promote  competition  in  local  markets.  In  particular,  the 
 Commission  found  that  a  national  list  would:  (1)  allow  requesting  carriers,  including 
 small  entities,  to  take  advantage  of  economies  of  scale;  (2)  provide  financial  markets  with 
 greater  certainty  in  assessing  requesting  carriers  business  plans;  (3)  facilitate  the  states 
 ability  to  conduct  arbitrations;  and  (4)  reduce  the  likelihood  of  litigation  regarding  the 
 requirements  of  section  251(  c)(  3).  193 

 191  Our  mandate  from  the  Court  is  similar  to  other  instances  in  which  federal  agencies  have 
 implemented  a  general  rule  of  applicability.  See  FCC  v.  WNCN  Listeners  Guild,  450  U.  S.  582  (1981); 
 Checkosky  v.  SEC,  23  F.  3d  452  (D.  C.  Cir.  1994);  Northeast  Utils.  Service  Co.  v.  FERC,  993  F.  2d  937  (1993). 

 192  See,  e.  g.,  Ameritech  Comments  at  5  (stating  that  Ameritechs  proposed  standards  are  easy 
 to  administer.);  CPI  Comments  at  13  (stating  that  the  Commission  should  make  regulation  efficient  by 
 avoiding  case-  by-  case  decisions);  KMC  Comments  at  2-  3  (stating  that  a  national  list  of  unbundled  elements 
 allows  for  more  efficient  implementation  of  the  1996  Act). 

 193  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15616-  27,  paras.  226-  48,  281- 
 83. 
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 118.  In  the  Notice,  we  stated  that  we  found  nothing  in  the  Supreme  Courts 
 decision  that  would  require  us  to  eliminate  national  unbundling  requirements.  We 
 tentatively  concluded  that  we  should  continue  to  identify  a  minimum  set  of  network 
 elements  that  must  be  unbundled  on  a  nationwide  basis,  and  sought  comment  on  this 
 conclusion.  We  also  sought  comment  on  whether  the  existence  of  geographic  variations 
 in  the  availability  of  elements  outside  of  the  incumbent  LECs  network  is  relevant  to  a 
 decision  to  impose  minimum  national  unbundling  requirements.  194 

 119.  Nearly  all  of  the  state  commissions  commenting  in  this  proceeding,  195  and 
 all  of  the  competitive  LECs,  196  assert  that  we  should  adopt  a  national  list  of  unbundled 
 elements.  The  state  commissions  agree  that  the  Commission  has  authority  to  adopt  such  a 
 list,  and  that  it  should  implement  a  process  for  the  states  to  modify  the  list  in  the  future, 
 based  on  conditions  that  exist  in  a  particular  state.  197  The  New  York  Commission  also 
 proposes  that,  in  establishing  the  national  list,  we  should  evaluate  whether  to  exclude  an 
 element  from  the  unbundling  obligations  in  discrete  market  areas  where  commercially 
 viable  alternatives  are  available.  198  The  incumbent  LECs  argue,  on  the  other  hand,  that 
 the  Supreme  Courts  decision  in  Iowa  Utils.  Bd.  requires  a  geographic  market-  by-  market 
 analysis  that  will  ultimately  not  result  in  a  national  list  of  unbundled  elements.  These 
 carriers  propose  that  the  Commission  adopt  national  standards  to  be  applied  by  state 
 commissions  on  a  market-  by-  market  basis.  199 

 194  Notice  at  para.  14. 
 195  California  PUC  Comments  at  3-  4;  Connecticut  DPUC  Comments  at  3-  4;  Illinois 
 Commission  Comments  at  2;  Iowa  Comments  at  1-  2;  Kentucky  PSC  Comments  at  2;  New  York  DPS 
 Comments  at  4-  7;  Ohio  PUC  Comments  at  3-  5;  Oregon  PUC  Comments  at  1;  Texas  PUC  Comments  at  2-  3; 
 Washington  UTC  Comments  at  3-  5;  NARUC  Reply  Comments  at  3;  New  Jersey  DRA  Reply  Comments  at 
 11;  Wisconsin  PSC  Reply  Comments  at  3-  4.  But  see  Florida  PSC  Comments  at  7-  8  (suggesting  that  the 
 Commission  establish  a  rebuttable  presumption  in  favor  of  unbundling  network  elements  listed  in  section 
 271  of  the  1996  Act  instead  of  adopting  a  national  list). 

 196  See,  e.  g.,  Ad  Hoc  Comments  at  3;  Allegiance  Comments  at  2-  4;  AT&  T  Comments  at  39- 
 46;  Cable  &  Wireless  Comments  at  22-  28;  Choice  One  Joint  Comments  at  2-  3;  Columbia  Comments  at  8;  CO 
 Space  Comments  at  4-  5;  Corecomm  Comments  at  8-  10;  Covad  Comments  at  3-  6;  CPI  Comments  at  4-  6; 
 Excel  Comments  at  17-  19;  KMC  Comments  at  2-  3;  MCI  WorldCom  Comments  at  4-  10;  Net2000  Comments 
 at  3-  7;  New  England  Voice  &  Data  Comments  at  4,  n.  4;  NEXTLINK  Comments  at  3-  7;  NorthPoint 
 Comments  at  1-  3;  OpTel  Comments  at  2;  Prism  Comments  at  3-  5,  9-  10;  Rhythms  Comments  at  9;  TelTrust 
 Comments  at  2;  TRA  Comments  at  9-  10  Waller  Creek  Comments  at  11-  12. 

 197  See,  e.  g.,  NARUC  Reply  Comments  at  3;  California  PUC  Comments  at  3-  4;  7-  14;  Illinois 
 Commission  Comments  at  2-  3;  Kentucky  PSC  Comments  at  2;  New  York  DPS  Comments  at  3-  7;  Ohio  PUC 
 Comments  at  3-  5,  21;  Oregon  PUC  Comments  at  1;  Texas  PUC  Comments  at  3-  5;  Washington  UTC 
 Comments  at  3-  9. 

 198  New  York  DPS  Comments  at  4-  5. 

 199  See,  e.  g.,  Ameritech  Comments  at  5-  6,  53-  65;  BellSouth  Comments  at  12-  18,  31;  GTE 
 Comments  at  20-  22;  SBC  Comments  at  15-  18;  US  West  Comments  at  26-  32. 
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 2.  Discussion 
 120.  We  adopt  our  tentative  conclusion  to  identify  a  minimum  list  of  network 
 elements  that  should  be  unbundled  on  a  national  basis.  Similar  to  New  Yorks  proposal, 
 we  also  conclude,  as  explained  below,  that  we  must  apply  discrete  geographic  and 
 product  market  exceptions  to  the  incumbents  duty  to  unbundle  the  elements  on  the 
 national  list,  where  appropriate.  We  conclude  that  the  Commission  has  the  legal  authority 
 to  adopt  a  national  list  of  network  elements  that  must  be  made  available  on  an  unbundled 
 basis,  and  that  the  other  factors  we  identify  above,  such  as  rapid  introduction  of 
 competition,  certainty  in  the  marketplace,  administrative  practicality,  and  promotion  of 
 facilities-  based  competition,  can  only  be  furthered  by  adoption  of  a  national  list. 

 a.  Legal  Authority 

 121.  The  Supreme  Court  decision  in  Iowa  Utils.  Bd.,  the  statutory  language  of 
 section  251(  d)(  2),  and  the  legislative  history  of  the  1996  Act  support  our  authority  to 
 develop  a  national  list  of  unbundled  elements.  In  particular,  the  Supreme  Court  upheld 
 explicitly  the  Commissions  jurisdiction  to  adopt  minimum  national  rules  to  implement 
 each  subsection  of  the  1996  Act.  200  Consistent  with  the  language  in  the  statute,  the 
 Supreme  Court  stated  that  section  251(  d)(  2)  .  .  .  requires  the  Commission  to  determine 
 on  a  rational  basis  which  network  elements  must  be  made  available,  taking  into  account 
 the  objectives  of  the  Act  and  giving  some  substance  to  the  necessary  and  impair 
 requirements.  201  The  Court  stated  that  some  of  the  national  unbundling  rules  the 
 Commission  adopted  originally  in  the  Local  Competition  First  Report  and  Order  might 
 have  been  supported  by  the  standard  required  by  section  251(  d)(  2).  The  Court  stated 
 however,  that  because  the  standard  was  not  consistently  applied,  it  was  forced  to  vacate 
 Rule  319.  202  As  explained  above,  we  have  adopted  a  limiting  standard  that  we  believe 
 responds  to  the  Supreme  Courts  concerns.  203  We  have  also  applied  the  standard 
 consistently  to  derive  a  list  of  network  elements  that  must  be  made  available  on  an 
 unbundled  basis  nationwide. 

 122.  In  addition,  we  do  not  find  that  the  Supreme  Court  decision  in  Iowa  Utils. 
 Bd.  requires  us  to  determine,  on  a  localized  state-  by-  state  or  market-  by-  market  basis 
 which  unbundled  elements  are  to  be  made  available.  The  Commission  examined  the 

 200  Iowa  Utils.  Bd.,  119  S.  Ct.  at  733. 
 201  Id..  at  736  (emphasis  added). 
 202  Id.  (citing  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15766,  paras.  521-  22 
 (requiring  the  incumbent  LECs  to  unbundle  their  operational  support  systems  because  competitors  ability  to 
 provide  service  successfully  would  be  significantly  impaired  if  they  did  not  have  access  to  the  incumbent 
 LECs  operation  support  system  functions.)). 

 203  See  supra  Section  (IV)(  B). 
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 conditions  in  the  nation  as  a  whole  to  determine,  in  the  Local  Competition  First  Report 
 and  Order,  that  the  incumbent  LECs  must  make  available  a  minimum  list  of  elements. 
 The  Commission  also  concluded  that  it  would  not  adopt  an  exhaustive  list  of  elements, 
 but  that  the  states  would  identify  additional  unbundling  obligations  based  on  local  market 
 conditions.  204  The  Supreme  Court  did  not  take  issue  with  this  determination.  The  Court 
 held  that  the  Commission  must  determine  on  a  rational  basis  which  network  elements 
 must  be  made  available,  taking  into  account  the  objectives  of  the  Act  and  giving  some 
 substance  to  the  necessary  and  impair  requirements  of  section  251(  d)(  2).  205  Although 
 this  language  permits  the  Commission  to  undertake  a  market-  by-  market  assessment  of 
 alternatives,  it  plainly  does  not  mandate  such  an  approach.  Rather,  it  provides  the 
 Commission  with  the  discretion  to  look  at  the  nation  as  a  whole  and  to  identify 
 differences  in  the  availability  of  alternatives  outside  of  the  incumbents  network  that  may 
 exist  in  discrete  geographic  areas. 

 123.  However  the  Commission  chooses  to  limit  the  incumbent  LECs  duty  to 
 unbundle  in  accordance  with  the  Supreme  Courts  opinion,  Congress  has  charged  the 
 Commission  in  section  251(  d)(  2)  with  determining  what  network  elements  should  be 
 made  available  for  purposes  of  subsection  [251](  c)(  3).  206  We  thus  have  the  authority  to 
 identify  a  minimum  list  of  network  elements  that  must  be  unbundled  on  a  nationwide 
 basis.  207  In  addition,  the  legislative  history  indicates  that  Congress  specifically 
 contemplated  that  the  Commission  would  open  the  last  monopoly  bottleneck  strongholds 
 in  telecommunications  by  requiring  incumbents  to  share  their  local  exchange  facilities, 
 including  the  equipment  with  capabilities  of  routing  and  signaling  calls,  network 
 capacity,  and  network  standards.  208  This  legislative  history  indicates  that  Congress 
 expected  the  Commission  would  identify  a  national  list  of  unbundled  network  elements 
 that  would  include,  at  a  minimum,  these  basic  network  elements. 

 b.  Goals  of  the  Act 

 124.  We  find  that  adoption  of  a  national  list  of  unbundled  network  elements 
 furthers  the  statutory  purpose  and  design  of  section  251(  d)(  2)  to  provide  competitive 
 LECs  with  access  to  unbundled  network  elements  that  will  allow  them  to  provide  the 
 services  they  seek  to  offer.  Moreover,  we  find  that  adoption  of  a  national  list  is  supported 
 by  the  factors  we  identify  above  as  being  important  to  further  the  fundamental  goals  of 
 the  Act. 

 204  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15624,  para.  243. 
 205  Iowa  Utils.  Bd.,  119  S.  Ct.  at  736. 
 206  47  U.  S.  C.    251(  d)(  2). 
 207  47  U.  S.  C.    251(  d)(  2).  See  also  Iowa  Utils.  Bd.,  119  S.  Ct.  at  736  (section  251(  d)(  2) 
 requires  the  Commission  to  determine  on  a  rational  basis  which  network  elements  must  be  made  available) 
 (emphasis  in  original). 

 208  H.  R.  Conf.  Rep.  104-  204,  at  49  (1995). 
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 125.  Rapid  Introduction  of  Competition.  We  find  that  a  national  list  of  unbundled 
 elements  will  encourage  the  rapid  introduction  of  competition  in  the  greatest  number  of 
 markets  because  it  will  provide  competitive  LECs  with  certainty  regarding  the  availability 
 of  network  elements.  In  fact,  the  record  reflects  that  many  competitive  LECs  are  poised 
 to  begin  providing  service  using  unbundled  elements,  particularly  for  residential  and 
 small  business  customers,  as  soon  as  the  elements  are  available  with  a  reasonable  degree 
 of  certainty.  209  Thus,  we  believe  that  the  certainty  that  adoption  of  a  national  list  will 
 bring  to  the  market  will  benefit  the  greatest  number  of  consumers,  particularly  residential 
 and  small  business  customers. 

 126.  We  agree  with  AT&  T  that  the  lack  of  nationwide  access  to  unbundled 
 elements  will  hinder  mass  market  competition  during  the  time  it  would  take  competitive 
 LECs  to  construct  alternative  networks  capable  of  serving  all  residential  customers  and 
 most  business  customers  in  a  community.  210  Even  in  areas  where  competitors  are  able  to 
 provide  facilities-  based  service  in  specific  wire  centers,  their  ability  to  provide  service  on 
 an  MSA,  LATA,  or  state-  wide  basis,  for  all  classes  of  customers,  is  impaired  without 
 access  to  the  incumbents  elements  on  a  broader  basis.  A  national  list  of  unbundled 
 elements  will  allow  requesting  carriers  to  enter  local  markets  in  a  manner  that  will  allow 
 them  to  approach  the  incumbent  LECs  historic  economies  of  scale,  scope,  and  ubiquity, 
 thereby  promoting  rapid  competition  for  all  customers,  including  residential  and  small 
 business  customers,  in  all  areas  of  the  country. 

 127.  According  to  the  FCC  Local  Competition  Report,  competitors  provide  only 
 about  1.8  percent  of  local  services  to  end  users.  211  The  record  in  this  proceeding  indicates 
 that  requesting  carriers  have  not  yet  been  able  to  obtain  unbundled  elements  on  a  wide-spread 
 basis  nationwide,  which  may  have  prevented  competitive  LECs  from  serving  a 
 greater  number  of  end  users.  For  example,  only  recently  has  unbundled  switching  been 
 made  available  in  combination  with  other  unbundled  network  elements  in  certain  states. 
 MCI  WorldCom  observes  that,  with  the  availability  of  unbundled  switching  in  New  York, 
 it  has  been  able  to  provide  local  service  to  upwards  of  60,000  residential  customers  since 

 209  See,  e.  g.,  Corecomm  Comments  at  2-  3  (  As  it  expands  its  operations  in  Ameritech  and  Bell 
 Atlantics  incumbent  areas,  Corecomm  intends  to  make  increasing  use  of  high  quality,  cost-  based  unbundled 
 network  elements  from  the  [incumbent  LECs]  to  reach  those  residential  customers  that  may  be  beyond  the 
 reach  of  most  competitive  carriers  facilities.);  Covad  Comments  at  2  (  Covads  planned  deployment  by  the 
 end  of  1999  will  cover  51  MSAs,  more  than  25  percent  of  the  nations  homes  and  businesses.  This  is  a  large-scale, 
 national  roll-  out,  based  upon  the  nationwide  availability  of  collocation,  unbundled  dedicated  transport, 
 and  unbundled  local  loops.);  McLeod  Comments  at  1-  2  (  As  of  March  31,  1999,  McLeodUSA  provided 
 competitive  local  exchange  services  to  over  143,000  residential  and  small  business  customers,  with  over 
 395,000  lines.  McleodUSA  anticipates  that  use  of  unbundled  network  elements  to  provide  service  will 
 increase  in  the  future,  and  therefore  has  a  substantial  interest  in  the  outcome  of  this  proceeding.);  NorthPoint 
 Comments  at  3  (  the  simple  fact  is  that  in  the  local  markets  in  which  NorthPoint  currently  offers  service  or 
 intends  to  in  the  near  future,  the  incumbent  LECs  are  the  only  ubiquitous  sources  for  loops,  transport  and 
 other  facilities  that  NorthPoint  needs  to  provide  service.). 

 210  AT&  T  Reply  Comments  at  3-  4. 

 211  FCC  Local  Competition  Report  at  12. 
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 January,  1999.  212  We  believe  that  by  re-  establishing  a  national  list,  with  certain 
 geographic  and  product  market  exceptions  that  are  consistent  with  the  standards  of 
 section  251(  d)(  2),  we  will  best  promote  efficient,  rapid,  and  widespread  entry  by  carriers 
 using  unbundled  network  elements.  Competitive  market  entry  and  service  expansion  on  a 
 widespread  basis  is  a  necessary  precondition  to  construction  of  self-  provisioned  facilities. 

 128.  Moreover,  as  the  Illinois  Commerce  Commission;  California  PUC,  and 
 Connecticut  Department  of  Public  Utility  Control  all  assert,  a  national  list  will  allow 
 competition  to  proceed  quickly  because  it  will  reduce  the  number  of  issues  that  the  states 
 must  address  in  upcoming  arbitrations  under  section  252(  b)  of  the  Act.  213  This  is 
 significant  because  many  states  will  be  conducting  arbitrations  and  reviewing 
 interconnection  agreements  as  the  initial  agreements  that  they  approved  in  1996  and  1997 
 begin  to  expire. 

 129.  We  are  not  persuaded  by  Ameritechs  argument  that  adoption  of  national 
 standards  containing  bright-  line  tests,  as  opposed  to  a  national  list  of  unbundled  elements, 
 would  facilitate  arbitrations.  214  Using  the  bright-  line  test  proposed  by  Ameritech  is 
 inappropriate  because  the  test  does  not  allow  us  to  consider  the  totality  of  the 
 circumstances  to  determine  whether  alternative  elements  are  actually  available  as  a 
 practical,  economic,  and  operational  matter.  Moreover,  the  resources  and  time  that 
 requesting  carriers  would  be  required  to  devote  to  individual  regulatory  proceedings 
 designed  to  determine  if  the  bright-  line  criteria  had  been  met  in  every  market  would  delay 
 the  introduction  of  competition.  The  outcomes  of  each  proceeding  would  likely  vary 
 across  the  country,  thereby  making  it  more  difficult  for  competing  carriers  to  execute 
 reasonably  uniform  national  or  regional  business  plans.  We  believe  that  a  national  list  of 
 elements  will  better  allow  carriers  to  enter  the  market  and  to  expand  their  businesses  as 
 rapidly  as  possible. 

 130.  As  explained  below,  we  will  revisit  our  unbundling  rules  in  three  years. 
 Although  we  recognize  that  due  to  changes  in  the  market  and  new  technologies,  the 
 national  list  will  likely  be  modified  over  time,  we  do  not  find  that  we  should  delay  the 
 onset  of  meaningful  competition  while  we  require  the  incumbent  LECs  and  the 
 competitors  to  produce  voluminous  amounts  of  data  and  participate  in  multiple 
 proceedings  to  determine  whether  alternatives  to  the  incumbents  network  are  available 
 and  being  used  in  every  market.  We  believe  that  a  national  list  (that  accounts  for  discrete 
 geographic  and  product  market  exceptions)  that  can  be  applied  at  this  time,  with  the  least 

 212  MCI  WorldCom  Comments,  Tab  1,  Decl.  of  Judith  R.  Levine/  Ronald  J.  McMurtrie,  at  para. 
 17.  See  also  AT&  T  Reply  Comments  at  15-  18  (stating  that  because  for  the  last  three  years,  critical  unbundled 
 network  elements  have  been  effectively  unavailable  because  of  the  Eighth  Circuits  decision  on  Rule  315(  b), 
 competition  has  existed  only  at  the  margins,  and  has  been  limited  to  portions  of  the  highest  volume  customer 
 markets.). 

 213  Illinois  Commission  Comments  at  2;  California  PUC  Comments  at  3-  4;  Connecticut 
 DPUC  Comments  at  3. 
 214  Ameritech  Comments  at  64-  65. 
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 amount  of  regulatory  involvement,  will  allow  carriers  to  deploy  resources  to  provide 
 service  to  the  greatest  number  of  consumers  instead  of  conducting  regulatory 
 proceedings. 

 131.  We  note  that  we  established  recently  collocation-  based  triggers  to  determine 
 when  it  would  be  appropriate  to  grant  incumbent  LECs  pricing  flexibility  for  certain 
 interstate  access  services  based  on  the  existence  of  competition  for  those  services.  215  In 
 the  Pricing  Flexibility  Order,  we  stated  that  the  triggers  we  adopted  were  policy 
 determinations  based  on  our  agency  expertise  and  our  interpretation  of  the  record  before 
 us  in  that  proceeding.  We  acknowledged,  however,  that  the  use  of  triggers  to  measure 
 competition  precisely  is  not  an  exact  science,  particularly  because  we  lack  verifiable  data 
 from  competitors  concerning  the  deployment  of  their  facilities.  Given  this  constraint,  and 
 our  desire  not  to  impose  heavy  administrative  burdens  on  the  industry  or  conduct 
 protracted  proceedings  to  determine  the  extent  of  competition,  we  devised  pricing 
 flexibility  triggers  based  on  objectively  measurable  criteria,  216  such  as  the  number  of 
 collocation  arrangements  in  a  given  wire  center.  217  We  found  that  it  is  appropriate  to  give 
 incumbent  LECs  pricing  flexibility  when  competitors  have  made  an  irreversible,  sunk 
 investment  in  facilities,  and  that  collocation  by  competitors  in  incumbent  LEC  wire 
 centers  is  a  reliable  indication  of  sunk  investment  by  competitors.  218  Specifically,  to 
 obtain  pricing  flexibility,  we  required  incumbent  LECs  to  show  that  at  least  one 
 competitor  relies  on  transport  facilities  provided  by  a  transport  provider  other  than  the 
 incumbent  at  each  wire  center  listed  in  the  incumbents  pricing  flexibility  petition  as  the 
 site  of  an  operational  collocation  arrangement.  219 

 132.  It  is  not  appropriate  to  use  these  types  of  triggers  to  determine  whether 
 alternative  sources  of  network  elements  are  actually  available  as  a  practical,  economic, 
 and  operational  matter.  As  we  explain  above,  the  ability  of  one  competitor  to  serve 
 certain  customers  in  a  particular  market  is  not  indicative  of  whether,  without  unbundled 
 access  to  the  incumbent  LECs  facilities,  competitive  LECs  could  provide  service  to  other 
 customers  in  the  same  market  or  to  customers  in  other  markets.  While  the  triggers  we 
 adopted  in  the  Pricing  Flexibility  Order  allow  us  to  determine  when  an  incumbent  LEC 
 can  re-  price  its  services  to  respond  to  competition,  they  do  not  allow  us  to  evaluate 
 whether  the  incumbent  LEC  can  withhold  access  to  the  inputs  that  requesting  carriers 
 need  to  provide  competitive  services  in  the  first  place.  In  order  to  undertake  this 
 evaluation,  we  must  consider  the  cost,  timeliness,  quality,  ubiquity  and  operational 

 215  Access  Charge  Reform  and  Price  Cap  Performance  Review  for  Local  Exchange  Carriers, 
 CC  Docket  Nos.  96-  262,  et  al.,  Fifth  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  FCC  99- 
 206,  paras.  77-  141  (rel.  Aug.  27,  1999)  (Pricing  Flexibility  Order). 

 216  Id.  at  para.  84. 

 217  Id.  at  para.  77. 
 218  Id.  at  paras.  81-  86. 
 219  Id.  at  para.  82  (emphasis  added). 
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 characteristics  of  alternative  elements.  As  we  explain  above,  discerning  the  practical, 
 economic,  and  operational  viability  of  these  alternatives  is  technical,  complex,  and  subject 
 to  considerable  uncertainty.  220  Based  on  the  record  before  us,  we  do  not  believe  that  we 
 can  develop  reliable  triggers  based  on  objectively  measurable  criteria  to  make  this 
 determination.  In  particular,  the  administrative  difficulty  associated  with  developing 
 triggers  that  capture  the  cost,  timeliness,  quality,  ubiquity,  and  operational  factors  of 
 alternatives  in  every  wire  center  throughout  an  incumbent  LECs  service  territory  requires 
 us  to  reject  such  an  approach.  Indeed,  the  Commission  chose  precisely  to  adopt  triggers 
 in  the  Pricing  Flexibility  Order,  221  because  we  found  that  they  were  administratively  easy 
 to  apply.  Conversely,  it  would  not  be  administratively  easy  to  apply  triggers  to  determine 
 which  network  elements  the  incumbent  LECs  must  unbundle.  Moreover,  the  use  of 
 triggers  also  does  not  allow  us  to  evaluate  whether  the  unbundling  obligations  we  adopt 
 are  consistent  with  the  goals  of  the  Act,  as  the  Supreme  Court  has  required  us  to  do.  222 

 133.  Moreover,  a  national  list  of  unbundled  network  elements  will  facilitate  the 
 introduction  of  rapid  competition  by  eliminating  needless  litigation  that  would  result  from 
 unbundling  requirements  that  differ  in  every  market.  Such  litigation  would  require 
 incumbent  LECs,  competitive  LECs,  and  the  state  commissions  to  expend  considerable 
 time  and  resources  to  litigate  issues  surrounding  whether  a  particular  unbundled  network 
 element  should  be  available  to  individual  carriers  seeking  to  serve  specific  customers  or 
 specific  areas  of  the  state.  Although  there  has  been  significant  litigation  over  the  past 
 three  years  regarding  the  incumbents  duty  to  unbundle  elements  under  section 
 251(  c)(  3),  223  we  believe  that  re-  establishing  a  national  list,  subject  to  the  Supreme  Courts 
 mandate  to  include  a  rational  limiting  standard,  will  reduce  the  likelihood  of  further 
 litigation  and  its  accompanying  delays  and  costs,  in  all  fifty  states. 

 134.  Promotion  of  Facilities-  Based  Competition,  Investment,  and  Innovation.  We 
 find  that  adoption  of  a  national  list  will  facilitate  the  deployment  by  competitors  of  their 
 own  facilities.  Permitting  competitors  to  obtain  access  to  unbundled  elements  on  a  broad 
 basis  will  allow  these  carriers  to  acquire  sufficient  customers  and  essential  market 
 information  to  enable  them  to  determine  whether  construction  of  new  facilities  is 
 justified.  We  believe  that  it  is  through  self-  provisioning  their  own  facilities  that 
 competitive  LECs  will  have  a  greater  ability  to  serve  all  classes  of  customers. 

 135.  Ameritech  claims  that  the  Commission  dismissed  outright  the  principal 
 goal  of  the  1996  Act  to  encourage  new  investment  and  innovation  by  all  competitors  in 
 the  market  when  it  adopted  national  unbundling  rules.  224  According  to  Ameritech,  the 

 220  See  supra  Section  (IV)(  B)(  4)(  b)(  ii). 
 221  Pricing  Flexibility  Order  at  para.  77. 
 222  Iowa  Utils.  Bd.,  119  S.  Ct.  at  734. 
 223  Id.  at  736. 
 224  Ameritech  Comments  at  17. 
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 national  unbundling  rules  adopted  in  1996  protected  inefficient  competitors  and 
 discouraged  efficient  entrants  from  investing  and  innovating  in  telecommunications 
 services  as  the  Act  intended.  225  Based  on  the  incumbents  own  evidence,  we  find  this 
 argument  lacking  in  credibility. 

 136.  The  incumbent  LECs  have  submitted  a  market  study  in  this  proceeding,  the 
 USTA  UNE  Report,  that  details  the  competitive  LECs  investment  in  their  own  facilities 
 on  an  element-  by-  element  basis  since  the  passage  of  the  1996  Act,  and  during  the  time 
 that  the  Commissions  national  unbundling  rules  have  been  in  effect.  226  Although  the 
 Commissions  unbundling  rules  have  been  the  subject  of  extensive  litigation,  none  of  the 
 parties  dispute  that  competitors  have  used  unbundled  elements,  particularly  unbundled 
 loops  and  transport,  where  these  elements  have  been  made  available.  Yet,  the 
 incumbents  UNE  Report  shows  that  competitors  have  built  nearly  30,000  miles  of  fiber 
 within  the  top  50  MSAs,  serving  nearly  15  percent  of  all  commercial  office  buildings.  227 

 137.  The  USTA  UNE  Report  also  states  that  competitors  have  deployed 
 approximately  700  switches  to  serve  medium  and  large  business  customers.  228  The  report 
 indicates  that  these  carriers  have  deployed  fixed  wireless  connections  to  extend  their  fiber 
 networks  out  to  many  more  customers.  229  The  incumbents  also  assert  that  many 
 competitors  are  providing  advanced  services  by  attaching  their  own  facilities  to  the 
 incumbent  LECs  unbundled  cooper  loops.  230  Overall,  the  incumbents  estimate  that 
 competitive  LECs  are  offering  service  over  approximately  2.5  million  facilities-  based 
 lines  in  the  incumbents  service  territories.  231  As  explained  more  fully  below,  these 
 facilities  are  still  not  available  broadly  enough  to  prevent  competitive  LECs,  in  most 
 cases,  from  being  impaired  in  their  ability  to  provide  service  without  access  to  the 
 incumbents  network.  Nonetheless,  the  data  presented  by  the  incumbents  shows 
 significant  and  growing  investment  by  the  competitive  LECs.  Accordingly,  we  find  no 
 merit  in  the  claim  made  by  Ameritech  and  other  incumbent  LECs  that  unbundling 
 elements  will  impede  the  Acts  goal  of  encouraging  new  investment  and  innovation  in 
 telecommunications  services. 

 225  Id.  17-  27. 
 226  USTA  Comments,  Peter  W.  Huber  and  Evan  T.  Leo,  UNE  Fact  Report  (USTA  UNE 
 Report). 
 227  Id.  at  II-  6,  III-  3. 

 228  Id.  at  I-  1. 
 229  Id.  at  11-  4,  III-  10  to  12. 
 230  Id.  at  VI-  19-  20. 
 231  Id.  at  III-  16  (The  incumbent  LECs  state  that  this  total  excludes  US  Wests  territory.). 
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 Federal  Communications  Commission  FCC  99-  238 
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 138.  The  incumbents  also  claim  that  national  unbundling  requirements  will 
 discourage  them  from  investing  and  innovating,  particularly  if  they  have  to  unbundle 
 elements  for  the  provision  of  advanced  services.  232  While  we  desire  to  do  nothing  to 
 discourage  investment  and  innovation  by  all  carriers,  we  note  that  the  Commissions 
 national  unbundling  policy  has  clearly  not  discouraged  incumbent  LECs  from  seeking  to 
 serve  new  markets.  Although  in  the  Local  Competition  First  Report  and  Order,  the 
 Commission  did  not  order  unbundling  of  certain  equipment  used  in  providing  advanced 
 services,  it  made  clear  that  the  states  could  extend  the  incumbents  unbundling  obligations 
 as  necessary  to  account  for  changes  in  technology  and  to  address  local  conditions.  233 
 Incumbent  LECs  have  therefore  known  since  1996  that  they  might  eventually  be  required 
 to  unbundle  elements  used  to  provide  advanced  services.  Moreover,  last  year,  in  the 
 Advanced  Services  Order  and  NPRM,  we  sought  specifically  comment  on  whether  to 
 unbundle  facilities  used  to  provide  advanced  services.  234  Notwithstanding  the  fact  that 
 the  incumbents  have  been  on  notice  that  they  could  be  required  to  unbundle  facilities  used 
 to  provide  advanced  services,  the  incumbents  have  announced  aggressive  rollout  plans  for 
 xDSL  service.  235  In  fact,  a  recent  financial  analysts  report  indicates  that  advanced  data 
 services  currently  comprise  an  average  of  9.9  percent  of  the  revenues  of  the  BOCs  and 
 GTE.  236  Although  the  incumbents  claim  that  competitors  have  deployed  more  advanced 

 232  See  Ameritech  Comments  at  25-  27,  BellSouth  Reply  Comments  at  7-  9;  SBC  Reply 
 Comments  at  27. 
 233  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15619,  para.  234. 

 234  Deployment  of  Wireline  Services  Offering  Advanced  Telecommunications  Capability,  CC 
 Docket  No.  98-  147,  Memorandum  Opinion  and  Order  and  Notice  of  Proposed  Rulemaking,  13  FCC  Rcd 
 24012,  24092-  93,  paras.  180-  82  (Advanced  Services  Memorandum  Opinion  and  Order  and  NPRM), 
 remanded  US  West  Communications  v.  FCC,  No.  98-  1410  (D.  C.  Cir.  Aug.  25,  1999). 

 235  Todays  broadband  services  include  services  based  on  digital  subscriber  line  technology 
 (commonly  referred  to  as  xDSL),  and  include  ADSL  (asymmetric  digital  subscriber  line)  services.  See,  e.  g., 
 Communications  Daily,  Nov.  20,  1998,  1998  WL  10697801  (Bell  Atlantic  announces  plans  to  deploy  xDSL 
 capable  lines  in  Boston  and  New  York  City  to  a  total  of  three  million  customers);  Communications  Daily, 
 Feb.  9,  1999,  1999  WL  7578715(  Bell  Atlantic  announces  that  its  xDSL  service  will  pass  by  20  million 
 households  in-  region  by  the  end  of  2000,  with  10  or  11  million  lines  qualified  for  xDSL  upgrade  by  that  date); 
 Communications  Daily,  July  29,  1999,  1999  WL  7580057  (Bell  Atlantic  and  GTE  announces  that  the  total 
 number  of  xDSL-  capable  lines  available  in-  region  by  years  end  will  be  17  million,  and  that  they  will  have 
 ADSL  capability  installed  in  550  central  offices  by  years  end,  thereby  allowing  it  to  serve  potentially  as  many 
 as  6.1  million  DSL  lines);  Communications  Daily,  July  21,  1999,  1999  WL  7580000  (SBC  announces  that  it 
 had  32,000  DSL  customers  as  of  the  end  of  2  nd  quarter  1999.  SBC  plans  to  reach  10  million  homes  with 
 xDSL-  capable  wires  by  the  end  of  1999);  US  West  at 
 http://  www.  uswest.  com/  about/  communicator/  vol2no1/  7.  html  (US  WEST  launched  ADSL  service  in  40  in-region 
 metropolitan  areas,  Jan.  29,  1998);  BellSouth  at 
 http://  www.  bellsouthcorp.  com/  proactive/  documents/  render/  16942.  html  (BellSouth  announced  roll-  out  of 
 BellSouth.  Net  Fast  Access  ADSL  Internet  service  in  30  markets.  Service  began  in  seven  key  markets:  New 
 Orleans,  Atlanta,  Birmingham,  Jacksonville,  Raleigh,  Charlotte,  and  Ft.  Lauderdale  encompassing  1.7  million 
 customers  by  the  end  of  1998.  It  states  that  service  will  extend  to  23  additional  markets  in  1999.). 

 236  Daniel  Reingold  and  Ehud  Gelblum,  Telecom  Services    Local,  Merrill  Lynch  &  Co.,  July 
 12,  1999,  at  3. 
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 services  equipment  than  the  incumbents  have  deployed,  237  they  nevertheless  acknowledge 
 that  the  incumbent  LECs  are  offering  advanced  services  in  7  of  the  10  largest  MSAs  and 
 in  22  of  the  top  50  MSAs.  238  We  find  these  statistics  to  be  significant  because  they 
 demonstrate  that  the  development  of  competition,  and  the  threat  of  losing  revenue  and 
 customers  to  carriers  offering  advanced  services,  provides  a  powerful  incentive  for 
 carriers  to  invest. 

 139.  We  therefore  conclude,  as  the  Commission  did  in  the  Local  Competition 
 First  Report  and  Order,  that  by  adopting  a  national  list  of  elements,  and  by  giving  the 
 states  the  flexibility  to  add  elements  as  technology  and  local  market  conditions  change, 
 we  will  not  discourage  incumbent  LECs  from  investing  and  deploying  innovative 
 services.  239  The  incumbent  LECs  will  have  an  increased  incentive  to  reduce  their 
 operating  and  capital  costs  and  to  introduce  new  and  innovative  services  that  will  increase 
 the  overall  usage  level  of  their  networks  as  they  face  competition  for  all  of  their  services. 
 Moreover,  the  Commissions  pricing  methodology  includes  a  risk-  adjusted  return  on 
 capital  and  economic  depreciation  for  the  incumbent  as  part  of  the  forward-  looking 
 rate.  240  As  we  indicated  above,  we  are  also  adopting  a  necessary  standard  that  fully 
 protects  the  incumbents  intellectual  property  associated  with  proprietary  network 
 elements  when  those  elements  are  used  by  the  incumbent  to  differentiate  its  products  from 
 those  of  its  competitors.  241  We  therefore  do  not  find  merit  in  arguments  that  the  adoption 
 of  a  list  of  network  elements  that  must  be  unbundled  nationwide  will  discourage 
 innovation  and  investment  by  incumbent  or  competitive  LECs. 

 140.  Certainty  in  the  Marketplace.  We  find  that  a  national  list  of  unbundled 
 elements  will  provide  uniformity  and  predictability  that  will  facilitate  the  development 
 and  implementation  of  national  and  regional  business  plans  by  competitive  LECs,  thereby 
 extending  the  benefits  of  competition  for  the  greatest  number  of  consumers.  We  agree 
 with  the  California  PUC  that  a  national  list  will  allow  multi-  state  competitors  to  create  a 
 national  business  plan  with  the  knowledge  that  a  set  of  network  elements  will  be  available 
 in  all  states.  242  Indeed,  we  find  that  the  unavailability  of  elements  on  a  nationwide  basis 

 237  To  the  extent  that  network  innovations  are  undertaken  by  equipment  vendors,  they  are  not 
 subject  to  the  unbundling  rules  we  adopt. 
 238  USTA  UNE  Report  at  VI-  19. 

 239  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15626,  para.  245  (  We  are  not 
 persuaded  that  national  rules  will  discourage  incumbent  LECs  from  developing  new  technologies  and 
 services;  to  the  contrary,  based  on  our  experience  in  other  telecommunications  markets,  we  believe  that 
 competition  will  stimulate  innovation  by  incumbent  LECs.). 

 240  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15849-  50,  paras.  686-  88;  MCI 
 WorldCom  Comments  at  9  and  Tab  2,  Decl.  of  John  E.  Kwoka,  at  para.  25. 
 241  See  supra  Section  IV(  B)(  2). 

 242  California  PUC  Comments  at  3.  See  also  CPI  Comments  at  5;  MCI  WorldCom  Comments 
 at  ii,  5;  Net2000  Comments  at  4-  5. 
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 would  jeopardize  the  usefulness  of  unbundled  elements  as  a  method  of  serving  the 
 maximum  number  of  consumers.  243 

 141.  We  also  continue  to  believe  that  national  unbundling  requirements  will 
 provide  financial  markets  with  greater  certainty  regarding  the  elements  that  are  available 
 to  competitive  LECs.  Such  certainty  should  reduce  the  risk  of  entry,  thereby  making 
 more  capital  available  at  less  cost  to  new  entrants  and  fledgling  competitors.  244  We  do 
 not  agree  with  Ameritech  that  a  national  list  would  perpetuate  uncertainty  in  capital 
 markets  because  carriers  would  challenge  the  list  regardless  of  what  elements  it 
 contains.  245  As  stated  above,  we  believe  that  a  national  list  will  actually  reduce  the  risk  of 
 litigation. 

 142.  Administrative  Practicality.  We  find  that  a  national  list  of  unbundled 
 elements  is  administratively  easier  for  the  Commission,  the  states,  and  the  industry  to 
 apply  than  a  list  that  varies  on  a  state-  by-  state  or  market-  by-  market  basis.  As  we  stated  in 
 the  Notice,  application  of  the  necessary  and  impair  standard  is  fact-  intensive.  246 
 Determining  the  availability  of  practical  alternatives  to  the  incumbents  network  elements 
 on  a  market-  by-  market  basis,  even  through  the  use  of  bright-  line  tests  as  proposed  by  the 
 incumbent  LECs,  would  potentially  require  the  Commission  or  the  states  to  analyze  the 
 availability  of  alternatives  in  almost  every  wire  center.  In  addition  to  creating  uncertainty 
 in  the  market,  such  a  proposal  would  consume  enormous  amounts  of  resources  and  time, 
 thereby  undermining  the  goal  of  the  Act  to  bring  the  benefits  of  rapid  competition  to  all 
 consumers.  Such  an  approach  would  also  require  a  new  analysis  each  time  a  new  carrier 
 sought  to  initiate  service  in  a  particular  market,  and  would  likely  lead  to  additional 
 litigation  by  adversely  affected  carriers.  247  We  do  not  believe  that  Congress  or  the 
 Supreme  Court  had  in  mind  the  adoption  of  a  procedure  that  would  impose  such  an 

 243  For  example,  MCI  WorldCom  points  out  that  the  Commission  declined  to  order  nationwide 
 unbundling  of  certain  elements  in  the  Local  Competition  First  Report  and  Order,  including  subloop  elements 
 and  dark  fiber.  It  states  that  this  led  to  dozens  of  state  commission  arbitrations  and  subsequent  lawsuits,  and 
 that  where  determinations  have  been  made  on  the  availability  of  these  elements,  MCI  WorldCom  reports  that 
 the  outcomes  have  been  inconsistent  from  one  state  to  another,  for  reasons  having  nothing  to  do  with 
 geographic  or  market  differences.  It  states  that  the  result  has  been  that  competitive  LECs  have  been  unable  to 
 formulate  any  national  or  regional  strategies  that  rely  on  the  use  of  dark  fiber  or  subloop  elements.  MCI 
 WorldCom  Comments  at  7-  8. 

 244  See  NorthPoint  Comments  at  2  (  Further,  as  the  Commission  correctly  anticipated,  the 
 establishment  of  national  requirements  for  unbundled  elements  has  assisted  NorthPoint  in  its  efforts  to  attract 
 capital  by  providing  financial  markets  with  greater  certainty  in  assessing  new  entrants  business  plans). 
 The  availability  of  a  national  list  of  elements  will  also  provide  certainty  for  incumbent  LECs  seeking  to  raise 
 capital  to  enter  markets  outside  of  their  service  territories. 

 245  Ameritech  Comments  at  64. 

 246  Notice  at  para.  12. 
 247  See  MGC  Comments  at  8  (stating  that  a  national  list  is  an  administrative  necessity  and 
 required  for  business  certainty). 
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 undue  and  unworkable  administrative  burden  on  the  Commission,  the  states,  or  the 
 industry. 

 143.  Reduced  Regulation.  We  believe  that  a  national  list  of  elements  that 
 contains  discrete  geographic  and  product  market  exceptions  will  result  immediately  in 
 reduced  regulation.  Moreover,  a  national  framework  under  which  elements  can  be 
 removed  from  the  national  list  is  consistent  with  the  deregulatory  goals  of  the  Act. 
 Reduced  regulation  will  occur  as  we  remove  elements  from  the  list  as  requesting  carriers 
 are  no  longer  impaired  without  access  to  those  elements,  and  it  otherwise  does  not  further 
 the  goals  of  the  Act  to  continue  requiring  incumbent  LECs  to  unbundle  them. 

 D.  Modification  of  the  National  List 

 1.  Background 
 144.  In  the  Local  Competition  Order  First  Report  and  Order,  the  Commission 
 acknowledged  that  the  rapid  pace  and  ever-  changing  nature  of  technological  advancement 
 in  the  telecommunications  industry  made  it  essential  that  the  Commission  retain  the 
 ability  to  revise  the  rules  as  circumstances  change.  The  Commission  noted  that,  absent 
 such  ability,  its  rules  might  impede  technological  change  and  frustrate  the  1996  Acts 
 overriding  goal  of  bringing  the  benefits  of  competition  to  consumers  of  local  phone 
 service.  Accordingly,  the  Commission  determined  that,  in  addition  to  identifying 
 unbundled  network  elements  that  incumbent  LECs  were  required  to  make  available  at  the 
 time  the  original  rules  were  adopted,  it  had  the  authority  to  identify  additional  or  different 
 unbundling  requirements  that  would  apply  to  incumbent  LECs  in  the  future.  248 

 145.  In  the  Local  Competition  Order  First  Report  and  Order,  the  Commission 
 also  determined  that  state  commissions  could  impose  additional  unbundling  requirements, 
 as  long  as  the  requirements  were  consistent  with  the  1996  Act  and  our  regulations.  249  The 
 Commission  codified  this  grant  of  authority  in  section  51.317  of  its  rules.  250  The 
 Commission  believed  that  the  states  authority  to  impose  additional  requirements, 
 combined  with  its  ability  to  modify  the  national  unbundling  rules,  provided  the  necessary 
 flexibility  to  accommodate  any  truly  unique  conditions  that  might  exist.  251  The 

 248  Local  Competition  Order  First  Report  and  Order,  11  FCC  Rcd  at  15626,  para.  246.  The 
 Commission  also  noted  that  its  existing  rules  set  forth  a  process  by  which  incumbent  LECs  could  request  a 
 waiver  of  the  requirements  adopted  in  the  Local  Competition  First  Report  and  Order.  Id.  at  15625,  para.  244. 

 249  Id.  We  based  this  grant  of  authority  on  47  U.  S.  C.  252(  e)(  3),  which  states:  Preservation  of 
 Authority.    Notwithstanding  paragraph  (2),  but  subject  to  section  253,  nothing  in  this  section  shall  prohibit  a 
 State  commission  from  establishing  or  enforcing  other  requirements  of  State  law  in  its  review  of  an 
 agreement,  including  requiring  compliance  with  intrastate  telecommunications  service  quality  standards  or 
 requirements.  47  U.  S.  C.  252(  e)(  3).  Section  252(  e)(  3)  requires  interconnection  agreements  to  be  submitted 
 to  the  state  commission  for  approval. 

 250  47  C.  F.  R.  51.317. 

 251  Local  Competition  Order  First  Report  and  Order,  11  FCC  Rcd  at  15625,  para.  244. 
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 Commission,  however,  did  not  address  the  issue  of  whether  states  could  remove  elements 
 from  the  national  list. 

 146.  In  the  Notice  we  sought  comment  on  whether  the  Commission  should  adopt 
 an  approach  that  would  allow  sunset  or  modification  of  the  section  253(  c)(  3)  unbundling 
 obligations  as  technology  and  market  conditions  evolve  over  time.  252  We  noted  that, 
 under  our  rules,  states  have  the  authority  to  impose  additional  unbundling 
 requirements.  253  We  sought  comment  on  whether  section  251(  d)(  2),  or  any  other 
 provision  of  the  Act,  provides  the  Commission  with  the  authority  to  delegate  to  the  states 
 the  responsibility  of  removing  network  elements  from  any  national  requirement.  254  We 
 sought  comment  on  proposals  for  a  mechanism  for  removal,  including  which  party  should 
 bear  the  burden  of  proof.  255  We  asked  whether  the  Commission  should  consider  a  phase-out 
 period  for  network  elements  removed  from  the  national  list.  Further,  we  asked 
 whether  we  should  institute  a  period  of  time  during  which  incumbents  could  not  seek 
 removal  of  network  elements  from  our  new  unbundling  rules.  256  We  also  asked  whether 
 we  could  adopt  a  sunset  provision.  257 

 147.  Several  of  the  state  commissions  argue  that  they  have  the  authority  to  add 
 and  subtract  elements  from  the  national  list,  258  while  the  Vermont  and  Illinois  state 

 252  Notice  at  paras.  11,  36. 
 253  Id.  at  para.  14  (citing  47  C.  F.  R.    51.317;  Local  Competition  First  Report  and  Order,  11 
 FCC  Rcd  at  15641-  42,  paras.  281-  83).  In  the  Notice,  we  noted  that  the  Supreme  Courts  analysis  of  section 
 251(  d)(  2)  might  have  a  bearing  on  Rule  51.317,  but  that  the  Court  did  not  directly  address  that  issue.  We  also 
 noted  that  the  Commission  asked  the  Eighth  Circuit  for  a  voluntary  remand  of  Rule  51.317  so  that  the 
 Commission  may  consider  it  in  light  of  the  Supreme  Courts  decision.  Notice  at  14,  n.  21.  In  requesting  a 
 remand  from  the  Eighth  Circuit,  the  Commission  did  not  attempt  to  defend  the  substance  of  Rule  51.317. 
 Nothing  in  this  Order  interferes  or  is  intended  to  interfere  with  the  Eighth  Circuits  jurisdiction  over  this 
 matter. 

 254  Notice  at  paras.  14,  38.  As  part  of  this  inquiry,  we  asked  if  the  Commission  should  be  able 
 to  review  state  decisions  to  remove  network  elements.  Id.  at  para.  14. 
 255  Id.  at  para  37.  We  asked  if  there  was  a  modification  of  an  unbundling  requirement  whether 
 an  incumbent  LEC  should  be  required  to  continue  to  unbundle  a  particular  element  identified  in  an 
 interconnection  agreement  until  the  date  that  the  agreement  expired.  We  also  asked  whether  an  incumbent 
 LEC  should  be  able  to  refuse  to  unbundle  a  network  element  that  is  no  longer  required  when  negotiating  a 
 new  contract  with  other  parties.  Id.  at  para.  36. 

 256  Id.  at  para.  37. 

 257  Id.  at  paras.  39-  40. 
 258  Iowa  Comments  at  2  (  Network  elements  should  be  added  or  removed  by  the  state 
 commissions  pursuant  to  the  record  made  before  the  commissions  in  proceedings  to  arbitrate  and  modify 
 interconnection  agreements.);  New  York  DPS  Comments  at  5-  6;  Ohio  PUC  Comments  at  3-  5;  Oregon  PUC 
 Comments  at  1;  Texas  PUC  Comments  at  3  (  It  is  the  Texas  PUCs  belief  that  the  Commission  has  the 
 authority  to  allow  states  to  have  substantial  discretion  in  the  addition  or  removal  of  network  elements  from  the 
 presumptive  national  list  .);  Washington  UTC  Comments  at  7  (claiming  that  the  Commission  could 
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 commissions  argue  that  the  Commission  should  establish  a  set  of  unbundling  obligations 
 to  which  the  state  may  add  additional  unbundling  obligations.  259  BellSouth  argues  that 
 states  should  be  able  to  add  or  remove  unbundled  elements  in  a  particular  zone.  260  SBC 
 and  GTE  oppose  allowing  the  states  to  add  or  subtract  elements.  261  US  West  argues  that 
 states  should  be  able  to  determine  whether  network  elements  no  longer  need  to  be 
 unbundled,  but  that  they  not  be  allowed  to  add  network  elements.  262  The  vast  majority  of 
 competitive  LECs  that  commented  in  this  proceeding,  as  well  as  NTIA  and  ALTS,  argue 
 that  the  states  should  be  allowed  to  add,  but  not  to  remove,  elements  from  the  national 
 list.  263 

 implement  something  analogous  to  state  commission  authority  to  subtract  elements  from  the  federal  list.); 
 NARUC  Reply  Comments  at  3. 

 259  Vermont  PSB  Comments  at  4-  5  (arguing  that  the  Act  establish[  es]  a  floor  beneath  which 
 State  regulatory  bodies  may  not  go,  but  not  a  ceiling  on  State  efforts  to  encourage  competition(  emphasis  in 
 original));  Illinois  Commission  Comments  at  4.  See  also  Kentucky  PSC  Comments  at  1-  2  (arguing  that  state 
 commissions  should  evaluate  issues  involving  [unbundled  network  elements]  not  specifically  prescribed  by 
 the  [Commission]);  California  PUC  Comments  at  9,  13  (urging  the  Commission  to  delegate  to  the  states  the 
 authority  to  remove  network  elements  added  by  the  states);  Connecticut  DPUC  Comments  at  4. 

 260  BellSouth  Comments  at  29-  30.  As  part  of  its  proposals,  BellSouth  argues  that  the 
 Commission  should  establish  a  strong  presumption  against  adding  network  elements  to  the  list. 
 261  SBC  Comments  at  18-  19;  GTE  Comments  at  29. 

 262  US  West  Comments  at  29-  32. 
 263  NTIA  Comments  at  42,  n.  114;  ALTS  Comments  at  5-  6;  CoreComm  Comments  at  10-  12; 
 e.  spire  Joint  Comments  at  7;  Joint  Consumer  Advocates  Comments  at  5-  6;  McLeod  Comments  at  3;  MGC 
 Comments  at  7;  Net2000  Comments  at  6;  NEXTLINK  Comments  at  5-  7;  OpTel  Comments  at  3,  14;  Prism 
 Comments  at  10;  Qwest  Comments  at  40-  42;  RCN  Comments  at  4-  5;  AT&  T  Reply  Comments  at  67; 
 CoreComm  Reply  Comments  at  7;  Level  3  Reply  Comments  at  12;  MCI  WorldCom  Reply  Comments  at  10- 
 11;  RCN  Reply  Comments  at  10.  See  also  Covad  Comments  at  6  (opposing  state  authority  to  remove  network 
 elements  from  the  national  list)  Metro  One  Comments  at  19  (arguing  that  the  Act  does  not  provide  the 
 Commission  with  the  authority  to  delegate  to  states  the  responsibility  of  removing  network  elements  from  the 
 national  list);  Cable  &  Wireless  Comments  at  45-  46  (opposing  state  authority  to  remove  network  elements 
 from  the  national  list).  But  see  TRA  Comments  at  29-  31  (arguing  that  for  the  first  two  years  the  Commission 
 should  review  petitions,  but,  subsequently,  state  commissions  should  be  able  to  add  or  remove  network 
 elements  pursuant  to  the  case  law  established  during  the  first  two  years);  Excel  Comments  at  19  (stating  that  it 
 would  not  object  to  rules  giving  the  States  a  significant  role  in  determining  whether  to  remove  [unbundled 
 network  elements]  from  the  mandatory  list  after  the  initial  three-  year  period);  ALTS  Reply  Comments  at  6 
 (  The  Commission  only  should  consider  adopting  a  mechanism  for  state-  by-  state  removal  of  [unbundled 
 network  elements]  from  the  national  list  after  a  two  year  period  during  which  the  Commissions  unbundling 
 rules  are  allowed  to  be  given  their  full  effect  .  .  .  .). 
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 2.  Discussion 
 a.  Modification  of  the  National  List  by  the  Commission 

 148.  As  discussed  above,  section  251(  d)(  2)  grants  the  Commission  authority  to 
 establish  a  national  list  of  network  elements  that  are  subject  to  the  unbundling 
 requirements  of  the  Act.  264  Given  the  rapid  changes  in  technology,  competition,  and  the 
 economic  conditions  of  the  telecommunications  market,  we  expect  that  the  list  of 
 unbundled  network  elements  that  meets  the  standards  of  section  251(  d)(  2)  will  change 
 over  time.  We  therefore  agree  with  commenters  that  we  will  need  to  reevaluate  our 
 national  rules  periodically.  265 

 149.  The  need  to  reassess  periodically  the  availability  of  elements  outside  the 
 incumbents  network  is  borne  out  by  the  changes  that  have  taken  place  since  we  first 
 adopted  our  unbundling  rules  three  years  ago.  For  example,  the  evidence  in  this 
 proceeding  indicates  that  competition  is  developing  in  some  geographic  markets  for 
 certain  customer  groups,  (e.  g.,  medium  and  large  businesses  in  major  metropolitan  areas). 
 Only  by  periodically  reevaluating  the  availability  of  alternative  network  elements  outside 
 the  incumbents  network  can  we  truly  determine  whether  the  incumbents  network  should 
 be  unbundled  in  order  to  meet  the  requirements  of  section  251  and  the  goals  of  the  Act. 
 We  therefore  conclude  that  as  market  conditions  change  and  new  technologies  develop, 
 we  will  periodically  revisit  the  issue  of  what  elements  are  subject  to  the  unbundling 
 obligations  of  the  Act. 

 150.  Although  we  will  periodically  revisit  our  unbundling  rules,  we  believe  that 
 it  would  be  inconsistent  with  our  overall  policy  goals  to  consider  petitions  to  remove 
 elements  from  the  national  list  immediately  upon  adoption  of  this  order.  266  Specifically, 

 264  See  supra  Section  (IV)(  D). 
 265  California  PUC  Reply  Comments  at  13;  New  York  DPS  Comments  at  1,7;  ALTS 
 Comments  at  6;  CompTel  Comments  at  54;  Cox  Comments  at  37-  38;  KMC  Comments  at  27;  Level  3 
 Comments  at  24;  MCI  WorldCom  Comments  at  11;  McLeod  Comments  at  3;  RCN  Comments  at  27; 
 Rhythms  Comments  at  3,  28;  AT&  T  Reply  Comments  at  51;  KMC  Reply  Comments  at  27;  Rhythms  Reply 
 Comments  at  14.  See  also  Allegiance  Comments  at  24;  Cable  &  Wireless  Comments  at  46;  GTE  Reply 
 Comments  at  79-  80.  But  see  OpTel  Comments  at  14-  15  (arguing  it  is  premature  to  establish  mechanisms  for 
 removal);  Sprint  Comments  at  40  (arguing  that  it  is  premature  to  address  this  issue  at  this  time).  Sprint  is  also 
 concerned  that  if  the  Commission  gives  any  encouragement  at  all  to  [a]  waiver  option,  it  is  likely  to  be 
 inundated  with  such  requests.  Sprint  Comments  at  41.  The  California  PUC  recommends  that  the  review 
 process  begin  three  years  after  the  adoption  of  a  minimal  list.  California  PUC  Reply  Comments  at  13. 
 Allegiance  recommends  that  removal  be  considered  on  an  incumbent  LEC-  by-  incumbent  LEC  basis. 
 Allegiance  Comments  at  25. 

 266  See  ALTS  Comments  at  6-  7;  MCI  WorldCom  Comments  at  11;  Sprint  Comments  at  41 
 (arguing  for  a  five  year  quiet  period);  ALTS  Reply  Comments  (recommending  a  two-  year  gestation 
 period);  Rhythms  Reply  Comments  at  14  (arguing  that  a  two-  year  period  may  be  too  short). 
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 as  discussed  above,  the  rules  we  adopt  today  seek  to  provide  a  measure  of  certainty  to 
 ensure  that  new  entrants  and  fledgling  competitors  can  design  networks,  attract 
 investment  capital,  and  have  sufficient  time  to  attempt  to  implement  their  business 
 plans.  267  Entertaining,  on  an  ad  hoc  basis,  numerous  petitions  to  remove  elements  from 
 the  list,  either  generally  or  in  particular  circumstances,  would  threaten  the  certainty  that 
 we  believe  is  necessary  to  bring  rapid  competition  to  the  greatest  number  of  consumers. 
 In  addition,  entertaining  numerous  petitions  on  an  ad  hoc  basis  would  undermine  the  goal 
 of  implementing  unbundling  rules  that  are  administratively  practical  to  apply. 

 151.  We  expect  to  reexamine  our  national  list  of  network  elements  that  are 
 subject  to  the  unbundling  obligations  of  the  Act  every  three  years.  268  We  note  that  many 
 of  the  first  interconnection  agreements  negotiated  in  1996  are  now  approaching  expiration 
 of  their  typical  three-  year  terms  and  will  be  eligible  for  renewal.  We  expect  parties  to 
 implement  the  requirements  of  this  Order  as  they  negotiate  new  interconnection 
 agreements.  We  find  that  a  similar  three-  year  time  frame  for  reevaluating  the  unbundling 
 obligations  is  warranted  to  provide  competitors  with  reasonable  certainty  for  a  period  of 
 time  that  is  sufficient  time  to  implement  their  plans.  Revisiting  our  rules  in  three  years 
 should  provide  sufficient  certainty  to  the  carriers  and  capital  markets  and  should  provide 
 carriers  with  sufficient  time  to  implement  their  plans.  269 

 152.  We  decline  to  adopt  a  rule  mandating  that  elements  will  not  be  subject  to 
 unbundling  after  a  date  certain  in  the  future.  Several  parties  have  suggested  that  it  would 
 be  extremely  difficult  for  us  to  predict  a  date  at  which  a  particular  network  element  would 
 no  longer  meet  the  necessary  and  impair  standards  of  section  251(  d)(  2).  270  As  noted 
 by  the  Illinois  Commission,  in  the  three  years  since  the  Act  was  implemented,  no  BOC 
 has  demonstrated  that  it  satisfies  the  competitive  checklist  in  section  271.  In  1996,  few 
 would  have  expected  that  three  years  later  BOCs  would  not  have  qualified  for  section  271 
 approval.  This  suggests  that  it  would  be  similarly  very  difficult  for  us  to  predict,  at  this 
 time,  the  date  at  which  incumbent  network  elements  would  no  longer  be  subject  to 
 unbundling  obligations  under  section  251.  Moreover,  we  note  that  we  find  no  basis  in  the 
 record  before  us  to  make  predictive  judgments  about  when  an  unbundling  standard  will 

 267  Sprint  Comments  at  41.  See  also  Excel  Comments  at  19. 
 268  Accord  California  PUC  Reply  Comments  at  13;  CO  Space  Comments  at  16;  Excel 
 Comments  at  19;  MCI  WorldCom  Comments  at  13  and  Tab  2,  Decl.  of  John  E.  Kwoka,  para.  38;  AT&  T 
 Reply  Comments  at  51. 

 269  See  ALTS  Comments  at  7  (advocating  a  two  year  review  cycle).  This  is  consistent  with  the 
 MFJs  tri-  ennial  review  process.  The  review  may  begin  after  approximately  only  two  years  of  experience  so 
 that  it  can  be  completed  in  three-  year  intervals. 

 270  Illinois  Commission  Comments  at  15-  16;  Choice  One  Joint  Comments  at  27;  MCI 
 WorldCom  Comments  at  12;  OpTel  Comments  at  14;  RCN  Comments  at  26;  Sprint  Comments  at  42-  43; 
 KMC  Reply  Comments  at  27-  28;  Sprint  Reply  Comments  at  12.  See  also  CoreComm  Comments  at  40;  KMC 
 Comments  at  27-  28;  Level  3  Comments  at  24;  California  PUC  Reply  Comments  at  14;  Pilgrim  Reply 
 Comments  at  12. 
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 no  longer  be  met  for  particular  network  elements.  Thus,  at  this  point  in  time,  we  do  not 
 have  enough  information  and  experience  to  determine  what  events  would  lead  to  an 
 automatic  sunset  of  one  of  our  unbundling  requirements.  Accordingly,  at  this  time,  we 
 decline  to  adopt  a  sunset  provision  for  removing  network  elements  from  the  national  list 
 adopted  in  this  Order. 

 b.  Modification  of  the  National  List  by  the  States 

 153.  We  agree  with  commenters  that  section  251(  d)(  3)  provides  state 
 commissions  with  the  ability  to  establish  additional  unbundling  obligations,  as  long  as  the 
 obligations  comply  with  subsections  251(  d)(  3)(  B)  and  (C).  271  Section  251(  d)(  3)  states 
 that: 

 In  prescribing  and  enforcing  regulations  to  implement  the 
 requirements  of  this  section,  the  Commission  shall  not  preclude  the 
 enforcement  of  any  regulation,  order,  or  policy  of  a  State 
 commission  that 

 (A)  establishes  access  and  interconnection  obligations  of  local 
 exchange  carriers; 
 (B)  is  consistent  with  the  requirements  of  this  section;  and 
 (C)  does  not  substantially  prevent  implementation  of  the 
 requirements  of  this  section  and  the  purposes  of  this  part.  272 

 154.  This  section  of  the  statute  allows  state  commissions  to  establish  access 
 obligations  of  local  exchange  carriers  that  are  consistent  with  our  rules  implementing 
 section  251.  273  We  believe  that  section  251(  d)(  3)  grants  state  commissions  the  authority 
 to  impose  additional  obligations  upon  incumbent  LECs  beyond  those  imposed  by  the 
 national  list,  as  long  as  they  meet  the  requirements  of  section  251  and  the  national  policy 
 framework  instituted  in  this  Order.  As  explained  below  however,  we  find  that  state-  by-state 
 removal  of  elements  from  the  national  list  would  substantially  prevent 
 implementation  of  the  requirements  and  purposes  of  this  section  of  the  Act. 

 155.  Section  51.317  of  the  Commissions  rules  codifies  the  standards  state 
 commissions  must  apply  to  add  elements  to  the  national  list  of  network  elements  we 
 adopt  in  this  Order.  274  In  its  current  form,  Rule  51.317  reflects  the  Commissions 

 271  California  PUC  Comments  at  7-  8;  Washington  UTC  Comments  at  6-  7;  Ameritech 
 Comments  at  48-  49;  NEXTLINK  Comments  at  6,  n.  17;  NTIA  Comments  at  42;  Allegiance  Reply  Comments 
 at  13  (quoting  47  U.  S.  C.    251(  d)(  3));  MCI  WorldCom  Reply  Comments  at  12-  13;  NARUC  Reply  Comments 
 at  4;  Washington  UTC  Reply  Comments  at  5-  6.  But  see  SBC  Comments  at  19  (arguing  that  section  251(  d)(  3) 
 prevents  states  from  adding  network  elements  to  the  list). 

 272  47  U.  S.  C.    251(  d)(  3). 
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 interpretation  of  the  necessary  and  impair  standards  adopted  in  the  Local  Competition 
 First  Report  and  Order.  Inasmuch  as  we  have  modified  the  necessary  and  impair 
 standard  to  respond  to  the  Supreme  Courts  directive,  we  must  also  amend  Rule  51.317  to 
 reflect  the  new  standards.  Accordingly,  we  modify  Rule  51.317,  to  bring  it  into 
 compliance  with  our  new  standards  and  the  Supreme  Courts  decision.  Modification  of 
 this  rule  will  enable  state  commissions  to  add  additional  unbundling  obligations 
 consistent  with  sections  251(  d)(  3)(  B)  and(  C)  of  the  Act.  275 

 156.  We  agree  with  the  California  PUC  that  states  have  the  authority  to  remove 
 network  elements  added  by  the  states.  Thus,  if  a  state  commission,  pursuant  to  section 
 251(  d)(  3),  adds  a  network  element  to  the  list  of  network  elements  an  incumbent  LEC 
 must  provide,  state  commissions  also  have  the  authority  subsequently  to  remove  those 
 elements  they  add.  276  As  discussed  above,  section  251(  d)(  3)(  A)  allows  state  commissions 
 to  impose  additional  unbundling  obligations  as  long  as  they  comply  with  subsections 
 251(  d)(  3)(  B)  and  (C).  If  a  state  commission  determines  that  the  additional  unbundling 
 obligations  it  imposed  no  longer  comply  with  section  251,  it  must  remove  those 
 obligations  pursuant  to  section  251(  d)(  3).  Beyond  ensuring  that  removal  of  those  state-imposed 
 obligations  are  consistent  with  sections  251  and  253  of  the  Act,  the  Commission 
 has  no  authority  to  prevent  a  state  from  removing  a  state-  imposed  unbundling  obligation. 
 Furthermore,  state  commissions  that  have  imposed  additional  unbundling  requirements, 
 pursuant  to  section  51.317  of  our  rules,  will  need  to  periodically  revisit  such  decisions  to 
 determine  whether  such  decisions  continue  to  comply  with  the  standards  articulated  in 
 this  Order. 

 157.  We  conclude  that,  at  this  time,  removing  network  elements  from  the 
 unbundling  obligations  established  in  this  Order  on  a  state-  by-  state  basis  would  not  be 
 consistent  with  the  goals  of  the  1996  Act.  Specifically,  in  this  proceeding,  we  have 
 examined  each  network  element  identified  previously  by  the  Commission  or  by  the 
 parties,  and  we  have  made  an  affirmative  finding  as  to  whether  or  not  the  particular 
 element  now  satisfies  the  unbundling  standards  of  the  Act  as  clarified  by  the  Supreme 
 Court.  Moreover,  we  have  considered  how  unbundling  these  elements  will  affect  the 
 development  of  competition  in  the  local  markets  as  contemplated  by  Congress,  and 
 whether  unbundling  particular  elements  will  further  the  goals  of  the  Act.  Indeed,  we  have 
 found  that  unbundling  particular  network  elements  is  necessary  to  further  the  goals  of  the 
 Act.  Consequently,  at  this  time,  state  decisions  to  remove  these  network  elements  from 

 273  California  PUC  Comments  at  8;  Washington  UTC  Comments  at  6;  Allegiance  Reply 
 Comments  at  13-  14.  But  see  GTE  Comments  at  29;  SBC  Comments  at  18-  19. 
 274  47  C.  F.  R.    51.317. 

 275  Rule  51.317  also  codifies  the  standard  under  which  this  Commission  will  consider  which 
 network  elements  must  be  unbundled.  See  Appendix  C. 
 276  California  PUC  Comments  at  9;  California  PUC  Reply  Comments  at  13. 
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 the  national  unbundling  obligations  would  substantially  prevent  implementation  of  the 
 requirements  of  section  251,  as  prohibited  by  subsection  251(  d)(  3)(  C). 

 158.  Furthermore,  we  find  that  there  are  compelling  policy  reasons  for  not 
 removing  elements  from  the  national  list  on  a  state-  by-  state  basis  at  this  time.  277 
 Unbundling  obligations  that  vary  from  state  to  state  in  the  near  future  would  substantially 
 undermine  the  reasons  discussed  above  for  implementing  a  national  list  in  the  first 
 instance.  278  We  agree  with  commenters  that  argue  that  state-  by-  state  removal  of  network 
 elements  from  the  national  list,  at  least  in  the  near  future,  would  lead  to  greater 
 uncertainty  in  the  market  and  would  hinder  the  development  of  competition.  279  As 
 discussed  above,  we  have  determined  that  national  unbundling  rules  promote  competition 
 in  telecommunications  market  by  guaranteeing  that  a  specific  set  of  network  elements 
 will  be  available  nationwide  for  a  minimum  amount  of  time.  280 

 159.  We  agree  with  the  California  PUC  and  other  state  commissions  that  having 
 a  guaranteed  list  of  network  elements  provides  enough  certainty  to  allow  competitive 
 LECs  to  develop  and  implement  regional  and  national  business  plans.  281  Creating 
 certainty  and  predictability  in  the  market  will  also  benefit  competition  by  enabling 
 competitors  to  raise  capital  at  lower  cost  to  create  and  enhance  their  networks.  282  If  each 
 state  could  remove  immediately  the  unbundling  obligations  established  in  this  Order, 
 competitors  would  not  have  the  benefit  of  knowing  how  long  an  element  would  be 
 available  on  an  unbundled  basis  in  any  given  locale.  The  resulting  uncertainty  would 
 frustrate  the  ability  of  carriers  to  plan  and  implement  competitive  entry  strategies 
 developed  to  serve  customers  on  a  regional  or  national  basis. 

 277  Covad  Comments  at  7.  Allegiance  suggests  that  once  the  Commission  has  gained  some 
 experience  with  removing  elements  from  the  national  list  that  it  might  be  possible  to  formulate  guidelines  and 
 turn  the  process  over  to  the  states.  Allegiance  Comments  at  25.  This  would  be  an  appropriate  inquiry  when 
 this  Commission  reviews  the  national  list  in  three  years.  See  supra  para.  151. 

 278  CompTel  Comments  at  53;  Cable  &  Wireless  Comments  at  45-  46;  CoreComm  Comments 
 at  9,  11-  12;  MGC  Comments  at  7;  Net  2000  Comments  5-  7;  NEXTLINK  Comments  at  5-  6;  CoreComm 
 Reply  Comments  at  7.  See  also  supra  Section  (IV)(  D). 

 279  Illinois  Commission  Comments  at  3;  Kentucky  PSC  Comments  at  2;  ALTS  Comments  at  6; 
 CompTel  Comments  at  53;  CoreComm  Comments  at  9;  NTIA  Comments  at  42,  n.  114;  CoreComm  Reply 
 Comments  at  9. 

 280  See  Connecticut  DPUC  Comments  at  3  (arguing  that  a  minimum  national  list  should 
 facilitate  competition  by  minimizing  new  entrants  cost  by  taking  advantage  of  economies  of  scale  as  they 
 enter  multiple  local  markets);  Kentucky  PSC  Comments  at  2;  MGC  Comments  at  6. 

 281  California  PUC  Comments  at  3;  Kentucky  PSC  Comments  at  2;  CoreComm  Comments  at 
 9;  California  PUC  Reply  Comments  at  13. 
 282  MGC  Comments  at  7;  NorthPoint  Comments  at  2. 
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 160.  We  also  agree  with  commenters  that  state-  by-  state  removal  of  network 
 elements  from  the  national  list  would  complicate  negotiation  of  interconnection 
 agreements  and  would  most  likely  lead  to  increased  litigation.  283  Indeed,  it  could  force 
 competitive  LECs,  each  time  they  seek  to  enter  into  an  interconnection  agreement,  to 
 demonstrate  that  the  identified  elements  continue  to  meet  the  standards  of  the  Act.  284 
 Once  an  incumbent  LEC  is  able  to  convince  a  state  commission  that  the  element  no 
 longer  meets  our  unbundling  standard,  the  ruling  would  likely  set  a  precedent  for  other 
 LECs.  In  addition,  the  possibility  that  a  state  decision  in  one  interconnection  proceeding 
 could  affect  all  interconnection  agreements  would  require  competitive  LECs  to  monitor 
 the  status  of  these  arbitrations  even  if  they  are  not  participants  in  the  arbitration.  We 
 therefore  agree  with  the  Illinois  Commission  that  having  only  this  Commission  remove 
 elements  from  the  national  list  makes  it  easier  for  the  states  to  resolve  disputed  issues 
 during  inter-  carrier  negotiations  and  arbitrations.  285 

 161.  We  believe  that  incumbent  LECs  have  more  of  an  incentive  than 
 competitive  LECs  to  challenge  the  unbundling  obligations  set  forth  in  this  Order.  286  In 
 addition  to  the  delay  and  uncertainty  created  by  litigating  the  unbundling  obligations  of 
 incumbent  LECs,  state  commissions,  as  well  as  incumbent  LECs  and  competitors,  would 
 be  faced  with  the  additional  costs  of  litigation.  287  Many  state  commissions  and  small 
 carriers  have  limited  resources  and  would  be  unduly  burdened  if  they  were  have  to 
 finance  on-  going  litigation  of  the  unbundling  rules.  288  Moreover,  as  several  state 

 283  Illinois  Commission  Comments  at  4;  CoreComm  Comments  at  9;  Covad  Comments  at  7-  8, 
 27;  MCI  WorldCom  Comments  at  6-  7;  MGC  Comments  at  8;  NEXTLINK  Comments  at  6;  Qwest  Reply 
 Comments  at  42. 

 284  GSA  Comments  at  4  (arguing  that  uniform  standards  eliminate  the  need  to  establish  basic 
 requirements  for  unbundling  in  each  instance);  Net2000  Comments  at  3  (claiming  that  uniform  nationwide 
 rules  would  avoid  re-  litigation  of  the  same  issue  in  dozens  of  jurisdictions);  Qwest  Comments  at  41.  See  also 
 Prism  Comments  at  4;  KMC  Reply  Comments  at  2. 

 285  Illinois  Commission  Comments  at  4;  Connecticut  DPUC  Comments  at  3.  See  also 
 California  PUC  Comments  at  3-  4  (stating  that  a  national  list  facilitates  the  arbitration  process  in  individual 
 states);  GSA  Comments  at  4  (claiming  that  uniform  unbundling  standards  will  help  state  regulators  to 
 conduct  arbitrations  .  .  .  without  the  need  to  establish  basic  requirements  for  unbundling  in  each  instance); 
 NorthPoint  Comments  at  2  (stating  that  national  requirements  have  significantly  eased  the  burden  of 
 interconnection  negotiations  and  arbitrations  for  NorthPoint);  Qwest  Comments  at  39  (citing  Local 
 Competition  First  Report  and  Order,  11  FCC  Rcd  at  15,528,  para.  56);  Qwest  Reply  Comments  at  42; 
 Rhythms  Reply  Comments  at  13  (arguing  that  a  national  list  will  streamline  the  state  arbitration  process). 

 286  CoreComm  Reply  Comments  at  9.  See  also  Qwest  Comments  at  41-  42. 

 287  Prism  Comments  at  4-  5;  Qwest  Comments  at  41;  CoreComm  Reply  Comments  at  3.  See 
 also  Allegiance  Reply  Comments  at  3-  4  (stating  that  the  Commissions  national  rules  eliminated  the  need  to 
 litigate  in  state  after  state  an  incumbent  LECs  obligation  to  offer  access  to  loops  and  other  particular  network 
 elements  that  facilities-  based  [competitive  LECs]  need  to  offer  service);  CoreComm  Comments  at  9;  Covad 
 Comments  at  7-  8,  27;  MGC  Comments  at  7-  8;  Sprint  Reply  Comments  at  12. 

 288  ALTS  Comments  at  6;  Covad  Comments  at  7-  8,  27;  TRA  Comments  at  31.  See  also 
 Allegiance  Comments  at  3. 
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 commenters  and  NARUC  note,  section  252(  e)(  6)  appears  to  limit  review  of  state 
 commission  decisions  to  federal  district  court.  289  Thus,  each  state  decision  could 
 eventually  lead  to  litigation  in  the  federal  courts,  creating  even  more  uncertainty  and 
 further  delaying  the  benefits  of  competition  to  consumers. 

 V.  APPLICATION  OF  THE  STANDARD  TO  INDIVIDUAL  NETWORK 
 ELEMENTS 

 A.  Loops 

 1.  Background 
 162.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  found 
 that  incumbent  LECs  must  provide  local  loops  on  an  unbundled  basis  to  requesting 
 carriers.  290  The  Commission  concluded  that  such  access  was  technically  feasible  and 
 would  promote  competition  in  the  local  exchange  market.  291  The  Commission,  at  that 
 time,  did  not  require  subloop  unbundling,  or  specify  whether  dark  fiber  fell  within  the 
 definition  of  the  loop.  292  The  Local  Competition  First  Report  and  Order  also  did  not 
 address  the  status  of  inside  wire  (wiring  located  inside  the  customer  premises  but 
 owned  by  the  incumbent). 

 163.  In  the  Notice,  we  stated  that  it  was  our  strong  expectation  that,  under  any 
 reasonable  interpretation  of  the  necessary  and  impair  standards  of  section  251(  d)(  2), 
 loops  would  be  subject  to  the  section  251(  c)(  3)  unbundling  obligations.  293  The  Notice 
 also  requested  that  parties  discuss  specific  costs  and  analyze  the  availability  of  alternative 
 sources  of  the  loop  facilities.  294 

 164.  In  general,  incumbent  LECs  contend  that  the  definition  of  the  loop  should 
 not  include  high-  capacity  loops  that  serve  large  business  customers,  dark  fiber,  inside 

 289  Iowa  Comments  at  3;  Florida  PSC  Comments  at  2-  5;  NARUC  Comments  at  3-  4;  Texas 
 PUC  Comments  at  5. 
 290  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15689-  90,  para.  377. 

 291  Id. 
 292  Id.  at  15695-  96,  paras.  390-  391  (subloop  unbundling).  Dark  fiber  is  defined  as  [  u]  nused 
 fiber  through  which  no  light  is  transmitted,  or  installed  fiber  optic  cable  not  carrying  a  signal.  It  is  dark 
 because  it  is  sold  without  light  communications  transmission.  The  [carrier]  leasing  the  fiber  is  expected  to  put 
 its  own  electronics  and  signals  on  the  fiber  and  make  it  light.  Harry  Newton,  Newtons  Telecom  Dictionary, 
 14  th  ed.  (Flatiron  Publishing,  New  York,  1998)  197-  98  (Newtons  Telecom  Dictionary). 

 293  Notice  at  para.  32.  (We  noted  that,  in  the  Local  Competition  First  Report  and  Order,  even 
 incumbent  LECs  agreed  that  the  loop  network  element  must  be  unbundled  pursuant  to  sections  251(  c)(  3)  and 
 251(  d)(  2)  of  the  Act.). 

 294  Notice  at  para  33. 
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 wire,  and  loop  conditioning.  295  State  regulatory  commissions  and  competitive  LECs 
 argue  that  loops  should  be  unbundled.  296  The  state  commissions  disagree  among 
 themselves  as  to  whether  or  not  competitive  providers  are  impaired  without  access  to  dark 
 fiber.  They  also  disagree  as  to  whether  dark  fiber  should  be  included  within  the  loop  and 
 transport  unbundled  network  elements  definitions  or  be  unbundled  as  a  separate  network 
 element.  297 

 2.  Discussion 
 165.  We  conclude  that  LECs  must  provide  access  to  unbundled  loops,  including 
 high-  capacity  loops,  nationwide.  We  find  that  requesting  carriers  are  impaired  without 
 access  to  loops,  and  that  loops  include  high-  capacity  lines,  dark  fiber,  line  conditioning, 
 and  certain  inside  wire.  Requiring  carriers  to  obtain  loops  from  alternative  sources  would 
 materially  raise  entry  costs,  delay  broad-  based  entry,  and  limit  the  scope  and  timeliness  of 
 the  competitors  service  offerings.  As  described  below,  we  conclude  that  neither  self-provisioning 
 loops  nor  obtaining  loops  from  third-  party  sources  is  a  sufficient  substitute 
 that  would  justify  excluding  loops  from  an  incumbent  LECs  unbundling  obligation  under 
 section  251(  c)(  3). 

 a.  Definition 

 166.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  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.  298  The  Commission  also  stated  that  the  definition  included,  for  example,  two-wire 
 and  four-  wire  analog  voice-  grade  loops,  and  two-  wire  and  four-  wire  loops  that  are 
 conditioned  to  transmit  digital  signals,  such  as  xDSL.  299  The  Commission  did  not, 
 however,  specify  whether  dark  fiber  fell  within  the  definition  of  the  loop.  300 

 295  See,  e.  g.,  Ameritech  Comments  at  101-  102;  BellSouth  Comments  at  64;  GTE  Comments  at 
 63-  68;  SBC  Comments  at  23-  24;  U  S  West  Comments  at  38-  39. 
 296  See,  e.  g.,  Kentucky  PSC  Comments  at  para.  3;  Ohio  PUC  Comments  at  13;  Texas  PUC 
 Comments  at  14;  CompTel  Comments  at  34-  35;  e-  Spire  Joint  Comments  at  23;  Focal  Comments  at  6-  7;  Level 
 3  Comments  at  15;  MCI  WorldCom  Comments  at  43;  Qwest  Comments  at  59-  61. 

 297  See,  e.  g.,  Florida  PSC  Comments  at  8-  9;  Illinois  Commission  Comments  at  15;  Iowa 
 Comments  at  9. 
 298  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15691,  para.  380. 

 299  xDSL  refers  to  the  various  kinds  of  Digital  Subscriber  Line  service,  such  as  ADSL 
 (Asynchronous  Digital  Subscriber  Line)  and  HDSL  (High-  bit-  rate  Digital  Subscriber  Line).  Id.  at  n.  823.  The 
 definition  includes  the  provision  of  cross-  connect  facilities.  Id.  at  15693,  para.  386. 

 300  In  the  Local  Competition  First  Report  and  Order,  the  Commission  refrained  from  limiting 
 the  transmission  technology  that  would  fit  the  loop  definition,  stating  only  that  the  definition  includes,  for 
 example,  two-  wire  and  four-  wire  analog  voice-  grade  loops,  and  two-  wire  and  four-  wire  loops  that  are 
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 167.  We  modify  the  definition  of  the  loop  network  element  to  include  all 
 features,  functions,  and  capabilities  of  the  transmission  facilities,  including  dark  fiber  and 
 attached  electronics  (except  those  used  for  the  provision  of  advanced  services,  such  as 
 DSLAMs)  owned  by  the  incumbent  LEC,  between  an  incumbent  LECs  central  office  and 
 the  loop  demarcation  point  at  the  customer  premises.  301  In  order  to  secure  access  to  the 
 loops  full  functions  and  capabilities,  we  require  incumbent  LECs  to  condition  loops. 
 This  broad  approach  accords  with  section  3(  29)  of  the  Act,  which  defines  network 
 elements  to  include  their  features,  functions  and  capabilities.  302  Our  intention  is  to 
 ensure  that  the  loop  definition  will  apply  to  new  as  well  as  current  technologies,  and  to 
 ensure  that  competitors  will  continue  to  be  able  to  access  loops  as  an  unbundled  network 
 element  as  long  as  that  access  is  required  pursuant  to  section  251(  d)(  2)  standards. 

 168.  Termination  of  the  Loop.  The  loop  definition  the  Commission  adopted  in 
 the  Local  Competition  First  Report  and  Order  defined  the  loop  as  terminating  at  the 
 network  interface  device  (NID)  at  the  customer  premises.  303  We  find  the  demarcation 
 point  preferable  to  the  NID  in  defining  the  termination  point  of  the  loop  because,  in  some 
 cases,  the  NID  does  not  mark  the  end  of  the  incumbents  control  of  the  loop  facility.  304 
 Where  incumbents  maintain  ownership  and  control  over  a  portion  of  the  loop  beyond  the 
 NID,  the  definition  of  the  loop  as  set  forth  by  the  Commission  in  the  Local  Competition 
 First  Report  and  Order  may  not  provide  the  competitor  with  actual  access  to  the 
 subscriber.  305 

 conditioned  to  transmit  the  digital  signals  needed  to  provide  services  such  as  ISDN,  ADSL,  HDSL,  and  DS1- 
 level  signals.  Id.  at  15691,  para.  380.  (emphasis  added).  For  a  definition  of  dark  fiber,  see  supra  n.  292. 

 301  In  other  words,  our  revised  definition  retains  the  definition  from  the  Local  Competition 
 First  Report  and  Order,  but  replaces  the  phrase  network  interface  device  with  demarcation  point,  and 
 makes  explicit  that  dark  fiber  and  loop  conditioning  are  among  the  features,  functions  and  capabilities  of  the 
 loop.  Issues  regarding  an  incumbent  LECs  obligation  to  afford  access  under  section  251(  c)(  3)  to  facilities 
 that  it  controls  but  does  not  own  are  being  addressed  in  the  Competitive  Networks  Notice. 

 302  47  U.  S.  C.  153(  29). 

 303  The  network  interface  device  (NID)  is  the  cross-  connect  device  used  to  connect  loop 
 facilities  to  inside  wiring.  47  C.  F.  R.    51.319(  b)(  1).  Until  1990,  the  Commission  mandated  the  connection  of 
 inside  wiring  to  the  Public  Switched  Telelphone  Network  through  a  carrier-  installed  jack  to  ensure  the  easy 
 disconnection  of  inside  wire  if  network  harm  should  occur,  and  to  limit  access  to  the  protector  on  the  carrier's 
 side  of  the  demarcation  point.  Review  of  Sections  68.104  and  68.213  of  the  Commission's  Rules  Concerning 
 Connection  of  Simple  Inside  Wiring  to  the  Telephone  Network  and  Petition  for  Modification  of  Section  68.213 
 of  the  Commission's  Rules  filed  by  the  Electronic  Industries  Association,  Report  and  Order  and  Further  Notice 
 of  Proposed  Rulemaking,  CC  Docket  No.  88-  57,  5  FCC  Rcd  4687,  at  para.  3  (1990). 

 304  See,  e.  g.  Ohio  PUC  Comments  at  19-  20;  AT&  T  Comments  at  83-  85;  CoreComm 
 Comments  at  35-  36;  MediaOne  Comments  at  16-  19;  OpTel  Comments  at  7-  12;  RCN  Comments  at  20-  21; 
 Teligent  Comments  at  2-  10;  WinStar  Comments  at  2-  13. 

 305  See  CoreComm  Comments  at  35-  36;  KMC  Comments  at  22;  OpTel  Comments  at  7;  Letter 
 from  W.  Kenneth  Ferree,  Attorney,  OpTel,  to  Magalie  R.  Salas,  Secretary,  Federal  Communications 
 Commission,  CC  Docket  Nos.  96-  98  and  99-  217  (filed  July  22,  1999). 
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 169.  Section  68.3  of  our  rules  defines  the  demarcation  point  as  that  point  on  the 
 loop  where  the  telephone  companys  control  of  the  wire  ceases,  and  the  subscribers 
 control  (or,  in  the  case  of  some  multiunit  premises,  the  landlords  control)  of  the  wire 
 begins.  306  Thus,  the  demarcation  point  is  defined  by  control;  it  is  not  a  fixed  location  on 
 the  network,  but  rather  a  point  where  an  incumbents  and  a  property  owners 
 responsibilities  meet.  307  The  demarcation  point  is  often,  but  not  always,  located  at  the 
 minimum  point  of  entry  (MPOE),  which  is  the  closest  practicable  point  to  where  the  wire 
 crosses  a  property  line  or  enters  a  building.  308  In  multiunit  premises,  there  may  be  either  a 
 single  demarcation  point  for  the  entire  building  or  separate  demarcation  points  for  each 
 tenant,  located  at  any  of  several  locations,  depending  on  the  date  the  inside  wire  was 
 installed,  the  local  carriers  reasonable  and  nondiscriminatory  practices,  and  the  property 
 owners  preferences.  309  Thus,  depending  on  the  circumstances,  the  demarcation  point 
 may  be  located  either  at  the  NID,  outside  the  NID,  or  inside  the  NID. 

 170.  Although  inside  wire  typically  consists  of  junction  and  utility  boxes,  riser 
 cable,  and  horizontal  distribution  wiring  within  an  apartment  building,  it  can  also  include 
 the  loop  facility  within  a  campus,  a  commercial  park,  or  a  garden  apartment  complex. 
 We  note  that  Teligent  prefers  the  term  intra-  building  wiring,  to  emphasize  that  the  plant 
 in  question  is  not  always  inside  the  customer  premises,  but  may,  especially  in  multiunit 
 buildings,  exist  primarily  within  the  landlords,  rather  that  the  subscribers,  premises.  310 
 Yet  even  the  term  intra-  building  wire  may  suggest  limitations  that  do  not  apply  in  some 
 situations,  because  inside  wire  is  often  out-  of-  doors,  as  is  the  case  at  garden  apartments 
 and  campuses,  among  other  places.  311  Thus,  although  we  refer  to  inside  wire  and 
 customer  premises,  for  the  sake  of  convenience,  we  acknowledge  that  the  wire  may  be 
 out-  of-  doors,  and  the  customer  may  be  a  subscriber,  a  landlord,  a  condominium,  a 
 university,  and  so  on. 

 306  47  C.  F.  R.    68.3.  See,  e.  g.,  GTE  Comments  at  89;  MGC  Comments  at  19-  20. 
 307  Any  loop  plant  that  exists  beyond  the  demarcation  point  is,  by  definition,  beyond  the 
 incumbent  LECs  control. 
 308  47  C.  F.  R.    68.3.  (  The  minimum  point  of  entry  [is]  either  the  closest  practicable  point  to 
 where  the  wiring  crosses  a  property  line  or  .  .  .  enters  a  multiunit  building  or  buildings.). 
 309  See  47  C.  F.  R.    68.3(  b)(  2)  for  further  definition  of  the  term  demarcation  point  as  it 
 applies  in  multiunit  installations.  See  also  Teligent  Comments  at  5-  6  (providing  a  graphic  illustration  of 
 possibilities).  In  the  Competitive  Networks  Notice,  we  have  sought  comment  on  how  the  definition  of  the 
 demarcation  point  under  Part  68  affects  access  to  multiple  tenant  environments  by  competitive 
 telecommunications  providers,  including  whether  an  incumbent  LECs  control  over  the  loop  for  purposes  of 
 competitive  access  may  be  greater  than  its  control  for  purposes  of  installation  and  maintenance.  Competitive 
 Networks  Notice  at  paras.  65-  67.  Accordingly,  we  may  subsequently  refine  our  criteria  for  determining  the 
 extent  of  an  incumbent  LECs  ownership  and  control,  and  hence  the  termination  point  of  the  loop,  in 
 accordance  with  the  record  developed  in  that  proceeding. 

 310  Teligent  Comments  at  4,  n.  4. 

 311  See,  e.  g.,  OpTel  Comments  at  7. 
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 171.  Defining  the  loop  to  terminate  at  the  same  point  as  the  incumbent  LECs 
 control  over  facilities  that  it  owns,  will  ensure  that  the  competitor  will  be  able  to  gain 
 access  to  the  entire  loop,  including  inside  wire.  312  We  note  that,  in  our  Access  to 
 Competitive  Networks  proceeding,  we  are  seeking  additional  comment  on  the  legal  and 
 technical  issues  arising  from  unbundled  inside  wiring  and  premises  facilities.  313  We  also 
 note  that  Section  251(  d)(  2)  imposes  obligations  only  on  incumbent  local  exchange 
 carriers  and  not,  for  instance,  on  third  parties  (such  as  the  owners  of  multi-  tenant 
 buildings).  Thus,  the  rules  adopted  in  this  Order  are  not  intended  to  give  competitive 
 service  providers  any  additional  legal  rights  vis-  a-  vis  such  third  parties,  including  access 
 to  a  multi-  unit  building  over  the  objection  of  the  property  owner.  Those  issues  are  being 
 addressed  in  other  proceedings  before  the  Commission.  314 

 172.  Conditioned  Loops.  We  clarify  that  incumbent  LECs  are  required  to 
 condition  loops  so  as  to  allow  requesting  carriers  to  offer  advanced  services.  315  The  terms 
 conditioned,  clean  copper,  xDSL-  capable  and  basic  loops  all  describe  copper 
 loops  from  which  bridge  taps,  low-  pass  filters,  range  extenders,  and  similar  devices  have 
 been  removed.  Incumbent  LECs  add  these  devices  to  the  basic  copper  loop  to  gain 
 architectural  flexibility  and  improve  voice  transmission  capability.  316  Such  devices, 
 however,  diminish  the  loops  capacity  to  deliver  advanced  services,  and  thus  preclude  the 
 requesting  carrier  from  gaining  full  use  of  the  loops  capabilities.  Loop  conditioning 
 requires  the  incumbent  LEC  to  remove  these  devices,  paring  down  the  loop  to  its  basic 
 form. 

