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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554
                                )
In the Matter of                )
                                )
 Application of Ameritech Michigan )CC Docket No. 97-137
Pursuant to Section 271 of the  )
Communications Act of 1934, as amended,)
To Provide In-Region, InterLATA Services)
In Michigan                     )
                   MEMORANDUM OPINION AND ORDER
       Adopted:  August 19, 1997Released:  August 19, 1997
By the Commission:   Chairman Hundt and Commissioners Quello, Ness, and Chong issuing
separate statements.
                        TABLE OF CONTENTS
                                                        Paragraph
   I.INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . .  1
II.  BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . .  5
       A. Statutory Framework. . . . . . . . . . . . . . . . .  5
        B.The Purpose of Section 271 . . . . . . . . . . . .   10
     C.   History of Ameritech's Efforts to Obtain In-Region, InterLATA
          Authorization for Michigan . . . . . . . . . . . . . 24
III. CONSULTATION WITH THE MICHIGAN PUBLIC SERVICE
     COMMISSIONAND THE UNITED STATES DEPARTMENT OF JUSTICE . . 30
        A.State Verification of BOC Compliance with Section 271(c) 30
        B.Department of Justice's Evaluation . . . . . . . . . 35
IV.  STANDARD FOR EVALUATING SECTION 271 APPLICATIONS. . . . . 43
        A.Burden of Proof for Section 271 Applications . . . . 43
        B.Compliance with Requirement that Application Be Complete When Filed 49
             1.Weight Accorded to New Factual Evidence . . . . 49
             2.Obligation To Present Evidence and Arguments Clearly 60
V.   COMPLIANCE WITH SECTION 271(c)(1)(A). . . . . . . . . . . 62
        A.Introduction . . . . . . . . . . . . . . . . . . . . 62
     B.   Factual Summary of Competing Providers' Operations in Michigan 64
     C.   Ameritech's Compliance with Section 271(c)(1)(A) . . 69
          1.   Existence of One or More Binding Agreements That Have Been
               Approved Under Section 252. . . . . . . . . . . 71
          2.   Provision of Access and Interconnection to Unaffiliated Competing
               Providers of Telephone Exchange Service . . . . 74
          3.   Provision of Telephone Exchange Service to Residential and
               Business Subscribers. . . . . . . . . . . . . . 80
          4.   Offer by Competing Providers of Telephone Exchange Service
               Either Exclusively Over Their Own Telephone Exchange Service
               Facilities or Predominantly Over Their Own Telephone Exchange
               Service Facilities in Combination with Resale . 86
          5.   Summary and Conclusion. . . . . . . . . . . .  104
  VI.CHECKLIST COMPLIANCE. . . . . . . . . . . . . . . . . .  105
        A.Implementation of the Checklist. . . . . . . . . .  107
     B.   Checklist Items of Limited Dispute . . . . . . . .  116
        C.Operations Support Systems . . . . . . . . . . . .  128
          1.   Summary . . . . . . . . . . . . . . . . . . . .128
          2.   Background. . . . . . . . . . . . . . . . . . .129
          3.   General Approach to Analyzing Adequacy of OSS  133
          4.   Evidence in the Record. . . . . . . . . . . .  144
          5.   Analysis of Ameritech's Provision of Access to OSS Functions 157
          6.   Absence of Substantial Evidence to Support Statutory Finding204
          7.   Other Concerns. . . . . . . . . . . . . . . . .214
        D.Interconnection in Accordance with Sections 251(c)(2) and 252(d)(1)222
             1.Summary . . . . . . . . . . . . . . . . . . . .222
             2.Evidence on the Record. . . . . . . . . . . . .225
             3.Inadequacy of Data Submitted. . . . . . . . . .232
             4.Evaluation of EOI Trunk Blocking Data . . . . .236
             5.Efforts to Resolve Blockage Problems  . . . . .246
             6.Conclusion. . . . . . . . . . . . . . . . . . .254
        E.Nondiscriminatory Access to 911 and E911 Services. .256
        F.Additional Concerns. . . . . . . . . . . . . . . . .280
             1.Pricing of Checklist Items. . . . . . . . . . .281
          2.   Unbundled Local Transport . . . . . . . . . . .298
          3.   Local Switching Unbundled from Transport, Local Loop
               Transmission, or Other Services . . . . . . . .319
          4.   Combinations of Unbundled Network Elements. . .332
          5.   Number Portability. . . . . . . . . . . . . . .338
VII. COMPLIANCE WITH SECTION 272 REQUIREMENTS. . . . . . . . .344
     A.   Introduction . . . . . . . . . . . . . . . . . . . .344
        B.Compliance with Section 272(b)(3) Requirements . . .349
        C.Compliance with Section 272(b)(5) Requirements . . .363
VIII.     OTHER CONCERNS RAISED IN THE RECORD. . . . . . . . .374
  IX.PUBLIC INTEREST . . . . . . . . . . . . . . . . . . . . .381
X.   CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . .403
XI.  ORDERING CLAUSES. . . . . . . . . . . . . . . . . . . . .404
  APPENDIXLIST OF COMMENTERS
   I.INTRODUCTION
      1.On May 21, 1997, Ameritech Michigan (Ameritech)  filed an application for
authorization under section 271 of the Communications Act of 1934, as amended, to provide in-
region, interLATA services in the State of Michigan.  For the reasons set forth below, we deny
Ameritech's application.
      2.  Before summarizing our conclusions, we wish to acknowledge the efforts to date
of the State of Michigan and Ameritech in opening that state's local exchange markets to
competition.  The State of Michigan has been at the forefront of state efforts to foster the
emergence of effectively competitive local exchange markets.  In 1991, the Michigan
Legislature passed legislation designed to remove barriers to local competition, five years before
Congress's 1996 overhaul of the federal telecommunications act.  Ameritech, too, long has been
among the leaders in its segment of the telecommunications industry working toward opening
local markets to competition.  Ameritech's Customer First Plan, for example, announced in
March 1993, constituted a major advance in telecommunications policy by proposing a
framework to eliminate legal, economic and technical barriers to local competition.
      3.  Since then, as the Department of Justice noted in its assessment, Ameritech "has
made significant and important progress toward meeting the preconditions for in-region
interLATA entry."  The Department of Justice, with which Ameritech has worked closely, has
also noted Ameritech's cooperation, particularly with respect to the development of processes for
nondiscriminatory access to Ameritech's operations support systems.  Such access is critically
important to the development of effective, sustained competition in the local exchange market.
      4.  That we ultimately conclude, as did the Michigan Public Service Commission
(Michigan Commission) and the Department of Justice, that Ameritech's May 21, 1997
application to provide in-region interLATA service in Michigan does not demonstrate
compliance with all of section 271's requirements, as we explain herein, does not diminish the
efforts Ameritech has made thus far.  Rather, our decision here recognizes the complexity of
opening historically monopolized local markets to competition, and the clear mandate of
Congress that such markets must be open to competition before the Bell Operating Companies
(BOCs) are to be permitted to provide in-region, interLATA services.
      5.  In this Order, we find that Ameritech has met its burden of demonstrating that it is
providing access and interconnection to an unaffiliated, facilities-based provider of telephone
exchange service to residential and business subscribers in Michigan, as required by section
271(c)(1)(A) of the statute.  We further conclude, however, that Ameritech has not yet
demonstrated that it has fully implemented the competitive checklist in section 271(c)(2)(B).  In
particular, we find that Ameritech has not met its burden of showing that it meets the competitive
checklist with respect to:  (1) access to its operations support systems; (2) interconnection; and
(3) access to its 911 and E911 services.  We do not decide whether Ameritech has met its burden
of demonstrating compliance with the remaining items on the competitive checklist.  In addition,
we find that Ameritech has not demonstrated that its "requested [in-region, interLATA
authorization] will be carried out in accordance" with the structural and transactional
requirements of sections 272(b)(3) and 272(b)(5), respectively.
      6.  In light of our conclusions that Ameritech has not demonstrated that it satisfies the
competitive checklist or that it would carry out the requested authorization in accordance with
section 272, we deny, pursuant to section 271(d)(3), Ameritech's application to provide in-
region, interLATA services in Michigan.  Thus, we need not, and do not, address the issue of
whether Ameritech has demonstrated that the authorization it seeks is consistent with the public
interest, convenience, and necessity.  Accordingly, we do not base the denial of Ameritech's
application on a public interest determination.  Nevertheless, in order to give Ameritech and
other interested parties guidance concerning the public interest standard that we will apply in
evaluating future section 271 applications, we set forth our views on the meaning and scope of
certain aspects of the public interest inquiry mandated by Congress.