 173.  GTE  contends  that  the  Eighth  Circuit,  in  the  Iowa  Utils.  Bd.  v.  FCC 
 decision,  overturned  the  rules  established  in  the  Local  Competition  First  Report  and 
 Order  that  required  incumbents  to  provide  competing  carriers  with  conditioned  loops 
 capable  of  supporting  advanced  services  even  where  the  incumbent  is  not  itself  providing 
 advanced  services  to  those  customers.  317  We  disagree.  Although  the  Eighth  Circuit 
 overturned  certain  rules  to  the  extent  those  rules  required  incumbent  LECs  to  provide 
 access  to  unbundled  network  elements  at  levels  of  quality  superior  to  those  the  incumbent 
 LECs  provide  themselves,  the  court  also  expressly  affirmed  the  Commissions 
 determination  that  section  251(  c)(  3)  requires  incumbent  LECs  to  provide  modifications  to 

 312  We  discuss  unbundling  of  inside  wire  as  a  separable  subloop  at  Section  (V)(  B)  infra. 
 313  Competitive  Networks  Notice  at  para.  51. 
 314  See,  e.  g.,  Access  to  Competitive  Networks;  Telecommunications  Services  Inside  Wiring,  CS 
 Docket  No.  95-  189,  First  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rulemaking,  13  FCC  Rcd 
 3659  (1997). 

 315  See  also  Advanced  Services  Memorandum  Opinion  and  Order  and  NPRM,  13  FCC  Rcd  at 
 24036-  37,  paras.  52-  53. 
 316  See  Covad  Reply  Comments  at  13-  14. 

 317  GTE  Comments  at  86-  87;  GTE  Reply  Comments  at  72-  73. 
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 their  facilities  to  the  extent  necessary  to  accommodate  access  to  network  elements.  318  We 
 find  that  loop  conditioning,  rather  than  providing  a  superior  quality  loop,  in  fact  enables 
 a  requesting  carrier  to  use  the  basic  loop.  Because  competitors  cannot  access  the  loop 
 with  all  its  native  features,  functions,  and  capabilities  unless  it  has  been  stripped  of 
 accreted  devices,  we  conclude  that  loop  conditioning  falls  within  the  definition  of  the  loop 
 network  element,  and  is  also  consistent  with  the  Eighth  Circuit  opinion. 

 174.  Dark  Fiber.  We  also  modify  the  loop  definition  to  specify  that  the  loop 
 facility  includes  dark  fiber.  319  Dark  fiber  is  fiber  that  has  not  been  activated  through 
 connection  to  the  electronics  that  light  it,  and  thereby  render  it  capable  of  carrying 
 communications  services.  320  Because  it  is  in  place  and  easily  called  into  service,  we  find 
 that  dark  fiber  is  analogous  to  dead  count  or  vacant  copper  wire  that  carriers  keep 
 dormant  but  ready  for  service.  Thus,  we  disagree  with  GTEs  argument  that,  unlike 
 vacant  copper,  dark  fiber  does  not  qualify  as  loop  plant.  321  GTE  maintains  that  extra 
 copper  cable  is  installed  to  provide  optimum  flexibility  and  contrasts  this  copper  to  dark 
 fiber,  which  GTE  terms  unused  inventory.  GTE  clarifies  that  [  t]  hese  fibers  remain 
 dark  until  they  are  needed.  322  We  find  this  to  be  a  distinction  without  a  difference,  and 
 conclude  that  both  copper  and  fiber  alike  represent  unused  loop  capacity.  We  find, 
 therefore,  that  dark  fiber  and  extra  copper  both  fall  within  the  loop  network  elements 
 facilities,  functions,  and  capabilities.  323 

 175.  Attached  Electronics.  We  conclude  that,  with  the  exception  of  Digital 
 Subscriber  Line  Access  Multiplexers  (DSLAMs),  the  loop  includes  attached  electronics, 

 318  Iowa  Utils  Bd.  v.  FCC,  120  F.  3d  at  813,  n.  33  (citing  Local  Competition  First  Report  and 
 Order,  11  FCC  Rcd  at  15602,  para.  198).  Covad  notes  that  no  party  appealed  to  the  Supreme  Court  the  Eighth 
 Circuits  holding  that    251(  c)(  3)  requires  incumbent  LECs  to  provide  such  modifications.  Covad  Reply 
 Comments  at  12.  See  also  AT&  T  Comments  at  76. 

 319  Notice  at  34  (We  asked  parties  whether,  in  light  of  technological  or  commercial 
 developments  since  adoption  of  the  Local  Competition  First  Report  and  Order,  we  should  modify  the 
 definition  of  the  loop  to  include  dark  fiber.). 

 320  See  Choice  One  Joint  Comments  at  25;  CO  Space  Comments  at  2;  KMC  Comments  at  20- 
 21. 
 321  GTE  Reply  Comments  at  63-  64. 

 322  Id.  at  64. 
 323  In  designating  dark  fiber  as  a  network  element,  we  acknowledge  that  some  facilities  that  the 
 incumbent  LEC  currently  uses  to  provide  service  may  not  constitute  network  elements  (e.  g.  unused  copper 
 wire  stored  in  an  incumbent  LECs  warehouse).  Defining  all  such  facilities  as  network  elements  would  read 
 the  used  in  the  provision  language  of  section  153(  29)  too  broadly.  Dark  fiber,  however,  is  distinct  in  that  it 
 is  unused  loop  capacity  that  is  physically  connected  to  facilities  that  the  incumbent  LEC  currently  uses  to 
 provide  service;  was  installed  to  handle  increased  capacity  and  can  be  used  by  competitive  LECs  without 
 installation  by  the  incumbent  Thus,  we  conclude  that  dark  fiber  falls  within  the  statutory  definition  of  a 
 network  element. 
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 including  multiplexing  equipment  used  to  derive  the  loop  transmission  capacity.  324  The 
 definition  of  a  network  element  is  not  limited  to  facilities,  but  includes  features,  functions, 
 and  capabilities  as  well.  325  Some  loops,  such  as  integrated  digital  loop  carrier  (IDLC),  are 
 equipped  with  multiplexing  devices,  without  which  they  cannot  be  used  to  provide  service 
 to  end  users.  Because  excluding  such  equipment  from  the  definition  of  the  loop  would 
 limit  the  functionality  of  the  loop,  we  include  the  attached  electronics  (with  the  exception 
 of  DSLAMs)  within  the  loop  definition.  By  contrast,  and  as  we  discuss  below,  we  find 
 that  the  DSLAM  is  a  component  of  the  packet  switch  network  element.  326 

 176.  High-  Capacity  Loops.  We  disagree  with  incumbent  LECs  that  high-capacity 
 loops  should  be  excluded  from  the  definition  of  the  loop.  327  High-  capacity  loops 
 retain  the  essential  characteristic  of  the  loop:  they  transmit  a  signal  from  the  central  office 
 to  the  subscriber,  or  vice  versa.  In  a  DS1  loop,  for  example,  the  attached  electronics  boost 
 the  wires  capacity,  but  the  wire  facility  used  for  transmission  of  the  traffic  is 
 indistinguishable  from  any  other  copper  wire.  Although  it  may  be  more  profitable  to  serve 
 customers  over  higher  capacity  lines,  such  differences  do  not  support  a  modification  of 
 the  loop  definition  to  exclude  high-  capacity  lines.  Whether  the  Commission  should 
 refrain  from  unbundling  high-  capacity  loops  is  another  matter,  which  we  discuss  below  in 
 our  unbundling  analysis. 

 177.  For  similar  reasons,  we  reject  US  Wests  argument  that  we  should  exclude 
 from  the  definition  the  loop  facilities  that  underlie  private  line  and  special  access 
 interconnection,  because  providing  these  services  to  competitors  at  lower-  than-  tariffed 
 rates  would  promote  regulatory  arbitrage  and  serve  no  valid  statutory  or  public 
 purpose.  328  The  Commission  has  not  previously  found  that  the  requirements  of  section 
 251(  c)(  3)  are  limited  to  any  particular  kind  of  service.  329  Moreover,  section  251(  d)(  2)  of 
 the  Act  refers  to  a    .  .  .  carrier  seeking  access  to  provide  the  services  that  it  seeks  to 

 324  See,  e.  g.  ALTS  Comments  at  41-  46;  CompTel  Comments  at  32-  33;  MCI  WorldCom 
 Comments  at  45-  46.  Carriers  providing  advanced  services  use  DSLAMs  to  split  voice  and  data  traffic  and 
 route  each  to  the  appropriate  destination.  For  discussion  of  DSLAMs,  see  infra  Section  (V)(  D). 

 325  47  U.  S.  C.  153(  29). 

 326  See  infra  Section  (V)(  D)(  2)  (packet  switching). 
 327  See  generally  Ameritech  Comments  at  100-  102;  Bell  Atlantic  Comments  at  37-  39;  Bell 
 South  Comments  at  65-  67,  70-  71;  GTE  Comments  at  63-  70;  SBC  Comments  at  23-  25,  30;  US  West 
 Comments  at  36-  40.  See  also  BellSouth  Comments  at  64. 

 328  US  West  Comments  at  38-  39.  US  West  refers  specifically  to  lines  DS1  and  higher. 

 329  See  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15679-  15683,  paras.  356- 
 365.  See  also  CompTel  v.  FCC,  117  F.  3d  at  1073  (upholding  the  Commissions  decision  to  allow  the 
 incumbent  to  collect  the  carrier  common  line  charge  (CCLC)  and  75  percent  of  the  transport  interconnection 
 charge,  until  June  30,  1997.) 
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 offer.  330  We  find  no  basis  for  placing  a  restriction  on  what  services  a  carrier  may  offer 
 using  the  loop  network  element.  Indeed,  the  prospect  of  competition  among  carriers  to 
 provide  services  over  the  loop  at  prices  that  more  closely  reflect  the  providers  costs 
 seems  to  us  to  accord  fully  with  Congresss  intent  in  passing  the  1996  Act.  We  do  not 
 now  decide  whether  or  not  this  analysis  may  extend  to  the  enhanced  extended  loop 
 (EEL),  but  rather  seek  comment  on  that  issue  in  the  Further  Notice  of  Proposed 
 Rulemaking,  below.  331 

 178.  Cross  Connects.  In  the  Local  Competition  First  Report  and  Order,  the 
 Commission  concluded  that  incumbent  LECs  must  provide  cross  connect  facilities 
 between  an  unbundled  loop  and  a  requesting  carriers  collocated  equipment.  332  The 
 Commission  emphasized  this  requirement  because  of  its  concern  that  incumbent  LECs 
 might  have  imposed  unreasonable  rates,  terms,  and  conditions  for  such  cross  connect 
 facilities  in  the  past.  333  Nothing  in  this  Order  disturbs  the  Commissions  findings 
 regarding  cross  connect  facilities.  In  particular,  we  continue  our  policy  that  incumbent 
 LECs  may  recover  the  cost  of  providing  such  facilities  in  accordance  with  our  rules 
 governing  the  costs  of  interconnection  and  unbundling.  Charges  for  cross  connect 
 facilities  must  meet  the  cost-  based  standard  provided  in  section  252(  d)(  1),  and  the  terms 
 and  conditions  of  providing  cross  connect  facilities  must  be  reasonable  and 
 nondiscriminatory  under  section  251(  c)(  3).  334 

 179.  Because  we  agree  with  the  Commissions  analysis  of  cross  connect 
 facilities  in  the  Local  Competition  First  Report  and  Order,  we  decline  to  include  cross 
 connect  facilities  within  the  definition  of  the  loop  network  element.  335  We  continue  to 
 view  the  cross  connect  as  a  means  of  interconnection  with  a  network  element,  rather  than 
 as  part  of  the  network  element.  We  require,  however,  that  incumbents  provide  cross 
 connect  facilities  according  to  sections  252(  d)(  1)  and  251(  c)(  3)  at  any  technically  feasible 
 point  that  a  requesting  carrier  seeks  access  to  the  loop.  We  conclude  that  such  a 
 requirement  is  needed  wherever  a  competitor  seeks  access  to  the  loop,  because  cross 
 connection  offers  a  potential  bottleneck,  and  incumbents  may  have  the  incentive  to 
 impose  unreasonable  rates,  terms,  and  conditions  for  cross-  connect  facilities. 

 330  47  U.  S.  C.  251(  d)(  2)  (emphasis  added). 
 331  See  infra  Section  VII. 
 332  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15693,  para.  386.  A  cross 
 connection  is  defined  as  [  a]  connection  scheme  between  cabling  runs,  subsystems,  and  equipment  using 
 patch  cords  or  jumpers  that  attach  to  connecting  hardware  on  each  end.  Newtons  Telecom  Dictionary  at 
 187. 

 333  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15693,  para.  386. 

 334  47  U.  S.  C.    252(  d)(  1)  and  251(  c)(  3). 
 335  See,  e.  g.,  ALTS  Comments  at  38-  39;  e.  spire/  Intermedia  Comments  at  23;  MCI  WorldCom 
 Comments  at  45-  46. 
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 b.  Proprietary  Concerns  Associated  with  the  Loop 
 180.  In  the  Local  Competition  First  Report  and  Order,  the  Commission 
 concluded  that  the  technology  associated  with  the  loop  is  not  proprietary  in  nature.  336 
 Parties  in  this  proceeding  have  not  identified  any  proprietary  concerns  associated  with 
 unbundled  loops,  and  we  find  none.  We  therefore  apply  the  impair  standard  of  section 
 251(  d)(  2),  rather  than  the  necessary  standard,  to  determine  whether  loops  are  subject  to 
 the  unbundling  obligations  of  the  Act. 

 c.  Unbundling  Analysis  for  the  Loop  in  General 

 181.  We  require  incumbent  LECs  to  provide  unbundled  access  to  loops 
 nationwide.  The  record  demonstrates  that  lack  of  access  to  unbundled  loops  impairs  a 
 carriers  ability  to  provide  the  services  it  seeks  to  offer  because  requiring  carriers  to  self-provision 
 loops  would  materially  raise  entry  costs,  delay  broad-  based  entry,  and  limit  the 
 scope  and  quality  of  the  competitors  offerings.  We  conclude  that  neither  self-provisioning 
 loops  nor  obtaining  loops  from  third-  party  sources  is  an  adequate  alternative 
 for  loops  that  a  carrier  can  obtain  from  an  incumbent  LEC  under  the  section  251(  c) 
 unbundling  obligation.  We  analyze  the  obligation  to  unbundle  separable  elements  of  the 
 loop,  such  as  inside  wire,  when  we  discuss  subloop  unbundling,  below.  We  defer  a 
 decision  on  whether  to  unbundle  the  high  frequency  portion  of  the  loop  to  a  further 
 proceeding. 

 182.  Cost  and  Timeliness.  We  agree  with  the  argument  that  self-  provisioning  is 
 not  a  viable  alternative  to  the  incumbents  unbundled  loops  because  replicating  an 
 incumbents  vast  and  ubiquitous  network  would  be  prohibitively  expensive  and  delay 
 competitive  entry.  337  We  find  the  reasons  for  unbundling  the  loop  that  the  Commission 
 articulated  in  the  Local  Competition  First  Report  and  Order  are  still  valid  three  years 
 later.  In  that  order,  the  Commission  recognized  that,  without  access  to  unbundled  loops, 
 competitors  would  need  to  invest  immediately  in  duplicative  facilities  in  order  to  compete 
 for  most  customers,  and  that  such  investment  and  construction  would  likely  delay,  if  not 
 prohibit,  market  entry  and  postpone,  perhaps  indefinitely,  the  benefits  of  telephone 
 competition  for  consumers.  Moreover,  the  Commission  found  that  without  access  to 
 unbundled  loops,  competitive  LECs  would  be  required  to  sink  a  large  initial  investment  in 
 loop  facilities  before  they  had  a  customer  base  large  enough  to  justify  such  an 
 expenditure,  thereby  increasing  the  risk  of  entry  and  raising  the  competitive  LECs  cost  of 
 capital.  338  By  contrast,  permitting  a  competitor  to  purchase  unbundled  loops  from  the 

 336  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15694,  para.  388. 
 337  AT&  T  Comments  at  63-  64;  Covad  Comments  at  32;  Focal  Comments  at  6;  Qwest 
 Comments  at  59-  61;  RCN  Comments  at  15;  Sprint  Comments  at  29.  See  also  MCI  WorldCom  Comments  at 
 43  (loops  comprise  44%  of  ILEC  network  investment);  Local  Competition  First  Report  and  Order,  11  FCC 
 Rcd  at  15690,  para.  378  n.  818  (Local  loop  plant  comprises  approximately  $109  billion.). 

 338  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15690,  para.  378. 
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 incumbent  LEC  allows  the  competitive  LEC  to  build  facilities  gradually,  and  to  deploy 
 loops  for  its  customers  where  it  is  efficient  to  do  so.  339 

 183.  Nothing  in  the  record  of  this  proceeding  leads  us  to  a  different  conclusion. 
 To  the  contrary,  we  find  that,  as  a  practical  matter,  building  loop  plant  continues  to  be,  in 
 most  cases,  prohibitively  expensive  and  time-  consuming.  Because  of  the  size  of  their 
 networks,  incumbent  LECs  enjoy  advantages  of  scope  that  competitors  cannot 
 replicate.  340  We  find  that  it  would  be  unreasonable  to  expect  a  competitive  LEC  to  invest 
 the  large  sums  of  capital  needed  to  build  out  ubiquitous  loop  plant  before  the  competitive 
 LEC  has  established  a  substantial  and  secure  customer  base.  Unlike  switches,  which  can 
 be  scaled  to  need,  relocated  if  the  business  fails  to  develop,  and  which  can  accommodate 
 a  fluctuating  customer  base,  much  of  the  loop  is  often  dedicated  to  a  particular  location. 
 In  addition,  if  the  competitive  LEC  loses  the  customer  back  to  the  incumbent  or  to 
 another  competitor,  the  competitive  LEC  would  probably  bear  the  full  loss  of  its  sunk 
 investment  in  the  redundant  loop.  341 

 184.  We  disagree  with  incumbents  assertions  that  we  should  not  unbundle  high-capacity 
 loops  because  competitive  LECs  have  successfully  self-  provisioned  loops  to 
 certain  large  business  customers.  According  to  these  commenters,  the  call  concentration 
 and  revenue  potential  of  high-  capacity  lines  (DS1  and  higher)  make  self-  provisioning 
 high-  capacity  lines  an  economically  viable  alternative  to  the  incumbent  LECs  unbundled 
 high-  capacity  loops.  342  Building  out  any  loop  is  expensive  and  time-  consuming, 
 regardless  of  its  capacity.  343  That  some  competitive  LECs,  in  certain  instances,  have 
 found  it  economical  to  serve  certain  customers  using  their  own  loops  suggests  to  us  only 
 that  carriers  are  unimpaired  in  their  ability  to  serve  those  particular  customers.  This 
 evidence  tells  us  nothing  about  the  customer  the  competitor  would  like  to  serve  but 
 cannot  because  the  cost  of  building  a  loop  from  the  customer  premises  to  the  competitive 
 LECs  switch  is  prohibitive. 

 339  Id.  at  15690,  para.  378. 
 340  See  Illinois  Commission  Comments  at  11-  12;  ALTS  Comments  at  36-  37;  AT&  T 
 Comments  at  62-  66;  CompTel  Comments  at  34-  35;  Covad  Comments  at  32;  Focal  Comments  at  6-  7;  MCI 
 WorldCom  Comments  at  43;  Sprint  Reply  Comments  at  6. 

 341  In  theory,  the  entrant  could  lease  the  loop  to  another  competitive  LEC,  if  one  exists,  but  the 
 other  competitor  might  have  its  loop  needs  met  by  the  incumbent  LEC. 
 342  See  Ameritech  Comments  at  101-  102;  Bell  Atlantic  at  37-  39;  SBC  Comments  at  23-  25;  U  S 
 West  comments  at  36-  40.  Several  of  these  parties  cite  the  USTA  UNE  Report  at  III-  3  and  III-  16  (stating  that 
 competitive  LEC  fiber  serves  15%  of  all  commercial  office  buildings  and  between  9%  and  18%  of  all 
 business  lines  from  dense  wire  centers  with  collocation  by  one  or  more  competitive  LECs.). 

 343  For  example,  assuming  the  availability  of  existing  conduit  and  pole  space,  the  estimated 
 cost  for  New  England  Voice  &  Data  to  install  its  own  fiber  is  $46,680  per  mile  for  a  96  fiber  cable.  Letter 
 from  Thomas  Jones,  on  behalf  of  New  England  Voice  &  Data,  LLC,  to  Magalie  Roman  Salas,  Secretary, 
 Federal  Communications  Commission,  CC  Docket  No.  96-  98,  at  6  (filed  July  15,  1999). 
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 185.  For  similar  reasons,  we  reject  BellSouths  proposal  that  we  not  require 
 incumbent  LECs  to  unbundle  larger  business  loops  in  Special  Access  Pricing  zones  1  and 
 2.  344  Because  of  the  expense  inherent  in  building  loops,  we  find  that  it  would  be 
 extremely  difficult  for  competitive  LECs  to  overbuild  the  ubiquitous  loop  plant  that  the 
 incumbents  have  built  up  over  decades,  even  to  serve  businesses  in  urban  districts.  The 
 enormous  sunk  investment  required  to  install  loops  would  inevitably  lead  to  competition 
 in  patches,  rather  than  the  seamless  competitive  service  of  a  fully  competitive  market. 
 Moreover,  we  find  that  using  Special  Access  Pricing  zones,  as  recently  modified  by  the 
 Commission,  would  provide  incumbent  LECs  with  discretion  to  define  their  own  loop 
 unbundling  obligations.  345  We  agree  with  MCI  WorldCom  that  the  Special  Access 
 Pricing  zone  approach  would  grant  incumbent  LECs  latitude  to  change  their 
 methodologies  for  defining  zones  to  upset  their  competitors  business  plans.  346  We  find 
 that  premising  an  incumbent  LECs  loop  unbundling  obligation  on  a  geographic  boundary 
 defined,  to  a  large  degree,  by  the  incumbent  LEC  itself  could  allow  an  incumbent  LEC  to 
 minimize  its  unbundling  obligation,  and  would  not  respond  to  a  requesting  carriers  need 
 for  access  to  unbundled  loops. 

 186.  In  addition  to  the  large  costs  of  building  loop  plant,  we  agree  with 
 commenters  in  this  phase  of  the  proceeding  that  overbuilding  the  incumbent  LECs  loops 
 would  embroil  the  competitor  in  lengthy  rights-  of-  way  disputes,  and  would  require  the 
 unnecessary  digging  up  of  streets.  347  Thus,  we  find  that  even  if  competitors  were  able  to 
 finance  the  replication  of  the  incumbents  loop  plant,  construction  of  new  facilities  would 
   at  the  least    materially  delay  competitors  ability  to  bring  their  services  to  consumers. 
 Such  delays  would  frustrate  the  competitors  ability  to  offer  timely  service  to  prospective 

 344  BellSouth  Comments  at  64-  66;  BellSouth  Reply  Comments  at  37-  38. 
 345  Incumbent  LECs  generally  proceed  through  a  three  step  process  to  assign  central  offices  to 
 zones  within  a  given  study  area.  In  the  first  step,  an  incumbent  LEC  ranks  its  wire  centers  in  order  of 
 decreasing  traffic  density,  based  on  some  measure  of  density  chosen  by  the  incumbent  LEC.  In  the  second 
 step,  the  incumbent  LEC  sets  breakpoints  within  the  zone  density  ranking  to  partition  the  wire  centers  into 
 zones  and  finally,  an  incumbent  LEC  further  adjusts  the  zones  as  it  sees  fit,  based  on  geographic  contiguity  or 
 community  of  interest  reasons.  See  Expanded  Interconnection  with  Local  Telephone  Company  Facilities,  CC 
 Docket  No.  91-  141,  Amendment  of  the  Part  69  Allocation  of  General  Support  Facility  Costs,  CC  Docket  No. 
 92-  222,  Report  and  Order  and  Notice  of  Proposed  Rulemaking,  7  FCC  Rcd  7369  (1992)  (Expanded 
 Interconnection  Order),  vacated  in  part  and  remanded,  Bell  Atlantic  v.  FCC,  24  F.  3d  1441  (1994);  First 
 Reconsideration,  8  FCC  Rcd  127  (1993);  Second  Reconsideration,  8  FCC  Rcd  7341  (1993);  Second  Report 
 and  Order,  8  FCC  Rcd  7374  (1993);  Memorandum  Opinion  and  Order,  9  FCC  Rcd  5154  (1994),  remanded, 
 Pacific  Bell  v.  FCC,  81  F.  3d  1147  (1996);  47  C.  F.  R.    61.38(  b)(  4). 

 346  MCI  WorldCom  argues  that  where  a  requesting  carrier  plans  to  purchase  unbundled 
 [elements],  the  incumbent  LEC  could  change  its  methodology  for  ranking  central  office  traffic  density  in  such 
 a  way  that  the  central  office  changed  zones,  and  the  incumbent  LEC  was  no  longer  required  to  offer  the 
 [element]  to  requesting  carriers.  See  Letter  from  Chuck  Goldfarb,  Director,  Law  and  Public  Policy  MCI 
 WorldCom,  to  Larry  Strickling,  Chief,  Common  Carrier  Bureau,  CC  Docket  No.  96-  98,  at  7  (filed  August  9, 
 1999). 

 347  See,  e.  g.,  AT&  T  Comments  at  63-  64;  Focal  Comments  at  6;  Qwest  Comments  at  60. 
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 customers.  Although  competitive  LECs  have  successfully  constructed  loops  in  some 
 circumstances,  we  find  that  the  cost,  risk,  disruption,  and  delay  of  self-  provisioning  loop 
 plant  would,  for  many  consumers,  foreclose  the  benefits  of  competition.  348 

 187.  Moreover,  in  the  Local  Competition  First  Report  and  Order,  the 
 Commission  specified  that  the  definition  of  the  loop  includes  various  grades  of  loops  to 
 allow  transmission  of  digital  signals  needed  to  provide  multiple  services  and  DS1-  level 
 signals.  349  The  Commission  reasoned  that  the  ability  to  offer  various  functions  in 
 competition  with  incumbent  LECs  could  benefit  small  entities  serving  niche  markets.  350 
 We  continue  to  believe  that  access  to  these  high-  capacity  lines  is  necessary  for  ubiquitous 
 deployment  of  high-  speed  services,  including  high-  speed  Internet  access.  We  therefore 
 agree  with  competitive  LECs  that  failing  to  assure  access  to  high-  capacity  loops  would 
 impair  their  ability  to  provide  the  services  that  they  seek  to  offer  in  broadband  service 
 markets.  351 

 188.  Ubiquity  and  Quality.  We  disagree  with  parties  that  argue  that  mobile 
 telephones  and  fixed  wireless  offer  an  alternative  to  the  incumbents  loop,  and  that  loops 
 therefore  should  not  be  unbundled.  352  Although  we  find  these  technologies  promising,  we 
 conclude  that  they  are  not  yet  viable  alternatives  to  the  incumbents  wireline  loop 
 facilities.  In  particular,  we  find  that  alternative  loop  technologies  are  not  as  widespread  as 
 the  incumbents  ubiquitous  network.  These  alternatives  do  not  offer  the  same 
 functionality  as  wireline  service,  and  the  data  capabilities  of  these  mobile  services  are 
 generally  inferior  to  wireline  loops  data  transmission  capabilities.  Cellular  and  PCS 
 telephone  footprints,  though  expanding,  are  not  ubiquitous.  Indeed,  millions  of 
 Americans  are  not  yet  served  by  mobile  wireless  carriers.  353  Moreover,  the  sound  quality 

 348  See  ALTS  Reply  Comments  at  18-  20;  Level  3  Reply  Comments  at  3;  RCN  Reply 
 Comments  at  6;  Qwest  Reply  at  50. 
 349  In  the  Local  Competition  First  Report  and  Order,  the  Commission  stated  that  its  definition 
 of  the  loop  .  .  .  includes,  for  example  .  .  .  DS1-  level  signals.  Local  Competition  First  Report  and  Order,  11 
 FCC  Rcd  15691  at  para.  380. 

 350  Id.  at  15691,  para.  380. 

 351  See,  e.  g.,  CompTel  Comments  at  32-  34;  e.  spire  Joint  Reply  Comments  at  16;  RCN 
 Comments  at  16. 
 352  Ameritech  Comments  at  103-  105;  Bell  Atlantic  Comments  at  36-  39;  BellSouth  Comments 
 at  67-  75;  GTE  Comments  at  66-  67;  SBC  Comments  at  25-  30;  US  West  Comments  at  37. 
 353  See  AT&  T  Comments  at  67-  72;  Illinois  Commission  Comments  at  11;  ALTS  Comments  at 
 37;  Level  3  Comments  at  15. 
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 of  cellular  and  PCS  service  is  not  always  equal  to  wireline  service.  354  Fixed  wireless 
 cannot  yet  offer  more  than  four  lines,  or  high-  speed  Internet  connection.  355 

 189.  We  also  disagree  with  the  incumbent  LECs  argument  that  cable  television 
 service  offers  a  viable  alternative  to  the  incumbents  unbundled  loop.  356  Cable  service  is 
 largely  restricted  to  residential  subscribers,  and  generally  supports  only  one-  way  service, 
 not  the  two-  way  communications  telephony  requires.  357  Moreover,  we  conclude  that 
 declining  to  unbundle  loops  in  areas  where  cable  telephony  is  available  would  be 
 inconsistent  with  the  Acts  goal  of  encouraging  entry  by  multiple  providers.  Given  that 
 neither  mobile  nor  fixed  wireless  can  yet  replace  wireline  service,  if  we  were  to  take  the 
 incumbents  approach,  consumers  might  be  left  to  a  choose  between  only  the  cable 
 company  and  the  incumbent  LEC. 

 190.  Loops  Capable  of  Providing  High-  Speed  Data  Services.  We  conclude  that 
 permitting  incumbents  to  deny  access  to  basic  loops  stripped  of  accreted  devices,  i.  e., 
 conditioned  loops,  would  preclude  the  ability  of  competitors  to  offer  high-  speed  data 
 services.  Such  unencumbered  copper  wire  is  necessary  for  requesting  carriers  to  provide 
 most  types  of  xDSL  service.  358  While  some  flavors  of  xDSL  can  be  provided  over 
 loops  with  a  limited  number  of  impediments,  as  a  general  rule  the  quality  of  such  service 
   particularly  the  speed    is  significantly  diminished,  compared  to  the  service  provided 
 over  unencumbered  wires.  359  DSL-  capable  loops  provide  end  users  with  broadband  data 
 transmission,  which  allows  rapid  access  to  the  Internet.  360  Unbundling  basic  loops,  with 
 their  full  capacity  preserved,  allows  competitors  to  provide  xDSL  services.  This  in  turn 
 will  foster  investment,  innovation,  and  competition  in  the  local  telecommunications 

 354  AT&  T  Comments  at  67-  69.  Covad  points  out  that  xDSL  high-  speed  data  service  cannot  be 
 provided  over  cellular  or  PCS.  Covad  Reply  Comments  at  8. 
 355  AT&  T  Comments  at  69-  70. 

 356  See,  Ameritech  Comments  at  103-  05;  Bell  Atlantic  Comments  at  36;  BellSouth  Reply 
 Comments  at  38-  39;  GTE  Comments  at  68-  70;  SBC  Comments  at  26-  28;  US  West  Comments  at  37-  38. 
 357  AT&  T  Comments  at  70-  72. 

 358  See,  e.  g.,  Covad  Reply  Comments  at  14;  NorthPoint  Comments  at  14.  As  we  explained  in 
 our  recent  Advanced  Services  First  Report  and  Order  and  FNPRM,  xDSL  technology  provides  multiple 
 benefits  to  the  consumer  that  cannot  be  achieved  with  traditional  analog  transmission.  The  use  of  xDSL 
 modems  allows  transmission  of  data  over  the  copper  loop  at  vastly  higher  speeds  than  can  be  achieved  with 
 analog  data  transmission.  Moreover,  combining  xDSL  technology  with  packet  switching  permits  more 
 efficient  use  of  the  network  because  information  generated  by  multiple  users  can  be  sent  over  a 
 telecommunications  facility  that  in  a  circuit-  switched  environment  may  be  dedicated  to  only  one  customer  for 
 the  duration  of  a  call.  In  addition,  the  customer  can  potentially  make  ordinary  voice  calls  over  the  public 
 switched  network  at  the  same  time  he  or  she  is  using  the  same  line  for  high-  speed  data  transmission. 
 Advanced  Services  First  Report  and  Order  and  FNPRM,  14  FCC  Rcd  at  4766-  67,  paras.  9-  10. 

 359  Newtons  Telecom  Dictionary  at  38-  39. 

 360  Advanced  Services  First  Report  and  Order  and  FNPRM,  14  FCC  Rcd  at  4767,  para.  10. 
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 marketplace.  Without  access  to  these  loops,  competitors  would  be  at  a  significant 
 disadvantage,  and  the  incumbent  LEC,  rather  than  the  marketplace,  would  dictate  the  pace 
 of  the  deployment  of  advanced  services.  361  We  also  note  that  the  availability  of 
 conditioned  loops  enables  competitors  to  deploy  xDSL  service  beyond  the  major 
 metropolitan  areas.  362  Finally,  we  note  our  obligation  under  section  706  to  encourage  the 
 deployment  of  advanced  services  by,  among  other  means,  promoting  competition  in  the 
 telecommunications  market.  363 

 191.  As  the  Commission  stated  in  the  Local  Competition  First  Report  and 
 Order,  requiring  incumbents  to  provide  conditioned  loops  will,  in  some  instances,  require 
 the  incumbent  LEC  to  take  affirmative  steps  to  enable  requesting  carriers  to  provide 
 services  that  the  incumbent  does  not  currently  provide.  364  We  now  clarify  that  we  require 
 the  incumbent  to  provide  loops  with  all  their  capabilities  intact,  that  is,  to  provide 
 conditioned  loops,  wherever  a  competitor  requests,  even  if  the  incumbent  is  not  itself 
 offering  xDSL  to  the  end-  user  customer  on  that  loop.  Thus,  incumbent  LECs  cannot 
 refuse  a  competitive  LECs  request  for  conditioned  loops  on  the  grounds  that  they 
 themselves  are  not  planning  to  offer  xDSL  to  that  customer. 

 192.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  also 
 stated  that  requesting  carriers  would  compensate  the  incumbent  LECs  for  the  cost  of 
 conditioning  the  loop.  365  Covad  and  Rhythms  argue  that,  because  loops  under  18,000  feet 
 generally  should  not  require  devices  to  enhance  voice-  transmission,  the  requesting  party 
 should  not  be  required  to  compensate  the  incumbent  for  removing  such  devices  on  lines 
 of  that  length  or  shorter.  366 

 193.  We  agree  that  networks  built  today  normally  should  not  require  voice-transmission 
 enhancing  devices  on  loops  of  18,000  feet  or  shorter.  367  Nevertheless,  the 
 devices  are  sometimes  present  on  such  loops,  and  the  incumbent  LEC  may  incur  costs  in 

 361  See,  Covad  Comments  at  36-  37.  Covad  states  that  Bell  Atlantic  makes  conditioned  loops 
 available  only  when  Bell  Atlantic  seeks  to  provide  ADSL  service  to  end  users,  thus  holding  competitive  LEC 
 expansion  plans  hostage  until  Bell  Atlantic  is  ready.  Covad  Comments  at  36,  n.  63. 

 362  See,  e.  g.,  Covad  Comments  at  36. 

 363  47  U.  S.  C.    706(  a). 
 364  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15692,  para.  382. 
 365  Id. 
 366  Covad  Comments  at  42-  43;  Rhythms  Reply  Comments  at  21. 
 367  See  generally  Bellcore  Notes  on  the  Network,  Loop  Transmission,  ch.  7.15,  (Telcordia, 
 1997);  Regis  J.  Bates  and  Donald  Gregory,  Voice  and  Data  Communications  Handbook  Signature  Edition, 
 (McGraw-  Hill,  New  York,  1997),  at  76-  77. 
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 removing  them.  Thus,  under  our  rules,  the  incumbent  should  be  able  to  charge  for 
 conditioning  such  loops.  368 

 194.  We  recognize,  however,  that  the  charges  incumbent  LECs  impose  to 
 condition  loops  represent  sunk  costs  to  the  competitive  LEC,  and  that  these  costs  may 
 constitute  a  barrier  to  offering  xDSL  services.  We  also  recognize  that  incumbent  LECs 
 may  have  an  incentive  to  inflate  the  charge  for  line  conditioning  by  including  additional 
 common  and  overhead  costs,  as  well  as  profits.  We  defer  to  the  states  to  ensure  that  the 
 costs  incumbents  impose  on  competitors  for  line  conditioning  are  in  compliance  with  our 
 pricing  rules  for  nonrecurring  costs.  369 

 195.  In  addition,  we  agree  with  commenters  that  argue  that  incumbent  LECs 
 must  provide  trouble  reports  to  the  competitive  LECs  for  any  function  or  capability  of 
 the  accessed  loop  element,  and  that  the  incumbent  may  not  limit  such  reports  to  voice-transmission 
 trouble  only.  370  Not  knowing  whether  or  not  the  accessed  line  is  functioning 
 properly  impairs  a  competitive  LECs  ability  to  provide  service,  because  subscribers  may 
 tend  to  blame  the  new  competitor,  rather  than  the  familiar  incumbent,  for  any  lapse  or 
 degradation  of  service.  Thus,  we  conclude  that,  in  so  far  as  it  is  technically  feasible,  the 
 incumbent  must  test  and  report  trouble  on  conditioned  lines,  if  requested  by  the 
 competitor,  for  all  of  the  lines  features,  functions,  and  capabilities,  and  may  not  restrict 
 its  testing  to  voice-  transmission  only. 

 196.  Dark  Fiber.  We  agree  with  commenters  that  argue  that,  because  dark  fiber 
 provides  high  transmission  capabilities  at  relatively  low  cost,  unbundling  dark  fiber  is 
 essential  for  competition  in  the  provision  of  advanced  services.  371  We  reject  the 
 incumbents  reasoning  that,  because  competitive  LECs  have  installed  lit  fiber  to  certain 
 high-  volume  customers,  they  could  also  install  their  own  dark  fiber,  and  therefore  are  not 
 impaired  without  access  to  the  incumbents  dark  fiber.  372  As  with  other  loops,  we  decline 
 to  infer  from  competitive  LEC  self-  provisioning  in  certain  circumstances  that,  as  a 
 general  matter,  the  expense  and  delay  involved  in  laying  fiber  do  not  impair  the  ability  of 

 368  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15692,  para.  382. 
 369  47  C.  F.  R.    51.507(  e).  See  generally  47  C.  F.  R.    51.501  et  seq.;  Local  Competition  First 
 Report  and  Order,  11  FCC  Rcd  at  15875-  15876,  paras.  749-  751. 
 370  MGC  Reply  Comments  at  11. 

 371  Illinois  Commission  Comments  at  15;  Iowa  Comments  at  9;  Cable  &  Wireless  Comments 
 at  34;  CO  Space  Comments  at  7;  GSA  Comments  at  7;  Waller  Creek  Comments  at  17.  See  also  Texas  PUC 
 Comments  at  16;  KMC  Comments  at  21.  New  England  Voice  &  Data  states  that  fiber  loops  are  particularly 
 necessary  to  bring  competition  in  advanced  services  to  the  residential  market.  New  England  Voice  &  Data 
 Comments  at  9-  10. 

 372  GTE  Comments  at  32;  US  West  Comments  at  39-  40. 
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 entrants  and  other  competitive  LECs  to  provide  the  services  they  seek  to  offer.  373  We  see 
 no  reason  to  distinguish  dark  fiber  from  our  general  unbundling  analysis  for  loops. 

 197.  US  West  argues  that  competitors  do  not  need  the  incumbent  LECs  fiber 
 because  a  wholesale  market  exists  in  loop  fiber.  374  We  find,  however,  that  the  nascent 
 wholesale  market  in  fiber  loop  facilities  is  not  yet  extensive  enough  for  us  to  conclude 
 that  competitors  are  not  impaired  without  access  to  incumbent  LECs  unbundled  dark 
 fiber  loops.  375  We  also  agree  with  the  argument  that  unbundled  loops,  including  fiber, 
 allow  competitive  LECs  to  build  out  their  networks  gradually.  376  By  supplementing  their 
 own  facilities  with  unbundled  fiber  loops,  a  competitive  LEC  can  offer  advanced  services 
 ubiquitously  and  not  limit  its  service  offering  to  small  areas  of  concentrated  demand.  377 

 198.  Because  fiber  is  currently  a  more  significant  component  of  interoffice 
 transport  than  the  loop  network  element,  we  discuss  aspects  of  dark  fiber  common  to  both 
 elements  when  we  discuss  interoffice  transport  below.  378  We  note  here,  however,  that 
 GTE  raises  concerns  that  incumbents,  because  of  their  carrier-  of-  last-  resort  obligations, 
 have  a  special  need  for  fiber  reserves.  379  As  we  explain  in  greater  detail  below,  we  find 
 these  concerns  exaggerated,  because  the  capacity  of  fiber  can  be  increased  many  fold 
 simply  by  increasing  the  power  of  the  electronics  that  light  it.  We  find,  therefore,  that  a 
 shortage  of  fiber  capacity  caused  by  unbundling  is  highly  unlikely. 

 199.  In  addition,  GTE  and  the  Telecommunications  Industry  Association  argue 
 that  requiring  incumbent  LECs  to  unbundle  fiber  will  reduce  their  incentive  to  build  fiber 
 loops  in  the  first  place.  380  We  remain  skeptical  that  this  is  the  case,  because  incumbents 
 face  loop  unbundling  obligations  no  matter  which  technology  they  deploy.  We  note, 

 373  See  New  England  Voice  &  Data  Comments  at  14-  15. 
 374  US  West  Comments  at  39-  40. 
 375  New  England  Voice  &  Data  states  that  although  Neon,  NEES,  and  C2C  offer  fiber  in  the 
 Northeast,  they  do  not  offer  fiber  on  a  ubiquitous  basis,  and  thus  are  not  a  readily  available,  reasonable 
 substitute  for  unbundled  dark  fiber.  New  England  Voice  &  Data  Comments  at  13. 

 376  RCN  Comments  at  15. 

 377  New  England  Voice  &  Data  Comments  at  9-  10.  New  England  Voice  &  Data  states  that 
 without  unbundled  dark  fiber  loops,  its  ability  to  offer  advanced  services  would  be  limited  to  approximately 
 two  miles  (  about  12,000)  from  the  central  office.  New  England  Voice  &  Data  Comments  at  10. 

 378  See  infra  Section  (V)(  E). 

 379  GTE  Comments  at  83-  84. 
 380  GTE  Comments  at  83-  84;  Letter  from  Derek  R.  Khlopin,  Regulatory  Counsel, 
 Telecommunications  Industry  Association,  to  Magalie  R.  Salas,  Secretary,  Federal  Communications 
 Commission,  CC  Docket  No.  96-  98,  Attachment  at  4-  12  (filed  Aug.  2,  1999)  (stating  that  incumbent  LECs 
 continue  to  build  copper  loop  facilities  even  though  fiber  could  be  deployed  at  no  additional  cost,  because, 
 according  to  TIA,  of  being  required  to  unbundle  new  fiber  facilities.). 
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 however,  that  the  Texas  commission  has  already  established  moderate  restrictions 
 governing  the  availability  dark  fiber.  381  We  do  not  wish  to  disturb  the  reasonable 
 limitations  and  technical  parameters  for  dark  fiber  unbundling  that  Texas  or  other  states 
 may  have  in  place.  If  incumbent  LECs  are  able  to  demonstrate  to  the  state  commission 
 that  unlimited  access  to  unbundled  dark  fiber  threatens  their  ability  to  provide  service  as  a 
 carrier  of  last  resort,  state  commissions  retain  the  flexibility  to  establish  reasonable 
 limitations  governing  access  to  dark  fiber  loops  in  their  states. 

 200.  Goals  of  the  Act.  We  conclude  that  access  to  the  full  capabilities  of 
 incumbent  LECs  loop  plant  nationwide  will  further  the  goals  of  the  Act.  Requiring 
 access  to  unbundled  loops  will  promote  the  rapid  development  of  competition  and  bring 
 the  benefits  of  competition  to  greater  numbers  of  consumers.  Access  to  unbundled  loops 
 will  also  encourage  competition  to  provide  broadband  services.  We  are  convinced  that 
 greater,  not  fewer,  options  for  procuring  loops  will  facilitate  entry  by  competitors,  and 
 that  Congress  intended  for  competitors  to  have  these  options  available.  382  We  find  that 
 the  benefits  of  uniform  loop  unbundling  outweigh  the  costs  of  creating  a  patchwork 
 regime  in  which  incumbents  will  seek  to  litigate  whether  particular  loops  should  be 
 unbundled  or  where  an  alternative  to  the  incumbent  LECs  loop  is  arguably  substitutable. 
 For  these  reasons,  incumbent  LECs  must  provide  unbundled  access  to  their  loop  network 
 element  nationwide. 

 201.  Spectrum  Unbundling.  A  number  of  parties  request  that  the  Commission 
 identify  loop  spectrum  as  a  separate  unbundled  network  element.  383  In  particular,  they 
 argue  that  requesting  carriers  need  access  to  the  high-  frequency  loop  spectrum  on  an 
 unbundled  basis  in  order  to  provide  advanced  telecommunications  services,  including 
 xDSL.  We  decline,  at  this  time,  to  identify  loop  spectrum  as  a  separate  unbundled 
 network  element.  In  the  Advanced  Services  First  Report  and  Order  and  FNPRM,  we  will 
 consider  whether  the  high-  frequency  spectrum  of  the  loop  qualifies  as  an  unbundled 
 network  element  and  the  operational  issues  associated  with  such  unbundling.  384  We 
 believe  that  the  record  developed  in  that  proceeding  more  fully  addresses  the  issues 
 associated  with  spectrum  unbundling,  and  we  therefore  decline  to  address  those  issues  in 
 this  proceeding. 

 381  See  Texas  PUC  Comments  at  16-  18. 
 382  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15718-  15719,  para  441. 
 383  Covad  Reply  Comments  at  9-  11;  Network  Access  Solutions  Comments  at  20-  26; 
 NorthPoint  Comments  at  14-  16;  Rhythms  Comments  at  16-  18;  Rhythms  Reply  Comments  at  25-  28. 
 384  Advanced  Services  First  Report  and  Order  and  FNPRM,  14  FCC  Rcd  at  4806-  12,  paras. 
 96-  107. 
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 B.  The  Subloop 
 1.  Background 
 202.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  declined 
 to  identify  the  feeder,  feeder/  distribution  interface  (FDI),  and  distribution  components  of 
 the  loops  as  individual  network  elements.  385  The  Commission  noted,  however,  that 
 subloop  unbundling  could  provide  competitors  flexibility  in  deploying  some  portions  of 
 loop  facilities,  while  elsewhere  relying  on  the  incumbent  LECs  facilities.  In  addition,  the 
 Commission  noted  that  carriers  would  need  access  at  points  along  the  loop  closer  to  the 
 customer  premises  to  provide  some  high  bandwidth  services,  such  as  ADSL.  386  The 
 Commission  also  found  that,  although  the  record  presented  evidence  mainly  of  logistical, 
 rather  than  technical,  impediments  to  subloop  unbundling,  proponents  of  subloop 
 unbundling  did  not  address  technical  issues  raised  by  incumbent  LECs.  387  The 
 Commission  stated  that  it  would  revisit  subloop  unbundling  when  the  record  on  the  issue 
 had  been  more  fully  developed.  388 

 203.  In  the  Notice,  we  sought  comment  on  whether,  due  to  technological 
 changes,  we  should  require  subloop  unbundling  at  the  remote  terminal  or  at  other  points 
 within  the  incumbent  LECs  network.  We  sought  comment  on  whether  to  unbundle 
 incumbent-  owned  facilities  on  the  end-  user  side  of  the  NID.  We  asked  commenters  to 
 apply  the  necessary  and  impair  standards  and  to  discuss  costs  and  availability  on  an 
 element-  by-  element  basis.  We  also  asked  those  commenters  requesting  further 
 unbundling  of  the  local  loop  to  discuss  possible  alternatives.  389 

 204.  Competitive  LECs  argue  generally  that  they  need  unbundled  access  to 
 subloop  elements  in  order  to:  (1)  connect  their  own  facilities  to  the  incumbents  inside 
 wire;  (2)  access  loops  that  an  incumbent  LEC  provides  over  integrated  digital  loop  carrier 
 (IDLC)  technology;  and  (3)  provide  advanced  services  over  xDSL.  390  These  commenters 

 385  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15695-  15696,  paras.  390-  391. 
 386  Id.  at  15696,  para.  390. 
 387  Id.  at  15696,  para.  391. 

 388  Id. 
 389  Notice  at  para.  33 
 390  See,  e.  g.,  Choice  One  Joint  Comments  at  21;  Inline  Comments  at  3-  4;  Level  3  Comments  at 
 17-  18;  RCN  Comments  at  22-  23.  Digital  Loop  Carrier  (DLC)  systems  digitally  encode  and  aggregate,  i.  e. 
 multiplex,  the  traffic  from  subscribers  loops  into  DS1  signals  or  higher  for  more  efficient  transmission  or 
 more  extended  range  than  traditionally  permitted  by  copper  loops.  The  analog  signals  are  carried  from 
 customer  premises  to  a  remote  terminal  (RT)  where  they  are  converted  to  digital,  mixed  with  other  signals, 
 and  carried,  generally  over  fiber,  to  the  LEC  central  office.  Integrated  Digital  Loop  Carriers  (IDLC)  establish 
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 argue  that  they  are  also  financially  burdened  if  they  must  pay  for  an  entire  loop  when  they 
 need  to  use  only  a  portion  of  it.  391  Incumbents  argue  generally  that  competitors  are  not 
 impaired  without  access  to  subloops;  that  technical  and  logistical  impediments  prevent 
 subloop  unbundling;  and  that  network  architectures  differ  too  broadly  to  adopt  an 
 unbundling  rule  that  applies  nationwide.  392  Several  state  commissions  argue  that  subloop 
 unbundling  requires  a  case-  by-  case  analysis  that  the  states  are  in  the  best  position  to 
 perform.  393  For  example,  Texas  states  that  subloop  unbundling  meets  the  impair 
 standard  of  section  251(  d)(  2)  and  requires  subloop  unbundling  at  the  remote  terminal.  394 

 2.  Discussion 
 205.  We  find  that  lack  of  access  to  unbundled  subloops  materially  diminishes  a 
 requesting  carriers  ability  to  provide  services  that  it  seeks  to  offer.  We  also  conclude  that 
 access  to  subloop  elements  is  likely  to  be  the  catalyst  that  will  allow  competitors,  over 
 time,  to  deploy  their  own  complementary  subloop  facilities,  and  eventually  to  develop 
 competitive  loops.  Lack  of  access  to  subloops  discourages  competitive  LECs  from 
 attempting  to  combine  their  own  feeder  plant  with  the  incumbents  distribution  plant  to 
 minimize  their  reliance  on  the  incumbents  facilities.  We  also  find  that  lack  of  unbundled 
 access  to  the  incumbents  subloops  would  preclude  competitors  from  offering  some 
 broadband  services.  Accordingly,  we  conclude  that  incumbent  LECs  must  provide 
 unbundled  access  to  subloops  nationwide,  where  technically  feasible. 

 a.  Definition  of  the  Subloop 

 206.  We  define  subloops  as  portions  of  the  loop  that  can  be  accessed  at  terminals 
 in  the  incumbents  outside  plant.  An  accessible  terminal  is  a  point  on  the  loop  where 
 technicians  can  access  the  wire  or  fiber  within  the  cable  without  removing  a  splice  case  to 

 a  direct,  digital  interface  with  the  switch  at  the  LEC  central  office,  which  makes  it  difficult,  or  even 
 impossible,  for  competitors  to  access  individual  loops  at  that  location.  xDSL  refers  to  Digital  Subscriber 
 Loop;  the  lower  case  x  is  a  place  holder  for  the  several  versions,  or  flavors  of  DSL  technology.  DSL 
 modems  allow  transmission  of  data  over  the  copper  loop  at  vastly  higher  speeds  than  can  be  achieved  with 
 analog  data  transmission.  In  addition,  customers  using  xDSL  can  make  ordinary  voice  calls  while  using  the 
 line  for  high-  speed  data  transmission.  xDSL  cannot  work  over  fiber,  and  it  generally  requires  a  clean  (i.  e., 
 conditioned)  copper  loop. 

 391  See,  e.  g.,  Ohio  PUC  Comments  at  20. 

 392  See,  e.  g.,  GTE  Comments  at  87-  89;  SBC  Comments  at  30-  31. 
 393  See,  e.  g.,  California  PUC  Comments  at  9-  10  (Commission  should  establish  guidelines,  but 
 allow  parties  to  negotiate  and  states  to  arbitrate  specific  terms);  Florida  PSC  Comments  at  8  (Subloop 
 unbundling  should  be  determined  case-  by-  case);  Ohio  PUC  Comments  at  16-  18  (States  should  develop  policy 
 on  an  ongoing  basis  as  technology/  business  evolves). 

 394  Texas  PUC  Comments  at  15-  16.  Texas  also  describes  limitations  it  imposes  to  safeguard 
 the  integrity  of  the  network.  Id.  at  16. 
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 reach  the  wire  or  fiber  within.  395  These  would  include  a  technically  feasible  point  near 
 the  customer  premises,  such  as  the  pole  or  pedestal,  396  the  NID  (which  we  discuss 
 below),  397  or  the  minimum  point  of  entry  to  the  customer  premises  (MPOE).  Another 
 point  of  access  would  be  the  feeder  distribution  interface  (FDI),  which  is  where  the  trunk 
 line,  or  feeder,  leading  back  to  the  central  office,  and  the  distribution  plant,  branching 
 out  to  the  subscribers,  meet,  and  interface.  The  FDI  might  be  located  in  the  utility  room 
 in  a  multi-  dwelling  unit,  in  a  remote  terminal,  or  in  a  controlled  environment  vault 
 (CEV).  398  We  acknowledge  that  some  FDIs  are  more  accessible  than  others;  utility 
 rooms  are  generally  more  spacious  than  vaults.  A  third  point  of  access  is,  of  course,  the 
 main  distribution  frame  in  the  incumbents  central  office.  399 

 207.  We  believe  that  a  broad  definition  of  the  subloop  that  allows  requesting 
 carriers  maximum  flexibility  to  interconnect  their  own  facilities  at  these  points  where 
 technically  feasible  will  best  promote  the  goals  of  the  Act.  Access  to  portions  of  the  loop 
 element  at  these  points,  i.  e.,  access  to  the  subloop,  will  facilitate  rapid  development  of 
 competition,  encourage  facilities-  based  competition,  and  promote  the  deployment  of 
 advanced  services.  Our  intention  is  to  ensure  that  the  subloop  definition  will  apply  to  new 
 as  well  as  current  technologies,  and  to  ensure  that  competitors  will  continue  to  be  able  to 
 access  subloop  unbundled  network  elements  as  long  as  that  access  is  required  pursuant  to 
 section  251(  d)(  2)  standards. 

 b.  Proprietary  Concerns  Associated  with  Subloops 

 208.  The  record  does  not  indicate,  nor  do  commenters  argue,  that  subloops  are 
 proprietary.  Moreover,  we  do  not  discern  any  copyright,  patent,  or  trademark  or  trade 
 secrecy  implications  to  subloop  unbundling.  We  therefore  apply  the  impair  standard  of 

 395  Accessible  terminals  contain  cables  and  their  respective  wire  pairs  that  terminate  on  screw 
 posts.  This  allows  technicians  to  affix  cross  connects  between  binding  posts  of  terminals  collocated  at  the 
 same  point.  Terminals  differ  from  splice  cases,  which  are  inaccessible  because  the  case  must  be  breached  to 
 reach  the  wires  within.  For  a  discussion  of  outside  plant,  see  Green,  James  Harry,  The  Irwin  Handbook  of 
 Telecommunications,  McGraw  Hill,  New  York  (3  rd  Ed.  1997),  at  ch.  6. 

 396  The  pole  or  pedestal  is  where  the  distribution  connects  to  the  drop.  The  drop  is  the 
 dedicated  wire  connecting  the  subscriber  to  the  network. 
 397  In  the  Local  Competition  First  Report  and  Order,  the  Commission  defined  the  NID  as  a 
 cross-  connect  device  used  to  connect  loop  facilities  to  inside  wiring.  Local  Competition  First  Report  and 
 Order,  11  FCC  Rcd  at  15697,  para.  392,  n.  852. 

 398  Controlled  environments  are  necessary  to  protect  the  electronic  devices,  such  as  the 
 multiplexing  equipment  on  IDLC  lines,  or  DSLAMs.  The  controlled  environment  is  known  as  a  controlled 
 environment  vault  (CEV)  if  it  is  located  below  ground,  and  as  a  hut  if  it  is  located  above  ground.  If  the 
 FDI  is  in  a  remote  terminal  in  a  utility  room,  there  may  be  no  distribution  or  drop,  and  the  loop  may  go 
 directly  from  the  feeder  to  inside  wire. 

 399  We  note  that  even  central  offices  can  present  feasibility  issues,  as  when  they  are  filled  to 
 capacity,  or  when  certain  lines,  such  as  IDLC,  cannot  be  accessed  at  that  point,  but  must  be  accessed  closer  to 
 the  end  user. 
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 section  of  251(  d)(  2)(  B)  to  determine  whether  subloops  are  subject  to  the  unbundling 
 requirements  of  the  Act. 

 c.  Unbundling  Analysis  for  Subloops 

 209.  We  conclude  that  incumbent  LECs  must  provide  unbundled  access  to 
 subloops.  Applying  our  unbundling  analysis,  we  conclude  that  lack  of  access  to 
 unbundled  subloops  at  technically  feasible  points  throughout  the  incumbents  loop  plant 
 will  impair  a  competitors  ability  to  provide  services  that  it  seeks  to  offer.  We  agree  with 
 commenters  that  self-  provisioning  subloop  elements,  like  the  loop  itself,  would  materially 
 raise  entry  costs,  delay  broad-  based  entry,  and  limit  the  scope  and  quality  of  the 
 competitive  LECs  service  offerings.  400  In  addition,  we  find  that  access  to  subloop 
 elements  promotes  self-  provisioning  of  part  of  the  loop,  and  thus  will  encourage 
 competitors,  over  time,  to  deploy  their  own  loop  facilities  and  eventually  to  develop 
 competitive  loops  where  it  is  cost  efficient  to  do  so. 

 210.  We  clarify  that  technically  feasible  points  would  include  a  point  near  the 
 customer  premises,  such  as  the  point  of  interconnection  between  the  drop  and  the 
 distribution  cable,  the  NID,  or  the  MPOE.  Such  access  would  give  competitors 
 unbundled  access  to  the  inside  wire  subloop  element,  in  cases  where  the  incumbent  owns 
 and  controls  wire  inside  the  customer  premises.  It  would  also  include  any  FDI,  whether 
 the  FDI  is  located  at  a  cabinet,  CEV,  remote  terminal,  utility  room  in  a  multi-  dwelling 
 unit,  or  any  other  accessible  terminal. 

 211.  Cost  and  Timeliness.  We  agree  with  commenters  that  loop  facilities, 
 including  subloop  elements,  are  the  most  time-  consuming  and  expensive  network  element 
 to  duplicate  on  a  pervasive  scale,  and  that  the  cost  of  self-  provisioning  subloops  can  be 
 prohibitively  expensive.  401  Self-  provisioning  subloops  would  require  requesting  carriers 
 to  incur  significant  sunk  costs  prior  to  offering  services  to  end  users.  402  Requiring 
 competitors  to  expend  such  sums  would,  at  a  minimum,  delay  entry  and  thus  postpone  the 
 benefits  of  competition  for  consumers.  403 

 212.  We  are  not  persuaded  by  GTEs  argument  that,  because  the  whole  loop  is  an 
 acceptable  substitute,  a  competitor  is  not  impaired  without  access  to  the  subloop.  404  First, 

 400  See,  e.  g.,  ALTS  Comments  at  46-  48;  Choice  One  Joint  Comments  at  21;  CoreComm 
 Comments  at  33-  35;  Level  3  Comments  at  17-  18;  NorthPoint  Comments  at  16;  OpTel  Comments  at  6-  7. 
 401  See,  e.  g.,  ALTS  Comments  at  37-  38;  AT&  T  Comments  at  63-  64;  Focal  Comments  at  6-  7; 
 Level  3  Comments  at  15;  MCI  WorldCom  Comments  at  43-  44;  Qwest  Comments  at  59-  61;  RCN  Comments 
 at  15.  See  also  Local  Competition  First  Report  and  Order  11  FCC  Rcd  at  15690,  para.  378. 

 402  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15690,  para.  378. 

 403  Id. 
 404  GTE  Comments  at  86-  87 
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 as  we  explain  below,  the  undivided  loop  does  not  always  afford  competitors  access  to 
 subscribers,  as  is  the  case  with  IDLC  loops.  405  Also,  as  a  rule,  requesting  carriers  that 
 supply  their  own  facilities  cannot  afford  to  pay  twice    first  for  the  facilities  they  self-provision, 
 and  again  for  the  incumbents  loop,  including  the  portion  that  they  do  not 
 utilize.  406  We  agree  with  the  Illinois  Commission  that  unbundling  subloops  provides 
 greater  efficiency  for  the  requesting  carrier  because  the  carrier  will  not  have  to  buy  the 
 entire  loop  to  interconnect  its  own  facilities  with  wiring  on  the  customer  premises.  407  If 
 competing  carriers  that  need  only  a  portion  of  the  loop  must  either  pay  for  the  entire  loop 
 or  forego  access  to  that  loop  altogether,  many  consumers  will  be  denied  the  benefits  of 
 competition. 

 213.  GTE  contends  that  possible  rights-  of-  way,  zoning,  power  supply,  and 
 similar  alleged  impediments  should  prevent  us  from  requiring  the  incumbent  to  provide 
 loop  sub-  elements  on  an  unbundled  basis.  408  We  assume  that  GTE  is  referring  to 
 potential  obstacles  that  the  requesting  carrier  may  encounter  from  cities,  counties,  electric 
 power  companies,  and  similar  third  parties  when  it  seeks  to  interconnect  its  equipment  at 
 subloop  access  points.  We  find  that  such  obstacles,  however,  to  the  extent  they  develop, 
 are  for  the  competitive  LEC  to  resolve  with  the  municipality  or  utility.  Such  obstacles  are 
 not  relevant  to  our  determination  of  whether  the  competitor  is  impaired  without 
 unbundled  access  to  the  incumbents  subloop  elements,  and  do  not  absolve  the  incumbent 
 from  its  obligation  to  provide  unbundled  access  to  those  elements. 

 214.  Impact  on  Network  Operations.  In  order  to  encourage  the  development  of 
 facilities-  based  competition,  requesting  carriers  must  be  able  to  interconnect  their 
 networks  with  the  incumbents  network  facilities  that  are  designed  to  provide  similar 
 services. 

 215.  First,  if  those  competitors  that  are  attempting  to  rely  primarily  on  their  own 
 facilities  are  unable  to  interconnect  near  the  customer  premises,  the  end  users  those 
 competitors  target  would  have  to  forego  the  benefits  of  competition  and  new  technology 
 those  competitors  offer.  409  We  agree  with  several  state  regulatory  commissions  that  argue 
 that,  to  the  extent  that  requesting  carriers  are  denied  flexibility  in  connecting  their 
 facilities  to  the  local  loop,  these  carriers  are  impaired  from  developing  their  own  network 

 405  Choice  One  Joint  Comments  at  21;  CoreComm  Comments  at  34. 
 406  See  Ohio  PUC  Comments  at  20  (stating  that  it  is  uneconomical  for  competitive  LECs  to 
 purchase  an  entire  loop  just  to  obtain  access  to  the  riser  cable.)  See  also  MCI  WorldCom  Comments  at  44-  45. 
 407  Illinois  Commission  Comments  at  14-  15. 

 408  GTE  Comments  at  88-  89. 
 409  See,  e.  g.,  OpTel  Comments  at  7-  8;  Teligent  Comments  at  7-  8;  WinStar  Comments  at  2-  3,  5- 
 7. 
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 infrastructure.  410  In  those  instances  where  competitive  carriers  are  able  to  self-  provision  a 
 portion  of  the  loop,  lack  of  access  to  the  part  of  the  incumbents  loop  they  need  could 
 impede  the  competitors  ability  to  develop  their  own  network  architecture  and  provide 
 new  service  offerings.  On  the  other  hand,  the  gradual  self-  provisioning  that  such  access 
 encourages  could  lead,  in  time,  to  conditions  that  would  permit  the  eventual  elimination 
 of  the  loop  element  from  the  unbundling  obligations  of  the  Act. 

 216.  For  example,  wireless  providers  may  require  only  the  final  leg  of  loop 
 distribution  plant  before  the  wire  passes  to  customer  control  at  the  demarcation  point.  411 
 In  particular,  a  facilities-  based  providers  ability  to  offer  service  in  a  multi-  unit  building 
 or  campus  may  be  severely  impaired  if  it  must  install  duplicative  inside  wiring.  412  We 
 agree  with  the  argument  that  requiring  competitive  LECs  to  convince  landlords  and 
 customers  to  permit  the  construction  of  redundant  inside  wiring  would  substantially 
 impede  market  entry  and  competition.  413  Even  if  permission  were  obtained,  over-building 
 inside  wire  might  be  sufficiently  expensive  and  time-  consuming  to  deter 
 potential  competitors.  414  Thus,  we  conclude  that  access  to  these  subloop  elements  at 
 technically-  feasible  interconnection  points  is  necessary  for  successful  competition  by 
 facilities-  based  competitors.  415 

 217.  Second,  carriers  need  unbundled  subloops  to  serve  subscribers  currently 
 served  by  IDLC  loops.  IDLC  technology  allows  a  carrier  to  multiplex  and  de-multiplex 
 (combine  and  separate)  traffic  at  a  remote  concentration  point,  or  remote 
 terminal,  and  to  deliver  the  combined  traffic  directly  into  the  switch,  without  first 
 separating  the  traffic  from  the  individual  lines.  416  In  such  cases,  competitors  generally 

 410  Illinois  Commission  Comments  at  14-  15  (stating  that  subloop  unbundling,  which  allows 
 competitive  LECs  flexibility  in  self-  provisioning  segments  of  the  loop,  allows  them  to  provide  their  own 
 facilities  where  construction  is  uncomplicated,  and  tie  those  facilities  to  the  incumbent  LECs  plant.);  Texas 
 PUC  Comments  at  15  (stating  that  subloop  unbundling  would  promote  development,  technological 
 advancement,  and  new  types  of  service.) 

 411  Depending  on  the  specific  architecture,  this  interconnection  point  might  be  at  the  pedestal, 
 the  NID,  the  MPOE,  or  any  other  accessible  terminal. 
 412  See,  e.  g.,  OpTel  Comments  at  7-  8;  Teligent  Comments  at  7-  8;  WinStar  Comments  at  2-  3,  5- 
 7. 
 413  See,  e.  g.,  RCN  Comments  at  21-  22.  Because  landlords  and  subscribers  may  reasonably 
 object  to  the  disruption  of  installing  duplicative  wiring,  we  reject  GTEs  argument  that  the  existence  of  a 
 robustly  competitive  market  in  electrical  contractors  may  be  interpreted  to  mean  that  withholding  access  to 
 the  incumbents  inside  wire  would  not  impair  competitors  ability  to  offer  services.  GTE  Comments  at  90. 

 414  See,  e.  g.,  KMC  Comments  at  22;  WinStar  Comments  at  6. 

 415  See,  e.  g.,  OpTel  Comments  at  7-  9;  Teligent  Comments  at  7. 
 416  The  device  which  accomplishes  both  the  mixing  of  signals  bound  for  the  central  office,  and 
 the  separation  of  signals  bound  for  subscribers,  is  a  multiplexer.  See  generally  MCI  WorldCom  Comments 
 at  44-  45  (Copper  wire  runs  from  the  customer  premises  to  a  remote  terminal,  from  where  the  traffic  is  no 
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 cannot  access  IDLC  loops  at  the  incumbents  central  office.  417  In  order  to  reach 
 subscribers  served  by  the  incumbents  IDLC  loops,  a  requesting  carrier  usually  must  have 
 access  to  those  loops  before  the  point  where  the  traffic  is  multiplexed.  That  is  where  the 
 end-  users  distribution  subloop  can  be  diverted  to  the  competitive  LECs  feeder,  before 
 the  signal  is  mixed  with  the  traffic  from  the  incumbent  LECs  other  distribution  subloops 
 for  transport  through  the  incumbents  IDLC  feeder.  418  Accordingly,  we  find  that  denying 
 access  at  this  point  may  preclude  a  requesting  carrier  from  competing  to  provide  service 
 to  customers  served  by  the  incumbents  IDLC  facilities.  This  would  particularly  affect 
 consumers  in  rural  areas,  where  incumbent  LECs  use  the  greatest  proportion  of  DLC 
 loops.  419 

 218.  Third,  competitors  seeking  to  offer  services  using  xDSL  technology  need  to 
 access  the  copper  wire  portion  of  the  loop.  420  In  cases  where  the  incumbent  multiplexes 
 its  copper  loops  at  a  remote  terminal  to  transport  the  traffic  to  the  central  office  over  fiber 
 DLC  facilities,  a  requesting  carriers  ability  to  offer  xDSL  service  to  customers  served 

 longer  transported  on  its  own  channel,  but  rather  is  transported  over  shared  channels.). 
 417  But  see  MCI  WorldCom,  Unbundling  Digital  Loop  Carriers,  at  11-  15  (March  1999).  MCI 
 WorldCom  states  that  there  are  four  ways  that  competitive  LECs  may  gain  access  to  IDLC  subscribers:  (1) 
 Multiple  Switch  Hosting;  (2)  Integrated  Network  Architecture;  (3)  Digital  Cross  Connect  Grooming;  and  (4) 
 Side  Door  Grooming.  We  note,  however,  that  Multiple  Switch  Hosting  is  available  only  on  the  newest  IDLC 
 systems  (Telcordia  GR-  303)  and  accommodates  only  a  few  competitors;  Integrated  Network  Architecture 
 appears  to  be  cost-  effective  only  for  competitive  LECs  with  substantial  market  penetration,  and  also  works 
 only  for  GR-  303-  compatible  systems;  Digital  Cross  Connect  Systems  require  all  loop  signals,  including 
 signals  for  loops  retained  by  the  incumbent  LEC,  to  pass  through  the  DCS  system  for  processing,  and  is 
 therefore  very  expensive;  and  MCI  WorldCom  agrees  that  Side  Door  Grooming  can  only  be  done  for  a  few 
 lines  per  remote  terminal.  Thus,  despite  their  future  potential,  these  methods  do  not  now  substantially  reduce 
 the  competitive  LECs  need  to  pick  up  IDLC  customers  traffic  before  it  is  multiplexed. 

 418  In  the  Local  Competition  First  Report  and  Order,  the  Commission  concluded  that 
 incumbent  LECs  must  provide  competitors  with  access  to  unbundled  loops,  regardless  of  whether  the 
 incumbent  LEC  uses  IDLC  technology,  or  similar  remote  concentration  systems,  for  the  particular  loop  sought 
 by  the  competitor.  In  that  Order,  the  Commission  noted  that  if  incumbent  LECs  were  not  required  to 
 unbundle  IDLC-  delivered  loops,  end  users  served  by  such  technologies  would  be  effectively  deprived  of 
 competition  for  their  business,  and  incumbent  LECs  would  be  encouraged  to  hide  loops  from  competitors 
 through  the  use  of  IDLC  technology.  The  Commission  also  found  that  it  is  technically  feasible  to  unbundle 
 IDLC-  delivered  loops  through  use  of  a  multiplexer  to  separate  the  unbundled  loop(  s)  prior  to  connecting  the 
 remaining  loops  to  the  switch.  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15692,  para  383. 
 In  the  three  years  since  the  Local  Competition  First  Report  and  Order,  however,  such  methods  have  not 
 proven  practicable.  Competitors  are  not  yet  able  economically  to  separate  and  access  IDLC  customers  traffic 
 on  the  wire-  center  side  of  the  IDLC  multiplexing  devices.  See  Level  3  Comments  at  17-  18;  NorthPoint 
 Comments  at  16-  18;  Prism  Comments  at  21;  RCN  Comments  at  22. 

 419  See,  e.  g.,  MCI  WorldCom  Comments  at  44-  45.  (More  than  20%  of  loops  use  DLC 
 technology,  and  the  percentage  will  only  increase  over  time.).  MCI  WorldCom  Reply  Comments  at  45 
 (More  than  half  the  wire  centers  in  the  United  States  (10,967  out  of  20,637)    the  majority  in  rural  areas   
 serve  under  2000  lines.  In  these  rural  areas,  about  half  the  loops  are  provisioned  over  DLC).  See  also  Choice 
 One  Joint  Comments  at  21;  CoreComm  Comments  at  34. 

 420  See,  e.  g.,  Covad  Comments  at  33-  34,  39-  41. 
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 over  those  facilities  will  be  precluded,  unless  the  competitor  can  gain  access  to  the 
 customers  copper  loop  before  the  traffic  on  that  loop  is  multiplexed.  Thus,  we  note  that 
 the  remote  terminal  has,  to  a  substantial  degree,  assumed  the  role  and  significance 
 traditionally  associated  with  the  central  office.  421  In  addition,  in  order  to  use  its  own 
 facilities  to  provide  xDSL  service  to  a  customer,  a  carrier  must  locate  its  DSLAM  within 
 a  reasonable  distance  of  the  customer  premises,  usually  less  than  18,000  feet.  422  In  both 
 of  these  situations,  a  requesting  carrier  needs  access  to  copper  wire  relatively  close  to  the 
 subscriber  in  order  to  serve  the  incumbents  customer. 

 219.  Goals  of  the  Act.  Access  to  unbundled  subloop  elements  allows 
 competitive  LECs  to  self-  provision  part  of  the  loop,  and  thus,  over  time,  to  deploy  their 
 own  loop  facilities,  and  eventually  to  develop  competitive  loops.  If  requesting  carriers 
 can  reduce  their  reliance  on  the  incumbent  by  interconnecting  their  own  facilities  closer  to 
 the  customer,  their  ability  to  provide  service  using  their  own  facilities  will  be  greatly 
 enhanced,  thereby  furthering  the  goal  of  the  1996  Act  to  promote  facilities-  based 
 competition.  Failure  to  unbundle  the  subloop  would  cause  residential  and  small  business 
 consumers  to  wait  unnecessarily  for  competitive  alternatives.  We  also  find  that  the 
 availability  of  unbundled  subloops  will  accelerate  the  development  of  alternative 
 networks,  because  it  will  allow  requesting  carriers  efficiently  to  connect  their  facilities 
 with  the  incumbents  loop  plant.  Thus,  our  decision  to  unbundle  subloops  is  consistent 
 with  the  1996  Acts  goals  of  rapid  introduction  of  competition  and  the  promotion  of 
 facilities-  based  entry. 

 d.  Technical  Feasibility 

 220.  We  note  that  parties  commenting  in  this  proceeding  disagree  as  to  the 
 technical  feasibility  of  accessing  various  points  of  the  loop.  For  example,  SBC  contends 
 that  incumbents  should  not  be  required  to  unbundle  subloops  at  the  CEV  because  the 
 CEV  is  a  small,  protected  environment  that  is  not  designed  for  access  by  multiple  parties. 
 SBC  also  argues  that  unbundling  at  the  cabinet  will  jeopardize  network  security.  423 

 421  The  Commission  has  long  held  collocation  at  the  central  office  to  be  desirable.  Our 
 analysis  extends  the  Commissions  reasoning  to  new  situations  as  the  network  architecture  evolves.  See 
 generally  Advanced  Services  First  Report  and  Order  and  FNPRM,  14  FCC  Rcd  at  4771-  94,  paras.  19-  60. 

 422  Id.  at  4772,  para  21.  See  also  AT&  T  Comments  at  85  (stating  that  high  speed  data 
 transmission  over  xDSL  technology  will  come  at  the  expense  of  competition  unless  CLECs  can  deploy  their 
 own  SONET  rings  and  lease  loop  distribution  from  the  ILEC.);  Level  3  Comments  at  17-  18;  RCN  Comments 
 at  22-  23.  DSL  technology  can  require  loop  lengths  as  short  as  4,000  feet. 

 423  See,  e.  g.,  SBC  Comments  at  30-  31  (By  separating  feeder  from  distribution,  the  ability  to 
 mechanize  testing  and  monitoring  from  the  switch  would  be  lost;  sending  technicians  in  place  of  mechanized 
 testing  would  decrease  service  and  increase  prices.)  See  also  Letter  from  Lincoln  E.  Brown,  SBC,  to  Magalie 
 R.  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98,  (filed  July  30,  1999)  (SBC 
 July  30,  1999  Ex  Parte)  (stating  that  unbundling  is  not  feasible  at  a  serving  terminal;  that  FDIs  are  small  and 
 sized  for  serving  areas;  and  present  an  extremely  limited  opportunity  for  single  CLEC  cable;  that  access  to  the 
 subloop  is  not  feasible  in  the  Hub;  and  that  there  is  extremely  limited  opportunity  for  access  at  RT/  FDI 
 combinations  due  to  space  constraints.) 
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 Competitive  LECs,  on  the  other  hand,  argue  that  SBC  exaggerates  these  impediments, 
 which  they  maintain  are  not  insurmountable.  424 

 221.  MGC  asserts,  and  we  agree,  that  our  collocation  rules,  which  we  recently 
 clarified  in  the  Advanced  Services  First  Report  and  Order,  apply  to  collocation  at  any 
 technically  feasible  point,  from  the  largest  central  office  to  the  most  compact  FDI.  425 
 This  is  because  our  collocation  rules  concern  methods  and  standards  of  obtaining 
 interconnection  and  access  to  unbundled  network  elements  under  section  251  of  the  Act, 
 and  thus  are  not  directed  to  any  one  type  of  facility.  Although  we  intend  to  make 
 collocation  available  at  all  accessible  terminals  on  the  loop,  we  acknowledge  that  the 
 incumbents  network  was  not  designed  to  house  additional  equipment  of  competitors. 
 Our  rules  do  not  require  incumbents  to  build  additional  space.  Nor  do  our  rules,  however, 
 preclude  requesting  carriers  from  constructing  their  own  facilities  adjacent  to  the 
 incumbents  equipment.  426  Moreover,  in  some  cases,  technicians  may  not  need  to  enter 
 the  cabinet  or  vault  at  all  because  virtual  collocation  arrangements  will  satisfy  the  needs 
 of  all  parties.  427  We  note  that,  prior  to  adoption  of  rules  requiring  incumbent  LECs  to 

 424  See,  e.  g.,  Letter  from  Scott  A.  Sarem,  MGC,  to  Magalie  R.  Salas,  Secretary,  Federal 
 Communications  Commission,  CC  Docket  No.  96-  98,  (filed  July  26,  1999)  (MGC  July.  23,  1999  Ex  Parte) 
 (stating  that  GTE  has  explained  to  MGC  in  detail  how  it  would  provision  MGC  with  subloops  through  a  D-  4 
 channel  bank,  and  citing  letter  from  Ellen  Robinson,  GTE,  to  Mark  Peterson,  MGC,  Apr.  16,  1998);  Letter 
 from  Patrick  J.  Donovan,  CoreComm,  to  Magalie  R.  Salas,  Secretary,  Federal  Communications  Commission, 
 CC  Docket  No.  96-  98,  (filed  July  30,  1999)  (CoreComm  Jul.  30,  1999  Ex  Parte.)  (stating  that  loops  are 
 typically  comprised  of  segments  accessible    and  accessed  by  incumbents    at  natural  junctures;  FDIs  are 
 designed  to  facilitate  connection  between  feeder  and  distribution);  Letter  from  David  N.  Porter,  MCI 
 WorldCom,  to  Magalie  R.  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98, 
 (filed  Aug.  10,  1999)  (MCI  WorldCom  Aug.  10,  1999  Ex  Parte.)  (stating  that  unbundling  is  feasible  at  either 
 end  of  a  copper  loop;  and  that  manufacturers  are  introducing  new  DLC  and  DSL  multiplexing  equipment  that 
 will  allow  local  exchange  carriers  to  share  common  shelves). 

 425  47  C.  F.  R.    51.321-  323;  MGC  July  23,  1999  Ex  Parte  at  2.  Pursuant  to  our  recent 
 Advanced  Services  First  Report  and  Order  and  FNPRM,  an  incumbent  LEC  may  not  refuse  to  permit 
 collocation  of  equipment  on  the  grounds  that  it  does  not  satisfy  certain  Bellcore  Network  Equipment  and 
 Building  Specifications  (NEBS)  performance  requirements,  and  an  incumbent  may  not  impose  on  a 
 collocating  competitor  safety  standards  that  exceed  the  safety  standards  it  imposes  on  its  own  equipment. 
 Advanced  Services  First  Report  and  Order  and  FNPRM,  14  FCC  Rcd  at  4781-  4782,  paras.  35-  36.  In 
 addition,  we  revised  our  rules  to  permit  collocating  carriers  to  construct  their  own  cross  connects.  Id.  at  4779- 
 4780,  para.  33. 

 426  See  MCI  WorldCom  Aug.  10,  1999  Ex  Parte  at  2. 

 427  MGC  July  23,  1999  Ex  Parte  subpart  F;  CoreComm  July  30,  1999  Ex  Parte..  MGC, 
 however,  doubts  that  incumbents  junction  boxes  do  in  fact  lack  space  for  fiber  termination  equipment, 
 because  such  equipment  may  not  take  up  more  than  a  shelf  or  two  on  an  equipment  rack.  MGC  July  23,  1999 
 Ex  Parte.  In  a  physical  collocation  arrangement,  a  competitor  leases  space  at  a  LEC's  premises  for  its 
 equipment.  The  competing  provider  has  physical  access  to  this  space  to  install,  maintain,  and  repair  its 
 equipment.  See  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15784,  n.  1361;  Expanded 
 Interconnection  Order,  7  FCC  Rcd  at  7391,  para.  42.  In  a  virtual  collocation  arrangement,  the  competitor 
 designates  the  equipment  to  be  placed  at  the  incumbent  LEC's  premises.  The  competing  provider,  however, 
 does  not  have  physical  access  to  the  incumbent's  premises.  Instead,  the  equipment  is  under  the  physical 
 control  of  the  incumbent  LEC,  and  the  incumbent  is  responsible  for  installing,  maintaining,  and  repairing  the 
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 offer  collocation  to  competitors,  incumbent  LECs  raised  similar  doubts  as  to  whether 
 collocation  would  be  feasible  at  central  offices.  428  As  indicated  by  the  number  of 
 collocation  arrangements  in  place  today,  these  doubts  were  not  well-  founded. 

 222.  The  record  indicates  that  the  space  available  for  collocating  and 
 interconnecting  at  various  subloop  access  points  will  vary  depending  on  the  incumbents 
 existing  plant  at  a  particular  location.  429  For  example,  the  feeder/  distribution  interface  for 
 a  business  park  could  be  located  in  a  room  that  contains  a  mini-  MDF,  racks  of  equipment, 
 and  enough  unoccupied  space  to  accommodate  easily  the  requesting  carriers  equipment. 
 In  other  situations,  such  as  at  a  remote  terminal  in  a  cabinet,  the  FDI  may  be  housed  in  a 
 facility  that  has  no  spare  space  at  all.  430  We  note  that  Texas  supports  unbundling  the 
 subloop,  but  has  not  ordered  unbundling  at  the  FDI  due  to  technical  problems  that, 
 according  to  Texas,  would  threaten  the  integrity  of  the  network.  431  Ohio  states  that  copper 
 loops  are  still  the  dominant  technology  in  its  state,  and  that  it  has  not  seen  evidence  to 
 suggest  that  it  is  technically  feasible  to  unbundle  copper  subloops.  432  Ohio  also  points  out 
 that  the  technical  feasibility  of  unbundling  subloops  at  particular  points  on  the  network 
 may  change  with  the  introduction  of  new  technologies.  433 

 223.  As  we  explain  above,  however,  we  conclude  that  the  goals  of  the  Act  are 
 best  served  by  determining  unbundling  rules  that  apply  to  network  elements 
 nationwide.  434  In  adopting  a  rule  that  requires  incumbents  to  unbundle  subloops  at  the 
 points  identified  above,  we  seek  to  provide  requesting  carriers  maximum  flexibility  to 
 interconnect  with  the  incumbents  network  at  technically  feasible  points  in  order  to  allow 
 competitors  to  serve  customers  efficiently.  Accordingly,  we  establish  a  rebuttable 
 presumption  that  the  subloop  can  be  unbundled  at  any  accessible  terminal  in  the  outside 
 loop  plant.  If  the  parties  are  unable  to  reach  an  agreement  pursuant  to  voluntary 
 negotiations  about  the  availability  of  space  or  the  technical  feasibility  of  unbundling  the 
 subloop  at  one  of  the  points  identified  above,  the  incumbent  will  have  the  burden  of 

 competing  provider's  equipment.  See  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15784- 
 15785,  para.  559;  Virtual  Collocation  Order,  9  FCC  Rcd  5154,  5158,  para.  7  (1994). 

 428  See  generally  Expanded  Interconnection  Order,  7  FCC  Rcd  7369  (1992);  Advanced 
 Services  Memorandum  Opinion  and  Order  and  NPRM,  13  FCC  Rcd  24012;  Advanced  Services  First  Report 
 and  Order  FNPRM,  14  FCC  Rcd  4761. 

 429  See  SBC  Comments  at  30-  31;  SBC  July  30,  1999  Ex  Parte. 

 430  SBC  July  30,  1999  Ex  Parte. 
 431  Texas  PUC  Comments  at  15-  16. 
 432  Ohio  PUC  Comments  at  16-  17.  See  also  MCI  WorldCom  Aug.  10,  1999  Ex  Parte 
 (defining  entire  dedicated  copper  loop  from  NID  to  RT  or  CO  as  single  subloop  element.). 
 433  Ohio  PUC  Comments  at  16.  See  also  USTA  Comments  at  35-  36. 

 434  See  supra  Section  (IV)(  C). 
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 demonstrating  to  the  state,  in  the  context  of  a  section  252  arbitration  proceeding,  that 
 there  is  no  space  available  or  that  it  is  not  technically  feasible  to  unbundle  the  subloop  at 
 these  points.  435 

 224.  Our  approach  to  subloop  unbundling  permits  evaluation  of  the  technical 
 feasibility  of  subloop  unbundling  on  a  case-  by-  case  basis,  and  takes  into  account  the 
 different  loop  plant  that  has  been  deployed  in  different  states.  We  find  that  the  questions 
 of  technical  feasibility,  including  the  question  of  whether  or  not  sufficient  space  exists  to 
 make  interconnection  feasible  at  assorted  huts,  vaults,  and  terminals,  and  whether  such 
 interconnection  would  pose  a  significant  threat  to  the  operation  of  the  network,  are  fact 
 specific.  Such  issues  of  technical  feasibility  are  best  determined  by  state  commissions, 
 because  state  commissions  can  examine  the  incumbents  specific  architecture  and  the 
 particular  technology  used  over  the  loop,  and  thus  determine  whether,  in  reality,  it  is 
 technically  feasible  to  unbundle  the  subloop  where  a  competing  carrier  requests.  436  We 
 also  note  we  are  considering  legal  issues  regarding  access  to  premises  in  the  Access  to 
 Competitive  Networks  proceeding.  437 

 225.  We  further  note  that  SBC  proposes  to  avoid  difficulties  associated  with 
 competing  carriers  serving  multi-  unit  premises  by  eliminating  multiple  demarcation 
 points  in  favor  of  a  single  demarcation  point,  which,  according  to  SBC,  would  remedy 
 competitive  LECs'  concerns.  438  OpTel  similarly  suggests  that  the  incumbent  should 
 provide  a  single  point  of  interconnection  at  or  near  the  property  line  of  multi-  unit 
 premises.  439  OpTel  further  maintains  that  the  cost  of  any  network  reconfiguration 
 required  to  create  a  point  of  interconnection  that  would  be  accessible  to  multiple  carriers 
 should  be  shared  by  all  the  carriers  concerned.  440 

 226.  Although  we  do  not  amend  our  rules  governing  the  demarcation  point  in  the 
 context  of  this  proceeding,  we  agree  that  the  availability  of  a  single  point  of 
 interconnection  will  promote  competition.  441  To  the  extent  there  is  not  currently  a  single 
 point  of  interconnection  that  can  be  feasibly  accessed  by  a  requesting  carrier,  we 
 encourage  parties  to  cooperate  in  any  reconfiguration  of  the  network  necessary  to  create 
 one.  If  parties  are  unable  to  negotiate  a  reconfigured  single  point  of  interconnection  at 

 435  See  47  U.  S.  C.    252(  b). 
 436  See,  e.  g.,  Florida  PSC  Comments  at  8;  Iowa  Comments  at  9;  Ohio  PUC  Comments  at  18. 
 See  also  Kentucky  PSC  Comments  at  para.  1;  New  York  DPS  Comments  at  6. 
 437  See  Competitive  Networks  Notice  at  para.  28  et  seq. 

 438  SBC  Reply  Comments  at  9  (citing  OpTel  Comments  at  10;  Teligent  Comments  at  3). 
 439  OpTel  Comments  at  10. 
 440  Id. 
 441  See  47  C.  F.  R.    68.3. 
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 multi-  unit  premises,  we  require  the  incumbent  to  construct  a  single  point  of 
 interconnection  that  will  be  fully  accessible  and  suitable  for  use  by  multiple  carriers.  442 
 Any  disputes  regarding  the  implementation  of  this  requirement,  including  the  provision  of 
 compensation  to  the  incumbent  LEC  under  forward-  looking  pricing  principles,  shall  be 
 subject  to  the  usual  dispute  resolution  process  under  section  252.  443  We  emphasize  that 
 this  principle  in  no  way  diminishes  a  carrier's  right  to  access  the  loop  at  any  technically 
 feasible  point,  including  other  points  at  or  near  the  customer  premises.  We  also  note  that 
 unbundling  inside  wire,  and  access  to  premises  facilities  in  general,  present  specific 
 technical  issues,  and  that  we  have  sought  additional  comment  on  these  issues  in  our 
 Access  to  Competitive  Networks  proceeding.  444  If  the  record  developed  in  that  proceeding 
 demonstrates  the  need  for  additional  federal  guidance  on  legal  or  technical  feasibility 
 issues  related  to  subloop  unbundling,  we  will  provide  such  additional  guidance,  consistent 
 with  the  policies  established  in  this  Order. 

 227.  Our  approach  to  subloop  unbundling  reflects  the  network  as  it  exists  today. 
 Technology  may  develop,  however,  in  ways  that  would  render  this  approach  too  limiting. 
 For  that  reason,  we  establish  a  further  rebuttable  presumption  that,  once  one  state  has 
 determined  that  it  is  technically  feasible  to  unbundle  subloops  at  a  designated  point,  it  will 
 be  presumed  that  it  is  technically  feasible  for  any  incumbent  LEC,  in  any  other  state,  to 
 unbundle  the  loop  at  the  same  point  everywhere.  If  the  conditions  surrounding  a  request 
 for  unbundling  at  a  similar  point  differ  to  such  an  extent  that  it  is  not  technically  feasible 
 for  the  incumbent  to  provide  unbundled  access  to  that  subloop  element,  the  incumbent 
 will  have  the  burden  of  demonstrating  in  a  section  252  arbitration  proceeding  that  such  an 
 arrangement  is  indeed  not  technically  feasible  under  those  different  conditions.  For 
 example,  Texas  requires  subloop  unbundling  at  the  remote  terminal.  445  If  a  competitive 
 LEC  seeks  unbundled  access  to  a  subloop  at  the  remote  terminal  from  an  incumbent  LEC 
 in  New  York,  the  burden  rests  with  the  New  York  incumbent  LEC  to  prove  that  its  own 
 situation  differs  to  such  an  extent  that  the  Texas  arrangement  is  not  technically  feasible. 
 We  believe  that  this  best  practices  approach  insures  that  incumbent  LECs  do  not  limit 
 access  to  subloops  based  on  unforeseeable  technological  and  infrastructure  developments. 