II.  BACKGROUND
      A. Statutory Framework
      7.The 1996 Act conditions BOC entry into the provision of in-region interLATA
services on compliance with certain provisions of section 271.  BOCs must apply to the Federal
Communications Commission (Commission) for authorization to provide interLATA services
originating in any in-region state.  The Commission must issue a written determination on each
application no later than 90 days after receiving such application.  In acting on a BOC's
application for authority to provide in-region interLATA services, the Commission must consult
with the Attorney General and give substantial weight to the Attorney General's evaluation of the
BOC's application.  In addition, the Commission must consult with the applicable state
commission to verify that the BOC has one or more state-approved interconnection agreements
with a facilities-based competitor, as required in section 271(c)(1)(A), or a statement of generally
available terms and conditions, as required in section 271(c)(1)(B), and that either the
agreement(s) or general statement satisfy the "competitive checklist," as described below.
      8.Section 271 requires the Commission to make various findings before approving
BOC entry.  A BOC must show that it satisfies the requirements of either section 271(c)(1)(A),
known as Track A, or 271(c)(1)(B), known as Track B.  Section 271(c)(1)(A), which is the
pertinent section for purposes of this Order, states that a BOC must provide access and
interconnection to one or more unaffiliated competing providers of telephone exchange service to
residential and business subscribers.  The section further specifies that the competing carrier's
telephone exchange service may be offered either exclusively over its own telephone exchange
service facilities or predominantly over its own telephone exchange service facilities in
combination with the resale of the telecommunications services of another carrier.
       9.In order to obtain authorization under section 271(c)(1)(A), the BOC must also
show that:  (1) it has "fully implemented the competitive checklist" contained in section
271(c)(2)(B); (2) the requested authorization will be carried out in accordance with the
requirements of section 272; and (3) the BOC's entry into the in-region interLATA market is
"consistent with the public interest, convenience, and necessity."
      B.The Purpose of Section 271
      10.  The 1996 Act's overriding goal is to open all telecommunications markets to
competition and, ultimately, to deregulate these markets.  Before the 1996 Act's passage, major
segments of the telecommunications industry were precluded, by law and economics, from
entering each others' markets.  The BOCs, the local progeny of the once-integrated Bell system,
were barred by the terms of the MFJ from entering certain lines of business, including long
distance services.  The ban on BOC provision of long distance services was based on the MFJ
court's determination that such a restriction was "clearly necessary to preserve free competition
in the interexchange market."  The court found that, if the BOCs were permitted to compete in
the interexchange market, they would have "substantial incentives" and opportunity, through
their control of local exchange and exchange access facilities and services, to discriminate
against their interexchange rivals and to cross-subsidize their interexchange ventures.
      11.  For many years, the provision of local exchange service was even more
effectively cordoned off from competition than the long distance market.  Regulators viewed
local telecommunications markets as natural monopolies, and local telephone companies, the
BOCs and other incumbent local exchange carriers (LECs), often held exclusive franchises to
serve their territories.  Moreover, even where competitors legally could enter local
telecommunications markets, economic and operational barriers to entry effectively precluded
such forays to any substantial degree.  Lifting statutory and regulatory barriers to local
competition was thus a necessary prerequisite to local competition, but not enough to bring
competition to the local market.  Equally important to the goal of competition was the
elimination of economic and operational barriers to entry.
      12.  These economic and operational barriers largely are the result of the historical
development of local exchange markets and the economics of local telephone networks.  An
incumbent LEC's ubiquitous network, financed over the years by the returns on investment under
rate-of-return regulation, enables an incumbent LEC to serve new customers at a much lower
incremental cost than a facilities-based entrant that must install its own network components.
Additionally, the value of a telephone network increases with the number of subscribers on the
network.  Congress recognized that duplicating the incumbents' local networks on a ubiquitous
scale would be enormously expensive.  It also recognized that no competitor could provide a
viable, broad-based local telecommunications service without interconnecting with the
incumbent LEC in order to complete calls to subscribers served by the incumbent LECs'
network.
      13.  Against this backdrop Congress enacted the sweeping reforms contained in the
1996 Act, the first comprehensive reform of the federal telecommunications statute in over sixty
years.  Congress, primarily through sections 251, 252 and 253 of the Act, sought to open local
telecommunications markets to previously precluded competitors not only by removing
legislative and regulatory impediments to competition, but also by reducing inherent economic
and operational advantages possessed by incumbents.  The provisions of the Act require
incumbent LECs, including BOCs, to share their networks in a manner that enables competitors
to choose among three methods of entry into local telecommunications markets, including those
methods that do not require a new entrant, as an initial matter, to duplicate the incumbents'
networks.  Pursuant to the Act, the BOCs must offer at cost-based rates nondiscriminatory
interconnection with their networks and access to unbundled elements of their networks for use
by competitors.  The Act also requires BOCs to make their retail services available at wholesale
rates so that they can be resold by new entrants.