 228.  In  addition  to  arguing  that  remote  terminals  will  in  some  cases  be 
 inaccessible,  SBC  also  argues  that,  by  separating  feeder  plant  from  distribution  plant,  the 
 ability  to  perform  mechanized  testing  and  monitoring  of  the  loop  from  the  incumbents 

 442  The  incumbent  is  obligated  to  construct  the  single  point  of  interconnection  whether  or  not  it 
 controls  the  wiring  on  the  customer  premises. 
 443  See  47  U.  S.  C.    252 

 444  See  generally  Competitive  Networks  Notice  at  paras.  49-  51  and  65-  67. 
 445  Texas  PUC  Comments  at  15-  16.  We  note  that  Texas  determined  that  the  RT  itself  would 
 not  be  part  of  the  unbundled  subloop.  To  protect  the  public  interest,  Texas  places  other  limitations  on  its 
 unbundling  requirement.  Id. 
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 Federal  Communications  Commission  FCC  99-  238 
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 switch  would  be  lost.  446  We  do  not  believe  that  this  technical  issue  precludes  us  from 
 establishing  unbundling  obligations  for  subloops.  Once  the  competitor  has  acquired  the 
 customer  from  the  incumbent,  the  competitor  will  have  the  incentive  to  ensure  that  there 
 is  a  method  by  which  the  customers  loop  can  be  tested.  The  technical  method  by  which 
 this  testing  is  accomplished  is  a  matter  for  the  parties  to  decide  through  negotiations.  If 
 the  incumbent  can  demonstrate  to  the  satisfaction  of  the  state  regulatory  commission  that 
 it  would  incur  increased  expenses  associated  with  testing  the  subloop  network  element, 
 we  presume  such  expenses  would  be  included  in  the  forward-  looking  price  of  the 
 element.  447  For  similar  reasons,  we  reject  the  argument  that  subloop  unbundling  is  not 
 feasible  because  it  may  create  additional  administrative  costs.  448 

 229.  Accordingly,  we  are  not  persuaded  by  incumbents  arguments  that  technical 
 feasibility  issues  require  us  to  find  that  subloops  are  not  subject  to  the  unbundling 
 obligations  of  the  Act.  We  note  that  incumbent  LECs  advanced  similar  arguments  against 
 collocation  at  central  offices;  we  continue  to  reject  those  arguments  in  the  subloop  context 
 as  well.  449  To  the  extent  disputes  arise  over  the  feasibility  of  interconnecting  at  various 
 points  on  the  loop,  states  will  address  these  issues  as  part  of  the  arbitration  process  under 
 section  252. 

 C.  Network  Interface  Devices  (NIDs) 

 1.  Background 
 230.  In  the  Local  Competition  First  Report  and  Order,  the  Commission 
 concluded  that  incumbent  LECs  must  offer  unbundled  access  to  the  network  interface 
 device  (NID).  450  It  defined  the  NID  network  element  as  a  cross-  connect  device  used  to 
 connect  loop  facilities  to  inside  wiring.  451  In  that  order,  the  Commission  noted  that  a 
 competitor  deploying  its  own  loops  must  be  able  to  connect  those  loops  to  customers 
 inside  wiring  in  order  to  provide  service,  especially  to  customers  in  multi-  tenant 
 buildings.  The  Commission  also  concluded  that  a  requesting  carrier  is  entitled  to  connect 
 its  loops,  via  its  own  NID,  to  the  incumbent  LECs  NID.  452 

 446  SBC  Comments  at  31. 
 447  See  47  U.  S.  C    252(  d). 
 448  See,  e.  g.,  GTE  Reply  Comments  at  76. 
 449  See,  e.  g.,  Expanded  Interconnection  Order,  7  FCC  Rcd  7369;  Advanced  Services  First 
 Report  and  Order  and  FNPRM,  14  FCC  Rcd  4761. 
 450  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15697,  para.  392. 

 451  Id.  at  15697,  para.  392,  n.  852. 
 452  Id.  at  15697,  para.  392. 
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 Federal  Communications  Commission  FCC  99-  238 
 107 
 231.  In  the  Notice,  we  sought  comment  on  application  of  the  necessary  and 
 impair  standards  of  section  251(  d)(  2)  to  the  network  elements  previously  identified  in 
 the  Local  Competition  First  Report  and  Order,  including  the  NID.  453  Incumbent  LECs 
 argue  that  NIDs  are  off-  the-  shelf  devices  that  can  be  purchased  inexpensively.  454 
 Competitive  LECs  argue  that  self-  provisioning  the  NID  is  economically  impracticable  at 
 the  level  of  ubiquity  needed  to  deploy  service  on  a  widespread  basis.  455 

 2.  Discussion 
 232.  We  conclude  that  lack  of  unbundled  access  to  the  incumbents  NID  impairs 
 the  ability  of  requesting  carriers  to  provide  the  services  that  they  seek  to  offer.  As 
 described  below,  we  conclude  that  the  competitors  ability  to  self-  provision  NIDs  does 
 not  constitute  a  viable  alternative  to  unbundled  access  to  the  incumbents  NID  element. 
 Although  the  physical  structure  of  the  NID  is  widely  available,  it  is  access  to  the  function, 
 rather  than  the  hardware  itself,  that  competitors  rely  upon.  The  record  indicates  that 
 requiring  a  requesting  carrier  to  self-  provision  NIDs  for  all  customers  it  seeks  to  serve 
 would  materially  raise  the  cost  of  entry,  delay  broad  facilities-  based  market  entry,  and 
 materially  limit  the  scope  and  quality  of  the  competitors  service  offerings.  456 
 Accordingly,  we  require  incumbent  LECs  to  provide  unbundled  access  to  NIDs 
 nationwide. 

 a.  Definition  of  the  NID 

 233.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  defined 
 the  NID  as  a  cross-  connect  device  used  to  connect  loop  facilities  to  inside  wiring.  We 
 modify  that  definition  of  the  NID  to  include  all  features,  functions,  and  capabilities  of  the 
 facilities  used  to  connect  the  loop  distribution  plant  to  the  customer  premises  wiring, 
 regardless  of  the  particular  design  of  the  NID  mechanism.  Specifically,  we  define  the 
 NID  to  include  any  means  of  interconnection  of  customer  premises  wiring  to  the 
 incumbent  LECs  distribution  plant,  such  as  a  cross-  connect  device  used  for  that 
 purpose.  457 

 234.  We  conclude  that  the  NID  definition,  for  the  purposes  of  our  unbundling 
 analysis,  should  be  flexible  and  technology-  neutral.  The  Commissions  rules  permit 

 453  Notice  at  paras.  31-  33. 
 454  See,  e.  g.,  GTE  Comments  at  56. 
 455  See,  e.  g.,  MCI  WorldCom  Comments  at  47;  MGC  Comments  at  20;  Net2000  Comments  at 
 12-  13;  Rhythms  Comments  at  18. 
 456  See,  e.  g.,  Cable  and  Wireless  Comments  at  34-  35;  Choice  One  Joint  Comments  at  19; 
 CoreComm  Comments  at  31. 
 457  As  we  discuss  at  Section  (V)(  A)  supra,  where  we  define  the  loop,  the  loop  may  terminate  at 
 the  NID,  before  the  NID,  or  beyond  the  NID. 
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 108 
 considerable  variation  in  the  interconnection  facilities  between  carrier  and  customer-controlled 
 facilities.  458  Furthermore,  evolution  in  network  design  and  technology  will 
 likely  cause  additional  design  variations  among  the  hardware  interfaces  between  carrier 
 and  customer  premises  facilities.  Accordingly,  we  define  the  NID  broadly  to  ensure  that 
 competitors  will  be  able  to  obtain  access  to  any  of  these  facilities  as  an  unbundled 
 network  element.  Our  intention  is  to  ensure  that  the  NID  definition  will  apply  to  new 
 technologies,  as  well  as  current  technologies,  and  to  ensure  that  competitors  will  continue 
 to  be  able  to  access  customer  premises  facilities  as  an  unbundled  network  element,  as 
 long  as  that  access  is  required  pursuant  to  section  251(  d)(  2)  standards. 

 235.  We  decline  to  adopt  parties  proposals  to  include  the  NID  in  the  definition 
 of  the  loop.  459  Similarly,  we  reject  arguments  that  we  should  include  inside  wiring  in  the 
 definition  of  the  NID  in  order  to  permit  facilities-  based  competitors  access  to  inside 
 wiring.  460  Although  competitors  may  choose  to  access  the  inside  wire  via  the  NID,  in 
 some  circumstances  they  may  choose  to  access  the  inside  wire  at  another  point,  such  as 
 the  minimum  point  of  entry.  By  continuing  to  identify  the  NID  as  an  independent 
 unbundled  network  element,  we  underscore  the  need  for  the  competitive  LEC  to  have 
 flexibility  in  choosing  where  best  to  access  the  loop.  Competitors  purchasing  a  subloop  at 
 the  NID,  however,  will  acquire  the  functionality  of  the  NID  for  the  subloop  portion  they 
 purchase.  We  therefore  find  no  need  to  include  inside  wiring  in  the  definition  of  the  NID, 
 or  to  include  the  NID  as  part  of  any  other  subloop  element. 

 b.  Proprietary  Concerns  Associated  with  the  NID 

 236.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  did  not 
 identify  any  proprietary  concerns  associated  with  NIDs.  461  No  parties  in  this  proceeding 
 identify  any  proprietary  concerns  associated  with  the  NID,  and  we  find  none.  We 
 therefore  apply  the  impair  standard  of  section  251(  d)(  2)(  A)  to  determine  whether  NIDs 
 are  subject  to  the  unbundling  obligations  of  the  Act. 

 c.  Unbundling  Analysis 

 458  See  47  C.  F.  R.    68.3,  68.104,  68.213,  68.215. 
 459  See  Cable  &  Wireless  Comments  at  34;  Choice  One  Joint  Comments  at  19;  KMC 
 Comments  at  18;  MCI  WorldCom  Comments  at  45,  47;  MGC  Comments  at  19;  Qwest  Comments  at  67. 
 460  See  Cable  &  Wireless  Comments  at  34-  35;  CompTel  Comments  at  36. 

 461  In  the  Local  Competition  First  Report  and  Order,  the  Commission  concluded  that 
 incumbent  LECs  must  offer  unbundled  access  to  the  NID,  as  a  network  element.  Local  Competition  First 
 Report  and  Order,  11  FCC  Rcd  at  15697,  para.  392. 

 461  In  that  phase  of  the  proceeding,  the  Commission  noted  that  a  competitor  deploying  its  own 
 loops  must  be  able  to  connect  those  loops  to  customers'  inside  wiring  in  order  to  provide  service,  especially  in 
 multi-  tenant  buildings.  The  Commission  therefore  concluded  that  a  requesting  carrier  is  entitled  to  connect  its 
 loops,  via  its  own  NID,  to  the  incumbent  LEC's  NID.  Local  Competition  First  Report  and  Order,  11  FCC 
 Rcd  at  15697,  para  392. 
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 237.  We  find  that  lack  of  access  to  the  NID  would  materially  diminish  a 
 competitors  ability  to  provide  the  services  it  seeks  to  offer.  In  particular,  we  find  that 
 requesting  carriers  would  be  impaired  without  access  to  NIDs  because  self-  provisioning 
 NIDs  would  materially  raise  entry  costs,  delay  broad  facilities-  based  entry,  and  materially 
 limit  the  scope  and  quality  of  the  competitors  service  offerings.  462  Accordingly,  we 
 require  incumbent  carriers  to  provide  unbundled  access  to  their  NIDs  nationwide. 
 Specifically,  an  incumbent  LEC  must  permit  a  requesting  carrier  to  connect  its  own  loop 
 facilities  to  the  inside  wire  of  the  premises  through  the  incumbent  LECs  network 
 interface  device,  or  at  any  other  technically  feasible  point,  to  access  the  inside  wire 
 subloop  network  element. 

 238.  Cost  and  Timeliness.  We  agree  with  those  commenters  that  maintain  that 
 there  are  no  economic  or  practical  alternatives  to  the  NID  that  would  otherwise  enable 
 requesting  carriers  to  provide  service.  463  NIDs  are  individually  dedicated  to  specific 
 customer  premises,  and  are  often  difficult  to  replace.  Requesting  carriers  ability  to 
 provide  service  to  their  customers  would  be  materially  diminished  if  they  had  to  self 
 provision  NIDs  because  of  the  significant  labor  and  construction  costs  involved  in  visiting 
 the  premises  of  each  customer  and  installing  the  device.  This  is  true  for  all  customers,  but 
 is  particularly  evident  for  residential  and  small  business  markets  because  of  the  greater 
 number  of  NIDs  required  to  provide  service  to  each  customer.  464  We  therefore  conclude 
 that  requiring  competitors  to  install  numerous,  redundant  NIDs  at  the  interface  to 
 customer  premises  wiring  would  constitute  a  substantial  economic  and  practical  barrier  to 
 market  entry,  and  a  needless  waste  of  carrier  resources. 

 239.  Ubiquity.  We  conclude  that  self-  provisioning  NIDs  is  not  economically 
 practical  at  the  level  of  ubiquity  at  which  incumbent  LECs  NIDs  are  currently  deployed. 
 We  disagree  with  GTEs  argument  that  the  NID  should  not  be  unbundled  because  the 
 hardware  is  inexpensive  and  available  from  a  multitude  of  non-  incumbent  LEC  sources. 
 Specifically,  GTE  claims  that  the  NID  hardware  costs  between  $25  and  $40,  and  that 
 requesting  carriers  can  purchase  NIDs  from  the  same  sources  that  incumbent  LECs  use.  465 
 We  do  not  find  that  the  cost  and  availability  of  NID  hardware  is  dispositive  of  the  need  to 
 unbundle  access  to  incumbent  LEC-  installed  NIDs.  As  with  other  network  elements,  in 
 conducting  our  unbundling  analysis  under  section  251(  d)(  2),  we  do  not  consider  the  cost 
 and  availability  of  network  elements  in  isolation.  Rather,  we  examine  whether,  after 
 applying  the  factors  we  explained  in  the  unbundling  standard  above,  a  requesting  carrier 

 462  See  supra  Section  (IV)(  B)(  4). 
 463  See  Choice  One  Joint  Comments  at  19;  CoreComm  Comments  at  31;  MGC  Comments  at 
 20;  KMC  Comments  at  18;  Net2000  Comments  at  12-  13;  Rhythms  Comments  at  18. 
 464  See  Cable  and  Wireless  Comments  at  33-  34;  Choice  One  Joint  Comments  at  19; 
 CoreComm  Comments  at  31;  KMC  Comments  at  18;  Level  3  Comments  at  17;  MCI  WorldCom  Comments 
 at  47. 

 465  GTE  Comments  at  56. 
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 is  able,  as  a  practical,  economic,  and  operational  matter,  to  use  alternatives  for  the 
 incumbents  network  elements.  Although  the  record  indicates  that  NID  hardware  may  be 
 available  from  alternative  sources  and  that  NIDs  are  affordable  individually,  it  is  the 
 aggregate  cost  and  difficulty  of  installing  duplicate  NIDs  at  every  potential  customer 
 location  that  substantially  impairs  a  requesting  carrier  from  offering  services.  466 

 240.  Goals  of  the  Act.  Access  to  unbundled  NIDs  furthers  the  Acts  goals  of 
 promoting  innovation,  the  rapid  introduction  of  competition,  and  the  development  of 
 facilities-  based  competition.  If  requesting  carriers  can  reduce  their  reliance  on  the 
 incumbent  by  interconnecting  their  own  facilities  closer  to  the  customer,  their  ability  to 
 provide  services  using  their  own  facilities  will  be  greatly  enhanced,  thereby  furthering  the 
 goal  of  the  1996  Act  to  promote  facilities-  based  competition.  We  find  that  the  availability 
 of  unbundled  NIDs  will  accelerate  the  development  of  alternative  networks,  because  it 
 will  allow  requesting  carriers  efficiently  to  connect  their  facilities  with  the  incumbents 
 loop  plant.  Thus,  our  decision  to  unbundle  NIDs  is  consistent  with  the  1996  Acts  goals 
 of  rapid  introduction  of  competition  and  the  promotion  of  facilities-  based  entry.  We 
 recognize  that  there  may  be  situations  where  a  competitive  LEC  could  successfully  self-provision 
 NIDs.  We  find,  however,  that  the  benefits  of  unbundling  the  NID  on  a 
 nationwide  basis  outweigh  the  costs  of  creating  a  patchwork  regime  in  which  incumbents 
 will  seek  to  litigate  whether  particular  NIDs  should  be  unbundled  or  whether  an 
 alternative  to  the  incumbent  LECs  NID  is  arguably  available  as  a  practical,  economic, 
 and  operational  matter. 

 D.  Local  Switching 

 1.  Local  Circuit  Switching 
 a.  Background 

 241.  In  the  Local  Competition  First  Report  and  Order,  the  Commission 
 concluded  that  incumbent  LECs  must  provide  local  circuit  switching  as  an  unbundled 
 network  element.  467  The  Commission  found  that  denying  access  to  the  local  circuit 
 switching  element  would  substantially  impair  the  ability  of  many  competing  carriers  to 
 provide  switched  telecommunications  services.  468 

 242.  In  the  Notice,  we  sought  comment  on  the  application  of  the  necessary  and 
 impair  standards  to  previously  identified  unbundled  network  elements,  including  the 
 switch.  469  The  Notice  requested  that  parties  include  specific  costs  and  an  analysis  of  the 
 availability  of  alternative  sources  of  switching.  470 

 466  See  MCI  WorldCom  Comments  at  47;  MGC  Comments  at  20. 
 467  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15602,  para.  197. 
 468  Id. 
 469  Notice  at  para.  32. 
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 243.  Incumbent  LECs  argue  that  a  market-  by-  market  analysis  of  the  availability 
 of  local  circuit  switching  requires  a  finding  that  requesting  carriers  are  not  impaired 
 without  access  to  unbundled  switching  in  certain  areas.  471  Conversely,  a  number  of 
 requesting  carriers  argue  that  they  are  impaired  without  unbundled  local  circuit  switching 
 nationwide  primarily  because  of  the  operational  impairment  associated  with  obtaining 
 collocation  and  coordinated  hot  cuts.  472  We  note  also  that  at  least  nine  of  the  eleven  states 
 participating  in  this  proceeding  agree  that  the  Commission  should  unbundle  local  circuit 
 switching.  473 

 b.  Discussion 
 (i)  Definition  of  Local  Circuit  Switching 

 244.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  defined 
 local  circuit  switching  as  including  the  basic  function  of  connecting  lines  and  trunks.  474 
 In  addition  to  line-  side  and  trunk-  side  facilities,  the  definition  of  the  local  switching 
 element  encompasses  all  the  features,  functions  and  capabilities  of  the  switch.  475  With  the 
 exception  of  MCI  WorldCom,  no  commenter  proposes  that  we  modify  the  current 
 definition  of  local  switching.  We  disagree  with  MCI  WorldCom,  and  find  no  reason  to 
 alter  our  current  definition  of  local  circuit  switching. 

 245.  MCI  WorldCom  proposes  that  we  modify  our  definition  of  local  circuit 
 switching  to  omit  the  line-  side/  trunk-  side  distinction  in  favor  of  a  technologically-  neutral 

 470  Id.  at  para.  33. 
 471  Ameritech  Comments  at  5;  BellSouth  Comments  at  56;  Bell  Atlantic  Comments  at  23;  GTE 
 Comments  at  39;  SBC  Comments  at  42;  USTA  Comments  at  34;  US  WEST  Comment  at  44. 
 472  AT&  T  Comments  at  86;  Cable  &  Wireless  Comments  at  36;  KMC  Comments  at  15; 
 Net2000  Comments  at  13;  Qwest  Comments  at  70;  Sprint  Comments  at  31. 
 473  California  PUC  at  4,5;  Connecticut  PUC  Comments  at  4,5;  Florida  PSC  Comments  at  7; 
 Illinois  Commission  Comments  at  11,  12-  13;  Iowa  Comments  at  6-  7,  8;  Kentucky  PSC  Comments  at  2;  New 
 York  DPS  Comments  at  2,  4;  Texas  PUC  Comments  at  14;  Washington  UTC  Comments  at  11.  But  see  Ohio 
 PUC  Comments  at  8. 

 474  See  Local  Competition  First  Report  and  Order,  11  FCC  Rcd.  at  15706,  para.  412.  The  line-side 
 switch  facilities  include  the  connection  between  a  loop  termination  at,  for  example,  a  main  distribution 
 frame  (MDF),  and  a  switch  line  card.  Trunk-  side  facilities  include  the  connection  between  trunk  termination 
 at  a  trunk-  side  cross-  connect  panel  and  a  trunk  card.  The  features,  functions,  and  capabilities  of  the  local 
 switch  include  the  basic  switching  function  of  connecting  lines  to  lines,  lines  to  trunks,  trunks  to  lines  and 
 trunks  to  trunks. 

 475  Id.  The  local  switching  element  includes  all  vertical  features  that  the  switch  is  capable  of 
 providing,  including  customized  routing  functions,  CLASS  features,  Centrex  and  any  technically  feasible 
 customized  routing  functions.  Custom  calling  features,  such  as  call  waiting,  three-  way  calling,  and  call 
 forwarding,  are  switch-  based  calling  functions.  CLASS  features,  such  as  caller  ID,  are  number  translation 
 services  that  are  based  on  the  availability  of  interoffice  signaling. 
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 definition  that  connects  loop  access  points  and  transport  access  points  to  the 
 switching  facility,  regardless  of  whether  a  given  switch  has  equipment  that  could  be 
 identified  as  line  port  cards  or  trunk  port  cards.  MCI  WorldCom  suggests  that  we  should 
 take  into  account  the  increasing  use  of  switches  to  connect  to  facilities  other  than  home 
 run  copper  loops,  including  DLCs.  476  We  cannot  find,  on  the  basis  of  the  record  before  us, 
 that  incumbent  LEC  circuit  switching  technologies  have  changed  in  such  a  way  as  to 
 warrant  modification  of  our  circuit  switching  definition.  477  Furthermore,  adopting  MCI 
 WorldComs  proposed  changes  could  require  state  commissions  to  re-  evaluate  their 
 current  pricing  analysis  of  unbundled  circuit  switching.  Replacing  the  existing  definition 
 of  switching  with  loop  access  points  or  the  switching  facility  could  lead  to 
 uncertainty  and  different  cost  determinations  in  state  pricing  proceedings.  We  find  no 
 procompetitive  basis  on  which  to  require  states  to  modify  their  settled  state  proceedings 
 that  have  addressed  forward-  looking  pricing  for  unbundled  switching.  Accordingly,  we 
 decline  to  modify  our  definition  of  local  circuit  switching. 

 (ii)  Proprietary  Concerns  Associated  With  Local  Circuit  Switching 

 246.  We  conclude  that  incumbent  LECs  may  not  withhold  access  to  switch 
 routing  tables  as  part  of  the  unbundled  local  circuit  switching  element  under  section 
 251(  d)(  2)(  A).  With  the  exception  of  Ameritech,  no  commenter  identifies  any  proprietary 
 concerns  associated  with  local  circuit  switching.  478  Ameritech  argues  that,  if  we  conclude 
 that  local  switching  qualifies  as  an  unbundled  network  element,  we  should  decline  to 
 require  incumbent  LECs  to  make  their  switch  routing  tables  available  to  requesting 
 carriers  because  these  tables  are  proprietary,  within  the  meaning  of  section 
 251(  d)(  2)(  A).  479  According  to  Ameritech,  routing  tables  are  part  of  the  computer 
 software  that  instructs  a  switch  how  to  route  network  traffic,  and  contain  extremely 
 valuable  information  that  is  not  necessary  to  a  requesting  carrier  under  section 
 251(  d)(  2)(  A).  480  Ameritech  further  argues  that  its  routing  tables  meet  the  legal 
 requirements  for  trade  secret  protection  from  unauthorized  disclosure.  481 

 476  MCI  WorldCom  Comments  at  56-  58.  A  loop  that  connects  an  end  office  to  an  end  users 
 premises  is  sometimes  referred  to  as  a  home  run  copper  loop. 
 477  For  example,  in  response  to  MCI  WorldComs  proposal,  Ameritech  asserted  that  its 
 switching  technology  has  not  changed  to  warrant  a  modification  to  the  local  circuit  switching  rule.  See  Letter 
 from  John  T.  Lenahan,  Assistant  General  Counsel,  Ameritech,  to  Magalie  R.  Salas,  Secretary,  Federal 
 Communications  Commission,  CC  Docket  96-  98  at  3-  4  (filed  July  30,  1999)  (Ameritech  Jul.  30,  1999  Ex 
 Parte). 

 478  Ameritech  Comments  at  85. 

 479  Id. 
 480  Id. 
 481  See  Ameritech  July  30,  1999  Ex  Parte  at  4. 
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 247.  Ameritech  contends  that,  because  it  has  invested  resources  in  creating 
 economic  value  in  its  routing  tables,  and  it  takes  reasonable  steps  to  protect  its  routing 
 tables  from  unauthorized  disclosure,  switch  routing  tables  meet  the  general  requirements 
 for  trade  secret  protection.  482  No  opposing  party  addresses  whether  Ameritechs  routing 
 table  meets  the  legal  requirements  for  trade  secret  protection.  CompTel  avers  that  switch 
 routing  tables  merely  perform  a  function  that  allows  a  switch  to  operate  in  a  network,  and 
 as  such,  switch  routing  tables  are  not  proprietary  and  should  be  included  within  the 
 unbundled  switching  element.  483  On  the  basis  of  Ameritechs  uncontested  assertion  that 
 its  routing  tables  qualify  for  trade  secret  protection,  we  find  that  Ameritechs  routing  table 
 may  qualify  for  trade  secret  protection.  Thus,  it  appears  that  the  routing  aspect  of  the 
 local  circuit  switching  element  may  be  proprietary. 

 248.  The  Necessary  Standard.  As  previously  discussed,  there  are  several 
 circumstances  which,  if  they  exist  with  respect  to  information  or  functionalities  that  the 
 incumbent  LEC  claims  are  proprietary,  will  permit  us  to  order  unbundling  of  the 
 proprietary  information  or  functionality  even  if  such  unbundling  is  not  strictly 
 necessary.  Access  to  the  incumbent  LECs  routing  tables  may  be  necessary  for  some 
 carriers  because  they  would  be  precluded,  as  an  economic  matter,  from  providing  service 
 to  certain  classes  of  customers  if  they  were  forced  to  self-  provision  their  own  routing 
 tables.  Requesting  carriers  would  be  economically  precluded  from  providing  service 
 because  of  the  costs  associated  with  developing  their  own  routing  tables  and  the 
 additional  non-  recurring  and  administrative  costs  of  substituting  dedicated  transport 
 unbundled  network  elements  for  shared  transport.  484  As  we  found  in  the  Local 
 Competition  Third  Reconsideration  Order,  the  high  costs  that  requesting  carriers  would 
 incur  without  access  to  shared  transport  would  deter  entry  and  impose  significant  costs  on 
 new  entrants  without  any  corresponding,  direct  benefits.  485 

 249.  Even  if  it  is  not  strictly  necessary  for  all  carriers  to  have  access  to  the 
 incumbent  LECs  routing  tables,  we  find  that  they  should  be  required  to  unbundle  them 
 because  two  of  the  three  circumstances  that  we  identified  previously  exist,  and  because 
 requesting  carriers  would  be  impaired  without  access  to  routing  tables  as  part  of  the 
 unbundled  local  circuit  switching  element. 

 250.  Specifically,  we  find  that  it  is  unlikely  that  Ameritech  will  compete  for  end-user 
 customers  based  on  the  ability  to  send  a  call  to  an  appropriate  destination,  or  that  its 

 482  See  id.  at  2. 
 483  CompTel  Reply  Comments  at  15. 
 484  See  Implementation  of  the  Local  Competition  Provision  in  the  Telecommunications  Act  of 
 1996,  Third  Order  on  Reconsideration  and  Further  Notice  of  Proposed  Rulemaking,  12  FCC  Rcd  12460, 
 12486-  87,  para.  50  (1997)  (Local  Competition  Third  Reconsideration  Order)  ([  W]  e  concluded  that  the 
 relative  costs  of  dedicated  transport,  including  the  associated  NRCs  [Non-  recurring  charges],  is  an 
 unnecessary  barrier  to  entry  for  competing  carriers.) 

 485  Id.  at  12481,  para.  34. 
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 routing  tables  allow  it  to  differentiate  its  services  from  its  competitors  services.  As  we 
 stated  above,  information  or  functionalities  that  do  not  distinguish  an  incumbent  LECs 
 service  from  that  of  its  competitors  services  are  unlikely  to  be  the  focus  of  an  incumbent 
 LECs  efforts  to  innovate,  and  therefore  do  not  require  the  higher  level  of  protection 
 normally  afforded  to  proprietary  elements  under  the  necessary  standard. 

 251.  Moreover,  we  find  that  incumbent  LECs  may  not  withhold  access  to  switch 
 routing  tables  as  part  of  the  unbundled  local  switching  element  because  doing  so  would 
 jeopardize  the  goal  of  the  1996  Act  to  bring  rapid  competition  to  the  greatest  number  of 
 customers.  One  of  the  most  essential  functions  a  switch  performs  is  to  provide  routing 
 information  that  sends  a  call  to  the  appropriate  destination.  486  Requiring  requesting 
 carriers  to  engage  in  the  potentially  lengthy  process  of  compiling  traffic  studies  and 
 populating  routing  tables  with  data  in  the  incumbent  LECs  unbundled  switch  would 
 frustrate  a  requesting  carriers  ability  to  use  unbundled  local  circuit  switching  to  serve 
 customers  quickly. 

 252.  As  described  below,  we  conclude  that  carriers  would  be  impaired  without 
 access  to  routing  tables  as  part  of  the  unbundled  local  circuit  switching  element. 
 Requesting  carriers  have  not  generally  deployed  self-  provisioned  local  circuit  switches  to 
 serve  the  mass  market.  487  We  conclude  that  requesting  carriers  are  impaired  without 
 access  to  unbundled  local  circuit  switching  to  serve  certain  customer  classes  in  discrete 
 geographic  areas.  We  therefore  order  incumbent  LECs  to  provide  access  to  unbundled 
 local  circuit  switching  in  these  circumstances.  488  We  note  that  requesting  carriers  will 
 request  unbundled  access  to  local  circuit  switching  when,  in  the  judgment  of  the 
 requesting  carrier,  the  costs  and  delays  associated  with  self-  provisioning  switching  do  not 
 warrant  purchase  and  installation  of  a  local  circuit  switch.  Accordingly,  because  of  the 
 circumstances  identified  above,  and  because  requesting  carriers  would  be  impaired 
 without  access  to  routing  tables  as  part  of  the  local  circuit  switching  element,  we  find  that 
 incumbent  LECs  may  not,  pursuant  to  section  251(  d)(  2)(  A),  withhold  access  to  switch 
 routing  tables. 

 (iii)  General  Unbundling  Analysis  for  Local  Circuit  Switching 

 253.  We  conclude  that,  as  a  general  matter,  unbundled  local  circuit  switching 
 meets  the  impair  standard  set  forth  in  section  251(  d)(  2).  Accordingly,  we  require 
 incumbent  LECs  to  provide  local  switching  as  an  unbundled  network  element.  Based  on 
 the  record,  we  find  that,  in  general,  lack  of  access  to  unbundled  local  switching  materially 
 raises  entry  costs,  delays  broad-  based  entry,  and  limits  the  scope  and  quality  of  the  new 

 486  Id.  at  12486-  87,  para.  45. 
 487  We  note  that  when  requesting  carriers  provide  service  to  end  users  with  self-  provisioned 
 switches,  they  do  not  rely  upon  the  incumbent  LECs  routing  table. 
 488  See  infra  Section  V(  D)(  1)(  b)(  iii)  (exception  to  national  unbundling  requirement  for  local 
 circuit  switching). 
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 entrants  service  offerings.  As  discussed  in  detail  below,  our  unbundling  analysis  focuses 
 upon  the  ability  of  a  requesting  carrier  to  self-  supply  switching  because  the  record  does 
 not  support  a  finding  that  requesting  carriers,  as  a  general  matter,  can  obtain  switching 
 from  carriers  other  than  the  incumbent  LEC.  489  We  find,  however,  that  an  exception  to 
 this  rule  is  required  under  certain  market  circumstances.  We  find  that,  where  incumbent 
 LECs  have  provided  nondiscriminatory,  cost-  based  access  to  combinations  of  loop  and 
 transport  unbundled  network  elements,  known  as  the  enhanced  extended  link  (EEL), 
 requesting  carriers  are  not  impaired  without  access  to  unbundled  switching  for  end  users 
 with  four  or  more  lines  within  density  zone  1  in  the  top  50  metropolitan  statistical  areas 
 (MSAs). 

 254.  Alternatives  Outside  the  Incumbents  Network.  As  of  March  1999, 
 approximately  167  different  competitors  have  deployed  approximately  700  switches 
 throughout  the  country.  490  According  to  USTA,  approximately  320  cities  are  served  by 
 at  least  one  competitive  switch.  491  SBC,  using  a  methodology  that  tracks  requesting 
 carriers  switches  by  examining  migration  of  lines  using  ported  numbers,  contends  that 
 within  the  50  largest  MSAs,  competitors  switches  currently  serve  approximately  75 
 percent  of  all  BOC  and  GTE  rate  exchange  areas.  492  Although  certain  requesting  carriers 
 argue  that  incumbent  LEC  statistics  are  not  precise,  493  the  record  indicates  that  a 
 significant  number  of  competitive  switches  have  been  deployed.  494  Our  examination  of 
 switching  investments  in  the  market  shows  that  requesting  carriers  have  self-  provisioned 
 a  significant  number  of  switches,  but  that  this  investment  represents  only  a  small  fraction 
 of  the  number  of  switches  deployed  by  the  incumbent  LECs. 

 489  See  TRA  Comments  at  34-  36  (citing  Appendix  II,  Report  of  the  Competitive 
 Communications  Group).  See  also,  Letter  from  Chuck  Goldfarb,  Director  Law  and  Public  Policy,  MCI 
 WorldCom  to  Larry  Strickling,  Chief,  Common  Carrier  Bureau,  Federal  Communications  Commission,  CC 
 Docket  No.  96-  98  (filed  August  9,  1999)  (MCI  WorldCom  August  9,  1999  Ex  Parte)  (  Wholesale  switching 
 markets  are  extremely  unlikely  to  develop  due  to  CLECs  desire  to  differentiate  their  product  offerings  by 
 self-  provisioning  their  own  switching  capability  wherever  feasible.). 

 490  USTA  UNE  Report  at  I-  1  (citing  Bellcore,  TR-  EQP-  000315,  Local  Exchange  Routing 
 Guide  (Mar.  1,  1999)). 
 491  USTA  UNE  Report  at  I-  1. 

 492  SBC  Comments  at  38. 
 493  At  the  end  of  1998,  ALTS  put  the  number  of  competitive  switches  at  667.  See  ALTS  Press 
 Release,  The  Telecommunications  Act  of  1996:  Progress  After  Three  Years,  January  21,  1999.  The 
 Competition  Policy  Institute  placed  the  number  of  competitive  switches  at  579  at  the  end  of  1999.  CPI  Reply 
 Comments  at  24  (citing  1999  CLEC  report,  The  10  th  Annual  Report  from  New  Paradigm  Resources  Group, 
 Inc.,  Table  7).  AT&  T  counters  that  inclusion  of  its  4ESS  switch  in  the  incumbent  LECs  count  is 
 inappropriate  because  these  switches  cannot  provide  certain  basic  aspects  of  local  phone  service.  AT&  T 
 Reply  Comments  at  96. 

 494  See,  e.  g.,  Ameritech  Comments  at  70-  71;  Bell  Atlantic  Comments  at  20-  21;  SBC 
 Comments  at  34-  35. 
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 255.  Since  the  Commission  adopted  the  Local  Competition  First  Report  and 
 Order,  competition  has  continued  to  develop  in  certain  geographic  markets,  particularly 
 for  large  business  customers  or  other  users  with  substantial  telecommunications  needs.  495 
 The  pattern  of  switch  deployment  by  competitors  suggests  that  the  costs  and  operational 
 delays  of  self-  provisioning  switching  do  not  preclude  requesting  carriers  from  serving 
 certain  customer  classes  in  certain  geographic  markets.  In  general,  however,  we  conclude 
 that  requesting  carriers  are  impaired  in  their  ability  to  provide  service  in  most  markets, 
 primarily  because  of  the  costs  of  self-  provisioning  switching  in  those  markets.  496  We  find 
 that  section  251(  d)(  2)(  B)  requires  consideration  not  simply  of  whether  denial  of  access  to 
 unbundled  switching  would  impair  a  competitors  ability  to  serve  the  high-  volume 
 business  market  that  many  requesting  carriers  are  already  serving,  but  whether  the 
 requesting  carrier  is  impaired  in  its  ability  to  provide  the  services  that  it  seeks  to  offer, 
 including  services  to  residential  and  small  business  markets.  Although  the  groundwork 
 for  residential  local  competition  is  evolving,  and  competition,  to  date,  has  focused  upon 
 users  with  substantial  telecommunications  needs,  we  do  have  some  evidence  that  some 
 requesting  carriers  will  seek  to  offer  residential  phone  service  to  the  mass  market  where 
 unbundled  switching  is  available.  497  Accordingly,  we  find  that  our  unbundling  analysis 
 should  take  into  account  the  possibility  that  carriers  will  offer  residential  service.  We  find 
 that,  taking  into  account  the  cost,  quality,  ubiquity  and  timeliness  factors  in  our  impair 
 standard  as  well  as  the  goals  of  the  Act,  lack  of  access  to  unbundled  switching  as  a 
 general  matter,  impairs  the  ability  of  a  requesting  carrier  to  provide  service  to  consumers. 

 256.  Incumbent  LECs  use  the  geographic  dispersion  of  deployed  local  circuit 
 switches  to  argue  for  a  geographic  or  market-  specific  approach  to  circuit  switch 
 unbundling.  498  Certain  incumbent  LECs  further  argue  that  the  presence  of  one 

 495  USTA  UNE  Report  at  I-  10-  19.  See  also  AT&  T  Reply  Comments  at  104  (  AT&  Ts  two 
 5ESS  switches  in  Dallas  .  .  .  are  not  being  used  to  reach  .  .  .  as  much  as  98  percent  .  .  .  of  the  addressable 
 business  and  residential  market  as  GTE  claims  is  the  case.  [citations  omitted].  Rather,  those  switches  like 
 AT&  Ts  DMS-  100  in  Washington,  D.  C.  are  being  used  to  offer  service  to  business  customers.  The  same  is 
 true  for  each  of  AT&  Ts  local  switching  in  other  markets,  such  as  Los  Angeles,  Denver,  Detroit  and 
 Tampa.);  Ameritech  Comments  at  73-  79;  BellSouth  Comments  at  58-  59;  GTE  Comments  at  40-  42,  46-  47; 
 SBC  Comments  at  36,38;  US  WEST  Comments  at  42-  43. 

 496  See  AT&  T  Reply  at  90;  CompTel  Comments  at  39;  MCI  WorldCom  Comments,  Tab  3, 
 Decl.  of  Mark  T.  Bryant,  paras.  14-  15  (MCI  WorldCom  Bryant  Decl). 
 497  See  supra  para.  126. 

 498  Ameritech  Comments  at  5-  6  (proposing  elimination  of  switch  unbundling  in  any  wire 
 center  in  which  collocation  is  available  and  throughout  rate  exchange  area  served  by  one  or  more  competitive 
 switches);  Bell  Atlantic  Comments  at  23  (proposing  elimination  of  switching  in  any  geographic  area  where 
 competitors  currently  provide  self-  provisioned  switching);  BellSouth  Comments  at  56  (proposing  national 
 market  for  elimination  of  switch  unbundling);  GTE  Comments  at  39-  42  (proposing  nationwide  elimination  of 
 switch  unbundling);  SBC  Comments  at  42  (proposing  elimination  of  switch  unbundling  in  rate  exchange 
 areas  served  by  one  switch);  USTA  Comments  at  34  (proposing  nationwide  elimination  of  switch  unbundling 
 requirement);  US  WEST  Comments  at  44  (proposing  presumption  of  elimination  of  switch  unbundling  within 
 50  miles  of  a  competitors  switch). 
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 competitors  switch  and  collocation  in  a  given  market  is  dispositive  of  whether  requesting 
 carriers  generally  will  be  impaired  without  access  to  unbundled  switching.  499  We  reject 
 this  argument.  Just  as  the  Supreme  Court  made  clear  that  the  impair  standard  is  not 
 triggered  by  any  increase  in  cost  or  decrease  in  quality,  we  find  that  switch  unbundling 
 cannot  turn  on  whether  a  single  carrier  has  self-  provisioned  switching.  The  fact  that  a 
 single  carrier  is  collocated  in  a  particular  central  office  and  is  not  using  unbundled 
 switching  does  not  conclusively  demonstrate  that  a  variety  of  carriers  can  self-  provision 
 switches  without  significant  cost  or  other  impediments  that  diminish  a  collocating 
 carriers  ability  to  provide  the  services  it  seeks  to  offer.  Indeed,  based  on  financial 
 analysts  reports  of  competitive  LECs  operations,  a  significant  number  of  requesting 
 carriers  currently  self-  provisioning  switches  are  not  generating  net  income  (i.  e., 
 profits).  500  Thus,  it  is  too  early  to  know  whether  self-  provisioning  is  economically  viable 
 in  the  long  run,  although  capital  markets  appear  to  be  supplying  requesting  carriers  with 
 access  to  capital  in  the  absence  of  demonstrated  profitability. 

 257.  Incumbent  LECs  have  provided  business  case  analyses  that  purport  to 
 demonstrate  that  a  requesting  carrier  could  expect  to  earn  profits  upon  entry  using  self-provided 
 switching  by  comparing  the  revenues  that  could  be  expected  from  self-provisioning 
 switching  with  the  full  costs  of  entry.  501  As  discussed  in  Section  IV  above, 
 we  favor  an  analytical  approach  that  considers  the  totality  of  the  circumstances  a 
 requesting  carrier  will  face,  rather  than  a  specific  business  case  analysis,  to  determine 
 whether  lack  of  access  to  particular  network  elements  materially  diminishes  a  requesting 
 carriers  ability  to  provide  the  services  it  seeks  to  offer.  Adopting  a  business  case 
 approach  would  require  the  Commission  to  conduct  a  detailed  analysis  of  the  profitability 
 of  entry  for  a  representative  firm  using  various  business  strategies  in  each  possible 
 market.  502  Such  an  approach  would  also  require  the  Commission  to  make  specific 

 499  Ameritech  Comments  at  5-  6,  84;  Bell  Atlantic  Comments  at  23;  BellSouth  Comments  at 
 56;  GTE  Comments  at  39;  SBC  Comments  at  42;  USTA  Comments  at  34;  US  WEST  Comment  at  44. 
 500  See,  e.  g.,  Mark  Kastan  and  Daniel  Reingold,  Telecom  Services  -  Local,  Merrill  Lynch  & 
 Co.,  June  3,  1999,  at  12,  13  (stating  that  of  the  10  competitive  LECs  that  are  primarily  facilities  based  (i.  e., 
 less  than  half  of  lines  are  through  resale),  only  four  of  those  are  EBITDA  positive  as  of  the  first  quarter  1999. 
 Of  the  rest,  Merrill  Lynch  expects  them  to  break  even  (turn  EBITDA  positive)  between  2000  and  2003.).  See 
 also  W.  Todd  Scott  and  David  J.  Bank,  Competitive  Local  Exchange  Carriers,  ING  Barings,  July  26,  1999,  at 
 9  (stating  that  ING  Barings  expects  some  CLECs  to  still  have  negative  earnings  in  2000  and  2001). 

 501  See  Ameritech  Comments,  Tab  B,  Aff.  of  William  L.  Fitzsimmons  (Ameritech 
 Fitzsimmons  Aff.);  USTA  Comments  at  34  (citing  Housman/  Sidak  study  of  unbundled  switching);  GTE 
 Comments,  Tab  B,  An  Analysis  of  Alternative  Network  Elements  Available  to  CLECs.  See  also  Letter 
 from  W.  Scott  Randolph,  Director,  Regulatory  Affairs,  GTE  Service  Corp.,  to  Magalie  R.  Salas,  Secretary, 
 Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  July  8,  1999)  (  PNR  and  Associates,  May 
 1999  Study). 

 502  The  Commission  would  need  to  carefully  evaluate  the  specific  assumptions,  both 
 concerning  costs  and  expected  revenues,  under  consideration.  Ameritech  included  a  study,  the  Fitzsimmons 
 study,  that  contains  a  number  of  weaknesses.  We  note  that  it  assumes  that  between  40%  and  60%  of  fiber 
 structure  costs  should  be  attributed  to  local  entry,  reflecting  the  fact  that  costs  can  be  shared  with  other 
 network  providers.  In  the  Universal  Service  proceeding,  after  much  discussion  by  all  parties,  sharing 
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 assumptions  regarding  the  competitors  business  model,  including  which  technology  a 
 competitor  would  choose  to  deploy,  which  market  a  competitor  would  choose  to  enter 
 (e.  g.,  business  and/  or  residential),  and  what  services  a  competitor  would  choose  to  offer. 
 In  addition,  a  business  case  approach  would  require  the  Commission  to  forecast  revenues 
 that  a  requesting  carrier  would  earn  if  it  entered  a  particular  market.  Whereas  the  actual 
 costs  of  network  elements  such  as  switches  are  quantifiable,  revenues  may  fluctuate 
 according  to  evolving  competitive  conditions  in  the  local  telecommunications  market. 

 258.  Although  we  do  not  adopt  an  approach  that  is  based  on  a  business  case 
 analysis  for  determining  whether  a  particular  entity  is  impaired,  we  do  make  several 
 general  observations  regarding  the  direct  cost  that  bear  on  a  requesting  carriers  decision 
 to  self-  provision  a  switch.  Fixed  costs  are  the  largest  portion  of  the  cost  of  a  switch.  The 
 average  cost  of  providing  service  to  customers  decreases  as  the  number  of  customers 
 served  increases.  As  a  general  rule,  we  find  that  scale  economies  are  more  pronounced 
 when  switches  operate  at  full  utilization.  Because  incumbent  LEC  switches  serve  the 
 majority  of  customers  for  local  exchange  service,  they  are  likely  to  be  able  to  take 
 advantage  of  substantially  greater  economies  of  scale  than  the  competitor  would  using  its 
 own  switches.  503  We  find  however,  that  facilities-  based  competitors  need  not  deploy 
 switches  in  exactly  the  same  network  configuration  as  an  incumbent,  thus  allowing 
 competitors  to  achieve  their  own  unique  and  competitive  efficiencies  by  deploying  their 
 own  switches.  504 

 259.  Cost.  We  find,  as  a  general  matter,  that  the  total  costs  of  self-  provisioning  a 
 switch  impose  on  the  requesting  carrier  a  significant  cost  disadvantage  relative  to  the 
 incumbent  LEC,  particularly  in  its  early  stages  of  entry.  We  emphasize  that  cost  is  only 
 one  factor  we  examine  in  our  impair  analysis.  The  evidence  of  circuit  switching  direct 
 costs  submitted  in  the  record  varies  significantly.  For  example,  incumbent  LECs  provide 
 evidence  that  the  direct  costs  to  competitors  of  self-  provisioning  switches  is  between 
 $100,000  and  $814,000  and  that  the  incremental  cost  is  between  $110  and  $146  per 

 percentages  of  from  55%  to  90%  for  underground  and  buried  plant  were  recommended.  The  Fitzsimmons 
 study  assumes  a  start-  up  cost  for  a  switch  of  $150,000  and  a  per  line  cost  of  $110.  In  contrast,  the 
 Commissions  universal  service  proceeding  has  assumed  corresponding  costs  of  $447,000  and  $83.  The 
 Fitzsimmons  study  uses  a  cost  of  capital  of  12%,  which  is  only  slightly  higher  than  the  value  of  11.25% 
 assumed  in  the  universal  service  context.  Since  a  competitor  would  be  unlikely  to  be  able  to  obtain  debt 
 financing  on  the  same  terms  as  an  established  incumbent,  the  competitive  cost  of  capital  should  perhaps 
 reflect  a  higher  proportion  of  equity  financing  or  a  higher  cost  of  debt.  In  either  case,  the  assumed  value  of 
 12%  may  be  an  underestimate  of  actual  capital  costs.  See  Ameritech  Fitzsimmons  Aff.  at  para.  20. 

 503  See  MCI  WorldCom  Bryant  Decl.  at  paras.  21-  22. 

 504  GTE  Reply  Comments,  Tab  B,  Reply  Declaration  of  Francis  J.  Murphy  at  7  (  based  on  the 
 latest  technology  options,  the  number  of  switches  required  to  serve  the  entire  country  [i]  s  4,200  (or  only  22% 
 of  the  current  number  of  total  switches))  (GTE  Murphy  Reply  Decl.);  California  PUC  Comments  at  4 
 (competitors  have  found  it  advantageous  to  have  their  switches  serve  a  much  larger  geographic  area  than 
 LEC  switches,  and  most  competitors  in  California  have  configured  their  networks  to  take  advantage  of  those 
 economies.). 
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 line.  505  AT&  T  counters  that  incumbent  LEC  models  exaggerate  the  efficiencies 
 associated  with  requesting  carrier  switches.  506  Independent  sources,  however,  estimate 
 the  fixed  cost  per  host  switch  to  be  $447,000  and  the  per-  line  cost  to  be  $83.  507  The 
 disparity  in  switching  costs  contained  in  the  record  appear  to  depend  on  the  technical 
 attributes  of  the  switch  at  issue.  The  more  critical  aspect  of  our  impair  analysis  is  not 
 the  costs  of  purchasing  a  local  circuit  switch,  but  rather  the  economies  of  scale  that  may 
 characterize  local  circuit  switching  and  the  additional  costs  that  requesting  carriers  incur 
 when  placing  their  self-  provisioned  switches  into  operation. 

 260.  We  find  that  incumbent  LECs  retain  material  scale  advantages  with  regard 
 to  provisioning  and  operating  local  circuit  switches.  Requesting  carriers  therefore  will 
 encounter  generally  greater  direct  costs  per  subscriber  when  provisioning  their  own 
 switches,  particularly  in  the  early  stages  of  entry  when  requesting  carriers  may  not  have 
 the  large  number  of  customers  that  is  necessary  to  increase  their  switch  utilization  rates 
 significantly.  When  we  examine  the  market  as  a  whole,  we  find  that  requesting  carriers 
 incur  higher  costs  due  to  their  inability  to  realize  economies  of  scale  using  circuit 
 switching  equipment.  We  find  that  the  scalability  of  a  switch  mitigates  but  does  not 

 505  GTE  submitted  evidence  to  show  that  the  HAI  model  (developed  by  AT&  T,  MCI)  run  with 
 the  host/  remote  option  enabled  produces  a  stand-  alone  fixed  host  switch  investment  of  between  $315,001  and 
 $855,003  and  a  per-  line  cost  between  $129  and  $124,  and  a  fixed  remote  switch  investment  cost  of  between 
 $17,143  and  $385,716  and  a  per-  line  cost  between  $120  and  $146  .  GTE  Comments  at  43  (citing  An 
 Analysis  of  Alternative  Network  Elements  Available  to  CLECs  at  21);  The  USTA  UNE  Report  provides 
 evidence  that  small  scale  circuit  switches  can  be  purchased  for  as  little  as  approximately  $100,000.  USTA 
 UNE  Report  at  I-  29,  n.  66.  MCI  WorldCom  contends  that  the  HAI  Model  bases  its  results  on  a  fixed  switch 
 investment  of  $242.73  per  line  for  Rocs  and  large  independent  telephone  companies  and  a  fixed  investment  of 
 $416.11  per  line  for  small  independent  telephone  companies,  including  additional  variable  costs  per  line 
 ranging  from  $140  to  $80  per  line  as  the  size  of  the  switch  increases.  MCI  WorldCom  Comments  at  51 
 (citing  Decl.  of  Mark  T.  Bryant,  at  para.  21).  Ameritechs  analysis  adopts  the  Universal  Service  Joint  Boards 
 assumption  that  start-  up  switch  costs  total  $150,000  with  an  incremental  cost  of  $110  per  line.  Ameritech 
 Fitzsimmons  Aff.  at  20.  CompTel  filed  an  Ex  Parte  describing  the  costs,  on  average,  of  installing  a  circuit 
 switch  as  several  million  dollars.  See  Letter  from  Carol  Ann  Bischoff,  Executive  Vice  President  and  General 
 Counsel,  CompTel,  to  Lawrence  E.  Strickling,  Chief,  Common  Carrier  Bureau,  Federal  Communications 
 Commission,  CC  Docket  96-  98  (filed  August  18,  1999)  (citing  Arias  Affidavit  at  para.  5;  Tidwell  Affidavit 
 May  26,  1999  at  para  5;  James  Affidavit  August  10,  1999  at  para  4;  Walker  Affidavit  at  para  4.);  SPR 
 Comments  at  6.  But  see  Comments  of  Bell  Atlantic  at  2,  filed  in  CC  Docket  No.  96-  45;  CC  Docket  No.  97- 
 160  (filed  July  23,  1999)  (stating  manufacturers  offer  very  large  discounts  on  initial  switch  purchases, 
 because  they  know  that  the  carrier  will  be  locked  in  to  the  same  manufacturer  for  additional  equipment, 
 which  can  be  priced  at  smaller  discounts.  Since  the  add-  ons  are  so  profitable,  the  competition  for  initial 
 switch  purchases  is  intense,  and  manufacturers  will  offer  fire  sale  prices  to  win  a  switch  replacement 
 contract.). 

 506  AT&  T  Reply  Comments  at  95,  Tab  A,  Aff.  of  Michael  R.  Baranowski/  John  C.  Klick/  Brian 
 F.  Pitkin,  at  para.  67)  (AT&  T  Baranowski  Reply  Aff.). 
 507  See  Commission  Takes  Action  to  Reform  Universal  Service  Support  for  Non-  Rural  Carriers 
 Providing  Service  in  High-  Cost  Areas  and  Commission  Adopts  Framework  for  Federal  Universal  Service 
 High-  Cost  Support  Mechanism;  Commission  Seeks  Comment  on  the  Input  Values  for  the  Forward-  Looking 
 Cost  Model,  CC  Docket  Nos.  96-  45;  96-  262;  97-  160,  FCC  No.  99-  17  (released  May  27,  1999)  1999  WL 
 345534  (FCC). 
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 eliminate  the  incumbent  LECs  scale  advantages  and  reduces  but  does  not  eliminate 
 competitors  sunk  costs  and  entry  barriers.  For  example,  it  is  generally  less  expensive  to 
 purchase  a  20,000  line  switch  rather  than  four  increments  of  5000  lines.  508  Furthermore, 
 the  advantages  of  incumbent  LEC  scale  economies  are  more  pronounced  when  requesting 
 carriers  provide  switch-  based  service  to  a  relatively  small  number  of  customers  through  a 
 self-  provisioned  switch.  509  For  example,  competitors  switching  costs  per  minute  at  a 
 10%  penetration  level  are  slightly  more  than  twice  the  cost  of  an  incumbent  LEC  serving 
 the  remaining  90%  of  the  market  with  its  own  switch.  510  We  find  that,  as  a  general 
 proposition,  requesting  carriers  will  incur  a  materially  greater  cost  when  self-  provisioning 
 switching  at  low  penetration  levels.  As  a  requesting  carriers  switch  utilization  rates 
 increase,  the  difference  between  the  switching  costs  incurred  by  competitive  and 
 incumbent  LECs  decreases,  but  the  impact  of  this  difference  does  not  become  irrelevant 
 in  the  impair  analysis  until  incumbent  LEC  and  competitors  switch  utilization  levels  are 
 more  comparable.  511  Market  facts  show  that  that  competitors  have  made  inroads  into  the 
 local  telecommunications  markets,  but  they  have  garnered  only  between  2.6  percent  to  5 
 percent  of  the  market  for  switched  telecommunications  services.  512  A  significant  portion 
 of  these  figures  represent  service  to  medium  and  large  business  customers,  rather  than  to 
 the  mass  market.  513  Accordingly,  we  find  that  as  a  general  matter,  requesting  carriers 

 508  See  Comments  of  Bell  Atlantic  at  9  filed  in  CC  Docket  No.  96-  45;  CC  Docket  No.  97-  160 
 (filed  July  23,  1999)  (stating  the  costs  per-  line  of  a  new  switch  is  significantly  below  the  costs  of  adding 
 capacity  to  an  existing  switch.).  See  also  Letter  from  Chuck  Goldfarb,  Director  Law  and  Public  Policy,  MCI 
 WorldCom  to  Jake  Jennings,  Special  Advisor,  Common  Carrier  Bureau,  Federal  Communications 
 Commission,  CC  Docket  No.  96-  98  (filed  September  1,  1999)  (arguing  that  for  a  20,000  line  switch  the 
 average  cost  per  line  is  $319  and  for  a  5,000  line  switch  the  average  cost  per  line  is  $462.). 

 509  Sprint  estimates  that  if  a  requesting  carrier  deploys  a  switch  capable  of  serving  100,000 
 access  lines  but  initially  only  serves  1000  access  lines,  the  cost  per  line  for  switching  is  roughly  $66,  whereas 
 if  the  incumbent  LEC  purchases  the  same  switch  at  the  same  cost  but  serves  50,000  lines,  it  would  have  a  per-line 
 cost  of  roughly  $4.55.  Should  the  requesting  carrier  purchase  a  smaller  switch,  Sprint  argues  that  if  the 
 requesting  carrier  served  10,000  lines  its  monthly  cost  for  switching  would  be  roughly  $27  per  line,  roughly 
 six  times  the  incumbent  LECs  cost  of  switching.  Sprint  Comments  at  29-  30.  See,  MCI  WorldCom 
 Comments  at  51(  Bryant  Decl.  at  paras.  25-  27). 

 510  MCI  WorldCom  Comments  at  51  (Citing  Bryant  Decl.  chart  11). 

 511  MCI  WorldCom  contends  that  at  10%  percent  market  penetration,  switching  costs  for  a 
 requesting  carrier  are  about  132%  above  incumbent  LEC  switching  costs  but  decrease  to  31%  above 
 incumbent  LEC  switching  costs  at  30%  penetration  levels.  See  MCI  WorldCom  Comments  at  51  (Bryant 
 Decl.  at  para.  30). 

 512  See  Bell  Atlantic  Reply  Comments,  Tab  2,  Decl.  of  Robert  W.  Crandall,  at  9.  (Bell  Atlantic 
 Crandall  Reply  Decl.)  NTIA  estimates  that  requesting  carriers  currently  serve  between  2  and  3  percent  of  all 
 local  access  lines.  NTIA  Comments  at  10  (citing  Council  of  Economic  Advisers,  Progress  Report:  Growth 
 and  Competition  in  U.  S.  Telecommunications  1993-  1998  8,  18  (February  8,  1999).  See  also  FCC  Local 
 Competition  Report  (finding  that  local  competitors  have  capture  5%  of  the  local  market). 

 513  See  Letter  from  Lori  Wright,  Senior  Manager,  Regulatory  Affairs,  MCI  WorldCom,  to 
 Magalie  R.  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98,  July  13,  1999. 
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 have  not  gained  sufficient  market  share  to  generate  switch  utilization  rates  and  economies 
 of  scale  comparable  to  the  incumbent  LEC,  particularly  to  serve  the  mass  market. 

 261.  We  recognize  that  switches  deployed  by  competitive  LECs  may  be  able  to 
 serve  a  larger  geographic  area  than  switches  deployed  by  the  incumbent  LEC,  thereby 
 reducing  the  direct,  fixed  cost  of  purchasing  circuit  switching  capacity  and  allowing 
 requesting  carriers  to  create  their  own  switching  efficiencies.  If  a  competitor  uses  a  single 
 switch  to  serve  a  rate  area  consisting  of  10-  15  incumbent  LEC  switches,  the  average 
 utilization  of  the  competitors  one  switch  can  be  as  high,  or  higher,  than  many,  or  even 
 all,  of  the  incumbent  LEC  switches.  This  dynamic  mitigates,  to  a  varying  degree, 
 incumbent  LEC  advantages  of  scale,  but  does  not  enable  competitive  LECs  to  achieve 
 comparable  scale  economies,  particularly  in  the  early  stages  of  entry.  514  Incumbent  LECs 
 contend  that  once  a  requesting  carrier  incurs  the  costs  to  deploy  a  switch,  it  can 
 economically  extend  the  reach  of  the  switch  to  serve  broader  markets.  We  find,  however, 
 that  switch  capacity,  distance-  sensitive  transport  costs,  and  collocation  costs  significantly 
 impair  a  requesting  carrier  from  fully  exploiting  this  market  entry  strategy.  We  note  that, 
 for  smaller  carriers,  an  inability  to  achieve  switching  scale  economies  may  have  greater 
 effect  upon  their  ability  to  offer  service  than  it  does  for  larger  carriers.  For  example,  TRA 
 contends  that,  without  access  to  unbundled  switching,  smaller  requesting  carriers  with 
 targeted  entry  plans  deploy  their  own  switch  to  serve  approximately  3,000  lines  will  incur 
 a  direct  additional  cost  of  $300,000  annually  without  access  to  unbundled  local 
 switching.  515  We  find  that  utilizing  unbundled  switching  is  likely  to  mitigate  this  early-stage 
 entry  barrier  and  is  consistent  with  Congress  intention  that  requesting  carriers  use 
 unbundled  network  elements  as  a  transitional  market  entry  strategy.  516 

 262.  We  find,  as  a  general  matter,  that  the  costs  of  self-  provisioning  switching 
 also  materially  diminish  a  requesting  carriers  ability  to  provide  the  services  it  seeks  to 
 offer.  Our  standard  recognizes  that  the  full  costs  of  using  self-  provisioned  circuit 
 switching  must  include  the  costs  incurred  by  a  competitor  to  substitute  its  local  circuit 
 switch  for  that  of  the  incumbent  LEC.  These  costs  include  the  costs  of  collocating  in  an 
 incumbent  LECs  central  office  from  which  the  requesting  carrier  accesses  unbundled 

 514  We  agree  with  AT&  T  that  even  if  a  competitors  switch  can  be  used  to  serve  customers 
 scattered  throughout  a  broad  geographic  area,  a  single  switch  would  still  lack  the  capacity  to  serve  a 
 significant  percentage  of  customers  in  all  but  the  most  sparsely  populated  areas.  AT&  T  Reply  Comments  at 
 97. 

 515  TRA  Comments  at  36. 

 516  Although  Congress  did  not  explicitly  express  a  preference  for  one  particular  competitive 
 strategy,  it  implicitly  recognized  that  the  purchase  of  unbundled  network  elements  would,  at  least  in  some 
 situations,  serve  as  a  transitional  strategy  until  such  time  as  fledgling  competitors  could  develop  a  customer 
 base  and  complete  the  construction  of  their  own  networks.  In  particular,  Congress  stated,  [  I]  t  is  unlikely  that 
 competitors  will  have  a  fully  redundant  network  in  place  when  they  initially  offer  local  service  because  the 
 investment  necessary  is  so  significant.  Some  facilities  and  capabilities.  .  .  will  likely  need  to  be  obtained  from 
 the  incumbent  [LEC]  as  network  elements  pursuant  to  new  section  251.  See  Joint  Explanatory  Statement  at 
 148. 
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 loops  to  serve  its  end-  user  customers.  Requesting  carriers  require  collocation  because 
 they  have  not  yet  duplicated  the  incumbent  LECs  loop  plant  to  provide  last  mile 
 connectivity  to  end  users.  Obtaining  unbundled  loops  and  connecting  these  loops  to 
 collocated  equipment  is  therefore  the  only  reasonable  and  economically  rational  manner 
 by  which  requesting  carriers  can  provide  connectivity  to  their  end  users. 

 263.  We  agree  with  parties  that  argue  that  collocation  imposes  materially  greater 
 costs  on  requesting  carriers  than  use  of  the  incumbent  LECs  switching.  517  Based  on  the 
 record,  it  appears  that  the  current  range  for  non-  recurring  charges  for  obtaining  physical 
 collocation  is  between  $15,000  and  $508,000  for  each  central  office  from  which  a 
 competitor  serves  customers  using  the  incumbent  LECs  unbundled  loops.  518  This 
 additional  cost  increases  the  costs  of  the  equipment  installed  in  the  cage  by  between  15  to 
 20  percent.  519  We  find  that  due  in  part  to  these  non-  recurring  charges,  a  requesting 
 carriers  decision  to  collocate  presumes  significant  market  penetration,  even  in  dense  wire 
 centers.  For  example,  data  submitted  by  MCI  WorldCom  for  New  York  City  suggests 
 that  collocation  in  dense  wire  centers  is  not  profitable  until  a  requesting  carriers  market 
 penetration  exceeds  8-  15  percent.  520  We  agree  that  the  costs  associated  with  collocation 
 and  the  revenue  opportunities  associated  with  a  given  wire  center  may  not  justify 

 517  AT&  T  Comments  at  96,  Tab  E,  Aff.  of  Michael  Pfau,  para.  25  (AT&  T  Pfau  Aff.); 
 California  PUC  Comments  at  4-  5;  CPI  Comments  at  21;  Cable  &  Wireless  Comments  at  36;  CompTel 
 Comments  at  40.  See  also  Letter  from  Jonathan  E.  Canis,  Counsel  for  ALTS,  Intermedia,  e.  spire,  to  Magalie 
 R.  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  August  27,  1999). 

 518  See  Letter  from  Carol  Ann  Bischoff,  Executive  Vice  President  and  General  Counsel, 
 CompTel,  to  Lawrence  E.  Strickling,  Chief,  Common  Carrier  Bureau,  Federal  Communications  Commission, 
 CC  Docket  No.  96-  98  (filed  August  18,  1999)(  stating  that  CompTel  members  report  that  recent  quotes  from 
 US  West  for  cageless  collocation  average  $41,000  (compared  to  $53,000  for  caged  collocation.)).  BellSouth 
 provides  information  that  the  total  non-  recurring  cost  of  a  200  square  foot  collocation  costs  approximately 
 $76,000.  BellSouth  Comments  at  Attachment  A  at  1.  Allegiance  claims  that  GTE  demanded  $508,000  for  a 
 10  x  10  collocation  cage  in  Santa  Monica,  California.  According  to  Advanced  TelCom,  initial  quotes  for 
 10x10  cages  in  U  S  Wests  territory  run  from  $35,000  to  $68,000  and  $30,000  to  $82,000  in  Pacific  and 
 Nevada  Bell  territories.  See  Letter  from  Jonathan  E.  Canis,  Counsel  for  ALTS,  Intermedia,  e.  spire,  to  Magalie 
 R.  Salas,  Esq.,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  Aug  27,  1999). 
 SBC  asserts  its  average  NRC  is  $15,405  for  caged  collocation  and  $10,566  for  cageless  collocation  in  Texas. 
 See  Letter  from  Lincoln  E.  Brown,  Director    Federal  Regulatory,  SBC,  to  Magalie  R.  Salas,  Secretary, 
 Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  July  15,  1999).  See  also  CompTel 
 Comments  at  39,  Tab  E,  Aff.  of  Richard  L.  Tidwell  at  para.  5  (CompTel  Tidwell  Aff.)  (arguing  that  total  cost 
 of  switch  installation  is  $4-  6  million). 

 519  AT&  T  Comments  at  96.  See  also,  BellSouth  Comments  Attachment  A  at  1  (describing 
 $128,700  cost  of  purchasing  necessary  equipment  for  one  collocation  arrangement.). 
 520  MCI  WorldComs  collocation  analysis  assumes  dense  wire  centers  (37,500  lines)  and  a 
 customer  churn  rate  of  15-  33  percent.  See  Letter  from  Lori  Wright,  Senior  Regulatory  Counsel,  MCI 
 WorldCom,  to  Magalie  R.  Salas,  Esq.,  Secretary,  Federal  Communications  Commission  (filed  July  9,  1999). 
 We  find  that  Ameritechs  collocation  model  which  assumes  a  non-  recurring  charge  of  $70,000  may  not  be 
 accurate  for  individual  competitor  collocation  requests,  particularly  in  dense  wire  centers.  Ameritech 
 Comments  at  76. 
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 establishing  a  collocation  arrangement  with  the  incumbent  LEC  in  many  central 
 offices.  521 

 264.  Accordingly,  we  find  that  as  a  general  matter,  collocation  costs  materially 
 diminish  the  ability  of  a  requesting  carrier  to  offer  service  using  self-  provisioned 
 switching.  Although  the  collocation  rules  we  adopted  in  our  Advanced  Services  First 
 Report  and  Order  and  FNPRM  are  intended,  and  expected,  to  reduce  the  costs  and 
 operational  delays  associated  with  collocation,  our  revised  rules  do  not  eliminate 
 altogether  the  cost  and  delay  associated  with  collocation.  522  We  recognize  that  incumbent 
 LECs  still  have  an  incentive  and  the  ability  to  raise  a  requesting  carriers  cost  of 
 collocation,  and  thus  raise  the  total  cost  of  self-  provisioning  switching. 

 265.  In  addition  to  the  costs  of  establishing  collocation  arrangements  with  the 
 incumbent  LEC,  requesting  carriers  incur  additional  costs  to  extend  unbundled  loops  to 
 their  collocation  cage.  The  manual  work  of  extending  a  loop  to  a  requesting  carriers 
 collocation  cage  is  known  as  a  coordinated  loop  cutover.  A  coordinated  loop  cutover 
 requires  incumbent  LEC  technicians  to  disconnect  the  subscribers  loop  from  the 
 incumbent  LECs  main  distribution  frame  and  rapidly  cross-  connect  it  to  the  competitors 
 facilities.  From  the  time  the  technician  disconnects  the  subscribers  loop  until  the 
 competitor  re-  establishes  service,  the  subscriber  is  without  service.  Simultaneously, 
 incumbent  LEC  and  competitor  technicians  must  coordinate  to  ensure  that  the 
 subscribers  telephone  number  is  ported  to  the  competitors  switch  so  that  inbound  calls 
 are  properly  routed  to  the  requesting  carriers  switch. 

 266.  The  coordinated  cutover  process  imposes  a  non-  recurring  cost  on 
 competitive  carriers  that  connect  their  own  switches  to  unbundled  loops.  For  example, 
 AT&  T  contends  that  the  non-  recurring,  per-  line  charge  for  a  coordinated  cutover  is 
 approximately  $45  in  New  York.  523  CompTel  argues  that  a  manual  loop  and  switching 
 port  migration  costs  between  $59.91  and  $218.62  per  unbundled  loop.  524  We 
 acknowledge  that  incumbent  LECs  may  incur  coordinated  cutover  costs  when  they  win 
 customers  from  competitive  LECs.  The  record  does  not  demonstrate,  however,  that 
 incumbent  LECs  are  incurring  coordinated  cutover  costs  in  the  same  or  substantially 
 similar  volumes  as  competitive  LECs.  We  find  that  the  additional  cost  of  coordinated 

 521  We  recognize  however,  that  the  costs  of  collocating  in  a  given  central  office  will  be  spread 
 between  a  requesting  carriers  total  service  offerings,  including  services  other  than  circuit-  switched  services. 
 522  Advanced  Services  First  Report  and  Order  and  FNPRM,  14  FCC  Rcd  at  4771-  94,  paras. 
 19-  60. 
 523  AT&  T  Comments  at  95-  96;  AT&  T  Pfau  Aff.  at  paras.  22-  23. 

 524  See  Letter  from  Carol  Ann  Bischoff,  Executive  Vice  President  and  General  Counsel, 
 CompTel,  to  Lawrence  E.  Strickling,  Chief,  Common  Carrier  Bureau,  CC  Docket  No.  96-  98  (filed  August  19, 
 1999)  (CompTel  August  19,  1999  Ex  Parte)  (describing  Standard  Manual  Loop/  Port  Migration  costs  of 
 $178.00  in  Florida,  $59.91  in  Georgia,  $67.18  in  New  York,  $107.63  in  Illinois,  $143.15  in  Kansas,  $123.45 
 in  Iowa  and  $218.62  in  Montana). 
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 loop  cutovers,  when  added  to  the  costs  of  collocation,  materially  diminishes  a 
 competitors  ability  to  substitute  its  own  switch  for  unbundled  switching.  Although  this 
 per-  line  non-  recurring  cost  is  likely  to  vary  between  incumbent  LECs,  it  represents  a 
 significant  cost  to  those  requesting  carriers  seeking  to  provide  service  to  the  mass  market 
 due  to  the  large  number  of  individual  loop  cutovers  that  are  necessary  to  serve  this 
 market. 

 267.  Ubiquity  and  Timeliness.  In  addition  to  the  costs  associated  with  accessing 
 individual  unbundled  loops  in  multiple  end  offices,  we  find  that  collocation  and  the 
 coordinated  loop  cutover  process  imposes  a  material  delay  on  competitive  LECs  that  offer 
 services  using  self-  provisioned  switches,  and  materially  limits  the  scope  of  customers  a 
 requesting  carrier  may  serve  quickly.  The  delay  includes  the  total  amount  of  time 
 required  to  purchase,  install,  turn  up  a  switch,  and  obtain  collocation,  as  well  as  the 
 amount  of  time  needed  for  incumbent  LECs  to  complete  coordinated  loop  cutovers. 

 268.  In  order  to  self-  provision  a  switch,  a  requesting  carrier  must  order,  test  the 
 switch,  and  integrate  it  into  its  network  and  internal  operations  support  systems.  525 
 Incumbent  LECs  claim  that  a  switch  can  be  fully  provisioned  in  as  little  as  40  days.  526 
 Although  this  may  be  theoretically  possible,  there  is  evidence  in  the  record  that  the  time 
 frame  for  provisioning  a  switch  is  significantly  longer.  527  Furthermore,  incumbent  LECs 
 focus  their  analysis  on  the  time  to  purchase  a  switch  rather  than  the  time  required  to  put  a 
 switch  into  operation.  Actual  delivery  of  a  switch  is  only  one  part  of  the  process  of  self-provisioning 
 switching.  528  Requesting  carriers  assert  that  it  takes  approximately  six 
 months  to  one  year  to  engineer,  furnish  and  install  a  switch.  529 

 525  AT&  T  Reply  Comments  at  99. 
 526  GTE  Comments  at  45-  46;  Bell  South  Comments  at  58. 
 527  MCI  WorldCom  Comments  Tab  5,  Decl.  of  Dennis  Herold/  Joseph  Stockhausen/  Ray 
 Lathrop,  at  para.  6)  (MCI  WorldCom  Herold  Decl.)  (arguing  that  once  a  decision  to  deploy  a  switch  is  made, 
 it  takes  18  to  24  months  to  provision  a  Class  5  switch). 

 528  For  example,  according  to  KMC  Telecom,  the  standard  installation  interval  for  a  Lucent 
 5ESS  switch  is  between  nine  and  12  months,  only  8  weeks  of  which  is  attributable  to  the  delivery  of  the 
 switch  itself.  See  Letter  from  Carol  Ann  Bischoff,  Executive  Vice  President,  CompTel  to  Lawrence  E. 
 Strickling,  Chief,  Common  Carrier  Bureau,  Federal  Communications  Commission,  CC  Docket  No.  96-  98 
 (filed  August  18,  1999)  (CompTel  August  18,  1999  Ex  Parte). 

 529  Most  commenters  addressing  switch  deployment  delays  describe  the  outer  time  boundaries 
 for  provisioning  a  switch.  See  e.  g.,  Cable  &  Wireless  Comments  at  36;  Choice  One  Joint  Comments  at  16; 
 CompTel  Comments  at  39,  n.  89  and  Tab  D,  Aff.  of  Martin  J.  Arias  at  para  5  (switch  deployment  takes  up  to 
 9  months  or  even  almost  two  years.)  (CompTel  Arias  Aff.);  KMC  Comments  at  15;  Net2000  Comments  at 
 14.  See  also,  Letter  from  Roy  Choates,  Senior  Vice  President  Construction,  KMC  Telecom,  to  Magalie  R. 
 Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  August  12,  1999) 
 (describing  actual  provisioning  interval  of  9    12  months  for  Lucent  5  ESS  switch).  The  USTA  UNE  Report 
 notes  that  switch  vendors  do  not  typically  deliver  a  switch  until  two-  and-  a-  half  to  three  months  after  an  order 
 is  received.  USTA  UNE  Report  at  I-  30  (citing  e.  spire  statement  of  seven  months  from  placing  an  order  to 
 deployment  of  switch). 
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 269.  Related  to  the  time  required  to  provision  a  switch  is  the  time  required  to 
 provision  collocation.  Incumbents  and  requesting  carriers  offer  conflicting  assertions 
 regarding  the  time  required  to  provision  collocation  in  incumbent  LEC  central  offices. 
 We  are  troubled  by  anecdotal  evidence  that  collocation  imposes  a  delay  of  six,  nine  or 
 twelve  months  on  the  provision  of  ubiquitous  service.  530  MCI  WorldCom  for  example, 
 argues  that  collocating  on  a  broad  scale  to  provide  ubiquitous  service  results  in  lengthy 
 collocation  delays.  531  NorthPoint  maintains  that  some  incumbent  LECs  have  imposed 
 governors  on  the  number  of  collocation  applications  they  will  accept,  thereby  delaying 
 ubiquitous  rollout  of  services.  532  Incumbent  LECs  counter  that  they  have,  and  will 
 continue  to,  provision  collocation  on  a  broad  scale  and  in  a  timely  fashion.  533  Ameritech 
 specifically  contends  that  competitive  LECs  have  established  collocation  arrangements  in 
 rate  centers  in  which  70  percent  of  Ameritechs  access  lines  are  located.  534  The  presence 
 of  one  collocator,  in  and  of  itself,  however,  does  not  establish  how  long  it  will  take  to 
 accommodate  subsequent  collocators.  We  find  nothing  in  the  record  to  demonstrate 
 conclusively  that  incumbent  LECs  have  committed  to  and  satisfied  a  collocation 
 provisioning  interval  of  less  than  six  months. 

 270.  We  therefore  find  incumbent  LEC  arguments  that  requesting  carriers  do  not 
 experience  collocation  delays  contradicted  by  the  actual  experiences  of  requesting 
 carriers.  Incumbent  LECs  do  not  appear  to  include  such  things  as  the  collocation 
 application  process  in  their  analysis  of  collocation  delays.  We  are  persuaded  by  those 
 commenters  that  assert  that  collocation,  examined  from  the  time  a  requesting  carrier 

 530  AT&  T  Comments  at  91  (citing  AT&  T  Pfau  Aff.  describing  collocation  delays  of  six  to 
 eight  months);  CompTel  Comments  at  40  (citing  CompTel  Arias  Aff.  describing  collocation  delays  of  several 
 months  at  a  minimum);  MCI  WorldCom  Reply  Comments  at  51  (collocation  takes  6  months  to  a  year). 
 Rhythms  notes  that  collocation  represents  the  single  greatest  obstacle  to  providing  service  and  that 
 collocation  typically  takes  between  five  and  seven  months  to  provision.  See  Letter  from  Jeffrey  Blumenfeld, 
 Counsel,  Rhythms  NetConnections,  Inc.,  to  Magalie  R.  Salas,  Secretary,  Federal  Communications 
 Commission,  CC  Docket  No.  96-  98  (filed  September  8,  1999). 

 531  MCI  WorldCom  Reply  Comments  at  51.  MCI  WorldCom  estimates  that  establishing  a 
 single  collocation  arrangement  requires  approximately  five  months  before  the  arrangement  is  in  place.  MCI 
 WorldCom  also  argues,  however,  that  if  a  requesting  carrier  seeks  to  expand  the  scope  of  its  services  by 
 requesting  collocation  arrangements,  the  collocation  delay  amounts  to  several  years  before  it  can  provide 
 service.  MCI  WorldCom  Herold  Decl.  at  paras.  9-  11). 

 532  See  Letter  from  Jonathan  E.  Canis,  Counsel  for  ALTS,  Intermedia,  e.  spire,  to  Magalie  R. 
 Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  August  27,  1999) 
 (stating  that  BellSouth  will  accept  5  applications  per  carrier  per  month.). 

 533  Ameritech  Comments  at  77;  Bell  Atlantic  Reply  Comments  at  14;  SBC  Reply  Comments  at 
 16;  US  WEST  Reply  Comments  at  44.  SBC  submitted  an  Ex  Parte  presentation  which  states  that  the  average 
 caged  collocation  interval  in  Texas  is  90  days  and  55-  70  days  for  cageless  collocation.  In  California,  the 
 average  caged  collocation  interval  is  120  days  and  110  days  for  cageless.  See  Letter  from  Lincoln  E.  Brown, 
 Director    Federal  Regulatory,  SBC,  to  Magalie  R.  Salas,  Federal  Communications  Commission,  CC  Docket 
 No.  96-  98  (filed  July  15,  1999). 

 534  Ameritech  Reply  Comments  at  22. 
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 initiates  the  collocation  process  until  a  collocation  arrangement  is  delivered,  generally 
 imposes  a  delay  of  approximately  six  months  on  the  provision  of  service.  535  We 
 conclude  that,  although  the  delays  associated  with  provisioning  collocation  arrangements 
 will  vary  from  incumbent  LEC  to  incumbent  LEC  and  by  requesting  carrier,  as  a  general 
 matter,  collocation  delays  materially  diminish  the  ability  of  a  requesting  carrier  to  provide 
 the  services  it  seeks  to  offer.  As  discussed  in  Section  IV  above,  although  we  cannot 
 quantify  precisely  how  much  of  a  delay  associated  with  collocation  and  self-  provisioning 
 switching  will  materially  diminish  the  ability  of  a  competitor  to  provide  the  services  it 
 seeks  to  offer,  we  find  that  delays  that  exceed  six  months  to  one  year  materially  diminish 
 the  ability  of  a  competitive  LEC  to  provide  the  services  it  seeks  to  offer  because  such 
 delay  prevents  the  competitive  LEC  from  responding  quickly  to  the  demand  for  its 
 services  in  a  rapidly  changing  market. 

 271.  As  noted  above,  requesting  carriers  must  also  wait  for  coordinated  cutovers 
 before  providing  service  with  their  own  switch.  536  We  disagree  with  BellSouth,  GTE, 
 Ameritech,  and  other  commenters  that  argue  that  the  Commission  should  not  consider 
 coordinated  cutover  delays  and  service-  quality  issues  in  its  impair  analysis.  537  Without 
 coordinated  loop  cutovers,  requesting  carriers  self-  provisioning  switching  and  accessing 
 unbundled  loops  cannot  provide  the  services  they  seek  to  offer.  To  date,  incumbent  LECs 
 have  provisioned  relatively  small  volumes  of  coordinated  loop  cutovers  compared  to 
 anticipated  demands.  538  Incumbent  LECs  counter  that  they  have  instituted  procedures  to 
 provide  timely  coordinated  cutovers  to  requesting  carriers.  539  Where  incumbent  LECs 
 have  undergone  comprehensive  testing  of  their  loop  provisioning  processes,  however, 
 independent  auditors  have  found  difficulties  regarding  coordinated  loop  cutover 
 performance.  540  Furthermore,  because  broad-  based  residential  competition  is  at  best 

 535  AT&  T  Comments  at  91;  CompTel  Comments  at  40;  MCI  WorldCom  Reply  Comments. 
 536  See  supra  para.  266. 
 537  BellSouth  Comments  at  61;  GTE  Comments  at  45,  n.  32;  Ameritech  Reply  Comments  at 
 29. 
 538  AT&  T  Reply  Comments  at  105;  Ameritech  Reply  Comments  at  29  (stating  that  Ameritech 
 has,  to  date,  provisioned  185,000  unbundled  loops  and  expects  to  provision  117,000  additional  unbundled 
 loops  by  end  of  1999). 

 539  BellSouth  argues  that  in  April,  1999,  BellSouth  cutover  70%  of  loop  orders  within  5 
 minutes  and  over  88%  were  performed  in  15  minutes  for  a  average  time  of  6.94  minutes.  Bell  South  Reply 
 Comments  ,  Attachment  E,  Aff.  of  W.  Keith  Milner  at  para.  10.  Ameritech  argues  that  if  coordinated  loop 
 cutovers  are  relevant  to  the  impair  analysis,  it  can  accommodate  any  reasonably  foreseeable  demand,  and  its 
 coordinated  loop  cutover  process  is  not  error-  prone  such  that  requesting  carriers  face  service-  quality 
 impairments.  Ameritech  Reply  Comments,  Attachment  B,  Aff.  of  John  B.  Mayer  at  11,  16-  29,  Schedules  1,  2. 
 This  assertion  does  not  carry  more  weight  merely  because  it  is  made  in  a  sworn  affidavit;  assertions  regarding 
 future  performance  are  inherently  unsupportable. 

 540  In  Texas,  SBC  is  undergoing  a  third  party  test  of  its  coordinated  loop  cutover  processes  by 
 Telcordia  Technologies,  Inc.  In  their  July,  1999  OSS  report,  Telcordia  states  that  [  e]  ighteen  ordering  types 
 for  UNE-  L  (loop  provisioning)  were  tested,  of  which  nine  were  successfully  ordered  and  provisioned  by  SBC. 
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 nascent,  incumbent  LECs  generally  have  not  successfully  provisioned  coordinated  loop 
 cutovers  in  the  volumes  necessary  for  requesting  carriers  to  serve  the  mass  market.  We 
 therefore  find  incumbent  LEC  promises  of  future  hot  cut  performance  insufficient  to 
 support  a  Commission  finding  that  the  coordinated  loop  cutover  process  does  not  impair 
 the  ability  of  a  requesting  carrier  to  provide  the  service  it  seeks  to  offer  without  unbundled 
 circuit  switching.  541  We  recognize  that  the  hot  cut  process  requires  manual  processing, 
 which  likely  creates  delays  between  the  time  a  requesting  carrier  wins  a  customer  and  the 
 time  it  can  provide  service  to  that  customer.  Accordingly,  we  find  that  the  coordinated 
 loop  cutover  process  impairs  the  ability  of  a  requesting  carrier  to  provide  timely  service. 

 272.  Goals  of  the  1996  Act.  As  noted  above,  our  unbundling  analysis  takes  into 
 account  whether  unbundling  a  particular  network  element  is  consistent  with  the  goals  of 
 the  1996  Act.  542  We  find  our  decision  to  unbundle  local  circuit  switching  is  consistent 
 with  the  1996  Acts  goals  of  rapid  introduction  of  competition  and  the  promotion  of 
 facilities-  based  entry. 

 273.  Our  unbundling  analysis  considers  how  the  switch  unbundling  obligation 
 we  adopt  will  encourage  requesting  carriers  to  rapidly  enter  the  local  market  in  order  to 
 serve  the  greatest  number  of  customers,  and  whether  the  failure  to  require  unbundling  will 
 cause  any  class  of  consumers  to  wait  unnecessarily  for  competitive  alternatives.  Failure 
 to  unbundle  local  circuit  switching  would  cause  residential  and  small  business  consumers 
 to  wait  unnecessarily  for  competitive  alternatives.  As  discussed  above,  the  costs  and 
 operational  delays  associated  with  collocating  in  multiple  end  offices  and  provisioning 
 delays  caused  by  the  inability  of  a  requesting  carrier  to  gain  access  to  unbundled  local 

 Nine  ordering  types  did  not  meet  expectations,  of  which  six  have  been  selected  for  retesting.  The  Public 
 Utility  Commission  of  Texas  Southwestern  Bell  Operations  Support  Systems  Report,  Issue  1,  July  1999,  at 
 Pg.  ES-  9.  In  New  York,  Bell  Atlantic  is  undergoing  a  third  party  test  of  its  coordinated  loop  cutover  process 
 by  KPMG.  In  their  July,  1999  OSS  report,  KPMG  states  that  Bell  Atlantic  technicians  performing 
 disconnects  and  Main  Distribution  Frame  (MDF)  rewiring  are  not  performing  their  activities  in  a 
 synchronized  manner  at  the  requested  Frame  Due  Time  of  the  order  and  perform  some  portion  of  cut  either 
 late  or  early.  KPMG  Draft  Final  Report,  July  22,  1999,  at  IV-  67.  See  also  Communications  Daily,  July  28, 
 1999  at  10  (  Major  uncorrected  exceptions  [found  by  KPMG  in  NY]  include  BA  problems  with  meeting 
 deadlines  for  hot  cuts,  where  BA  disconnects  loops  from  its  own  network  and  reconnects  it  to  requesting 
 carriers  network.  BA  has  claimed  95%  of  hot  cuts  are  performed  on  time  and  without  service  interruptions, 
 but  AT&  T  claims  real  rate  is  only  75%.);  Letter  from  Robert  W.  Quinn,  Jr.,  Director    Federal  Government 
 Affairs,  AT&  T,  to  Mr.  Jake  Jennings,  Special  Advisor,  Common  Carrier  Bureau,  Federal  Communications 
 Commission,  CC  Docket  No.  96-  98  (filed  August  18,  1999)  (citing  supplemental  affidavit  of  Mr.  Jack  Meek 
 before  the  New  York  Department  of  Public  Service).  Mr.  Meeks  affidavit  contends  that  for  the  period  March 
 23  through  July  23  approximately  13%  of  BA-  NYs  hot  cut  loop  orders  resulted  in  errors  attributable  to  BA-NY. 

 541  Our  insistence  on  actual  performance    and  not  future  promises  --  of  incumbent  LEC 
 compliance  with  our  rules  is  not  new.  See  Application  of  Ameritech  Michigan  Pursuant  to  Section  271  of  the 
 Communications  Act  of  1934,  as  amended,  To  Provide  In-  Region,  InterLATA  Services  in  Michigan,  CC 
 Docket  No.  97-  137,  Memorandum  Opinion  and  Order,  12  FCC  Rcd  20543  (1997)  (Ameritech  Michigan  271 
 Order). 

 542  See  supra  Section  IV(  B)(  4)(  b)(  iii). 
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 circuit  switching  will  cause  residential  and  small  business  customers  to  wait  for  service. 
 Requiring  incumbent  LECs  to  provide  access  to  unbundled  switching,  and  to  use 
 unbundled  switching  in  combination  with  other  network  elements,  will  allow  requesting 
 carriers  to  serve  the  greatest  number  of  customers,  without  incurring  collocation  and 
 switch  provisioning  delays.  Where  unbundled  switching  has  been  made  available, 
 requesting  carriers  have  gained  market  share  in  the  residential  and  small  business 
 markets.  543  Accordingly,  we  find  that  requiring  incumbent  LECs  to  provide  access  to 
 unbundled  switching  will  allow  requesting  carriers  to  rapidly  enter  local  markets. 

 274.  We  also  find  that  the  availability  of  unbundled  switching  will  also 
 accelerate  the  development  of  alternative  networks  because  it  will  allow  requesting 
 carriers  to  generate  revenues  to  justify  the  construction  of  new  switching  facilities.  544  As 
 noted  above,  many  carriers  emphasize  that  they  plan  to  deploy  alternative  facilities  as 
 soon  as  it  is  technically  and  economically  possible  to  do  so  at  a  cost  close  to  the 
 incumbent  LECs  prices  for  network  elements.  545  Granting  requesting  carriers  access  to 
 unbundled  switching  will  allow  these  carriers  to  serve  customers  in  areas  where  traffic 
 volumes  and  customer  densities  make  it  difficult  initially  to  justify  deploying  a  switch. 
 Furthermore,  allowing  requesting  carriers  to  purchase  unbundled  switching  will  allow 
 new  entrants  to  test  market  demand  for  circuit  switched  services  before  deploying  their 
 own  facilities.  As  requesting  carriers  obtain  customers  using  unbundled  switching,  we 
 expect  that  the  revenues  generated  from  this  activity  will  enable  requesting  carriers  to 
 extend  the  reach  of  their  existing  switching  capabilities  or  deploy  switching  capability  to 
 serve  the  residential  and  small  business  market. 

 275.  On  balance,  we  conclude  that  local  circuit  switching  should  be  unbundled 
 nationwide.  We  now  consider  whether  it  would  be  appropriate  to  establish  an  exception 
 to  the  national  unbundling  requirement. 

 543  MCI  WorldCom  Reply  at  42-  46;  AT&  T  Reply  at  23-  24;  SBC  Reply  at  3-  4.  Since  these 
 combinations  of  unbundled  network  elements  have  become  available,  competitive  LECs  have  started  offering 
 service  in  the  residential  mass  market  in  those  areas.  For  example,  in  January  of  this  year,  Bell  Atlantic,  as 
 part  of  an  agreement  with  the  New  York  Department  of  Public  Service,  began  offering  the  unbundled  network 
 element  platform  out  of  particular  end  offices  in  New  York  City.  As  a  result,  between  January  1,  1999  and 
 May  26,  1999,  MCI  WorldCom  acquired  upwards  of  60,000  new  local  residential  customers.  AT&  T  also 
 plans  to  begin  serving  local  residential  customers  over  the  platform  in  Texas.  See  supra  Section  I. 

 544  See,  e.  g.,  AT&  T  Comment  at  21-  22  (stating  that  using  unbundled  network  elements  also 
 facilitates  the  transition  to  facilities-  based  competition  because  it  permits  entrants  to  gather  critical 
 information,  such  as  customers  calling  volumes  and  traffic  patterns  that  they  need  to  plan  their  facilities 
 deployment);  ALTS  Comment  at  20-  24;  MCI  WorldCom  Comment  at  8. 

 545  See  CompTel  Comments  at  12;  MCI  WorldCom  Comments  at  8-  9,  26-  27;  Net2000 
 Comments  at  2-  3;  Sprint  Comments  at  16-  19. 
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 (iv)  Exception  to  National  Unbundling  Requirement 
 276.  As  discussed  in  section  IV  above,  we  do  not  limit  our  unbundling  analysis 
 to  the  cost,  timeliness,  ubiquity  and  quality  factors  described  above.  Rather,  we  look  at 
 the  totality  of  the  circumstances  and  marketplace  developments  when  considering 
 whether  a  requesting  carrier  is  impaired  without  access  to  unbundled  local  circuit 
 switching.  In  addition  to  examining  where  requesting  carriers  have  deployed  switches, 
 we  look  to  the  marketplace  to  see  which  customers  are  receiving  service  from  facilities-based 
 competitors.  To  the  extent  the  market  shows  that  requesting  carriers  are  not  serving 
 a  market  segment  with  self-  provisioned  switches,  we  find  that  this  fact  is  probative 
 evidence  that  for  a  discrete  market  segment  requesting  carriers  are  impaired  without 
 access  to  unbundled  local  circuit  switching.  Conversely,  to  the  extent  that  the  market 
 shows  that  requesting  carriers  are  generally  providing  service  in  particular  situations  with 
 their  own  switches,  we  find  this  fact  to  be  probative  evidence  that  requesting  carriers  are 
 not  impaired  without  access  to  unbundled  local  circuit  switching.  The  task  before  us  is  to 
 develop  an  administratively  simple  rule  that  reflects  marketplace  developments  and 
 provides  certainty  to  market  participants.  We  seek  to  adopt  a  rule  that  serves  as  a 
 reasonable  proxy  for  when  competitors  are  indeed  impaired  in  their  ability  to  provide  the 
 services  they  seek  to  offer. 