      14.  A salient feature of these market-opening provisions is that a competitor's success
in capturing local market share from the BOCs is dependent, to a significant degree, upon the
BOCs' cooperation in the nondiscriminatory provisioning of interconnection, unbundled network
elements and resold services pursuant to the pricing standards established in the statute.  Because
the BOCs, however, have little, if any, incentive to assist new entrants in their efforts to secure a
share of the BOCs' markets, the Communications Act contains various measures to provide this
incentive, including section 271.  Through this statutory provision, Congress required BOCs to
demonstrate that they have opened their local telecommunications markets to competition before
they are authorized to provide in-region long distance services.  Section 271 thus creates a
critically important incentive for BOCs to cooperate in introducing competition in their
historically monopolized local telecommunications markets.
      15.  By requiring BOCs to demonstrate that they have opened their local markets to
competition before they are authorized to enter into the in-region long distance market, the 1996
Act enhances competition in both the local and long distance markets.  We believe that entry into
the long distance market by BOCs that have opened their local markets would further
competition in the long distance market and benefit consumers.  Indeed, given the BOCs' strong
brand recognition and other significant advantages from incumbency, advantages that will
particularly redound in the broad-based provision of bundled local and long distance services, we
expect that the BOCs will be formidable competitors in the long distance market and, in
particular, in the market for bundled local and long distance services.  The recent successes of
Southern New England Telecommunications Corporation (SNET) and GTE in attracting
customers for their long distance services illustrates the ability of local carriers to garner a
significant share of the long distance market rapidly.  Further, recent studies have predicted that
AT&T's share of the long distance market may fall to 30 percent with BOC entry.  Such
additional competition in the long distance market is precisely what the 1996 Act contemplates
and is welcomed.
      16.  In this regard, the development of a substantially competitive market for interstate
interexchange services has enabled us to seek to reduce regulation in this area by eliminating
tariffs for non-dominant interexchange carriers. We remain concerned, however, that not all
segments of this market appear to be subject to vigorous competition.  For example, we remain
concerned about the relative lack of competition among carriers to serve low volume long
distance customers.  We expect that BOCs entering the long distance market will compete
vigorously for all segments of the market, including low volume long distance customers.  We
note that, in determining the extent to which BOC entry into the long distance market would
further competition, we would find it more persuasive if parties presented specific information as
to how such entry will bring the benefits of competition, including lower prices, to all segments
of the long distance market.
      17.  Significantly, however, the 1996 Act seeks not merely to enhance competition in
the long distance market, but also to introduce competition to local telecommunications markets.
Many of the new entrants, including the major interexchange carriers, and the BOCs, should they
enter each other's territories, enjoy significant advantages that make them potentially formidable
local exchange competitors.  Unlike BOC entry into long distance, however, the competing
carriers' entry into the local market is handicapped by the unique circumstance that their success
in competing for BOC customers depends upon the BOCs' cooperation.  Moreover, BOCs will
have access to a mature, vibrant market in the resale of long distance capacity that will facilitate
their rapid entry into long distance and, consequently, their provision of bundled long distance
and local service.  Additionally, switching customers from one long distance company to another
is now a time-tested, quick, efficient, and inexpensive process.  New entrants into the local
market, on the other hand, do not have available a ready, mature market for the resale of local
services or for the purchase of unbundled network elements, and the processes for switching
customers for local service from the incumbent to the new entrant are novel, complex and still
largely untested.  For these reasons, BOC entry into the long distance market is likely to be much
easier than entry by potential BOC competitors into the local market, a factor that may work to a
BOC's advantage in competing to provide bundled services.