 277.  In  their  initial  and  reply  comments  in  this  proceeding,  the  parties  take 
 sharply  diverging  positions  regarding  the  circumstances  and  geographic  areas  where  local 
 circuit  switches  should  be  unbundled,  if  at  all.  Incumbent  LECs  generally  support 
 elimination  of  their  obligation  to  unbundle  local  circuit  switches  in  a  geographic  area 
 where  one  requesting  carrier  has  deployed  a  single  local  circuit.  546  Competitive  LECs 
 oppose  the  incumbent  LEC  proposals  for  elimination  of  the  circuit  switch  unbundling 
 obligation  and  argue  that  local  circuit  switching  should  be  unbundled  on  a  national 
 basis.  547  In  several  ex  parte  presentations  after  the  record  closed,  a  number  of  parties 
 softened  their  initial  positions  and  propose  a  more  narrowly  tailored  rule  for  determining 
 when  circuit  switching  need  not  be  unbundled.  548  A  number  of  other  parties  respond  to 
 these  fall-  back  positions  in  subsequent  ex  parte  presentations.  549 

 546  Ameritech  Comments  at  5-  6,  84;  Bell  Atlantic  Comments  at  23;  BellSouth  Comments  at 
 56;  SBC  Comments  at  42;  GTE  Comments  at  39;  USTA  Comments  at  34;  US  WEST  Comment  at  44. 
 547  See,  e.  g.,  Cable  &  Wireless  Comments  at  36;  KMC  Comments  at  15;  Net2000  Comments 
 at  13;  Sprint  Comments  at  31;  Qwest  Comments  at  70;  AT&  T  Comments  at  86. 
 548  See  Letter  from  Chuck  Goldfarb,  Director,  Law  and  Public  Policy  MCI  WorldCom,  to 
 Lawrence  E.  Strickling,  Chief,  Common  Carrier  Bureau,  Federal  Communications  Commission,  CC  Docket 
 No.  96-  98,  at  4  (filed  August  9,  1999)  (concluding  that  the  top  29  MSAs  should  define  the  geographic  scope 
 of  an  incumbent  LECs  local  circuit  switch  unbundling  obligation);  Letter  from  Christopher  M.  Heimann, 
 Director  of  Legal  Affairs,  Ameritech,  to  Magalie  R.  Salas,  Secretary,  Federal  Communications  Commission, 
 CC  Docket  No.  96-  98  (filed  September  7,  1999)  (stating  that  Ameritech  would  not  oppose  an  MSA  approach 
 pursuant  to  which  ULS  and  the  UNE  platform  would  not  be  made  available  in  the  top  100  MSAs  in  the 
 United  States.);  CompTel  August  19,1999  Ex  Parte  (arguing  that  local  circuit  switching  should  not  be 
 unbundled  in  density  zone  1  within  the  highest  density  MSAs);  Letter  from  Kathleen  B.  Levitz,  Vice  President 
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 278.  Despite  our  conclusion  that,  in  general,  requesting  carriers  are  impaired 
 without  access  to  unbundled  switching,  we  conclude  that  it  is  appropriate  to  establish  a 
 more  narrowly  tailored  rule  to  reflect  significant  marketplace  developments.  As 
 described  more  fully  below,  we  find  that  requesting  carriers  are  not  impaired  without 
 access  to  unbundled  local  circuit  switching  when  they  serve  customers  with  four  or  more 
 lines  in  density  zone  1  in  the  top  50  metropolitan  statistical  areas  (MSAs),  as  set  forth  in 
 Appendix  B,  where  incumbent  LECs  have  provided  nondiscriminatory,  cost-  based  access 
 to  the  enhanced  extended  link  (EEL)  throughout  density  zone  1.  550 

 279.  Top  50  MSAs.  We  conclude  that  it  is  appropriate  to  create  an  exception  to 
 the  switching  unbundling  obligation  in  certain  circumstances  in  the  top  50  MSAs,  as  they 
 are  defined  by  the  Office  of  Management  and  Budget.  551  We  thus  respond  to  various 
 suggestions  in  the  record  that  an  exception  from  the  switching  unbundling  obligation 
 should  encompass  the  top  29,  top  35  and  top  100  MSAs  in  the  United  States.  552 

 280.  As  previously  noted,  as  of  March,  1999,  approximately  167  different 
 competitors  have  deployed  approximately  700  switches  throughout  the  country.  553  When 
 we  analyze  where  requesting  carriers  have  deployed  these  switches,  we  find  that  most  of 

   Federal  Regulatory,  BellSouth,  to  Ms.  Magalie  R.  Salas,  Secretary,  Federal  Communications  Commission, 
 CC  Docket  No.  96-  98  (filed  July  29,  1999)(  proposing  that  local  circuit  switching  should  not  be  unbundled  in 
 zones  1  and  2  or  in  rate  exchange  areas  served  by  one  of  more  CLEC  switches). 

 549  See  Letter  from  Robert  W.  Quinn,  Jr.,  AT&  T,  to  Mr.  Lawrence  Strickling,  Chief,  Common 
 Carrier  Bureau,  Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  August  19,  1999)  (AT&  T 
 August  19,  1999  Ex  Parte)  (arguing  AT&  T  would  be  impaired  if  local  circuit  switching  is  not  unbundled  in 
 MSAs  36-  100);  Letter  from  David  Scott,  Birch  Telecom,  to  Jake  E.  Jennings,  Special  Advisor,  Common 
 Carrier  Bureau,  Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  September  8,  1999) 
 (opposing  attempts  to  restrict  the  availability  of  unbundled  local  circuit  switching);  Letter  from  Melissa 
 Newman,  Vice  President    Federal  Regulatory  U  S  WEST,  to  Magalie  R.  Salas,  Secretary,  Federal 
 Communications  Commission,  CC  Docket  No.  96-  98  (filed  August  18,  1999)  (opposing  MCIs  MSA 
 approach); 

 550  47  C.  F.  R.    69.123  of  the  Commissions  rules  define  the  parameters  for  the  establishment 
 of  density  pricing  zones  that  allow  price-  cap  LECs  to  charge  geographically  deaveraged  rates  for  switched 
 transport  services.  Density  zone  1  is  the  geographic  area  with  the  highest  access  line  density  and  amount  of 
 traffic  volume. 

 551  An  MSA  is  made  up  of  a  county  or  group  of  contiguous  counties  surrounding  a  city  with  a 
 population  of  50,000  or  more.  The  Office  of  Management  and  Budget  defines  MSAs  for  use  in  federal 
 statistical  activities  pursuant  to  44  U.  S.  C.    3504(  d)(  3)  and  31  U.  S.  C.    1104(  d).  Presently,  there  are  258 
 MSAs  in  the  United  States. 

 552  See  Letter  from  Chuck  Goldfarb,  Director,  Law  and  Public  Policy  MCI  WorldCom  to  Larry 
 Strickling,  Chief,  Common  Carrier  Bureau,  Federal  Communications  Commission,  at  Page  4,  CC  Docket  No. 
 96-  98  (filed  August  9,  1999)  (Top  29  MSAs);  AT&  T  August  19,  1999  Ex  Parte  (Top  35  MSAs);  Letter  from 
 Christopher  M.  Heimann,  Director  of  Legal  Affairs,  Ameritech,  to  Magalie  R.  Salas,  Secretary,  Federal 
 Communications  Commission,  CC  Docket  No.  96-  98  (filed  September  7,  1999)  (analysis  of  top  100  MSAs). 

 553  USTA  UNE  Report  at  I-  1. 
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 these  switches  have  been  deployed  within  the  confines  of  the  top  50  MSAs.  554 
 According  to  USTAs  data,  which  relies  on  the  Local  Exchange  Routing  Guide, 
 approximately  61  percent  of  all  requesting  carrier  switches  nationwide  have  been 
 deployed  in  the  top  50  MSAs.  555  More  significantly,  the  vast  majority  of  these  MSAs 
 contain  multiple  switches  owned  by  competitors.  In  particular,  four  or  more  competitive 
 switches  have  been  deployed  in  96  percent  of  the  top  50  MSAs.  556  According  to  USTAs 
 data,  only  two  MSAs  in  the  top  50  --  Cincinnati  and  Las  Vegas  --  have  less  than  three 
 requesting  carrier  switches  serving  an  incumbent  LEC  rate  exchange  area  within  the 
 MSA. 

 281.  Based  on  the  evidence  in  the  record,  we  conclude  that  exempting  incumbent 
 LECs  from  unbundling  local  circuit  switching  in  certain  circumstances  in  the  top  50 
 MSAs  is  reasonable  because  nearly  all  of  the  top  50  MSAs  contain  a  significant  number 
 of  competitive  switches.  557  In  contrast,  MSAs  below  the  top  50  typically  contain  fewer 
 competitive  switches.  For  example,  in  US  WESTs  territory,  no  MSA  between  50  and 
 150  contains  more  than  three  competitive  switches.  558  In  the  top  100  MSAs  in 

 554  USTA  UNE  Report  at  I-  11  (  Rate  Exchange  Areas  in  top  50  MSAs  Where  CLECs  Have 
 Obtained  NXX  Codes).  We  recognize  also  that  requesting  carrier  switches  may  serve  more  than  one  rate 
 exchange  area.  See  USTA  UNE  Report  at  I-  23  (  According  to  the  March  1999  LERG,  the  average  CLEC 
 switch  in  BOC  and  GTE  territory  has  NXX  codes  for  14  rate  exchange  areas.). 

 555  USTA  UNE  Report  at  I-  11  (  Rate  Exchange  Areas  in  top  50  MSAs  Where  CLECs  Have 
 Obtained  NXX  Codes).  We  note  that  the  remainder  of  the  switches  if  evenly  deployed  throughout  MSAs  50- 
 200  would  result  in  no  MSA  having  more  than  2  requesting  carrier  switches  in  an  MSA.  For  example,  the 
 USTA  UNE  Report  states  that  there  are  12  competitive  LEC  switches  in  New  York,  23  competitive  LEC 
 switches  in  Washington,  D.  C.,  19  competitive  LEC  switches  in  Atlanta,  11  competitive  LEC  switches  in 
 Seattle  and  12  competitive  LEC  switches  in  Denver. 

 556  See  USTA  UNE  Report  at  I-  11. 

 557  See  USTA  Comments,  Tab  3,  Map  1  (overlaying  borders  of  top  50  MSAs  to  CLEC 
 switches;  Source:  March  1999  LERG).  CompTel  also  submitted  the  following  data  to  describe  competitive 
 LEC  operations  in  the  top  50  MSAs.  Where  carriers  obtain  unbundled  loops,  they  are  providing  service  with 
 their  own  switch.  In  the  New  York  MSA,  there  are  2,154,569  business  lines  and  the  incumbent  LEC  has 
 provisioned  49,442  unbundled  loops  resulting  in  a  market  share  for  all  competitive  LECs  of  2.2  percent.  In 
 the  Los  Angeles  MSA,  there  are  2,149,360  business  lines  and  the  incumbent  LEC  has  provisioned  46,561 
 unbundled  loops  resulting  in  a  market  share  of  2.1  percent.  In  the  Chicago  MSA,  there  are  2,068,118  business 
 lines  and  the  incumbent  LEC  has  provisioned  20,469  unbundled  loops  resulting  in  a  market  share  of  1.0 
 percent.  In  the  Washington,  D.  C.  MSA,  there  are  1,657,658  business  lines  and  the  incumbent  LEC  has 
 provisioned  3,391  unbundled  loops  resulting  in  a  market  share  of  .2  percent.  In  the  Boston  MSA,  there  are 
 1,355,657  business  lines  and  the  incumbent  LEC  has  provisioned  3,098  unbundled  loops  resulting  in  a  market 
 share  of  .2  percent.  See  CompTel  August  19,  1999  Ex  Parte. 

 558  See  Letter  from  Melissa  Newman,  Vice  President    Federal  Regulatory,  US  WEST,  to 
 Magalie  R.  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98  Attachment  A 
 (filed  August  18,  1999)  (US  WEST  August  18,  1999  Ex  Parte). 
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 Ameritechs  territory,  only  six  percent  of  Ameritechs  wire  centers  are  served  by  four  or 
 more  competitive  switches.  559 

 282.  We  recognize  that  drawing  the  line  at  the  top  50  MSAs  means  that 
 incumbent  LECs  serving  more  rural  territories,  which  have  fewer  MSAs  that  are  in  the 
 top  50  MSAs,  will  continue  to  be  subject  to  an  unbundled  switching  obligation.  We 
 nonetheless  believe  that  this  is  a  reasonable  exercise  of  our  administrative  discretion. 
 Extending  an  incumbent  LECs  switch  unbundling  exemption  to  include  more  than  the 
 top  50  MSAs  would  require  us  to  find  that  requesting  carriers  are  not  impaired  without 
 unbundled  access  to  local  circuit  switching  in  these  MSAs.  We  have  no  basis  in  the 
 record  before  us  to  make  such  a  finding  because  there  are  relatively  few  competitive 
 switches  outside  of  the  top  50  MSAs. 

 283.  We  note  that  collocation  costs  and  delay,  as  compared  to  revenue  potential, 
 may  contribute  to  the  relative  lack  of  robust  competitive  switch  deployment  in  areas 
 outside  of  the  top  50  MSAs.  As  discussed  above,  the  total  costs  of  a  competitor  using 
 self-  provisioned  local  circuit  switching  on  an  MSA  basis  include  the  costs  incurred  in 
 providing  service  to  every  customer  that  the  competitor  seeks  to  serve.  We  concluded 
 above  that  collocation  imposes  indirect  costs  on  carriers  installing  their  own  switches.  560 
 We  also  found  that  the  amount  of  collocation  cost  are  likely  to  vary  according  to 
 individual  requesting  carriers.  561  We  believe  that  the  revenue  potential  of  serving  less 
 dense  markets  outside  the  top  50  MSAs  is  unlikely  to  outweigh  the  costs  of  collocating  in 
 these  markets,  and  accordingly,  competitors  are  impaired  without  access  to  unbundled 
 local  switching. 

 284.  Density  Zone  1.  When  we  examine  the  deployment  of  switches  by 
 competitors  at  a  more  granular  level,  we  find  that,  based  on  the  record  before  us, 
 requesting  carriers  have  deployed  greater  numbers  of  switches  in  areas  of  high  customer 
 density.  Several  incumbent  LECs  argue  that  switching  should  not  be  unbundled  in  dense 
 wire  centers,  but  each  proffers  its  own  geographic  market  definition  for  our  local  circuit 
 switch  unbundling  analysis.  562  BellSouth  proposes,  and  other  incumbent  LECs  support, 
 the  use  of  density  zones  1  and  2  to  capture  the  areas  in  which  competitors  have  deployed 
 switches  and  where  incumbent  LECs  need  not  unbundle  switching.  563 

 559  See  Letter  from  Christopher  M.  Heimann,  Director  of  Legal  Affairs,  Ameritech  to  Magalie 
 R.  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  September  7,  1999) 
 (Ameritech  September  7  Ex  Parte). 

 560  See  supra  Section  (V((  D)(  1). 

 561  Id. 
 562  Id. 
 563  47  C.  F.  R.    69.123.  Incumbent  LECs  generally  proceed  through  a  three-  step  process  to 
 assign  central  offices  to  density  zones  within  a  given  study  area.  In  the  first  step,  an  incumbent  LEC  ranks  its 
 wire  centers  in  order  of  decreasing  traffic  density,  based  on  some  measure  of  density  chosen  by  the  incumbent 
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 285.  We  conclude  that  it  is  appropriate  to  create  an  exception  to  the  local  circuit 
 switching  unbundling  obligation  only  in  density  zone  1,  within  the  top  50  MSAs.  The 
 exception  applies  to  density  zone  1  as  it  was  defined  on  January  1,  1999.  Based  on  the 
 limited  evidence  in  the  record,  we  believe  that  density  zone  1  closely  reflects  the  wire 
 centers  where  competitive  LEC  switches  are  located.  In  particular,  of  the  seven  markets 
 in  the  top  50  MSAs  served  by  BellSouth,  each  MSA  contains  at  least  one  density  zone 
 1  564  where  approximately  97  percent  of  all  competitive  LEC  switches  have  been 
 deployed.  565  We  recognize  that  only  one  commenter,  BellSouth,  provided  detailed  data  to 
 describe  where  requesting  carriers  have  deployed  switches  in  density  zone  1.  The  record 
 does  not  contain  similar  data  for  other  incumbent  LECs.  Given  the  record  before  us  and 
 the  need  to  provide  a  measure  of  certainty  to  the  market,  we  believe  that  drawing  a  line  at 
 density  zone  1  within  the  top  50  MSAs  represents  a  reasonable  approximation  of  where 
 requesting  carriers  are  not  impaired  without  access  to  unbundled  local  circuit  switching. 

 286.  In  order  to  prevent  incumbent  LECs  from  modifying  their  density  zones  to 
 limit  their  unbundling  obligation  for  local  circuit  switching,  we  freeze,  for  unbundling 
 purposes,  the  incumbent  LECs  density  zone  1  as  it  was  defined  on  January  1,  1999. 
 Otherwise,  incumbent  LECs  would  retain  significant  discretion  to  define  their  density 
 zone  boundaries  in  the  future.  The  Commission  reviews  incumbent  LEC  zone  density 
 pricing  plans  under  a  reasonableness  standard.  566  For  example,  our  rules  allow 
 incumbent  LECs  to  define  zone  boundaries  upon  a  showing  that  the  assignment  of 
 central  offices  to  each  of  the  zones  reflects  cost-  related  characteristics,  such  as  traffic 
 density  or  some  measure  of  traffic  through  each  office.  567  MCI  WorldCom  argues  that 

 LEC.  In  the  second  step,  the  incumbent  LEC  sets  breakpoints  within  the  zone  density  ranking  to  partition  the 
 wire  centers  into  zones,  and  finally,  an  incumbent  LEC  further  adjusts  the  zones  as  it  sees  fit,  based  on 
 geographic  contiguity  or  community  of  interest  reasons.  See  Expanded  Interconnection  Order,  7  FCC  Rcd  at 
 7454-  55,  para.  179;  47  C.  F.  R.    61.38(  b)(  4).  See  also  Access  Charge  Reform,  CC  Docket  No.  96-  262,  Fifth 
 Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  1999  WL  669188,  (rel.  August  5,  1999).  See 
 Letter  from  Kathleen  B.  Levitz,  Vice  President    Federal  Regulatory  BellSouth,  to  Magalie  R.  Salas, 
 Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  July  28,  1999)  (Incumbent 
 LEC  Joint  Ex  Parte)  (96%  of  Zone  1  wire  centers  served  by  one  or  more  CLEC  switches;  84  %  of  Zone  2 
 wire  centers  served  by  one  or  more  CLEC  switches). 

 564  BellSouth  Comments  at  Attachment  D. 

 565  See  BellSouth  Comments  at  59.  Specifically,  in  Atlanta,  competitive  LECs  have  deployed 
 20  switches  in  zone  1;  in  Miami,  13  switches  in  zone  1;  in  Orlando,  9  switches  in  zone  1;  in  Charlotte,  9 
 switches  in  zone  1;  in  New  Orleans,  7  switches  in  zone  1;  in  Nashville,  7  switches  in  zone  1;  and  in 
 Greensboro,  2  switches  in  zone  1. 

 566  See  GTE  Service  Corporation  Revised  Zone  Density  Pricing  Plan,  Order,  10  FCC  Rcd. 
 5696,  5697  para.  7  (1995);  BellSouth  Telecommunications  Inc.,  GTE  Service  Corporation,  Lincoln  Telephone 
 and  Telegraph  Co.  NYNEX  Telephone  Companies,  Pacific  Bell,  and  Rochester  Telephone  Corporation  Zone 
 Density  Pricing  Plans,  Order,  8  FCC  Rcd  4443,  4446,  para.  8  (1993)  (First  Zone  Density  Order). 

 567  See  Expanded  Interconnection  Order,  7  FCC  Rcd  at  7454-  55,  para  179;  47  C.  F.  R.   
 61.38(  b)(  4).  MCI  WorldCom  notes  that  it  is  unaware  of  any  zone  density  plan  that  has  been  found 
 unreasonable.  Letter  from  Chuck  Goldfarb,  Director,  Law  and  Public  Policy,  MCI  WorldCom  to  Larry 
 Strickling,  Chief,  Common  Carrier  Bureau,  Federal  Communications  Commission  (filed  August  9,  1999). 
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 using  the  zone  approach  would  allow  incumbent  LECs  to  redefine  breakpoints  to  put 
 more  central  offices  into  zones  in  which  the  incumbent  LECs  were  not  required  to 
 provide  switching  as  an  unbundled  network  element  and  would  allow  incumbent  LECs 
 to  change  their  methodologies  for  defining  zones  to  upset  their  competitors  business 
 plans.  568  To  address  the  possibility  that  incumbent  LECs,  going  forward,  could  amend 
 their  density  zones  to  minimize  their  unbundling  obligations,  we  create  an  exception  to 
 the  unbundling  obligation  in  the  density  zones  as  they  existed  on  January  1,  1999.  569  We 
 believe  that  freezing  the  zones  as  of  January  1,  1999,  for  purposes  of  section  251 
 unbundling  obligations,  addresses  MCI  WorldComs  concerns. 

 287.  As  discussed  in  our  unbundling  analysis  above,  as  requesting  carriers 
 switch  utilization  rates  increase,  the  difference  between  the  switching  costs  incurred  by 
 competitive  and  incumbent  LECs  decreases,  and  the  per  line  switching  costs  will  decrease 
 as  a  requesting  carriers  customer  base  grows.  570  Because  of  increased  demand  for 
 telecommunications  services  and  the  enhanced  revenue  opportunities  associated  with 
 serving  customers  in  high-  density  areas,  such  as  density  zone  1,  we  find  that  requesting 
 carriers  serving  these  dense  areas  are  able  to  make  more  efficient  use  of  their  switching 
 facilities,  and  can  thus  counter  incumbent  LEC  scale  economies.  We  therefore  find  that 
 the  cost  of  purchasing  a  circuit  switch  does  not  impair  a  requesting  carriers  ability  to 
 provide  the  services  it  seeks  to  offer  in  density  zone  1,  in  certain  circumstances. 

 288.  Need  for  Enhanced  Extended  Link.  Our  conclusion  that  competitors  are  not 
 impaired  in  certain  circumstances  without  access  to  unbundled  switching  in  density  zone 
 1  in  the  top  50  MSAs  also  is  predicated  upon  the  availability  of  the  enhanced  extended 
 link  (EEL).  As  noted  in  section  VI(  B)  above,  the  EEL  allows  requesting  carriers  to  serve 
 a  customer  by  extending  a  customers  loop  from  the  end  office  serving  that  customer  to  a 
 different  end  office  in  which  the  competitor  is  already  collocated.  The  EEL  therefore 
 allows  requesting  carriers  to  aggregate  loops  at  fewer  collocation  locations  and  increase 
 their  efficiencies  by  transporting  aggregated  loops  over  efficient-  high  capacity  facilities  to 
 their  central  switching  location.  Thus,  the  cost  of  collocation  can  be  diminished  through 
 the  use  of  the  EEL.  We  agree  with  ALTS  that,  if  requesting  carriers  can  obtain 
 nondiscriminatory,  cost-  based  access  to  the  enhanced  extended  link,  their  collocation 

 568  MCI  WorldCom  argues  that  where  a  requesting  carrier  plans  to  purchase  unbundled 
 switching,  the  incumbent  LEC  could  change  its  methodology  for  ranking  central  office  traffic  density  in  such 
 a  way  that  the  central  office  changed  zones,  and  the  incumbent  LEC  was  no  longer  required  to  offer  switching 
 to  requesting  carriers.  MCI  is  further  unaware  of  any  incumbent  LEC  methodology  or  zone  plan  that  has  ever 
 been  found  unreasonable.  See  MCI  WorldCom  August  9  Ex  Parte. 

 569  See  CompTel  August  19  Ex  Parte  (supporting  use  of  density  zone  1  as  they  existed  on 
 January  1,  1999  in  top  MSAs.). 
 570  As  previously  noted,  MCI  WorldCom  contends  that  at  10%  percent  market  penetration, 
 switching  costs  for  a  requesting  carrier  are  about  132%  above  incumbent  LEC  switching  costs  but  decrease  to 
 31%  above  incumbent  LEC  switching  costs  at  30%  penetration  levels.  See  MCI  WorldCom  Comments  at  51 
 and  MCI  WorldCom  Bryant  Decl.  at  para.  30). 
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 costs  would  decrease,  and  they  would  need  to  collocate  in  as  few  as  one  incumbent  LEC 
 central  office  in  an  MSA  to  provide  service.  571 

 289.  We  are  not  persuaded  by  arguments  that  use  of  the  EEL  produces  only  a 
 short  term  advantage  over  collocation.  572  Although  we  agree  with  SBC  that  distance-sensitive 
 EEL  costs  can  exceed  the  costs  associated  with  collocation  over  time,  we  find 
 that  the  ability  of  a  requesting  carrier  to  provision  EELs  more  quickly  than  collocation 
 arrangements,  without  the  substantial  upfront  costs  of  establishing  collocation  in  multiple 
 central  offices,  can  reduce  significantly  the  costs  of  self-  provisioning  a  switch  in  the 
 initial  phase  of  an  entry  strategy.  When  projected  EEL  costs  exceed  projected  collocation 
 costs,  competitive  LECs  may  reconfigure  their  networks  to  ensure  the  continued 
 efficiency  of  their  networks.  We  conclude  that  requesting  carriers,  reacting  to 
 marketplace  demands  and  their  own  network  topologies,  are  better  able  to  weigh  the  costs 
 and  benefits  of  EELs  compared  to  collocation  and  adjust  their  plans  accordingly.  Where 
 a  requesting  carrier  chooses  the  EEL,  we  find  that  it  reduces  a  requesting  carriers 
 reliance  on  collocation. 

 290.  Customers  with  Four  or  More  Lines.  Our  analysis  of  an  incumbent  LECs 
 local  circuit  switching  obligation  has  focused  primarily  upon  the  geographic  areas  where 
 competitive  carriers  have  deployed  switches.  We  now  consider  whether,  within  these 
 geographic  areas,  market  facts  demonstrate  that  requesting  carriers  are  not  impaired 
 without  access  to  local  circuit  switching  for  discrete  market  segments  or  customer  classes. 

 291.  We  conclude  that  without  access  to  unbundled  local  circuit  switching, 
 requesting  carriers  are  impaired  in  their  ability  to  serve  the  mass  market.  As  discussed 
 above,  our  unbundling  analysis  takes  into  account  market  conditions  to  determine 
 whether  a  requesting  carrier  is  impaired  without  access  to  unbundled  local  circuit 
 switching.  Since  the  Commission  adopted  the  Local  Competition  First  Report  and  Order, 
 competition  has  continued  to  develop,  primarily  for  business  customers  or  users  with 
 substantial  telecommunications  needs.  573  Commenters  in  this  proceeding  generally  argue 
 that  requesting  carriers  have  deployed  switches  to  serve  medium  and  large  business 

 571  ALTS  Comments  at  62. 
 572  In  Texas,  SBC  compares  a  $21  monthly  loop  cost  and  a  $29  EEL  cost  which  does  not 
 include  approximately  $40  per  month  of  distance  sensitive  transport  costs  (assuming  8  miles  from  the  SBC 
 central  office  to  collocation  cage).  SBC  further  assumes  that  requesting  carriers  incur  on  average  a  $15,405 
 non-  recurring  charge  for  collocation  and  a  $995  recurring  charge  per  month  for  collocation.  Thus,  under 
 SBCs  cost  analysis,  it  would  take  a  requesting  carrier  a  matter  of  months  before  the  recurring  EEL  and 
 transport  costs  are  greater  than  the  up-  front  collocation  expenses.  See  Letter  from  Lincoln  E.  Brown,  Director 
 -  Federal  Regulatory,  SBC,  to  Magalie  R.  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket 
 No.  96-  98  (filed  July  15,  1999). 

 573  See  Advanced  Services  Memorandum  Opinion  and  Order  and  NPRM,  13  FCC  Rcd  at  n.  80 
 (  The  local  competition  that  has  developed  has  focused  on  larger  business  customers  in  large  cities,  not  on 
 residential  or  small  business  customers.).  See  also  Trends  in  Telephone  Service,  Industry  Analysis  Division, 
 Common  Carrier  Bureau,  Federal  Communications  Commission,  September  1999,  at  Section  9-  1. 
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 customers  and  are  not  yet  serving  mass  market  customers,  which  largely  are  residential 
 customers.  574  No  party  in  this  proceeding,  however,  identifies  the  characteristics  that 
 distinguish  medium  and  large  business  customers  from  the  mass  market. 

 292.  There  are  several  methods  we  could  use  to  distinguish  between  the  mass 
 market  and  the  medium  and  large  business  market  for  purposes  of  our  unbundling 
 analysis.  For  example,  we  could  use  revenues,  number  of  employees,  number  of  lines,  or 
 some  other  factor  to  distinguish  between  the  mass  market  and  the  medium  and  large 
 business  market. 

 293.  We  find,  however,  that  a  rule  that  provides  access  to  unbundled  local 
 switching  for  requesting  carriers  when  they  serve  customers  with  three  lines  or  less 
 captures  a  significant  portion  of  the  mass  market.  First,  virtually  all  residential  customers 
 would  be  captured  by  such  a  rule.  While  an  increasing  number  of  American  homes  are 
 served  by  second  lines,  we  believe  it  is  a  rare  case  in  which  residences  have  three  lines, 
 and  even  more  unusual  for  a  home  to  have  four  or  more  lines.  Second,  any  business  that 
 has  three  or  fewer  lines  is  likely  to  share  more  characteristics  of  the  mass  market 
 customer  than  a  medium  and  large  business.  In  particular,  small  businesses  are  likely  to 
 use  the  same  number  of  lines  as  many  residential  subscribers  and  purchase  similar 
 volumes  and  types  of  telecommunications  services. 

 294.  We  recognize  that  a  rule  that  removes  unbundling  obligations  based  on  line 
 count  will  be  marginally  overinclusive  or  underinclusive  given  individual  factual 
 circumstances.  We  find,  however,  that  in  our  expert  judgment,  a  rule  that  distinguishes 
 customers  with  four  lines  or  more  from  those  with  three  lines  or  less  reasonably  captures 
 the  division  between  the  mass  market    where  competition  is  nascent    and  the  medium 
 and  large  business  market    where  competition  is  beginning  to  broaden. 

 295.  Our  decision  to  examine  mass  market  and  larger  business  markets 
 separately  is  consistent  with  the  Commissions  merger  review  analysis  and  the 
 Commissions  reform  of  the  interstate  access  charge  regime.  In  the  MCI-  WorldCom 
 merger,  we  identified  two  distinct  product  markets    residential  and  small  business,  which 
 we  described  as  one  market,  and  medium  and  large  business  customers,  which  we 
 described  as  the  larger  business  market.  575  In  the  Access  Reform  proceeding,  the 
 Commission  distinguished  between  primary  residences  and  single  line  businesses  which 
 constitute  a  large  portion  of  the  mass  market,  and  multi-  line  business  customers  which 

 574  USTA  UNE  Report  at  I-  10-  I-  19  &  App.  A.  See  also  Ameritech  Comments  at  73-  79; 
 AT&  T  Reply  Comments  at  104;  BellSouth  Comments  at  58-  59;  GTE  Comments  at  40-  42,  46-  47;  SBC 
 Comments  at  36,  38;  US  WEST  Comments  at  42-  43. 

 575  See  Application  of  WorldCom,  Inc.  and  MCI  Communications  Corporation  for  Transfer  of 
 Control  of  MCI  Communications  Corporation  to  WorldCom,  Inc.,  Memorandum  Opinion  and  Order,  13  FCC 
 Rcd  18025,  at  paras.  24-  26  (1998)  (  we  identify  two  distinct  product  markets,  reflecting  customers  groups 
 with  different  patters  of  demand:  (1)  residential  customers  and  small  business  (mass  market);  and  (2) 
 medium-  sized  and  large  business  customers  (larger  business  market).). 
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 constitute  the  medium  and  large  business  markets.  576  We  therefore  conclude  that  it  is 
 appropriate  to  make  a  similar  distinction  between  mass  market  customers  and  larger 
 business  customers  in  creating  an  exception  to  the  unbundling  obligation  for  local  circuit 
 switching. 

 296.  As  discussed  above,  a  requesting  carrier  is  materially  diminished  in  its 
 ability  to  offer  service  to  mass  market  customers  without  access  to  unbundled  switching 
 because  it  will  face  materially  greater  costs,  materially  greater  delay,  and  will  lack  the 
 same  ubiquitous  reach  as  the  incumbent  LECs  network.  In  addition  to  the  costs  of 
 establishing  a  collocation  arrangement  with  the  incumbent  LEC,  we  noted  above  that 
 requesting  carriers  incur  additional  costs  and  face  service  quality  impediments  when 
 extending  a  customers  loop  to  their  collocation  cages.  577 

 297.  In  contrast,  marketplace  developments  suggest  that  competitors  are  not 
 impaired  in  their  ability  to  serve  certain  high-  volume  customers  in  the  densest  areas.  We 
 believe  that  the  coordinated  cutover  process  will  not  necessarily  impair  the  ability  of  a 
 requesting  carrier  to  serve  an  end  user  in  density  zone  1.  Medium  and  large  business 
 customers  are  often  sophisticated  users  of  telecommunications  services  that  are  able  to 
 order  their  operations  in  a  manner  that  minimizes  disruptions  that  may  be  caused  by 
 coordinated  cutovers.  578  For  example,  requesting  carriers  seeking  to  provide  service  to 
 medium  and  large  business  customers  may  engage  in  direct  outbound  marketing  in  such  a 
 way  as  to  control  coordinated  cutover  order  flows  to  the  incumbent  LEC.  579  In  addition, 
 to  the  extent  that  incumbent  LECs  provide  requesting  carriers  with  unbundled  switching 
 to  serve  the  mass  market,  requesting  carriers  will  require  fewer  coordinated  loop  cutovers 
 in  the  aggregate  and  can  focus  their  efforts  on  coordinated  cutovers  for  customers  not 
 served  with  unbundled  local  circuit  switching.  580  Finally,  because  business  customers 

 576  See  Access  Charge  Reform,  CC  Docket  No.  96-  262  et  al.,  First  Report  and  Order,  12  FCC 
 Rcd  15982  (1997)  (Access  Charge  Reform  Order),  aff'd  sub  nom.  Southwestern  Bell  Tel.  Co.  v.  Fed. 
 Communications  Comm'n,  ___  F.  3d  ___  (8th  Cir.,  Aug.  19,  1998);  Order  on  Reconsideration,  12  FCC  Rcd 
 10119  (1997),  Second  Order  on  Reconsideration  and  Memorandum  Opinion  and  Order,  12  FCC  Rcd  16606 
 (1997)  (distinguishing  between  primary  residences,  single  line  business  and  multi-  line  business  customers). 

 577  See  supra  para.  268.  We  note  that  for  medium  and  large  business  customers  in  dense  wire 
 centers,  many  requesting  carriers  serve  these  customers  with  their  own  SONET  rings  and  thus  incur  no 
 additional  hot  cut  costs,  delays  or  service  quality  impairments. 

 578  For  example,  coordinated  cutovers  that  do  not  occur  during  normal  business  hours  may  not 
 disrupt  the  operations  of  a  business  customer. 
 579  For  example,  a  competitive  LEC  may  use  a  sales  force  instead  of  mass  market  advertising 
 to  control  the  demand  for  its  services  and  thus  the  number  of  coordinated  cutovers  required  to  serve  its 
 customers. 

 580  In  Ameritechs  territory,  the  market  segment  for  business  customers  with  three  lines  or  less 
 accounts  for  approximately  72  percent  of  Ameritechs  business  customer  base.  See  Letter  from  James  K. 
 Smith,  Director,  Federal  Relations,  Ameritech,  to  Magalie  R.  Salas,  Secretary,  Federal  Communications 
 Commission,  CC  Docket  No.  96-  98  (filed  September  8,  1999)(  Ameritech  Business  Customer  Base  by  Line 
 Size). 
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 generate  comparably  greater  revenues  than  residential  customers,  requesting  carriers  may 
 be  more  willing  to  incur  the  provisioning  difficulties  that  may  be  present  in  the 
 coordinated  cutover  process. 

 298.  We  conclude  that  carriers  will  not  be  impaired  in  their  ability  to  serve  high 
 volume  users  only  when  the  EEL  is  provided  throughout  density  zone  1.  While  some 
 customers  in  this  area  already  are  being  served  by  facilities-  based  carriers  without  the 
 EEL,  the  availability  of  the  EEL  will  ensure  that  requesting  carriers  are  able  to  serve 
 customers  ubiquitously  throughout  the  area.  If  the  EEL  is  available  and  a  requesting 
 carrier  seeks  to  serve  a  high  volume  business,  the  incumbent  LEC  can  provision  the  high 
 capacity  loop  and  connect  directly  to  a  requesting  carriers  collocation  cage.  581  In  this 
 scenario,  the  requesting  carrier  need  not  initiate  a  coordinated  loop  cutover.  Moreover, 
 the  availability  of  the  EEL  substantially  reduces  the  delay  a  requesting  carrier  would 
 experience  before  it  is  able  to  actually  provide  service.  582 

 299.  Goals  of  the  1996  Act.  As  noted  above,  our  unbundling  analysis  considers 
 how  the  switching  unbundling  obligation  we  adopt  will  encourage  requesting  carriers  to 
 rapidly  enter  the  local  market  and  whether  the  failure  to  require  unbundling  will  cause  any 
 class  of  consumers  to  wait  unnecessarily  for  competitive  alternatives.  Our  decision  to 
 relieve  incumbent  LECs  from  their  unbundling  obligations  in  the  circumstances  described 
 above  will  not  require  medium  and  large  businesses  to  wait  unnecessarily  for  competitive 
 alternatives.  We  find  that  requesting  carriers  have  deployed  a  large  number  of  switches  to 
 serve  medium  and  large  business  customers  in  the  densest  areas  of  the  top  50  MSAs,  and 
 these  medium  and  large  business  customers  by  and  large,  have  a  choice  in  their  local 
 service  provider.  583  Accordingly,  we  find  that  relieving  incumbent  LECs  of  their 
 unbundled  switching  obligation,  as  set  forth  herein,  will  not  require  medium  and  small 
 business  consumers  to  wait  unnecessarily  for  competitive  alternatives  because  they  are 
 largely  available  today.  Furthermore,  eliminating  an  incumbent  LECs  local  circuit 
 switching  obligation  in  these  circumstances  is  consistent  with  our  goal  to  reduce 
 regulation  when  possible.  Our  decision  also  provides  requesting  carriers  with  access  to 
 the  elements  they  need  to  ramp  up  towards  continued  deployment  of  self-  provisioned 
 switches  and  is  therefore  consistent  with  our  policies  of  encouraging  facilities-  based 
 competition  and  encouraging  innovation. 

 581  Furthermore,  requesting  carriers  and  incumbent  LECs  have  developed  routine  provisioning 
 processes  to  deploy  the  EEL  using  the  ASR  or  Access  Service  Request  process,  and  thus  requesting  carriers 
 will  not  face  material  provisioning  delays  and  costs  to  integrate  the  EEL  into  their  networks. 

 582  See  Letter  from  Jonathan  E.  Canis,  Counsel  for  ALTS,  Intermedia,  e.  spire,  to  Magalie  R. 
 Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  August  27,  1999). 
 583  AT&  T  Reply  Comments  at  104  (  AT&  Ts  two  5ESS  switches  in  Dallas  .  .  .  are  not  being 
 used  to  reach  .  .  .  as  much  as  98  percent  .  .  .  of  the  addressable  business  and  residential  market  as  GTE 
 claims  is  the  case.  [citations  omitted].  Rather,  those  switches  like  AT&  Ts  DMS-  100  in  Washington,  D.  C. 
 are  being  used  to  offer  service  to  business  customers.  The  same  is  true  for  each  of  AT&  Ts  local  switching  in 
 other  markets,  such  as  Los  Angeles,  Denver,  Detroit  and  Tampa.). 
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 2.  Packet  Switching 
 a.  Background 

 300.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  declined 
 to  find  that  incumbent  LEC  packet  switches  should  be  identified  as  unbundled  network 
 elements  because  the  Commission  did  not  have  an  adequate  record  to  support  such  a 
 conclusion.  584  In  the  Notice,  we  sought  comment  on  whether  packet  switches  should  be 
 unbundled  pursuant  to  section  251(  c)(  3),  and  whether  there  is  any  basis  for  treating 
 network  elements  used  in  the  provisioning  of  packet-  switched  advanced  services  any 
 differently  than  those  used  in  the  provisioning  of  circuit-  switched  voice  services.  585 
 Incumbent  LECs  argue  that  they  generally  trail  in  the  deployment  of  packet  switches,  and 
 therefore  should  not  be  subject  to  unbundling  requirements  that  might  eliminate  their 
 incentives  to  invest  in  equipment  used  to  provide  advanced  services.  586  Several 
 competitors  argue  in  favor  of  unbundling  packet  switching  to  encourage  the  broad-  based 
 deployment  of  advanced  services.  587 

 301.  We  are  aware,  however,  that  US  WEST  has  argued  that  section  251(  c)(  3) 
 does  not  apply  to  any  network  elements,  such  as  packet  switches,  used  to  provide 
 advanced  services,  such  as  xDSL.  588  We  note  that  the  Commission  has  requested,  and 
 has  received,  a  remand  from  the  United  States  Court  of  Appeals  for  the  District  of 
 Columbia  Circuit  to  address  US  WESTs  argument  that  the  Commission  is  without 
 statutory  authority  to  require  incumbent  LECs  to  provide  access  to  unbundled  elements 
 used  in  the  provision  of  advanced  services.  589  After  receiving  a  more  complete 
 administrative  record,  we  intend  to  fully  address  US  WESTs  arguments  in  the  Advanced 
 Services  Memorandum  Opinion  and  Order  and  NPRM  remand  proceeding.  590  In 
 remanding  back  to  the  agency,  the  court  declined  to  vacate  portions  of  the  Advanced 

 584  Local  Competition  First  Report  and  Order,  11  FCC  Rcd.  at  15713,  para.  427. 
 585  Notice  at  para  35. 
 586  SBC  Reply  Comments  at  26-  27,  74,  76-  77;  US  WEST  Comments  at  57-  58;  BellSouth 
 Comments  at  32-  33;  Bell  Atlantic  Comments  at  40.  See  also  Ameritech  Comments  at  118;  GTE  Comments 
 at  73  (Incumbent  LECs  should  not  have  to  unbundle  packet  switches  because  CLECs  and  cable  companies 
 lead  in  the  deployment  of  such  services.). 

 587  Allegiance  Comments  at  16;  Cable  &  Wireless  Comments  at  4;  Covad  Comments  at  6; 
 GSA  Comments  at  6;  KMC  Comments  at  25-  26;  Net2000  Comments  at  130;  Qwest  Reply  Comments  at  66. 
 588  US  WEST  Comments  at  56,  n.  122. 

 589  See  US  WEST  v.  Federal  Communications  Commission,  Order  No.  98-  1410  (D.  C.  Cir.  Aug. 
 25,  1999). 
 590  See  Comments  Requested  in  Connection  with  Court  Remand  of  August  1998  Advanced 
 Services  Order,  Public  Notice,  CC  Docket  Nos.  98-  11,  98-  26,  98-  32,  98-  78,  98-  91,  98-  147  (rel.  September  9, 
 1999). 
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 Services  Memorandum  Opinion  and  Order  and  NPRM  challenged  by  US  WEST. 
 Accordingly,  our  decision  in  that  Order  that  xDSL  services  are  either  telephone 
 exchange  service  or  exchange  access  service  remains  in  effect  during  the  pendency  of  the 
 Advanced  Services  Memorandum  Opinion  and  Order  and  NPRM  remand  proceeding.  591 
 We  therefore  may  consider  whether  packet  switching  should  be  unbundled  under  the 
 framework  established  in  this  proceeding. 

 b.  Discussion 
 (i)  Definition  of  Packet  Switching 

 302.  As  a  threshold  matter,  we  must  define  the  functionality  of  the  packet 
 switching  unbundled  network  element.  In  packet-  switched  networks,  messages  between 
 network  users  are  divided  into  units,  commonly  referred  to  as  packets,  frames,  or  cells. 
 These  individual  units  are  then  routed  between  network  users.  The  switches  that  provide 
 this  routing  function  are  packet  switches,  and  the  function  of  routing  individual  data 
 units  based  on  address  or  other  routing  information  contained  in  the  units  is  packet 
 switching.  592 

 303.  We  find  that  a  component  of  the  packet  switching  functionality,  and 
 included  in  our  definition  of  packet  switching  is  the  Digital  Subscriber  Line  Access 
 Multiplexer  (DSLAM).  The  DSLAM  splits  voice  (low  band)  and  data  (high  band) 
 signals  carried  over  a  copper  twisted  pair.  DSLAM  equipment  sometimes  includes  a 
 splitter.  If  not,  a  separate  splitter  device  separates  voice  and  data  traffic.  The  voice  signal 
 is  transmitted  toward  a  circuit  switch,  and  the  data  from  multiple  lines  is  combined  in 
 packet  or  cell  format  and  is  transmitted  to  a  packet  switch,  typically  ATM  or  IP.  The 
 DSLAM  combines:  (1)  the  ability  to  terminate  copper  customer  loops  (which  includes 
 both  a  low-  band  voice  channel  and  a  high-  band  data  channel,  or  solely  a  data  channel); 
 (2)  the  ability  to  forward  the  voice  channels,  if  present,  to  a  circuit  switch  or  multiple 
 circuit  switches;  (3)  the  ability  to  extract  data  units  from  the  data  channels  on  the  loops; 
 and  (4)  the  ability  to  combine  data  units  from  multiple  loops  onto  one  or  more  trunks  that 
 connect  to  a  packet  switch  or  packet  switches. 

 304.  We  define  packet  switching  as  the  function  of  routing  individual  data  units, 
 or  packets,  based  on  address  or  other  routing  information  contained  in  the  packets.  The 
 packet  switching  network  element  includes  the  necessary  electronics  (e.  g.,  routers  and 
 DSLAMs).  We  find  that  packet  switching  qualifies  as  a  network  element  because  it 
 includes  all  features,  functions  and  capabilities  .  .  .  sufficient  .  .  .  for  transmission, 

 591  Advanced  Services  Memorandum  Opinion  and  Order  and  NPRM,  13  FCC  Rcd  at  24032,  at 
 para.  40. 
 592  With  packet  switching,  the  packet  switches  place  data  units  on  inter-  switch  trunks  only 
 when  there  are  active  communications  between  network  users.  When  users  are  not  sending  each  other 
 messages  or  packets,  no  bandwidth  is  used  on  the  trunks  between  packet  switches.  By  contrast,  with  voice 
 connections  between  circuit  switches,  when  both  users  are  silent,  the  digital  trunks  carry  digitally  encoded 
 silence.  Inter-  switch  bandwidth  is  required  even  when  no  information  is  being  exchanged. 
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 routing  or  other  provision  of  a  telecommunications  service.  593  Because  packet  switching 
 and  DSLAMs  are  used  to  provide  telecommunications  services,  packet  switching 
 qualifies  as  a  network  element.  594  We  adopt  a  definition  of  packet  switching  that  does  not 
 favor  or  disadvantage  one  packet  switching  technology  over  another.  Our  intention  is  to 
 define  packet  switching  in  such  a  way  as  to  capture  the  functionality  of  packet  networks, 
 without  regard  to  a  particular  packetizing  technology  that  an  incumbent  LEC  has 
 deployed  in  its  network.  Several  parties  propose  definitions  of  packet  switching  which 
 elaborate  on  the  Commissions  existing  circuit  switching  definition.  595  We  decline  to 
 adopt  proposed  definitions  of  packet  switching  that  exclude  DSLAMs  from  the  packet 
 switching  functionality.  596  We  further  decline  to  adopt  equipment-  specific  packet 
 switching  network  elements,  as  proposed  by  Intermedia  and  e.  spire.  597  We  find  that  with 
 todays  technology,  packetizing  is  an  integral  function  of  the  DSLAM.  Accordingly,  we 
 include  the  DSLAM  functionality,  with  the  routing  and  addressing  functions  of  packet 
 switches,  in  our  functional  definition  of  packet  switching. 

 (ii)  Proprietary  Concerns  Associated  With  Packet  Switching 

 305.  No  party  alleged  that  packet  switching  was  proprietary  within  the  meaning 
 of  section  251(  d)(  2).  We  find  that  the  record  provides  no  basis  for  withholding  packet 
 switching  from  competitors  based  on  proprietary  considerations  or  subjecting  packet 
 switching  to  the  more  demanding  necessary  standard  set  forth  in  section 
 251(  d)(  2)(  A).  598  Instead  we  examine  packet  switching  under  the  impair  standard  of 
 section  251(  d)(  2)(  B). 

 (iii)  Unbundling  Analysis  for  Packet  Switching 

 306.  We  decline  at  this  time  to  unbundle  the  packet  switching  functionality, 
 except  in  limited  circumstances.  Among  other  potential  factors,  we  recognize  that  the 
 presence  of  multiple  requesting  carriers  providing  service  with  their  own  packet  switches 
 is  probative  of  whether  they  are  impaired  without  access  to  unbundled  packet  switching. 
 The  record  demonstrates  that  competitors  are  actively  deploying  facilities  used  to  provide 

 593  Local  Competition  First  Report  and  Order,  11  FCC  Rcd.  at  15633,  para.  262. 
 594  ALTS  Reply  Comments  at  57. 
 595  CompTel  Comments  at  37-  38;  Qwest  Reply  Comments  at  66. 
 596  CompTel  proposed  a  definition  that  includes  the  assembling,  disassembling,  addressing, 
 conversion  or  routing  of  digital  information  in  packet  form.  The  packet  switching  capability  network  element 
 shall  include  all  features,  functions  and  capabilities  of  the  packet  switching  and/  or  routing  devices.  CompTel 
 Comments,  Appendix  A  at  5. 

 597  e.  spire  Joint  Comments  at  30-  31. 

 598  See  MGC  Comments  at  21;  Net2000  Comments  at  13-  14;  Rhythms  Comments  at  19;  TRA 
 Comments  at  12. 
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 advanced  services  to  serve  certain  segments  of  the  market    namely,  medium  and  large 
 business    and  hence  they  cannot  be  said  to  be  impaired  in  their  ability  to  offer  service, 
 at  least  to  these  segments  without  access  to  the  incumbents  facilities.  In  other  segments 
 of  the  market,  namely,  residential  and  small  business,  we  conclude  that  competitors  may 
 be  impaired  in  their  ability  to  offer  service  without  access  to  incumbent  LEC  facilities 
 due,  in  part,  to  the  cost  and  delay  of  obtaining  collocation  in  every  central  office  where 
 the  requesting  carrier  provides  service  using  unbundled  loops.  We  conclude,  however, 
 that  given  the  nascent  nature  of  the  advanced  services  marketplace,  we  will  not  order 
 unbundling  of  the  packet  switching  functionality  as  a  general  matter. 

 307.  Both  the  record  in  this  proceeding,  and  our  findings  in  the  706  Report, 
 establish  that  advanced  services  providers  are  actively  deploying  facilities  to  offer 
 advanced  services  such  as  xDSL  across  the  country.  599  Competitive  LECs  and  cable 
 companies  appear  to  be  leading  the  incumbent  LECs  in  their  deployment  of  advanced 
 services.  600  For  example,  in  1999,  Rhythms  expects  to  roll  out  xDSL  services  in  1,000 
 end  offices  nation  wide.  601  Covads  planned  network  deployment  is  expected  to  reach  51 
 MSAs  by  the  end  of  1999.  602  In  the  past  year,  NorthPoint  deployed  facilities  capable  of 
 transmitting  xDSL  signals  in  17  metropolitan  markets.  603  NorthPoint  plans  to  expand  its 
 DSL-  based  local  networks  from  25  major  markets,  representing  37  metropolitan  statistical 
 areas  (MSAs),  to  28  markets,  or  61  MSAs,  by  the  end  of  1999.  604  Qwest  announced  in 
 August  1999,  that  it  is  now  providing  DSL  service  in  13  U.  S.  markets  and  plans  to 
 expand  to  more  than  30  major  markets  by  the  end  of  1999.  605  In  addition,  EarthLink  has 

 599  USTA  UNE  Report  at  VI-  1  to  8.  706  Report,  14  FCC  Rcd  at  2398.  In  the  706  Report,  we 
 concluded  that  incumbents  and  competitive  carriers  alike  have  made  tens  of  billions  of  dollars  of  investment 
 in  broadband  facilities.  Incumbent  LECs  alone  have  announced  plans  to  offer  broadband,  xDSL  services  to 
 approximately  twenty  million  homes  in  1999.  706  Report,  14  FCC  Rcd  at  2419-  20,  para  42. 

 600  See  706  Report,  14  FCC  Rcd  at  2423-  24,  para.  48.  See  also  Comments  of  GTE  at  74. 

 601  Rhythms  Comments  at  1  (  By  the  end  of  1999,  Rhythms  plans  to  collocate  networking 
 equipment  in  at  least  1,000  central  offices  and  be  operational  in  33  metropolitan  markets.). 
 602  Covad  Comments  at  2  (  Covads  planned  network  deployment  by  the  end  of  1999  will 
 cover  51  MSAs,  more  than  25%  of  the  nations  homes  and  businesses). 
 603  NorthPoint  Comments  at  2  (  In  the  past  year  alone,  for  example,  NorthPoint  has  begun 
 offering  service  in  17  new  markets  in  the  United  States,  including  San  Francisco,  New  York,  Chicago, 
 Pittsburgh  and  Cleveland.).  See  also  Letter  from  John  J.  Heitmann,  Counsel  for  Intermedia/  e.  spire  to 
 Magalie  R.  Salas,  Secretary,  Federal  Communications  Commission  (filed  July  21,  1999).  (  e.  spire  has 
 deployed  66  data  switches  nationwide  and  Intermedia  has  deployed  175  data  switches). 

 604  NorthPoint  Launches  DSL  Service  in  the  Twin  Cities;  Offering  the  Speediest  Business-Class 
 DSL  Service  Around,  August  3,  1999  <<  http://  www.  northpoint.  net/  press/  press_  990803.  html>>. 
 NorthPoint  Brings  DSL  Internet  Access  to  Baltimore,  PRNewswire,  March  30,  1999. 

 605  Qwest  Launches  Digital  Subscriber  Line  Service,  Cambridge  Telecom  Report,  August  1, 
 1999  available  at  1999  WL  8103900. 
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 partnered  with  Sprint  to  offer  nationwide  xDSL  service.  606  KMC  Telecom  Inc. 
 announced  aggressive  rollout  of  DSL  services  with  plans  to  introduce  additional 
 broadband  applications  by  year-  end.  607  Marketplace  developments  like  the  ones  described 
 above  suggest  that  requesting  carriers  have  been  able  to  secure  the  necessary  inputs  to 
 provide  advanced  services  to  end  users  in  accordance  with  their  business  plans.  This 
 evidence  indicates  that  carriers  are  deploying  advanced  services  to  the  business  market 
 initially  as  well  as  the  residential  and  small  business  markets. 

 308.  Several  parties,  in  addition  to  the  incumbent  LECs,  argue  that  the 
 Commission  should  not  unbundle  packet  switching  or  DSLAMS  generally.  608  We 
 recognize  that  equipment  needed  to  provide  advanced  services,  such  as  DSLAMS  and 
 packet  switches,  are  available  on  the  open  market  at  comparable  prices  to  incumbents  and 
 requesting  carriers  alike.  609  Incumbent  LECs  and  their  competitors  are  both  in  the  early 
 stages  of  packet  switch  deployment,  and  thus  face  relatively  similar  utilization  rates  of 
 their  packet  switching  capacity.  Packet  switching  utilization  rates  will  differ  from  circuit 
 switching  utilization  rates  because  of  the  incumbent  LECs  monopoly  position  as  carrier 
 of  last  resort.  Incumbent  LEC  circuit  switches,  because  they  serve  upwards  of  90  percent 
 of  the  circuit  switched  market,  may  achieve  higher  utilization  rates  than  the  circuit 
 switches  of  requesting  carriers.  Because  the  incumbent  LEC  does  not  retain  a  monopoly 
 position  in  the  advanced  services  market,  packet  switch  utilization  rates  are  likely  to  be 
 more  equal  as  between  requesting  carriers  and  incumbent  LECs.  It  therefore  does  not 
 appear  that  incumbent  LECs  possess  significant  economies  of  scale  in  their  packet 
 switches  compared  to  the  requesting  carriers. 

 309.  Collocating  in  incumbent  LEC  central  offices  imposes  material  costs  and 
 delays  on  a  requesting  carrier  and  materially  diminishes  a  requesting  carriers  ability  to 
 provide  the  services  it  seeks  to  offer.  As  discussed  above,  we  identified  the  costs  and 
 delays  associated  with  collocation  as  factors  that  impair  a  requesting  carriers  ability  to 
 self-  provision  circuit  switches  to  serve  residential  and  small  business  market.  610  We  see 
 no  reason  to  distinguish  a  requesting  carriers  collocation-  related  costs  and  delays  to 

 606  Telephony,  Communications  Daily,  July  15,  1999,  at  11. 
 607  Telephony,  Communications  Daily,  June  8,  1999,  at  10. 
 608  Northpoint  Comments  at  18-  19  (stating  that  when  competitive  LECs  have  access  to  loops 
 and  collocation,  any  competitive  LEC  can  provide  the  necessary  infrastructure,  i.  e.  DSLAMs  and  packet 
 switches);  Rhythms  Comments  at  26  (stating  that  incumbent  LECs  must  make  their  DSLAMs  available  on 
 an  unbundled  basis  when  advanced  service  providers  are  unable  to  access  a  full  clean  copper  loop.);  Ohio 
 PUC  Comments  at  15. 

 609  See  ITIC  Comments  at  6-  7  (  ILECs  competitors  can  acquire  and  install  equipment  for 
 advanced  services  on  a  relatively  equal  footing  with  the  incumbent  LECs.  The  relevant  electronic  equipment 
 is  produced  by  numerous  vendors,  establishing  a  competitive  equipment  market  that  can  effectively  discipline 
 prices,  provisioning  and  other  service  terms  for  the  foreseeable  future.). 

 610  See  supra  Section  (V(  D)(  1). 
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 provide  circuit-  switched  service  from  those  collocation  costs  and  delays  incurred  by 
 requesting  carriers  to  provide  packet-  switched  services.  These  costs  and  delays  lead  us  to 
 find  that  competitors  are  impaired  in  their  ability  to  offer  advanced  services  without 
 access  to  incumbent  LEC  facilities.  As  discussed  in  more  detail  below,  that  conclusion  is 
 not  dispositive  of  whether  unbundling  is  appropriate  at  this  time  under  section  251(  d)(  2). 
 As  discussed  in  section  IV  above,  in  addition  to  the  impair  standard  we  consider 
 whether  unbundling  will  open  local  markets  to  competition  and  how  access  to  a  given 
 network  element  will  encourage  the  rapid  introduction  of  local  competition  to  the  benefit 
 of  the  greatest  number  of  customers.  611 

 310.  NorthPoint  argues  that  an  additional  impediment  it  faces  when  providing 
 advanced  services  using  xDSL  technologies  is  the  absence  of  line  sharing.  612  Currently, 
 many  incumbent  LECs  offer  advanced  services  over  the  high-  frequency  range  of  the  same 
 loops  they  use  to  offer  voice  services.  Although  the  incumbent  LEC  may  use  a  single 
 copper  pair  to  provide  xDSL  services,  in  the  absence  of  line  sharing,  requesting  carriers 
 providing  xDSL  services  must  purchase  an  additional  unbundled  loop  to  serve  their 
 customers,  thereby  incurring  additional  non-  trivial  costs.  In  light  of  the  substantial 
 number  of  packet  switches  deployed  by  competitive  LECs,  even  in  comparison  to 
 incumbent  LEC  deployment,  we  conclude  that  these  non-  trivial  costs  are  substantial 
 enough  to  impair  the  requesting  carriers  ability  to  provide  the  services  it  seeks  to  offer 
 within  the  meaning  of  section  251(  d)(  2).  Unlike  circuit  switching  services,  however, 
 requesting  carriers  providing  data  services  do  not  face  the  operational  impediment  of 
 obtaining  a  coordinated  cutover  of  the  loop  on  a  timely  basis,  because  they  typically  are 
 providing  service  over  a  second  line.  Because  such  carriers  purchase  an  additional 
 unbundled  copper  loop  to  serve  the  customer,  the  customers  voice  service  is  never 
 disconnected,  and  the  requesting  carrier  faces  none  of  the  timing  and  quality  impediments 
 associated  with  the  hot  cut  process. 

 311.  We  further  decline  to  unbundle  specific  packet  switching  technologies 
 incumbent  LECs  may  have  deployed  in  their  networks.  E.  spire/  Intermedia  request  that 
 we  require  incumbent  LECs  to  unbundle:  (1)  the  ports  on  their  data  switches  or  routers; 
 and  (2)  the  connectivity,  including  the  switching  fabric  and  associated  software  functions, 
 between  such  ports  at  capacities  ranging  from  DS0  to  DS3.  613  E.  spire/  Intermedia  focus 
 their  request  upon  a  particular  packet-  switching  technology  --  frame  relay.  614 
 E.  spire/  Intermedia  argue  that  they  are  impaired  without  access  to  these  data  unbundled 
 network  elements  to  complete  virtual  circuits  because  they  lack  the  incumbent  LECs 

 611  See  supra  Section  IV. 
 612  See  NorthPoint  Comments  at  14-  15. 
 613  e.  spire/  Intermedia  Comments  at  29. 
 614  See  Letter  from  John  J.  Heitmann,  Counsel  for  Intermedia/  e.  spire,  to  Magalie  R.  Salas, 
 Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  July  21,  1999)  (Frame  Relay 
 and  Data  UNEs  Ex  Parte). 
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 economies  of  density  and  the  ability  to  statistically  multiplex  data  traffic  to  make  efficient 
 use  of  transport  facilities.  615 

 312.  We  reject  e.  spire/  Intermedias  request  for  a  packet  switching  or  frame  relay 
 unbundled  network  element.  First,  as  discussed  above,  we  will  define  unbundled  network 
 elements,  to  the  extent  practicable,  in  a  technologically  neutral  manner  so  as  to  not  favor 
 one  particular  packet  switching  technology  over  another.  Defining  an  unbundled  network 
 element  according  to  a  particular  packet  switching  technology,  such  as  frame  relay, 
 violates  this  principle  of  technological  neutrality.  Furthermore,  defining  packet  switching 
 elements  according  to  a  specific  technology  creates  the  possibility  that  as  innovative 
 packet  switching  technologies  are  deployed,  they  may  or  may  not  fall  within  our 
 definition  of  packet  switching.  Second,  e.  spire/  Intermedia  have  not  provided  any  specific 
 information  to  support  a  finding  that  requesting  carriers  are  impaired  without  access  to 
 unbundled  frame  relay.  We  note,  however,  that  e.  spire/  Intermedia  are  free  to  demonstrate 
 to  a  state  commission  that  lack  of  unbundled  access  to  the  incumbents  frame  relay 
 network  element  impairs  their  ability  to  provide  the  services  they  seeks  to  offer.  A  state 
 commission  is  empowered  to  require  incumbent  LECs  to  unbundle  specific  network 
 elements  used  to  provide  frame  relay  service,  consistent  with  the  principles  set  forth  in 
 this  order. 

 313.  We  do  find,  however,  one  limited  exception  to  our  decision  to  decline  to 
 unbundle  packet  switching.  Access  to  packetized  services  to  provide  xDSL  service 
 requires  clean  copper  loops  without  bridge  taps  or  other  impediments.  616  Furthermore, 
 xDSL  services  generally  may  not  be  provisioned  over  fiber  facilities.  In  locations  where 
 the  incumbent  has  deployed  digital  loop  carrier  (DLC)  systems,  an  uninterrupted  copper 
 loop  is  replaced  with  a  fiber  segment  or  shared  copper  in  the  distribution  section  of  the 
 loop.  In  this  situation,  and  where  no  spare  copper  facilities  are  available,  competitors  are 
 effectively  precluded  altogether  from  offering  xDSL  service  if  they  do  not  have  access  to 
 unbundled  packet  switching.  617  Moreover,  if  there  are  spare  copper  facilities  available, 
 these  facilities  may  not  meet  the  necessary  technical  requirements  for  the  provision  of 
 certain  advanced  services.  For  example,  if  the  loop  length  exceeds  18,000  feet,  the 
 provision  of  ADSL  service  is  technically  infeasible.  When  an  incumbent  has  deployed 
 DLC  systems,  requesting  carriers  must  install  DSLAMs  at  the  remote  terminal  instead  of 
 at  the  central  office  in  order  to  provide  advanced  services.  We  agree  that,  if  a  requesting 
 carrier  is  unable  to  install  its  DSLAM  at  the  remote  terminal  or  obtain  spare  copper  loops 
 necessary  to  offer  the  same  level  of  quality  for  advanced  services,  the  incumbent  LEC  can 
 effectively  deny  competitors  entry  into  the  packet  switching  market.  We  find  that  in  this 
 limited  situation,  requesting  carriers  are  impaired  without  access  to  unbundled  packet 
 switching.  Accordingly,  incumbent  LECs  must  provide  requesting  carriers  with  access  to 

 615  Id. 
 616  See  Ohio  PUC  Comments  at  14-  15;  Covad  Comments  at  40;  Northpoint  Comments  at  19; 
 Rhythms  Comments  at  15-  16. 
 617  Level  3  Comments  at  23;  NorthPoint  Comments  at  18-  19;  Rhythms  Comments  at  27. 
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 unbundled  packet  switching  in  situations  in  which  the  incumbent  has  placed  its  DSLAM 
 in  a  remote  terminal.  This  obligation  exists  as  of  the  effective  date  of  the  rules  adopted  in 
 this  Order.  The  incumbent  will  be  relieved  of  this  unbundling  obligation  only  if  it  permits 
 a  requesting  carrier  to  collocate  its  DSLAM  in  the  incumbents  remote  terminal,  on  the 
 same  terms  and  conditions  that  apply  to  its  own  DSLAM.  Incumbents  may  not 
 unreasonably  limit  the  deployment  of  alternative  technologies  when  requesting  carriers 
 seek  to  collocate  their  own  DSLAMs  in  the  remote  terminal. 

 314.  Policy  Goals.  Incumbent  LECs  argue  in  this  proceeding  that  their  incentive 
 to  invest  and  innovate  in  new  technologies  capable  of  providing  advanced  services  will  be 
 curtailed  if  we  mandate  unbundling.  618  We  note  that  investments  in  facilities  used  to 
 provide  service  to  nascent  markets  are  inherently  more  risky  than  investments  in  well 
 established  markets.  Customer  demand  for  advanced  services  is  also  more  difficult  to 
 predict  accurately  than  is  the  demand  for  well  established  services,  such  as  traditional  lain 
 old  telephone  service  (POTS). 

 315.  We  acknowledge  that  the  incumbent  LEC  argument  that  unbundling  may 
 adversely  affect  innovation  is  consistent  with  economic  theory,  but  events  in  the 
 marketplace  suggest  that  other  factors  may  be  driving  incumbent  LECs  to  invest  in  xDSL 
 technologies,  notwithstanding  the  economic  theory.  For  example,  in  January  1998,  U  S 
 WEST  announced  a  rollout  of  ADSL  service  to  40  in-  region  metropolitan  areas.  619  In 
 October  1998,  BellSouth  announced  its  plans  to  offer  ADSL  service  to  1.7  million 
 customers  in  30  markets  by  the  end  of  1998,  and  23  additional  markets  in  1999.  620  In 
 January  1998,  SBC  announced  a  massive  rollout  of  ADSL,  targeting  more  than  500 
 central  offices  and  9.5  million  residential  and  business  customers  by  year-  end.  621  In 
 January  1999,  Bell  Atlantic  announced  plans  to  rollout  ADSL  service  in  several  states  and 
 entered  into  a  marketing  alliance  with  America  On-  Line  in  which  Bell  Atlantic  hopes,  by 
 the  end  of  1999  to  make  ADSL  available  to  seven  million  subscribers.  622  Combined,  Bell 
 Atlantic  and  GTE  have  stated  that  the  number  of  xDSL  capable-  lines  available  in  region 
 will  be  17  million  and  they  will  have  ADSL  capability  in  550  central  offices,  allowing 

 618  BellSouth  Comments  at  32-  33;  Bell  Atlantic  Comments  at  43-  45;  U  S  WEST  Comments  at 
 57-  58;  SBC  Comments  at  74.  We  note  that  incumbent  LECs  made  similar  claims  in  response  to  our  Notice  in 
 the  Advanced  Services  docket.  See  Advanced  Services  Memorandum  Opinion  and  Order  and  NPRM,  13 
 FCC  Rcd  24012. 

 619  See  US  West  at  http://  www.  uswest.  com/  about/  communicator/  vol2no1/  7.  html  (US  WEST 
 launched  ADSL  service  in  40  in-  region  metropolitan  areas  during  the  first  half  of  1998). 
 620  See  BellSouth  Rolls  Out  ADSL  to  ISP,  CLEC,  &  IXCs,  RBOC  Update,  Oct.  1,  1998. 

 621  See  Telephony,  Communications  Daily,  Jan.  13,  1998.  See  also,  Bell  Atlantic  and  SBC 
 Push  Merger  Plans  to  Analysts,  Communications  Daily,  Nov.  17,  1998. 
 622  See  Bell  Atlantic  to  Offer  Special  ADSL  Service  for  AOL,  Comm.  Daily,  November  17, 
 1998  at  1. 
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 them  to  serve  as  many  as  6.1  million  xDSL  customers.  623  Such  investments  have  been 
 planned  and  undertaken  notwithstanding  the  fact  that  we  sought  comment  in  August  1998 
 on  whether  facilities  used  to  provide  advanced  services  must  be  unbundled  pursuant  to 
 section  251.  624 

 316.  Despite  the  encouraging  signs  of  investment  in  facilities  used  to  provide 
 advanced  services  described  above,  we  are  mindful  that  regulatory  action  should  not  alter 
 the  successful  deployment  of  advanced  services  that  has  occurred  to  date.  Our  decision  to 
 decline  to  unbundle  packet  switching  therefore  reflects  our  concern  that  we  not  stifle 
 burgeoning  competition  in  the  advanced  service  market.  We  are  mindful  that,  in  such  a 
 dynamic  and  evolving  market,  regulatory  restraint  on  our  part  may  be  the  most  prudent 
 course  of  action  in  order  to  further  the  Acts  goal  of  encouraging  facilities-  based 
 investment  and  innovation.  625 

 317.  Our  overriding  objective,  consistent  with  the  congressional  directive  in 
 section  706,  is  to  ensure  that  advanced  services  are  deployed  on  a  timely  basis  to  all 
 Americans  so  that  consumers  across  America  have  the  full  benefits  of  the  Information 
 Age.  The  advanced  services  marketplace  is  a  nascent  one.  Although  some  investment 
 has  occurred  to  date,  much  more  investment  in  the  future  is  necessary  in  order  to  ensure 
 that  all  Americans  will  have  access  to  these  services.  We  remain  concerned  about  the 
 lack  of  deployment  in  rural  areas.  We  note  that  we  will  carefully  monitor  the  deployment 
 of  broadband  services  to  ensure  that  the  objectives  of  section  706  and  the  Act  are  being 
 met.  We  decline  to  unbundle  packet  switching  at  this  time,  except  for  the  limited 
 exception  described  above. 

 E.  Interoffice  Transmission  Facilities 

 1.  Background 
 318.  In  the  Local  Competition  First  Report  and  Order,  the  Commission 
 concluded  that  incumbent  LECs  must  provide  interoffice  transmission  facilities  on  an 
 unbundled  basis  to  requesting  carriers.  In  particular,  the  Commission  required  incumbent 
 LECs  to  provide  dedicated  and  shared  transport  as  an  unbundled  network  element 

 623  See  Communications  Daily,  July  21,  1999. 
 624  See  Advanced  Services  Memorandum  Opinion  and  Order  and  NPRM,  13  FCC  Rcd  at 
 24054-  63  paras.  92-  115.  Furthermore,  it  is  widely  believed  that  incumbent  LECs  recent  moves  to  offer 
 broadband  to  residential  customers  are  primarily  a  reaction  to  other  companies  entry  into  broadband.  In  the 
 706  proceeding,  U  S  West  noted  that  when  cable  television-  based  broadband  was  available  in  three  cities  it 
 served,  it  announced  competing  service  in  14  states  and  43  cities.  Reply  Comments  of  U  S  West 
 Communications,  Inc.  filed  in  CC  Docket  No.  98-  147,  at  6  n.  9. 

 625  The  Commission  emphasized  the  need  for  caution  by  regulators  when  it  stated  we  need  to 
 be  particularly  careful  about  any  action  we  take  to  promote  broadband  deployment,  given  the  nascent  nature 
 of  the  residential  market  for  broadband.  At  this  time,  the  dimensions  of  broadband  and  the  upper  limits  of 
 market-  based  supply  and  demand  are  unclear.  Advanced  Services  First  Report  and  Order  and  FNPRM,  14 
 FCC  Rcd.  at  2436-  37,  para.  74. 
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 pursuant  to  section  251(  c)(  3).  626  The  Commission  found  that  such  access  was  technically 
 feasible  and  would  promote  competition  in  the  local  exchange  market.  627  In  that  order, 
 however,  the  Commission  declined  to  address  the  unbundling  of  incumbent  LEC  dark 
 fiber  because  the  record  provided  insufficient  evidence  to  decide  that  issue.  628 

 319.  In  the  Notice,  we  sought  comment  on  the  application  of  the  necessary  and 
 impair  standards  to  previously  identified  unbundled  network  elements,  including 
 interoffice  transport  facilities.  629  The  Notice  requested  that  parties  include  specific  costs 
 and  an  analysis  of  the  availability  of  alternative  sources  of  transport  supply.  630  We  also 
 sought  comment  on  whether,  in  light  of  technological  advances  or  experience  in  the 
 marketplace  since  adoption  of  the  Local  Competition  First  Report  and  Order,  we  should 
 modify  the  definition  of  any  of  the  previously  identified  network  elements  including,  for 
 example,  the  definition  of  transport,  to  include  dark  fiber.  631 

 320.  Incumbent  LECs  generally  argue  that  interoffice  transport  should  not  be 
 unbundled  where  a  single  alternative  source  of  transport  is  available.  632  Competitive 
 LECs  argue  that  because  alternative  sources  of  transport  supply  are  largely  unavailable, 
 requesting  carriers  are  impaired  without  access  to  unbundled  transport.  633  Most  of  the 
 state  commissions  addressing  this  issue  agree  that  transport  should  remain  an  unbundled 
 network  element.  634 

 626  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15717,  para.  439.  See  also 
 Third  Reconsideration  Order,  12  FCC  Rcd  at  12475,  para.  25. 
 627  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15717-  18,  para.  439. 

 628  Id.  at  15722,  para.  450.  Dark  fiber  is  deployed  fiber  optic  cable  connecting  two  points 
 within  the  incumbent  LECs  network.  It  is  dark  because  it  does  not  have  electronics  on  either  end  of  the 
 dark  fiber  segment  to  energize  it  to  transmit  a  telecommunications  service. 

 629  Notice  at  para.  33. 

 630  Id. 
 631  Id.  at  para.  34. 
 632  Ameritech  Comments  at  88;  Bell  Atlantic  Comments  at  30;  BellSouth  Comments  at  53; 
 GTE  Comments  at  10,  59;  SBC  Comments  at  50. 
 633  Ad  Hoc  Comments  at  3;  Cable  &  Wireless  Comments  at  37-  38;  Choice  One  Joint 
 Comments  at  14,  18;  CoreComm  Comments  at  25;  Excel  Comments  at  4;  KMC  Comments  at  12,  15;  ;  MGC 
 Comments  at  2,  9,  21;  NorthPoint  Comments  at  19;  Net2000  Comments  at  10,14;  Prism  Comments  at  17; 
 TRA  Comments  at  12,15; 

 634  Connecticut  DPUC  Comments  at  4;  Florida  PSC  Comments  at  11;  Illinois  Commission 
 Comments  at  13;  Iowa  Comments  at  6-  7;  Kentucky  PSC  Comments  at  2;  Oregon  PUC  Comments  at  2;  Texas 
 PUC  Comments  at  14. 
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 2.  Discussion 
 321.  We  find  that  requesting  carriers  are  impaired  without  access  to  unbundled 
 dedicated  and  shared  transport  network.  In  particular,  self-  provisioning  ubiquitous 
 interoffice  transmission  facilities,  or  acquiring  these  facilities  from  non-  incumbent  LEC 
 sources,  materially  increases  a  requesting  carriers  costs  of  entering  a  market  or  of 
 expanding  the  scope  of  its  service,  delays  broad-  based  entry,  and  materially  limits  the 
 scope  and  quality  of  a  requesting  carriers  service  offerings.  Although  the  record 
 indicates  that  competitive  LECs  have  deployed  transport  facilities  along  certain  point-  to-point 
 routes,  the  record  also  demonstrates  that  self-  provisioned  transport,  or  transport 
 from  non-  incumbent  LEC  sources,  is  not  sufficiently  available  as  a  practical,  economic, 
 and  operational  matter  to  warrant  exclusion  of  interoffice  transport  from  an  incumbent 
 LECs  unbundling  obligations  at  this  time.  Accordingly,  we  conclude  that  incumbent 
 LECs  must  offer  unbundled  access  to  their  interoffice  transmission  facilities  nationwide. 

 a.  Dedicated  Transport 
 (i)  Definition 

 322.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  defined 
 dedicated  interoffice  transmission  facilities  as  incumbent  LEC  transmission  facilities 
 dedicated  to  a  particular  customer  or  carrier  that  provide  telecommunications  between 
 wire  centers  owned  by  incumbent  LECs  or  requesting  telecommunications  carriers,  or 
 between  switches  owned  by  incumbent  LECs  or  requesting  telecommunications 
 carriers.  635  The  Commission  further  concluded  that  incumbent  LECs  must  provide  all 
 technically  feasible  capacity-  related  services  such  as  DS1-  DS3  and  OC3-  OC96 
 services.  636 

 323.  High-  Capacity  Transmission.  We  reaffirm  that  the  definition  of  dedicated 
 transport  set  forth  in  the  Local  Competition  First  Report  and  Order  includes  all 
 technically  feasible  capacity-  related  services  such  as  DS1-  DS3  and  OC3-  OC96  dedicated 
 transport  services.  We  clarify  that  this  definition  includes  all  technically  feasible 
 capacity-  related  services,  including  those  provided  by  electronics  that  are  necessary 
 components  of  the  functionality  of  capacity-  related  services  and  are  used  to  originate  and 
 terminate  telecommunications  services.  637  We  find  that  unbundling  high-  capacity 
 dedicated  transport  offerings  will  encourage  competition  and  facilitate  the  deployment  of 
 advanced  services.  Unbundling  high-  capacity  dedicated  transport  offerings  also  addresses 
 claims  by  CompTel  and  other  parties  that  non-  incumbent  LEC  facilities  cannot  provision 

 635  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15718,  para.  440. 
 636  Id. 
 637  Incumbent  LECs  often  deploy  equipment  such  as  the  NEC  RC-  28D,  Lucent  DDM2000  and 
 GR-  303  to  provide  capacity-  related  services.  See  BellSouth  Comments,  Attachment  A  at  1. 
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 sufficient  bandwidth  for  data-  intensive  services.  638  Accordingly,  we  modify  section 
 319(  d)(  ii)  of  our  rules  to  clarify  that  incumbent  LEC  must  unbundle  DS1  through  OC192 
 dedicated  transport  offerings  and  such  higher  capacities  as  evolve  over  time.  Our 
 intention  is  to  ensure  that  the  definition  of  interoffice  transmission  will  apply  to  new,  as 
 well  as  current  technologies,  and  to  ensure  that  competitors  will  continue  to  be  able  to 
 access  these  facilities  as  unbundled  network  elements  as  long  as  that  access  is  required 
 pursuant  to  section  251(  d)(  2). 

 324.  Notwithstanding  the  fact  that  we  require  incumbents  to  unbundle  high-capacity 
 transmission  facilities,  we  reject  Sprints  proposal  to  require  incumbent  LECs  to 
 provide  unbundled  access  to  SONET  rings.  639  In  the  Local  Competition  First  Report  and 
 Order,  the  Commission  limited  an  incumbent  LECs  transport  unbundling  obligation  to 
 existing  facilities,  and  did  not  require  incumbent  LECs  to  construct  facilities  to  meet  a 
 requesting  carriers  requirements  where  the  incumbent  LEC  has  not  deployed  transport 
 facilities  for  its  own  use.  640  Although  we  conclude  that  an  incumbent  LECs  unbundling 
 obligation  extends  throughout  its  ubiquitous  transport  network,  including  ring  transport 
 architectures,  we  do  not  require  incumbent  LECs  to  construct  new  transport  facilities  to 
 meet  specific  competitive  LEC  point-  to-  point  demand  requirements  for  facilities  that  the 
 incumbent  LEC  has  not  deployed  for  its  own  use. 

 325.  Dark  Fiber.  In  addition,  we  modify  the  definition  of  dedicated  transport  to 
 include  dark  fiber.  Dark  fiber  is  deployed,  unlit  fiber  optic  cable  that  connects  two  points 
 within  the  incumbent  LECs  network.  As  discussed  above,  dark  or  unlit  fiber,  unlike 
 lit  fiber,  does  not  have  electronics  on  either  end  of  the  dark  fiber  segment  to  energize  it 
 to  transmit  a  telecommunications  service.  641  Thus,  dark  fiber  is  fiber  which  has  not  been 
 activated  through  connection  to  the  electronics  that  light  it  and  render  it  capable  of 
 carrying  telecommunications  services.  642  To  provide  additional  capacity,  new  electronics 
 are  attached  to  previously  lit  fiber  or  to  previously  dark  fiber.  Because  dark  fiber  is 
 already  installed  and  easily  called  into  service,  we  find  that  it  is  similar  to  the  unused 

 638  For  example,  in  Atlanta,  Allegiance  argues  that  the  sole  alternative  transport  network  serves 
 only  three  incumbent  LEC  central  offices  and  that  the  provider  is  unwilling  or  unable  to  provision  sufficient 
 bandwidth  to  meet  Allegiances  requirements.  Allegiance  Comments  at  19.  See  also  Covad  Comments  at  47 
 (requesting  that  the  Commission  recognize  that  interoffice  bandwidth  is  not  unlimited  and  given  Covads 
 bandwidth  requirements,  there  will  be  an  insufficient  supply  of  interoffice  transport  if  an  incumbent  LEC  is  no 
 longer  required  to  unbundle  transport);  CompTel  Comments  at  42  (requesting  unbundled  access  to  high-capacity 
 or  packet  transport  services.) 

 639  Sprint  Comments  at  38. 

 640  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15722,  para.  451. 
 641  See  supra  Section  (V)(  A)(  2). 
 642  Choice  One  Joint  Comments  at  25;  CO  Space  Comments  at  2;  KMC  Comments  at  21. 
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 capacity  of  other  network  elements,  such  as  switches  or  dead  count  or  vacant  copper 
 wire  that  is  dormant  until  carriers  put  it  in  service.  643 

 326.  We  agree  with  state  commissions  and  competitive  LECs  that  dark  fiber 
 meets  the  statutory  definition  of  a  network  element,  and  therefore  is  included  within  the 
 definition  of  the  dedicated  interoffice  transport  network  element.  644  Section  153(  29)  of 
 the  Act  defines  the  term  network  element  as  a  facility  or  equipment  used  in  the 
 provision  of  a  telecommunications  service,  including  features,  functions,  and  capabilities 
 that  are  provided  by  means  of  such  facility  or  equipment.  645  The  Supreme  Court  upheld 
 this  broad  definition  of  a  network  element  and  acknowledged  that  it  includes  not  only 
 physical  elements  but  non-  physical  elements  as  well.  646  Because  dark  fiber  is  unused 
 transport  capacity,  we  find  that  it  is  a  feature,  function,  and  capability  of  facilities  used  to 
 provide  telecommunications  services.  647  In  addition,  we  note  that  since  the  Commission 
 released  its  Local  Competition  First  Report  and  Order,  several  states,  acting  through 
 arbitration  proceedings,  have  required  incumbent  LECs  to  unbundle  dark  fiber  interoffice 
 transport  facilities,  and  several  federal  district  courts,  in  affirming  state  commission 
 decisions,  have  held  that  dark  fiber  meets  the  statutory  definition  of  an  unbundled 
 network  element.  648 

 327.  We  reject  incumbent  LECs  arguments  that  because  dark  fiber  is  transport 
 that  is  not  currently  used  in  the  provision  of  a  telecommunications  service,  within  the 
 meaning  of  section  153(  29),  it  does  not  meet  the  statutory  definition  of  a  network  element 

 643  See,  e.  g.,  Petition  for  Arbitration  of  an  Interconnection  Agreement  Between  AT&  T 
 Communications  of  the  Pacific  Northwest,  Inc.  and  GTE  Northwest,  Incorporated,  Washington  UTC  Docket 
 No.  UT-  960307,  Commission  Order  Approving  Interconnection  Agreement,  at  19-  20  (1997)  (  As  a  form  of 
 spare  capacity,  dark  fiber  is  not  fundamentally  different  than  dead  copper.).  See  also  Comments  of  CO 
 Space  at  12,  (citing  a  New  Hampshire  commission  finding  that  the  fact  that  dark  fiber  is  not  currently  used  in 
 the  provision  of  service  to  customers  for  a  fee  does  not  distinguish  itself  from  other  network  elements.) 
 (citation  omitted). 

 644  Illinois  Commission  Comments  at  10;  Iowa  Comments  at  9;  GSA  Comments  at  7,10;  Cable 
 and  Wireless  Comments  at  34;  CO  Space  Comments  at  7;  Waller  Creek  Comments  at  17;  See  also  Texas 
 Commission  Comments  at  16;  KMC  Comments  at  21. 

 645  47  U.  S.  C.    3(  29)  provides  that:  The  term  network  element  means  a  facility  or 
 equipment  used  in  the  provision  of  a  telecommunications  service.  Such  term  also  includes  features,  functions, 
 and  capabilities  that  are  provided  by  means  of  such  facility  or  equipment,  including  subscribers  numbers, 
 databases,  signaling  systems,  and  information  sufficient  for  billing  and  collection  or  used  in  the  transmission, 
 routing,  or  other  provision  of  a  telecommunications  service.  47  U.  S.  C.    3(  29).  See  also,  Local  Competition 
 First  Report  and  Order,  11  FCC  Rcd  at  15631,  para.  258. 

 646  Iowa  Utils.  Bd.,  119  S.  Ct.  at  731. 

 647  CO  Space  Comments  at  3  (and  cases  cited  therein). 
 648  See  CO  Space  Reply  Comments  at  3  (and  cases  cited  therein). 
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 or  the  definition  of  interoffice  transport.  649  Rather,  we  agree  with  the  Illinois  Commission 
 that  the  term  used  in  the  provision  of  telecommunications  service  in  section  153(  29) 
 refers  to  network  facilities  or  equipment  that  is  customarily  employed  for  the  purpose 
 of  providing  a  telecommunications  service.  650  Although  particular  dark  fiber  facilities 
 may  not  be  lit  they  constitute  network  facilities  dedicated  for  use  in  the  provision  of 
 telecommunications  service,  as  contemplated  by  the  Act.  Indeed,  most  other  network 
 elements  have  surplus  capacity  or  can  be  upgraded  to  provide  additional  capacity  and 
 therefore  are  not  always  currently  used  as  the  term  is  interpreted  by  incumbent  LECs. 
 For  example,  switches,  loops,  and  other  network  elements  each  may  have  spare,  unused 
 capacity,  yet  each  meets  the  definition  of  a  network  element.  651 

 328.  We  acknowledge  that  it  would  be  problematic  if  some  facilities  that  the 
 incumbent  LEC  customarily  uses  to  provide  service  were  deemed  to  constitute  network 
 elements  (e.  g.,  unused  copper  wire  stored  in  a  spool  in  a  warehouse).  Defining  such 
 facilities  as  network  elements  would  read  the  used  in  the  provision  language  of  section 
 153(  29)  too  broadly.  652  Dark  fiber,  however,  is  distinguishable  from  this  situation  in  that 
 it  is  physically  connected  to  the  incumbents  network  and  is  easily  called  into  service. 
 Thus,  as  indicated  above,  we  conclude  that  dark  fiber  falls  within  the  statutory  definition 
 of  a  network  element. 

 329.  We  also  note  that  our  reading  of  the  term  "used"  comports  with  the 
 Commission's  interpretation  of  the  term  "provide"  in  the  context  of  section  271. 
 Specifically,  in  the  order  denying  Ameritechs  application  to  provide  long  distance 
 service  pursuant  to  section  271  of  the  Act,  the  Commission  rejected  competitors 
 arguments  that  the  term  provide  requires  the  BOC  to  actually  furnish  a  checklist 
 item.  653  Rather,  the  Commission  concluded  that  the  term  provide  requires  incumbent 
 LECs  to  make  available  to  requesting  carriers  the  checklist  item  in  question  upon 
 reasonable  demand.  654  Similarly,  we  interpret  the  term  used  in  the  definition  of  a 
 network  element  to  mean  capable  of  being  used  in  the  provision  of  a 
 telecommunications  service. 

 649  GTE  Comments  at  64,  80;  US  WEST  Comments  at  39-  40;  Bell  Atlantic  Reply  Comments 
 at  31. 
 650  MCI  Corp.:  Petition  for  Arbitration  Pursuant  to  Section  252(  b)  of  the  Telecomms.  Act  of 
 1996  to  Establish  an  Interconnection  Agreement  with  Central  Tel.  Co.  of  Ill.,  96  AB-  009,  1997  Ill.  PUC 
 LEXIS  61,  at  *7  (Feb.  5,  1997)  (emphasis  added). 

 651  See,  e.  g.,  As  a  form  of  spare  capacity,  dark  fiber  is  not  fundamentally  different  than 
 dead  copper.  In  the  matter  of  the  Petition  for  Arbitration  of  an  Interconnection  Agreement  Between 
 AT&  T  Communications  of  the  Pacific  Northwest,  Inc.  and  GTE  Northwest,  Incorporated,  Washington  UTC 
 Docket  No.  UT-  960307,  Commission  Order  Approving  Interconnection  Agreement,  at  19-  20  (1997). 

 652  47  U.  S.  C.    153(  29). 

 653  Ameritech  Michigan  271  Order,  12  FCC  Rcd  at  20601-  02,  para.  110. 
 654  Id. 
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 330.  We  do  not  agree  with  GTE  that,  unlike  vacant  copper,  dark  fiber  does  not 
 qualify  as  interoffice  transport.  655  According  to  GTE,  dark  fiber  differs  from  extra  copper 
 pairs  in  a  cable  because  dark  fiber  is  unused  inventory,  whereas  copper  cable  is 
 installed  to  provide  maximum  flexibility.  656  We  find  this  to  be  a  distinction  without  a 
 difference.  Whether  located  in  the  loop  plant  or  in  the  transport  network  of  an  incumbent 
 LEC,  both  copper  and  fiber  represent  unused  capacity.  Accordingly,  we  conclude  that 
 dark  fiber  falls  within  the  dedicated  transport  network  elements  facilities,  functions,  and 
 capabilities.  657 

 (ii)  Proprietary  Concerns  Associated  with  Dedicated  Transport 

 331.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  did  not 
 identify  any  proprietary  concerns  associated  with  dedicated  transport.  658  No  party  has 
 identified  any  proprietary  concerns  associated  with  unbundled  dedicated  transport  in  this 
 phase  of  the  proceeding,  and  we  find  none.  We  therefore  apply  the  impair  standard  of 
 section  251(  d)(  2)  to  determine  whether  dedicated  transport  is  subject  to  the  unbundling 
 obligations  of  the  Act. 

 (iii)  Unbundling  Analysis 

 332.  We  conclude  that  lack  of  access  to  unbundled  interoffice  transport  impairs  a 
 carriers  ability  to  provide  the  services  it  seeks  to  offer.  Requiring  carriers  to  self-provision, 
 or  acquire  from  third-  party  providers,  extensive  interoffice  transmission 
 facilities  materially  increases  the  costs  of  market  entry  or  of  expanding  service,  delays 
 broad-  based  entry,  and  limits  the  scope  and  quality  of  the  competitor's  service  offerings. 
 Neither  self-  provisioning  interoffice  transport  facilities  nor  obtaining  these  facilities  from 
 third-  party  sources  is  an  adequate  alternative  to  the  ubiquitous  transmission  facilities  that 
 a  competitor  can  obtain  from  the  incumbent  LEC  under  section  251s  unbundling 
 obligations.  Accordingly,  we  require  incumbent  LECs  to  provide  unbundled  access  to 
 their  interoffice  transmission  facilities. 

 333.  Although  the  record  indicates  that  competitive  LECs  have  deployed 
 interoffice  transport  facilities  along  selected  point-  to-  point  routes,  primarily  in  dense 
 market  areas,  we  find  that  the  these  facilities  are  not  available,  as  a  practical,  economic, 
 and  operational  matter,  such  that  a  requesting  carriers  ability  to  provide  the  services  it 
 seeks  to  offer  would  not  be  impaired  without  access  to  the  incumbents  ubiquitous 

 655  GTE  Comments  at  64. 
 656  Id. 
 657  47  U.  S.  C.    13(  29).  We  address  incumbent  LEC  concerns  about  their  special  need  for  fiber 
 reserves  below.  See  infra  Section  V.  E.  2. 
 658  The  Commission  reaffirmed  this  conclusion  in  the  Local  Competition  Third 
 Reconsideration  Order,  12  FCC  Rcd  at  12480-  12481,  para  32. 
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 interoffice  transmission  facilities.  Specifically,  the  competitive  transport  facilities  that 
 currently  exist  do  not  interconnect  all  of  an  incumbent  LECs  central  offices  and  all 
 interexchange  carriers  points  of  presence  within  an  MSA,  or  a  substantial  portion  thereof. 

 334.  Availability  of  Alternatives  Outside  the  Incumbents  Network.  Local 
 competitors  began  deploying  fiber  networks  in  urban  markets  approximately  15  years 
 ago.  659  Incumbent  LECs  have  provided  a  significant  amount  of  data  indicating  the 
 location  of  transport  facilities  deployed  by  competitive  LECs.  For  example,  the 
 incumbents  submitted,  through  the  USTA  UNE  Report,  data  that  indicates  that,  by  the 
 end  of  1998,  competitive  LECs  had  deployed  interoffice  transport  in  approximately  300 
 cities.  660  According  to  the  USTA  UNE  Report,  competitors  have  deployed  nearly  30,000 
 route  miles  of  fiber  within  the  top  50  MSAs.  661 

 335.  In  addition,  the  USTA  UNE  Report  states  that  of  the  top  50  MSAs,  forty-seven 
 are  served  by  at  least  three  competitors;  29  are  served  by  five  or  more  competitors; 
 and  16  are  served  by  seven  or  more  competitors.  662  The  USTA  Report  also  asserts  that 
 requesting  carriers  have  deployed  fiber  in  all  but  15  of  the  MSAs  ranked  between  50  and 
 150  663  and  that  competitors  have  centered  their  deployment  of  competitive  fiber  around 
 dense  wire  centers,  which  USTA  defines  as  wire  centers  with  40,000  or  more  access 
 lines.  664  The  USTA  UNE  Report  also  maintains  that  as  of  March  1999,  incumbent  LECs 
 have  the  following  number  of  wire  centers  that  are  served  by  at  least  one  competitive 
 fiber  provider:  Ameritech  161;  Bell  Atlantic  274;  BellSouth  136;  GTE  70;  SBC  284;  US 
 WEST  118.  665 

 336.  The  incumbents  also  provide  evidence  of  the  number  of  collocation 
 arrangements  in  many  of  their  wire  centers.  Relying  on  this  data,  the  incumbents  argue 
 that  there  are  significant  alternatives  to  interoffice  transport  services  available.  According 
 to  USTA,  the  fact  that  competitors  have  operational  collocation  arrangements  in 
 approximately  874  dense  wire  centers  implies  the  presence  of  competitive  fiber 

 659  In  1985,  New  York  state  regulators  granted  Teleport  authority  to  provide  interoffice 
 services  in  New  York  City.  See  Case  28891,  Teleport  Communications  (NYDPS  Jan.,  7,  1985). 
 660  Among  the  competitors  with  the  most  extensive  fiber  networks  are  AT&  T,  MCI,  Sprint, 
 Qwest,  Level  3,  Enron,  MFN,  Williams,  Frontier,  IXC,  NEXTLINK,  Intermedia,  Hyperion,  RCN,  GST,  ICG, 
 Electric  Lightwave  and  e.  spire.  See  USTA  UNE  Report  at  II. 

 661  USTA  UNE  Report  Appendix  B  at  II-  6. 

 662  Id. 
 663  Id. 
 664  The  USTA  UNE  Report  argues  that  there  is  a  close  correlation  between  collocation  and  the 
 presence  of  competitive  fiber  facilities  in  these  dense  wire  centers.  USTA  UNE  Report  at  I-  8. 
 665  USTA  UNE  Report  at  II-  20. 
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 nearby.  666  In  particular,  according  to  the  USTA  UNE  Report,  of  the  wire  centers  with 
 20,000  or  more  lines,  90  percent  in  the  SBC  region,  72  percent  in  the  Bell  Atlantic  region, 
 and  74  percent  in  the  US  West  region  have  collocation,  which  the  incumbents  assert 
 signifies  competitive  transport  is  available.  667 

 337.  Bell  Atlantic  also  argues  that  its  Competitive  Alternative  Transport 
 Terminal  (CATT)  service,  currently  offered  on  a  trial  basis  with  Metromedia  Fiber 
 Network  Services  (MFN),  offers  high  capacity  interoffice  dedicated  transport  services  to 
 any  collocated  carrier.  Bell  Atlantic  claims  that  MFN  has  entered  into  this  CATT 
 arrangement  in  a  large  number  of  end  offices  and  that  CATT  will  be  generally  available 
 to  other  carriers  pursuant  to  tariff.  668 

 338.  Other  evidence  in  the  record,  however,  undermines  the  incumbents 
 suggestion  that  competitive  fiber  is  sufficiently  available  that  transport  should  not  be 
 unbundled.  MCI  WorldCom,  for  example,  provides  information  about  the  number  of 
 transport  providers  in  the  six  major  cities  included  in  the  USTA  survey.  According  to 
 MCI  WorldCom,  only  eight  of  the  138  wire  centers  in  Los  Angeles  have  three  or  more 
 collocators  that  provide  transport.  669  Similarly,  MCI  WorldCom  states  that  only  four  of 
 64  wire  centers  in  Seattle  have  three  or  more  collocators  providing  transport  and  only  one 
 of  25  wire  centers  in  San  Jose  has  three  or  more  collocators  providing  transport.  In 
 addition,  MCI  WorldCom  reports  that,  in  Minneapolis,  Richmond  and  Washington  DC 
 with  135,  51,  and  158  wire  centers  respectively,  no  end  office  has  three  collocators 
 providing  transport.  670 

 339.  In  addition,  NorthPoint  reports  that  the  incumbent  LEC  is  the  only  source 
 of  transport  for  at  least  70%  of  central  offices  in  which  NorthPoint  is  collocated,  even  in 
 dense  wire  centers  in  large  metropolitan  areas.  671  Similarly,  Sprint  asserts  that  in  New 

 666  Id. 
 667  Id.  at  II-  8. 
 668  See  Letter  from  Dee  May,  Federal  Regulatory  -  Bell  Atlantic,  to  Magalie  R.  Salas, 
 Secretary,  Federal  Communications  Commission,  Docket  96-  98  (filed  July  13,  1999). 
 669  See  MCI  WorldCom  August  13,  1999  Ex  Parte. 

 670  Letter  from  Chuck  Goldfarb,  Director  Law  and  Public  Policy  MCI  WorldCom,  to  Larry 
 Strickling,  Chief,  Common  Carrier  Bureau,  Federal  Communications  Commission,  CC  Docket  No.  96-  98 
 (filed  August  16,  1999).  MCI  WorldCom  contends  that  this  level  of  collocation  evidences  an  astonishingly 
 small  amount  of  transport  competition.  Id. 

 671  Letter  from  A.  Richard  Metzger,  Jr.,  attorney  for  NorthPoint  Communications,  to  Magalie 
 R.  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  August  13,  1999) 
 (NorthPoint  submits  data  that  in  Atlanta,  the  incumbent  LEC  is  the  only  transport  alternative  for  78%  of  COs 
 where  it  is  collocated.  In  the  San  Francisco  metropolitan  area,  the  incumbent  LEC  is  the  sole  transport 
 provider  in  70%  of  COs  where  it  is  collocated.  In  New  York,  the  number  is  75%;  Chicago,  71%,  Los 
 Angeles,  77%  and  Seattle,  73%.  ).  MCI  WorldCom  submitted  an  Ex  Parte  showing  that  out  of  approximately 
 20,000  incumbent  LEC  central  offices  nationwide,  there  are  two  end  offices  with  five  competitor  collocations; 
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 York  City,  which  is  considered  the  most  mature  market  in  the  country,  Sprint  continues  to 
 use  the  incumbent  LEC  extensively  for  transport  because  competitive  fiber  is  not 
 available  in  sufficient  numbers  of  incumbent  LEC  central  offices  for  it  to  offer  a 
 ubiquitous  service  in  this  area.  672 

 340.  Ubiquity.  We  conclude  that,  despite  the  evidence  of  some  competitively 
 deployed  interoffice  transmission  facilities,  lack  of  access  to  the  incumbents  dedicated 
 transmission  facilities  impairs  a  requesting  carriers  ability  to  provide  the  services  it  seeks 
 to  offer.  The  alternatives  cited  in  the  evidence  submitted  by  the  incumbents  are  not 
 ubiquitously  available,  and  therefore  competitive  transport  if  not  available  as  a  practical, 
 economic  and  operational  matter. 

 341.  As  an  initial  matter,  we  are  not  persuaded  that  the  incumbents  data 
 accurately  reflects  the  extent  to  which  alternatives  are  actually  available  to  competitors. 
 In  particular,  we  find  that  only  at  a  granular,  wire  center-  by-  wire  center  level  does  the 
 record  show  the  presence  of  competitive  alternatives  to  the  incumbents  interoffice 
 transport,  albeit  on  a  non-  ubiquitous  basis.  673  Thus,  without  access  to  unbundled 
 dedicated  transport,  requesting  carriers  would  be  forced  to  create  a  patchwork  of 
 alternative  network  facilities,  where  they  have  been  deployed  and  are  being  offered  to 
 other  carriers,  or  alternatively  to  construct  their  own  transport  facilities.  The  USTA  UNE 
 Report  based  its  analysis  on  the  markets  that  have  attracted  the  most  competitive  transport 
 entry.  For  example,  the  USTA  UNE  Report  states  that  [  I]  n  the  Los  Angeles  MSA,  72 
 wire  centers  serve  40,000  +  lines.  Of  these,  20  have  at  least  one  collocated  competitive 
 LEC.  An  analysis  of  fiber  route  maps  shows  that  CLEC  fiber  passes  through  at  least  15 

 28  end  offices  with  four  competitor  collocations  and  63  end  offices  with  three  competitor  collocations  offering 
 competitive  transport.  See  Letter  from  Chuck  Goldfarb,  Director  Law  and  Public  Policy  MCI  WorldCom  to 
 Larry  Strickling,  Chief,  Common  Carrier  Bureau,  Federal  Communications  Commission,  CC  Docket  No.  96- 
 98  (filed  August  13,  1999.). 

 672  Sprint  Comments  at  32-  33. 

 673  As  discussed  above,  we  recognize  that  the  Commission  has  established  a  framework  for 
 incumbent  LEC  pricing  flexibility  in  areas  where  competition  for  dedicated  transport  and  most  special  access 
 services  has  developed.  Competition  evidenced  by  the  satisfaction  of  certain  triggers,  to  the  extent  they  are 
 met,  however,  does  not  demonstrate  that  a  requesting  carrier  is  not  impaired  without  access  to  unbundled 
 dedicated  transport.  The  Commissions  pricing  flexibility  rules  provide  for  flexibility  where  one  requesting 
 carrier  is  collocated  in  a  serving  wire  center.  These  rules  allow  incumbent  LECs  to  meet  competitive 
 transport  entry  with  pricing  flexibility.  They  do  not,  however,  describe  market  conditions  where  requesting 
 carriers  would  not  be  impaired  without  access  to  unbundled  transport.  Furthermore,  even  in  those  areas  where 
 competition  for  special  access  services  is  present  and  where,  presumably  the  triggers  for  pricing  flexibility 
 have  been  met,  the  price  differentials  between  TELRIC-  priced  transport  and  special  access  may  persist  for  an 
 indefinite  period  of  time  because  the  differential  between  unbundled  transport  and  retail  special  access 
 services  are  significant.  According  to  one  commenter,  in  the  San  Francisco  Bay  Area,  PacBells  monthly 
 access  charge  for  a  DS3  special  access  service  is  more  than  50%  higher  than  unbundled  transport.  In  New 
 York  City,  Bell  Atlantics  monthly  DS3  tariff  rate  is  258%  higher  than  the  comparable  unbundled  network 
 element  transport  rate.  In  Miami,  BellSouths  DS3  tariff  rate  is  353%  higher  than  comparable  unbundled 
 network  element  interoffice  transport  rates.  See  Covad  Comments  at  45,  Attachment  3,  Aff.  of  Mark  Shipley 
 and  David  Rauschenberg,  at  para.  22-  23. 
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 of  20  wire  center  areas  with  collocation.  674  Thus,  according  to  USTAs  data,  15  of  72 
 dense  wire  centers  or  approximately  21%  of  dense  wire  centers  in  the  Los  Angeles  MSA 
 include  competitive  fiber  nearby.  675 

 342.  We  note  that  the  incumbents  do  not  explain  what  is  meant  by  fiber  that  is 
 nearby.  Nor  do  incumbents  explain  how  having  fiber  nearby  reflects  the  availability 
 of  ubiquitous  transport  alternatives.  In  addition,  however,  because  the  incumbents  data 
 focuses  only  on  the  most  dense  wire  centers,  the  data  provides  little  to  no  information 
 about  the  availability  of  transport  in  less  dense  wire  centers  in  the  same  cities.  If  the 
 analysis  were  expanded  to  include  less  dense  wire  centers,  or  wire  centers  serving  less 
 than  40,000  lines,  the  analysis  would  presumably  show  a  lower  percentage  of  competitive 
 alternatives  for  the  entire  MSA  than  is  reflected  by  the  data  provided  by  the  incumbents. 

 343.  Incumbents  rely  on  the  evidence  of  competitively  deployed  transport 
 submitted  in  the  USTA  UNE  Report  to  argue  that  competitive  LECs  are  not  impaired 
 without  access  to  unbundled  transport  facilities  in  locations  where  competitive  LECs  have 
 already  deployed  transport.  Specifically,  the  incumbents  argue  that  the  Commission 
 should  exclude  dedicated  transport  from  an  incumbent  LECs  unbundling  obligations  in 
 any  area  where  at  least  one  requesting  carrier  has  deployed  transport  facilities  and  has 
 collocated  its  own  transmission  equipment  in  an  incumbent  LEC  central  office.  676  We 
 reject  this  argument.  Although  the  incumbents  evidence  shows  that  nearly  30,000  route 
 miles  of  fiber  have  been  deployed  in  the  top  50  MSAs,  there  are  few,  if  any  alternative 
 transport  facilities  outside  the  incumbent  LECs  networks  that  connect  all  or  most  of  an 
 incumbent  LECs  central  offices  and  interexchange  carriers  points  of  presence  within  an 
 MSA.  677  Even  where  competitive  alternatives  exist,  the  alternatives  generally  do  not 
 travel  the  same  routes  as  the  incumbents  facilities.  Thus,  even  if  competitors  were  able 

 674  USTA  UNE  Report  at  II-  8. 
 675  Id. 
 676  GTE  Comments  at  10,  59  (stating  that  the  Commission  should  not  unbundle  transport  in 
 wire  centers  with  15,000  or  more  access  lines  and  the  presence  of  one  or  more  collocation  arrangements); 
 Ameritech  Comments  at  88  (stating  that  the  Commission  should  not  unbundle  dedicated  transport  in  dense 
 wire  centers  with  one  or  more  collocation  arrangements);  SBC  Comments  at  50  (stating  that  the  Commission 
 should  not  unbundle  dedicated  transport  in  dense  wire  centers  with  one  or  more  collocation  arrangements); 
 BellSouth  Comments  at  53  (stating  that  the  Commission  should  not  require  unbundling  of  dedicated  transport 
 in  Zone  1  and  Zone  2);  Bell  Atlantic  Comments  at  30  (stating  that  the  Commission  should  not  require 
 unbundling  of  dedicated  transport  in  any  area  here  at  least  one  carrier  has  deployed  its  own  network  and  there 
 is  the  presence  of  one  collocation  arrangement);  US  WEST  Comments  at  48  (stating  that  the  Commission 
 should  establish  a  presumption  that  incumbent  LECs  do  not  have  to  unbundle  transport  to  or  from  wire  centers 
 with  20,000  or  more  loops  and  have  one  or  more  collocation  arrangements). 

 677  USTA  UNE  Report  at  II-  6.  Covad  states  that  it  is  dependent  on  incumbent  LEC  inter-  office 
 transport  for  83  percent  of  its  transport  requirements  and  that  it  has  a  choice  of  transport  providers  for  less 
 than  7  percent  of  its  collocation  facilities.  Covad  Comments  at  44.  AT&  T  argues  that  it  purchases  82%  of  its 
 dedicated  transport  requirements  from  incumbent  LECs  because  competitive  offerings  are  not  ubiquitously 
 available.  AT&  T  Comments  at  122. 
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 to  purchase  indirect  routing  from  alternative  providers,  to  the  extent  alternatives  exist, 
 competitors  more  than  likely  have  to  route  their  traffic  along  indirect,  inefficient  routing 
 patterns,  thereby  increasing  their  costs  of  transport.  678  Thus,  contrary  to  arguments  made 
 by  incumbent  LECs,  we  find  that  the  evidence  demonstrates  that  a  significant  number  of 
 central  offices  in  a  given  MSA  are  not  effectively  served  by  competitive  fiber  facilities. 

 344.  We  reject  any  bright-  line  test  that  triggers  elimination  of  an  incumbent 
 LECs  unbundling  obligation  based  on  the  presence  of  a  single  competitor  that  has  self-provisioned 
 transport  in  a  particular  market.  As  discussed  above,  in  order  to  determine 
 whether  or  not  a  requesting  carriers  ability  to  provide  the  services  it  seeks  to  offer  is 
 impaired  within  the  meaning  of  section  251(  d)(  2),  we  must  determine  whether 
 alternatives  outside  the  incumbents  network  are  available  as  a  practical,  economic,  and 
 operational  matter,  and  determine  whether  unbundling  a  particular  element  is  consistent 
 with  the  goals  of  the  Act.  679 

 345.  In  particular,  we  find  that  basing  our  unbundling  rules  on  the  bright-  line 
 proposed  by  the  incumbents  does  not  address  whether  lack  of  unbundled  access  to  the 
 incumbents  ubiquitous  transport  facilities  would  impair  other  requesting  carriers  ability 
 to  provide  the  services  they  seek  to  offer.  Indeed,  under  the  test  proposed  by  the 
 incumbents,  the  first  new  entrant  to  deploy  transport  facilities  in  any  particular  market 
 would  determine  the  degree  and  pace  of  competition  in  that  market  as  well  as  the  scope  of 
 an  incumbent  LECs  unbundling  obligation,  and  would  potentially  result  in  the  presence 
 of  only  two  competitors  in  the  market  (e.  g.  a  duopoly).  Limiting  the  development  of 
 competition  in  such  a  manner  is  contrary  to  the  goals  of  the  Act  and  is  inconsistent  with 
 the  purpose  of  our  unbundling  rules. 

 346.  In  order  to  provide  service,  competitive  LECs  require  dedicated  transport 
 facilities  that  are  more  extensive  than  those  that  are  currently  deployed  along  the  point-  to-point 
 routes.  The  competitive  alternatives  that  are  available  along  limited  point-  to-  point 
 routes  do  not  necessarily  allow  competitive  LECs  to  connect  their  collocation 
 arrangements  or  switching  nodes  according  to  the  needs  of  their  individual  network 
 designs.  These  carriers  also  require  dedicated  transport  to  deliver  traffic  from  their  own 
 traffic  aggregation  points  to  the  incumbent  LECs  network  for  purposes  of 
 interconnection.  Without  access  to  the  incumbents  ubiquitous  transport  facilities, 
 competitive  LECs  are  faced  with  the  delays  and  costs  of  deploying  their  own  transport 
 facilities  to  meet  the  demand.  Alternatively,  competitive  LECs  must  utilize  a  patchwork 
 of  competitive  alternatives,  where  available,  to  collect  and  route  traffic  to  the  required 
 destination. 

 678  Letter  from  Robert  Shanahan,  Vice  President,  New  England  Voice  &  Data,  to  Magalie  R. 
 Salas,  Secretary,  Federal  Communications  Commission,  Docket  96-  98  (filed  July  15,  1999)  (describing 
 Manchester,  N.  H.  to  Nashua,  N.  H.  fiber  buildout  and  increase  of  11  miles  over  incumbent  LECs  route  if  a 
 competitive  transport  alternative  is  selected). 

 679  See  supra  Section  (IV)(  B)(  4). 
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 347.  Entrance  Facilities.  Bell  Atlantic  and  BellSouth  specifically  argue  that 
 extensive  deployment  by  competitive  LECs  of  the  transport  link  between  the 
 interexchange  carrier  point  of  presence  and  an  incumbents  serving  wire  center  (the 
 entrance  facility),  requires  us  to  find  that  requesting  carriers  are  not  impaired  in  their 
 ability  to  serve  these  point-  to-  point  markets.  680  According  to  Bell  Atlantic,  for  example, 
 there  are  competitors  that  serve  approximately  90  percent  of  Bell  Atlantics  special  access 
 transport  customers.  681  According  to  BellSouth,  19  of  their  302  wire  centers  have  at  least 
 one  actual  or  pending  collocation  arrangement  and  one  actual  or  pending  entrance 
 facility.  682 

 348.  We  acknowledge  that,  based  on  the  record  before  us,  the  entrance  facility 
 market  appears  to  be  the  most  mature  segment  of  the  interoffice  transport  market,  and 
 thus  may,  in  some  situations,  provide  requesting  carriers  with  effective  alternatives  to 
 unbundled  transport  for  certain  point-  to-  point  routes.  683  The  record  does  not  indicate, 
 however,  the  extent  to  which  these  facilities  are  available  to  other  requesting  carriers  or 
 whether  the  location  of  these  facilities  serve  the  transport  needs  of  requesting  carriers 
 seeking  to  provide  service  to  particular  locations.  In  particular,  the  incumbents  data  does 
 not  indicate  the  locations  at  which  competitive  entrance  facilities  terminate,  or  whether 
 the  facilities  connect  incumbent  LEC  serving  wire  centers  to  all  or  substantially  all  of  the 
 interexchange  carrier  points  of  presence.  Accordingly,  we  cannot  conclude,  based  on  the 
 record  before  us,  that  the  competitive  entrance  facility  market  is  providing  requesting 
 carriers  with  effective  alternatives  to  unbundled  transport  for  all,  or  substantially  all  of  the 
 routes  requesting  carriers  would  need  in  order  to  provide  the  services  they  seek  to  offer. 

 349.  Dark  Fiber.  Incumbent  LECs  argue  that  some  competitive  LECs  have 
 deployed  significant  amounts  of  fiber  to  meet  the  growing  demand  for  transport  services, 

 680  See  Letter  from  Susanne  Guyer,  Assistant  Vice  President,  Bell  Atlantic,  to  Magalie  R. 
 Salas,  Esq.,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  August  25,  1999) 
 (Bell  Atlantic  August  25  Ex  Parte);  Letter  from  Kathleen  B.  Levitz,  Vice  President    Federal  Regulatory, 
 BellSouth,  to  Magalie  R.  Salas,  Esq.,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98 
 (filed  August  16,  1999)  (BellSouth  August  16,  1999  Ex  Parte). 

 681  See  Bell  Atlantic  August  25,  1999  Ex  Parte. 

 682  See  BellSouth  August  16,  1999  Ex  Parte. 
 683  We  note  that,  in  addition,  Bell  Atlantic,  Intermedia,  Allegiance  and  Time  Warner  argue,  in 
 a  joint  Ex  Parte  filing,  that  the  Commission  should  establish  a  limitation  on  loop  transport  combinations  to 
 prevent  substitution  of  special  access  service  for  unbundled  loop  transport  combinations  in  this  segment  of  the 
 transport  market.  Letter  from  Edward  D.  Young,  Associate  General  Counsel,  Bell  Atlantic,  Heather  B.  Gold, 
 Vice  President,  Industry  Policy,  Intermedia  Communications,  Robert  W.  McCausland,  Vice  President, 
 Regulatory  and  Interconnection,  Allegiance  Telecom,  Inc.,  Don  Shepheard,  Vice  President,  Federal 
 Regulatory,  Time  Warner  Telecom,  to  Honorable  William  E.  Kennard,  Chairman,  Federal  Communications 
 Commission,  CC  Docket  No.  96-  98  (filed  September  2,  1999).  ALTS  agrees  and  supports  excluding  entrance 
 facilities  from  an  incumbent  LECs  transport  obligation  where  a  given  point-  to-  point  route  does  not  meet  the 
 impair  standard.  Letter  from  Jonathan  Askin,  Vice  President,  ALTS,  to  Magalie  R.  Salas,  Secretary,  Federal 
 Communications  Commission,  CC  Docket  No.  96-  98  (filed  September  3,  1999). 
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 and  that  competitive  LECs  are  not  impaired  without  access  to  the  incumbents  unbundled 
 dark  fiber.  684  Incumbent  LECs  further  argue  that  the  presence  of  competitive  fiber  in 
 dense  wire  centers  is  evidence  of  a  wholesale  market  for  dedicated  transport,  685  and 
 support  this  claim  by  providing  anecdotal  evidence  that  competitors  are  swapping  fiber 
 capacity  with  each  other.  686  We  disagree.  Rather,  we  agree  with  those  commenters  that 
 argue  that  a  competitive  wholesale  market  for  alternative  network  elements  has  not 
 developed  for  dedicated  transport,  in  part  because  of  the  lack  of  ubiquitous  transport 
 alternatives.  687 

 350.  Although  there  is  evidence  of  transport  deployment  by  non-  incumbent 
 providers  along  some  point-  to-  point  routes,  the  record  does  not  support  a  general  finding 
 that  requesting  carriers  can,  on  a  ubiquitous  basis,  practically  and  effectively  substitute 
 transport  services  provided  by  other  competitive  carriers  for  unbundled  transport.  Indeed, 
 the  record  indicates  that  the  fiber  frenzy  and  bandwidth  markets  cited  by  incumbent 
 LECs  are  largely  limited  to  portions  of  inter-  city,  long-  haul  networks  that  do  not 
 ubiquitously  reach  the  interoffice  segments  of  the  incumbent  LECs  network.  688  Lack  of 
 access  to  ubiquitous  transport  alternatives,  which  allow  competitive  LECs  to  interconnect 
 their  networks  with  all  the  central  offices  serving  their  customers,  will  impair  these 
 carriers  ability  to  provide  the  services  they  seek  to  offer.  689  Accordingly,  we  reject  the 
 incumbent  LECs  argument  that  the  presence  of  a  competitive  transport  alternatives  along 

 684  Bell  Atlantic  Comments  at  31-  32;  GTE  Comments  at  82;  US  WEST  Comments  at  39-  40. 
 These  carriers  argue  that  the  evidence  of  competitively  deployed  fiber  has  created  a  wholesale  market  for 
 dark  fiber. 

 685  Bell  Atlantic  Comments  at  31;  BellSouth  Comments  at  51;  GTE  Comments  at  61. 

 686  See  Letter  from  Kathleen  B.  Levitz,  Vice  President-  Federal  Regulatory,  BellSouth  to  Jake 
 Jennings,  Special  Advisor,  Common  Carrier  Bureau,  Federal  Communications  Commission,  CC  Docket  No. 
 96-  98  (filed  July  22,  1999). 

 687  AT&  T  Comments  at  122;  CompTel  Comments  at  42;  ALTS  Comments  at  51. 

 688  AT&  T  Reply  Comments  at  128;  Covad  Comments  at  44-  45;  Waller  Creek  Reply 
 Comments  at  11. 
 689  For  Example,  New  England  Voice  &  Data  argues  that  substituting  lit  OC-  48  fiber  for 
 unbundled  dark  fiber  would  result  in  a  material  decrease  in  the  reliability  of  its  network  because  it  would 
 introduce  three  additional  multiplexers,  and  thus  three  additional  potential  points  of  failure,  at  each 
 collocation.  In  addition,  New  England  Voice  &  Data  claims  that  if  it  were  required  to  purchase  lit  transport, 
 New  England  Voice  &  Datas  control  and  management  of  its  interconnection  links  would  become  totally 
 dependent  upon  incumbent  LECs.  In  contrast,  if  New  England  Voice  &  Data  is  able  to  obtain  access  to 
 unbundled  dark  fiber,  it  installs  its  own  multiplexers  to  complete  its  SONET  ring  architecture  and  therefore 
 controls  its  own  provisioning,  surveillance  and  repair.  Thus,  according  to  New  England  Voice  &  Data, 
 substituting  lit  fiber  for  unbundled  dark  fiber  in  the  interoffice  transport  segment  of  the  network  prevents  it 
 from  installing  a  highly  reliable  SONET  ring  architecture  to  offer  ring-  based  services  and  introduces 
 additional  failure  points  in  a  requesting  carriers  end  to  end  transport  service.  New  England  Voice  &  Data 
 Comments  at  12-  13. 
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 certain  routes  is  evidence  that  requesting  carriers  generally  are  not  impaired  without 
 access  to  the  incumbents  unbundled  dark  fiber. 

 351.  In  addition,  to  the  extent  that  there  may  be  excess  capacity  along  these  fiber 
 routes,  non-  incumbent  providers  of  competitive  transport  facilities  are  under  no  legal 
 obligation  to  offer  their  excess  capacity  to  their  competitors.  Moreover,  interexchange 
 carriers  (IXCs)  operate  both  as  access  customers  of  the  incumbent  LEC,  as  well  as  the 
 incumbents  competitor  in  the  local  exchange  market.  These  inter-  carrier  relationships 
 complicate  the  functioning  of  an  effective  wholesale  transport  market  because  the 
 alternative  provider  of  transport  is  also  a  significant  competitor.  690  In  these  circumstances, 
 it  is  possible  that  local  affiliates  of  IXCs  could  potentially  discriminate  against 
 unaffiliated  requesting  carriers  seeking  access  to  competitive  transport  facilities  by 
 denying  access  altogether. 

 352.  Although  we  include  dark  fiber  in  the  unbundling  obligations  of  section 
 251(  c)(  3),  we  note  that  GTE  argues  that  it  must  maintain  control  of  its  dark  fiber  reserves 
 because,  as  a  carrier  of  last  resort,  it  is  obliged  to  provide  service  to  any  and  all  customers 
 as  the  need  arises.  691  GTE  also  argues  that  requiring  incumbent  LECs  to  make  their 
 reserve  capacity  available  to  new  entrants  discourages  long  term  business  planning  and 
 deprives  the  incumbents  of  the  fruits  of  their  investment.  692  We  note  that  with  the 
 addition  of  electronics  such  as  Dense  Wave  Division  Multiplexing  (DWDM)  equipment, 
 incumbent  and  competitive  carriers  alike  can  expand  the  bandwidth  of  existing  capacity 
 without  installing  new  dark  fiber.  693  We  find  that  technological  solutions  such  as  these 
 largely  address  GTEs  concern  that  unbundled  access  to  dark  fiber  may  adversely  affect 
 its  ability  to  provide  service.  In  addition,  however,  if  incumbent  LECs  are  able  to 
 demonstrate  to  a  state  commission  that  unbundling  dark  fiber  threatens  their  ability  to 
 provide  service  as  a  carrier  of  last  resort,  states  have  the  flexibility  to  establish 
 reasonable  limitations  and  technical  parameters  for  dark  fiber  unbundling.  694  We 

 690  Because  AT&  T  controls  TCG  and  MCI  WorldCom  controls  MFS,  Sprint  notes  that  it  has 
 considerable  reluctance  to  shifting  its  access  dependence  from  potential  long  distance  competitors,  the 
 RBOCs,  to  its  current  long  distance  competitors.  Sprint  Comments  at  34. 

 691  GTE  Comments  at  83-  84. 

 692  Id.  at  84. 
 693  Dense  Wavelength  Division  Multiplexing  (DWDM)  is  a  multiplexing  technique  that 
 permits  multiple  SONET  or  other  optical  signal  formats  to  be  carried  on  one  fiber  on  different  wavelengths. 
 The  capacity  of  existing  DWDM  systems  now  exceeds  several  hundred  gigabits  per  second  (Gbps),  and  has 
 been  approximately  doubling  each  year  for  the  past  several  years.  DWDM  allows  carriers  to  extend  the 
 capacity  of  their  embedded  fiber. 

 694  For  example,  the  Texas  Commission  allows  incumbent  LECs,  upon  establishing  need  to  the 
 satisfaction  of  the  state  commission,  to  revoke  leased  fiber  from  competitive  LECs  with  12  months  notice. 
 The  Texas  commissions  dark  fiber  unbundling  rules  also  allow  incumbent  LECs  to  take  back  underused  (less 
 than  OC-  12)  fiber,  and  forbid  competitors  in  any  two  year  period  from  leasing  more  than  25%  of  the  dark 
 fiber  in  a  given  segment  of  the  network.  We  believe  the  measures  established  by  the  Texas  PUC  address  the 
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 conclude,  however,  that  for  a  limitation  on  dark  fiber  to  be  reasonable,  it  must  relate  to  a 
 likely  and  foreseeable  threat  to  an  incumbent  LECs  ability  to  provide  service  as  a  carrier 
 of  last  resort.  In  establishing  reasonable  limitations  and  technical  parameters  for  dark 
 fiber,  states  should  acknowledge  that  requesting  carriers  require  regulatory  certainty  in 
 order  to  implement  their  business  plans. 

 353.  Other  Technologies.  We  reject  Bell  Atlantics  proposal  that  the  Commission 
 consider  the  availability  of  wireless  transport  in  our  unbundling  analysis.  695  The  record 
 does  not  demonstrate  that  wireless  transport  options  are  available  across  any  particular 
 MSA.  Nor  does  the  record  address  the  question  of  whether  integrating  wireless  transport 
 offerings  into  a  wireline  transport  network  allows  providers  to  offer  service  of  the  same 
 quality  and  functionality  as  they  would  be  able  to  offer  using  wireline  alternatives. 
 Notably,  NEXTLINK,  the  largest  Local  Multipoint  Distribution  Service  (LMDS)  licensee 
 and  a  potential  source  of  competitive  wireless  transport,  supports  the  continued 
 availability  of  unbundled  dedicated  transport  network  elements.  696 

 354.  Tariffed  Offerings.  We  also  reject  GTE  and  US  Wests  argument  that 
 competitive  LECs  have  access  to  ubiquitous  transport  through  the  use  of  the  incumbents 
 special  access  tariff  arrangements.  697  As  discussed  above,  we  give  little  weight  to  the 
 incumbent  LECs  special  access  tariffs.  698  Moreover,  the  Commission  previously 
 rejected  this  argument  in  the  Local  Competition  First  Report  and  Order.  699  For  reasons 
 the  Commission  articulated  in  that  order,  we  reject  the  incumbents  argument  here.  If  we 
 were  to  adopt  the  incumbents  approach,  the  incumbents  could  effectively  avoid  all  of  the 
 1996  Acts  unbundling  and  pricing  requirements  by  offering  tariffed  services  that, 
 according  to  the  incumbents,  would  qualify  as  alternatives  to  unbundled  network 
 elements.  This  would  effectively  eliminate  the  unbundled  network  element  option  for 
 requesting  carriers,  which  would  be  inconsistent  with  Congress  intent  to  make  available 
 to  requesting  carriers  three  different  competitive  strategies,  including  access  to  unbundled 
 network  elements. 

 incumbent  LECs  legitimate  concerns.  Texas  PUC  Comments  at  16-  17.  We  note  that  MGC,  a  competitive 
 LEC  that  urges  the  Commission  to  unbundle  dark  fiber,  also  supports  limitations  such  as  those  adopted  in 
 Texas.  See  Letter  from  Scott  A.  Sarem,  Assistant  Vice  President,  Regulatory,  MGC  Communications,  to 
 Christopher  Libertelli,  Attorney,  Common  Carrier  Bureau,  Federal  Communications  Commission,  CC  Docket 
 No.  96-  98  (filed  August  12,  1999). 

 695  Bell  Atlantic  Comments  at  30. 

 696  NEXTLINK  Reply  Comments  at  27. 
 697  GTE  Comments  at  61.  See  also  Letter  from  Melissa  Newman,  Vice  President    Federal 
 Regulatory,  US  West,  to  Magalie  R.  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No. 
 96-  98  at  Pg.  2  (filed  August  18,  1999)  (arguing  that  the  relevance  of  tariffed  services  as  a  substitute  for 
 unbundled  transport  in  the  Local  Competition  First  Report  and  Order  is  no  longer  valid  precedent.). 

 698  See  supra  Section  (IV)(  B)(  4). 

 699  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15644,  para.  287. 
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 355.  Cost.  We  conclude  that  the  costs  of  self-  provisioning  dedicated  transport 
 facilities  materially  diminish  a  requesting  carriers  ability  to  provide  the  services  it  seeks 
 to  offer.  We  agree  with  commenters  that  argue  that  replicating  the  incumbents  vast  and 
 ubiquitous  transport  network  would  be  prohibitively  expensive,  and  delay  competitive 
 entry.  700  In  the  Local  Competition  First  Report  and  Order,  the  Commission  concluded 
 that  a  requesting  carrier  would  incur  much  higher  costs  if  it  had  to  construct  all  of  its 
 own  facilities  to  match  the  scope  of  an  incumbent  LECs  interoffice  transport 
 network.  701  Nothing  has  changed  in  the  intervening  three  years  to  cause  us  to  alter  this 
 conclusion.  Indeed,  based  on  the  record  before  us,  we  conclude  that  the  material  costs 
 and  delays  associated  with  self-  provisioning  duplicate,  ubiquitous  transport  facilities 
 would  impair  a  competitive  LECs  ability  to  offer  services  to  a  broad  base  of  consumers. 
 Accordingly,  we  require  incumbent  LECs  to  offer  unbundled  access  to  their  dedicated 
 transport  facilities. 

 356.  Self-  provisioning  dedicated  transport  requires  competitive  LECs  to  incur 
 significant  direct  and  other  costs,  including  the  cost  of  fiber,  the  cost  of  deploying  fiber  in 
 public  rights  of  way,  trenching  and  the  cost  of  purchasing  and  collocating  the  necessary 
 transmission  equipment.  702  For  example,  the  record  indicates  that  the  direct  equipment 
 costs  of  purchasing  interoffice  transport  equipment  exceeds  $300  per  line,  703  and  that  the 
 cost  of  constructing  alternative  transport  facilities  (e.  g.,  digging  and  backfilling  trench) 
 are  between  $200,000  -  $300,000  per  mile  in  densely  populated  areas.  704  According  to 
 GTE,  the  direct  cost  of  constructing  a  one  hundred  mile  dedicated  transport  facility  is 
 close  to  $3  million.  705 

 357.  In  addition,  in  order  to  use  alternative  transport  facilities,  either  through 
 self-  provisioning  or  through  third-  party  providers,  a  competitive  LEC  must  collocate  at 
 the  incumbents  central  office.  Collocating  in  each  end  office  imposes  materially  greater 
 costs  on  requesting  carriers  than  would  the  purchase  of  the  incumbents  interoffice 
 transport  facilities.  Based  on  the  record,  it  appears  that  the  current  range  for  non-recurring 
 charges  for  provisioning  physical  collocation  arrangements  is  between  $15,000 

 700  California  PUC  Comments  at  4-  5;  AT&  T  Comments  at  96;  Cable  and  Wireless  Comments 
 at  36;  CompTel  Comments  at  40;  CPI  Comments  at  21;  Sprint  Comments  at  34-  36.  See  also  Letter  from  John 
 J.  Heitmann,  representing  ALTS,  to  Magalie  R.  Salas,  Secretary,  Federal  Communications  Commission,  CC 
 Docket  No.  96-  98  (filed  Aug  6,  1999). 

 701  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15718,  para.  441. 

 702  This  can  include  such  things  as  fiber  distribution  panels,  optical  terminating  equipment, 
 multiplexers,  digital  cross  connects,  test  access  equipment,  digital  loop  carrier  equipment,  power  distribution 
 panels,  and  cable  racks. 

 703  AT&  T  Comments  at  121. 

 704  Id.  at  120. 
 705  GTE  Comments  at  Exhibit  B,  page  32. 
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 and  $508,000  for  each  central  office  where  a  competitor  serves  customers  with  unbundled 
 loops.  706  This  results  in  an  increase  of  between  15  and  20  percent  to  the  costs  of  the 
 equipment  installed  in  the  cage.  707  In  addition  to  the  substantial  costs  of  constructing  and 
 collocating  self-  provisioned  transport  facilities,  competitive  LECs  must  incur  additional 
 of  negotiating  and  obtaining  municipal  rights-  of-  way  permissions  .  708 

 358.  If  a  competitive  LEC  were  required  to  obtain  transport  from  multiple,  non-ubiquitous 
 alternative  providers  of  transport,  to  the  extent  it  is  available,  they  would  incur 
 additional  costs  associated  with  coordinating  back  office  billing  and  collection 
 arrangements,  as  well  as  the  costs  associated  with  coordinating  operational  issues  arising 
 out  of  use  of  multiple  vendors.  709  While  we  acknowledge  that  the  precise  level  of  costs 
 will  vary  according  to  the  business  plans  of  each  competitive  LEC,  we  conclude  that 
 contracting  with  third-  parties  to  coordinate  among  multiple  carriers  in  order  to  serve 
 ubiquitously  would  materially  diminish  the  ability  of  a  requesting  carrier  to  provide  the 
 services  it  seeks  to  offer.  Moreover,  because  purchasing  transport  capacity  is  generally 
 less  expensive  at  higher  levels  of  capacity,  competitive  LECs  using  multiple  providers 
 would  lose  efficiencies  they  would  otherwise  achieve  if  they  were  able  to  aggregate  their 
 traffic  over  the  facilities  of  one  ubiquitous  provider.  710 

 359.  We  reject  the  incumbent  LECs  cost  models  that  purport  to  demonstrate  that 
 the  fact  that  competitors  have  deployed  a  significant  amount  of  fiber  in  downtown 
 business  districts  is  evidence  that  the  cost  of  self-  provisioning  transport  facilities  does  not 
 impair  a  competitive  LECs  ability  to  provide  the  service  it  seeks  to  offer.  711  We  find  that 

 706  See  CompTel  Comments  at  39  (arguing  that  total  cost  of  switch  installation  is  $4-  6  million). 
 707  AT&  T  Comments  at  96.  See  also  Bell  South  Comments,  Attachment  A  at  1  (describing 
 $128,700  cost  of  purchasing  necessary  equipment  for  one  collocation  arrangement.). 
 708  NEXTLINK  states  that  to  obtain  a  telecommunications  franchise  from  the  City  of  New 
 York,  it  was  required  to  pay  exorbitant  fees  to  deploy  facilities  in  public  rights  of  way.  NEXTLINK  Reply 
 Comments  at  29  (arguing  that  the  City  of  New  York  assesses  exorbitant  fees  and  assesses  a  multitude  of 
 discriminatory,  non-  competitively  neutral  requirements  that  are  not  imposed  on  Bell  Atlantic.);  AT&  T 
 Comments  at  121  (citing  Beans  Affidavit  at  para  12,  describing  4%  gross  revenue  fees  associated  with 
 Dearborn,  Michigan  franchise).  See  also  Allegiance  Comments  at  19;  Sprint  Comments  at  33;  Network 
 Access  Solutions  Reply  Comments  at  11;  NEXTLINK  Reply  Comments  at  29;  Qwest  Reply  Comments  at 
 72-  77;. 

 709  Sprint  Comments  at  34. 

 710  CompTel  Comments  at  42 
 711  See,  e.  g.,  USTA  UNE  Report  at  II-  1;  GTE  Comments  at  Exhibit  B,  at  22-  33  (Network 
 Engineering  Consultants  Inc.  s  Analysis  of  Alternative  Network  Elements  Available  to  CLECs);  Bell 
 Atlantic  Comments  at  Exhibit  C;  Decl.  of  R.  Dean  Foremann/  Charles  L.  Jackson,  at  11-  18.  BellSouth 
 analyzes  AT&  Ts  existing  transport  facilities  in  one  representative  market,  Atlanta,  and  estimates  that  AT&  T 
 could  build  out  its  existing  facilities  to  deploy  a  ubiquitous  transport  network  for  an  estimated  average  cost  per 
 month  of  $36  per  DS1  transport  facility.  See  Letter  from  Kathleen  Levitz,  Vice  President    Federal  Regulatory 
 BellSouth,  to  Magalie  R.  Salas,  Secretary,  Federal  Communications  Commission  (filed  July  30,  1999) 
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 cost  models  estimating  the  costs  of  self-  provisioning  transport  are  highly  sensitive  to 
 assumptions  that  are  not  necessarily  representative  of  the  actual  market  place.  For 
 example,  BellSouth  provides  a  cost  model  that  analyzes  the  transport  networks  of  several 
 competitive  LECs  located  in  Atlanta,  and  projects  that  the  costs  to  the  competitive  LECs 
 of  extending  the  scope  of  their  network  to  reach  all  central  offices  within  that  city  is 
 between  $35  and  $38  per  DS1.  712  BellSouth  does  not  explain  the  difference  between  its 
 models  cost  estimate  of  $35-$  38  per  month,  per  dedicated  DS1  and  the  cost  estimate  of 
 $84  per  month,  per  dedicated  DS1  generated  by  a  model  the  Commission  developed  in  its 
 universal  service  proceeding.  713  Nor  does  BellSouth  explain  why  the  costs  generated  by 
 its  model  are  significantly  lower  than  the  costs  generated  by  the  model  developed  by 
 Hatfield  Associates,  Inc.,  which  shows  the  cost  of  a  DS-  1  to  be  $110  per  month.  714 
 Moreover,  it  is  not  clear  whether  BellSouths  cost  estimates  assume  full  utilization  of  the 
 transport  facilities.  For  competitive  LECs  entering  the  market  that  have  little  usage,  the 
 relevant  comparison  between  the  costs  of  self-  provisioning  and  purchasing  unbundled 
 transport  from  the  incumbent  should  be  based  on  the  number  of  DS1s  actually  carried,  not 
 on  the  number  of  DS1s  that  could  potentially  be  used  by  the  requesting  carrier. 

 360.  Ameritech  proposes  the  use  of  a  model  that,  it  asserts,  shows  that  in  two 
 second  tier  cities  in  Ameritechs  territory,  it  is  economical  for  competitive  LECs  to  build 
 ubiquitous  transport  networks  of  less  than  100  miles  to  wire  centers  with  a  total  of 
 100,000  access  lines.  715  Even  assuming,  arguendo,  that  Ameritechs  model  accurately 
 projects  the  theoretical  viability  or  profitability  of  extending  a  competitive  LECs 
 transport  network,  as  noted  by  the  Supreme  Court,  the  ability  to  amass  earnings  alone  is 
 not  dispositive  of  whether  or  not  a  requesting  carrier  is  impaired  without  access  to  the 
 incumbents  unbundled  transport.  716  We  therefore  find  that  cost  models  proposed  by 
 BellSouth,  Ameritech,  and  others  do  not  accurately  indicate  the  extent  to  which  the  costs 

 (BellSouth  estimates  MCIs  cost  per  DS1  transport  at  $35  per  month;  ICGs  cost  per  DS1  transport  at  $36  per 
 month;  and  e.  spires  cost  per  DS1  transport  at  $38  per  month).  See  also  Comments  of  Bell  Atlantic  at  26; 
 Comments  of  GTE  at  48  (Appendix  D). 

 712  See  Letter  from  Kathleen  Levitz,  Vice  President    Federal  Regulatory  BellSouth,  to 
 Magalie  R.  Salas,  Esq.,  Secretary,  Federal  Communications  Commission  (filed  July  30,  1999). 
 713  See  generally  Commission  Takes  Action  to  Reform  Universal  Service  Support  for  Non-Rural 
 Carriers  Providing  Service  in  High-  Cost  Areas  and  Commission  Adopts  Framework  for  Federal 
 Universal  Service  High-  Cost  support  Mechanism;  Commission  Seeks  Comment  on  the  Input  Values  for  the 
 Forward-  Looking  Cost  Model,  CC  Docket  No.  96-  45;  96-  262;  97-  160,  FCC  No.  99-  17  (released  May  27, 
 1999). 

 714  BellSouths  fill  factor  assumption  of  75%  may  also  not  be  representative  of  actual  market 
 conditions  for  requesting  carriers. 
 715  Ameritech  Fitzsimmons  Aff.  at  pg.  32. 

 716  Iowa  Utils.  Bd.,  119  S.  Ct.  721,  734  (  An  entrant  whose  anticipated  annual  profits  from  the 
 proposed  service  are  reduced  from  100%  of  investment  to  99%  of  investment  has  perhaps  been  impaired  in 
 its  ability  to  amass  earnings,  but  has  not  ipso  facto  been  impair[  ed]  .  .  .  in  its  ability  to  provide  the  services  it 
 seeks  to  offer.). 
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 associated  with  self-  provisioning  transport  materially  diminish  a  requesting  carriers 
 ability  to  provide  the  services  it  seeks  to  offer.  Finally,  as  discussed  above,  we  do  not 
 base  our  unbundling  analysis  on  individual  business  case  analyses.  717 

 361.  Timeliness.  We  conclude  that  lack  of  access  to  the  incumbents  interoffice 
 transport  network  would  materially  delay  a  requesting  carrier  entry  into  the  local  market 
 or  alternatively  delay  expansion  of  an  existing  carriers  service  offerings.  Whether 
 requesting  carriers  self-  provision  interoffice  transport,  or  purchase  it  from  third-  party 
 providers,  they  must  collocate  their  own  equipment  at  the  incumbents  central  office. 
 Thus,  collocation  is  an  essential  prerequisite  to  self-  provisioned  and  third-  party 
 provisioned  transport,  and  the  time  required  to  collocate  affects  a  requesting  carriers 
 ability  to  provide  service  using  dedicated  transport. 

 362.  Incumbents  and  requesting  carriers  provide  different  estimates  about  the 
 time  required  to  implement  a  single  collocation  arrangements  in  an  incumbent  LECs 
 central  office.  In  general,  competitive  LECs  argue  that  each  collocation  arrangement 
 requires  between  six  months  and  a  year  to  provision.  718  In  addition,  these  carriers  argue 
 that  the  delay  associated  with  implementing  collocation  arrangements  is  compounded  as 
 competitive  LECs  expand  their  networks  and  seek  to  establish  more  collocation 
 arrangements.  719  Incumbent  LECs  respond  that  they  have  provisioned  collocation  to 
 requesting  carriers  in  a  timely  fashion  and  on  a  broad  scale.  720 

 363.  We  acknowledge  that  collocation  arrangements  necessarily  require  some 
 time  to  implement,  and  that  the  amount  of  time  required  to  order  and  provision  a 
 collocation  arrangement  will  vary  from  incumbent  LEC  to  incumbent  LEC  and  by 
 requesting  carrier.  Accordingly,  we  do  not  attempt  to  specifically  quantify  what 
 constitutes  a  reasonable  provisioning  interval  for  a  single  collocation  arrangement.  We 

 717  See  supra  Section  (IV)(  B)(  2). 
 718  See  supra  Section  (V)(  D)(  1).  AT&  T  Comments  at  91  (citing  collocation  delays  of  six  to 
 eight  months);  CompTel  Comments  at  40  (stating  that  collocation  takes  several  months  at  a  minimum);  MCI 
 WorldCom  Reply  Comments  at  52  (stating  that  collocation  takes  6  months  to  a  year).  New  England  Voice  & 
 Data  notes  that  it  took  six  months  to  gain  access  to  conduit  space  to  pull  cable  11,000  feet  of  fiber  from  Bell 
 Atlantics  switch  to  New  England  Voice  &  Datas  switch.  New  England  Voice  &  Data  Comments  at  14. 

 719  MCI  WorldCom  estimates  that  establishing  a  single  collocation  arrangement  requires 
 approximately  five  months  before  the  arrangement  is  in  place.  MCI  WorldCom  also  argues,  however,  that  if  a 
 requesting  carrier  seeks  to  expand  the  scope  of  its  services  by  requesting  collocation  arrangements,  the 
 collocation  delay  amounts  to  several  years  before  it  can  provide  service.  MCI  WorldCom  Comments,  Herold 
 Declaration,  at  para.  10-  11. 

 720  Ameritech  Comments  at  28,  77;  SBC  Reply  Comments  at  16;  US  WEST  Reply  Comments 
 at  44;  Bell  Atlantic  Reply  Comments  at  14;  BellSouth  Reply  Comments  at  36.  SBC  submitted  an  Ex  Parte 
 presentation  which  states  that  the  average  caged  collocation  interval  in  Texas  is  90  days  and  55-  70  days  for 
 cageless  collocation.  In  California,  the  average  caged  collocation  interval  is  120  days  and  110  days  for 
 cageless.  See  Letter  from  Lincoln  E.  Brown,  Director    Federal  Regulatory,  SBC,  to  Magalie  R.  Salas, 
 Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  July  15,  1999). 
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 agree,  however,  with  commenters  that  provisioning  the  multiple  collocation  arrangements 
 needed  to  provide  a  ubiquitous  transport  network  within  an  MSA  would  compound 
 significantly  the  inherent  delays  associated  with  provisioning  a  single  collocation 
 arrangement.  NorthPoint  contends  that  most  incumbent  LECs  have  imposed  governors 
 on  the  number  of  collocation  applications  they  will  accept.  721  Specifically,  BellSouth  has 
 limited  the  number  of  collocation  applications  a  requesting  carrier  may  file  to  five  per 
 month,  thereby  delaying  ubiquitous  rollout  of  services.  722  Requiring  requesting  carriers  to 
 collocate  in  numerous  end  offices  in  order  to  obtain  ubiquitous  transport  facilities  would 
 materially  delay  the  ability  of  requesting  carriers  to  enter  a  market  or  to  expand  its  service 
 offerings  to  the  greatest  number  of  consumers. 

 364.  Several  carriers  argue  that  the  process  of  securing  necessary  access  to 
 rights-  of-  way,  pole  attachments,  and  conduit  space  significantly  delays  their  ability  to 
 compete.  723  For  example,  NEXTLINK  notes  that  it  took  two  years  to  negotiate  and 
 obtain  a  telecommunications  franchise  from  the  City  of  New  York  before  it  could  deploy 
 competitive  facilities,  and  that  it  must  negotiate  separate  agreements  with  each 
 municipality  traversed  by  its  fiber  ring.  724  We  find  that  the  delays  of  this  magnitude 
 associated  with  obtaining  authority  to  access  public  rights-  of-  way  materially  delay  the 
 ability  of  a  requesting  carrier  to  self-  provision  transport. 

 365.  Functionality  and  Quality.  We  conclude  that  requiring  carriers  to  utilize 
 alternative  sources  of  transport  imposes  functional  and  quality  disadvantages  that 
 materially  diminish  a  requesting  carriers  opportunity  to  provide  the  services  it  seeks  to 
 offer.  If  the  Commission  were  to  adopt  the  incumbent  LEC  proposals  to  eliminate 
 unbundled  access  to  interoffice  transport  in  areas  where  there  are  one  or  more  alternative 
 suppliers  in  the  market,  carriers  would  have  to  use  multiple  alternative  suppliers,  where 
 available,  for  their  transport  requirements.  Using  a  patchwork  of  transport  offerings 
 consisting  of  facilities  acquired  from  competitive  LEC/  competitive  access  providers  and 
 the  incumbent  LEC,  in  lieu  of  ubiquitous  incumbent  LEC  transport  facilities,  would 
 introduce  additional  complexity  into  a  ubiquitous  end-  to-  end  transport  network.  For 
 example,  Sprint  notes  that  when  facilities  of  more  than  one  carrier  are  involved,  repair 
 times  are  roughly  three  times  longer  than  if  the  entire  transport  network  were  controlled 
 by  one  carrier  or  provisioned  exclusively  through  unbundled  transport.  725  In  addition, 
 Sprint  argues  that  an  end-  to-  end  transport  offering  provisioned  by  multiple  providers  may 

 721  See  Letter  from  John  J.  Heitmann,  representing  ALTS,  to  Magalie  R.  Salas,  Secretary, 
 Federal  Communications  Commission,  CC  Docket  No.  96-  98  (filed  Aug  6,  1999). 
 722  See  id. 

 723  New  England  Voice  &  Data  Comments  at  14;  NEXTLINK  Reply  Comments  at  28. 
 724  NEXTLINK  Reply  Comments  at  29. 
 725  Sprint  notes  that  nationwide,  incumbent  LECs  meet  transport  provisioning  deadlines  90 
 percent  of  the  time;  while  CLECs  meet  these  dates  between  48  and  68  percent  of  the  time.  Sprint  Comments 
 at  34  and  Appendix  B,  Decl.  of  Kevin  E.  Brauer,  at  4. 
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 require  several  digital-  to-  analog  and  analog-  to-  digital  conversions  or  protocol 
 conversions,  which  could  lower  total  connection  speeds  otherwise  achievable  with  a 
 single  provider  transport  offering.  726  Although  we  do  not  conclude  that  digital-  to-  analog 
 or  analog-  to-  digital  protocol  conversions  result  in  a  material  quality  degradation,  we  find 
 that,  as  a  general  matter,  requiring  requesting  carriers  to  utilize  a  patchwork  of 
 competitive  alternatives,  to  the  extent  they  are  available,  to  collect  and  route  traffic  to  the 
 required  destination  can  result  in  a  material  degradation  of  quality  in  the  service  the 
 requesting  carrier  to  seeks  to  provide. 

 366.  Goals  of  the  Act.  We  recognize  that  requiring  incumbent  LECs  to  unbundle 
 dedicated  transport  may  be  marginally  overinclusive  because  of  the  presence  of  some 
 alternative  fiber  along  selected  point-  to-  point  routes  in  dense  markets.  We  believe, 
 however,  that  the  benefits  of  uniform  transport  unbundling  outweigh  the  costs  of  creating 
 a  patchwork  regime  in  which  incumbent  LECs  would  likely  seek  to  litigate  its  transport 
 unbundling  obligation  on  particular  point-  to-  point  routes  where  transport  alternatives  are 
 arguably  available.  As  we  stated  above,  unbundling  requirements  that  provide  uniformity 
 and  certainty  to  the  market  will  allow  new  entrants  and  fledgling  competitors  to 
 implement  national  and  regional  business  plans  and  attract  capital  investment.  Litigation 
 over  the  incumbents  unbundling  obligations  requires  the  parties  to  these  agreements  and 
 the  state  commissions  that  approve  them  to  expend  vast  amounts  of  time  and  resources 
 and  would  impede  the  development  of  competition. 

 367.  Creating  a  patchwork  of  transport  unbundling  obligations  would  be 
 inconsistent  with  the  goal  of  the  1996  Act  to  facilitate  rapid  entry  into  the  local  exchange 
 market.  We  reiterate  the  Commissions  conclusion  in  the  Local  Competition  First  Report 
 and  Order  that  [  w]  e  recognize  that  there  are  alternative  suppliers  of  interoffice  facilities 
 in  certain  areas.  We  are  convinced,  however,  that  entry  will  be  facilitated  if  competitors 
 have  greater,  not  fewer,  options  for  procuring  interoffice  facilities  as  part  of  their  local 
 networks,  and  that  Congress  intended  for  competitors  to  have  these  options  available  from 
 competitors.  727  Furthermore,  we  believe  that  our  decision  to  unbundle  interoffice 
 transport  is  consistent  with  Congress  recognition,  in  section  271,  that  providing 
 unbundled  access  to  interoffice  transport  would  encourage  rapid  entry  into  the  local 
 exchange  market.  728 

 368.  We  further  find  that  the  allegations  of  the  competitive  harms  resulting  from 
 a  uniform  transport  unbundling  obligation  are  overstated.  We  believe  that  there  are 
 significant  operational  and  technical  incentives  for  a  requesting  carrier  to  eliminate  its 
 reliance  upon  transport  provided  by  incumbent  LECs  over  the  long  term.  729  Where 

 726  Sprint  Comments,  Appendix  D,  Sprint  Experience  with  BellSouth,  at  4. 
 727  Local  Competition  First  Report  and  Order,  11  FCC  Rcd.  15718-  15719,  at  para  441. 
 728  47  U.  S.  C.    271(  2)(  B)(  v). 
 729  Sprint  contends  that  better  financial  results,  over  the  long  run,  should  be  achievable  by 
 increasing  the  return  from  capital  dollars  spend  rather  than  continuing  to  expense  to  multiple  third  party 
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 alternative  providers  build  transport  facilities  to  areas  exclusively  served  by  the 
 incumbent  LECs  facilities,  requesting  carriers  may  substitute  those  alternative  sources  of 
 transport  as  they  become  available.  We  therefore  expect  the  need  for  unbundled  transport 
 will  decrease  as  competitive  transport  networks  become  more  ubiquitous.  We  will  closely 
 monitor  the  developments  in  the  transport  market  to  determine  whether  the  transport 
 market,  or  a  particular  segment  of  this  market,  is  supplying  requesting  carriers  with 
 effective  alternatives  to  the  incumbent  LECs  unbundled  network  elements  when  we 
 reexamine  these  rules  in  three  years.  730 

 b.  Shared  Transport 

 369.  We  find  that  lack  of  unbundled  access  to  incumbents  shared  transport 
 would  impair  the  requesting  carriers  ability  to  use  unbundled  switching.  731  In  particular, 
 without  access  to  unbundled  shared  transport,  a  requesting  carrier  would  have  to  self-provision 
 or  purchase  dedicated  transport  from  the  incumbent,  which  would  materially 
 increase  the  costs  and  decrease  the  quality  of  services  the  requesting  carrier  could 
 provide,  and  would  materially  limit  the  carriers  ability  to  serve  a  broad  base  of 
 customers.  Accordingly,  where  an  incumbent  LEC  provides  requesting  carriers  with 
 access  to  unbundled  switching,  we  require  incumbent  LECs  also  to  provide  access  to 
 unbundled  shared  transport  services. 

 (i)  Definition 

 370.  In  the  Local  Competition  Third  Reconsideration  Order,  the  Commission 
 defined  shared  transport  as  transmission  facilities  shared  by  more  than  one  carrier, 
 including  the  incumbent  LEC,  between  end  office  switches,  between  end  office  switches 
 and  tandem  switches,  and  between  tandem  switches  in  the  incumbent  LECs  network.  732 

 transport  providers.  Sprint  argues  that  dependence  upon  external  vendors  also  increases  the  business 
 uncertainties  and  risks  (in  terms  of  pricing  fluctuations,  quality  control,  choice  of  vendors,  changes  in  vendor 
 business  strategy)  associated  with  third  party  transport  provisioning.  Sprint  Comments,  Declaration  of  Kevin 
 Brauer,  at  4. 

 730  See  Letter  from  Ernest  L.  Bush,  Jr.,  Assistant  Vice  President    BellSouth 
 Telecommunications,  to  Lawrence  Strickling,  Chief,  Common  Carrier  Bureau,  Federal  Communications 
 Commission,  CC  Docket  No.  96-  98  (filed  August  16,  1999)  (arguing  that  the  entrance  facilities  or  POP  to 
 incumbent  LEC  wire  center  segment  of  the  transport  market  has  developed  to  such  an  extent  that  requesting 
 carriers  are  not  impaired  without  access  to  unbundled  transport  in  this  market  segment.). 

 731  We  note  at  the  outset  that  a  requesting  carrier  that  uses  its  own  self-  provisioned  switch, 
 rather  than  unbundled  local  switches  obtained  from  an  incumbent  LEC,  to  provide  local  exchange  and 
 exchange  access  service  would  use  dedicated  transport  facilities  to  carry  traffic  between  its  network  and  the 
 incumbent  LECs  network.  Thus,  the  only  carrier  that  would  need  shared  transport  facilities  would  be  one 
 that  was  using  an  unbundled  local  switch.  Requesting  carriers  may  also  utilize  unbundled  tandem  switching 
 to  substitute  shared  transport  for  common  transport  in  situations  where  the  requesting  carrier  is  not  providing 
 local  service  to  the  end  user.  We  note  that  this  use  of  shared  transport  is  currently  pending  before  the 
 Commission  and  we  expect  to  address  it  in  connection  with  the  Further  Notice  adopted  in  this  proceeding. 

 732  The  definition  of  shared  transport  includes  shared  transport  from  one  end  office  to  another 
 end  office.  See  47  C.  F.  R.    51.319(  d)(  1)(  ii).  It  does  not  include  the  provision  of  shared  transport  from  an 
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 The  Commission  clarified  in  that  proceeding  that  incumbent  LECs  are  not  required  to 
 provide  shared  transport  between  incumbent  LEC  switches  and  serving  wire  centers.  733 
 No  commenter  in  this  phase  of  the  proceeding  specifically  addressed  the  definition  of 
 shared  transport  and  the  record  provides  no  basis  for  modifying  our  definition  of  shared 
 transport. 

 371.  Ameritech,  however,  argues  that  shared  transport  is  not  an  unbundled 
 network  element  within  the  meaning  of  section  251(  c)(  3).  Specifically,  Ameritech  argues 
 that  under  the  Supreme  Courts  ruling,  incumbent  LECs  must  provide  to  requesting 
 carriers  pre-  assembled  combinations  of  individual  unbundled  network  elements  if  the 
 element  can  be  purchased  separately.  734  Because  shared  transport  is  technically 
 inseparable  from  unbundled  switching  requesting  carriers  do  not  have  the  option  of  using 
 unbundled  shared  transport  without  also  taking  unbundled  local  switching.  Thus, 
 according  to  Ameritech,  the  shared  transport  element  is  not  an  unbundled  element 
 within  the  meaning  of  section  251(  c)(  3).  735 

 372.  We  reject  Ameritechs  arguments.  The  Supreme  Court  upheld  the 
 Commissions  interpretation  that  the  phrase  on  an  unbundled  basis  in  section  251(  c) 
 does  not  refer  to  physically  separated  elements  but  rather  to  separately  priced  elements.  736 
 Shared  transport  is  an  unbundled  element  because  it  consists  of  separately  priced 
 switching  and  transport  network  elements.  The  fact  it  is  technically  infeasible  for  a 
 competitor  to  use  shared  transport  with  self-  provisioned  switching  is  irrelevant  to  whether 
 an  element  is  unbundled  pursuant  to  section  251(  c)(  3).  In  addition,  the  Eighth  Circuit, 
 in  affirming  our  decision  in  the  Local  Competition  Third  Reconsideration  Order,  rejected 
 Ameritechs  argument  when  it  held  that  shared  transport  meets  the  definition  of  an 
 unbundled  network  element  because  it  is  a  feature,  function,  [or]  capability,  that  is 
 provided  by  facilities  and  equipment  used  in  the  provision  of  a  telecommunications 
 service.  737  Accordingly,  we  conclude  that  shared  transport  meets  the  definition  of  an 
 unbundled  network  element. 

 (ii)  Proprietary  Concerns  Associated  With  Shared  Transport 

 373.  Ameritech  asserts  that  its  routing  table  used  to  provide  shared  transport  is 
 proprietary.  As  discussed  above,  we  reject  Ameritechs  claim  because  we  find  that 

 end  office  to  an  end  user.  See  Centennial  Joint  Comments  at  5. 
 733  Local  Competition  Third  Reconsideration  Order,  12  FCC  Rcd  12453,  at  para.  27. 

 734  Ameritech  Comments  at  94-  96. 
 735  Id.. 
 736  Iowa  Utils.  Bd.,  119  S.  Ct.  at  737. 
 737  Southwestern  Bell  Tel.  Co.  v.  Federal  Communications  Commission,  153  F.  3d  597,  603 
 (8th  Cir.  1998). 
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 incumbent  LECs  may  not  withhold  access  to  unbundled  local  switching  on  the  grounds 
 that  switch  routing  tables  are  proprietary  in  nature  under  section  251(  d)(  2)(  A).  738  With 
 the  exception  of  Ameritech,  no  commenter  identifies  any  proprietary  concerns  associated 
 with  the  provision  of  shared  transport,  and  we  identify  none.  Accordingly,  we  analyze 
 shared  transport  under  the  impair  standard  of  section  251(  d)(  2)(  B). 

 (iii)  Unbundling  Analysis 

 374.  We  conclude  that  a  requesting  carriers  ability  to  provide  the  services  it 
 seeks  to  offer  is  impaired  without  access  to  the  incumbents  unbundled  shared  transport. 
 Without  access  to  unbundled  shared  transport,  a  requesting  carrier  would  have  to  self-provision 
 or  purchase  dedicated  transport  from  the  incumbent,  which  would  materially 
 increase  the  costs  and  decrease  the  quality  of  services  the  requesting  carrier  could 
 provide,  and  would  materially  limit  the  carriers  ability  to  serve  a  broad  base  of 
 customers.  739  Accordingly,  we  conclude  that  incumbent  LECs  must  provide  unbundled 
 access  to  shared  transport. 

 375.  Costs  and  Quality.  We  find  that  lack  of  unbundled  access  to  the 
 incumbents  shared  transport  facilities  materially  increases  a  requesting  carriers  costs  of 
 providing  service.  As  described  above,  we  find  that  there  is  a  lack  of  ubiquitous  transport 
 alternatives  available  to  requesting  carriers.  Thus,  without  access  to  the  incumbents 
 shared  transport  facilities,  a  requesting  carriers  must  either  deploy  its  own  dedicated 
 facilities  or  purchase  dedicated  transport  from  the  incumbent.  Because  requesting 
 carriers,  in  the  early  stages  of  entering  the  local  market,  may  not  yet  have  sufficient 
 market  information  to  forecast  accurately  their  traffic  volumes,  they  may  miscalculate  the 
 amount  of  dedicated  transport  capacity  they  will  need.  Specifically,  an  inability  to 
 reasonably  forecast  traffic  volumes  would  likely  cause  a  requesting  carrier  to  purchase  an 
 insufficient  amount,  or  conversely,  too  much  dedicated  transport  capacity.  In  shared 
 transport  arrangements,  the  switch  routes  the  competitors  traffic  through  the  most 
 efficient  trunking  group  available.  The  trunking  group  is  shared  among  many  users, 
 including  the  incumbent  LECs  end  users,  thereby  reducing  requesting  carrier  costs  and 
 utilizing  capacity  only  when  necessary  to  route  and  complete  a  call.  740 

 376.  In  addition,  as  traffic  demands  increase,  a  requesting  carrier  will  incur  a 
 non-  recurring  charge  each  time  it  purchases  additional  transport  capacity.  In  contrast, 
 where  a  requesting  carrier  purchases  unbundled  shared  transport  to  meet  increased 
 customer  demand,  it  effectively  purchases  the  entire  capacity  of  the  incumbent  LECs 
 network  and  will  not  incur  non-  recurring  charges  for  additional  increments  of  dedicated 

 738  See  supra  Section  (V)(  D)(  1). 
 739  AT&  T  Comments  at  99;  Centennial  Joint  Comments  at  7;  TRA  Comments  at  39. 
 740  We  recognize  that  competitors  face  significant  demand  uncertainty,  particularly  in  the  early 
 stages  of  entry,  but  as  the  local  exchange  market  matures,  competitors  will  be  required  to  assume  the  normal 
 business  risks  of  forecasting  demand  and  provisioning  transport  to  meet  this  demand. 
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 transport  capacity.  Purchasing  only  those  increments  of  capacity  that  the  requesting 
 carrier  requires  to  meet  demand  eliminates  inefficient  use  of  dedicated  transport  facilities. 
 In  addition,  at  low  volumes  requesting  carriers  will  incur  significantly  higher  recurring, 
 per-  minute  costs  to  substitute  dedicated  transport  for  shared  transport  arrangements  at  low 
 volumes.  We  reiterate  the  Commissions  conclusion  in  the  Third  Order  on 
 Reconsideration  that  the  relative  costs  of  dedicated  transport,  including  the  associated 
 NRCs  [non-  recurring  charges],  is  an  unnecessary  barrier  to  entry  for  competing 
 carriers.  741 

 377.  According  to  Ameritech,  competitive  LECs  have  the  option  of  using  its  end 
 office  integration  (EOI)  service,  a  tariffed,  retail  service  that  Ameritech  claims  will  carry, 
 on  a  minute-  of-  use  basis,  whatever  interoffice  transport  traffic  the  competitive  LEC 
 delivers  to  its  point  of  interconnection.  742  Under  this  plan,  Ameritech  would  not  require 
 requesting  carriers  to  order  dedicated  transport  facilities  until  their  actual  volume  levels 
 justified  provisioning  a  dedicated  trunk.  Consistent  with  the  little  weight  we  afford  the 
 incumbents  tariffed  offerings  for  consideration  as  an  alternative  to  dedicated  transport, 
 we  reject  the  argument  that  Ameritechs  tariffed  EOI  service  eliminates  the  obligation  to 
 unbundle  shared  transport.  743 

 378.  We  agree  with  commenters  that  argue  that  the  ability  to  obtain  access  to 
 shared  transport  enables  them  to  handle  traffic  at  peak  loads  and  maintain  call  blockage 
 levels  that  are  at  parity  with  those  of  the  incumbent  LECs.  744  As  the  Commission  stated 
 in  the  Local  Competition  Third  Reconsideration  Order,  a  new  entrant  entering  the  local 
 market  with  smaller  traffic  volumes  would  have  to  maintain  greater  excess  transport 
 capacity  relative  to  the  incumbent  LEC  in  order  to  provide  the  same  level  of  service 
 quality  (i.  e.  same  level  of  successful  call  completion)  as  the  incumbent  LEC.  745  We 

 741  Local  Competition  Third  Reconsideration  Order,  12  FCC  Rcd  at  12488,  para  50.  In  the 
 Third  Reconsideration  proceeding,  AT&  T  contended  that  the  cost  is  $.  041767  per  minute  for  dedicated 
 transport  plus  associated  non-  recurring  charges.  AT&  T  claimed  that  Ameritech  would  charge  a  total  of 
 $5008.58  per  DS1  and  $58,552.87  per  switch.  AT&  T  argued  that  this  compares  with  $.  000776  per  minute  for 
 unbundled  shared  transport.  Ameritech  responded  that  the  correct  price  for  tandem  routed  dedicated  facilities 
 cost  is  $.  0031148  per  minute  plus  associated  NRCs.  Id. 

 742  Ameritech  Comments  at  72. 

 743  See  supra  Section  (IV)(  B)(  4).  There  are  also  substantial  questions  concerning  whether 
 Ameritechs  EOI  includes  the  transport  and  termination  charges  Ameritech  would  levy  on  top  of  the  per-minute 
 fees  and  the  non-  recurring  charges  that  Ameritech  would  impose  for  establishing  its  EOI  service. 

 744  MCI  WorldCom  Comments  62  and  Tab  4,  Decl.  of  John  M.  Wimmer,  at  para.  28;  AT&  T 
 Reply  Comments  at  108. 
 745  Local  Competition  Third  Reconsideration  Order,  12  FCC  Rcd  at  12488,  para  51  (citing 
 William  W.  Sharkey,  The  Theory  of  Natural  Monopoly,  184-  85  (1982)  (  that  for  a  given  number  of  circuits 
 the  economies  [of  scale]  are  more  pronounced  at  higher  grades  of  service  (lower  blocking  probability).  The 
 economics  of  scale,  however,  decline  substantially  as  the  number  of  circuits  increases.  Therefore  for  small 
 demands,  a  fragmentation  of  the  network  could  result  in  a  significant  cost  penalty  because  more  circuits  would 
 be  required  to  maintain  the  same  grade  of  service.  At  large  demands,  the  costs  of  fragmentation  are  less 
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 conclude  a  requesting  carrier  would  be  impaired  without  access  to  unbundled  shared 
 transport  because  it  would  have  to  choose  between  purchasing  excess  capacity  or 
 incurring  increased  call  blockage  rates. 

 379.  Goals  of  the  Act.  We  find  that  requiring  incumbent  LECs  to  provide 
 unbundled  access  to  shared  transport  is  consistent  with  the  Acts  goal  of  encouraging 
 requesting  carriers  to  rapidly  enter  the  local  market  and  serve  the  greatest  number  of 
 customers.  Requiring  unbundled  access  to  shared  transport  is  particularly  important 
 because  it  addresses  the  transport  needs  of  requesting  carriers  in  the  early  stages  of 
 competitive  entry  by  allowing  competitors  to  efficiently  purchase  transport  facilities  as 
 they  ramp  up  toward  higher-  capacity  dedicated  transport  requirements.  Furthermore, 
 when  used  in  conjunction  with  unbundled  switching,  requesting  carriers  may  find  it 
 economical  to  serve  the  small  business  and  residential  markets  using  shared  transport 
 because  these  market  segments  may  not  always  support  traffic  volumes  that  justify  using 
 dedicated  transport  services.  Accordingly,  we  find  that  requiring  unbundled  access  to 
 shared  transport  promotes  the  prompt  development  of  competition  to  serve  the  greatest 
 number  of  customers,  as  intended  by  the  Act. 

 F.  Signaling  Networks  and  Call-  Related  Databases 

 1.  Signaling  Networks 
 a.  Background 

 380.  In  the  Local  Competition  First  Report  and  Order,  the  Commission 
 concluded  that  incumbent  LECs,  upon  request,  must  provide  nondiscriminatory  access  to 
 their  signaling  networks  on  an  unbundled  basis.  746  The  Commission  stated  that  it  was 
 technically  feasible  for  incumbent  LECs  to  provide  such  access,  and  that  such  access  was 
 critical  to  entry  in  the  local  exchange  market.  747  The  Commission  concluded  that 

 pronounced.)  Id. 
 746  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15738,  para.  479.  These 
 networks  are  referred  to  as  out  of  band  signaling  networks,  and  they  simultaneously  carry  signaling 
 messages  for  multiple  calls.  In  general,  most  LECs  signaling  networks  adhere  to  a  Bellcore  standard 
 Signaling  System  7  (SS7)  protocol.  SS7  networks  use  signaling  links  to  transmit  routing  messages  between 
 switches,  and  between  switches  and  call-  related  databases  (such  as  the  Line  Information  Database,  Toll  Free 
 Calling  Database,  and  Advanced  Intelligent  Network  databases).  These  links  enable  a  switch  to  send  queries 
 via  the  SS7  network  to  call-  related  databases,  which  return  customer  information  or  instructions  for  call 
 routing  to  the  switch.  A  typical  SS7  network  includes  a  signaling  link  that  transmits  signaling  information  in 
 packets,  from  a  local  switch  to  a  signaling  transfer  point  (STP),  which  is  a  high-  capacity  packet  switch.  The 
 STP  switches  packets  onto  other  links  according  to  the  address  information  contained  in  the  packet.  These 
 additional  links  extend  to  other  switches,  databases,  and  STPs  in  the  incumbent  LECs  networks.  A  switch 
 routing  a  call  to  another  switch  will  initiate  a  series  of  signaling  messages  via  signaling  links  through  a  STP  to 
 establish  a  call  path  on  the  voice  network  between  the  switches.  Id.  at  paras  479-  483. 

 747  Id.  at  15738,  para.  479. 
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 incumbent  LECs  must  provide  unbundled  access  to  signaling  networks  as  part  of  the 
 unbundled  switch  network  element  as  well  as  on  a  standalone  basis.  748 

 381.  In  the  Notice,  we  sought  comment  on  the  application  of  the  necessary  and 
 impair  standards  to  previously  identified  unbundled  network  elements,  including 
 signaling  networks.  749  The  Notice  also  requested  that  parties  include  specific  costs  and  an 
 analysis  of  the  availability  of  alternative  signaling  facilities.  750 

 382.  The  majority  of  state  commissions  and  competitive  LECs  commenting  in 
 this  phase  of  the  proceeding  argue  that  the  incumbent  LECs  signaling  networks  should 
 be  unbundled  because  alternatives  to  the  incumbents  signaling  networks  are  more  costly, 
 have  lower  quality,  and  do  not  provide  the  ubiquity  of  the  incumbents  networks.  751  The 
 incumbent  LECs  argue  that  based  on  the  availability  of  alternative  signaling  providers, 
 requesting  carriers  are  not  impaired  in  their  ability  to  provide  services.  752 

 b.  Discussion 

 383.  We  conclude  that  without  unbundled  access  to  the  incumbent  LECs 
 signaling  networks,  a  requesting  carriers  ability  to  provide  the  services  it  seeks  to  offer  is 
 impaired.  Requiring  a  requesting  carrier  to  obtain  signaling  from  alternative  sources 
 would  materially  diminish  its  ability  to  provide  the  services  it  seeks  to  offer,  due  to  the 
 quality  differences  between  the  signaling  networks  available  from  the  incumbent  LEC 
 and  those  available  from  alternative  providers  of  signaling.  As  described  below,  we 
 conclude  that  neither  self-  provisioning  signaling  networks,  nor  obtaining  this  element 
 from  third-  party  sources,  is  a  sufficient  substitute  that  would  justify  excluding  signaling 
 networks  from  the  incumbent  LECs  unbundling  obligation  under  section  251(  c)(  3).  We 
 therefore  require  incumbent  LECs  to  provide  requesting  carriers  with  unbundled  access 
 to  their  signaling  networks. 

 748  Id.  at  15738-  41,  paras.  479-  483. 
 749  Notice  at  para.  33. 
 750  Id.. 
 751  See  Florida  PSC  Comments  at  6-  7;  Illinois  Commission  Comments  at  14;  Iowa  Comments 
 at  6;  Kentucky  PSC  Comments  at  2;  Allegiance  Comments  at  20;  Cable  &  Wireless  Comments  at  37-  38; 
 Choice  One  Joint  Comments  at  18;  Cox  Comments  at  34-  36;  KMC  Comments  at  16-  17;  Level  3  Comments  at 
 15-  16;  Net  2000  Comments  at  15-  16.  But  see  MGC  Comments  at  31. 

 752  See  Ameritech  Comments  at  114-  116;  BellSouth  Comments  at  76;  GTE  Comments  at  54- 
 56;  SBC  Comments  at  43;  US  WEST  Comments  at  47;  USTA  UNE  Report,  Tab  5,  at  1-  5. 
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 (i)  Definition 
 384.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  defined 
 the  signaling  network  element  as  including,  but  not  limited  to,  signaling  links  and 
 signaling  transfer  points  (STPs).  753  No  party  commenting  in  this  phase  of  the  proceeding 
 has  asked  us  to  modify  our  definition,  and  we  find  no  marketplace  developments  that 
 would  cause  us  to  re-  evaluate  our  definition  of  the  signaling  network  element. 
 Accordingly,  we  reaffirm  the  definition  of  signaling  networks  that  was  adopted  in  the 
 Local  Competition  First  Report  and  Order.  754 

 (ii)  Proprietary  Analysis 

 385.  We  agree  with  commenters  that  signaling  links  and  STPs  are  not 
 proprietary.  755  Moreover,  we  do  not  discern  any  copyright,  patent,  or  trade  secret 
 implications  to  unbundling  signaling  links  and  STPs,  and  carriers  do  not  generally  rely 
 upon  their  signaling  links  and  STPs  to  differentiate  themselves  from  their  competitors.  In 
 addition,  SS7  signaling  networks  generally  adhere  to  Bellcore  standards  rather  than  LEC-specific 
 protocols,  and  provide  seamless  connectivity  between  networks.  756  We  therefore 
 conclude  that  signaling  links  and  STPs  are  not  proprietary  elements,  and  we  analyze 
 signaling  networks  under  the  impair  standard  of  section  251(  d)(  2)(  B). 

 (iii)  Unbundling  Analysis 

 386.  Current  switch  technology  requires  each  local  switch  to  connect  to  a  single 
 STP.  757  All  parties,  including  incumbent  LECs,  agree  that  because  the  incumbent  LECs 
 switching  networks  are  already  connected  to  a  STP,  a  carrier  that  purchases  unbundled 
 switching  from  an  incumbent  LEC  must  also  purchase  signaling  from  that  incumbent 

 753  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15724,  para.  456. 
 754  Id.  at  15723-  24,  para.  455. 
 755  See,  e.  g.,  Allegiance  Comments  at  19-  20;  Cox  Comments  at  34-  35;  e-  spire  Joint  Comments 
 at  26. 
 756  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15739,  para.  481. 

 757  BellSouth  Comments  at  76.  See  also  Ameritech  Comments  at  114  n.  326  (citing  James  H. 
 Green,  The  Irwin  Handbook  of  Telecommunications  297  (3  rd  Ed.  1997)  (  he  SS7  network  routes  messages  on 
 a  point-  to  point  basis  using  unique  originating  and  terminating  point  codes.  Each  node  in  the  network  is 
 identified  by  its  own  unique  point  code/  network  address.  When  a  call  is  set  up  between  two  end  office 
 switches,  the  originating  end  office  formulates  an  initial  address  message  (IAM)  to  the  terminating  end  office. 
 The  IAM  includes  the  originating  telephone  number,  originating  point  code,  terminating  telephone  number, 
 and  terminating  point  code.  To  route  a  signaling  packet  successfully,  the  STP  must  associate  each  point  code 
 with  a  particular  end  office.  Existing  technology,  therefore,  permits  routing  over  only  a  single  set  of  A-  links, 
 (links  between  a  specific  end  office  and  the  SS7  network),  for  any  given  point  code.). 
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 LEC.  758  In  such  cases,  the  incumbent  LEC  must  provide  access  to  its  signaling  network 
 from  that  switch  in  the  same  manner  in  which  it  obtains  such  access  itself.  759 

 387.  A  requesting  carrier  that  has  deployed  its  own  switch,  or  has  purchased 
 switching  from  an  alternative  source,  however,  may  purchase  signaling  from  an 
 incumbent  LEC  and  link  its  switch  to  the  incumbent  LECs  signaling  network. 
 Alternatively,  the  requesting  carrier  may  self-  provision  signaling  or  purchase  signaling 
 from  an  alternative  provider.  Thus,  the  only  issue  left  to  be  resolved  is  whether 
 competitive  LECs  that  do  not  purchase  switching  from  an  incumbent  LEC  are  impaired 
 without  unbundled  access  to  the  incumbents  signaling  network  element. 

 388.  We  conclude  that  regardless  of  whether  a  requesting  carrier  self-  provisions 
 its  own  switching,  or  purchases  switching  from  an  alternative  source,  the  incumbent  LEC 
 must  provide  the  requesting  carrier  with  unbundled  access  to  the  incumbents  signaling 
 network,  pursuant  to  section  251(  c)(  3).  Consistent  with  our  framework  for  unbundling  as 
 set  forth  above,  we  find  that  in  such  situations,  lack  of  access  to  unbundled  signaling 
 systems  materially  diminishes  the  ability  of  a  requesting  carrier  to  provide  the  services  it 
 seeks  to  offer.  In  particular,  requiring  a  competitor  to  self-  provision  or  use  alternative 
 sources  of  signaling  materially  degrades  the  quality  of  its  service  to  end  users  and 
 materially  restricts  its  ability  to  provide  service  on  a  ubiquitous  basis.  We  therefore 
 require  incumbent  LECs  to  provide  requesting  carriers  that  have  deployed  their  own 
 switching  facilities  access  to  the  incumbent  LECs  unbundled  signaling  network  for  each 
 of  the  requesting  carriers  switches.  This  connection  shall  be  made  in  the  same  manner  as 
 an  incumbent  LEC  connects  one  of  its  own  switches  to  a  signaling  transfer  point. 

 389.  Alternatives  in  the  Market.  The  record  indicates  that  there  are  several 
 alternatives  to  the  incumbent  LECs  signaling  networks  available  in  the  market.  760  In 
 particular,  there  are  six  major  facilities-  based  SS7  network  providers  (AT&  T,  MCI 
 WorldCom,  Illuminet,  TNX,  GTE-  INS,  and  SBC/  SNET)  and  four  mid-  sized  facilities-based 
 SS7  network  providers  (GST,  ICG,  Intermedia  and  US  LEC),  that  operate  regional 
 SS7  networks.  761  In  GTEs  service  area,  twelve  competitive  LECs  have  opted  to  build 
 their  own  signaling  networks.  762  In  addition,  there  are  several  suppliers  of  the  equipment 
 used  to  operate  a  signaling  network:  Lucent,  Tekelec,  Nortel,  Alcatel,  IEX  Corporation, 

 758  See,  e.  g.,  SBC  Comments  at  43  (  Signaling  is  a  servant  to  switching.  .  .  current  technology 
 requires  each  local  switch  to  link  to  one-  and  only  one-  signaling  network.  To  the  extent  that  a  CLEC 
 purchases  unbundled  switching  from  an  RBOC  or  GTE,  it  must  necessarily  connect  to  that  same  ILEC's 
 signaling  network.).  See  also  BellSouth  Comments  at  76;  MCI  WorldCom  Comments  at  55;  US  WEST 
 Comments  at  47;  USTA  UNE  Report,  Tab  5,  at  1. 

 759  See  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15740,  para.  483. 

 760  BellSouth  Comments  at  76;  USTA  UNE  Report,  Tab  5,  at  1. 
 761  USTA  UNE  Report  at  V-  5. 
 762  GTE  Comments  at  55. 
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 SummaFour,  and  Siemens.  763  We  also  note  that  the  equipment  produced  by  these 
 companies  is  based  on  standard  interfaces  and  protocols. 

 390.  As  discussed  above,  however,  the  mere  existence  of  alternatives  outside  the 
 network  does  not  mean  that  requesting  carriers  are  not  impaired  without  unbundled  access 
 to  the  incumbent  LECs  network.  764  Based  on  our  analysis  of  the  factors  identified  above, 
 we  find  that  a  requesting  carrier  is  materially  diminished  in  its  ability  to  offer  service  if  it 
 is  not  able  to  purchase  signaling  as  an  unbundled  network  element.  765 

 391.  Cost.  In  light  of  the  significant  evidence  of  multiple  third-  party  providers 
 of  signaling,  we  disagree  with  parties  that  assert  that  self-  provisioning  signaling,  or 
 obtaining  signaling  from  alternative  providers,  would  involve  substantial  and  material 
 cost  and  would  delay  competition  in  the  local  market.  766  Although  several  states  and 
 competitive  LECs  argue  that  replication  of  the  incumbent  LECs  signaling  network  would 
 be  extremely  costly,  they  have  not  submitted  cost  data  in  the  record  to  support  their 
 claims.  767 

 392.  Unlike  self-  provisioning  a  switch  or  network  elements  that  are  dedicated  to 
 individual  subscribers  (i.  e.  the  NID),  deploying  a  signaling  network  does  not  require  a 
 requesting  carrier  to  incur  substantial  sunk  and  fixed  costs,  because  a  carrier  does  not 
 need  multiple  signaling  facilities  in  order  to  establish  a  signaling  network  that  is  capable 
 of  providing  service  to  a  broad  base  of  customers.  Rather,  existing  technology  permits 

 763  Id.  at  54. 
 764  See  supra  Section  (IV)(  B)(  4)  (discussing  the  impair  standard  of  section  251(  d)(  2)(  B)). 
 765  Id. 
 766  See  MGC  Comments  at  31  (stating  SS7  signaling  is  made  generally  available  on  a  national 
 basis  and  in  a  cost-  effective  manner.). 
 767  Time  Warner  Reply  Comments  at  3.  See  also  Illinois  Commission  Comments  at  13  (The 
 Illinois  Commission  noted  that  utilization  of  the  incumbent  LECs  switching  signaling  is  required  for  the 
 completion  of  a  call,  and  that  a  replication  of  the  incumbents  in-  place  network  would  be  extremely  costly, 
 thereby  posing  an  impediment  to  competition.);  Letter  from  Jonathan  Askin,  Vice  President    Law,  ALTS,  to 
 Magalie  Roman  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98,  at  2  (filed 
 July  29,  1999)  (ALTS  July  29,  1999  Ex  Parte)  (  Start-  up  CLECs  do  not  have  big  enough  SS7  message 
 volumes  to  justify  volume  discounts  that  hub  providers  may  offer  to  larger  firms,  creating  a  significant  barrier 
 to  entry  since  the  CLECs  cannot  approach  the  low  unit  costs  that  the  ILECs  achieve  with  their  own  volumes.); 
 CoreComm  Comments  at  30  (CoreComm  notes  that  requiring  new  entrants  to  incur  the  cost  of  deploying 
 redundant  network  architecture  would  significantly  impair  the  ability  of  requesting  carriers  to  compete.); 
 Letter  from  Tina  S.  Pyle,  Executive  Director,  Public  Policy,  MediaOne,  to  Jake  E.  Jennings,  Policy  and 
 Programming  Division,  Common  Carrier  Bureau,  Federal  Communications  Commission,  CC  Docket  No.  96- 
 98,  Signaling  Attachment  at  1-  2  (filed  August  12,  1999)  (MediaOne  August  12,  1999  Ex  Parte)  (stating  that 
 MediaOne  cannot  economically  self-  provision  a  signaling  system;  and  estimating  that  the  point  at  which 
 the  costs  of  providing  the  SS7  network  first  were  less  than  the  cost  of  obtaining  the  SS7  network  was  the  time 
 period  at  which  MediaOne  forecast  slightly  more  than  one  million  subscriber  lines.).  We  note  that 
 MediaOne  did  not  submit  cost  data  in  the  record  to  support  this  claim. 
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 the  carrier  that  is  using  its  own  switch  to  route  signals  over  a  single  set  of  A-  links  (links 
 between  a  specific  end  office  and  the  SS7  network  for  any  given  point  code).  768  The 
 carriers  single  STP  can  serve  its  entire  network.  Alternatively,  a  competitive  LEC  can 
 purchase  signaling  from  the  non-  incumbent  sources  mentioned  above.  We  agree  with 
 MGC  that  cost-  effective  SS7  signaling  networks  are  generally  available  on  a  national 
 basis.  769 

 393.  Several  parties  argue  that  because  alternative  signaling  providers  have  not 
 established  the  ubiquitous  presence  to  match  the  incumbent  LECs  signaling  footprint,  the 
 cost  of  transport  to  an  alternative  providers  signaling  network  materially  increases  the 
 requesting  carriers  cost.  770  Replicating  the  ubiquitous  signaling  networks  of  the 
 incumbent  LECs  may  be  prohibitively  expensive  for  some  competitive  LECs.  In 
 addition,  new  entrants  in  the  local  market  most  likely  do  not  have  the  scale  necessary  to 
 justify  the  investment  needed  to  replicate  the  incumbent  LECs  signaling  networks.  We 
 do  not  find  sufficient  evidence  in  the  record,  however,  to  support  a  conclusion  that  the 
 cost  of  self-  provisioning  or  purchasing  signaling  from  alternative  sources,  in  and  of  itself, 
 would  require  us  to  unbundle  the  incumbents  signaling  network.  Accordingly,  we  find 
 that  the  cost  of  non-  incumbent  LEC  alternative  signaling  networks  is  not  dispositive  of 
 whether  or  not  a  competitive  LECs  ability  to  provide  the  services  it  seeks  to  offer  is 
 materially  diminished.  For  reasons  we  discuss  below,  however,  we  do  find  that 
 competitive  LECs  need  to  have  access  to  a  ubiquitous  signaling  network  in  order  to 
 ensure  the  same  quality  of  service  as  the  incumbents. 