      18.  If the local market is not open to competition, the incumbent will not face serious
competitive pressure from new entrants, such as the major interexchange carriers.  In other
words, the situation would be largely unchanged from what prevailed before passage of the 1996
Act.  That is why we must ensure that, as required by the Act, a BOC has fully  complied with
the competitive checklist.  Through the competitive checklist and the other requirements of
section 271, Congress has prescribed a mechanism by which the BOCs may enter the in-region
long distance market.  This mechanism replaces the structural approach that was contained in the
MFJ by which BOCs were precluded from participating in that market.  Although Congress
replaced the MFJ's structural approach, Congress nonetheless acknowledged the principles
underlying that approach -- that BOC entry into the long distance market would be
anticompetitive unless the BOCs' market power in the local market was first demonstrably
eroded by eliminating barriers to local competition.  This is clear from the structure of the statute,
which requires BOCs to prove that their markets are open to competition before they are
authorized to provide in-region long distance services.  We acknowledge that requiring
businesses to take steps to share their market is an unusual, arguably unprecedented act by
Congress.  But similarly, it is a rare step for Congress to overrule a consent decree, especially
one that has fostered major advances in technology, promoted competitive entry, and developed
substantial capacity in the long distance market.  Congress plainly intended this to be a serious
step.  In order to effectuate Congress' intent, we must make certain that the BOCs have taken
real, significant, and irreversible steps to open their markets.  We further note that Congress
plainly realized that, in the absence of significant Commission rulemaking and enforcement, and
incentives all directed at compelling incumbent LECs to share their economies of scale and scope
with their rivals, it would be highly unlikely that competition would develop in local exchange
and exchange access markets to any discernable degree.
      19. Unless such competition emerges, one of the ultimate goals of the 1996 Act,
telecommunications deregulation, cannot be realized, at least not without risking monopoly
prices for consumers.  It is often easy to lose sight of the fact that deregulation will affect not
only federal regulation of the telecommunications industry, but state regulation as well.  Indeed,
because regulation of the prices that consumers pay for local telecommunications services is a
matter of state control, Congress's goal of deregulation will be most strongly felt at the state
 level.
      20.  In addition to deregulation, the opening of all telecommunications markets to
competition will have other profound benefits.  Consumers will have the choice of obtaining all
of their telecommunications services from a single provider, so-called one-stop shopping.
Telecommunications providers will be able to bundle packages of services to meet specific
customer demands.  Additionally, as we have recently noted, competition in the local
telecommunications markets may help remove implicit subsidies in access charges.  In the end,
consumers will benefit greatly by the removal of market barriers allowing firms the opportunity
for full and fair competition in both the local and long distance markets on the basis of price,
quality of service, and technological innovation.
      21.  In order to obtain these benefits, we must apply the statutory conditions designed
to ensure that local telecommunications markets are open to competition such that previously
precluded competitors in local and in long distance markets may now become competitors in
each market.  It is essential for local competition that the various methods of entry into the local
telecommunications market contemplated by the Act -- construction of new facilities, purchase
of unbundled network elements, and resale -- be truly available.  Therefore, an open local market
is one in which, among other things, new entrants have nondiscriminatory access to
interconnection, transport and termination, and unbundled network elements at prices based on
forward-looking economic costs, and the opportunity to obtain retail services at an appropriate
discount for resale.  New entrants cannot compete effectively if, for example, the price of
unbundled network elements precludes efficient entry by not allowing new entrants to take
advantage of the incumbent's economies of scale, scope and density.  Moreover, we need to
ensure that the ability of efficient new entrants to garner market share is not obstructed by a
BOC's failure to provide these essential inputs.  We would question whether a BOC's local
telecommunications market is open to competition absent evidence that the BOC is fully
cooperating with new entrants to efficiently switch over  customers as soon as the new entrants
win them.  This entails, among other things, the ability of new entrants to obtain the same access
to the BOCs' operations support systems that the BOCs or their affiliates enjoy.
      22.  Moreover, we need to ensure that the market opening initiatives of the BOCs
continue after their entry into the long distance market.  It is not enough that the BOC prove it is
in compliance at the time of filing a section 271 application; it is essential that the BOC must
also demonstrate that it can be relied upon to remain in compliance.  This may be demonstrated
in various ways.  For example, we must be confident that the procedures and processes requiring
BOC cooperation, such as interconnection and the provision of unbundled network elements,
have been sufficiently available, tested, and monitored.  Additionally, we will look to see if there
are appropriate mechanisms, such as reporting requirements or performance standards, to
measure compliance, or to detect noncompliance, by the BOCs with their obligations.  Finally,
the BOC may propose to comply continually with certain conditions, or we may, on a case-by-
case basis, impose conditions on a BOC's entry to ensure continuing compliance.  The section
271 approval process necessarily involves viewing a snapshot of an evolving process.  We must
be confident that the picture we see as of the date of filing contains all the necessary elements to
sustain growing competitive entry into the future.