 394.  Ubiquity  and  Quality.  Although  we  do  not  conclude  that  the  cost  of  self-provisioning 
 alternative  signaling  impairs  a  requesting  carriers  ability  to  provide  the 
 services  it  seeks  to  offer,  we  find  that  lack  of  access  to  the  incumbent  LECs  ubiquitous 
 networks  materially  diminishes  this  ability.  We  agree  with  commenters  who  argue  that 
 because  alternative  vendors  of  signaling  networks  only  have  a  few  geographically 
 dispersed  STPs,  they  cannot  provide  requesting  carriers  with  signaling  that  is  of 
 comparable  quality  to  that  of  the  incumbent  LECs  signaling  networks.  771 

 768  See,  e.  g.,  Ameritech  Comments  at  114,  n.  326. 
 769  See  MGC  Comments  at  31. 
 770  See,  e.  g.,  ALTS  July  29  Ex  Parte  at  2-  3  (stating  that  any  CLEC  ordering  A-  Link 
 connectivity  from  the  local  ILEC  can  expect  to  pay  for  a  local  T1  within  a  few  miles  or  so  from  their  central 
 office  for  transport  of  the  56-  kb  signal.  On  the  other  hand,  a  CLEC  ordering  its  A-  Links  from  an  alternative 
 provider  can  expect  to  order  a  T1  for  transport  of  several  hundred  miles  from  an  IXC  carrier.);  John  J. 
 Heitmann,  Net  2000,  to  Jake  E.  Jennings,  Policy  and  Programming  Division,  Common  Carrier  Bureau, 
 Federal  Communications  Commission,  CC  Docket  No.  96-  98,  Presentation  at  2,  5  (filed  August  13,  1999) 
 (Net  2000  August  13,  1999  Ex  Parte)  (stating  that  regional  STP  pairs  require  long  transport  links  for 
 connectivity,  and  longer  transport  links  lead  to  higher  costs  in  smaller  markets  where  connectivity  with  a 
 single  pair  of  ILEC  STPs  would  be  required). 

 771  MCI  WorldCom  Reply  Comments  at  55-  56.  MCI  WorldCom  also  noted  [  i]  f  a  CLEC 
 wishes  to  offer  ubiquitous,  high-  quality  local  services,  it  must,  as  a  practical  matter,  tap  into  the  ILECs 
 signaling  networks  and  databases.  Id.  at  55.  See  also  Time  Warner  Reply  Comments  at  16  (stating  that 
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 395.  The  ubiquitous  nature  of  an  incumbent  LECs  signaling  network  provides  it 
 with  advantages  that  competitive  LECs  cannot  achieve  through  use  of  alternative 
 signaling  networks.  For  example,  the  Bell  Operating  Companies  have  deployed  at  least 
 one  STP  in  every  LATA.  772  Each  of  the  incumbent  LECs  STPs  is  connected  to  one  or 
 more  incumbent  switches  serving  customers  limited  to  a  particular  geographic  area  within 
 the  incumbent  LECs  region,  while  alternative  signaling  systems  typically  rely  on  a  very 
 few  or  even  a  single  STP  pair  as  a  gateway  to  its  signaling  system.  773  Consequently,  if  a 
 competitive  LEC  uses  an  alternative  provider  of  signaling,  the  competitive  LECs  entire 
 customer  base  may  be  connected  to  a  single  STP  pair.  If  an  outage  occurs  within  the 
 incumbent  LECs  signaling  network,  only  those  customers  served  by  switches  connected 
 to  that  particular  STP  will  be  adversely  affected.  In  contrast,  where  a  competitive  LEC 
 relies  on  one  or  a  small  number  of  STPs  to  serve  its  entire  network,  a  greater  portion,  if 
 not  all,  of  the  competitive  LECs  customers  will  be  negatively  affected  by  a  network 
 outage.  774  The  lack  of  access  to  a  ubiquitous  signaling  network  could  adversely  impact 
 the  competitive  LECs  customer  satisfaction,  thereby  placing  the  competitive  LEC  at  a 
 disadvantage  vis-  -  vis  the  incumbent. 

 396.  We  note  that  Time  Warner  claims  that  alternative  signaling  networks  lack 
 diversity  in  signaling  links  that  provide  redundant  signaling  paths,  and  this  lack  of 
 diversity  reduces  the  reliability  of  the  signaling  network.  775  Time  Warner  argues  that  this 

 alternative  SS7  vendors  do  not  offer  anything  close  to  an  adequate  substitute  for  incumbent  LECs  SS7 
 signaling  networks). 

 772  USTA  UNE  Report  at  V-  1.  See  also  MCI  WorldCom  Reply  Comments  at  55  (  No  third 
 party  vendor  owns  a  signaling  network  in  every  Local  Access  Transport  Area  (  LATA),  nor  do  they  provide 
 direct  connectivity  with  the  ILECs  switches.);  Time  Warner  Reply  Comments  at  17  (  ILEC  signaling 
 systems  contain  many  STP  pairs  (typically  one  per  LATA.). 

 773  See,  e.  g.,  KMC  Comments  at  16-  17  (noting  that  independent  signaling  vendors  do  not  offer 
 signaling  services  everywhere);  Time  Warner  Reply  Comments  at  17;  Letter  from  Thomas  Jones,  Counsel  for 
 Time  Warner  Telecom,  to  Magalie  Roman  Salas,  Secretary,  Federal  Communications  Commission,  CC 
 Docket  96-  98,  Attachment  at  3  (filed  July  15,  1999)  (Time  Warner  July  15,  1999  Ex  Parte)  (noting  [  m]  ost 
 CLECs  who  have  deployed  switches  have  not  deployed  their  own  regional  or  national  signaling  networks.). 

 774  A  number  of  requesting  carriers  argue  that  they  have  experienced  customer  outages  as  a 
 result  of  utilizing  alternative  signaling  providers.  A  single  fiber  cut,  which  affected  132  DS3s  for  nearly  seven 
 hours,  and  an  outage  which  disrupted  service  to  800  customers  in  four  markets,  demonstrated  the  material 
 decrease  in  quality  experienced  by  Time  Warner  when  it  utilized  an  alternative  signaling  provider.  The  cut 
 caused  the  vendors  SS7  network  to  block  Integrated  Switched  Digital  Network  User  Part  (call  set-  up) 
 messages  originating  at  Time  Warners  Memphis  switch.  Thus,  no  call  originating  at  a  line  served  by  the 
 Memphis  switch  and  terminating  at  a  line  served  by  another  switch  could  be  completed.  Time  Warners 
 problem  with  its  800  number  service  was  caused  by  the  failure  of  four  of  19  T1s  in  the  vendors  network.  The 
 problem  lasted  for  approximately  five  hours.  Time  Warner  also  cited  outages  in  Rochester,  New  York, 
 Memphis,  Tennessee,  and  Raleigh,  North  Carolina,  which  caused  its  customers  to  lose  service  and  seriously 
 damaged  [its]  reputation  for  high-  quality,  reliable  service.  Letter  from  Thomas  Jones,  Counsel  for  Time 
 Warner  Telecom,  to  Magalie  Roman  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  96- 
 98,  Attachment  at  1-  3  (filed  July  27,  1999)  (Time  Warner  July  27,  1999  Ex  Parte). 

 775  Time  Warner  Reply  Comments  at  16-  18;  Time  Warner  July  15,  1999  Ex  Parte,  Attachment 
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 lack  of  diversity  also  leads  to  more  frequent  outages  that  directly  impact  customer 
 satisfaction.  776  Although  we  agree  that  lack  of  diversity  in  signaling  networks  could  very 
 likely  result  in  greater  numbers  of  customers  affected  by  network  outages,  Time  Warner 
 has  not  provided  evidence  in  this  proceeding  to  support  its  specific  claim. 

 397.  Other  commenters  identify  similar  quality  issues  associated  with  the  use  of 
 alternative  signaling  networks.  777  We  agree  that  a  lack  of  redundant  signaling  paths  may 
 increase  the  likelihood  that  more  customers  may  be  affected  by  signaling  outages.  We 
 are,  however,  unable  to  conclude  based  on  the  record  before  us,  if  the  outages  attributed 
 to  a  lack  of  diversity  are  isolated  incidents,  or  if  they  are  the  result  of  an  increased  risk  of 
 failure.  Thus,  we  do  not  base  our  decision  to  unbundle  the  incumbent  LECs  signaling 
 networks  on  the  lack  of  diversity  in  alternative  providers  signaling  networks.  As 
 discussed  above,  however,  we  find  that  a  competitive  LECs  ability  to  provide  the  service 
 it  seeks  to  offer  is  materially  diminished,  because  alternative  providers  signaling 
 networks  lack  the  ubiquity  of  the  incumbent  LECs  networks,  and  that  larger  portions  of  a 
 requesting  carriers  network  would  likely  be  affected  by  a  single  point  of  failure  on  the 
 signaling  network.  778 

 398.  Other  quality  problems  identified  by  ALTS  members  include  poor 
 customer  service  associated  with  utilizing  alternative  signaling  providers.  779  While  we 
 agree  that  these  quality  concerns  may  materially  decrease  the  ability  of  requesting  carriers 
 to  provide  the  services  it  seeks  to  offer,  we  do  not  find  them  dispositive  of  whether 
 requesting  carriers  are  impaired  in  general.  In  particular,  it  is  not  clear  from  the  record 

 at  3.  See  also  Time  Warner  Reply  Comments  at  16  (  Signaling  systems  typically  aggregate  their  traffic  from 
 each  STP  pair  to  a  regional  STP  pair,  where  additional  information  is  stored  in  a  call-  related  database.  The 
 messages  traveling  between  STP  pairs  are  carried  over  signaling  links.  These  signaling  links  are  crucial  to  the 
 signal  system  networks,  and  signaling  links  must  travel  over  diverse  paths  in  order  to  be  considered  properly 
 redundant,  and  therefore  reliable.). 

 776  Time  Warner  July  27,  1999  Ex  Parte  at  Attachment  at  3. 

 777  See,  e.  g.  Time  Warner  Reply  Comments  at  17.  ALTS  July  29,  1999  Ex  Parte  at  2, 
 Attachment  at  1  (citing  alternative  vendors  inability  to  attain  personnel  with  the  requisite  skill  and  experience 
 to  operate  a  reliable  SS7  signaling  network);  Cox  Comments  at  35  (stating  that  use  of  third  party  vendors  can 
 result  in  delays  and  errors  that  would  not  result  if  a  CLEC  is  connected  directly  with  the  ILEC  signaling 
 system.);  ALTS  July  29  Ex  Parte  at  3  (citing  an  ALTS  member  that  has  A-  Link  connectivity  to  three 
 signaling  providers,  one  incumbent  LEC  and  two  alternative  providers.  The  member  stated  that  it  has  been 
 materially  impaired  in  obtaining  signaling  service  due  to  significant  obstacles  it  has  encountered  with 
 personnel,  equipment,  and  ubiquity  in  its  dealings  with  the  two  alternative  providers.  The  member  asserted 
 that  it  has  maintained  connectivity  to  the  incumbent  LEC  because  the  alternative  providers  did  not  have  any 
 capacity.). 

 778  See,  e.  g.,  MediaOne  August  12,  1999  Ex  Parte,  Signaling  Attachment  at  1  (citing  a  failure 
 at  an  alternative  signaling  vendors  STP,  which  caused  signaling  traffic  to  be  re-  routed  to  the  vendors  other 
 STP.  Software  problems  at  the  second  STP  produced  service  degradation  and  an  eventual  outage  of  six  hours, 
 which  affected  a  number  of  carriers  nationwide.).  MediaOne  also  cited  another  STP  failure  by  the  same 
 provider,  which  resulted  in  an  outage  of  nearly  seven  hours.  Id. 

 779  ALTS  July  29,  1999  Ex  Parte  at  3. 
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 whether  these  quality  concerns  are  isolated  instances,  or  alternatively,  are  prevalent 
 throughout  the  industry. 

 399.  Goals  of  the  1996  Act.  We  conclude  that  unbundling  the  incumbent  LECs 
 signaling  networks  will  promote  the  development  of  facilities-  based  competition  and 
 thereby  encourage  investment  and  innovation  in  new  technologies  and 
 telecommunications  services.  Competitive  LECs  deploying  their  own  switches  will  not 
 have  the  incentive  to  do  so  if  they  are  faced  with  having  to  rely  on  less  ubiquitous  and  less 
 reliable  alternatives  for  signaling.  Unbundling  the  incumbent  LECs  signaling  networks 
 will  give  competitive  LECs  incentive  to  deploy  their  own  switches,  because  they  can  be 
 connected  to  the  ubiquitous  incumbent  LECs  signaling  networks.  The  1996  Act  was 
 designed  to  spur  competition  in  the  local  market.  Our  decision  to  unbundle  incumbent 
 LECs  signaling  networks  facilitates  this  goal,  and  creates  options  for  consumers  in  their 
 local  telecommunications  service. 

 2.  Call-  Related  Databases 
 a.  Background 

 400.  In  the  Local  Competition  Order,  the  Commission  determined  that  access  to 
 call-  related  databases  was  technically  feasible,  and  concluded  that  incumbent  LECs  must 
 provide  nondiscriminatory  access  to  their  call-  related  databases  on  an  unbundled  basis, 
 for  the  purpose  of  switch  query  and  database  response  through  the  SS7  network.  780  The 
 Commission  also  required  incumbent  LECs  to  provide  unbundled  access  to  the  Advanced 
 Intelligence  Network  (AIN)  platform.  The  Commission  found  that  such  access  was 
 technically  feasible,  and  that  competitors  would  be  impaired  without  access  to  the  AIN 
 platform.  781 

 401.  In  the  Notice,  we  asked  parties  to  comment  on  unbundling  the  seven 
 network  elements  we  previously  identified,  including  signaling  and  call-  related 
 databases.  782  Most  requesting  carriers  argue  that  the  Commission  should  require 
 incumbent  LECs  to  provide  access  to  call-  related  databases  on  an  unbundled  basis.  783 
 Incumbent  LECs  argue  that  access  to  call-  related  databases  on  an  unbundled  basis  is  not 
 required  under  section  251(  d)(  2).  784 

 780  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15741,  para.  484.  Call-  related 
 databases  are  those  SS7  databases  used  for  billing  and  collection  or  used  in  transmission,  routing,  or  other 
 provision  of  a  telecommunications  service.  Id.  at  n.  1126. 

 781  Id.  at  15743-  45,  paras.  488-  491. 

 782  Notice  at  para.  33. 
 783  See,  e.  g.,  Allegiance  Comments  at  20;  Cable  &  Wireless  Comments  at  37-  38;  KMC 
 Comments  at  16-  17;  TRA  Comments  at  41. 
 784  See,  e.  g.,  Ameritech  Comments  at  116-  118;  BellSouth  Comments  at  76;  SBC  Comments  at 
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 b.  Discussion 
 402.  We  find  that,  as  a  general  matter,  requesting  carriers  ability  to  provide  the 
 services  they  seek  to  offer  is  impaired  without  unbundled  access  to  the  incumbent  LECs 
 call-  related  databases.  Thus,  we  require  incumbent  LECs,  upon  request,  to  provide 
 nondiscriminatory  access  to  their  call-  related  databases  on  an  unbundled  basis,  for  the 
 purpose  of  switch  query  and  database  response  through  the  SS7  network.  We  conclude 
 that  requesting  carriers  ability  to  provide  the  services  they  seek  to  offer  is  impaired 
 without  unbundled  access  to  the  incumbent  LECs  AIN  platform  and  architecture.  Thus, 
 we  find  that  incumbent  LECs,  upon  request,  must  provide  nondiscriminatory  access  to 
 their  AIN  platform  and  architecture.  We  also  conclude,  however,  that  service  software 
 created  in  the  AIN  platform  and  architecture  is  proprietary  and  thus  analyzed  under  the 
 necessary  standard  of  section  251(  d)(  2)(  A).  Based  on  our  necessary  standard,  we 
 conclude  that  incumbent  LECs  are  not  required  to  unbundle  the  services  created  in  the 
 AIN  platform  and  architecture  that  qualify  for  proprietary  treatment. 

 (i)  Definition 

 403.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  defined 
 call-  related  databases  as  databases,  other  than  operations  support  systems,  that  are  used 
 in  signaling  networks  for  billing  and  collection  or  the  transmission,  routing,  or  other 
 provision  of  telecommunications  service.  785  The  Commission  further  required 
 incumbent  LECs  to  provide  unbundled  access  to  their  call-  related  databases,  including  but 
 not  limited  to:  the  Line  Information  database  (LIDB),  the  Toll  Free  Calling  database,  the 
 Local  Number  Portability  database,  and  Advanced  Intelligent  Network  databases.  786  No 
 commenter  in  this  phase  of  the  proceeding  challenges  the  definitions  of  call-  related 
 databases  or  AIN  that  were  adopted  in  the  Local  Competition  First  Report  and  Order,  and 
 we  find  no  reason  for  modifying  those  definitions.  As  discussed  below,  however,  we 
 clarify  that  the  definition  of  call-  related  databases  includes,  but  is  not  limited  to,  the 
 calling  name  (CNAM)  database,  as  well  as  the  911  and  E911  databases. 

 404.  The  Advanced  Intelligent  Network  (AIN)  uses  distributed  intelligence  in 
 centralized  databases  to  control  call  processing  and  manage  network  information, 
 eliminating  the  need  for  those  functions  to  be  performed  at  every  switch.  787  The  AIN 
 database  enables  some  call  processing  functions  to  be  performed  outside  the  switch. 
 There  are  two  separate  components  of  the  AIN.  The  first  component  is  the  AIN  platform 
 and  architecture.  The  AIN  platform  and  architecture  basically  consists  of  an  off-  line 
 computer  known  as  the  Service  Creation  Environment  (SCE),  Service  Management 

 44-  45. 
 785  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15741  n.  1126. 

 786  Id.  at  15741-  42,  para.  484. 
 787  Id.  at  15724-  25,  para.  459. 
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 System  (SMS),  788  and  AIN  software.  AIN  services  are  designed  and  tested  in  the  SCE.  789 
 Once  a  service  is  successfully  tested,  the  software  is  transferred  to  a  SMS  that  administers 
 and  supports  service  control  point  (SCP)  databases  in  the  network.  790  The  SMS  then 
 regularly  downloads  software  and  information  to  a  SCP  where  interaction  with  the  voice 
 network  takes  place  via  signaling  links  and  STPs.  791 

 405.  When  a  software  trigger  is  activated,  an  AIN  capable  switch  uses  the  SS7 
 network  to  access  databases,  SCPs,  that  contain  service  software  and  subscriber 
 information,  for  instruction  on  how  to  route,  monitor,  or  terminate  the  call.  The  second 
 component  of  the  AIN  is  the  AIN  service  software  that  is  developed  in  the  AIN  platform, 
 and  is  used  to  provide  telecommunications  service.  Examples  of  AIN  services  include: 
 deployment  of  number  portability,  wireless  roaming,  and  advanced  services  such  as 
 same-  number  service  (i.  e.  500  number  service)  and  voice  recognition  dialing. 

 406.  As  a  general  matter,  no  commenter  challenges  the  definitions  of  call-  related 
 databases  or  AIN  that  were  adopted  in  the  Local  Competition  First  Report  and  Order. 
 Several  commenters,  however,  request  that  the  Calling  Name  (CNAM)  database  be 
 classified  as  a  call-  related  database.  792  The  CNAM  database  contains  the  name  of  the 
 customer  associated  with  a  particular  telephone  number  and  is  used  to  provide  Caller  ID 
 and  related  services.  793  We  take  this  opportunity  to  clarify  that  the  definition  of  call-related 
 databases  includes,  but  is  not  limited  to,  the  calling  name  (CNAM)  database,  as 
 well  as  the  911  and  E911  databases.  Call-  related  databases  are  databases  that  supply 
 information  or  instructions  used  for  billing  and  collection  or  used  in  the  transmission, 
 routing,  or  other  provision  of  telecommunications  service.  794  The  CNAM,  911,  and 
 E911  databases  are  call-  related  databases,  because  they  are  used  for  billing  and 
 collection,  or  used  in  the  transmission,  routing  or  other  provision  of  a  telecommunications 

 788  An  SMS  interconnects  to  the  SCP  to  send  information  and  call  processing  instructions  that 
 are  needed  for  a  network  switch  to  process  and  complete  a  telephone  call.  It  also  provides  carriers  with  the 
 capability  of  entering  and  storing  data  regarding  the  processing  and  completing  of  a  telephone  call. 

 789  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15724-  25,  para.  459. 

 790  Id. 
 791  Id. 
 792  See  MCI  WorldCom  Comments  at  60-  62  (citing  CNAM  as  the  Customer  Name 
 database);  MediaOne  Comments  at  15-  16.  See  also  AT&  T  Comments  at  110  (citing  CNAM  as  the  Caller 
 Name  database);  Cox  Comments  at  36. 

 793  See  MCI  WorldCom  Comments  at  60;  MediaOne  Comments  at  15. 

 794  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15741,  n.  1126.  Updating  or 
 compiling  the  information  in  these  databases  takes  place  through  a  separate  process  involving  different 
 equipment.  Carriers  input  information  directly  into  a  service  management  system  (SMS),  which  downloads 
 such  information  into  the  appropriate  database. 
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 service.  795  CNAM  databases  are  used  to  provide  Caller  ID  and  related 
 telecommunications  services,  and  the  911  and  E911  databases  are  telecommunications 
 services  used  to  provide  emergency  assistance.  We  specifically  identify  the  CNAM,  911 
 and  E911  databases  as  being  illustrative  of  call-  related  databases,  and  not  as  a 
 comprehensive  list  of  all  call-  related  databases. 

 407.  We  note  that  Low  Tech  Designs  requests  that  the  Commission  require  AIN 
 triggers  and  AIN  trigger  upgrades  be  made  available  to  competitors  on  an  unbundled 
 basis.  796  We  find  that  there  is  not  enough  evidence  in  the  record  to  make  a  determination 
 about  the  technical  feasibility  of  unbundling  AIN  triggers.  We  therefore  decline  to 
 expand  our  definition  of  call-  related  databases  to  include  AIN  triggers,  and  reaffirm  the 
 definition  of  call-  related  databases  in  the  Local  Competition  First  Report  and  Order. 
 Low  Tech  Designs  also  requests  that  the  Commission  mandate  the  interconnection  of 
 CLEC-  provided  and  other  third-  party  AIN/  SS7  Service  Control  Points  and  Intelligent 
 Peripherals.  797  We  decline  this  request  because  we  find  that  there  is  not  enough 
 evidence  in  the  record  to  make  a  determination  as  to  the  technical  feasibility  of 
 interconnecting  third-  party  SCPs  and  Intelligent  Peripherals  to  incumbent  LECs 
 signaling  networks.  Our  refusal  to  grant  Low  Tech  Designs  request  in  this  proceeding 
 does  not  affect  the  ability  of  any  state  commission  to  address  this  issue. 

 (ii)  Proprietary  Concerns  Associated  with  Call-Related  Databases 

 408.  With  the  exception  of  AIN  service  software,  commenters  do  not  identify 
 proprietary  concerns  associated  with  the  provision  of  call-  related  databases.  Moreover, 
 with  the  exception  of  AIN  service  software,  we  do  not  discern  any  copyright,  patent,  or 
 trade  secret  implications  to  unbundling  call-  related  databases.  Thus,  with  the  exception  of 
 AIN  service  software,  we  analyze  call-  related  databases  under  the  impair  standard  of 
 section  251(  d)(  2)(  B). 

 409.  Because  certain  services  created  in  the  AIN  platform  and  architecture  are 
 proprietary,  we  agree  with  Ameritech  and  BellSouth  that  if  competitive  LECs  receive 
 unbundled  access  to  incumbent  LECs  AIN  platforms,  access  to  AIN  service  software 
 should  not  be  unbundled.  798  Ameritech  cites  a  new  proprietary  service,  Privacy 
 Manager,  to  illustrate  why  its  AIN  service  software  qualifies  as  a  proprietary  network 
 element.  Privacy  Manager  is  derived  from  the  SCE,  and  allows  consumers  to  screen 

 795  Id.. 
 796  Low  Tech  Comments  at  14. 
 797  Id. 
 798  Ameritech  Comments,  Tab  A,  Joint  Affidavit  of  Debra  J.  Aron/  Robert  G.  Harris 
 (Ameritech  Aron  &  Harris  Aff.)  at  20  (citing  Ameritechs  new  service,  Privacy  Manager,  as  an  example  of 
 AIN  software  the  merits  evaluation  pursuant  to  the  necessary  standard  of  section  251(  d)(  2)(  A));  BellSouth 
 Comments  at  80-  81. 
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 telemarketing  calls.  799  Ameritech  asserts  that  Privacy  Manager  includes  several  new  and 
 useful  improvements  that  are  subject  to  patent  protection,  and  are  the  subject  of  several 
 pending  patent  applications.  800  Ameritech  adds  that  Privacy  Manager  is  currently  a  trade 
 secret  because  it  has  independent  economic  value,  is  not  generally  known  by  or  readily 
 discernable  to  Ameritechs  competitors,  and  has  been  the  subject  of  reasonable  security 
 measures.  801  We  agree  with  Ameritech  that  services  such  as  Privacy  Manager  qualify  as 
 proprietary  treatment.  We  also  agree  that  software  services  such  as  Privacy  Manager 
 are  new  and  innovative  products  used  to  differentiate  the  incumbent  LECs  service 
 offering.  As  such,  they  should  be  evaluated  under  the  necessary  standard  of  section 
 251(  d)(  2)(  A).  802 

 (iii)  Unbundling  Analysis  for  Call-  Related  Databases 

 (a)  The  Impair  Standard 
 410.  Consistent  with  our  framework  for  unbundling  set  forth  above,  we  find  that 
 lack  of  access  to  call-  related  databases  on  an  unbundled  basis  would  materially  impair  the 
 ability  of  a  requesting  carrier  to  provide  the  services  it  seeks  to  offer  in  the  local 
 telecommunications  market.  803  In  particular,  we  are  persuaded  that  there  are  no 
 alternatives  of  comparable  quality  and  ubiquity  available  to  requesting  carriers,  as  a 
 practical,  economic,  and  operational  matter,  for  the  incumbent  LECs  call-  related 
 databases.  Thus,  we  require  incumbent  LECs  to  provide  non  discriminatory  access  to 
 their  call-  related  databases,  including,  but  not  limited  to,  the  CNAM  Database,  the  911 
 Database,  the  LIDB,  Toll  Free  Calling  Database,  AIN  databases,  and  downstream  number 
 portability  databases,  by  means  of  physical  access  at  the  signaling  transfer  point  linked  to 
 the  unbundled  databases.  Incumbent  LECs  must  allow  requesting  carriers  that  have 
 purchased  an  incumbent  LECs  local  switching  capability  to  use  the  incumbent  LECs 

 799  When  a  call  is  received  and  Caller  ID  cannot  identify  the  caller  because  the  number  is 
 blocked,  unavailable,  out  of  the  area,  or  private,  Privacy  Manager  intercepts  the  call  before  the 
 telephone  rings,  and  informs  the  caller  that  the  number  he  or  she  has  dialed  does  not  accept  calls  from 
 unidentified  numbers.  The  caller  is  then  prompted  to  say  his  or  her  name  or  the  company  he  or  she  represents 
 in  order  to  complete  the  call.  If  no  name  is  given,  the  call  is  disconnected.  If  a  name  is  given,  the  call  rings 
 through,  and  the  recorded  name  is  played  to  the  called  party.  The  called  party  is  given  the  option  of 
 accepting  the  call,  declining  the  call  or  refusing  a  sales  call.  Letter  from  John  T.  Lenahan,  Assistant  General 
 Counsel,  Ameritech,  to  Magalie  Roman  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket 
 96-  98,  Proprietary  Network  Elements  Attachment  at  4-  5  (filed  July  30,  1999)  (Ameritech  July  30,  1999  Ex 
 Parte). 

 800  Id. 

 801  Id.  at  5-  6. 
 802  We  note  that  BellSouth  states  that  it  has  invested  heavily  in  internally  developing 
 proprietary  applications  software  that  runs  on  its  AIN  platform,  and  that  it  has  received  patents  on  many  of  its 
 developments.  BellSouth  Comments  at  80. 

 803  See  supra  Section  (IV)(  B)(  4)  (discussing  the  impair  standard  of  section  251(  d)(  2)(  B)). 
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 service  control  point  element  in  the  same  manner,  and  via  the  same  signaling  links,  as  the 
 incumbent  LEC  itself.  An  incumbent  LEC  must  allow  a  requesting  carrier  that  has 
 deployed  its  own  switch  and  has  linked  that  switch  to  an  incumbent  LECs  signaling 
 system  to  gain  access  to  the  incumbent  LECs  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  carriers  switch. 

 411.  We  note  that  our  analysis  of  call-  related  databases  is  intertwined  with  our 
 analysis  of  signaling,  because  signaling  is  necessary  to  obtain  access  to  certain  call-  related 
 databases.  804  Thus,  our  decision  to  unbundle  the  signaling  network  leads  us  to  unbundle 
 call-  related  databases  as  well.  805  We  believe  that  access  to  call-  related  databases,  such  as 
 the  LIDB,  Toll  Free  calling,  CNAM  and  Number  Portability  databases,  encourages 
 efficient  network  architecture  deployment  and  promotes  the  ability  of  new  entrants  and 
 established  competitors  to  provide  service  in  the  local  exchange  market.  806  We  also  agree 
 with  commenters  that  access  to  the  incumbent  LECs'  call-  related  databases  is  critical  to 
 permitting  the  seamless  routing  and  completion  of  traffic  both  among  competitors  and 
 between  competitors  and  the  incumbent  LEC.  807 

 412.  With  respect  to  AIN  specifically,  the  Commission  found  in  the  Local 
 Competition  First  Report  and  Order  that  requesting  carriers  need  equivalent  access  to  the 
 incumbent  LECs  SMSs  to  populate  their  own  information  in  call-  related  databases.  The 
 Commission  explained  that  information  bound  for  many  call-  related  databases  is  entered 
 into  an  SMS  that  then  downloads  the  information  to  the  databases  for  real-  time  use  on  the 
 network.  808  To  ensure  efficient  access  to  the  incumbent  LECs  databases,  we  affirm  that 
 incumbent  LECs  must  provide  a  requesting  telecommunications  carrier  with  the 
 information  necessary  to  enter  correctly,  or  format  for  entry,  the  information  relevant  for 
 input  into  the  incumbent  LECs  SMS.  The  Commission  also  found  in  the  Local 
 Competition  First  Report  and  Order,  that  it  is  technically  feasible  to  access  the  SMS, 
 through  the  SCE,  to  deploy  AIN  services.  809  There  is  no  evidence  in  this  record  to 
 suggest  otherwise,  and  we  therefore  affirm  the  finding  in  the  Local  Competition  First 
 Report  and  Order  that  incumbent  LECs  must  provide  a  requesting  carrier  the  same  access 
 to  design,  create,  test,  and  deploy  AIN-  based  services  at  the  SMS,  through  a  SCE,  that  the 
 incumbent  LEC  provides  to  itself.  Incumbent  LECs  must  also  provide  requesting  carriers 

 804  See,  e.  g.,  Allegiance  Comments  at  20  (  In  particular,  the  800  database,  local  number 
 portability  database,  and  AIN  platform  are  inherently  related  to  the  signaling  network.). 
 805  Similarly,  if  we  had  initially  concluded  that  call-  related  databases  must  be  unbundled,  we 
 would  have  been  led  to  unbundle  signaling  networks. 
 806  See  also  Cable  &  Wireless  Comments  at  38;  Net  2000  Comments  at  15. 

 807  Qwest  Comments  at  82. 
 808  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15746,  para.  494. 
 809  Id.  at  15747-  48,  para.  495. 
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 with  access  to  call-  related  databases  and  access  to  the  SMS  in  a  manner  that  complies 
 with  the  privacy  requirements  in  section  222  of  the  Act.  810 

 413.  As  we  further  found  in  the  Local  Competition  First  Report  and  Order, 
 access  to  the  incumbent  LECs  SCPs,  SMS  and  SCE  for  the  creation  and  deployment  of 
 AIN  services  may  require  incumbent  LECs  and  requesting  carriers  to  develop  measures  to 
 protect  the  incumbent  LECs  facilities  and  data.  811  We  continue  to  believe  that  there  may 
 be  mediation  issues  that  need  to  be  addressed  before  a  competing  carrier  obtains  access  to 
 these  databases.  Accordingly,  if  parties  are  unable  to  agree  to  appropriate  mediation 
 mechanisms  through  negotiations,  we  conclude  that  during  arbitration  of  such  issues,  state 
 commissions  (or  the  Commission  acting  pursuant  to  section  252(  e)(  5))  must  consider 
 whether  such  mediation  is  necessary,  and  if  so,  whether  it  will  protect  adequately  against 
 intentional  or  unintentional  misuse  of  the  incumbent  LECs  AIN  facilities. 

 414.  SBC  argues  that  requesting  carriers  have  access  to  alternative  call-  related 
 databases  to  store  their  data  in  any  LIDB  in  the  nation.  812  Similarly,  BellSouth  and  GTE 
 claim  that  requesting  carriers  can  obtain  call-  related  database  capabilities  from  alternative 
 sources.  813  Despite  these  assertions,  we  find  that  as  with  signaling  networks,  requesting 
 carriers  are  impaired  without  unbundled  access  to  incumbent  LECs  call-  related  databases 
 pursuant  to  section  251(  d)(  2). 

 415.  Cost  and  Quality.  Several  commenters  argue  that  it  would  be  costly  for 
 requesting  carriers  to  replicate  the  incumbent  LECs  call-  related  databases,  or  obtain  call-related 
 database  services  from  alternative  vendors.  814  MediaOne  submitted  data  to 
 support  these  claims  for  the  LIDB  and  CNAM  databases.  815  Other  commenters,  however, 
 generally  have  not  submitted  sufficient  cost  data  in  the  record  to  support  their  claims  that 

 810  47  U.  S.  C.    222. 
 811  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15743-  44,  15748,  paras.  488, 
 496. 
 812  SBC  Comments  at  44. 

 813  BellSouth  Comments  at  76;  GTE  Comments,  Appendix  B  at  47-  51.  GTE  cites  third  party 
 providers  of  call  related  databases  including,  Illuminet,  SNET,  GTE  Intelligent  Network  Services,  and 
 Revcom.  GTE  Comments,  Appendix  B  at  48-  49. 

 814  See,  e.  g.,  CompTel  Comments  at  44;  CoreComm  Comments  at  30;  KMC  Comments  at  16- 
 17;  MediaOne  Comments  at  12-  13,  15-  16;  Qwest  Comments  at  83. 
 815  MediaOne  Comments  at  12-  13  (stating  that  MediaOne  asked  three  alternative  providers  for 
 quotes  for  LIDB  validation,  and  the  providers  submitted  prices  ranging  from  5  cents  to  10  cents  per 
 transaction,  compared  to  an  average  of  .034  cents  per  transaction  for  incumbent  LECs).  MediaOne  also  stated 
 that  BellSouth  proposed  to  charge  MediaOne  a  rate  of  1  cent  per  query  for  access  to  its  CNAM  database  in 
 Florida,  but  only  charges  about  5  cents  per  line  per  month  in  Georgia.  This  means  that  with  an  average 
 subscriber  receiving  approximately  225  calls  per  month,  the  Florida  rate  works  out  to  $2.25  per  line  per 
 month,  or  45  times  the  Georgia  rate.  Id.  at  15. 
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 it  would  be  extremely  costly  to  replicate  the  incumbent  LECs  call-  related  databases,  or 
 obtain  call-  related  database  services  from  alternative  providers.  Based  on  the  record 
 before  us,  we  find  that  the  cost  incurred  by  a  requesting  carrier  to  self-  provision  or  use 
 alternative  databases  does  not  appear  to  materially  diminish  the  carriers  ability  to  provide 
 the  services  it  seeks  to  offer. 

 416.  We  conclude  that  unbundled  access  to  incumbent  LECs  call-  related 
 databases  is  required  in  some  instances  for  requesting  carriers  to  offer  the 
 telecommunications  services  they  seek  to  provide.  For  example,  in  some  cases,  access  to 
 incumbent  LEC  databases  is  the  only  practical  way  to  ensure  proper  call  flow.  816 
 Specifically,  incumbent  LECs  are  the  only  providers  of  CNAM  database  information.  817 
 Incumbent  LECs  CNAM  databases  provide  information  about  customers  of  both 
 requesting  carriers  and  incumbent  LECs.  818  Therefore,  in  order  for  a  switch-  based 
 competitor  to  provide  caller  ID  to  its  customers,  it  must  have  access  to  the  incumbent 
 LECs  CNAM  database.  Such  access  is  critical,  especially  because  a  majority  of  calls  to 
 a  competitors  customers  originate  from  the  incumbent. 

 417.  Goals  of  the  Act.  Requiring  incumbent  LECs  to  provide  access  to  call-related 
 databases,  including  access  to  the  AIN  databases,  will  foster  investment  and 
 innovation  in  the  local  telecommunications  marketplace.  Requesting  carriers  require 
 access  to  call-  related  databases  and  AIN  databases  to  provide  the  services  they  seek  to 
 offer  in  the  local  telecommunications  market.  Requesting  carriers  also  require  access  to 
 the  AIN  platform  and  architecture,  so  that  they  may  have  the  opportunity  to  devise 
 innovative  AIN  services  that  will  spur  competition  and  benefit  consumers  through  greater 
 choices  of  telecommunications  services.  819 

 816  See  Cox  Comments  at  35.  Cox  notes  that  access  to  incumbent  LEC  call  related  databases  is 
 necessary  to  ensure  proper  call  flow  when  an  incumbent  LEC  customer  is  using  call  forwarding  features.  Id. 
 817  See  Cox  Comments  at  36  (Cox  notes  that  ILEC  CNAM  databases  give  access  to 
 information  about  both  the  ILEC  subscribers  and  subscribers  of  other  local  exchange  carriers  that  choose  to 
 store  this  information  in  the  CNAM  database.  In  Coxs  experience,  third  party  vendors  do  not  have  access  to 
 this  information,  with  the  result  that  customers  simply  do  not  receive  the  caller  name  information  they 
 expect.);  MediaOne  Comments  at  15-  16;  Letter  from  MediaOne,  to  Jake  E.  Jennings,  Federal 
 Communications  Commission,  CC  Docket  No.  96-  98  (filed  August  11,  1999)  (MediaOne  August  11,  1999  Ex 
 Parte)  (  While  others  can  provide  access  to  the  ILECs  CNAM  databases,  only  the  ILECs  have  a  database 
 with  their  customers  names.).  But  see  SBC  Comments  at  44  (stating  that  CLECs  that  provide  their  own 
 switches  also  do  not  need  access  to  SBCs  Line  Information  databases  at  TELRIC  prices.  Switch-  based 
 CLECs  can  readily  store  their  data  in  any  Line  Information  (LIDB)  or  Name  Information  (CNAM)  database 
 in  the  nation.). 

 818  See  Cox  Comments  at  36. 

 819  See,  e.  g.,  Iowa  Comments  at  8  (stating  that  service  management  systems  are  integrally 
 related  to  signaling  networks  and  call  related  databases,  and  noting  that  the  failure  to  unbundle  service 
 management  systems  would  eliminate  a  competitors  ability  to  provide  service);  Allegiance  Comments  at  20- 
 21  (  Because  AIN  is  a  service  platform  that  incumbent  LECs  use  to  build  their  own  services,  CLECs  cannot 
 offer  comparable  services  without  access  to  AIN  capabilities.);  KMC  Comments  at  17  (stating  that  access  to 
 the  SMS  is  necessary  for  competitors  to  effectively  use  call  related  databases.);  MCI  WorldCom  Comments 
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 (b)  The  Necessary  Standard 
 418.  As  discussed  above,  we  find  that  AIN  service  software  qualifies  as  a 
 proprietary  network  element,  and  therefore,  should  be  analyzed  under  the  necessary 
 standard.  Our  interpretation  of  the  necessary  standard  requires  the  Commission  to 
 determine  whether,  after  taking  into  consideration  alternatives  outside  the  incumbents 
 network,  lack  of  access  to  that  element  would,  as  a  practical,  economic,  and  operational 
 matter,  preclude  the  requesting  carrier  from  providing  the  services  it  seeks  to  offer. 

 419.  We  agree  with  Ameritech  that  unbundling  AIN  service  software  such  as 
 Privacy  Manager  is  not  necessary  within  the  meaning  of  the  standard  in  section 
 251(  d)(  2)(  A).  In  particular,  a  requesting  carrier  does  not  need  to  use  an  incumbent  LECs 
 AIN  service  software  to  design,  test,  and  implement  a  similar  service  of  its  own.  820 
 Because  we  are  unbundling  the  incumbent  LECs  AIN  databases,  SCE,  SMS,  and  STPs, 
 requesting  carriers  that  provision  their  own  switches  or  purchase  unbundled  switching 
 from  the  incumbent  will  be  able  to  use  these  databases  to  create  their  own  AIN  software 
 solutions  to  provide  services  similar  to  Ameritechs  Privacy  Manager.  They  therefore 
 would  not  be  precluded  from  providing  service  without  access  to  it.  Thus,  we  agree  with 
 Ameritech  and  BellSouth  that  AIN  service  software  should  not  be  unbundled.  821 

 420.  We  believe  that  excluding  AIN  service  software,  such  as  Privacy 
 Manager,  from  the  unbundling  requirements  of  section  251(  d)(  2),  will  protect  incentives 
 for  the  incumbent  LEC  to  invest  and  deploy  new  and  innovate  services.  We  also  believe 
 that  such  protection,  in  conjunction  with  our  decision  to  unbundle  the  AIN  platform  and 
 architecture,  will  promote  innovation  and  deployment  of  new  services  by  requesting 
 carriers. 

 G.  Operations  Support  Systems 

 1.  Background 
 421.  In  the  Local  Competition  First  Report  and  Order,  the  Commission 
 concluded  that  incumbent  LECs  must  provide  access  to  operations  support  systems  (OSS) 
 functions  on  an  unbundled  basis  to  requesting  carriers.  822  The  Commission  also  required 

 at  Tab  6,  Decl.  of  Bernard  Ku,  at  para.  8  (  CLEC  access  to  AIN  databases,  ILEC  Service  Creation 
 Environment,  and  Service  Management  System  is  critical  if  the  CLECs  are  to  develop  and  deploy  new  and 
 innovative  services.  These  services  require  interoperability;  and  one  critical  aspect  of  this  testing,  field 
 deployment  testing,  cannot  be  duplicated  outside  the  ILEC  AIN  environment.). 

 820  Ameritech  Comments  at  128. 

 821  Ameritech  Aron  &  Harris  Aff.  at  20;  BellSouth  Comments  at  80. 
 822  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15763-  68,  paras.  516-  28.  OSS 
 are  composed  of  various  back  office  systems,  databases  and  personnel  that  an  incumbent  LEC  uses  to 
 commercially  provision  telecommunications  service  to  its  customers,  resellers,  and  the  purchasers  of 
 unbundled  network  elements.  Id.  at  15766-  67,  para.  523. 
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 incumbent  LECs  to  make  modifications  to  their  OSS  as  necessary  in  order  to  offer 
 nondiscriminatory  access  to  these  functions,  including  access  to  interface  design 
 systems.  823  Specifically,  the  Commission  determined  in  the  Local  Competition  First 
 Report  and  Order  that  the  provision  of  access  to  OSS  functions  and  the  information  they 
 contain  is  integral  to  the  ability  of  competing  carriers  to  enter  the  local  exchange 
 market.  824  The  Commission  further  concluded  that  a  requesting  carrier  that  lacks  access 
 to  the  incumbents  OSS  will  be  severely  disadvantaged,  if  not  precluded  altogether,  from 
 fairly  competing.  825  In  Iowa  Utils.  Bd.,  the  Supreme  Court  expressly  affirmed  the 
 Eighth  Circuits  holding  that  the  Commissions  designation  of  operations  support  systems 
 as  a  network  element  was  an  eminently  reasonable  interpretation  of  the  1996  Act.  826 

 422.  In  the  Notice,  we  sought  comment  on  the  application  of  the  necessary  and 
 impair  standards  to  previously  identified  unbundled  network  elements,  including 
 OSS.  827  The  Notice  also  requested  comment  on  whether  the  Commission  should  modify 
 the  definition  of  OSS. 

 423.  All  commenters  to  this  proceeding  agree  that  OSS  qualifies  as  an  unbundled 
 network  element.  828  Incumbent  LECs,  however,  argue  that  the  Commission  should  limit 
 access  to  OSS  functions  to  those  instances  when  a  requesting  carrier  purchases  another 
 network  element,  an  interconnection  offering,  or  resold  services  from  the  incumbent 
 LEC.  829  Competitors,  on  the  other  hand,  argue  that  OSS  qualifies  as  an  independent 

 823  Id.  at  15767-  68,  paras.  524-  25.  The  Commission  affirmed  these  obligations  in  the  Local 
 Competition  Second  Reconsideration  Order,  11  FCC  Rcd  at  19740-  45,  paras.  5-  12.  The  interface  design 
 system  is  an  electronic  gateway  used  to  electronically  access  OSS  information  such  as  telephone  number, 
 address  validation,  order  receipt  notice,  etc. 

 824  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15763-  64,  para.  518;  Local 
 Competition  Second  Reconsideration  Order,  11  FCC  Rcd  at  19741-  43,  paras.  6-  10. 
 825  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15763-  64,  paras.  516-  518. 

 826  Iowa  Utils.  Bd.,  119  S.  Ct.  at  733-  34. 
 827  Notice  at  para.  33. 
 828  See,  e.  g.,  California  PUC  Comments  at  5  (stating  that  OSS  is  where  the  rubber  meets  the 
 road  in  developing  a  competitive  market);  Cox  Comments  at  31  (stating  that  the  inability  to  access 
 incumbent  LEC  OSS  functionalities  would  have  a  devastating  effect  on  competitive  LECs);  Qwest 
 Comments  at  84  (stating  that  lack  of  access  to  incumbent  LECs  OSS  would  drastically  increase  costs  and 
 delays  of  competitors);  Pilgrim  Reply  Comments  at  8  (stating  that  a  broad  array  of  incumbent  LEC  OSS 
 functionalities  are  required  to  provide  virtually  any  competitive  telecommunications  service). 

 829  See,  e.  g.,  GTE  Comments  at  71  (competitive  LECs  may  have  access  to  OSS  when  reselling 
 incumbent  LEC  service  or  purchasing  unbundled  incumbent  LEC  elements,  but  retail  use  of  incumbent  OSS 
 by  competitors  should  not  be  required);  SBC  Comments  at  56-  57  (incumbent  LECs  need  not  provide  OSS 
 functions  to  a  competitive  LEC  to  enable  that  competitive  LEC  to  obtain  a  service  of  facility  from  a  non-incumbent 
 LEC  source););  U  S  WEST  Comments  at  41  (incumbent  LECs  are  only  required  to  provide 
 unbundled  OSS  access  to  network  elements  that  meet  the  necessary  and  impair  standards). 
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 unbundled  network  element  and  therefore  is  not  subject  to  any  such  limitations.  830 
 Additionally,  they  argue  that  an  incumbent  LECs  duty  to  provide  unbundled  access  to 
 OSS  includes  an  obligation  to  provide  loop  qualification  information.  831  ALTS  requests 
 that  the  Commission  require  incumbent  LECs  to  provide  access  to  OSS  functions  for 
 carrier-  to-  carrier  transactions.  832 

 2.  Discussion 
 424.  We  find  that  requesting  carriers  are  impaired  without  access  to  the 
 incumbent  LECs  OSS  as  an  unbundled  network  element.  The  record  demonstrates  that, 
 in  general,  lack  of  access  to  OSS  as  an  unbundled  network  element  materially  diminishes 
 a  requesting  carriers  ability  to  provide  the  services  it  seeks  to  offer.  We  also  clarify  that 
 the  definition  of  OSS  includes  access  to  loop  qualification  information.  Finally,  we  reject 
 the  incumbent  LECs  proposal  to  limit  access  to  OSS  to  situations  where  the  requesting 
 carrier  is  ordering  other  unbundled  network  elements  or  resold  services. 

 a.  Definition  of  OSS 

 425.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  defined 
 OSS  as  consisting  of  pre-  ordering,  ordering,  provisioning,  maintenance  and  repair,  and 
 billing  functions  supported  by  an  incumbent  LECs  databases  and  information.  833  OSS 
 includes  the  manual,  computerized,  and  automated  systems,  together  with  associated 
 business  processes  and  the  up-  to-  date  data  maintained  in  those  systems.  834  Because  of  the 
 varied,  and  largely  non-  standardized,  development  of  incumbent  LECs  OSS,  the 
 Commission  identified  certain  functions  needed  by  competitive  carriers  to  deliver  local 
 exchange  and  exchange  access  services  at  the  level  expected  by  customers  and  state 
 commissions.  Specifically,  the  Commission  identified  the  five  functions  of  OSS  that 
 incumbent  LECs  must  make  available  to  competitors  on  an  unbundled  basis:  pre-ordering, 
 ordering,  provisioning,  repair  and  maintenance,  and  billing.  835 

 830  See,  e.  g.,  MCI  WorldCom  Reply  Comments  at  62. 
 831  See,  e.  g.,  ALTS  Comments  at  60-  61;  Covad  Comments  at  53-  54;  Prism  Comments  at  22- 
 23;  Rhythms  Comments  at  22-  24. 
 832  Letter  from  Jonathan  Askin,  ALTS,  to  Magalie  Roman  Salas,  Secretary,  Federal 
 Communications  Commission,  CC  Docket  No.  96-  98  (filed  July  30,  1999)  (ALTS  July  30,  1999  Ex  Parte). 
 833  47  C.  F.  R.    51.319(  f)(  1). 

 834  MCI  WorldCom  Comments  at  67-  68.  See  also  Local  Competition  First  Report  and  Order, 
 11  FCC  Rcd  at  15763-  64,  paras.  517-  18. 
 835  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15764-  66,  paras.  518,  523.  OSS 
 are  composed  of  varied  systems,  databases  and  personnel  that  an  incumbent  LEC  uses  to  commercially 
 provision  telecommunications  service  to  its  customers,  resellers  and  the  purchasers  of  unbundled  network 
 elements. 
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 426.  We  find  no  reason  to  modify  our  definition  of  OSS.  The  majority  of 
 commenters  support  the  existing  definition  of  OSS.  836  A  few  parties  request  that  we 
 broaden  the  definition  of  OSS  to  include  access  to  the  incumbent  LECs  electronic 
 interface  and  gateways  to  enable  the  processing  of  orders  without  manual  intervention.  837 
 Because  these  requests  focus  on  the  method  by  which  competitors  access  incumbent  LEC 
 OSS,  we  believe  that  interface  and  gateway  issues  are  already  captured  in  the 
 nondiscriminatory  access  requirements  of  the  Local  Competition  First  Report  and 
 Order.  838  Accordingly,  we  find  it  unnecessary  to  modify  our  definition  of  OSS  in  this 
 manner.  We  agree  with  ALTS,  however,  that  the  Commission  should  clarify  that  the  pre-ordering 
 function  includes  access  to  loop  qualification  information.  Loop  qualification 
 information  identifies  the  physical  attributes  of  the  loop  plant  (such  as  loop  length,  the 
 presence  of  analog  load  coils  and  bridge  taps,  and  the  presence  and  type  of  Digital  Loop 
 Carrier)  that  enable  carriers  to  determine  whether  the  loop  is  capable  of  supporting  xDSL 
 and  other  advanced  technologies.  839  This  information  is  needed  by  carriers  seeking  to 
 provide  advanced  services  over  those  loops  through  the  use  of  packet  switches  and 
 DSLAMs.  840 

 427.  We  clarify  that  pursuant  to  our  existing  rules,  an  incumbent  LEC  must 
 provide  the  requesting  carrier  with  nondiscriminatory  access  to  the  same  detailed 
 information  about  the  loop  that  is  available  to  the  incumbent,  so  that  the  requesting  carrier 
 can  make  an  independent  judgment  about  whether  the  loop  is  capable  of  supporting  the 
 advanced  services  equipment  the  requesting  carrier  intends  to  install.  Based  on  these 
 existing  obligations,  we  conclude  that,  at  a  minimum,  incumbent  LECs  must  provide 
 requesting  carriers  the  same  underlying  information  that  the  incumbent  LEC  has  in  any  of 
 its  own  databases  or  other  internal  records.  For  example,  the  incumbent  LEC  must 
 provide  to  requesting  carriers  the  following:  (1)  the  composition  of  the  loop  material, 
 including,  but  not  limited  to,  fiber  optics,  copper;  (2)  the  existence,  location  and  type  of 
 any  electronic  or  other  equipment  on  the  loop,  including  but  not  limited  to,  digital  loop 
 carrier  or  other  remote  concentration  devices,  feeder/  distribution  interfaces,  bridge  taps, 
 load  coils,  pair-  gain  devices,  disturbers  in  the  same  or  adjacent  binder  groups;  (3)  the  loop 

 836  AT&  T  Comments  at  134;  Cable  &  Wireless  Comments  at  39;  CompTel  Comments  at  45; 
 MediaOne  Comments  at  14. 
 837  See,  e.  g.,  Covad  Comments  at  54. 

 838  Local  Competition  First  Report  and  Order,  13  FCC  Rcd  at  15766-  68,  para.  523-  28. 
 839  ALTS  Comments  at  60-  61;  Covad  Comments  at  53-  54;  Prism  Communications  Comments 
 at  23.  As  described  in  Part  (V)(  A)  supra,  Digital  Loop  Carrier  (DLC)  systems  digitally  encode  and  aggregate, 
 i.  e.  "multiplex",  the  traffic  from  subscribers'  loops  into  DS1  signals  or  higher  for  more  efficient  transmission 
 or  more  extended  range  than  traditionally  permitted  by  copper  loops.  The  analog  signals  are  carried  from 
 customer  premises  to  a  remote  terminal  (RT)  where  they  are  converted  to  digital,  mixed  with  other  signals, 
 and  carried,  generally  over  fiber,  to  the  LEC  central  office. 

 840  ALTS  Comments  at  60-  61;  Covad  Comments  at  53-  54;  Prism  Comments  at  23;  Rhythms 
 Comments  at  22-  24. 
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 length,  including  the  length  and  location  of  each  type  of  transmission  media;  (4)  the  wire 
 gauge(  s)  of  the  loop;  and  (5)  the  electrical  parameters  of  the  loop,  which  may  determine 
 the  suitability  of  the  loop  for  various  technologies.  Consistent  with  our  nondiscriminatory 
 access  obligations,  the  incumbent  LEC  must  provide  loop  qualification  information 
 based,  for  example,  on  an  individual  address  or  zip  code  of  the  end  users  in  a  particular 
 wire  center,  NXX  code,  or  on  any  other  basis  that  the  incumbent  provides  such 
 information  to  itself. 

 428.  In  addition,  we  agree  with  Covad  that  an  incumbent  LEC  should  not  be 
 permitted  to  deny  a  requesting  carrier  access  to  loop  qualification  information  for 
 particular  customers  simply  because  the  incumbent  is  not  providing  xDSL  or  other 
 services  from  a  particular  end  office.  841  We  also  agree  with  commenters  that  an 
 incumbent  must  provide  access  to  the  underlying  loop  information  and  may  not  filter  or 
 digest  such  information  to  provide  only  that  information  that  is  useful  in  the  provision  of 
 a  particular  type  of  xDSL  that  the  incumbent  chooses  to  offer.  842  For  example,  SBC 
 provides  ADSL  service  to  its  customers,  which  has  a  general  limitation  of  use  for  loops 
 less  than  18,000  feet.  In  order  to  determine  whether  a  particular  loop  is  less  than  18,000 
 feet,  SBC  has  developed  a  database  used  by  its  retail  representatives  that  indicates  only 
 whether  the  loop  falls  into  a  green,  yellow,  or  red  category.  843  Under  our 
 nondiscrimination  requirement,  an  incumbent  LEC  can  not  limit  access  to  loop 
 qualification  information  to  such  a  green,  yellow,  or  red  indicator.  Instead,  the 
 incumbent  LEC  must  provide  access  to  the  underlying  loop  qualification  information 
 contained  in  its  engineering  records,  plant  records,  and  other  back  office  systems  so  that 
 requesting  carriers  can  make  their  own  judgments  about  whether  those  loops  are  suitable 
 for  the  services  the  requesting  carriers  seek  to  offer.  Otherwise,  incumbent  LECs  would 
 be  able  to  discriminate  against  other  xDSL  technologies  in  favor  of  their  own  xDSL 
 technology. 

 429.  We  disagree,  however,  with  Covads  unqualified  request  that  the 
 Commission  require  incumbent  LECs  to  catalogue,  inventory,  and  make  available  to 
 competitors  loop  qualification  information  through  automated  OSS  even  when  it  has  no 
 such  information  available  to  itself.  844  If  an  incumbent  LEC  has  not  compiled  such 
 information  for  itself,  we  do  not  require  the  incumbent  to  conduct  a  plant  inventory  and 
 construct  a  database  on  behalf  of  requesting  carriers.  We  find,  however,  that  an 
 incumbent  LEC  that  has  manual  access  to  this  sort  of  information  for  itself,  or  any 

 841  Covad  Comments  at  54. 
 842  Letter  from  Michael  Olsen,  Deputy  General  Counsel,  NorthPoint  Communications,  to  Carol 
 E.  Mattey,  Chief,  Policy  and  Program  Planning  Division,  Common  Carrier  Bureau,  Federal  Communications 
 Commission,  (filed  August  19,  1999)(  NorthPoint  August  19,  1999  Ex  Parte) 

 843  NorthPoint  August  19,  1999  Ex  Parte.  See  also  Rhythms  Comments  at  23  (stating  that 
 incumbent  LECs  routinely  provide  competitor  with  a  yes  or  no  answer  as  to  whether  the  incumbent 
 believes  a  given  loop  is  ADSL  capable). 

 844  Covad  Comments  at  54. 
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 affiliate,  must  also  provide  access  to  it  to  a  requesting  competitor  on  a  non-  discriminatory 
 basis.  In  addition,  we  expect  that  incumbent  LECs  will  be  updating  their  electronic 
 database  for  their  own  xDSL  deployment  and,  to  the  extent  their  employees  have  access 
 to  the  information  in  an  electronic  format,  that  same  format  should  be  made  available  to 
 new  entrants  via  an  electronic  interface. 

 430.  We  also  clarify  that  under  our  existing  rules,  the  relevant  inquiry  is  not 
 whether  the  retail  arm  of  the  incumbent  has  access  to  the  underlying  loop  qualification 
 information,  but  rather  whether  such  information  exists  anywhere  within  the  incumbents 
 back  office  and  can  be  accessed  by  any  of  the  incumbent  LECs  personnel.  Denying 
 competitors  access  to  such  information,  where  the  incumbent  (or  an  affiliate,  if  one  exists) 
 is  able  to  obtain  the  relevant  information  for  itself,  will  impede  the  efficient  deployment 
 of  advanced  services.  To  permit  an  incumbent  LEC  to  preclude  requesting  carriers  from 
 obtaining  information  about  the  underlying  capabilities  of  the  loop  plant  in  the  same 
 manner  as  the  incumbent  LECs  personnel  would  be  contrary  to  the  goals  of  the  Act  to 
 promote  innovation  and  deployment  of  new  technologies  by  multiple  parties. 

 431.  Consistent  with  the  framework  we  adopted  in  the  Local  Competition  First 
 Report  and  Order,  we  conclude  that  access  to  loop  qualification  information  must  be 
 provided  to  competitors  within  the  same  time  intervals  it  is  provided  to  the  incumbent 
 LECs  retail  operations.  To  the  extent  such  information  is  not  normally  provided  to  the 
 incumbent  LECs  retail  personnel,  but  can  be  obtained  by  contacting  incumbent  back 
 office  personnel,  it  must  be  provided  to  requesting  carriers  within  the  same  time  frame 
 that  any  incumbent  personnel  are  able  to  obtain  such  information.  It  would  be 
 unreasonable,  for  instance,  if  the  requesting  carrier  had  to  wait  several  days  to  receive 
 such  information  from  the  incumbent  in  the  incumbents  personnel  have  the  ability  to 
 obtain  such  information  in  several  hours.  In  order  to  provide  local  exchange  and 
 exchange  access  service,  a  competitor  needs  such  information  quickly  to  be  able  to 
 determine  whether  a  particular  loop  will  support  xDSL  service. 

 b.  Proprietary  Concerns  Associated  with  OSS 

 432.  The  record  does  not  indicate,  nor  do  commenters  argue,  that  OSS  is 
 proprietary.  Moreover,  we  do  not  discern  any  copyright,  patent,  or  trademark  or  trade 
 secrecy  implications  to  unbundling  OSS.  We  therefore  conclude  that  OSS  should  be 
 evaluated  under  the  impair  standard.  845 

 c.  Unbundling  Analysis  for  OSS 

 433.  We  conclude  that  lack  of  access  to  the  incumbent  LECs  OSS  impairs  the 
 ability  of  requesting  carriers  to  provide  the  services  they  seek  to  offer.  The  incumbents 
 OSS  provides  access  to  key  information  that  is  unavailable  outside  the  incumbents 
 networks  and  is  critical  to  the  ability  of  other  carriers  to  provide  local  exchange  and 

 845  See  ALTS  Comments  at  59. 
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 exchange  access  service.  We  therefore  require  incumbent  LECs  to  offer  unbundled 
 access  to  their  OSS  nationwide. 

 434.  Commenters  overwhelmingly  agree  that  the  unbundling  of  OSS  satisfies  the 
 impair  standard  of  section  251(  d)(  2).  846  OSS  is  a  precondition  to  accessing  other 
 unbundled  network  elements  and  resold  services  because  competitors  must  utilize  the 
 incumbent  LECs  OSS  to  order  all  network  elements  and  resold  services.  847  Thus,  the 
 success  of  local  competition  depends  on  the  availability  of  access  to  the  incumbent  LECs 
 OSS.  848  Without  unbundled  access  to  the  incumbent  LECs  OSS,  competitors  would  not 
 be  able  to  provide  their  customers  comparable,  competitive  service,  and  hence  would 
 have  to  operate  at  a  material  disadvantage.  849  While  we  acknowledge  that  a  competitive 
 market  is  developing  for  OSS  systems,  these  alternative  providers  do  not  provide 
 substitutable  alternatives  to  the  incumbent  LECs  OSS  functionality.  850  Alternative  OSS 
 vendors  provide  requesting  carriers  with  an  electronic  interface  that  allow  competitive 
 LECs  to  access  the  incumbent  LECs  OSS  and  internal  customer  care  systems.  These 
 vendors  cannot  provide  a  sufficient  substitute  for  the  incumbent  LECs  underlying  OSS 
 because  incumbent  LECs  have  access  to  exclusive  information  and  functionalities  needed 
 to  provide  service  (e.  g.,  customer  service  record  information,  provisioning  of  orders  for 
 unbundled  network  element  and  resold  services,  ability  to  initiate  repairs  for  unbundled 
 network  elements  and  resold  services,  etc.).  851 

 435.  We  reject  the  incumbent  LECs  arguments  to  limit  the  scope  of  a  requesting 
 carriers  access  to  the  incumbents  OSS  functions  to  situations  where  the  competitor  is 
 ordering  other  unbundled  network  elements  or  resold  services  from  the  incumbent 

 846  See,  e.  g.,  California  PUC  Comments  at  5-  6;  Florida  PSC  Comments  at  7;  Illinois 
 Commission  Comments  at  6-  7;  ALTS  Comments  at  59-  61;  AT&  T  Comments  at  134-  35;  CompTel 
 Comments  at  45-  46;  e.  spire  Joint  Comments  at  20-  22;  Focal  Comments  at  8;  MCI  WorldCom  Comments  at 
 67-  70;  MGC  Comments  at  27-  28;  Net2000  Comments  at  16-  17;  Network  Access  Solutions  Comments  at  19; 
 NEXTLINK  Comments  at  40-  41;  NorthPoint  Comments  at  20. 

 847  ALTS  Comments  at  58;  AT&  T  Comments  at  134;  Covad  Comments  at  53;  GTE 
 Comments  at  71;  MCI  WorldCom  Comments  at  68-  69;  Rhythms  Comments  at  21. 
 848  ALTS  Comments  at  58-  60  (citing  the  Local  Competition  First  Report  and  Order,  11  FCC 
 Rcd  at  15763-  64,  para.  518);  AT&  T  Comments  at  134-  35. 
 849  Iowa  Comments  at  7;  CompTel  Comments  at  45-  46;  Cox  Comments  at  30-  31; 
 e.  spire/  Intermedia  Comments  at  21-  22;  Focal  Comments  at  8;  MediaOne  Comments  at  14;  Qwest  Comments 
 at  84-  85.  See  also  AT&  T  Comments  at  135;  Level  3  Comments  at  17;  MCI  WorldCom  Comments  at  69; 
 RCN  Comments  at  18-  19. 

 850  GTE  Comments  at  71  (stating  that  19  OSS  vendors  including  Lucent,  IBM,  Ascend,  and 
 Nortel  market  database  systems  and  other  products  to  perform  all  OSS  functions)(  citation  omitted);  US 
 West  Comments  at  41-  42  (stating  that  OSS  vendors  include  Metasolv,  Visionael,  Remedy,  Nortel,  and 
 Lucent). 

 851  CompTel  Comments  at  45;  Cox  Comments  at  31;  MCI  WorldCom,  Tab  7,  Decl.  of  John 
 Sivori,  at  para.  5.  See  also  AT&  T  Comments  at  135. 
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 LEC.  852  We  find  such  limitations  to  be  discriminatory  because  access  to  the  same 
 information  and  support  functions  as  the  incumbent  LEC  is  needed  by  requesting  carriers 
 to  provide  quality  service  over  their  own  facilities.  For  example,  the  incumbent  LEC  has 
 access  to  unique  information  about  the  customer's  service,  and  a  competitors  ability  to 
 provide  service  is  materially  diminished  without  access  to  that  information.  This  is  true 
 regardless  of  whether  the  competitor  is  providing  service  entirely  through  its  own 
 facilities,  entirely  over  the  incumbents,  or  using  some  combination  of  the  two.  In 
 particular,  the  full  facilities-  based  competitor  runs  the  risk  of  offering  a  lower  quality 
 service  from  the  perspective  of  the  end  user  if  it  does  not  know  all  the  details  of  the 
 customer's  current  service  offering.  As  another  example,  carriers  may  also  need  to  access 
 the  repair  and  maintenance  function  in  the  incumbents  OSS  to  submit  trouble  tickets  for 
 interconnection  trunks. 

 436.  We  do  not  decide  ALTS  request  at  this  time  that  incumbent  LECs  provide 
 access  to  OSS  functions  even  when  the  incumbent  is  no  longer  the  retail  provider  of  local 
 service  to  an  end  user.  853  The  record  has  not  been  sufficiently  developed  to  establish 
 how,  absent  access  to  incumbent  LEC  OSS,  requesting  LECs  ability  to  provide  the 
 services  they  seek  to  offer  would  be  materially  diminished  when  the  incumbent  LEC  is 
 not  involved  in  providing  service  to  a  retail  customer.  The  most  apparent  example  of  this 
 situation  would  be  customer  changeovers  where  competitive  LECs  are  serving  customers 
 through  resale  of  the  incumbents  services  or  use  of  the  incumbents  unbundled  network 
 elements.  This  appears  to  us  to  be  an  industry-  wide  issue.  Thus,  as  a  first  step,  we 
 encourage  the  industry  to  develop  guidelines  and  standards  to  facilitate  the  orderly 
 transition  of  customers  from  one  carrier  to  another.  We  note  that  any  solution  to  this 
 problem  must  adhere  to  the  requirements  of  the  Act,  including  the  nondiscriminatory 
 access  requirements  of  section  251(  c)(  3)  and  the  CPNI  obligations  of  section  222.  854 

 852  See,  e.  g.,  SBC  Comments  at  56-  57  (stating  that  incumbent  LECs  need  not  provide  OSS 
 functions  to  a  competitive  LEC  to  enable  that  competitive  LEC  to  obtain  a  service  or  facility  from  a  non-incumbent 
 LEC  source);  GTE  Comments  at  71  (stating  that  competitive  LECs  may  have  access  to  OSS  when 
 reselling  incumbent  LEC  service  or  purchasing  unbundled  incumbent  LEC  elements,  but  retail  use  of 
 incumbent  OSS  by  competitors  should  not  be  required);  US  West  Comments  at  41  (stating  that  incumbent 
 LECs  are  only  required  to  provide  unbundled  OSS  access  to  network  elements  that  meet  the  necessary  and 
 impair  standards). 

 853  ALTS  July  30,  1999  Ex  Parte  (stating  that,  for  example,  if  CLEC  A  takes  a  customer  from 
 CLEC  B,  CLEC  A  may  need  access  to  the  ILECs  OSS  where  CLEC  B  had  provisioned  service  to  that 
 customer  using  an  unbundled  loop.  The  loop  would  have  to  be  disconnected  from  the  ILECs  main 
 distribution  frame  from  CLEC  B  and  reconnected  to  CLEC  A.  The  timing  of  the  loop  cutover  and  issues  of 
 number  portability  require  coordination). 

 854  For  instance,  the  incumbent  LEC  must  not  discriminate  in  the  provision  of  services 
 necessary  for  customer  changes.  Winback  is  an  example  of  a  situation  requiring  such  customer  changes, 
 where  the  incumbent  LEC  wins  back  a  former  customer  from  a  competitor.  The  incumbent  would  be  under  a 
 concomitant  duty  to  perform  customer  changes  for  requesting  carriers  on  a  basis  equal  to  that  which  it 
 provides  for  itself. 
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 437.  We  reject  commenters  proposal  that  the  Commission  establish  and  ensure 
 that  incumbent  LECs  meet  OSS  performance  standards,  both  quantitative  and  qualitative, 
 to  demonstrate  parity  under  the  rules.  855  Failure  to  satisfy  these  performance  standards, 
 according  to  MCI  WorldCom,  should  automatically  trigger  a  process  to  identify  and 
 correct  the  root  cause  of  the  OSS  problem.  856  We  decline  to  adopt  performance  standards 
 in  this  proceeding.  The  issue  before  us  in  this  proceeding  is  whether  OSS  is  subject  to  the 
 unbundling  obligations  of  section  251,  not  whether  the  Commission  should  establish 
 performance  standards  and  penalties  to  determine  if  an  incumbent  is  providing 
 nondiscriminatory  access  to  its  OSS  functions.  We  note  that  the  states  have  primary 
 authority  under  section  252  for  setting  schedules  and  resolving  disputes  concerning  access 
 to  OSS  functions  as  unbundled  network  elements.  In  addition,  in  the  Second  Order  on 
 Reconsideration  ,  the  Commission  did  not  preclude  requesting  carriers  from  bringing 
 enforcement  actions  against  incumbent  LECs  to  the  Commission  for  consideration.  857 
 Thus,  more  appropriate  forums  exist  for  the  resolution  of  specific  allegations  of 
 noncompliance  with  our  unbundling  rules.  Accordingly,  we  find  it  unnecessary,  at  this 
 time,  to  modify  our  rules  in  the  manner  suggested. 

 H.  Operator  Services  and  Directory  Assistance 

 1.  Background 
 438.  In  the  Local  Competition  First  Report  and  Order,  the  Commission  required 
 incumbent  LECs  to  provide  unbundled  access  to  their  operator  services  and  directory 
 assistance  (OS/  DA).  The  Commission  found  that  access  to  the  systems  supporting  both 
 operator  call  completion  services  and  directory  assistance  was  necessary,  under  section 
 251(  d)(  2)(  A)  for  new  entrants  to  provide  competing  local  exchange  service.  858  The 
 Commission  also  concluded  that  a  competitors  ability  to  provide  service  would  be 
 significantly  impaired,  under  section  251(  d)(  2)(  B),  if  it  did  not  have  access  to  the 
 incumbent  LECs  operator  call  completion  services  and  directory  assistance.  859  The 
 Commission  therefore  required  incumbent  LECs  to  provide  unbundled  access  to  the 
 databases  used  in  the  provision  of  both  call  completion  services  and  directory 
 assistance.  860  In  Iowa  Utils.  Bd.,  the  Supreme  Court  expressly  affirmed  the  Eighth 
 Circuits  holding  that  the  Commissions  designation  of  operator  services  and  directory 

 855  CPI  Comments  at  30;  MCI  WorldCom  Comments  at  70;  Media  One  Comments  at  14; 
 Prism  Comments  at  23. 
 856  MCI  WorldCom  Comments  at  70,  Tab  7,  Decl.  of  John  Sivori,  at  para.  8. 

 857  See  Local  Competition  Second  Reconsideration  Order,  11  FCC  Rcd  at  19744,  para.  11. 
 858  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15774,  para.  539. 
 859  Id.  11  FCC  Rcd  at  15774,  para.  540. 
 860  Id.  at  15773-  74,  para.  538. 
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 assistance  as  a  network  element  was  an  eminently  reasonable  interpretation  of  the  1996 
 Act.  861 

 439.  In  the  Notice,  we  sought  comment  on  whether  the  definition  of  OS/  DA 
 should  be  modified  and  whether  there  are  any  proprietary  concerns  associated  with 
 OS/  DA  systems.  862  We  also  sought  comment  on  whether  OS/  DA  should  remain  an 
 unbundled  network  element.  863  We  sought  further  comment  on  the  implications  of  an 
 incumbent  LECs  obligations  to  provide  OS/  DA  services  under  the  nondiscriminatory 
 access  provisions  of  section  251(  b)(  3)  if  those  services  are  not  provided  by  incumbent 
 LECs  as  unbundled  network  elements  under  section  251(  c)(  3).  864 

 440.  Commenters  generally  support  the  existing  definition  of  operator  services 
 and  directory  assistance  and  do  not  identify  proprietary  concerns  associated  with  OS/  DA 
 systems.  The  majority  of  commenters,  including  competitive  LECs,  interexchange 
 carriers,  alternative  OS/  DA  providers,  and  most  state  commissions,  argue  that  incumbents 
 should  provide  unbundled  access  to  their  OS/  DA  services.  865  The  incumbent  LECs, 
 MGC  (a  facilities-  based  competitive  LEC),  and  the  Ohio  PUC  note  the  general 
 availability  of  third-  party  OS/  DA  alternatives  as  evidence  of  a  wholesale  market  and 
 argue  that  the  Commission  should  not  unbundle  the  incumbent  LECs  OS/  DA  services.  866 

 2.  Discussion 
 441.  We  find  that  where  incumbent  LECs  provide  customized  routing,  lack  of 
 access  to  the  incumbents  OS/  DA  service  on  an  unbundled  basis  does  not  materially 
 diminish  a  requesting  carriers  ability  to  offer  telecommunications  service.  867  The  record 

 861  Iowa  Utils.  Bd.,  119  S.  Ct.  at  733-  34. 
 862  Notice  at  paras.  15,  34. 
 863  Id.  at  para.  33. 
 864  Notice  at  para.  42.  Section  251(  b)(  3)  imposes  on  each  telecommunications  carrier, 
 including  incumbent  LECs,  the  duty  to  provide  dialing  parity  to  competing  providers  of  telephone  exchange 
 service  and  telephone  toll  service,  and  the  duty  to  permit  all  such  providers  to  have  nondiscriminatory  access 
 to  telephone  numbers,  operator  services,  directory  assistance,  and  directory  listing,  with  no  unreasonable 
 dialing  delays.  47  U.  S.  C.    251(  b)(  3). 

 865  See,  e.  g.,  Kentucky  PSC  Comments  at  para.  2;  Allegiance  Comments  at  23-  24;  AT&  T 
 Comments  at  126-  134;  AT&  T  Reply  Comments  at  136-  42;  Choice  One  Joint  Comments  at  20;  CompTel 
 Comments  at  46-  47;  GSA  Comments  at  4-  6. 

 866  Ohio  PUC  Comments  at  11-  13;  Bell  Atlantic  Comments  at  32-  36;  BellSouth  Comments  at 
 77-  79;  Cincinnati  Bell  Comments  at  7;  GTE  Comments  at  49-  54;  MGC  Comments  at  31;  USTA  UNE  Report 
 at  IV-  1  to  10. 

 867  Customized  routing  permits  requesting  carriers  to  designate  the  particular  outgoing  trunks 
 associated  with  unbundled  switching  provided  by  the  incumbent,  which  will  carry  certain  classes  of  traffic 
 originating  from  the  requesting  providers  customers.  This  feature  would  allow  the  requesting  carrier  to 
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 provides  significant  evidence  of  a  wholesale  market  in  the  provision  of  OS/  DA  services 
 and  opportunities  for  self-  provisioning  OS/  DA  services.  Moreover,  we  do  not  find  that 
 the  evidence  regarding  the  differences  in  cost,  timeliness,  quality,  interoperability  and 
 ubiquity  between  the  incumbents  OS/  DA  service  and  alternative  OS/  DA  services, 
 provided  either  through  self-  provisioning  or  third-  party  alternatives,  is  sufficient  to 
 conclude  that  lack  of  unbundled  access  to  the  incumbents  OS/  DA  service  would 
 materially  diminish  a  requesting  carriers  ability  to  offer  the  services  it  seeks  to  provide. 
 We  note  that  nondiscriminatory  access  to  the  incumbents  underlying  databases  used  in 
 the  provision  of  OS/  DA  is  required  under  section  251(  b)(  3)  of  the  1996  Act.  The 
 additional  nondiscrimination  requirements  of  section  251(  b)(  3),  coupled  with  evidence  of 
 multiple  alternative  providers  of  OS/  DA  service  in  the  marketplace,  provide  strong 
 evidence  that  competitors  are  not  impaired  without  access  to  the  incumbents  OS/  DA 
 service  as  an  unbundled  network  element. 

 442.  Accordingly,  incumbent  LECs  need  not  provide  access  to  its  OS/  DA  as  an 
 unbundled  network  element.  All  LECs,  however,  must  continue  to  provide  their 
 competitors  with  nondiscriminatory  access  to  their  OS/  DA,  pursuant  to  section  251(  b),  as 
 implemented  by  the  Commission.  We  believe  that  this  outcome  best  comports  with  the 
 realities  of  a  growing  OS/  DA  marketplace,  embraces  a  deregulatory  approach  where 
 justified,  and  does  not  unduly  confine  the  entry  strategies  of  competitive  carriers. 

 a.  Definition  of  Operator  Services  and  Directory 
 Assistance 

 443.  The  Commission  has  defined  operator  services  as  any  automatic  or  live 
 assistance  to  a  consumer  to  arrange  for  billing  or  completion,  or  both,  of  a  telephone 
 call,  868  and  has  stated  that  directory  assistance  is  a  service  that  allows  subscribers  to 
 retrieve  telephone  numbers  of  other  subscribers.  869  In  the  Local  Competition  Second 
 Report  and  Order,  the  Commission  clarified  that  the  nondiscriminatory  requirements  of 
 section  251(  b)(  3)  included  the  obligation  of  LECs  to  comply  with  the  reasonable  request 
 of  a  competing  provider  to  rebrand  or  unbrand  its  OS/  DA  services.  870  We  recently 
 reaffirmed  this  holding  in  the  Directory  Listing  Information  Order,  where  we  stated  that 

 specify  that  OS/  DA  traffic  from  its  customers  be  routed  over  designated  trunks  which  terminate  at  the 
 requesting  carriers  OS/  DA  platform  or  a  third  partys  OS/  DA  platform. 

 868  Local  Competition  Second  Report  and  Order,  11  FCC  Rcd  at,  19448,  para.  110  (citing  47 
 U.  S.  C.    226(  a)(  7)).  The  Commission  also  concluded  that  busy  line  verification,  emergency  interrupt,  and 
 operator-  assisted  directory  assistance  are  forms  of  operator  services.  Id.  at  para.  110,  citing  47  U.  S.  C.   
 226(  a)(  7). 

 869  Performance  Measurements  Notice,  13  FCC  Rcd  at  12823,  n.  14. 

 870  Local  Competition  Second  Report  and  Order  at  19455,  paras.  128-  29  (operator  services) 
 and  19463,  para.  148  (directory  assistance);  47  C.  F.  R.    51.217(  d). 
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 to  the  extent  technically  feasible,  a  LEC  must  identify  and  rebrand  the  traffic  it  provides 
 to  its  competitors.  871 

 444.  We  decline  to  expand  the  definition  of  OS/  DA,  as  proposed  by  some 
 commenters,  to  include  an  affirmative  obligation  to  rebrand  OS/  DA  872  and  to  provide 
 directory  assistance  listing  updates  in  daily  electronic  batch  files.  873  We  find  such 
 modifications  unnecessary  because,  as  mentioned  above,  these  obligations  already  exist 
 under  section  251(  b)(  3),  and  the  relevant  rules  promulgated  thereunder. 

 b.  Proprietary  Concerns  Associated  with  OS/  DA 

 445.  With  the  exception  of  one  commenter,  no  parties  identify  proprietary 
 concerns  associated  with  OS/  DA,  and  we  find  none.  874  Moreover,  we  do  not  discern  any 
 copyright,  patent,  or  trademark  or  trade  secrecy  implications  associated  with  OS/  DA. 
 Accordingly,  we  analyze  incumbent  LECs  obligations  to  provide  unbundled  access  to  its 
 OS/  DA  under  the  impair  standard.  875 

 871  Implementation  of  the  Telecommunications  Act  of  1996:  Telecommunications  Carriers  Use 
 of  Customer  Proprietary  Network  Information  and  Other  Customer  Information,  Implementation  of  the  Local 
 Competition  Provisions  of  the  Telecommunications  Act  of  1996,  Provision  of  Directory  Listing  Information 
 under  the  Telecommunications  Act  of  1934,  As  Amended,  CC  Docket  Nos.  96-  115,  96-  98,  99-  273,  Third 
 Report  and  Order,  Second  Order  on  Reconsideration,  and  Notice  of  Proposed  Rulemaking,  FCC  99-  227, 
 paras.  141-  148  (rel.  September  9,  1999)  (Directory  Listing  Information  Order). 

 872  See  RCN  Comments  at  20  (stating  that  incumbent  LECs  should  be  required  to  rebrand 
 OS/  DA  services  for  the  requesting  carrier). 
 873  See,  e.  g.,  AT&  T  Comments  at  134;  MCI  WorldCom  Comments  at  71-  74;  MediaOne 
 Comments  at  13;  Metro  One  Comments  at  17-  18. 
 874  We  note  that  while  Metro  One  argues  that  directory  assistance  is  not  proprietary  and  should 
 be  unbundled,  it  identifies  unpublished  directory  assistance  listings  as  the  only  conceivably  proprietary 
 aspect  of  the  incumbent  LECs  OS/  DA  services.  Metro  One,  however,  does  not  describe  the  intellectual 
 property  concerns  associated  with  unpublished  listings  and  does  not  claim  a  need  for  unbundled  access  to 
 unpublished  listings  under  the  necessary  standard  in  section  251(  d)(  2)(  A).  Metro  One  simply  states  that 
 incumbent  LECs  have  refused  to  make  unpublished  listings  available  to  requesting  carriers,  while  they  enjoy 
 access  to  unpublished  listings  in  the  provision  of  directory  assistance  to  their  customers.  Metro  One 
 Comments  at  10-  11.  Metro  One  requests  that  in  lieu  of  providing  the  non-  published  customers  name  and 
 address,  the  incumbent  LEC  provide  the  name  of  the  customer  without  the  telephone  number  or  address  with 
 a  notation  that  the  listing  is  non-  published.  Id.  We  note  that  pursuant  to  rule  51.217(  c)(  3)(  iii),  however,  LECs 
 cannot  provide  access  to  unlisted  telephone  numbers  or  other  information  customers  have  asked  a  LEC  not  to 
 make  available.  47  C.  F.  R.    51.217(  c)(  3)(  iii).  Conversely,  section  251(  c)(  3)  requires  LECs  to  provide 
 nondiscriminatory  access  to  directory  assistance.  47  U.  S.  C.    251(  c)(  3).  The  Commission  recently  resolved 
 any  potential  inconsistency  by  requiring  a  LEC  to  make  available  to  requesting  carriers  the  names  and 
 addresses  of  unlisted  or  unpublished  subscriber  information  to  the  extent  its  own  operators  have  access  to  this 
 information.  For  example,  if  subscriber  information  is  not  available  to  the  incumbents  operator,  then  no 
 access  need  be  given  to  the  competitor.  See  Directory  Listing  Information  Order  at  paras.  164-  169. 

 875  See,  e.  g.,  Cox  Comments  at  30  (stating  that  OS/  DA  are  not  proprietary,  so  they  should  be 
 subject  to  the  impair  test). 
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 c.  Unbundling  Analysis 
 446.  Consistent  with  the  unbundling  analysis  set  forth  above,  we  conclude  that 
 where  an  incumbent  LEC  provides  customized  routing  to  the  requesting  carrier  as  part  of 
 the  unbundled  switching  element,  lack  of  access  to  the  incumbents  OS/  DA  on  an 
 unbundled  basis  does  not  materially  diminish  a  requesting  carriers  ability  to  provide  the 
 services  it  seeks  to  offer.  The  record  demonstrates  that  a  variety  of  alternative  providers 
 of  OS/  DA  offer  services  at  comparable  cost  and  quality  to  those  of  the  incumbents.  We 
 agree  with  the  incumbent  LECs,  MGC,  and  the  Ohio  PUC  that  the  incumbents  enjoy  no 
 material  advantage  obtaining  the  key  inputs  for  OS/  DA  services.  876  Certain  commenters 
 point  to  differences  in  cost  and  the  amount  of  time  required  to  implement  services 
 provided  by  these  alternative  sources  to  support  their  arguments  that  competing  carriers 
 are  impaired  without  access  to  the  incumbents  OS/  DA  services.  The  majority  of  these 
 commenters,  however,  focus  on  the  differences  in  the  quality  and  accessibility  of  the 
 information  in  the  incumbent  LECs  OS/  DA  databases  relative  to  that  available  from 
 third-  party  sources.  As  discussed  more  fully  below,  we  find  that  these  quality  differences 
 are  addressed  adequately  by  other  sections  of  the  Act. 

 447.  Alternatives  in  the  Marketplace.  Competition  in  the  provision  of  operator 
 services  and  directory  assistance  has  existed  since  divestiture.  877  Such  competition  has 
 accelerated  in  the  directory  assistance  market  as  a  result  of  the  Supreme  Courts  decision 
 to  allow  copying  of  carriers  white  pages  listings  in  their  entirety.  878  For  example, 
 according  to  SBC,  more  than  30  competitive  LECs  presently  provide  their  own  OS/  DA 
 services  or  resell  the  services  of  non-  incumbent  LECs.  879  In  Bell  Atlantics  region,  only 
 70  out  of  400  interconnection  agreements  require  Bell  Atlantic  to  provide  OS/  DA  as  an 
 unbundled  network  element.  880  Thus,  in  more  than  80%  of  Bell  Atlantics 
 interconnection  arrangements,  competitive  LECs  have  chosen  to  provide  OS/  DA  for 
 themselves  or  to  obtain  such  service  from  wholesale  providers.  According  to  the  Rural 
 Telephone  Coalition,  rural  incumbent  LECs  have  obtained  OS/  DA  services  from  outside 
 sources  for  many  years  because  they  find  third-  party  sources  to  be  cost-  effective.  881  In 

 876  Bell  Atlantic  Comments  at  32-  36;  Cincinnati  Bell  Comments  at  7;  MGC  Comments  at  31; 
 Ohio  PUC  Comments  at  11-  13. 
 877  See  Cincinnati  Bell  Comments  at  7  (attests  that  the  market  for  OS/  DA  has  been  competitive 
 for  years  because  it  has  purchased  OS/  DA  services  from  competitive  providers  for  that  long);  USTA  UNE 
 Report  at  IV-  1. 

 878  Feist  v.  Rural  Telephone  Service  Co.,  499  U.  S.  340,  111  S.  Ct.  1282  (1991). 

 879  SBC  Reply  Comments  at  22.  See  also  Cincinnati  Bell  Comments  at  7  (reports  awareness  of 
 17  competitive  providers  of  operator  services  and  13  directory  assistance  providers). 
 880  Bell  Atlantic  Comments  at  32.  Bell  Atlantic  also  asserts  that  there  is  an  over-  capacity  in  the 
 OS/  DA  market  that  has  resulted  in  an  increased  competitiveness  within  the  market,  a  trend  it  expects  to 
 continue  for  the  next  two  to  three  years.  Id.  at  32-  33. 

 881  Rural  Telephone  Coalition  Comments  at  10-  11.  See  also  Cincinnati  Bell  Comments  at  7. 
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 addition,  Bell  Atlantic  reports  that  its  wireless  affiliate,  Bell  Atlantic  Mobile,  relies  on  a 
 third-  party  OS/  DA  provider.  882  MGC  advocates  that  OS/  DA  not  be  unbundled  because, 
 in  its  view,  competitive  LECs  can  purchase  OS/  DA  from  a  number  of  vendors  offering 
 cost-  effective  nationwide  alternatives  to  those  of  the  incumbent  LECs.  883 

 448.  Even  requesting  carriers  advocating  the  unbundling  of  operator  and 
 directory  assistance  services  acknowledge  that  there  exists  a  substantial  number  of 
 alternative  providers  of  operator  and  directory  assistance  services.  For  example,  AT&  T, 
 MCI  WorldCom,  and  Sprint  have  already  established  national  operator  services  via  toll-free 
 numbers.  884  McLeod  USA  self-  provisions  nationwide  directory  assistance 
 service.  885  Metro  One  provides  OS/  DA  services  to  ALLTEL  and  GST  Telecom.  886  Cox 
 and  Omnipoint  obtain  OS/  DA  service  from  Teltrust,  and  WinStar  obtains  these  services 
 from  Frontier.  887  Requesting  carriers  may  also  obtain  OS/  DA  services  and  directory 
 listings  from  numerous  wholesale  providers,  including  CenturyTel  Telecommunications, 
 Clifton  Forge,  Consolidated  Communications,  Excell,  Experians  TEC  Group,  Frontier, 
 HebCom,  InfoNXX,  Metro  One,  Quest411  and  Teltrust.  888 

 449.  It  appears  that  this  increasing  availability  of  competitive  OS/  DA  providers 
 coincides  with  a  decrease  in  incumbent  LEC  OS/  DA  call  volumes.  Evidence  in  the 
 record  indicates  that  call  volumes  to  incumbent  OS/  DA  services  have  declined  steadily 
 over  the  past  few  years.  For  example,  SBC  claims  directory  assistance  call  volumes  have 
 decreased  almost  30  percent  since  1995,  and  SBC  operator-  assisted  calls  have  dropped  by 
 over  50  percent  during  the  same  period.  889  Similarly,  BellSouths  operator-  assisted  call 

 882  Bell  Atlantic  Comments  at  34  (stating  that  InfoNXX  provides  OS/  DA  services  for  a  variety 
 of  telecommunications  service  providers,  including  Bell  Atlantics  wireless  subscribers). 
 883  MGC  Comments  at  31.  MGC,  however,  currently  purchases  OS/  DA  services  from  the 
 incumbent  LECs.  Letter  from  Scott  A.  Sarem,  Assistant  Vice  President,  Regulatory,  MGC,  to  Christopher 
 Libertelli,  Common  Carrier  Bureau,  Policy  Division,  Federal  Communications  Commission,  CC  Docket  Nos. 
 96-  98,  95-  185  (filed  August  12,  1999). 

 884  See  Bell  Atlantic  Comments  at  33.  Bell  Atlantic  also  points  out  that  MCI  WorldCom, 
 AT&  T  and  Sprint  offer  operator  services  and  directory  assistance  as  both  wholesale  and  retail  services.  Id. 
 885  USTA  UNE  Report  IV-  9. 

 886  Id.  at  IV-  2,  5. 
 887  Id.  at  IV-  2,  5  (citation  omitted). 
 888  See  Bell  Atlantic  Comments  at  Ex.  4.  In  addition,  various  Internet  sites  provide  national 
 directory  listings  at  no  charge,  including  Alta  Vista  People  Search,  At  Hand,  Big  Yellow,  Bigbook,  555- 
 1212.  com,  InfoSpace,  InfoUSA,  Switchboard.  com,  Smartpages,  WhoWhere  People  Finder,  Worldpages, 
 Yahoo!  People  Finder,  and  Zip2.  See  USTA  UNE  Report  at  IV-  1  to  6. 

 889  SBC  Comments  at  64. 
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 volumes  have  declined  over  60  percent  in  the  past  eight  years.  890  According  to  Bell 
 Atlantic,  it  lost  greater  than  67  percent  of  its  wholesale  directory  assistance  calls  between 
 1994  and  1998.  891  In  fact,  Bell  Atlantic  claims  that  interexchange  carriers  accounted  for 
 over  68%  of  the  operator  services  market  in  1998  and  represented  72%  of  the  wholesale 
 operator  services  market  by  1997.  892  This  trend,  combined  with  the  number  of  alternative 
 operator  services  and  directory  assistance  providers  outside  the  incumbent  LECs 
 networks,  strongly  suggests  that  requesting  carriers  are  not  impaired  without  access  to  the 
 incumbent  LECs  OS/  DA  service.  Significantly,  we  find  that  the  existence  of  multiple 
 alternative  providers  of  OS/  DA  service  in  the  marketplace,  coupled  with  evidence  of 
 competitors  decreasing  reliance  on  incumbent  OS/  DA  services,  demonstrates  that 
 requesting  carriers  ability  to  provide  the  services  it  seeks  to  offer  is  not  materially 
 diminished  without  access  to  the  incumbents  OS/  DA  service  on  an  unbundled  basis. 

 450.  Cost.  In  light  of  the  significant  evidence  of  multiple  third-  party  providers  of 
 OS/  DA,  we  find  unpersuasive  assertions  that  replication  of  OS/  DA  service  facilities  and 
 functionalities  would  involve  substantial  and  material  cost  and  would  delay  competitive 
 entry  into  the  local  market.  893  The  costs  associated  with  self-  provisioning  OS/  DA 
 include:  (1)  the  cost  of  the  facility,  including  employees,  real  estate,  computers;  894  (2)  the 
 cost  of  transporting  traffic  to  the  facilities;  and  (3)  the  cost  of  obtaining  the  underlying 
 subscriber  information  contained  in  OS/  DA  databases.  895  We  acknowledge  that,  in  some 
 situations,  depending  on  the  type  of  OS/  DA  service  a  requesting  carrier  seeks  to  provide, 
 OS/  DA  service  may  be  more  expensive  if  it  is  purchased  from  third-  party  providers  than 
 it  would  be  if  purchased  from  the  incumbent.  We  find,  however,  that  such  differences 
 will  not  materially  diminish  a  requesting  carriers  ability  to  provide  local  exchange  or 
 exchange  access  service. 

 451.  We  are  unpersuaded  by  Coxs  argument  that  OS/  DA  service  should  be 
 unbundled  because  incumbents  enjoy  economies  of  scale  and  scope  that  greatly  reduce 
 the  cost  of  providing  these  services  to  their  own  customers.  896  In  light  of  the  number  of 
 alternative  providers  currently  providing  OS/  DA  service  and  the  competitive  market  that 
 is  developing  for  long  distance  transport,  we  find  this  argument  unconvincing.  We  also 

 890  USTA  UNE  Report  at  IV-  6. 
 891  Bell  Atlantic  Comments  at  34-  35.  See  also  USTA  UNE  Report  at  IV-  6  (citing  that  Bell 
 Atlantic  lost  approximately  60  percent  of  its  wholesale  DA  calls  between  1994  and  1997). 
 892  Bell  Atlantic  Comments  at  33  (citation  omitted). 

 893  See,  e.  g.,  CompTel  Comments  at  46-  47. 
 894  By  use  of  the  term  facility,  we  refer  to  the  real  estate,  employees,  and  computers  used  in 
 the  provision  of  OS/  DA  call  centers. 
 895  See,  e.  g.,  USTA  UNE  Report  at  IV-  9  to  10. 

 896  Cox  Comments  at  32. 
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 find  that  incumbents  do  not  have  any  particular  advantage  in  obtaining  the  facilities 
 needed  to  create  a  call  center,  including  employees,  real  estate  and  computers.  897  In 
 addition,  unlike  many  other  network  elements,  such  as  switching  or  transport,  the  ability 
 to  provide  a  nationwide  OS/  DA  service  does  not  require  large  amounts  of  sunk  and  fixed 
 costs  in  facilities  that  must  be  deployed  ubiquitously  in  order  to  serve  a  broad  customer 
 base.  Rather,  a  requesting  carrier  can  establish  one  call  center  or  a  few  regional  centers  to 
 which  it  can  transport  all  of  the  calls  on  its  network  and  provide  OS/  DA  service 
 nationwide.  898  Moreover,  we  believe  that  a  competitive  LEC  or  a  group  of  competitive 
 LECs  can  achieve  economies  of  scale  by  aggregating  demand  for  OS/  DA  services  over 
 various  regions  by  processing  them  through  a  single  call  center.  Unlike  the  self-provisioning 
 of  switches,  or  other  such  network  elements,  self-  provisioning  a  single 
 OS/  DA  platform  would  not  require  the  competitive  carrier  to  deploy  equipment 
 throughout  the  network  to  ubiquitously  serve  its  customers. 

 452.  Certain  competitive  LECs  assert  that  purchasing  long-  haul  DS1  facilities  to 
 alternative  OS/  DA  call  centers  is  more  expensive  than  purchasing  local  loops  to  access 
 OS/  DA  services  provided  by  incumbent  LECs.  899  In  particular,  Time  Warner  claims  that 
 special  access  rates  to  trunk  its  OS/  DA  calls  to  a  vendors  national  call  center  are 
 approximately  $500,000  a  year.  900  MediaOne  estimates  that  remote  long-  haul  facilities 
 cost  $1500-$  2000  per  month  for  a  DS1  compared  to  local  loops  provisioned  by  the 
 incumbent  LEC  for  about  $500  per  month.  901 

 453.  While,  on  its  face,  the  disparity  between  transport  costs  to  carry  OS/  DA 
 traffic  between  the  competitors  switch  and  a  self-  provisioned  call  center  appears 
 significant,  it  does  not  persuade  us  that  transport  costs  associated  with  self-  provisioning 
 or  purchasing  OS/  DA  from  third-  party  vendors  materially  diminishes  the  ability  of 
 requesting  carriers  to  provide  local  exchange  service.  The  record  reveals  a  number  of 
 alternative  OS/  DA  providers  with  multiple  call  centers  located  throughout  the  country. 
 For  example,  HebCom  operates  five  regional  call  centers,  Excell  operates  six  regional  call 
 centers  and  InfoNXX  operates  four.  902  Teltrust  operates  a  national  OS/  DA  service  with 

 897  See,  e.  g.,  Bell  Atlantic  Comments  35-  36;  GTE  Comments  at  53;  USTA  UNE  Report  at  IV-9 
 to  10. 
 898  We  note  that  whether  the  requesting  carrier  is  purchasing  OS/  DA  from  a  third-  party 
 provider  or  the  incumbent  LEC,  the  costs  would  include  the  cost  of  the  underlying  subscriber  information 
 contained  in  the  OS/  DA  databases  (which  is  generally  subject  to  various  pricing  schemes  and  includes  the  cost 
 of  the  facilities)  and  the  cost  of  transport  to  the  OS/  DA  call  center. 

 899  MediaOne  Comments  at  13. 

 900  Time  Warner  states  that  it  migrated  to  the  incumbent  LECs  OS/  DA  services,  in  part,  to 
 reduce  transport  expenses.  Time  Warner  July  15,  1999  Ex  Parte,  Attachment  at  1. 
 901  See,  e.  g.,  MediaOne  Comments  at  12-  13. 

 902  USTA  UNE  Report  at  IV-  9  to  10.  See  also  Letter  from  John  T.  Lenahan,  Assistant  General 
 Counsel,  Ameritech,  to  Magalie  Roman  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket 
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 several  call  centers.  903  The  availability  of  multiple  locations  of  alternative  providers,  both 
 regional  and  national,  allows  competitors  to  choose  a  service  that  will  be  most  cost-efficient, 
 depending  on  the  area  in  which  it  provides  service.  It  is  not  clear  from  the 
 record  whether  Time  Warner  considered  the  availability  of  these  regional  solutions  to  its 
 OS/  DA  needs  when  making  its  initial  decision  to  transport  calls.  904  Additionally,  the 
 incumbent  LEC  itself  often  maintains  regional  call  centers  that  are  outside  the  local 
 calling  area  of  a  particular  call  center.  Bell  Atlantic,  for  example,  offers  directory 
 assistance  for  most  of  New  England  (Rhode  Island,  Vermont,  New  Hampshire,  Maine 
 and  western  Massachusetts)  out  of  its  Providence,  RI,  Burlington,  VT  and  Portland,  ME 
 offices,  with  all  calls  routed  through  a  switch  in  Manchester,  NH.  905  In  such  cases,  the 
 incumbent  may  also  incur  long-  haul  transport  costs  to  trunk  its  OS/  DA  traffic  to  the  call 
 center. 

 454.  Regardless  of  the  OS/  DA  provider,  the  cost  of  transporting  traffic  to  the  call 
 center  is  factored  into  the  overall  price  of  OS/  DA  services.  Where  a  competitive  LEC 
 obtains  OS/  DA  services  from  an  incumbent  LEC,  even  at  cost-  based  rates,  the  incumbent 
 charges  the  competitive  LEC  for  transport,  either  separately  or  as  part  of  the  total  cost  for 
 OS/  DA  service.  Similarly,  where  a  competitive  LEC  obtains  OS/  DA  from  an  alternative 
 OS/  DA  provider,  the  carrier  or  OS/  DA  provider  must  pay  for  transport  to  the  call  center. 
 It  is  notable  that  rural  incumbent  LECs,  which  arguably  have  to  haul  traffic  the  furthest, 
 find  third-  party  OS/  DA  sources  cost-  effective.  906  The  fact  that  rural  LECs  and  a 
 significant  number  of  competitive  LECs  and  interexchange  carriers  presently  either  self-provision 
 these  services  or  rely  on  wholesale  providers  for  their  OS/  DA  services 
 constitutes  substantial  evidence  that  the  cost  of  transport  does  not  materially  diminish  the 
 ability  to  provide  service. 

 455.  Because  OS/  DA  databases  are  available  on  a  value  added  and 
 nondiscriminatory  basis  under  section  251(  b)(  3)  of  the  Act,  a  competing  carrier  need  only 
 provide  transport  to  an  incumbents  LECs  database.  We  acknowledge  that  self-provisioning 
 OS/  DA  service  may  require  competing  carriers  to  incur  substantial  start-  up 
 costs  that  may  represent  a  high  percentage  of  overall  expenses  until  call  volumes  and 
 customer  penetration  levels  rise.  907  We  find,  however  that  the  costs  of  self-  provisioning 
 OS/  DA  do  not  impair  a  requesting  carriers  ability  to  provide  service  because  in  addition 

 No.  96-  98,  at  2  (filed  July  30,  1999)  (Ameritech  July  30  Ex  Parte). 
 903  Teltrust  Comments  at  3-  4. 

 904  See,  e.  g.,  Ameritech  July  30,  1999  Ex  Parte  at  2-  3. 
 905  Letter  from  Dee  May,  Director  Federal  Regulatory  Affairs,  Bell  Atlantic,  to  Magalie 
 Roman  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98,  Attachments  (filed 
 August  30,  1999). 

 906  See  Rural  Telephone  Coalition  Comments  at  10-  11 

 907  See  Qwest  Reply  Comments  at  83-  85. 
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 to  self-  provisioning,  there  are  multiple  alternatives  available  in  the  market.  908  In  addition, 
 regional  or  nationwide  OS/  DA  call  centers  enable  competitive  carriers  to  aggregate  call 
 volume  to  reach  sufficient  economies  of  scale.  We  note  too  that  carriers  are  not  limited  to 
 self-  provisioning.  Carriers  may  choose  instead  to  use  alternative  OS/  DA  providers, 
 reducing  the  fixed  costs  of  provisioning  OS/  DA  services.  Moreover,  competitive  carriers 
 who  wish  to  obtain  OS/  DA  from  the  incumbent  may  do  so  consistent  with  the  incumbent 
 LECs  nondiscriminatory  access  obligations  under  section  251(  b)(  3).  909 

 456.  Quality.  We  find  that  the  functionality  of  third-  party  supplied  OS/  DA  is 
 sufficiently  equivalent  to  that  of  the  incumbents  services  such  that  a  requesting  carriers 
 ability  to  provide  the  services  it  seeks  to  offer  is  not  impaired  without  access  to  the 
 incumbents  OS/  DA  service.  Although  we  acknowledge  that  differences  in  quality  may 
 exist,  we  find  that,  in  light  of  the  full  scope  of  OS/  DA  options  available  to  requesting 
 carriers,  the  differences  identified  in  this  proceeding  do  not  materially  diminish  a 
 requesting  carriers  ability  to  offer  local  exchange  or  exchange  access  service. 

 457.  Specifically,  we  find  that  lack  of  unbundled  OS/  DA  service  from  the 
 incumbent  LEC  does  not  materially  diminish  the  ability  of  requesting  carriers  to  provide 
 the  service  they  seek  to  offer;  several  carriers  have  successfully  self-  provisioned  OS/  DA, 
 while  other  carriers  rely  upon  alternative  providers  of  OS/  DA  services.  Requesting 
 carriers,  however,  complain  that  the  alternative  sources  for  operator  services  and  directory 
 assistance  are  inferior  because  the  information  provided  to  customers  is  not  as  complete, 
 and  is  not  updated  as  frequently,  as  incumbent  LEC  databases.  910  According  to  several 
 commenters,  incumbent  LECs  update  their  directory  listing  databases  daily,  and  often  on 
 a  real-  time  basis,  as  they  complete  service  order  processes.  911  In  contrast,  alternative 
 providers  may  obtain  their  data  from  sources  such  as  yellow  pages  databases,  scanned 
 white  page  listings,  postal  service  change  of  address  forms,  motor  vehicle  registration 
 records,  and  voter  registration  records,  which  are  not  updated  as  often.  912  Requesting 
 carriers,  however,  have  the  ability,  under  section  251(  b)(  3),  to  obtain  nondiscriminatory 
 access  to  the  incumbent  LECs,  or  any  other  competing  LECs,  databases  used  in  the 

 908  See  supra  Section  (IV)(  B)(  4). 
 909  Section  251(  b)(  3)  requires  incumbent  LECs  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  service,  directory  assistance,  and  directory 
 listing,  with  no  unreasonable  dialing  delays.  47  U.  S.  C.    251(  b)(  3). 

 910  See,  e.  g.,  AT&  T  Comments  at  130;  Allegiance  Comments  at  23;  Cox  Comments  at  33; 
 MCI  WorldCom  Comments  at  72;  MediaOne  Comments  at  12;  Metro  One  Comments  at  3-  4. 
 911  AT&  T  Comments  at  130;  AT&  T  Reply  Comments  at  140-  141.  See  also  Cox  Comments  at 
 33. 
 912  AT&  T  Comments  at  130-  131;  Metro  One  Comments  at  3-  4.  See  also  Cox  Comments  at 
 33. 
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 provision  of  OS/  DA.  913  Where  competitive  LECs  may  obtain  OS/  DA  information  and 
 services,  directly  or  indirectly,  from  incumbent  LEC  sources,  we  do  not  find  cognizable 
 differences  in  the  quality  of  that  information  or  services.  The  record  indicates  that 
 carriers  that  are  entitled  to  access  to  incumbent  LEC  database  information  and  updates, 
 such  as  competitive  LECs  and  interexchange  carriers  like  MCI  WorldCom,  Sprint  and 
 AT&  T,  offer  directory  assistance  on  a  wholesale  basis  to  other  competitive  LECs.  914 
 Additionally,  we  note  that  third-  party  OS/  DA  providers  are  often  able  to  purchase 
 incumbent  LEC  OS/  DA  database  information  and  updates.  915  We  are  therefore  not 
 persuaded  that  lack  of  unbundled  access  to  incumbent  LEC  databases  used  in  the 
 provision  of  OS/  DA  necessarily  results  in  quality  differences  that  would  materially 
 diminish  a  requesting  carriers  ability  to  offer  service. 

 458.  MediaOne  claims  that  operators  of  alternative  OS/  DA  providers  may  be 
 unfamiliar  with  the  names  of  the  local  communities  because  their  call  centers  are  often 
 distantly  located.  916  We  do  not  believe  that  this  constitutes  a  material  difference  in 
 quality.  First,  we  note  that  MediaOne  does  not  explain  how  an  operators  proximity  to 
 the  customer  results  in  a  difference  in  OS/  DA  service  quality.  Search  strategies  used  by 
 OS/  DA  operators  can  be  based  on  fuzzy  logic  queries  and  phonetic  spellings  that  enable 
 operators  to  retrieve  information  without  the  exact  spelling  of,  or  familiarity  with,  a  place 
 or  proper  name.  For  local  directory  assistance,  alternative  providers  also  train  their  call 
 center  operators  to  be  familiar  with  the  localities  and  any  necessary  variations  on  word 
 pronunciations.  917  In  addition,  incumbents  often  maintain  remote  or  regional  call  centers 

 913  Teltrust  asserts  that  it  has  been  unable  to  obtain  nondiscriminatory  access  to  incumbent 
 LEC  database  information  because  it  is  not  a  telecommunications  carrier.  Teltrust  claims  that  there  are 
 compelling  reasons  why  alternative  OS/  DA  providers  are  currently  precluded  from  competing  effectively 
 against  incumbent  LECs,  including  blocked  access  to  incumbent  LEC  databases  and  high  tariff  rates.  Teltrust 
 urges  the  Commission  to  clarify  our  access  obligations  to  require  incumbent  LECs  to  make  their  OS/  DA 
 databases  available  to  third  parties  that  provide  OS/  DA  as  outsourced  functions  for  requesting 
 telecommunications  carriers.  Teltrust  Comments  at  9.  We  do  not  have  a  full  record  on  this  issue  in  this 
 docket  and  therefore  decline  to  address  Teltrusts  arguments  at  this  time.  We  recently  sought  comment  on 
 whether  the  Commission  can  and  should  grant  nondiscriminatory  access  to  LEC  directory  assistance 
 databases  to  those  directory  assistance  providers  that  are  not  themselves  exchange  service  providers  or  toll 
 service  providers.  Directory  Listing  Information  Order  at  paras.  155-  156.  Accordingly,  we  will  address  these 
 issues  in  that  proceeding. 

 914  Bell  Atlantic  Comments  at  33-  34  and  Exhibit  4. 

 915  See,  e.  g.,  Letter  from  Lincoln  E.  Brown,  Director-  Federal  Regulatory,  SBC,  to  Magalie 
 Roman  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98,  at  2  (filed  July  26, 
 1999);  Letter  from  Loretta  Garcia,  Counsel  for  Teltrust,  to  Magalie  Roman  Salas,  Secretary,  Federal 
 Communications  Commission,  CC  Docket  No.  96-  98  at  1  (Teltrust  obtains  most  of  its  OS/  DA  database 
 information  from  Experian.  Teltrust  believes  that  Experian  buys  its  data  from  most  of  the  RBOCs.)  (filed 
 August  12,  1999)  (Teltrust  August  12,  1999  Ex  Parte). 

 916  MediaOne  Comments  at  12.  See  also  Allegiance  Comments  at  24  (local  operators  may 
 have  language  skills  that  are  useful  in  serving  ethnic  communities  in  their  service  areas). 
 917  Teltrust  August  12,  1999  Ex  Parte  at  2. 
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 that  are  located  outside  the  local  calling  area  of  a  large  percentage  of  the  incumbent 
 LECs  own  customers  918  Thus,  the  incumbents  operators  may  have  no  more  familiarity 
 with  the  names  of  particular  locales  in  a  geographic  area  than  do  the  operators  of  a 
 competitor.  Thus,  if  a  competitor  wants  to  ensure  that  the  operators  it  is  utilizing  are 
 trained  for  a  particular  area,  it  can  best  achieve  this  result  by  self-  provisioning  OS/  DA 
 service  and  training  its  own  operators.  Alternatively,  a  competitive  carrier  may  also 
 select  an  alternative  OS/  DA  provider  with  a  call  center  closer  to  the  carriers  customer 
 base  than  the  incumbents  call  center  or  contract  with  the  provider  for  special  operator 
 training  to  cover  the  names  of  locales  within  the  specific  geographic  markets  the 
 competitive  carrier  serves.  We  are  satisfied  that  operator-  training  disparities  between 
 vendor-  provided  operators  and  those  of  the  incumbent  LEC  do  not  materially  diminish  a 
 requesting  carriers  ability  to  offer  service. 

 459.  We  reject  arguments  that  we  should  unbundle  access  to  the  incumbents 
 OS/  DA  service  because  national  operator  services  have  limited  ability  to  connect  to  local 
 public  safety  answering  points  (PSAPs)  in  emergency  situations.  Specifically,  certain 
 commenters  argue  that  in  such  situations,  national  operator  services  usually  advise  the 
 caller  to  hang-  up  and  dial  911.  919  While  issues  of  public  safety  are  of  paramount 
 concern,  the  standard  by  which  we  decide  to  unbundle  a  non-  proprietary  network  element 
 focuses  on  whether  a  carriers  ability  to  provide  the  services  that  it  seeks  to  offer  is 
 impaired  by  lack  of  access  to  that  element.  920  Accordingly,  we  look  to  whether  the  ability 
 or  inability  to  connect  OS/  DA  calls  to  a  PSAP  impairs  the  ability  of  a  carrier  to  offer  local 
 exchange  services.  We  conclude  that  it  does  not. 

 460.  Although  subscribers  may  mistakenly  dial  OS/  DA  to  reach  emergency 
 assistance,  the  ability  to  connect  a  misdirected  call  to  a  PSAP  is  unlikely  to  result  in  a 
 competitive  advantage  in  the  provision  of  local  exchange  service.  At  least  one  third-  party 
 provider  of  OS/  DA  service,  Teltrust,  states  that  it  requires  its  customers  to  provide  the 
 emergency  number  of  the  PSAP  for  the  originating  caller  so  that  it  knows  which  agency 
 to  call.  921  In  cases  where  it  receives  an  incoming  call  from  an  800  number  and  does  not 
 have  an  emergency  number  associated  with  the  calling  partys  location,  the  operator  can 
 call  emergency  services  if  the  calling  party  can  provide  the  name  of  the  location.  Should 
 a  competitive  carrier  decide  to  obtain  OS/  DA  services  for  its  customers  from  the 
 incumbent  on  a  nondiscriminatory  basis,  under  section  251(  b)(  3),  it  will  be  able  to 
 connect  its  customers  to  the  PSAP  in  the  same  manner  as  the  incumbent.  Moreover,  it  is 
 not  clear  whether  all  incumbent  LEC  OS/  DA  call  centers,  especially  those  with  remote 

 918  For  example,  Bell  Atlantic  provides  directory  assistance  for  New  York  from  a  call  center 
 located  in  Massachusetts.  Bell  Atlantic  August  30,  1999  Ex  Parte  Attachment.  See  also,  Cincinnati  Bell 
 Comments  at  7  (  Neither  operator  services  nor  directory  assistance  have  a  geographically  distinct  market). 

 919  Cox  Comments  at  33.  See  also  Teligent  Reply  Comments  at  6. 

 920  See  47  U.  S.  C.    251(  d)(  2)(  B). 
 921  Teltrust  August  12,  1999  Ex  Parte  at  2. 
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 OS/  DA  call  centers,  have  the  ability  to  connect  their  own  customers  to  every  PSAP.  922 
 Thus,  even  if  a  requesting  carrier  had  unbundled  access  to  the  incumbents  OS/  DA 
 service,  its  subscribers  may  receive  instructions  from  the  incumbents  operator  that  do  not 
 measurably  differ  from  the  instructions  it  would  receive  from  an  alternative  providers 
 operator.  Indeed  the  only  way  in  which  a  competitor  can  retain  control  over  the  quality  of 
 OS/  DA  service  is  to  self-  provide  its  own  OS/  DA  call  center  and  train  its  own  operators. 
 By  self-  providing  its  own  call  centers  it  can  require  its  customers  to  provide  it  with 
 detailed  emergency  information  and  populate  its  database  accordingly. 

 461.  We  find  insufficient  evidence  in  the  record  to  suggest  that,  based  on 
 performance  measurements,  there  is  a  material  difference  in  the  timelines  with  which  an 
 incumbents  operator,  compared  to  third-  party  operators,  can  respond  to  an  inquiry. 
 MediaOne  asserts  that  the  average  speed  to  answer  OS/  DA  calls  for  competitors  is  15-  18 
 seconds,  while  the  incumbent  commits  to  answering  calls  to  its  OS/  DA  platform  in  less 
 than  six  seconds.  923  The  data  MediaOne  provides,  while  helpful,  is  inconclusive. 
 Specifically,  the  data,  which  consists  of  the  performance  of  one  incumbent  and  a  few 
 competitors,  provides  too  small  a  sample  size  for  us  to  extrapolate  these  results  over  the 
 entire  OS/  DA  industry  and  conclude  that  competitive  carriers  ability  to  provide  service  is 
 impaired.  While  we  acknowledge  that  there  are  likely  to  be  some  measurable  differences 
 among  OS/  DA  providers  for  particular  OS/  DA  components,  we  do  not  find  sufficient 
 record  evidence  to  conclude  that  a  requesting  carrier  is  impaired  without  access  to  the 
 incumbents  OS/  DA  service.  Moreover,  applying  the  unbundling  standard  we  set  forth 
 above,  the  question  of  whether  lack  of  access  to  the  incumbents  network  element 
 materially  diminishes  a  requesting  carriers  ability  to  provide  the  services  it  seeks  to  offer 
 is  determined  based  on  the  totality  of  the  circumstances.  Thus,  while  relevant,  we  cannot 
 say  that  the  proffered  average  speed  to  answer  calls,  or  other  OS/  DA  quality  issues, 
 contribute  significantly  to  a  competitors  overall  ability  to  provide  local  exchange  and 
 exchange  access  service. 

 462.  Timeliness.  We  do  not  find  any  impediments  associated  with  self-provisioning 
 OS/  DA  services  that  would  delay  a  requesting  carriers  entry  into  the  local 
 exchange  or  exchange  access  market.  Although  AT&  T  identifies  delays  associated  with 
 implementing  the  customized  routing  necessary  to  use  alternative  OS/  DA  providers,  924 

 922  AT&  T  argues  that  competitive  LECs  need  updated  and  accurate  information  on  PSAPs  on 
 the  same  terms  that  incumbent  LECs  provide  such  updates  to  themselves.  AT&  T  Comments  at  129-  130.  The 
 obligation  of  a  LEC  to  provide  such  listings  and  updates  to  competing  providers  in  readily  accessible  formats 
 in  a  timely  fashion  upon  request,  is  already  contained  in  rule  51.217(  c)(  3)(  ii),  implementing  the 
 nondiscriminatory  access  requirements  in  section  251(  b)(  3).  47  C.  F.  R.    51.217(  c)(  3)(  ii);  47  U.  S.  C.   
 251(  b)(  3). 

 923  MediaOne  Comments  at  12. 

 924  AT&  T  Comments  at  126-  28.  AT&  T  reports  that  it  took  two  years  in  Texas  and  one  year  in 
 Connecticut  to  resolve  customize  routing  issues.  AT&  T  claims  that  customized  routing  solutions,  either 
 through  AIN  or  line  class  codes,  can  take  up  to  two  years  to  implement.  According  to  AT&  T,  either  approach 
 requires  the  entrant  and  the  ILEC  to:  (1)  negotiate  the  technical  details;  (2)  design  a  test  plan;  (3)  deploy  the 
 facilities  and  perform  the  necessary  changes  in  switch  software;  (4)  perform  the  testing;  and  (5)  resolve 
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 the  record  indicates  that  AT&  Ts  customized  routing  issues  have  been  resolved.  925  We 
 are  unaware  of  any  ongoing  problems  that  create  material  delays  when  competing  carriers 
 purchase  OS/  DA  service  from  alternative  providers.  We  agree  that  customized  routing  is 
 necessary  to  access  alternative  sources  of  OS/  DA  for  competitors  not  deploying  their  own 
 switches.  926  Commenters  state  that  a  key  component  of  providing  carriers  with  a  choice 
 of  competitive  OS/  DA  suppliers  is  the  availability  of  line  class  codes  in  the  unbundled 
 switching  element.  927  Lack  of  a  customized  routing  solution  that  enables  competitors  to 
 route  traffic  to  alternative  OS/  DA  providers  would  therefore  effectively  preclude 
 competitive  LECs  from  using  such  alternative  providers.  928  Thus,  if  an  incumbent  LEC 
 does  not  provide  customized  routing  to  requesting  carriers  that  use  the  incumbents 
 unbundled  switching  element,  it  must  provide  unbundled  access  to  its  OS/  DA  service. 

 463.  Impact  on  Network  Operations.  We  conclude  that  the  interoperability 
 issues  identified  in  the  record  do  not  materially  diminish  a  requesting  carriers  ability  to 
 provide  local  exchange  or  exchange  access  service.  In  particular,  MCI  WorldCom 
 complains  that  incumbent  LECs  should  implement  Feature  Group  D  signaling,  instead  of 
 outdated  legacy  signaling  protocol.  929  According  to  MCI  WorldCom,  to  use  the 
 incumbent  LECs  signaling  protocol  instead  of  Feature  Group  D,  most  competitive  LECs 
 would  have  to  either  deploy  new  customized  operator  platforms  or  modify  their  existing 
 platforms,  both  of  which  impose  substantial  costs.  930  SBC  responds  that  the  customized 
 routing  of  Feature  Group  D  is  not  technically  feasible  in  all  end-  office  switches.  931 

 problems  encountered  in  the  test.  The  solution  must  then  be  deployed  at  all  switches  where  customized 
 routing  is  necessary.  Until  customized  routing  solutions  have  been  tested  and  broadly  deployed,  AT&  T  urges 
 the  Commission  to  require  incumbent  LECs  to  unbundle  their  OS/  DA  services.  Id. 

 925  Letter  from  Kathleen  B.  Levitz,  Vice  President-  Federal  Regulatory,  BellSouth,  to  Jake 
 Jennings,  Policy  and  Program  Planning  Division,  Common  Carrier  Bureau,  Federal  Communications 
 Commission,  CC  Docket  No.  96-  98  (filed  July  26,  1999)  (BellSouth  July  26,  1999  Ex  Parte)  (Georgia  from 
 June,  5,  1997  to  September  14,  1997;  South  Florida  from  August  21,  1997  to  December  19,  1997;  Tennessee 
 from  August  21,  1997  to  week  of  December  8,  1997). 

 926  The  Commission  has  required  incumbent  LECs  to  implement  customized  routing  where  it 
 is  technically  feasible.  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15709,  15773,  paras.  418, 
 536. 

 927  See,  e.  g.,  Qwest  Comments  at  87-  88. 

 928  CompTel  Reply  Comments  at  24. 
 929  MCI  WorldCom  Comments  at  73.  MCI  WorldCom  asserts  that  Feature  Group  D  signaling 
 protocol  is  already  being  used  to  route  traffic  between  the  ILEC  switch  and  other  carriers.  MCI  WorldCom 
 adds  that  it  would  be  extremely  costly  to  accommodate  mass  signaling  protocol,  and  that  the  expense  is 
 unnecessary  because  another  protocol  is  available  to  meet  competitive  LECs  needs.  Id.  See  also  CompTel 
 Reply  Comments  at  24. 

 930  Qwest  Reply  Comments  at  84. 

 931  SBC  Reply  Comments  at  26. 
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 BellSouth,  however,  offers  a  technical  solution  to  MCI  WorldComs  concern  in  some  of 
 its  offices  and  states  its  willingness  to  deploy  these  solutions  throughout  its  network.  932 
 In  instances  where  the  requesting  carrier  obtains  the  unbundled  switching  element  from 
 the  incumbent,  the  lack  of  customized  routing  effectively  precludes  requesting  carriers 
 from  using  alternative  OS/  DA  providers  and,  consequently,  would  materially  diminish  the 
 requesting  carriers  ability  to  provide  the  services  it  seeks  to  offer.  Thus,  we  require 
 incumbent  LECs,  to  the  extent  they  have  not  accommodated  technologies  used  for 
 customized  routing,  to  offer  OS/  DA  as  an  unbundled  network  element. 

 464.  Finally,  we  find  that  the  ability  to  obtain  nondiscriminatory  access  to 
 operator  services  and  directory  assistance  under  section  251(  b)(  3)  significantly  mitigates 
 any  potential  impairment  a  requesting  carrier  may  experience  if  denied  access  to  the 
 incumbents  OS/  DA  services  as  an  unbundled  network  element.  933  There  are  a 
 substantial  number  of  regional  and  national  alternative  providers  of  OS/  DA  service  that 
 are  serving  a  variety  of  customers,  including  some  incumbent  LECs  and  IXCs.  We  do 
 not  find  differences  in  cost,  quality,  timeliness,  and  ubiquity  that  would  lead  to  the 
 conclusion  that  requesting  carriers  ability  to  provide  local  exchange  and  exchange  access 
 services  would  be  materially  diminished  without  access  to  the  incumbents  OS/  DA 
 service  as  an  unbundled  network  element.  Rather,  we  find  that  these  alternative  sources 
 of  OS/  DA  service  are  available  as  a  practical,  economic,  and  operational  matter. 
 Moreover,  we  believe  that  not  requiring  that  incumbent  LECs  to  unbundle  OS/  DA  service 
 is  consistent  with  the  goals  of  the  Act,  because  it  will  reduce  competitors  reliance  on  the 
 incumbents  network  and  create  new  opportunities  for  competitors  of  OS/  DA  service  to 
 differentiate  their  services  through  increased  quality  and  decreased  prices. 

 VI.  MISCELLANEOUS  ISSUES 
 A.  Section  271-  Related  Issues 

 1.  Background 
 465.  Section  271(  c)(  2)(  B)  enumerates  a  competitive  checklist  that  BOCs  must 
 comply  with  to  obtain  interLATA  authority.  934  In  particular,  prior  to  obtaining  authority 
 to  provide  long  distance  service,  section  271(  c)(  2)(  B)  requires  BOCs  to  demonstrate, 
 among  other  things,  that  they  are  providing  or  generally  offering  to  requesting  carriers 

 932  BellSouth  July  26,  1999  Ex  Parte  (explaining  the  technical  solutions  used  to  resolve  the 
 compatibility  issues  surrounding  MCI  WorldComs  use  of  Feature  Group  D  signaling). 
 933  MediaOne  supports  the  Commissions  decision  not  to  require  incumbents  to  unbundle 
 OS/  DA,  provided  the  Commission  reaffirms  the  requirement  for  nondiscriminatory  access  under  section 
 251(  b)(  3),  including  the  requirement  that  a  LEC  not  discriminate  in  favor  of  its  own  use  of  these  services. 
 Letter  from  Tina  S.  Pyle,  Executive  Director,  Public  Policy,  MediaOne,  to  Jake  Jennings,  Policy  and  Program 
 Planning  Division,  Common  Carrier  Bureau,  Federal  Communications  Commission,  CC  Docket  No.  96-  98 
 (filed  August  12,  1999). 

 934  47  U.  S.  C.    271(  c)(  2)(  B). 
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 the  following  network  elements:  local  loops,  transport,  switching,  databases  and 
 signaling.  935 

 466.  In  the  Notice,  we  sought  comment  on  the  interplay  between  the  unbundling 
 obligations  of  section  251(  c),  and  the  competitive  checklist  network  elements  of  section 
 271.  936  Among  other  things,  we  sought  comment  on  what  pricing  standards  would  apply 
 if  a  checklist  network  element  were  no  longer  required  to  be  unbundled  pursuant  to 
 section  251(  c)(  3),  after  considering  the  necessary  and  impair  standards  of  section 
 251(  d)(  2).  937 

 467.  Certain  incumbents  argue  that  if  a  network  element  on  the  checklist  no 
 longer  needs  to  be  unbundled,  the  item  need  not  be  provided  to  requesting  carriers  at 
 prices  predicated  on  our  forward  looking  costs.  938  Other  commenters  counter  that  the 
 inclusion  of  network  elements  on  the  checklist  is  presumptive  evidence  that  these 
 elements  must  be  unbundled,  939  and  thus,  provided  to  requesting  carriers  at  prices 
 predicated  on  our  forward  looking  costs. 

 2.  Discussion 
 468.  In  this  Order,  we  conclude  that  circuit  switching  and  shared  transport  need 
 not  be  unbundled  in  certain  circumstances.  940  Nonetheless,  providing  access  and 
 interconnection  to  these  elements  remains  an  obligation  for  BOCs  seeking  long  distance 
 approval.  We  therefore  must  decide  what  prices,  terms,  and  conditions  apply  to  these 
 elements  that  no  longer  need  to  be  unbundled.  941 

 469.  We  conclude  that  the  prices,  terms,  and  conditions  set  forth  under  sections 
 251  and  252  do  not  presumptively  apply  to  the  network  elements  on  the  competitive 
 checklist  of  section  271. 

 470.  The  Commission  must  consider  unbundling  network  elements  in 
 accordance  with  section  251(  c)(  3),  while  according  due  deference  to  the  necessary  and 
 impair  standards  articulated  in  section  251(  d)(  2),  and  by  the  Supreme  Court.  The 

 935  Id. 
 936  Notice  at  para.  41. 
 937  Id. 
 938  See  Ameritech  Comments  at  52-  53;  Ameritech  Joint  Reply  Comments  at  23. 
 939  MCI  WorldCom  Comments  at  23;  Qwest  Comments  at  56-  57;  Sprint  Comments  at  27. 
 940  See  supra  Sections  (V)(  D)(  1)  and  (V)(  E)(  2)(  b). 
 941  Network  elements  unbundled  pursuant  to  section  251(  c)  must  comply  with  the  pricing 
 standards  of  section  252(  d)(  1).  47  U.  S.  C.    251(  c)(  3). 
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 Commission  must  evaluate  the  network  elements  on  the  competitive  checklist  under  the 
 auspices  of  section  271.  If  a  checklist  network  element  is  unbundled,  the  applicable 
 prices,  terms  and  conditions  are  determined  in  accordance  with  sections  251  and  252.  If  a 
 checklist  network  element  does  not  satisfy  the  unbundling  standards  in  section  251(  d)(  2), 
 the  applicable  prices,  terms  and  conditions  for  that  element  are  determined  in  accordance 
 with  sections  201(  b)  and  202(  a). 

 471.  Although  section  271  does  not  specify  that  the  checklist  network  elements 
 must  be  provided  in  accordance  with  section  251(  c)(  3),  the  Commission  nonetheless  has 
 independent  authority  to  ensure  that  items  (iv)-(  vi)  of  the  checklist  are  provided  on  a 
 reasonable,  nondiscriminatory  basis.  In  Iowa  Utils.  Bd.,  the  Supreme  Court  affirmed  the 
 Commissions  regulatory  authority  over  the  pricing  of  section  251  unbundled  network 
 elements,  rejecting  the  claim  that  this  matter  is  reserved  to  the  states.  942  In  reaching  this 
 conclusion,  the  Court  held  that  the  Commissions  pricing  authority  resides  broadly  in 
 section  201(  b),  which  grants  the  agency  authority  to  prescribe  rules  and  regulations  as 
 may  be  necessary  in  the  public  interest  to  carry  out  the  provisions  of  this  Act.  943 

 472.  Section  201(  b)  provides  a  basis  for  the  Commission  to  scrutinize  the  prices, 
 terms,  and  conditions  under  which  the  checklist  network  elements  are  offered.  Section 
 201(  b)  states  that  [  a]  ll  charges,  practices,  classifications,  and  regulations  for  and  in 
 connection  with  such  communication  services,  shall  be  just  and  reasonable,  and  any  such 
 charge,  practice,  classification,  or  regulation  that  is  unjust  or  unreasonable  is  hereby 
 declared  unlawful.  944  Section  202(  a)  mandates  that  [  i]  t  shall  be  unlawful  for  any 
 common  carrier  to  make  any  unjust  or  unreasonable  discrimination  in  charges,  practices, 
 classifications,  regulations,  facilities,  or  services  for  or  in  connection  with  like 
 communication  service.  945  In  addition,  checklist  items  (vii)  and  (x)  explicitly  require 
 nondiscriminatory  access  to  OS/  DA,  databases,  and  signaling.  946 

 473.  In  circumstances  where  a  checklist  network  element  is  no  longer  unbundled, 
 we  have  determined  that  a  competitor  is  not  impaired  in  its  ability  to  offer  services 
 without  access  to  that  element.  Such  a  finding  in  the  case  of  switching  for  large  volume 
 customers  is  predicated  in  large  part  upon  the  fact  that  competitors  can  acquire  switching 
 in  the  marketplace  at  a  price  set  by  the  marketplace.  947  Under  these  circumstances,  it 
 would  be  counterproductive  to  mandate  that  the  incumbent  offers  the  element  at  forward- 

 942  Iowa  Utils.  Bd.,  119  S.  Ct.  at  732. 
 943  Id. 
 944  47  U.  S.  C.    201(  b). 
 945  47  U.  S.  C.    202(  a). 
 946  47  U.  S.  C.    271(  c)(  2)(  B). 
 947  See  supra  Section  (V)(  D)(  1)(  b). 
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 looking  prices.  Rather,  the  market  price  should  prevail,  as  opposed  to  a  regulated  rate 
 which,  at  best,  is  designed  to  reflect  the  pricing  of  a  competitive  market.  948 

 B.  Combinations  of  Unbundled  Loops  and  Transport  Network  Elements 

 474.  A  number  of  parties  identify  issues  surrounding  combinations  of  loop  and 
 transport  network  elements.  In  particular,  several  competitive  LECs  argue  that  the 
 Commission  should  identify  the  enhanced  extended  link  (EEL)  as  a  separate  network 
 element  or  require  incumbent  LECs  to  provide  requesting  carriers  access  to  loop  and 
 transport  elements  in  combination,  even  if  those  elements  are  not  currently  combined.  949 
 Incumbent  LECs  argue  that,  for  loop  transport  elements  that  are  currently  combined 
 requesting  carriers  should  not  be  allowed  to  substitute  such  combinations  of  elements  for 
 existing,  regulated  special  access  services.  950  According  to  incumbent  LECs,  allowing 
 this  substitution  would  either  force  them  to  increase  local  rates  or  undermine  universal 
 service.  951 

 1.  Enhanced  Extended  Link 
 a.  Background 

 475.  In  the  Local  Competition  Order,  the  Commission  identified  loops  and 
 transport  as  network  elements  subject  to  the  unbundling  obligation  of  section  251(  c)(  3). 
 In  rule  51.315(  b),  the  Commission  prohibited  incumbents  from  separating  network 
 elements  that  are  currently  combined.  952  In  addition,  the  Commission  adopted  rules 
 51.315(  c)    (f)  requiring  incumbent  LECs  to  combine  unbundled  network  elements  in  any 
 manner,  even  if  those  elements  are  not  currently  combined.  953  The  Eighth  Circuit 

 948  See  Ameritech  Joint  Reply  Comments  at  23. 
 949  ALTS  Comments  at  62-  67;  CompTel  Comments  at  47-  53;  e.  spire  Joint  Comments  at  28; 
 Level  3  Comments  at  20;  McLeod  Comments  at  8. 
 950  Bell  Atlantic  Reply  Comments  at  26;  SBC  Reply  Comments  at  28. 

 951  Letter  from  William  B.  Barfield,  Associate  General  Counsel,  BellSouth  Corporation,  to 
 Lawrence  E.  Strickling,  Chief,  Common  Carrier  Bureau,  Federal  Communications  Commission,  CC  Docket 
 No.  96-  98,  at  1,6  (filed  Aug.  9,  1999)(  BellSouth  Aug.  9,  1999  Ex  Parte);  Letter  from  Susanne  Guyer, 
 Assistant  Vice  President,  Federal  Regulatory,  Bell  Atlantic,  to  Magalie  R.  Salas,  Secretary,  Federal 
 Communications  Commission,  CC  Docket  No.  96-  98  (filed  Aug.  25,  1999);  Letter  from  J.  Richard  Teel,  Vice 
 President,  BellSouth,  to  Lawrence  E.  Strickling,  Chief,  Common  Carrier  Bureau,  Federal  Communications 
 Commission,  CC  Docket  96-  98,  at  2  (filed  Sept.  8,  1999)(  BellSouth  Sept.  8,  1999  Ex  Parte).  See  also  Letter 
 from  Kathleen  B.  Levitz,  Vice  President-  Federal  Regulatory,  BellSouth  Corporation,  to  Magalie  R.  Salas, 
 Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  98,  at  4  (filed  August  26,  1999). 

 952  Rule  51.315(  b)  states:  Except  upon  request,  an  incumbent  LEC  shall  not  separate 
 requested  network  elements  that  the  incumbent  LEC  currently  combines. 
 953  Rule  51.315(  c)-(  f)  states: 

 (c)  Upon  request,  an  incumbent  LEC  shall  perform  the  functions  necessary  to  combine 
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 overturned  a  number  of  the  Commissions  rules,  including  rules  51.315(  b)    (f).  954  Rule 
 51.315(  b),  however,  was  reinstated  by  the  Supreme  Court.  955  In  light  of  the  reasoning  set 
 forth  in  the  Courts  opinion,  the  Commission  asked  the  Eighth  Circuit  to  reinstate  rules 
 51.315(  c)    (f).  956 

 476.  In  the  Notice,  we  sought  comment  on  whether  we  should  identify  additional 
 network  elements  beyond  the  seven  listed  in  the  Local  Competition  First  Report  and 
 Order.  957  We  also  sought  comment  on  whether,  in  light  of  the  Supreme  Courts  decision, 
 we  could  require  incumbent  LECs  to  combine  network  elements  that  are  not  currently 
 combined,  such  as  an  unbundled  loop  with  unbundled  transport.  958 

 477.  In  response  to  the  Notice,  a  number  of  parties,  including  competitive  LECs 
 and  state  commissions,  argue  that  we  should  either  identify  a  new  network  element 
 comprised  of  unbundled  loop,  multiplexing/  concentrating  equipment,  and  dedicated 
 transport  (the  enhanced  extended  link  or  EEL)  or,  alternatively,  reinstate  rules 
 51.315(  c)    (f)  which  require  incumbent  LECs  to  provide  unbundled  loop  and  transport 

 unbundled  network  elements  in  any  manner,  even  if  those  elements  are  not  ordinarily  combined  in 
 the  incumbent  LECs  network,  provided  that  such  combination  is: 

 (1)  Technically  feasible;  and 
 (2)  Would  not  impair  the  ability  of  other  carriers  to  obtain  access  to  the  unbundled  network 
 elements  or  to  interconnect  with  the  incumbent  LECs  network. 

 (d)  Upon  request,  an  incumbent  LEC  shall  perform  the  functions  necessary  to  combine 
 unbundled  network  elements  with  elements  possessed  by  the  requesting  telecommunications  carrier 
 in  any  technically  feasible  manner. 

 (e)  An  incumbent  LEC  that  denies  a  request  to  combine  elements  pursuant  to  paragraph 
 (c)(  1)  or  paragraph  (d)  of  this  section  must  prove  to  the  state  commission  that  the  requested 
 combination  in  not  technically  feasible. 

 (f)  An  incumbent  LEC  that  denies  a  request  to  combine  elements  pursuant  to  paragraph 
 (c)(  2)  of  this  section  must  prove  to  the  state  commissions  that  the  requested  combination  would 
 impair  the  ability  of  other  carriers  to  obtain  access  to  unbundled  network  elements  or  to  interconnect 
 with  the  incumbent  LECs  network. 

 47  C.  F.  R.    51.315(  c)-(  f). 
 954  Iowa  Utils.  Bd.  v.  FCC,  120  F.  3d  at  813. 

 955  Iowa  Utils.  Bd.,  119  S.  Ct  at  736-  738. 
 956  Iowa  Utils.  Bd.  v.  FCC,  Brief  for  Respondents  at  79-  87  (Oral  argument  was  held  on 
 September  17,  1999.  To  date,  no  decision  has  been  announced). 
 957  Notice  at  para.  33. 

 958  Id. 
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 elements  on  a  combined  basis.  959  Incumbent  LECs  argue  that  we  should  not  identify  the 
 EEL  as  a  separate  network  element  because  it  would  constitute  an  unlawful  combination 
 of  two  or  more  elements  not  currently  combined.  960  The  incumbent  LECs  also  argue  that 
 we  cannot  reinstate  rules  51.315(  c)    (f)  because  they  are  currently  pending  before  the 
 Eighth  Circuit. 

 b.  Discussion 

 478.  We  decline  to  define  the  EEL  as  a  separate  network  element  in  this  Order. 
 As  discussed  above,  the  Eighth  Circuit  is  currently  reviewing  whether  rules  51.315(  c)   
 (f)  should  be  reinstated.  We  see  no  reason  to  decide  now  whether  the  EEL  should  be  a 
 separate  network  element,  in  light  of  the  Eighth  Circuits  review  of  those  rules. 

 479.  A  number  of  commenters  argue  that  we  should  reaffirm  the  Commissions 
 decision  in  the  Local  Competition  First  Report  and  Order.  961  In  that  order  the 
 Commission  concluded  that  the  proper  reading  of  currently  combines  in  rule  51.315(  b) 
 means  ordinarily  combined  within  their  network,  in  the  manner  which  they  are  typically 
 combined.  962  Incumbent  LECs,  on  the  other  hand,  argue  that  rule  51.315(  b)  only  applies 
 to  unbundled  network  elements  that  are  currently  combined  and  not  to  elements  that  are 
 normally  combined.  963  Again,  because  this  matter  is  currently  pending  before  the 
 Eighth  Circuit,  we  decline  to  address  these  arguments  at  this  time. 

 480.  We  note  that  in  the  Local  Competition  First  Report  and  Order,  and  again  in 
 this  proceeding,  we  identify  the  loop  and  dedicated  transport  as  separate  unbundled 
 network  elements.  964  In  particular,  as  discussed  above,  we  define  the  loop  as  the 
 functionality  that  extends  from  the  customer  demarcation  point  to  the  main  distribution 
 frame  associated  with  the  incumbent  LECs  central  office  switch.  We  define  dedicated 
 transport  as  the  transmission  facilities  dedicated  to  a  particular  customer  between  wire 
 centers  owned  by  the  incumbent  LECs  or  requesting  telecommunications  carriers,  or 
 between  switches  owned  by  incumbent  LECs  or  requesting  carriers.  To  the  extent  an 
 unbundled  loop  is  in  fact  connected  to  unbundled  dedicated  transport,  the  statute  and  our 
 rule  51.315(  b)  require  the  incumbent  to  provide  such  elements  to  requesting  carriers  in 

 959  AT&  T  Comments  at  136-  37;  Cable  &  Wireless  Comments  at  40-  41;  Choice  One  Joint 
 Comments  at  23.  See  also  California  PUC  Comments  at  6;  ALTS  Comments  at  62;  CoreComm  Comments  at 
 36-  37. 

 960  See,  e.  g.,  GTE  Comments  at  84-  85;  Ameritech  Joint  Reply  Comments  at  26-  28. 

 961  ALTS  Comments  at  79-  80.  See  also  Excel  Comments  at  14;  Net2000  Comments  at  22; 
 NEXTLINK  Comments  at  42-  43;  e.  spire  Joint  Reply  Comments  at  17-  18;  GSA  Reply  Comments  at  17. 
 962  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15648,  para.  296. 

 963  GTE  Reply  Comments  at  84-  85;  SBC  Reply  Comments  at  28. 
 964  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15689-  93,  15718,  paras.  377-  85, 
 440. 
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 Federal  Communications  Commission  FCC  99-  238 
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 combined  form.  Thus,  although  in  this  Order,  we  neither  define  the  EEL  as  a  separate 
 unbundled  network  element  nor  interpret  rule  51.315(  b)  as  requiring  incumbents  to 
 combine  unbundled  network  elements  that  are  ordinarily  combined,  we  note  that  in 
 specific  circumstances,  the  incumbent  is  presently  obligated  to  provide  access  to  the  EEL. 
 In  particular,  the  incumbent  LECs  may  not  separate  loop  and  transport  elements  that  are 
 currently  combined  and  purchased  through  the  special  access  tariffs.  Moreover, 
 requesting  carriers  are  entitled  to  obtain  such  existing  loop-  transport  combinations  at 
 unbundled  network  element  prices.  965 

 481.  We  also  decline  at  this  time  to  reinstate  rules  51.315(  c)    (f).  As  discussed 
 above,  this  issue  is  currently  pending  before  the  Eighth  Circuit.  As  a  general  matter, 
 however,  we  believe  that  the  reasoning  of  the  Supreme  Courts  decision  to  reinstate  rule 
 51.315(  b)  based  on  the  nondiscrimination  language  of  section  251(  c)(  3)  applies  equally  to 
 rules  51.315(  c)    (f).  Specifically,  the  Court  held  that  section  251(  c)(  3)  s 
 nondiscrimination  requirement  means  that  access  provided  by  the  incumbent  LEC  must 
 be  at  least  equal  in  quality  to  that  which  the  incumbent  LEC  provides  to  itself.  966  We  note 
 that  incumbent  LECs  routinely  combine  loop  and  transport  elements  for  themselves.  For 
 example,  incumbent  LECs  routinely  provide  combinations  of  loop  and  transport  elements 
 for  themselves  in  order  to:  (1)  deliver  data  traffic  to  their  own  packet  switches;  (2) 
 provide  private  line  services;  and  (3)  provide  foreign  exchange  service.  967  In  addition,  we 
 note  that  incumbent  LECs  routinely  provide  the  functional  equivalent  of  the  EEL  through 
 their  special  access  offerings.  968 

 482.  We  believe  that  the  basis  upon  which  the  Eighth  Circuit  invalidated  rules 
 51.315(  c)    (f)  has  been  called  into  question  by  the  Supreme  Courts  decision.  In 
 particular,  the  Eighth  Circuit  determined  that  unbundled  meant  physical  separation  of 
 network  elements.  969  The  Supreme  Court  clarified  that  unbundled  means  separate 
 prices.  970  The  Supreme  Court  also  stated  that  section  251(  c)  does  not  say,  or  even 
 remotely  imply,  that  elements  must  be  provided  [in  discrete  pieces,  and  never  in 
 combined  form.]  971  We  also  note  that  an  additional  basis  for  the  Eighth  Circuits 
 decision  to  invalidate  rules  51.315(  b)    (f)  was  its  understanding  that  incumbents  would 
 rather  grant  their  competitors  access  to  their  facilities  than  combine  elements  on  behalf 

 965  See  47  U.  S.  C.    252(  d)(  1). 
 966  Iowa  Utils.  Bd.,  119  S.  Ct  at  737.  See  also  Local  Competition  First  Report  and  Order,  11 
 FCC  Rcd.  at  15658,  para.  312;  47  C.  F.  R.    51.311(  b). 
 967  ALTS  Reply  Comments  at  53;  GTE  Comments  at  85. 

 968  See,  e.  g.,  GTE  Comments  at  85;  ALTS  Reply  Comments  at  53. 
 969  Iowa  Utils.  Bd.  v.  FCC,  120  F.  3d  at  813. 
 970  Iowa  Utils.  Bd.,  119  S.  Ct.  at  737. 
 971  Id. 
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 218 
 of  requesting  carriers.  972  Experience  over  the  last  year  demonstrates  that  incumbent 
 LECs  have  refused  to  provide  access  to  network  elements  so  that  competitors  could 
 combine  them,  except  in  situations  where  competitive  LECs  have  collocated  in  the 
 incumbents  central  offices.  973  Accordingly,  we  believe  that  section  251(  c)(  3)  provides  a 
 sound  basis  for  reinstating  rules  51.315(  c)    (f). 

 2.  Use  of  unbundled  network  elements  to  provide  exchange 
 access  services 

 a.  Background 

 483.  As  discussed  above,  in  some  situations  in  the  incumbents  network,  loops 
 and  dedicated  transport  network  elements  are  already  combined  to  provide  special  access 
 services  for  interexchange  carriers.  In  ex  parte  filings,  incumbent  LECs,  including 
 BellSouth  and  SBC,  argue  that  the  Commission  should  restrict  a  requesting  carrier  from 
 obtaining  such  combined  facilities  as  unbundled  network  elements  in  order  to  prevent 
 requesting  carriers  from  by-  passing  existing  special  access  services.  974  BellSouth  and 
 SBC  both  argue  that  such  a  restriction  is  necessary  to  prevent  interexchange  carriers  from 
 benefiting  from  the  difference  between  special  access  rates  and  unbundled  network 
 element  prices  and  thus,  protect  the  incumbent  LECs  current  exchange  access  revenue 
 streams.  975  Competitive  LECs  respond  that  the  plain  language  of  section  251(  c)(  3) 

 972  Iowa  Utils.  Bd.  v.  FCC,  120  F.  3d  at  813. 
 973  See,  e.  g.,  AT&  T  Comments  at  141-  42.  We  note  that  we  held  previously  in  BellSouth  271 
 Louisiana  II  that  incumbent  LECs  may  not  limit  a  competitors  ability  to  access  network  elements  in  order  to 
 combine  them  to  collocation  arrangements.  Specifically,  we  stated  that  BellSouths  offering  in  Louisiana  of 
 collocation  as  the  sole  method  for  combining  unbundled  network  elements  is  inconsistent  with  section 
 251(  c)(  3).  Application  of  BellSouth  Corporation,  BellSouth  Telecommunications,  Inc.,  and  BellSouth  Long 
 Distance,  Inc.  for  Provision  of  In-  Region,  InterLATA  Services  in  Louisiana,  13  FCC  Rcd  20599,  20703-  05, 
 para.  168.  This  decision  was  based  on  our  rule  that  requesting  carriers  are  entitled  to  request  any  technically 
 feasible  methods  of  accessing  and  combining  unbundled  network  elements.  We  found  that  section  251(  c)(  3) 
 required  incumbent  LECs  to  provide  nondiscriminatory  access  to  network  elements  on  an  unbundled  basis  at 
 any  technically  feasible  point  .  .  .,  which  was  not  limited  to  collocation  arrangements.  Id. 

 974  BellSouth  Aug.  9,  1999  Ex  Parte  at  1,  4-  5;  Letter  from  Martin  E.  Grambow,  Vice  President 
 and  General  Counsel,  SBC,  to  Lawrence  F.  Strickling,  Chief,  Common  Carrier  Bureau,  Federal 
 Communications  Commission,  CC  Docket  No.  96-  98,  at  1,  Att.  1-  9  (filed  Aug.  11,  1999)  (SBC  August  11, 
 1999  Ex  Parte). 

 975  BellSouth  Sept.  8  Ex  Parte  at  1;  Letter  from  Lincoln  E.  Brown,  Director-  Federal 
 Regulatory,  SBC,  to  Magalie  Roman  Salas,  Secretary,  Federal  Communications  Commission,  CC  Docket  96- 
 98,  Att.  at  2,  6-  7  (filed  Sept.  9,  1999)(  SBC  Sept.  9,  1999  Ex  Parte).  Alternatively,  BellSouth  argues  that  the 
 Commission  should  decline  to  unbundle  transport  facilities  between  a  requesting  carriers  switch  and  the 
 incumbent  LECs  switch.  BellSouth  Sept.  8,  1999  Ex  Parte  at  1.  See  also  SBC  Sept.  9,  1999  Ex  Parte  Att.  at 
 2-  5.  As  discussed  Section  (V)(  E)  supra,  we  reject  the  incumbent  LECs  argument  not  to  unbundle  such 
 dedicated  transport  links. 
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 Federal  Communications  Commission  FCC  99-  238 
 219 
 precludes  the  Commission  from  imposing  any  restrictions  on  the  use  of  unbundled 
 network  elements.  976 

 b.  Discussion 

 484.  Section  251(  c)(  3)  of  the  Act  requires  incumbent  LECs  to  provide  to 
 requesting  carriers  access  to  unbundled  network  elements  for  the  provision  of  a 
 telecommunications  service  .  .  .  .  977  In  the  Local  Competition  First  Report  and  Order, 
 the  Commission  found  that  section  251(  c)(  3)  permits  interexchange  carriers  and  all  other 
 requesting  carriers,  to  purchase  unbundled  elements  for  the  purpose  of  offering  exchange 
 access  services,  or  for  the  purpose  of  providing  exchange  access  services  to  themselves  in 
 order  to  provide  interexchange  services  to  consumers.  978  In  particular,  the  Commission 
 found  that  its  conclusion  not  to  impose  restrictions  on  the  use  of  unbundled  network 
 elements  was  compelled  by  the  plain  language  of  the  1996  Act  because  exchange 
 access  and  interexchange  services  are  telecommunications  services.  979  Moreover,  in 
 the  Local  Competition  First  Report  and  Order,  the  Commission  found  that  the  language 
 of  section  251(  c)(  3),  which  provides  that  telecommunications  carriers  may  purchase 
 unbundled  elements  in  order  to  provide  a  telecommunications  service,  is  not 
 ambiguous.  980  This  conclusion  that  the  Act  does  not  permit  usage  restrictions  was 
 codified  in  Rule  51.309(  a),  which  provides  that  [  a]  n  incumbent  LEC  shall  not  impose 
 limitations,  restrictions,  or  requirements  on  request  for,  or  the  use  of,  unbundled  network 
 elements  that  would  impair  the  ability  of  a  requesting  telecommunications  carrier  to  offer 
 a  telecommunications  service  in  the  manner  the  requesting  telecommunications  carrier 
 intends.  981  That  rule  was  not  challenged  in  court  by  any  party. 

 485.  Parties  have  raised  again  arguments  that  allowing  requesting  carriers  to  use 
 unbundled  network  elements  to  provide  exchange  access  would  have  significant  policy 
 ramifications.  As  BellSouth  explains,  existing  combinations  of  unbundled  loops  and 
 transport  network  elements  are  a  direct  (and  often  physically  identical)  substitute  for  the 
 incumbent  LECs  regulated  access  services  .  .  .  ,  but  priced  significantly  lower  than 
 tariffed  special  access  services.  982  The  special  access  service  that  BellSouth  and  SBC 
 refer  to  consists  of  entrance  facilities  from  the  interexchange  carriers  point  of  presence 
 (POP)  to  an  incumbent  LECs  switch  or  serving  wire  center  (SWC),  a  dedicated  transport 

 976  See,  e.  g.,  e.  spire  Joint  Comments  at  13-  18;  ALTS  Reply  Comments  at  54. 
 977  47  U.  S.  C.    251(  c)(  3). 
 978  Local  Competition  First  Report  and  Order,  11  FCC  Rcd.  at  15679,  para.  356. 
 979  Id.  at  15679,  para.  356. 
 980  Id.  at  15680,  para.  359  (citation  omitted). 
 981  47  C.  F.  R.    51.309(  a). 
 982  BellSouth  August  9,  1999  Ex  Parte  at  1. 
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 link  from  the  SWC  to  an  end  office,  and  a  channel  termination  facility  from  the  end  office 
 to  the  end  user.  983 

 486.  As  an  initial  matter,  under  existing  law,  a  requesting  carrier  is  entitled  to 
 obtain  existing  combinations  of  loop  and  transport  between  the  end  user  and  the 
 incumbent  LECs  serving  wire  center  on  an  unrestricted  basis  at  unbundled  network 
 element  prices.  984  In  particular,  any  requesting  carrier  that  is  collocated  in  a  serving  wire 
 center  is  free  to  order  loops  and  transport  to  that  serving  wire  center  as  unbundled 
 network  elements  because  those  elements  meet  the  unbundling  standard,  as  discussed 
 above.  Moreover,  to  the  extent  those  unbundled  network  elements  are  already  combined 
 as  a  special  access  circuit,  the  incumbent  may  not  separate  them  under  rule  51.315(  b), 
 which  was  reinstated  by  the  Supreme  Court.  985  In  such  situations,  it  would  be 
 impermissible  for  an  incumbent  LEC  to  require  that  a  requesting  carrier  provide  a  certain 
 amount  of  local  service  over  such  facilities. 

 487.  Moreover,  we  wish  to  make  clear  that  in  situations  where  the  requesting 
 carrier  is  collocated  and  has  self-  provisioned  transport  or  obtained  transport  from  an 
 alternative  provider,  but  is  purchasing  unbundled  loops,  that  carrier  may  provide  only 
 exchange  access  over  those  facilities.  Thus,  for  instance,  a  requesting  carrier  is  entitled  to 
 purchase  unbundled  loops  in  order  to  provide  advanced  services  (e.  g.,  interstate  special 
 access  xDSL  service). 

 488.  Finally,  we  clarify  that  interexchange  carriers  are  entitled  to  use  unbundled 
 dedicated  transport  from  their  POP  to  a  serving  wire  center  in  order  to  provide  local 
 telephone  exchange  service.  Such  carriers  are  entitled  to  obtain  such  dedicated  transport 
 links  pursuant  to  the  unbundling  standard  discussed  above.  The  fact  that  such  carriers 
 may  also  provide  exchange  access  over  those  facilities  does  not  alter  our  conclusion. 

 489.  We  conclude  that  the  record  in  this  phase  of  the  proceeding  is  insufficient 
 for  us  to  determine  whether  or  how  our  rules  should  apply  in  the  discrete  situation 
 involving  the  use  of  dedicated  transport  links  between  the  incumbent  LECs  serving  wire 
 center  and  an  interexchange  carriers  switch  or  point  of  presence  (or  entrance  facilities). 
 Only  a  handful  of  parties  commented  on  the  special  access  arbitrage  issue  that  was  first 
 raised  by  BellSouths  August  9,  1999,  ex  parte  filing.  We  believe  that  we  should  fully 
 explore  the  policy  ramifications  of  applying  our  rules  in  a  way  that  potentially  could 
 cause  a  significant  reduction  of  the  incumbent  LECs  special  access  revenues  prior  to  full 

 983  Letter  from  Ernest  L.  Bush,  Jr.,  Assistant  Vice  President,  BellSouth,  to  Lawrence 
 Strickling,  Chief,  Common  Carrier  Bureau,  Federal  Communications  Commission,  CC  Docket  No.  96-  98,  at 
 1,  (filed  August  16,  1999)  (BellSouth  August  16,  1999  Ex  Parte) 

 984  See  47  C.  F.  R.    51.309(  a),  51.315(  b). 

 985  Iowa  Utils.  Bd.,  119  S.  Ct.  at  736-  38.  We  note,  however,  that  any  substitution  of  unbundled 
 network  elements  for  special  access  would  require  the  requesting  carrier  to  pay  any  appropriate  termination 
 penalties  required  under  volume  or  term  contracts. 
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 implementation  of  access  charge  and  universal  service  reform.  Therefore,  we  set  certain 
 discrete  issues  for  further  comment  below. 

 C.  Nondiscrimination  Obligations  of  Incumbent  LECs 

 490.  We  reaffirm  the  conclusion  the  Commission  adopted  in  the  Local 
 Competition  First  Report  and  Order  that  national  rules  defining  nondiscriminatory 
 access  to  unbundled  network  elements  will  reduce  the  costs  of  entry  and  speed  the 
 development  of  competition  in  local  telecommunications  markets.  986  We  find  that  the 
 phrase  nondiscriminatory  access  in  section  251(  c)(  3)  means  at  least  two  things:  first, 
 the  quality  of  an  unbundled  network  element  that  an  incumbent  LEC  provides,  as  well  as 
 the  access  provided  to  that  element,  must  be  equal  between  all  carriers  requesting  access 
 to  that  element;  second,  where  technically  feasible,  the  access  and  unbundled  network 
 element  provided  by  an  incumbent  LEC  must  be  provided  in  substantially  the  same  time 
 and  manner  to  that  which  the  incumbent  provides  to  itself.  987 

 491.  In  those  situations  where  an  incumbent  LEC  does  not  provide  access  to 
 network  elements  to  itself,  we  reaffirm  our  requirement  that  incumbent  LECs  must 
 provide  access  in  a  manner  that  provides  a  requesting  carrier  with  a  meaningful 
 opportunity  to  compete.  988  Because  we  believe  that  the  technical  infeasibility  problem 
 will  arise  rarely,  we  expect  incumbent  LECs  to  fulfill  the  non-  discrimination  requirement 
 in  nearly  all  instances  where  they  provision  unbundled  network  elements.  In  the  rare 
 instances  where  technical  feasibility  issues  arise,  incumbent  LECs  must  prove  to  a  state 
 commission  that  it  is  technically  infeasible  to  provide  access  to  unbundled  elements  at  the 
 same  level  of  quality  that  the  incumbent  LEC  provides  to  itself.  989 

 VII.  FOURTH  FURTHER  NOTICE  OF  PROPOSED  RULEMAKING 
 A.  Background 

 492.  As  noted  above,  in  the  Local  Competition  First  Report  and  Order,  the 
 Commission  held  that  for  all  unbundled  network  elements,  including  combinations  of 
 network  elements,  incumbent  LECs  may  not  impose  any  usage  restriction  on  the  use  of 
 such  elements,  or  combinations  thereof.  In  that  order,  however,  the  Commission  imposed 
 a  temporary  access  charge  on  the  purchase  of  unbundled  switching.  In  particular,  the 
 Commission  required  requesting  carriers  to  pay,  for  a  limited  time  period,  the  carrier 
 common  line  charge  (CCL)  and  75  percent  of  the  Tandem  Interconnection  Charge 

 986  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15657,  para.  309. 
 987  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15763-  64.  We  note  that  rule 
 51.311(  c)  is  currently  before  the  Court  of  Appeals  for  the  Eighth  Circuit. 
 988  See  Ameritech  Michigan  Order,  12  FCC  Rcd  at  20619;  Local  Competition  First  Report  and 
 Order,  11  FCC  Rcd  at  15660;  Local  Competition  Second  Reconsideration  Order,  11  FCC  Rcd  at  19742. 
 989  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15658-  59,  para.  313. 
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 (TIC).  990  The  Commission  found  that  it  had  discretion  under  the  Act  to  adopt  a  limited, 
 transitional  plan  to  address  public  policy  concerns  raised  by  the  bypass  of  access  charges 
 via  unbundled  elements.  This  decision  was  upheld  by  the  Eighth  Circuit,  which  found 
 that  the  Commission  decision  was  reasonable.  991 

 493.  In  the  Third  Order  on  Reconsideration,  the  Commission  required 
 incumbent  LECs  to  provide  access  to  shared  transport  as  an  unbundled  network  element 
 in  conjunction  with  local  and  tandem  switching.  In  that  order,  the  Commission  limited 
 the  obligation  of  incumbent  LECs  to  provision  shared  transport  to  end  users  to  whom  the 
 requesting  carrier  was  providing  local  exchange  service.  The  Commission  sought 
 comment  on  whether  requesting  carriers  may  use  unbundled  dedicated  or  shared  transport 
 facilities  in  conjunction  with  unbundled  switching,  to  originate  or  terminate  interstate  toll 
 traffic  to  customers  to  whom  the  requesting  carrier  does  not  provide  local  exchange 
 service.  992  Specifically,  the  Further  Notice  of  Proposed  Rulemaking  requested  comment 
 on  the  intensely  interrelated  question  of  whether  such  use  would  conflict  with  the 
 Commissions  implementation  of  access  charge  reform  and  universal  service.  993 

 B.  Discussion 

 494.  Parties  have  argued  in  this  proceeding  that  allowing  requesting  carriers  to 
 obtain  combinations  of  loop  and  transport  unbundled  network  elements  based  on  forward-looking 
 cost  would  provide  opportunities  for  arbitrage  of  special  access  services.  We  are 
 cognizant  that  special  access  pre-  dates  passage  of  the  1996  Telecommunications  Act  and 
 has  historically  been  provided  by  incumbent  LECs  at  prices  that  are  higher  than  the 
 unbundled  network  element  pricing  scheme  of  section  252(  d)(  1).  Accordingly,  in  this 
 Further  Notice  we  consider  whether  there  is  any  basis  in  the  statute  or  our  rules  under 
 which  incumbent  LECs  could  decline  to  provide  entrance  facilities  at  unbundled  network 
 element  prices. 

 495.  We  seek  comment  on  the  argument  that  the  just  and  reasonable  terms  of 
 section  251(  c)  or  section  251(  g)  permit  the  Commission  to  establish  a  usage  restriction  on 
 entrance  facilities.  Parties  should  also  address  whether  there  is  any  other  statutory  basis 
 for  limiting  an  incumbent  LECs  obligation  to  provide  entrance  facilities  as  an  unbundled 
 network  element. 

 496.  We  acknowledge  that  resolution  of  this  issue  potentially  could  have  large 
 financial  impact  on  incumbent  local  exchange  carriers.  We  seek  comment  on  this  issue, 
 and  on  the  extent  to  which  any  such  impact  should  be  considered  in  reaching  a  decision 

 990  Id.  at  15864-  66,  paras.  721-  25.  The  Commission  selected  June  30,  1997  as  the  ultimate  end 
 date  for  this  transitional  time  period. 
 991  CompTel  v.  FCC,  117  F.  3d  at  1073-  75. 

 992  Local  Competition  Third  Reconsideration  Order,  12  FCC  Rcd.  at  12462,  para.  3. 
 993  Id.  at  12462,  12495-  96,  paras.  3,  60-  61.  This  Further  Notice  remains  pending. 
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 on  this  issue.  We  seek  comment  on  the  policy  implications,  if  any,  of  a  significant 
 reduction  in  special  access  revenues  for  our  universal  service  program.  994  Finally, 
 because  the  record  developed  in  the  Further  Notice  of  Proposed  Rulemaking  in  the 
 Shared  Transport  Order  is  two  years  old,  we  invite  parties  to  refresh  the  record  on 
 whether  requesting  carriers  may  use  unbundled  dedicated  or  shared  transport  facilities  in 
 conjunction  with  unbundled  switching  to  originate  or  terminate  interstate  toll  traffic  to 
 customers  to  whom  the  requesting  carrier  does  not  provide  local  exchange  service.  995 

 VIII.  PROCEDURAL  ISSUES 
 A.  Final  Regulatory  Flexibility  Analysis 

 497.  As  required  by  the  Regulatory  Flexibility  Act  (RFA),  996  an  Initial 
 Regulatory  Flexibility  Analysis  (IRFA)  was  incorporated  in  the  Notice  in  CC  Docket  No. 
 96-  98.  997  The  Commission  sought  written  public  comments  on  the  proposals  in  the 
 Notice,  including  comments  on  the  IRFA.  This  present  Final  Regulatory  Flexibility 
 Analysis  (FRFA)  conforms  to  the  RFA.  998 

 1.  Need  for,  and  Objectives  of,  the  Third  Report  and  Order 
 498.  This  Order  responds  to  the  Supreme  Courts  January,  1999,  decision  that 
 directs  the  Commission  to  revise  the  standards  used  to  determine  which  network  elements 
 incumbent  LECs  must  unbundle  pursuant  to  section  251  of  the  Act.  999  More  specifically, 
 this  Order  gives  substance  to  the  necessary  and  impair  standards  in  section  251(  d)(  2) 
 of  the  Act.  Applying  these  standards,  and  considering  the  availability  of  elements  outside 
 of  the  incumbents  network,  this  Order  adopts  a  list  of  network  elements  that  must  be 
 unbundled  on  a  national  basis,  subject  to  certain  discrete  geographic  and  product  market 
 exceptions.  This  Order  also  announces  that  the  Commission  will  reexamine  the  national 

 994  We  note  that  in  a  recent  Notice  of  Proposed  Rulemaking  in  the  Access  Reform  and 
 Universal  Service  proceeding,  we  tentatively  concluded  that  when  non-  rural  local  exchange  carriers  receive 
 explicit  interstate  universal  service  support,  they  should  eliminate  implicit  support  by  reducing  switched 
 access  common  line  rates.  We  did  not  propose  to  treat  special  access  services  as  if  the  current  prices  of  those 
 services  included  implicit  support  for  universal  service.  Federal-  State  Joint  Board  on  Universal  Service,  CC 
 Docket  96-  45,  Seventh  Report  and  Order  and  Thirteenth  Order  on  Reconsideration  in  CC  Docket  No.  96-  45, 
 Fourth  Report  and  Order  in  CC  Docket  No.  96-  262  and  Further  Notice  of  Proposed  Rulemaking,  14  FCC  Rcd 
 8078,  8138-  8139,  para.  128-  131  (May  28,  1999). 

 995  Local  Competition  Third  Reconsideration  Order,  12  FCC  Rcd.  at  12462,  para.  3. 

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

 997  Notice  at  paras.  46-  53. 

 998  See  5  U.  S.  C.    604. 
 999  Iowa  Utils.  Bd.,  119  S.  Ct.  at  734-  36. 
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 list  of  unbundled  network  elements  in  three  years.  It  reaffirms  a  state  commissions 
 authority  to  require  incumbent  LECs  to  unbundle  additional  elements,  as  long  as  the 
 unbundling  obligations:  (1)  are  consistent  with  the  requirements  of  section  251;  (2)  do  not 
 substantially  prevent  implementation  of  the  requirements  of  that  section  and  the  purposes 
 of  the  Act;  and  (3)  are  consistent  with  the  national  policy  framework  established  in  this 
 Order.  Finally  the  Order  reaffirms  that  incumbent  LECs  are  obligated  to  offer 
 combinations  of  network  elements  that  are  already  combined,  including  combinations  of 
 loop,  multiplexing/  concentrating  equipment,  and  dedicated  transport  if  they  are  currently 
 combined. 

 2.  Summary  of  Significant  Issues  Raised  by  the  Public 
 Comments  in  Response  to  the  IRFA 

 499.  We  received  no  comments  in  response  to  the  IRFA  in  the  Notice.  We  did, 
 however,  receive  some  general  small-  business-  related  comments  which  are  discussed 
 throughout  the  Order  and  are  summarized  in  subsection  5  of  the  FRFA,  infra. 

 3.  Description  and  Estimate  of  the  Number  of  Small 
 Entities  to  which  Rules  will  Apply 

 500.  In  the  FRFA  to  the  Commissions  Local  Competition  First  Report  and 
 Order,  1000  we  adopted  the  analysis  and  definitions  set  forth  in  determining  the  small 
 entities  affected  by  this  Order  for  purposes  of  this  FRFA.  The  RFA  directs  agencies  to 
 provide  a  description  of  and,  where  feasible,  an  estimate  of  the  number  of  small  entities 
 that  will  be  affected  by  rules.  1001  The  RFA  generally  defines  the  term  "small  entity"  as 
 having  the  same  meaning  as  the  terms  "small  business,"  "small  organization,"  and  "small 
 governmental  jurisdiction."  1002  The  RFA  defines  a  "small  business"  to  be  the  same  as  a 
 "small  business  concern"  under  the  Small  Business  Act,  1003  unless  the  Commission  has 
 developed  one  or  more  definitions  that  are  appropriate  to  its  activities.  1004  Under  the 
 Small  Business  Act,  a  "small  business  concern"  is  one  that:  (1)  is  independently  owned 
 and  operated;  (2)  is  not  dominant  in  its  field  of  operation;  and  (3)  meets  any  additional 
 criteria  established  by  the  Small  Business  Administration  (SBA).  1005  Below  we  further 
 describe  and  estimate  the  number  of  small  entities  that  may  be  affected  by  the  rules 
 adopted  in  this  Order. 

 1000  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  16150-  56,  paras.  1343-  57. 
 1001  5  U.  S.  C.    603(  b)(  3),  604(  a)(  3). 
 1002  5  U.  S.  C.    601(  6). 
 1003  15  U.  S.  C.    632. 
 1004  5  U.  S.  C.    601(  3)  (incorporating  by  reference  the  definition  of  "small  business  concern"  in 
 5  U.  S.  C.    632). 
 1005  15  U.  S.  C.    632. 
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 501.  We  have  included  small  incumbent  LECs  in  this  RFA  analysis.  As  noted 
 above,  a  "small  business"  under  the  RFA  is  one  that,  inter  alia,  meets  the  pertinent  small 
 business  size  standard  (e.  g.,  a  telephone  communications  business  having  1,500  or  fewer 
 employees),  and  "is  not  dominant  in  its  field  of  operation."  1006  The  SBA's  Office  of 
 Advocacy  contends  that,  for  RFA  purposes,  small  incumbent  LECs  are  not  dominant  in 
 their  field  of  operation  because  any  such  dominance  is  not  national  in  scope.  1007  We  have 
 therefore  included  small  incumbent  LECs  in  this  RFA  analysis,  although  we  emphasize 
 that  this  RFA  action  has  no  effect  on  the  Commissions  analyses  and  determinations  in 
 other  non-  RFA  contexts. 

 502.  The  United  States  Bureau  of  the  Census  (the  Census  Bureau)  reports  that  at 
 the  end  of  1992,  there  were  3,497  firms  engaged  in  providing  telephone  services,  as 
 defined  therein,  for  at  least  one  year.  1008  These  firms  include  a  variety  of  different 
 categories  of  carriers,  including  LECs,  interexchange  carriers,  competitive  access 
 providers,  wireless  providers,  operator  service  providers,  pay  telephone  operators, 
 wireless  providers,  and  resellers.  At  least  some  of  these  3,497  telephone  service  firms 
 may  not  qualify  as  small  entities  because  they  are  not  "independently  owned  and 
 operated."  1009  For  example,  a  wireless  provider  that  is  affiliated  with  a  LEC  having  more 
 than  1,500  employees  would  not  meet  the  definition  of  a  small  business.  It  seems 
 reasonable  to  conclude,  therefore,  that  fewer  than  3,497  of  these  telephone  service  firms 
 are  small  entities  that  may  be  affected  by  this  Order.  Since  1992,  however,  many  new 
 carriers  have  entered  the  telephone  services  marketplace.  At  least  some  of  these  new 
 entrants  may  be  small  entities  that  are  affected  by  this  Order. 

 503.  The  SBA  has  developed  a  definition  of  small  entities  for  telephone 
 communications  companies  other  than  radiotelephone  (wireless)  companies.  The  Census 
 Bureau  reports  that  there  were  2,321  such  telephone  companies  that  had  been  operating 
 for  at  least  one  year  at  the  end  of  1992.  1010  According  to  the  SBA's  definition,  a  wireline 

 1006  5  U.  S.  C.    601(  3). 
 1007  Letter  from  Jere  W.  Glover,  Chief  Counsel  for  Advocacy,  SBA,  to  William  E.  Kennard, 
 Chairman,  Federal  Communications  Commission  (May  27,  1999).  The  Small  Business  Act  contains  a 
 definition  of  "small  business  concern,"  which  the  RFA  incorporates  into  its  own  definition  of  "small 
 business."  See  15  U.  S.  C.    632(  a)  (Small  Business  Act);  5  U.  S.  C.    601(  3)  (RFA).  SBA  regulations  interpret 
 "small  business  concern"  to  include  the  concept  of  dominance  on  a  national  basis.  13  C.  F.  R.   
 121.102(  b).  Since  1996,  out  of  an  abundance  of  caution,  the  Commission  has  included  small  incumbent  LECs 
 in  its  regulatory  flexibility  analyses.  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  16144-  45, 
 paras.  1328-  30. 

 1008  United  States  Department  of  Commerce,  Bureau  of  the  Census,  1992  Census  of 
 Transportation,  Communications,  and  Utilities:  Establishment  and  Firm  Size,  at  Firm  Size  1-  123  (1995)  (1992 
 Census). 

 1009  15  U.  S.  C.    632(  a)(  1). 

 1010  1992  Census,  supra  note  1008,  at  Firm  Size  1-  123. 
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 Federal  Communications  Commission  FCC  99-  238 
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 telephone  company  is  a  small  business  if  it  employs  no  more  than  1,500  persons.  1011  All 
 but  26  of  the  2,321  wireline  companies  listed  by  the  Census  Bureau  were  reported  to  have 
 fewer  than  1,000  employees.  Thus,  even  if  all  26  of  those  companies  had  more  than 
 1,500  employees,  there  would  still  be  2,295  wireline  companies  that  might  qualify  as 
 small  entities.  Although  it  seems  certain  that  some  of  these  carriers  are  not  independently 
 owned  and  operated,  we  are  unable  at  this  time  to  estimate  with  greater  precision  the 
 number  of  wireline  carriers  and  service  providers  that  would  qualify  as  small  business 
 concerns  under  the  SBA's  definition.  Consequently,  we  estimate  that  fewer  than  2,295  of 
 these  wireline  companies  are  small  entities  that  this  Order  may  affect.  Since  1992, 
 however,  many  wireline  carriers  have  entered  the  telephone  services  marketplace.  Many 
 of  these  new  entrants  may  be  small  entities  that  are  affected  by  this  Order. 

 504.  Incumbent  Local  Exchange  Carriers.  Neither  the  Commission  nor  the  SBA 
 has  developed  a  definition  specifically  directed  toward  small  incumbent  LECs.  The 
 closest  applicable  definition  under  SBA  rules  is  for  telephone  communications  companies 
 other  than  radiotelephone  (wireless)  companies.  The  most  reliable  source  of  information 
 regarding  the  number  of  LECs  nationwide  of  which  we  are  aware  appears  to  be  the  data 
 that  we  collect  annually  in  connection  with  the  Telecommunications  Relay  Service 
 (TRS).  According  to  our  most  recent  data,  1,410  companies  reported  that  they  were 
 engaged  in  the  provision  of  local  exchange  services.  1012  Although  it  seems  certain  that 
 some  of  these  carriers  are  not  independently  owned  and  operated  or  have  more  than  1,500 
 employees,  we  are  unable  at  this  time  to  estimate  with  greater  precision  the  number  of 
 small  incumbent  LECs  that  would  qualify  as  small  business  concerns  under  SBA's 
 definition.  Consequently,  we  estimate  that  there  are  fewer  than  1,410  small  incumbent 
 LECs  that  may  be  affected  by  the  decisions  and  rules  adopted  in  this  Order. 

 4.  Description  of  Projected  Reporting,  Recordkeeping,  and 
 Other  Compliance  Requirements 

 505.  Pursuant  to  sections  251(  c)  and  (d)  of  the  1996  Act,  incumbent  LECs, 
 including  those  that  qualify  as  small  entities,  are  required  to  provide  nondiscriminatory 
 access  to  unbundled  network  elements.  1013  The  only  exception  to  this  rule  is  those 
 carriers  that  qualify  and  have  gone  through  the  process  of  obtaining  an  exemption, 
 suspension  or  modification  pursuant  to  section  251(  f)  of  the  Act.  This  Order  interprets 
 the  necessary  and  impair  standards  of  section  251(  d)(  2)  in  such  a  way  that  it  fulfills  the 
 Supreme  Courts  requirement  that  we  apply  some  limiting  standard  to  an  incumbent 
 LECs  251(  c)  obligations.  1014  In  this  Order,  we  identify  a  minimum  set  of  network 

 1011  13  C.  F.  R.    121.201,  Standard  Industrial  Classification  (SIC)  Code  4812. 
 1012  Federal  Communications  Commission,  Carrier  Locator:  Interstate  Service  Providers,  Fig.  1 
 (Jan.  1999)  (Carrier  Locator  Report). 
 1013  47  U.  S.  C.    251(  f). 

 1014  Iowa  Utilities  Bd.,  119  S.  Ct.  at  734. 
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 elements  that  incumbent  LECs  are  obligated  to  offer  to  requesting  carriers  on  an 
 unbundled  basis  nationwide:  (1)  local  loops,  including  dark  fiber  and  high-  capacity 
 loops;  1015  (2)  subloops;  1016  (3)  network  interface  devices;  1017  (4)  local  switching,  except 
 under  certain  conditions;  1018  (5)  interoffice  transport;  1019  (6)  signaling  and  call-  related 
 databases;  1020  (7)  operations  support  systems;  1021  and  (8)  in  very  limited  situations,  packet 
 switching.  1022  State  commissions  may  require  incumbent  LECs  to  provide  additional 
 network  elements  on  an  unbundled  basis.  1023  The  Order  also  clarifies  that  incumbent 
 LECs  are  obligated  to  provide  access  to  combinations  of  loop,  multiplexing/  concentrating 
 equipment  and  dedicated  transport  if  they  are  currently  combined.  Compliance  with  the 
 rules  and  decisions  adopted  in  this  Order  may  require  the  use  of  engineering,  technical, 
 operational,  accounting,  billing,  and  legal  skills. 

 5.  Steps  Taken  to  Minimize  the  Economic  Impact  of  this 
 Order  on  Small  Entities,  and  Alternatives  Considered 

 506.  As  we  concluded  in  the  original  FRFA,  1024  and  as  discussed  more 
 thoroughly  above,  1025  we  believe  that  our  actions  establishing  a  minimum  national  list  of 
 unbundled  network  elements  in  this  Order  facilitates  the  development  of  competition  in 

 1015  See  supra  Section  (V)(  A). 
 1016  See  supra  Section  (V)(  B). 
 1017  See  supra  Section  (V)(  C). 
 1018  See  supra  Section  (V)(  D).  Incumbent  LECs  must  offer  unbundled  access  to  local  circuit 
 switching,  except  for  switching  used  to  serve  end  users  with  four  or  more  lines  in  access  density  zone  1  (the 
 densest  areas)  in  the  top  50  Metropolitan  Statistical  Areas  (MSAs),  provided  that  the  incumbent  LEC  provides 
 non-  discriminatory,  cost-  based  access  to  the  enhanced  extended  link.  (An  enhanced  extended  link  (EEL) 
 consists  of  a  combination  of  an  unbundled  loop,  multiplexing/  concentrating  equipment,  and  dedicated 
 transport.  The  EEL  allows  new  entrants  to  serve  customers  without  having  to  collocate  in  every  central  office 
 in  the  incumbents  territory.). 

 1019  See  supra  Section  (V)(  E). 

 1020  See  supra  Section  (V)(  F). 
 1021  See  supra  Section  (V)(  G). 
 1022  See  supra  Section  (V)(  D)(  2).  In  circumstances  where  a  requesting  carrier  is  unable  to 
 install  its  DSLAM  at  the  remote  terminal  or  obtain  spare  copper  loops,  and  the  incumbent  LEC  has  deployed 
 packet  switching  for  its  own  use,  an  incumbent  LEC  must  provide  a  requesting  carrier  with  access  to 
 unbundled  packet  switching. 

 1023  See  supra  Section  (IV)(  E). 

 1024  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  16157-  58,  para.  1364. 
 1025  See  supra  Section  (IV)(  D). 
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 the  local  exchange  and  exchange  access  markets.  This  decision  decreases  entry  barriers 
 and  provides  reasonable  opportunities  for  all  carriers,  including  small  entities,  to  provide 
 local  exchange  and  exchange  access  services. 

 507.  National  requirements  for  unbundling  allows  requesting  carriers,  including 
 small  entities,  to  take  advantage  of  economies  of  scale  in  network.  Requesting  carriers, 
 which  may  include  small  entities,  should  have  access  to  the  same  technologies  and 
 economies  of  scale  and  scope  available  to  incumbent  LECs.  Having  such  access  will 
 facilitate  competition  and  help  lower  prices  for  all  consumers,  including  individuals  and 
 small  entities.  A  minimum  national  list  of  unbundled  network  elements  also  should 
 facilitate  the  development  of  consistent  standards  and  help  resolve  issues  without 
 imposing  additional  litigation  costs  on  parties,  including  small  entities. 

 508.  Establishing  a  minimum  national  list  of  unbundled  network  elements 
 facilitates  negotiations  and  reduces  regulatory  burdens  for  all  parties,  including  small 
 entities.  Adopting  a  national  list  lowers  requesting  carriers  cost  by  enabling  them  to 
 implement  regional  and/  or  national  business  plans.  In  reaching  this  conclusion  we 
 considered  one  proposal  to  adopt  national  standards  that  would  be  applied  by  state 
 commissions  on  a  market-  by-  market  basis.  We  concluded  that  this  approach  would  lead 
 to  greater  uncertainty  in  the  market  and  would  hinder  the  development  of  competition. 
 We  also  found  that  it  would  complicate  the  negotiation  of  interconnection  agreements  and 
 lead  to  increased  litigation.  Furthermore,  this  approach  would  increase  the  administrative 
 burden  on  state  commissions  and  parties  arbitrating  interconnection  agreements  before 
 these  state  commissions.  1026  All  of  these  factors  would  slow  the  development  of 
 competition.  Therefore  we  reaffirmed  our  decision  in  the  Local  Competition  First  Report 
 and  Order  to  adopt  a  national  list. 

 6.  Report  to  Congress 
 509.  The  Commission  will  send  a  copy  of  the  Third  Report  and  Order,  including 
 this  FRFA,  in  a  report  to  be  sent  to  Congress  pursuant  to  the  Small  Business  Regulatory 
 Enforcement  Fairness  Act  of  1996.  1027  In  addition,  the  Commission  will  send  a  copy  of 
 the  Third  Report  and  Order,  including  the  FRFA,  to  the  Chief  Counsel  for  Advocacy  of 
 the  Small  Business  Administration.  The  Third  Report  and  Order  and  FRFA,  or 
 summaries  thereof,  will  also  be  published  in  the  Federal  Register.  1028 

 B.  Initial  Regulatory  Flexibility  Analysis  (IRFA) 

 1026  See  supra  Section  (IV)(  E). 
 1027  See  5  U.  S.  C.    801(  a)(  1)(  A). 
 1028  See  5  U.  S.  C.    604(  b). 
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 510.  As  required  by  the  RFA,  1029  the  Commission  has  prepared  this  present 
 Initial  Regulatory  Flexibility  Analysis  (IRFA)  of  the  possible  significant  economic  impact 
 on  small  entities  by  the  policies  and  rules  proposed  in  this  Fourth  Further  Notice  of 
 Proposed  Rulemaking.  Written  public  comments  are  requested  on  this  IRFA.  Comments 
 must  be  identified  as  responses  to  the  IRFA  and  must  be  filed  by  the  deadlines  for 
 comments  on  the  Fourth  Further  Notice  of  Proposed  Rulemaking  provided  above  in 
 section  VII.  The  Commission  will  send  a  copy  of  the  Fourth  Further  Notice  of  Proposed 
 Rulemaking,  including  this  IRFA,  to  the  Chief  Counsel  for  Advocacy  of  the  Small 
 Business  Administration.  1030  In  addition,  the  Fourth  Further  Notice  of  Proposed 
 Rulemaking  and  IRFA,  or  summaries  thereof,  will  be  published  in  the  Federal 
 Register.  1031 

 1.  Need  for,  and  Objectives  of,  the  Proposed  Rules 
 511.  In  this  proceeding  commenters  have  argued  that  allowing  requesting 
 carriers  to  obtain  combinations  of  loop  and  transport  unbundled  network  elements  based 
 on  forward-  looking  cost  would  provide  opportunities  for  arbitrage  of  special  access 
 services.  We  recognize  that  special  access  has  historically  been  provided  by  incumbent 
 LECs  at  prices  that  are  higher  than  the  unbundled  network  element  pricing  scheme  of 
 section  252(  d)(  1).  Accordingly,  in  this  Fourth  Further  Notice,  the  Commission  seeks 
 comment  on  the  legal  and  policy  bases  for  precluding  requesting  carriers  from 
 substituting  dedicated  transport  for  special  access  entrance  facilities.  We  ask  whether 
 there  is  any  basis  in  the  statute  or  our  rules  under  which  incumbent  LECs  could  decline  to 
 provide  entrance  facilities  at  unbundled  network  element  prices. 

 512.  Finally,  because  the  record  developed  in  the  Further  Notice  of  Proposed 
 Rulemaking  in  the  Shared  Transport  Order  is  two  years  old,  we  invite  parties  to  refresh 
 the  record  on  whether  requesting  carriers  may  use  unbundled  dedicated  or  shared 
 transport  facilities  in  conjunction  with  unbundled  switching  to  originate  or  terminate 
 interstate  toll  traffic  to  customers  to  whom  the  requesting  carrier  does  not  provide  local 
 exchange  service.  1032 

 2.  Legal  Basis 
 513.  Sections  1-  4,  10,  201,  202,  251-  254,  271,  and  303(  r)  of  the 
 Communications  Act,  as  amended,  47  U.  S.  C.    151-  54,  160,  201,  202,  251-  54,  271,  and 
 303(  r). 

 1029  See  supra  note  996. 
 1030  See  5  U.  S.  C.    603(  a). 
 1031  See  id. 
 1032  Local  Competition  Third  Reconsideration  Order,  12  FCC  Rcd.  at  12462,  para.  3. 
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 3.  Description  and  Estimate  of  the  Number  of  Small 
 Entities  to  Which  the  Proposed  Rules  Will  Apply 

 514.  In  the  FRFA  in  the  Third  Report  and  Order,  supra,  we  have  described  the 
 entities  possibly  affected  by  that  decision.  1033  We  anticipate  that  the  same  entities,  as  well 
 as  those  described  below,  could  be  affected  by  any  action  taken  in  response  to  the  Fourth 
 Further  Notice.  We  therefore  incorporate  the  description  and  estimates  used  in  the  FRFA 
 in  the  Third  Report  and  Order,  1034  and  add  the  following  descriptions. 

 515.  Competitive  Local  Exchange  Carriers.  Neither  the  Commission  nor  SBA 
 has  developed  a  definition  of  small  entities  specifically  directed  toward  providers  of 
 competitive  local  exchange  services.  The  most  reliable  source  of  information  regarding 
 the  number  of  competitive  LECs  nationwide  of  which  we  are  aware  appears  to  be  the  data 
 we  collected  in  the  August,  1999  Local  Competition  Report.  According  to  our  most 
 recent  data,  158  companies  reported  that  they  were  local  service  competitors  holding 
 numbering  codes.  1035  Although  it  seems  certain  that  some  of  these  carriers  are  not 
 independently  owned  and  operated,  or  have  more  than  1,500  employees,  we  are  unable  at 
 this  time  to  estimate  with  greater  precision  the  number  of  competitive  LECs  that  would 
 qualify  as  small  business  concerns  under  SBAs  definition.  Consequently,  we  estimate 
 that  there  are  fewer  than  158  small  entity  competitive  LECs  that  may  be  affected  by  the 
 decisions  and  rules  adopted  in  response  to  the  Fourth  Further  Notice  of  Proposed 
 Rulemaking. 

 516.  Competitive  Access  Providers.  Neither  the  Commission  nor  SBA  has 
 developed  a  definition  of  small  entities  specifically  directed  toward  providers  of 
 competitive  access  services  (CAPs).  The  closest  applicable  definition  under  SBA  rules  is 
 for  telephone  communications  companies  other  than  radiotelephone  (wireless) 
 companies.  The  most  reliable  source  of  information  regarding  the  number  of  CAPs 
 nationwide  of  which  we  are  aware  appears  to  be  the  data  that  we  collect  annually  in 
 connection  with  the  TRS  Worksheet.  According  to  our  most  recent  data,  129  companies 
 reported  that  they  were  engaged  in  the  provision  of  competitive  access  services.  1036 

 1033  See  supra  paras.  500-  504. 
 1034  See  supra  paras.  500-  504. 
 1035  Report,  Local  Competition:  August  1999,  at  45,  Table  4.1  (This  report  is  an  update  of  the 
 Local  Competition  Report  issued  in  December  of  1998.  The  report  was  compiled  by  the  Industry  Analysis 
 Division  of  the  Common  Carrier  Bureau  of  the  Federal  Communications  Commission.  This  report  is 
 available  in  the  Commissions  Reference  Information  Center  at  445  12  th  Street,  S.  W.,  Courtyard  Level, 
 Washington,  DC.  Copies  may  be  purchased  from  the  International  Transcription  Services,  Inc.,  at  (202)  857- 
 3800.  It  can  also  be  downloaded,  file  name  LCOMP99-  1.  PDF  or  LCOMP99-  1ZIP,  from  the  Commissions 
 internet  site  at  http://  www.  fcc.  gov/  ccb/  stats.) 

 1036  Carrier  Locator  Report  at  Fig.  1.  This  figure  also  includes  competitive  LECs,  as 
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 Although  it  seems  certain  that  some  of  these  carriers  are  not  independently  owned  and 
 operated,  or  have  more  than  1,500  employees,  we  are  unable  at  this  time  to  estimate  with 
 greater  precision  the  number  of  competitive  LECs  that  would  qualify  as  small  business 
 concerns  under  SBAs  definition.  Consequently,  we  estimate  that  there  are  fewer  than 
 129  small  entity  competitive  LECs  that  may  be  affected  by  the  decisions  and  rules 
 adopted  in  response  to  the  Fourth  Further  Notice  of  Proposed  Rulemaking. 

 4.  Description  of  Projected  Reporting,  Recordkeeping,  and 
 Other  Compliance  Requirements 

 517.  If  the  Commission  does  not  establish  any  restrictions  on  the  use  of 
 unbundled  network  elements  or  combinations  of  network  elements,  no  additional 
 compliance  requirements  are  anticipated  from  further  consideration  of  this  issue.  If, 
 however,  restrictions  on  access  to  network  elements  are  imposed,  and  depending  on  how 
 the  restrictions  are  imposed,  competitive  LECs,  CAPs  and  other  purchasers  of  unbundled 
 network  elements,  including  small  entities,  may  be  subject  to  additional  reporting, 
 recordkeeping  and  other  compliance  requirements.  Incumbent  LECs,  including  small 
 incumbent  LECs,  would  also  be  impacted  because  they  would  have  to  keep  track  of 
 competitive  LEC  filings  and  whether  the  use  of  the  unbundled  network  element  changed 
 in  such  a  way  that  a  restriction  would  attach.  If  restrictions  are  placed  on  the  use  of 
 unbundled  network  elements  or  combinations  of  such  elements,  compliance  with  these 
 requests  may  require  the  use  of  engineering,  technical,  operational,  accounting,  billing, 
 and  legal  skills.  1037 

 5.  Steps  Taken  to  Minimize  Significant  Economic  Impact 
 on  Small  Entities,  and  Significant  Alternatives 
 Considered 

 518.  If  requesting  carriers  can  substitute  unbundled  network  elements,  such  as 
 transport,  for  entrance  facilities,  incumbent  LECs,  including  small  entities,  may  be 
 significantly  economically  impacted.  On  the  other  hand,  substituting  unbundled  network 
 elements  for  entrance  facilities  could  benefit  competitive  LECs,  CAPs,  and  other 
 purchasers  of  unbundled  network  elements.  The  Commission  will  evaluate  in  this 
 proceeding  whether  there  are  legal  grounds  for  restricting  such  access.  If  no  such  grounds 
 exist,  and  instead  if  the  statute  requires  unrestricted  access  to  these  unbundled  network 
 elements  or  combinations,  then  the  Commission  will  have  no  alternative  other  than 
 implementation  of  the  statutory  requirements  for  unrestricted  access. 

 6.  Federal  Rules  that  May  Duplicate,  Overlap,  or  Conflict 
 with  the  Proposed  Rules 

 519.  None. 

 determined  by  TRS  filings. 
 1037  See  supra  Section  VII. 
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 IX.  ADMINISTRATIVE  MATTERS 
 520.  Pursuant  to  Sections  1.415  and  1.419  of  the  Commission's  rules,  47  C.  F.  R. 
   1.415,  1.419,  interested  parties  may  file  comments  on  or  before  January  12,  2000  and 
 reply  comments  on  or  before  February  11,  2000.  Comments  may  be  filed  using  the 
 Commission's  Electronic  Comment  Filing  System  (ECFS)  or  by  filing  paper  copies.  See 
 Electronic  Filing  of  Documents  in  Rulemaking  Proceedings,  63  Fed.  Reg.  24,121  (1998). 

 521.  Comments  filed  through  the  ECFS  can  be  sent  as  an  electronic  file  via  the 
 Internet  to  <http://  www.  fcc.  gov/  e-  file/  ecfs.  html>.  Generally,  only  one  copy  of  an 
 electronic  submission  must  be  filed.  If  multiple  docket  or  rulemaking  numbers  appear  in 
 the  caption  of  this  proceeding,  however,  commenters  must  transmit  one  electronic  copy  of 
 the  comments  to  each  docket  or  rulemaking  number  referenced  in  the  caption.  In 
 completing  the  transmittal  screen,  commenters  should  include  their  full  name,  Postal 
 Service  mailing  address,  and  the  applicable  docket  or  rulemaking  number.  Parties  may 
 also  submit  an  electronic  comment  by  Internet  e-  mail.  To  get  filing  instructions  for  e-mail 
 comments,  commenters  should  send  an  e-  mail  to  ecfs@  fcc.  gov,  and  should  include 
 the  following  words  in  the  body  of  the  message,  "get  form  <your  e-  mail  address."  A 
 sample  form  and  directions  will  be  sent  in  reply. 

 522.  Parties  who  choose  to  file  by  paper  must  file  an  original  and  four  copies  of 
 each  filing.  If  you  want  each  Commissioner  to  receive  a  personal  copy  of  your 
 comments,  you  must  file  an  original  plus  eleven  copies.  All  filings  must  be  sent  to  the 
 Commissions  Secretary,  Magalie  Roman  Salas,  Office  of  the  Secretary,  TW-  A306, 
 Federal  Communications  Commission,  445  12  th  Street,  S.  W.,  Washington,  D.  C.  20554. 
 The  Common  Carrier  Bureau  contact  for  this  proceeding  is  Jodie  Donovan-  May  at  202- 
 418-  1580.  If  more  than  one  docket  or  rulemaking  number  appear  in  the  caption  of  this 
 proceeding,  commenters  must  submit  two  additional  copies  for  each  additional  docket  or 
 rulemaking  number. 

 523.  Parties  who  choose  to  file  by  paper  should  also  submit  their  comments  on 
 diskette.  These  diskettes  should  be  submitted  to:  Jodie  Donovan-  May,  Federal 
 Communications  Commission,  445  12  th  Street,  S.  W.,  Washington,  D.  C.  20554.  Such  a 
 submission  should  be  on  a  3.5  inch  diskette  formatted  in  an  IBM  compatible  format  using 
 Word  for  Windows  or  compatible  software.  The  diskette  should  be  accompanied  by  a 
 cover  letter  and  should  be  submitted  in  "read  only"  mode.  The  diskette  should  be  clearly 
 labeled  with  the  commenter's  name,  proceeding  (including  the  lead  docket  number  in  this 
 case,  Docket  No.  96-  98,  type  of  pleading  (comment  or  reply  comment),  date  of 
 submission,  and  the  name  of  the  electronic  file  on  the  diskette.  The  label  should  also 
 include  the  following  phrase  "Disk  Copy  -  Not  an  Original."  Each  diskette  should  contain 
 only  one  party's  pleadings,  preferably  in  a  single  electronic  file.  In  addition,  commenters 
 must  send  diskette  copies  to  the  Commission's  copy  contractor,  International 
 Transcription  Service,  Inc.,  1231  20th  Street,  N.  W.,  Washington,  D.  C.  20037. 
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 Federal  Communications  Commission  FCC  99-  238 
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 524.  Ex  Parte  Rules.  This  proceeding  will  be  treated  as  a  permit-  but-  disclose 
 proceeding  subject  of  the  permit-  but-  disclose  requirements  under  Section  1.1206(  b)  of 
 the  Commissions  rules.  1038  Ex  parte  presentations  are  permissible  if  disclosed  in 
 accordance  with  Commission  rules,  except  during  the  Sunshine  Agenda  period  when  ex 
 parte  or  otherwise,  are  generally  prohibited.  Person  making  oral  ex  parte  presentations 
 are  reminded  that  a  memorandum  summarizing  a  presentation  must  contain  a  summary  of 
 the  substance  of  the  presentation  and  not  merely  a  listing  of  the  subjects  discussed.  More 
 than  a  one  or  two  sentence  description  of  the  view  are  arguments  presented  is  generally 
 required.  1039  Additional  rules  pertaining  to  oral  and  written  presentations  are  set  forth  in 
 Section  1.1206(  b). 

 X.  ORDERING  CLAUSES 

 525.  Accordingly,  IT  IS  ORDERED  that  pursuant  to  Sections  1,  3,  4,  201-  205, 
 251,  256,  271,  303(  r)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151, 
 153,  154,  201-  205,  251,  252,  256,  271,  303(  r)  the  THIRD  REPORT  AND  ORDER  AND 
 FOURTH  FURTHER  NOTICE  OF  PROPOSED  RULEMAKING  is  hereby  ADOPTED. 

 526.  IT  IS  FURTHER  ORDERED  that    51.319  of  the  Commissions  Rules  ,  47 
 C.  F.  R.    51.319,  as  set  forth  in  Appendix  C  hereto,  is  effective  30  days  after  publication 
 in  the  Federal  Register,  with  the  exception  of  only  the  following  requirements,  which  are 
 effective  120  days  after  publication  in  the  Federal  Register:  the  requirement  to  provide 
 access  on  an  unbundled  basis  to  dark  fiber  as  set  forth  in    51.319(  a)(  1);  the  requirement 
 to  provide  access  on  an  unbundled  basis  to  subloops  and  inside  wire  as  set  forth  in   
 51.319(  a)(  2);  the  requirement  to  provide  access  on  an  unbundled  basis  to  packet 
 switching  in  the  limited  circumstances  set  forth  in    51.319(  c)(  3)(  B);  the  requirement  to 
 provide  access  on  an  unbundled  basis  to  dark  fiber  transport  as  set  forth  in   
 51.319(  d)(  1)(  B);  the  requirement  to  provide  access  on  an  unbundled  basis  to  the  Calling 
 Name  Database,  911  Database,  and  E911  Database  as  set  forth  in  51.319(  e)(  2)(  A);  and 
 the  requirement  to  provide  access  on  an  unbundled  basis  to  loop  qualification  information 
 as  set  forth  in    51.319(  g).  1040 

 527.  IT  IS  FURTHER  ORDERED  that  the  Commissions  Office  of  Public 
 Affairs,  Reference  Operations  Division,  SHALL  SEND  a  copy  of  this  THIRD  REPORT 
 AND  ORDER,  including  the  Final  Regulatory  Flexibility  Analysis,  to  the  Chief  Counsel 
 for  Advocacy  of  the  Small  Business  Administration. 

 528.  IT  IS  FURTHER  ORDERED  that  the  Commissions  Office  of  Public 
 Affairs,  Reference  Operations  Division,  SHALL  SEND  a  copy  of  this  FOURTH 

 1038  47  C.  F.  R.    1.1206(  b),  as  revised. 
 1039  See  id.  at    1.1206(  b)(  2). 
 1040  These  delineated  requirements  were  not  contained  in    51.319  prior  to  the  rule  being 
 vacated  by  the  Supreme  Court  in  Iowa  Utils.  Bd. 
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 FURTHER  NOTICE  OF  PROPOSED  RULEMAKING,  including  the  Initial  Regulatory 
 Flexibility  Analysis,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business 
 Administration. 

 FEDERAL  COMMUNICATIONS  COMMISSION 

 Magalie  Roman  Salas 
 Secretary 
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 APPENDIX  A 
 List  of  Commenters  in  CC  Docket  No.  96-  98 
 Ad  Hoc  Telecommunications  Users  Committee  (Ad  Hoc) 
 Allegiance  Telecom,  Inc.  (Allegiance) 
 Ameritech  (Ameritech) 
 Association  for  Local  Telecommunications  Services  (ALTS) 
 AT&  T  Corp.  (AT&  T) 
 Bell  Atlantic  Telephone  Companies  (Bell  Atlantic) 
 BellSouth  Corporation/  BellSouth  Telecommunications,  Inc.  (BellSouth) 
 Cable  and  Wireless  USA,  Inc.  (Cable  &  Wireless) 
 Centennial  Cellular  Corporation,  CenturyTel  Wireless,  Inc.,  Thumb  Cellular 
 Limited  Partnership,  and  Trillium  Cellular  Corporation  (Centennial  Joint) 
 Choice  One  Communications,  Network  Plus,  Inc.,  GST  Telecom  Inc., 
 CTSI,  Inc.,  and  Hyperion  Telecommunications,  Inc.  (Choice  One  Joint) 
 Cincinnati  Bell  Telephone  Company  (Cincinnati  Bell) 
 CO  Space  Services,  Inc.  (CO  Space) 
 Columbia  Telecommunications,  Inc.  (Columbia) 
 Competition  Policy  Institute  (CPI) 
 Competitive  Telecommunications  Association  (CompTel) 
 Connecticut  Department  of  Public  Utility  Control  (Connecticut  DPUC) 
 Corecomm  Limited  (Corecomm) 
 Covad  Communications  Company  (Covad) 
 Cox  Communications,  Inc.  (Cox) 
 e.  spire  Communications,  Inc.  and  Intermedia  Communications  Inc.  (e.  spire 
 Joint) 
 Excel  Communications,  Inc.  (Excel) 
 Florida  Public  Service  Commission  (Florida  PSC) 
 Focal  Communications  Corporation  (Focal) 
 General  Services  Administration  (GSA) 
 GTE  Service  Corporation  (GTE) 
 Illinois  Commerce  Commission  (Illinois  Commission) 
 Information  Technology  Industry  Council  (ITIC) 
 Inline  Connection  Corporation  (Inline) 
 Iowa  Utilities  Board  (Iowa) 
 Joint  Consumer  Advocates  (Joint  Consumer  Advocates) 
 Kentucky  Public  Service  Commission  (Kentucky  PSC) 
 KMC  Telecom  Inc.  (KMC) 
 Level  3  Communications,  Inc.  (Level  3) 
 Low  Tech  Designs,  Inc.  (Low  Tech) 
 MCI  WorldCom,  Inc.  (MCI  WorldCom) 
 McLeodUSA  Telecommunications  Services,  Inc.  (McLeod) 
 Mediaone  Group,  Inc.  (Mediaone) 
 Metro  One  Telecommunications,  Inc.  (Metro  One) 
 Metromedia  Fiber  Network  Services,  Inc.  (MFN) 
 MGC  Communications,  Inc.  (MGC) 
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 National  Association  of  Regulatory  Utility  Commissioners  (NARUC) 
 National  Telecommunications  and  Information  Administration  (NTIA) 
 Net2000  Communications,  Inc.  (Net2000) 
 Network  Access  Solutions  Corporation  (NAS) 
 New  England  Voice  &  Data,  LLC  (New  England  Voice  &  Data) 
 New  Jersey  Division  of  the  Ratepayer  Advocate  (New  Jersey  DRA) 
 New  York  State  Department  of  Public  Service  (New  York  DPS) 
 NEXTLINK  Communications,  Inc.  (NEXTLINK) 
 Northpoint  Communications,  Inc.  (Northpoint) 
 Ohio  Public  Utilities  Commission  (Ohio  PUC) 
 Optel,  Inc.  (OpTel) 
 People  of  the  State  of  California  and  the  California  Public  Utilities 
 Commission  (California  PUC) 
 Pennsylvania  Public  Utility  Commission  (Pennsylvania  PUC) 
 Pilgrim  Telephone,  Inc.  (Pilgrim) 
 Prism  Communications  Services,  Inc.  (Prism) 
 Oregon  Public  Utility  Commission  (Oregon  PUC) 
 Qwest  Communications  Corp.  (Qwest) 
 RCN  Telecom  Services,  Inc.  (RCN) 
 Rhythms  Netconnections  Inc.  (Rhythms) 
 Rural  Telephone  Coalition  (Rural  Telephone  Coalition) 
 SBC  Telecommunications,  Inc.  (SBC) 
 Sprint  Corporation  (Sprint) 
 Strategic  Policy  Research  (SPR) 
 Telecommunications  Resellers  Association  (TRA) 
 TelTrust,  Inc.  (TelTrust) 
 Teligent,  Inc.  (Teligent) 
 Texas  Public  Utility  Commission  (Texas  PUC) 
 Time  Warner  Telecom  (Time  Warner) 
 United  States  Telephone  Association  (USTA) 
 US  WEST,  Inc.  (US  West) 
 UTC,  The  Telecommunications  Association  (UTC) 
 Vermont  Public  Service  Board  (Vermont  PSB) 
 Waller  Creek  Communications,  Inc.  (Waller  Creek) 
 Washington  Utilities  and  Transportation  Commission  (Washington  UTC) 
 Weingarten,  Michael  (Weingarten) 
 WinStar  Communications,  Inc.  (WinStar) 
 Wisconsin  Public  Service  Commission  (Wisconsin  PSC) 
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 APPENDIX  B 
 Top  50  Metropolitan  Statistical  Areas  (MSAs) 

 1.  Los  Angeles    Long  Beach 
 2.  New  York 
 3.  Chicago 
 4.  Philadelphia 
 5.  Washington,  D.  C. 
 6.  Detroit 
 7.  Houston 
 8.  Atlanta 
 9.  Boston 
 10.  Dallas 
 11.  Riverside    San  Bernardino 
 12.  Phoenix    Mesa 
 13.  Minneapolis    St.  Paul 
 14.  San  Diego 
 15.  Orange  County 
 16.  Nassau    Suffolk 
 17.  St.  Louis 
 18.  Baltimore 
 19.  Pittsburgh 
 20.  Oakland 
 21.  Seattle    Bellevue    Everett 
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 Federal  Communications  Commission  FCC  99-  238 
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 22.  Tampa    St.  Petersburg    Clearwater 
 23.  Cleveland    Lorain    Elyria 
 24.  Miami 
 25.  Newark 
 26.  Denver 
 27.  Portland    Vancouver 
 28.  San  Francisco 
 29.  Kansas  City 
 30.  San  Jose 
 31.  Cincinnati 
 32.  Fort  Worth    Arlington 
 33.  Norfolk    Virginia  Beach    Newport  News 
 34.  Sacramento 
 35.  San  Antonio 
 36.  Indianapolis 
 37.  Orlando 
 38.  Milwaukee    Waukesha 
 39.  Fort  Lauderdale 
 40.  Columbus,  OH 
 41.  Las  Vegas 
 42.  Charlotte    Gastonia    Rock  Hill 
 43.  Bergen    Passaic 
 44.  New  Orleans 
 45.  Salt  Lake  City    Ogden 
 46.  Buffalo    Niagara  Falls 
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 47.  Greensboro    Winston  Salem    High  Point 
 48.  Nashville 
 49.  Hartford 
 50.  Providence    Fall  River    Warwick 

 Source:  March  1999  LERG;  USTA  UNE  Report  at  I-  22. 
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 APPENDIX  C 
   51.3l7.  Standards  for  Requiring  the  Unbundling  of  Network  Elements 
 (a)  Proprietary  Network  Elements.  A  network  element  shall  be  considered  to  be 
 proprietary  if  an  incumbent  LEC  can  demonstrate  that  it  has  invested 
 resources  to  develop  proprietary  information  or  functionalities  that  are 
 protected  by  patent,  copyright  or  trade  secret  law.  The  Commission  shall 
 undertake  the  following  analysis  to  determine  whether  a  proprietary  network 
 element  should  be  made  available  for  purposes  of  section  251(  c)(  3)  of  the  Act: 
 (1)  Determine  whether  access  to  the  proprietary  network  element  is 
 necessary.  A  network  element  is  necessary  if,  taking  into 
 consideration  the  availability  of  alternative  elements  outside  the 
 incumbent  LECs  network,  including  self-  provisioning  by  a  requesting 
 carrier  or  acquiring  an  alternative  from  a  third-  party  supplier,  lack  of 
 access  to  the  network  element  precludes  a  requesting 
 telecommunications  carrier  from  providing  the  services  that  it  seeks  to 
 offer.  If  access  is  necessary,  then,  subject  to  any  consideration  of 
 the  factors  set  forth  under  subsection  (c)  of  this  rule,  the  Commission 
 may  require  the  unbundling  of  such  proprietary  network  element. 
 (2)  In  the  event  that  such  access  is  not  necessary,  the  Commission  may 
 require  unbundling  subject  to  any  consideration  of  the  factors  set  forth 
 under  subsection  (c)  of  this  rule  if  it  is  determined  that: 
 (A)  The  incumbent  LEC  has  implemented  only  a  minor 
 modification  to  the  network  element  in  order  to  qualify 
 for  proprietary  treatment; 
 (B)  The  information  or  functionality  that  is  proprietary  in 
 nature  does  not  differentiate  the  incumbent  LECs 
 services  from  the  requesting  carriers  services;  or 
 (C)  Lack  of  access  to  such  element  would  jeopardize  the 
 goals  of  the  1996  Act. 
 (b)  Non-  Proprietary  Network  Elements.  The  Commission  shall  undertake  the 
 following  analysis  to  determine  whether  a  non-  proprietary  network  element 
 should  be  made  available  for  purposes  of  section  251(  c)(  3)  of  the  Act: 
 (1)  Determine  whether  lack  of  access  to  a  non-  proprietary  network 
 element  impairs  a  carriers  ability  to  provide  the  service  it  seeks  to 
 offer.  A  requesting  carriers  ability  to  provide  service  is  impaired  if, 
 taking  into  consideration  the  availability  of  alternative  elements 
 outside  the  incumbent  LECs  network,  including  self-  provisioning  by 
 a  requesting  carrier  or  acquiring  an  alternative  from  a  third-  party 
 supplier,  lack  of  access  to  that  element  materially  diminishes  a 
 requesting  carriers  ability  to  provide  the  services  it  seeks  to  offer. 
 The  Commission  will  consider  the  totality  of  the  circumstances  to 
 determine  whether  an  alternative  to  the  incumbent  LECs  network 
 element  is  available  in  such  a  manner  that  a  requesting  carrier  can 
 provide  service  using  the  alternative.  If  the  Commission  determines 
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 that  lack  of  access  to  an  element  impairs  a  requesting  carriers 
 ability  to  provide  service,  it  may  require  the  unbundling  of  that 
 element,  subject  to  any  consideration  of  the  factors  set  forth  under 
 subsection  (c). 
 (2)  In  considering  whether  lack  of  access  to  a  network  element  materially 
 diminishes  a  requesting  carriers  ability  to  provide  service,  the 
 Commission  shall  consider  the  extent  to  which  alternatives  in  the 
 market  are  available  as  a  practical,  economic,  and  operational  matter. 
 The  Commission  will  rely  upon  the  following  factors  to  determine 
 whether  alternative  network  elements  are  available  as  a  practical, 
 economic,  and  operational  matter: 
 (A)  Cost,  including  all  costs  that  requesting  carriers  may  incur 
 when  using  the  alternative  element  to  provide  the  services  it 
 seeks  to  offer; 
 (B)  Timeliness,  including  the  time  associated  with  entering  a 
 market  as  well  as  the  time  to  expand  service  to  more 
 customers; 
 (C)  Quality; 
 (D)  Ubiquity,  including  whether  the  alternatives  are  available 
 ubiquitously; 
 (E)  Impact  on  network  operations. 
 (c)  In  determining  whether  to  require  the  unbundling  of  any  network  element 
 under  this  rule,  the  Commission  may  also  consider  the  following  additional 
 factors: 
 (1)  Whether  unbundling  of  a  network  element  promotes  the  rapid 
 introduction  of  competition; 
 (2)  Whether  unbundling  of  a  network  element  promotes  facilities-based 
 competition,  investment,  and  innovation; 
 (3)  Whether  unbundling  of  a  network  element  promotes  reduced 
 regulation; 
 (4)  Whether  unbundling  of  a  network  element  provides  certainty  to 
 requesting  carriers  regarding  the  availability  of  the  element; 
 (5)  Whether  unbundling  of  a  network  element  is  administratively 
 practical  to  apply. 
 (d)  If  an  incumbent  LEC  is  required  to  provide  nondiscriminatory  access  to  a 
 network  element  in  accordance  with    51.311  and  section  251(  c)(  3)  of  the  Act 
 under    51.319  or  any  applicable  Commission  Order,  no  state  commission 
 shall  have  authority  to  determine  that  such  access  is  not  required.  A  state 
 commission  must  comply  with  the  standards  set  forth  in  this    51.317  when 
 considering  whether  to  require  the  unbundling  of  additional  network  elements. 
 With  respect  to  any  network  element  which  a  state  commission  has  required  to 
 be  unbundled  under    51.317,  the  state  commission  retains  the  authority  to 
 subsequently  determine,  in  accordance  with  the  requirements  of  this  rule,  that 
 such  network  element  need  no  longer  be  unbundled. 

   51.319  Specific  unbundling  requirements. 
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 (a)  Local  Loop  and  Subloop.  An  incumbent  LEC  shall  provide 
 nondiscriminatory  access,  in  accordance  with    51.311  and  section  251(  c)(  3) 
 of  the  Act,  to  the  local  loop  and  subloop,  including  inside  wiring  owned  by 
 the  incumbent  LEC,  on  an  unbundled  basis  to  any  requesting 
 telecommunications  carrier  for  the  provision  of  a  telecommunications  service. 
 (1)  Local  Loop.  The  local  loop  network  element  is  defined  as  a 
 transmission  facility  between  a  distribution  frame  (or  its  equivalent)  in 
 an  incumbent  LEC  central  office  and  the  loop  demarcation  point  at  an 
 end-  user  customer  premises,  including  inside  wire  owned  by  the 
 incumbent  LEC.  The  local  loop  network  element  includes  all  features, 
 functions,  and  capabilities  of  such  transmission  facility.  Those 
 features,  functions,  and  capabilities  include,  but  are  not  limited  to,  dark 
 fiber,  attached  electronics  (except  those  electronics  used  for  the 
 provision  of  advanced  services,  such  as  Digital  Subscriber  Line  Access 
 Multiplexers),  and  line  conditioning.  The  local  loop  includes,  but  is 
 not  limited  to,  DS1,  DS3,  fiber,  and  other  high  capacity  loops. 
 (2)  Subloop.  The  subloop  network  element  is  defined  as  any  portion  of 
 the  loop  that  is  technically  feasible  to  access  at  terminals  in  the 
 incumbent  LECs  outside  plant,  including  inside  wire.  An  accessible 
 terminal  is  any  point  on  the  loop  where  technicians  can  access  the  wire 
 or  fiber  within  the  cable  without  removing  a  splice  case  to  reach  the 
 wire  or  fiber  within.  Such  points  may  include,  but  are  not  limited  to, 
 the  pole  or  pedestal,  the  network  interface  device,  the  minimum  point 
 of  entry,  the  single  point  of  interconnection,  the  main  distribution 
 frame,  the  remote  terminal,  and  the  feeder/  distribution  interface. 
 (A)  Inside  Wire.  Inside  wire  is  defined  as  all  loop  plant  owned  by 
 the  incumbent  LEC  on  end-  user  customer  premises  as  far  as 
 the  point  of  demarcation  as  defined  in    68.3,  including  the 
 loop  plant  near  the  end-  user  customer  premises.  Carriers  may 
 access  the  inside  wire  subloop  at  any  technically  feasible  point 
 including,  but  not  limited  to,  the  network  interface  device,  the 
 minimum  point  of  entry,  the  single  point  of  interconnection, 
 the  pedestal,  or  the  pole. 
 (B)  Technical  feasibility.  If  parties  are  unable  to  reach  agreement, 
 pursuant  to  voluntary  negotiations,  as  to  whether  it  is 
 technically  feasible,  or  whether  sufficient  space  is  available,  to 
 unbundle  the  subloop  at  the  point  where  a  carrier  requests,  the 
 incumbent  LEC  shall  have  the  burden  of  demonstrating  to  the 
 state,  pursuant  to  state  arbitration  proceedings  under  section 
 252  of  the  Act,  that  there  is  not  sufficient  space  available,  or 
 that  it  is  not  technically  feasible,  to  unbundle  the  subloop  at 
 the  point  requested. 
 (C)  Best  practices.  Once  one  state  has  determined  that  it  is 
 technically  feasible  to  unbundle  subloops  at  a  designated 
 point,  an  incumbent  LEC  in  any  state  shall  have  the  burden  of 
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 demonstrating,  pursuant  to  state  arbitration  proceedings  under 
 section  252  of  the  Act,  that  it  is  not  technically  feasible,  or 
 that  sufficient  space  is  not  available,  to  unbundle  its  own 
 loops  at  such  a  point. 
 (D)  Rules  for  collocation.  Access  to  the  subloop  is  subject  to  the 
 Commissions  collocation  rules  at    51.321-  323. 
 (E)  Single  point  of  interconnection.  The  incumbent  LEC  shall 
 provide  a  single  point  of  interconnection  at  multi-  unit 
 premises  that  is  suitable  for  use  by  multiple  carriers.  This 
 obligation  is  in  addition  to  the  incumbent  LECs  obligation  to 
 provide  nondiscriminatory  access  to  subloops  at  any 
 technically  feasible  point.  If  parties  are  unable  to  negotiate 
 terms  and  conditions  regarding  a  single  point  of 
 interconnection,  issues  in  dispute,  including  compensation  of 
 the  incumbent  LEC  under  forward-  looking  pricing  principles, 
 shall  be  resolved  under  the  dispute  resolution  processes  in 
 section  252  of  the  Act. 
 (3)  Line  conditioning.  The  incumbent  LEC  shall  condition  lines  required 
 to  be  unbundled  under  this  section  wherever  a  competitor  requests, 
 whether  or  not  the  incumbent  LEC  offers  advanced  services  to  the 
 end-  user  customer  on  that  loop. 
 (A)  Line  conditioning  is  defined  as  the  removal  from  the  loop  of 
 any  devices  that  may  diminish  the  capability  of  the  loop  to 
 deliver  high-  speed  switched  wireline  telecommunications 
 capability,  including  xDSL  service.  Such  devices  include,  but 
 are  not  limited  to,  bridge  taps,  low  pass  filters,  and  range 
 extenders. 
 (B)  Incumbent  LECs  shall  recover  the  cost  of  line  conditioning 
 from  the  requesting  telecommunications  carrier  in  accordance 
 with  the  Commissions  forward-  looking  pricing  principles 
 promulgated  pursuant  to  section  252(  d)(  1)  of  the  Act. 
 (C)  Incumbent  LECs  shall  recover  the  cost  of  line  conditioning 
 from  the  requesting  telecommunications  carrier  in  compliance 
 with  rules  governing  nonrecurring  costs  in    51.507(  e). 
 (D)  In  so  far  as  it  is  technically  feasible,  the  incumbent  LEC  shall 
 test  and  report  trouble  for  all  the  features,  functions,  and 
 capabilities  of  conditioned  lines,  and  may  not  restrict  testing 
 to  voice-  transmission  only. 
 (b)  Network  Interface  Device.  An  incumbent  LEC  shall  provide 
 nondiscriminatory  access,  in  accordance  with    51.311  and  section  251(  c)(  3) 
 of  the  Act,  to  the  network  interface  device  on  an  unbundled  basis  to  any 
 requesting  telecommunications  carrier  for  the  provision  of  a 
 telecommunications  service.  The  network  interface  device  network  element  is 
 defined  as  any  means  of  interconnection  of  end-  user  customer  premises  wiring 
 to  the  incumbent  LECs  distribution  plant,  such  as  a  cross  connect  device  used 
 for  that  purpose.  An  incumbent  LEC  shall  permit  a  requesting 
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 Federal  Communications  Commission  FCC  99-  238 
 5 
 telecommunications  carrier  to  connect  its  own  loop  facilities  to  on-  premises 
 wiring  through  the  incumbent  LECs  network  interface  device,  or  at  any  other 
 technically  feasible  point. 
 (c)  Switching  Capability.  An  incumbent  LEC  shall  provide  nondiscriminatory 
 access,  in  accordance  with    51.311  and  section  251(  c)(  3)  of  the  Act,  to  local 
 circuit  switching  capability  and  local  tandem  switching  capability  on  an 
 unbundled  basis,  except  as  set  forth  in    51.319(  c)(  1)(  B),  to  any  requesting 
 telecommunications  carrier  for  the  provision  of  a  telecommunications  service. 
 An  incumbent  LEC  shall  be  required  to  provide  nondiscriminatory  access  in 
 accordance  with    51.311  and  section  251(  c)(  3)  of  the  Act  to  packet  switching 
 capability  on  an  unbundled  basis  to  any  requesting  telecommunications  carrier 
 for  the  provision  of  a  telecommunications  service  only  in  the  limited 
 circumstance  described  in    51.319(  c)(  3)(  B). 
 (1)(  A)  Local  Circuit  Switching  Capability,  including  Tandem 
 Switching  Capability.  The  local  circuit  switching  capability  network 
 element  is  defined  as: 
 (i)  Line-  side  facilities,  which  include,  but  are  not  limited  to,  the 
 connection  between  a  loop  termination  at  a  main  distribution 
 frame  and  a  switch  line  card; 
 (ii)  Trunk-  side  facilities,  which  include,  but  are  not  limited  to,  the 
 connection  between  trunk  termination  at  a  trunk-  side  cross-connect 
 panel  and  a  switch  trunk  card;  and 
 (iii)  All  features,  functions  and  capabilities  of  the  switch,  which 
 include,  but  are  not  limited  to: 
 (1)  The  basic  switching  function  of  connecting  lines  to 
 lines,  lines  to  trunks,  trunks  to  lines,  and  trunks  to 
 trunks,  as  well  as  the  same  basic  capabilities  made 
 available  to  the  incumbent  LECs  customers,  such  as  a 
 telephone  number,  white  page  listing  and  dial  tone,  and 
 (2)  All  other  features  that  the  switch  is  capable  of 
 providing,  including  but  not  limited  to,  customer 
 calling,  customer  local  area  signaling  service  features, 
 and  Centrex,  as  well  as  any  technically  feasible 
 customized  routing  functions  provided  by  the  switch. 
 (B)  Notwithstanding  the  incumbent  LECs  general  duty  to  unbundle  local 
 circuit  switching,  an  incumbent  LEC  shall  not  be  required  to  unbundle 
 local  circuit  switching  for  requesting  telecommunications  carriers  when 
 the  requesting  telecommunications  carrier  serves  end-  users  with  four  or 
 more  voice  grade  (DS0)  equivalents  or  lines,  and  the  incumbent  LECs 
 local  circuit  switches  are  located  in: 
 (i)  The  top  50  Metropolitan  Statistical  Areas  as  set  forth  in  Appendix 
 B  of  the  Third  Report  and  Order  and  Fourth  Further  Notice  of 
 Proposed  Rulemaking  in  CC  Docket  No.  96-  98,  and 
 (ii)  In  Density  Zone  1,  as  defined  in    69.123  on  January  1,  1999. 
 (2)  Local  Tandem  Switching  Capability.  The  tandem  switching  capability 
 network  element  is  defined  as: 
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 Federal  Communications  Commission  FCC  99-  238 
 6 
 (A)  Trunk-  connect  facilities,  which  include,  but  are  not  limited  to,  the 
 connection  between  trunk  termination  at  a  cross  connect  panel  and  switch 
 trunk  card; 
 (B)  The  basic  switch  trunk  function  of  connecting  trunks  to  trunks;  and 
 (C)  The  functions  that  are  centralized  in  tandem  switches  (as  distinguished 
 from  separate  end  office  switches),  including  but  not  limited,  to  call 
 recording,  the  routing  of  calls  to  operator  services,  and  signaling 
 conversion  features. 
 (3)  Packet  Switching  Capability.  (A)  The  packet  switching  capability  network 
 element  is  defined  as  the  basic  packet  switching  function  of  routing  or 
 forwarding  packets,  frames,  cells  or  other  data  units  based  on  address  or  other 
 routing  information  contained  in  the  packets,  frames,  cells  or  other  data  units, 
 and  the  functions  that  are  performed  by  Digital  Subscriber  Line  Access 
 Multiplexers,  including  but  not  limited  to: 
 (i)  The  ability  to  terminate  copper  customer  loops  (which  includes 
 both  a  low  band  voice  channel  and  a  high-  band  data  channel,  or 
 solely  a  data  channel); 
 (ii)  The  ability  to  forward  the  voice  channels,  if  present,  to  a  circuit 
 switch  or  multiple  circuit  switches; 
 (iii)  The  ability  to  extract  data  units  from  the  data  channels  on  the 
 loops,  and 
 (iv)  The  ability  to  combine  data  units  from  multiple  loops  onto  one 
 or  more  trunks  connecting  to  a  packet  switch  or  packet  switches. 
 (B)  An  incumbent  LEC  shall  be  required  to  provide  nondiscriminatory 
 access  to  unbundled  packet  switching  capability  only  where  each  of  the 
 following  conditions  are  satisfied: 
 (i)  The  incumbent  LEC  has  deployed  digital  loop  carrier  systems, 
 including  but  not  limited  to,  integrated  digital  loop  carrier  or 
 universal  digital  loop  carrier  systems;  or  has  deployed  any  other 
 system  in  which  fiber  optic  facilities  replace  copper  facilities  in  the 
 distribution  section  (e.  g.,  end  office  to  remote  terminal,  pedestal  or 
 environmentally  controlled  vault); 
 (ii)  There  are  no  spare  copper  loops  capable  of  supporting  the  xDSL 
 services  the  requesting  carrier  seeks  to  offer; 
 (iii)  The  incumbent  LEC  has  not  permitted  a  requesting  carrier  to 
 deploy  a  Digital  Subscriber  Line  Access  Multiplexer  at  the  remote 
 terminal,  pedestal  or  environmentally  controlled  vault  or  other 
 interconnection  point,  nor  has  the  requesting  carrier  obtained  a 
 virtual  collocation  arrangement  at  these  subloop  interconnection 
 points  as  defined  by    51.319(  b);  and 
 (iv)  The  incumbent  LEC  has  deployed  packet  switching  capability 
 for  its  own  use. 
 (d)  Interoffice  Transmission  Facilities.  An  incumbent  LEC  shall  provide 
 nondiscriminatory  access,  in  accordance  with    51.311  and  section  251(  c)(  3)  of  the  Act, 
 to  interoffice  transmission  facilities  on  an  unbundled  basis  to  any  requesting 
 telecommunications  carrier  for  the  provision  of  a  telecommunications  service. 
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 Federal  Communications  Commission  FCC  99-  238 
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 (1)  Interoffice  transmission  facility  network  elements  include: 
 (A)  Dedicated  transport,  defined  as  incumbent  LEC  transmission  facilities, 
 including  all  technically  feasible  capacity-  related  services  including,  but 
 not  limited  to,  DS1,  DS3  and  OCn  levels,  dedicated  to  a  particular 
 customer  or  carrier,  that  provide  telecommunications  between  wire  centers 
 owned  by  incumbent  LECs  or  requesting  telecommunications  carriers,  or 
 between  switches  owned  by  incumbent  LECs  or  requesting 
 telecommunications  carriers; 
 (B)  Dark  fiber  transport,  defined  as  incumbent  LEC  optical  transmission 
 facilities  without  attached  multiplexing,  aggregation  or  other  electronics; 
 (C)  Shared  transport,  defined  as  transmission  facilities  shared  by  more  than 
 one  carrier,  including  the  incumbent  LEC,  between  end  office  switches, 
 between  end  office  switches  and  tandem  switches,  and  between  tandem 
 switches,  in  the  incumbent  LEC  network. 
 (2)  The  incumbent  LEC  shall: 
 (A)  Provide  a  requesting  telecommunications  carrier  exclusive  use  of 
 interoffice  transmission  facilities  dedicated  to  a  particular  customer  or 
 carrier,  or  use  the  features,  functions,  and  capabilities  of  interoffice 
 transmission  facilities  shared  by  more  than  one  customer  or  carrier. 
 (B)  Provide  all  technically  feasible  transmission  facilities,  features,  functions, 
 and  capabilities  that  the  requesting  telecommunications  carrier  could  use 
 to  provide  telecommunications  services; 
 (C)  Permit,  to  the  extent  technically  feasible,  a  requesting 
 telecommunications  carrier  to  connect  such  interoffice  facilities  to 
 equipment  designated  by  the  requesting  telecommunications  carrier, 
 including  but  not  limited  to,  the  requesting  telecommunications  carriers 
 collocated  facilities;  and 
 (D)  Permit,  to  the  extent  technically  feasible,  a  requesting 
 telecommunications  carrier  to  obtain  the  functionality  provided  by  the 
 incumbent  LECs  digital  cross-  connect  systems  in  the  same  manner  that 
 the  incumbent  LEC  provides  such  functionality  to  interexchange  carriers. 
 (e)  Signaling  Networks  and  Call-  Related  Databases.  An  incumbent  LEC  shall 
 provide  nondiscriminatory  access,  in  accordance  with    51.311  and  section  251(  c)(  3)  of 
 the  Act,  to  signaling  networks,  call-  related  databases,  and  service  management  systems 
 on  an  unbundled  basis  to  any  requesting  telecommunications  carrier  for  the  provision  of  a 
 telecommunications  service. 
 (1)  Signaling  Networks:  Signaling  networks  include,  but  are  not  limited  to, 
 signaling  links  and  signaling  transfer  points. 
 (A)  When  a  requesting  telecommunications  carrier  purchases  unbundled 
 switching  capability  from  an  incumbent  LEC,  the  incumbent  LEC  shall 
 provide  access  from  that  switch  in  the  same  manner  in  which  it  obtains 
 such  access  itself. 
 (B)  An  incumbent  LEC  shall  provide  a  requesting  telecommunications  carrier 
 with  its  own  switching  facilities  access  to  the  incumbent  LECs  signaling 
 network  for  each  of  the  requesting  telecommunications  carriers  switches. 
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 Federal  Communications  Commission  FCC  99-  238 
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 This  connection  shall  be  made  in  the  same  manner  as  an  incumbent  LEC 
 connects  one  of  its  own  switches  to  a  signaling  transfer  point. 
 (2)  Call-  Related  Databases:  Call-  related  databases  are  defined  as  databases, 
 other  than  operations  support  systems,  that  are  used  in  signaling  networks  for  billing  and 
 collection,  or  the  transmission,  routing,  or  other  provision  of  a  telecommunications 
 service. 
 (A)  For  purposes  of  switch  query  and  database  response  through  a  signaling 
 network,  an  incumbent  LEC  shall  provide  access  to  its  call-  related 
 databases,  including  but  not  limited  to,  the  Calling  Name  Database,  911 
 Database,  E91l  Database,  Line  Information  Database,  Toll  Free  Calling 
 Database,  Advanced  Intelligent  Network  Databases,  and  downstream 
 number  portability  databases  by  means  of  physical  access  at  the  signaling 
 transfer  point  linked  to  the  unbundled  databases. 
 (B)  Notwithstanding  the  incumbent  LECs  general  duty  to  unbundle  call-related 
 databases,  an  incumbent  LEC  shall  not  be  required  to  unbundle 
 the  services  created  in  the  AIN  platform  and  architecture  that  qualify  for 
 proprietary  treatment. 
 (C)  An  incumbent  LEC  shall  allow  a  requesting  telecommunications  carrier 
 that  has  purchased  an  incumbent  LECs  local  switching  capability  to  use 
 the  incumbent  LECs  service  control  point  element  in  the  same  manner, 
 and  via  the  same  signaling  links,  as  the  incumbent  LEC  itself. 
 (D)  An  incumbent  LEC  shall  allow  a  requesting  telecommunications  carrier 
 that  has  deployed  its  own  switch,  and  has  linked  that  switch  to  an 
 incumbent  LECs  signaling  system,  to  gain  access  to  the  incumbent 
 LECs  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  carriers  switch. 
 (E)  An  incumbent  LEC  shall  provide  a  requesting  telecommunications  carrier 
 with  access  to  call-  related  databases  in  a  manner  that  complies  with 
 section  222  of  the  Act. 
 (3)  Service  Management  Systems: 
 (A)  A  service  management  system  is  defined  as  a  computer  database  or 
 system  not  part  of  the  public  switched  network  that,  among  other  things: 
 (1)  Interconnects  to  the  service  control  point  and  sends  to  that  service 
 control  point  the  information  and  call  processing  instructions  needed 
 for  a  network  switch  to  process  and  complete  a  telephone  call;  and 
 (2)  Provides  telecommunications  carriers  with  the  capability  of  entering 
 and  storing  data  regarding  the  processing  and  completing  of  a 
 telephone  call. 
 (B)  An  incumbent  LEC  shall  provide  a  requesting  telecommunications  carrier 
 with  the  information  necessary  to  enter  correctly,  or  format  for  entry,  the 
 information  relevant  for  input  into  the  incumbent  LECs  service 
 management  system. 
 (C)  An  incumbent  LEC  shall  provide  a  requesting  telecommunications  carrier 
 the  same  access  to  design,  create,  test,  and  deploy  Advanced  Intelligent 
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 Federal  Communications  Commission  FCC  99-  238 
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 Network-  based  services  at  the  service  management  system,  through  a 
 service  creation  environment,  that  the  incumbent  LEC  provides  to  itself. 
 (D)  An  incumbent  LEC  shall  provide  a  requesting  telecommunications  carrier 
 access  to  service  management  systems  in  a  manner  that  complies  with 
 section  222  of  the  Act. 
 (f)  Operator  Services  and  Directory  Assistance.  An  incumbent  LEC  shall  provide 
 nondiscriminatory  access  in  accordance  with    51.311  and  section  251(  c)(  3)  of  the  Act  to 
 operator  services  and  directory  assistance  on  an  unbundled  basis  to  any  requesting 
 telecommunications  carrier  for  the  provision  of  a  telecommunications  service  only  where 
 the  incumbent  LEC  does  not  provide  the  requesting  telecommunications  carrier  with 
 customized  routing  or  a  compatible  signaling  protocol.  Operator  services  are  any 
 automatic  or  live  assistance  to  a  consumer  to  arrange  for  billing  or  completion,  or  both,  of 
 a  telephone  call.  Directory  assistance  is  a  service  that  allows  subscribers  to  retrieve 
 telephone  numbers  of  other  subscribers. 
 (g)  Operations  Support  Systems:  An  incumbent  LEC  shall  provide 
 nondiscriminatory  access  in  accordance  with    51.311  and  section  251(  c)(  3)  of  the  Act  to 
 operations  support  systems  on  an  unbundled  basis  to  any  requesting  telecommunications 
 carrier  for  the  provision  of  a  telecommunications  service.  Operations  support  system 
 functions  consist  of  pre-  ordering,  ordering,  provisioning,  maintenance  and  repair,  and 
 billing  functions  supported  by  an  incumbent  LECs  databases  and  information.  An 
 incumbent  LEC,  as  part  of  its  duty  to  provide  access  to  the  pre-  ordering  function,  must 
 provide  the  requesting  carrier  with  nondiscriminatory  access  to  the  same  detailed 
 information  about  the  loop  that  is  available  to  the  incumbent  LEC. 
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 Federal  Communications  Commission  FCC  99-  238 
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   51.5  Terms  and  definitions. 
 Pre-  ordering  and  ordering.  Pre-  ordering  and  ordering  includes  the  exchange  of 
 information  between  telecommunications  carriers  about:  current  or  proposed  customer 
 products  and  services;  or  unbundled  network  elements,  or  some  combination  thereof. 
 This  information  includes  loop  qualification  information,  such  as  the  composition  of  the 
 loop  material,  including  but  not  limited  to:  fiber  optics  or  copper;  the  existence,  location 
 and  type  of  any  electronic  or  other  equipment  on  the  loop,  including  but  not  limited  to, 
 digital  loop  carrier  or  other  remote  concentration  devices,  feeder/  distribution  interfaces, 
 bridge  taps,  load  coils,  pair-  gain  devices,  disturbers  in  the  same  or  adjacent  binder 
 groups;  the  loop  length,  including  the  length  and  location  of  each  type  of  transmission 
 media;  the  wire  gauge(  s)  of  the  loop;  and  the  electrical  parameters  of  the  loop,  which  may 
 determine  the  suitability  of  the  loop  for  various  technologies. 
249
 Federal  Communications  Commission  FCC  99-  238 
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 APPENDIX  D 
250
 Federal  Communications  Commission  FCC  99-  238 
 Separate  Statement  of 
 Commissioner  Susan  Ness 

 Re:  Implementation  of  the  Local  Competition  Provisions  of  the  Telecommunications  Act  of 
 1996,  CC  Docket  No.  96-  98 

 Local  competition  is  the  cornerstone  of  the  Telecommunications  Act  of  1996  (the  Act). 
 Under  section  251  of  the  Act,  Congress  facilitated  the  transition  from  a  monopoly  to  a 
 competitive  market  for  telecommunications  services  by  creating  three  vehicles  for  entry: 
 reselling  the  services  of  the  incumbent  local  exchange  carrier  (ILEC)  at  retail  prices  less  avoided 
 costs;  leasing  one  or  more  unbundled  network  elements  (UNEs)  from  the  ILEC  at  wholesale 
 discounts;  and  offering  facilities-  based  competition.  Policy  makers  assumed  --  but  did  not 
 require  --  that  most  new  competitors  would  migrate  over  time  to  their  own  facilities  as 
 equipment  availability  and  customer  demand  warranted.  Initially,  however,  new  entrants  would 
 need  to  use  piece-  parts  of  the  incumbents  network  to  establish  a  foothold  in  a  market. 

 Just  over  three  years  ago,  in  our  Local  Competition  Order,  I  voted  to  unbundle  seven 
 network  elements  under  section  251(  d)(  2)  of  the  Act.  In  January,  the  Supreme  Court  remanded 
 to  the  Commission  that  section  of  our  order  dealing  with  unbundled  network  elements,  finding 
 that  we  had  not  adequately  considered  the  necessary  and  impair  standard  when  we  gave 
 competitors  blanket  access  to  the  incumbents  networks.  1 

 In  August  of  1996,  with  little  local  competition  on  the  horizon,  we  took  an  expansive 
 view  of  what  new  entrants  would  need  to  jumpstart  competition  and  a  narrow  view  of  the 
 limitations  embodied  in  section  251(  d)(  2).  Today,  with  three  years  of  experience  to  guide  us,  we 
 have  crafted  a  standard  that  balances  the  need  to  jumpstart  competition  with  the  need  to  preserve 
 incumbent  incentives  to  innovate  and  invest  in  new  facilities.  The  analytical  framework  we  adopt 
 today  facilitates  efficient  rather  than  inefficient  competition    as  Congress  intended. 

 Our  new  standard  reconfigures  the  national  list  by  paring  down  some  elements  and 
 bolstering  others.  I  write  separately  to  elaborate  on  a  few  key  points. 

 Advanced  Services 
 I  support  our  decision  not  to  require  unbundling  of  facilities  used  to  provide  advanced 
 services,  such  as  packet  switches  and  DSLAMs.  Incumbents  argue  that,  if  forced  to  unbundle 
 such  facilities,  incumbents  would  have  no  incentive  to  deploy  these  new  broadband  networks  in 

 1  AT&  T  v.  Iowa  Utils.  Bd.,  119  S.  Ct.  721  (1999). 
251
 Federal  Communications  Commission  FCC  99- 
 238 

 SEPARATE  STATEMENT  OF 
 COMMISSIONER  HAROLD  FURCHTGOTT-  ROTH, 
 CONCURRING  IN  PART  AND  DISSENTING  IN  PART 

 Re:  Implementation  of  the  Local  Competition  Provisions  of  the  Telecommunications 
 Act  of  1996,  Third  Report  and  Order  and  Fourth  Further  Notice  of  Proposed  Rulemaking,  CC 
 Docket  96-  98. 

 I  concur  in  the  result  reached  by  todays  Order.  Although  I  would  not  have  interpreted 
 section  251(  d)(  2)  as  the  Commission  has  chosen  to  do,  I  believe  that  the  statutory  language  is 
 flexible  enough  to  encompass  the  Commissions  approach.  1  I  emphasize,  however,  that  there  is 
 much  in  the  detailed  and  lengthy  language  of  this  Order  that  I  cannot  endorse.  I  would  have 
 preferred  to  adopt  a  far  simpler  set  of  unbundling  requirements,  based  on  a  far  more  transparent 
 analysis  of  the  record.  In  my  view,  the  Commission  should  exercise  the  authority  that  it  has  to 
 establish  nationwide  unbundling  requirements  with  the  utmost  circumspection,  brevity,  and  clarity. 
 The  elaborate  unbundling  rules  set  forth  in  this  Order  are  out  of  keeping  with  this  principle. 
 Complex  rules  benefit  neither  incumbent  nor  competing  carriers.  Rather,  complexity  leads  to 
 uncertainty  and  litigation,  and  in  the  end,  the  biggest  losers  will  be  the  American  consumers.  It 
 would  therefore  have  been  much  better  for  us  to  have  left  many  of  the  difficult  matters  that  the 
 Order  purports  to  resolve  to  the  negotiation  and  arbitration  processes  of  section  252.  State 
 commissions  are  better  equipped  to  address  these  intricate  and  individualized  issues. 

 I  also  write  to  express  my  disagreement  with  three  particular  issues  that  I  believe  the 
 Commission  has  incorrectly  resolved. 

 The  Commission  Has  Adopted  an  Inappropriate  Exception  to  the  Switching 
 Unbundling  Requirements.  I  concur  in  the  Commissions  conclusion  that,  outside  of  certain 
 densely  populated  areas  (e.  g.,  density  zone  1  of  the  top  50  metropolitan  statistical  areas  in  the 
 country),  local  circuit  switching  should  be  unbundled  nationwide  on  the  basis  of  section 
 251(  d)(  2). 

 Within  these  densely  populated  areas,  however,  I  do  not  believe  that  the  Commission  has 
 articulated  a  defensible  explanation  why,  consistent  with  section  251(  d)(  2),  switching  is  to  be 
 available  as  an  unbundled  element  in  some  peculiar  circumstances,  but  not  in  others.  In  my  view, 

 1  The  Commissions  current  understanding  of  section  251(  d)(  2)  is  a  substantial  improvement  over  its  previous 
 construction  of  this  provision.  However,  although  this  interpretation  may  be  adequate,  I  believe  that  section 
 251(  d)(  2)  could  be  understood  in  a  clearer  and  more  economically  consistent  way.  At  a  future  date,  therefore,  I 
 will  comment  more  extensively  on  an  economic  framework  for  section  251(  d)(  2)  that  will  complement  the  standard 
 that  the  Commission  adopts  today.  I  do  not  endorse  all  of  the  concepts  or  discussion  in  this  Order,  but  I  concur  in 
 the  basic  notion  that  impairment  should  be  grounded  in  materiality  of  harm  and  applied  based  on  a  national  list. 
252
 Federal  Communications  Commission  FCC  99-  238 
 1 
 November  3,  1999 
 STATEMENT  OF  COMMISSIONER  MICHAEL  K.  POWELL, 
 DISSENTING  IN  PART 

 Re:  Third  Report  and  Order  and  Fourth  Further  Notice  of  Proposed  Rulemaking, 
 Implementation  of  the  Local  Competition  Provisions  in  the  Telecommunications 
 Act  of  1996  (CC  Docket  No.  96-  98) 

 As  I  have  tried  to  impress  on  many  occasions,  1  the  Supreme  Court  gave  us  a  tall 
 order  in  AT&  T  Corp.  v.  Iowa  Utilities  Bd.  2  The  Court  rejected  the  previous  Commissions 
 decision  to  provide  competitive  carriers  with  unbridled  access  to  every  element  of  the 
 incumbents  network  at  steeply  discounted,  cost-  based  prices.  In  particular,  the  Court 
 rejected  the  previous  Commissions  presumption  in  favor  of  unbundling  the  entire 
 incumbent  network,  subject  to  potential  exclusions  that,  in  any  event,  never  materialized.  3 
 That  approach,  the  Court  admonished,  gave  no  effect  to  the  limiting  necessary  and 
 impair  standards  of  section  251(  d)(  2).  In  place  of  this  presumption,  the  Court  ordered  the 
 Commission  to  surmount  a  high  factual  hurdle:  the  burden  of  demonstrating  that  each 
 network  element  is  unbundled  only  to  the  extent  that,  without  it,  competitive  local  exchange 
 carriers  (CLECs)  would  be  impaired  from  providing  service.  4 

 I  think  the  Commission  has  gone  quite  far  in  demonstrating  that  some  CLECs 
 would  be  impaired  if  denied  access  to  several  elements  of  the  incumbents  network.  As 
 such,  I  support  much  of  this  action.  I  believe  we  have  failed,  however,  to  demonstrate 
 this  with  respect  to  switching  functionality.  I  believe,  furthermore,  that  the  shortcomings 
 of  our  attempt  to  apply  the  statutory  standard  to  switching  reveal  more  general  and 
 serious  flaws  in  the  type  of  impairment  analysis  we  adopt  here.  Thus,  I  must  respectfully 
 dissent  in  part  from  this  decision. 

 The  Commission  Has  Failed  to  Meet  Its  Burden  of  Showing  That  Failure  to 
 Unbundle  Switching  Would  Impair  CLECs  from  Providing  Service 

 I  sincerely  applaud  my  colleagues  for  the  steps  they  have  taken  to  consider  the 
 availability  of  switching  outside  the  incumbents  network,  including  self-  provisioning.  It  is 
 on  the  basis  of  many  of  these  steps  that  I  am  able  to  support  much  of  the  decision  in  this 
 area.  For  my  part,  however,  I  do  not  believe  the  Commission  has  met  its  burden  of  showing 

 1  See,  e.  g.,  Implementation  of  the  Local  Competition  Provisions  in  the  Telecommunications  Act  of 
 1996,  CC  Docket  No.  96-  98,  Second  Further  Notice  of  Proposed  Rulemaking,  FCC  99-  70  (rel.  Apr.  16, 
 1999)  (statement  of  Commissioner  Powell,  dissenting  in  part).  2 
 See  AT&  T  Corp.  et  al.  v.  Iowa  Utils.  Bd.  et  al.,  119  S.  Ct.  721  (1999).  3 
 Id.  at  736  (holding  Commission  erroneously  perceived  a  general  obligation  to  unbundle  that  it 
 could  soften  by  regulatory  grace).  As  the  Supreme  Court  indicated,  the  previous  Commission  provided 
 blanket  access  virtually  all  significant  elements  of  the  incumbents  network.  Id.  at  735.  4 
 See  cf.  119  S.  Ct.  721,  736  (  Section  251(  d)(  2)  does  not  authorize  the  Commission  to  create 
 isolated  exemptions  from  some  underlying  duty  to  make  all  network  elements  available.  It  requires  the 
 Commission  to  determine  on  a  rational  basis  which  network  elements  must  be  made  available,  taking  into 
 account  the  objectives  of  the  Act  and  giving  some  substance  to  the  necessary  and  impair 
 requirements.). 
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 that  failure  to  unbundle  switching  would  impair  CLECs  from  providing  service  in  the 
 densest  areas  of  the  largest  markets.  Thus,  I  would  have  been  prepared  to  leave  switching 
 off  the  unbundling  list  for  the  provision  of  service  to  all  customers  in  access  Zone  1, 
 regardless  of  their  size  or  type,  and  regardless  of  whether  the  incumbent  is  providing  the 
 extended  link  or  EEL. 

 As  the  record  amply  demonstrates,  the  vast  majority  of  CLEC  switches  are 
 concentrated  in  these  zones,  5  amounting  to  multiple  companies  providing  switch-  based 
 alternative  service  in  the  market.  The  tele-  density  in  these  zones,  moreover,  suggests  that  if 
 CLECs  chose  to,  they  could  economically  serve  relatively  significant  numbers  of  residential 
 customers  in  these  zones,  particularly  in  multiple  dwelling  units  (MDUs).  Additionally,  in 
 light  of  the  existence  of  special  access  service  and  our  related  decisions  today  regarding  loop 
 and  transport,  CLECs  can  potentially  serve  many  residential  and  other  customers  even 
 beyond  Zone  1.  Based  on  the  evidence  showing  significant  CLEC  deployment  using  their 
 own  switches,  I  am  unpersuaded  that  CLECs  are  materially  impaired  if  they  cannot  obtain 
 unbundled  switching  in  Zone  1.  6 

 The  Rationale  for  Requiring  the  EEL  as  a  Condition  for  Declining  to  Unbundle  Switching  Lacks  Clarity 

 With  respect  to  the  EEL,  I  am  certainly  persuaded  that  this  functionality  (which 
 allows  transmission  from  the  CLECs  switch  to  its  customers  via  the  incumbents  facilities) 
 will  make  it  easier  for  CLECs  to  provide  service.  But  the  question  the  Court  has  mandated 
 that  we  answer  is  not  whether  access  to  parts  of  the  incumbents  network  makes  it  easier  for 
 CLECs,  but  whether  denial  of  such  access  would  impair  CLECs  ability  to  provide  service 
 within  the  meaning  of  section  251(  d)(  2).  7  If  a  network  element  satisfies  this  standard,  then 
 the  Act  requires  that  we  make  it  available.  Our  decision  today  muddies  an  already 
 complicated  analysis.  On  the  one  hand,  we  insist  that  we  cannot  mandate  the  EEL  pending 
 the  Eighth  Circuits  resolution  of  the  appeal  of  our  authority  to  require  combinations  of 
 elements.  On  the  other  hand,  in  the  face  of  repeated  and  well-  documented  incumbent 
 requests  to  remove  switching  as  an  unbundled  element,  we  provide  strong  and  direct 
 incentives  to  incumbents  to  provide  the  EEL  as  a  condition  of  such  removal.  To  make 
 matters  worse,  we  do  so  even  though  we  also  conclude  that  our  existing  rules  permit  CLECs 
 to  obtain  the  same  functionality  as  the  EEL,  at  least  in  many  circumstances,  by  simply 
 converting  special  access  services  to  network  elements.  I  think  the  cleaner  approach  would 
 have  been  to  wait  for  the  Eighth  Circuits  combination  ruling  or  simply  decide  whether  the 

 5  See,  e.  g.,  BellSouth  Comments  at  59. 
 6  I  should  add,  however,  that  my  belief  that  declining  to  unbundle  switching  in  Zone  1  would 

 address  many,  but  not  all,  of  my  concerns  regarding  geographic  variations  and  the  impact  of  those 
 variations  on  our  impairment  analysis.  By  using  a  broad  national  approach  based  on  highly-  disputed 
 generalities,  I  still  fear  that  the  Commission  has  failed  to  pay  adequate  attention  to  the  Courts  instruction 
 that  we  assess  the  availability  of  elements  outside  the  incumbents  network,  including  self-  provisioning.  A 
 preferable  option  would  have  been  to  provide  some  time-  limited  ability  for  state  commissions  that  perceive 
 their  markets  are  different  to  remove  elements  from  the  national  list,  based  on  a  showing  consistent  with 
 this  decision  and  our  existing  rules.  This  authority  was  advocated  by  the  vast  majority  of  state  commenters 
 in  this  docket.  See,  e.  g.,  Washington  Utilities  &  Transportation  Commission  Comments  at  2,  California 
 Public  Utilities  Commission  Comments  at  7,  and  New  York  Department  of  Public  Service  Comments  at  5.  7 
 See  47  U.  S.  C.  251(  d)(  2)(  B). 
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 EEL  should  be  made  available  itself  as  a  network  element. 
 The  Impairment  Analysis  is  Based  on  Faulty  Assumptions  Regarding  CLEC 
 Facilities  Deployment 

 More  generally,  I  believe  the  impairment  analysis  we  adopt  is  based  on  poorly 
 supported,  or  simply  false,  assumptions.  For  example,  we  assume  that  the  few  factors  we 
 examine  closely  (including  cost,  quality,  ubiquity,  timeliness,  etc.)  are  sufficient  to 
 determine  whether  a  CLEC  would  be  impaired  from  providing  service.  Although  the 
 analysis  purports  to  consider  the  totality  of  circumstances,  we  focus  predominantly  on 
 cost.  We  assign  almost  no  weight  to  other  factors  directly  relevant  to  assessing  whether  a 
 CLEC  can  become  an  effective  competitor  in  a  particular  market  or  customer  segment, 
 such  as  CLECs  ability  to  target  market  and  the  relative  profit  potential  of  serving 
 different  types  of  customers. 

 The  difficulties  of  this  approach  become  apparent  when  we  look  at  the  facts. 
 CLECs  have  deployed  switches  in  numerous  markets  throughout  the  country.  The  Order 
 suggests  that  CLECs  may  be  deploying  these  switches  despite  significant  impairment. 
 Yet  it  is  equally  possible  that  the  evidence  of  CLEC  switch  deployment  means  that 
 CLECs,  as  a  general  matter,  are  not  significantly  impaired  from  competing  if  the 
 incumbent  is  not  forced  to  unbundle  switching.  By  declining  to  consider  seriously  all  of 
 the  factors  relevant  to  impairment,  we  render  ourselves  powerless  to  demonstrate 
 rigorously  which  of  these  two  possibilities  is  reality.  I  am  pleased  that  we  have  at  least 
 begun  to  acknowledge  that  there  may  be  factors  other  than  the  few  we  emphasize  that  are 
 relevant  to  the  question  of  impairment.  I  am  disappointed,  however,  that  we  cannot 
 admit  that  evidence  of  CLEC  switch  deployment  strongly  suggests  that  CLECs  are  not 
 significantly  impaired  without  access  to  unbundled  switching,  both  in  areas  in  which 
 CLECs  have  deployed  switches  and  areas  in  which  they  have  not  done  so. 

 I  am  also  uncomfortable  with  the  extent  to  which  the  Order  suggests  that  the 
 primary  reason  CLECs  have  not  deployed  in  some  smaller  markets  is  that  they  lack 
 adequate  access  to  the  incumbents  network.  There  are  other  obvious  reasons  why  CLEC 
 deployment  has  not  yet  reached  some  smaller  markets.  CLECs  are  profit  maximizers  and 
 thus  it  is  unremarkable  that  they  first  deploy  circuit  and  packet  switches  in  denser  areas 
 where  they  can  reach  more  customers  at  lower  cost.  The  simple  absence  of  switch 
 deployment  in  smaller  markets  tells  us  precious  little.  In  sum,  we  dont  really  know 
 whether  CLECs  have  not  deployed  in  those  markets  because  they  are  impaired  or  because 
 they  just  have  found  it  uneconomical  to  serve  those  areas,  perhaps  for  reasons  unrelated 
 to  UNE  availability. 

 The  Impairment  Analysis  Unnecessarily  Imports  Collocation  and  Other  Problems 
 That  Do  Not  Result  Directly  From  Denying  CLECs  Access  to  UNEs 

 Finally,  I  am  troubled  by  the  extent  to  which  we  are  importing  into  the 
 impairment  analysis  collocation  and  other  problems  that  do  not  result  directly  from 
 denying  CLECs  access  to  UNEs.  To  the  extent  collocation  is  a  problem  for  CLECs 
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 Federal  Communications  Commission  FCC  99-  238 
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 hoping  to  deploy  their  own  switches,  for  example,  it  is  difficult  to  argue  that  this  problem 
 results  from  denying  CLECs  access  to  unbundled  switching  from  the  incumbent.  Rather, 
 in  this  situation,  collocation  is  its  own  separate  problem,  which  I  would  have  preferred  to 
 address  more  directly  (e.  g.,  through  stronger  enforcement  at  the  state  or  federal  levels). 
 In  addition  to  my  concern  that  this  approach  will  muddy  our  impairment  analysis,  I  worry 
 that  it  will  ultimately  prove  futile.  To  the  extent  our  collocation  rules  have  been 
 ineffective  because  they  have  not  been  sufficiently  detailed  or  well-  enforced,  as  some 
 have  alleged,  I  fail  to  see  how  imposing  additional  general  requirements  in  the 
 unbundling  context  will  fix  the  underlying  collocation  problem.  Instead,  we  may  just  be 
 layering  ineffective  rules  on  top  of  ineffective  rules. 

 Conclusion 
 Having  said  all  that,  I  do  generally  support  most  of  the  remainder  of  the  item,  and  I 
 commend  my  colleagues  and  the  Common  Carrier  Bureau  for  their  diligence  and  hard  work 
 in  working  through  these  issues.  Despite  my  misgivings  about  a  few  of  the  bottom  lines,  I 
 fully  recognize  that  an  enormous  amount  of  blood,  sweat  and  tears  have  gone  into  the 
 decisions  we  reach  here.  (I  have  cried  some  of  these  tears  myself.)  The  Bureau,  in 
 particular,  is  to  be  commended  for  bringing  us  this  far  in  our  efforts  to  grapple  with  the 
 voluminous  and  highly-  complex  record  that  the  parties  have  developed  in  this  docket. 
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 the  impair  standard  adopted  today  is  flexible  enough  to  permit  the  Commission  to  have  come 
 down  either  way  on  the  question  whether  to  require  the  unbundling  of  switching  in  densely 
 populated  areas.  The  record  reveals  that  competitive  carriers  have  deployed  many  switching 
 facilities  with  significant  capacity  in  many  densely  populated  areas,  2  and  it  further  shows  that  these 
 carriers  can  use  these  switches  to  provide  service  to  all  classes  of  customers,  regardless  of  the 
 number  of  lines  a  customer  has  and  regardless  of  whether  the  enhanced  extended  link  (  EEL)  is 
 available.  At  the  very  least,  this  deployment  demonstrates  that  self-  provisioning  of  switching  is 
 feasible  in  densely  populated  areas,  and  therefore,  as  Commissioner  Powell  observes,  switching 
 may  not  merit  designation  as  an  unbundled  element  in  these  regions.  At  the  same  time,  however, 
 it  at  least  conceivable  that  under  the  impair  standard  some  competitive  carriers  would  face 
 material  differences  in  cost  unless  switching  is  unbundled,  although  such  a  determination  must  be 
 grounded  in  facts.  Although  I  do  not  think  that  such  facts  are  in  the  record  before  us,  I  am  willing 
 to  entertain  the  possibility  that  they  might  be  established. 

 I  cannot  agree,  however,  that  the  impair  standard  is  so  malleable  that  the  Commission 
 may  predicate  the  unbundling  of  a  network  element  on  the  individual  circumstances  of  an 
 incumbent  or  competing  carrier.  Indeed,  in  other  parts  of  the  order,  the  Commission  properly 
 rejects  the  notion  that  unbundling  should  be  required  based  on  individual  determinations  of 
 impairment,  citing  administrative  and  other  concerns.  See  UNE  Remand  Order    66.  Yet,  despite 
 this  conclusion,  the  Commission  chooses  to  base  the  availability  of  switching  as  a  network 
 element  on  whether  an  incumbent  carrier  has  made  available  the  EEL.  Conditioning  the 
 availability  of  a  network  element  in  this  way  will  result  only  in  unproductive  litigation  and 
 needless  administrative  expenses  to  determine  whether  the  condition  has  been  satisfied.  I  also 
 share  Commissioner  Powells  view  that  this  aspect  of  the  order  may  reflect  an  attempt  to 
 circumvent  litigation  that  is  currently  pending  in  the  United  States  Court  of  Appeals  for  the  Eighth 
 Circuit,  which  is  considering  whether  the  EEL  may  be  deemed  a  network  element  under  section 
 251(  c)(  3). 

 In  addition,  I  do  not  believe  that  section  251(  d)(  2)  permits  the  Commission  to  define 
 switching  as  an  unbundled  element  based  on  the  number  of  lines  that  serve  an  individual  customer. 
 We  have  before  us  no  clear  evidence  that  there  are  material,  switching-  related  differences  in  the 
 cost  of  serving  customers  with  different  numbers  of  lines.  Certainly,  there  is  no  basis  whatsoever 
 for  concluding  there  are  material  differences  in  the  cost  of  providing  switching  to  customers  with 
 three  lines,  rather  than  four.  I  therefore  cannot  approve  of  the  Commissions  conclusion  that 
 carriers  in  densely  populated  areas  will  be  impaired  in  their  ability  to  offer  local  telephone  service 
 to  customers  with  three  or  fewer  lines  unless  they  have  access  to  local  circuit  switching. 

 Moreover,  I  think  that  basing  the  availability  of  a  network  element  on  the  identity  of  the 
 ultimate  retail  customer  may  well  violate  section  251(  c)(  3)  s  requirement  that  access  to  network 
 elements  be  provided  on  a  nondiscriminatory  basis.  From  a  technological  and  economic 

 2  Implementation  of  the  Local  Competition  Provisions  of  the  Telecommunications  Act  of  1996,  CC  Docket  96-  98, 
 Third  Report  and  Order  and  Fourth  Further  Notice  of  Proposed  Rulemaking,    282-  283  (1999)  (hereinafter  UNE 
 Remand  Order). 
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 perspective,  there  is  no  difference  between  a  carrier  that  serves  four  one-  line  customers  and  a 
 carrier  that  serves  one  four-  line  customer.  There  is  consequently  no  reason  to  discriminate 
 between  the  two  carriers  by  giving  the  first  access  to  local  circuit  switching,  but  denying  such 
 access  to  the  second. 

 Finally,  the  administrative  costs  of  implementing  and  enforcing  the  Commissions 
 meaningless  distinction  between  three-  and  four-  line  customers  are  daunting.  Because  of 
 differences  in  billing  arrangements  and  the  availability  of  bundled  service  offerings,  it  is  often 
 difficult  (if  not  impossible)  to  determine  exactly  how  many  lines  a  given  customer  has.  If  there  are 
 price  advantages  associated  with  having  fewer  than  four  lines,  enterprising  customers  may  well 
 discover  ways  of  appearing  to  have  fewer  than  four  lines.  And  even  if  it  were  possible  to  know 
 how  many  lines  a  customer  has,  there  are  substantial  administrative  costs  associated  with  keeping 
 track  of  a  customers  number  of  lines,  and  correspondingly,  determining  the  network  elements  to 
 which  a  competing  carrier  has  access.  The  Commission  offers  no  explanation  how  it  plans  to 
 enforce  the  three-  line  restriction.  How  does  it  propose  to  handle  the  problem  of  a  small  business 
 customer  served  by  a  competitor  that  has  purchased  unbundled  switching  from  an  incumbent, 
 when  that  business  decides  to  add  a  line,  bringing  its  total  number  of  lines  from  three  to  four? 
 Does  the  Commission  intend  itself  to  monitor  the  market  to  determine  whether  switching  should 
 be  unbundled  as  to  a  particular  end  user?  Does  it  intend  for  State  commissions  to  undertake  this 
 oversight  function? 

 In  light  of  these  legal  and  logistical  difficulties,  the  appropriate  course  would  have  been 
 simply  to  make  switching  available  or  unavailable  as  a  network  element  in  densely  populated 
 areas.  I  therefore  dissent  from  the  Commissions  decision  to  require  unbundling  of  local  circuit 
 switching  for  requesting  carriers  in  densely  populated  areas  under  the  particular  circumstances 
 adopted  today. 

 The  Further  Notice  of  Proposed  Rulemaking  Is  Unwarranted.  The  Commission  seeks 
 further  comment  on  whether  it  should  impose  restrictions  on  the  use  of  the  enhanced  extended 
 link  for  the  provision  of  access  services  from  an  interexchange  carriers  point  of  presence  to  an 
 end  user.  See  UNE  Remand  Order    493-  498.  The  concern  is  that  competitors  may  purchase 
 unbundled  local  loops  and  local  transport  at  cost-  based  rates,  combine  these  elements,  and  offer 
 the  combinations  to  customers  as  a  substitute  for  the  existing  special  access  services  they 
 purchase  from  incumbents.  In  ex  parte  filings  submitted  to  the  Commission  in  late  summer, 
 various  parties  urged  the  Commission  to  restrict  the  uses  to  which  competitors  may  put  these 
 combinations,  to  prevent  competitors  from  undercutting  the  prices  charged  for  special  access 
 services  (which  traditionally  have  included  subsidies  used  to  support  universal  service).  3 

 3  See  Letter  from  David  G.  Frolio,  Attorney,  BellSouth,  to  Lawrence  F.  Strickling,  Common  Carrier  Bureau, 
 Federal  Communications  Commission,  CC  Docket  96-  98  (filed  Aug.  9,  1999);  Letter  from  Michael  E.  Grambow, 
 Vice  President  and  General  Counsel,  SBC,  to  Lawrence  F.  Strickling,  Common  Carrier  Bureau,  Federal 
 Communications  Commission,  CC  Docket  96-  98  (filed  Aug.  11,  1999);  Letter  from  Edward  D.  Young,  III,  Senior 
 Vice  President  and  Deputy  General  Counsel,  Bell  Atlantic,  Heather  B.  Gold,  Vice  President    Industry  Policy, 
 Intermedia  Communications  Inc.,  Robert  W.  McCausland,  Vice  President    Regulatory  and  Interconnection, 
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 As  an  initial  matter,  I  believe  that  Congress  intended  for  the  Commission  to  implement 
 section  251s  requirements  expeditiously  and  in  a  single  proceeding    and  then  leave  the  market 
 alone  to  function  without  government  interference.  To  the  extent  that  the  Commission 
 implements  section  251  in  a  piecemeal  fashion,  as  it  apparently  proposes  to  do,  4  incumbent  and 
 competing  local  exchange  carriers  lack  clear  guidelines  and  certainty  regarding  their  obligations 
 and  rights  under  the  1996  Act.  I  therefore  object  to  the  Commissions  Further  Notice  of 
 Proposed  Rulemaking  as  improperly  drawing  out  the  process  of  implementing  section  251. 

 In  any  event,  the  Further  Notice  is  unnecessary,  since  the  statute  supplies  no  basis  for 
 restricting  a  competitors  use  of  any  network  element  or  combination  of  network  elements.  The 
 Commission  resolved  this  very  question  in  the  Local  Competition  First  Report  and  Order,  and 
 there  is  no  reason  to  revisit  the  conclusion  that  we  reached  there.  In  the  Local  Competition  First 
 Report  and  Order,  the  Commission  observed  that  section  251(  c)(  3)  places  no  restriction  on  the 
 uses  to  which  a  requesting  carrier  may  put  an  unbundled  network  element.  5  Nor  does  the  Act 
 authorize  the  Commission  to  limit  the  ways  in  which  a  requesting  carrier  may  use  an  incumbents 
 network  elements.  Section  251(  c)(  3)  simply  imposes  on  incumbents  the  duty  to  give  requesting 
 carriers  nondiscriminatory  access  to  unbundled  network  elements  for  the  provision  of  a 
 telecommunications  service.  47  U.  S.  C.    251(  c)(  3).  Thus,  so  long  as  a  competitor  uses 
 unbundled  network  elements  to  provide  a  telecommunications  service    and  exchange  access 
 service  is  inarguably  a  telecommunications  service    that  use  is  permissible  under  section 
 251(  c)(  3). 

 To  the  extent  that  incumbent  carriers  are  worried  that  competitors  will  be  able  to  offer 
 combinations  of  network  elements  at  prices  that  undercut  the  prices  of  incumbents  special  access 
 services,  that  problem  results  not  from  the  Commissions  local  competition  regulations,  but  from 
 the  structure  of  implicit  access  charges.  As  the  Commission  has  recognized,  requiring  incumbents 
 to  include  in  their  prices  for  access  services  implicit  subsidies  (as  incumbents  historically  have 
 been  required  to  do)  may  place  incumbents  at  a  competitive  disadvantage.  6  But  the  solution  to 

 Allegiancetelecom,  Inc.,  &  Don  Shepheard,  Vice  President,  Federal  Regulatory  Affairs,  Time  Warner  Telecom,  to 
 William  E.  Kennard,  Chairman,  and  Commissioners,  Federal  Communications  Commission,  CC  Docket  96-  98 
 (filed  Sept.  2,  1999). 

 4  For  example,  in  March  1999,  the  Commission  asked  for  comment  on  whether  section  251(  c)(  3)  requires  an 
 incumbent  carrier  to  offer  competitors  access  to  the  high  frequency  portions  of  the  incumbents  local  loops  (a 
 technology  known  as  line  sharing  or  spectrum  unbundling).  See  Deployment  of  Wireline  Services  Offering 
 Advanced  Telecommunications  Capability,  First  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  14 
 FCC  Rcd  4761    92-  107  (Mar.  31,  1999).  In  my  view,  it  would  have  been  preferable  to  have  consolidated  the 
 line-  sharing  issue  into  this  proceeding. 

 5  See  Implementation  of  the  Local  Competition  Provisions  of  the  Telecommunications  Act  of  1996,  CC  Docket  96- 
 98,  First  Report  and  Order,  11  FCC  Rcd  15499,  15679  [  356]  (1997)  (hereinafter  Local  Competition  First  Report 
 and  Order). 

 6  Local  Competition  First  Report  and  Order,  11  FCC  Rcd  at  15506  [  5]. 
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 this  problem  lies  not  in  imposing  restrictions  on  competitors  uses  of  network  combinations. 
 Rather,  the  Commission  should  promptly  revise  its  rules  for  access  charges.  See  Texas  Office  of 
 Public  Utility  Counsel  v.  FCC,  183  F.  3d  393,  425  (5th  Cir.  1999). 

 Not  only  would  limiting  competing  carriers  use  of  network  elements  be  inconsistent  with 
 the  statute,  but  also  it  would  be  bad  policy.  Congress  did  not  intend  for  the  Commission  or  state 
 regulators  to  waste  their  resources  policing  the  uses  to  which  competitors  put  network  elements. 

 The  Commissions  Decision  To  Review  Its  National  List  of  Network  Elements  Every 
 Three  Years  Is  Illegal.  The  Commission  announces  that  it  plans  to  reexamine  the  list  of  network 
 elements  that  are  subject  to  the  Acts  unbundling  requirements  every  three  years,  beginning, 
 presumably,  in  2002.  See  UNE  Remand  Order    152.  The  Commission  ignores  entirely  section 
 11s  requirement  that,  in  every  even-  numbered  year,  the  Commission  is  required  to  review  all 
 regulations  issued  under  this  Act  in  effect  at  the  time  of  the  review  that  apply  to  the  operations  or 
 activities  of  any  provider  of  telecommunications  service  in  order  to  determine  whether  those 
 regulations  continue  to  serve  the  public  interest.  47  U.  S.  C.    161(  a)  (emphasis  added).  Section 
 11  further  directs  the  Commission  to  repeal  or  modify  any  regulation  it  determines  is  no  longer 
 necessary  in  the  public  interest.  Id.    161(  b).  The  next  biennial  review  process  will  occur  in 
 2000. 

 By  its  plain  terms,  section  11  applies  to  all  regulations  issued  under  the  Communications 
 Act,  including  the  unbundling  requirements  that  the  Commission  adopts  today.  The  Commission 
 has  no  authority  to  ignore  this  requirement,  even  if  it  thinks  such  review  is  unneeded.  To  be  sure, 
 in  its  2000  biennial  review,  the  Commission  might  appropriately  consider  the  short  time  the 
 unbundling  regulations  had  been  in  effect  in  assessing  whether  these  requirements  continue  to 
 serve  the  public  interest.  But  it  may  not  simply  rewrite  the  law  to  suit  its  purposes. 
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 rural  areas.  2  In  many  urban  markets,  we  have  witnessed  competition  from  cable  providers  and 
 other  new  entrants  propel  local  exchange  carriers  to  roll  out  xDSL  service.  But  I  am  concerned 
 about  the  limited  availability  of  advanced  services  in  rural  America  today.  Advanced  services 
 are  a  key  to  rural  economic  renaissance,  because  they  enable  entrepreneurs  to  establish  new 
 businesses  literally  anywhere  and  strengthen  the  economic  viability  of  established  enterprises.  If 
 the  incumbents  are  correct  that  unbundling  inhibits  investment  in  these  areas,  then  I  expect  --  as 
 a  result  of  our  action  today  --  to  see  a  surge  in  incumbent  investment  in  facilities  to  provide 
 advanced  services  to  our  rural  communities. 

 Unbundled  Local  Switching 
 I  support  the  majoritys  decision  to  carve  out  an  exemption  from  the  general 
 unbundling  requirement  for  switches  serving  dense,  urban  markets.  Lack  of  access  to  unbundled 
 switching  should  not  impair  the  ability  of  new  entrants  to  provide  service  in  these  markets, 
 especially  if  those  competitors  are  targeting  large  and  medium  size  businesses.  Indeed,  evidence 
 in  the  record  shows  that  most  of  the  competitive  facilities-  based  deployment  has  occurred  in 
 precisely  these  high-  density  zones.  Although  no  fit  will  ever  be  perfect,  we  have  given  careful 
 consideration  to  areas  where  competitors  are  self-  provisioning  or  where  there  is  a  possibility  that 
 competitors  can  purchase  from  another  provider  --  two  of  the  key  factors  that  the  Supreme  Court 
 said  we  failed  to  consider  in  our  initial  decision.  3 

 I  have  reservations,  however,  about  the  decision  to  require  unbundling  for  small 
 businesses  with  three  lines  or  less.  While  I  want  to  ensure  that  small  businesses  also  have  a 
 choice  of  providers,  I  am  concerned  that  adding  additional  unbundling  requirements  in  high 
 density  areas  is  not  the  best  way  to  address  the  problem.  A  policy  based  on  the  number  of 
 telephone  lines  a  customer  orders  could  create  consumer  confusion  and  be  an  administrative 
 nightmare.  What  happens,  for  example,  if  the  number  of  lines  that  a  small  business  orders 
 fluctuates  seasonally  (e.  g.,  during  the  holiday  season)?  I  fear  that  tracking  the  number  of  lines  in 
 this  manner  imposes  significant  administrative  costs  on  carriers  and  is  potentially  unenforceable. 
 I  am  also  concerned  about  undercutting  those  providers  that  have  deployed  their  own  switches 
 and  want  to  serve  the  small  business  community. 

 In  addition,  unlike  the  majority,  I  would  have  required  access  to  unbundled  switching  for 
 all  residences,  rather  than  only  those  with  three  lines  or  less.  There  are  instances  where  multiple 
 families  live  together  in  a  single  residence,  or  students    all  of  who  order  their  own  telephone 

 2  See  Comments  of  US  West,  at  60  (arguing  that  unbundling  advanced  services  elements  would  have  a  dampening 
 effect  on  the  incentives  of  both  CLECs  and  ILECs  to  invest  and  innovate  in  advanced  services  technologies, 
 particularly  in  high-  cost  areas);  Comments  of  SBC,  at  76-  77  (warning  that  consumers  are  harmed  when  new 
 technologies  never  enter  the  market  because  of  disincentives  created  by  a  regulatory  regime);  Comments  of  Bell 
 Atlantic,  at  43-  44  (arguing  that  unbundling  obligations  for  advanced  services  equipment  would  reduce  incentives  for 
 incumbents  to  invest  in  such  equipment);  Comments  of  GTE,  at  80  (stating  that  an  unbundling  rule  for  advanced 
 services  elements  would  result  in  less  innovation  and  [would]  deprive  consumers  of  valuable  new  services).  See 
 also  Comments  of  USTA,  at  40-  42  (stating  that  an  ILEC  would  be  unlikely  to  invest  in  deployment  of  new 
 broadband  networks  and  services  if  it  knows  that  the  Commission  will  [require  unbundling]). 

 3  See  119  S.  Ct.  at  735. 
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 lines    share  accommodations.  Surely  these  instances  meet  the  definition  of  mass  market  and 
 should  not  be  excluded  from  the  exception. 

 Operator  Services  and  Directory  Assistance  (OS/  DA) 
 I  am  delighted  that  third-  party  providers  of  OS/  DA  are  emerging  to  fill  an  increasing 
 need  for  OS/  DA  services.  However,  the  Act  does  not  require  incumbents  to  provide  these  third-party 
 providers  with  nondiscriminatory  access  to  directory  databases.  4  This  clearly  hampers 
 their  ability  to  provide  reliable  directory  assistance  to  those  carriers  that  will  now  need  to  rely  on 
 a  non-  incumbent  source  for  their  OS/  DA.  I  recognize  that  we  have  raised  this  issue  in  the 
 context  of  another  proceeding,  which  I  hope  will  be  resolved  shortly. 

 Combinations  of  UNEs  and  Special  Access 
 The  order  defers  decision  on  whether  there  should  be  limited  use  restrictions  for  certain 
 combinations  of  UNEs  to  avoid  an  opportunity  for  arbitrage  for  special  access.  While  I  agree 
 that  we  should  develop  a  fuller  record  on  this  issue,  I  am  hesitant  to  start  down  the  slippery  slope 
 of  adopting  use  restrictions  on  UNEs.  Nevertheless,  I  will  withhold  final  judgment  on  these 
 issues  until  I  have  reviewed  the  record  developed  in  response  to  the  Further  Notice.  I  am 
 particularly  interested  in  finding  out  whether  restricted  use  of  UNE  combinations  might 
 inadvertently  lead  to  inefficient  or  unreliable  network  configurations. 

 Conclusion 
 We  have  adopted  a  workable  framework  that  takes  into  account  variations  in  the  way  that 
 competition  is  developing  in  different  areas  of  the  country.  We  have  reaffirmed  the  benefit  of  a 
 national  policy  that  provides  competitors  with  the  certainty  they  need  to  develop  business  plans 
 and  raise  capital,  and  reduces  the  opportunity  for  further  protracted  litigation.  As  competition 
 continues  to  take  hold,  we  intend  to  scale  back  our  unbundling  requirements  even  further.  Now 
 that  the  new  rules  are  in  place,  I  urge  all  players  to  move  beyond  litigation  and  to  embrace 
 competition. 

 4  47  U.  S.  C.    251(  b)(  3). 
262