      23.  The requirements of section 271 are neither punitive nor draconian.  They reflect
the historical development of the telecommunications industry and the economic realities of
fostering true local competition so that all telecommunications markets can be opened to
effective, sustained competition.  Complying with the competitive checklist, ensuring that entry
is consistent with the public interest, and meeting the other requirements of section 271 are
realistic, necessary goals.  That is not to say, however, that they are easy to meet or achievable
overnight.  Given the complexities of the task of opening these local markets to true, sustainable
competition, it is not surprising that companies that are earnestly and in good faith cooperating in
opening their local markets to competition have not yet completed the task.  It is through such
earnest, good faith efforts that BOCs will obtain authorization to provide in-region long distance
service.  Section 271 primarily places in each BOC's hands the power to determine if and when it
will enter the long distance market.  This is because it is the BOC's willingness to open its local
telecommunications markets to competition pursuant to the requirements of the Act that will
determine section 271 approval.
     C.   History of Ameritech's Efforts to Obtain In-Region, InterLATA
          Authorization for Michigan
      24.  Ameritech's efforts to obtain authority to provide in-region, interLATA services in
Michigan began more than four years ago, when Ameritech announced its unique Customers
First Plan in March 1993.  In that plan, Ameritech proposed a framework for eliminating legal,
economic, and technical barriers to entry to local exchange competition, in return for obtaining a
waiver from the line of business restrictions in the MFJ in order to provide interLATA services,
inter alia, in Grand Rapids, Michigan.  Before judicial action was taken on Ameritech's proposal,
however, the 1996 Act was enacted.
      25.  On January 2, 1997, Ameritech filed with the Commission its initial application to
provide in-region, interLATA services in the state of Michigan, pursuant to section 271 (initial
application).  Ameritech's initial application proved to be premature, however, because it relied
on an interconnection agreement with AT&T Communications of Michigan that had not been
approved by the Michigan Commission, as required by section 271, and that did not appear to be
a legally binding contract.  As a result, Ameritech's initial application contained certain
procedural irregularities that led in the first instance to the Commission restarting the 90-day
period of review for that application.  Then, on February 7, 1997, the Commission concluded
that, for purposes of satisfying section 271, Ameritech could not rely on Ameritech's purported
interconnection agreement with AT&T that was filed with its application.
      26.   In reaching this conclusion, we noted that, "[b]ecause of the strict 90-day statutory
review period, the section 271 review process is keenly dependent on both final approval of a
binding agreement pursuant to section 252 as well as an applicant's submission of a complete
application at the commencement of a section 271 proceeding."  We emphasized that an
application's completeness was essential to permit state commissions and the Department of
Justice to meet their respective statutory consultative obligations, as well as to allow interested
parties to comment on, and the Commission to evaluate, an enormous and complex record in a
short period of time.
      27. On February 11, 1997, Ameritech asked the Commission to dismiss its
application without prejudice.  On February 12, 1997, the Common Carrier Bureau granted
Ameritech's request, and terminated review of Ameritech's application without reaching the
merits.
      28.  On May 21, 1997, Ameritech filed with the Commission an application to provide
in-region, interLATA services in the state of Michigan.  Ameritech represents that its
application satisfies the requirements of section 271(c)(1)(A), because it has entered into
interconnection agreements with three carriers (Brooks Fiber, MFS WorldCom, and TCG) that
have been approved by the Michigan Commission.  Ameritech also represents that it has "'fully
implemented the competitive checklist in section 271(c)(2)(B)' . . . by providing each of the
checklist items to its Section 271(c)(1)(A) competitors . . . at rates and on terms and conditions
that comply with the Act."  In addition, Ameritech states that it has established a separate
affiliate, Ameritech Communications, Inc. (ACI), to provide in-region, interLATA services in
Michigan, and that it and ACI will abide by the structural and transactional requirements of
section 272.  Finally, Ameritech argues that grant of its application is consistent with the public
interest, because Ameritech's entry into the in-region, interLATA services market in Michigan
will produce substantial benefits for consumers.  Accordingly, Ameritech requests the
Commission to grant its application to provide in-region, interLATA services in the state of
Michigan.
      29.  As noted above, our review of the extensive record compiled in this proceeding
indicates that Ameritech has made considerable progress toward satisfying the requirements of
section 271.  In this Order, we conclude that Ameritech is providing access and interconnection
to an unaffiliated, facilities-based provider of telephone exchange service to residential and
business subscribers in Michigan, as required by section 271(c)(1)(A).  In addition, the record
evidence shows that Ameritech has made substantial efforts to implement the competitive
checklist.  We conclude in this Order, however, that Ameritech has not yet demonstrated that it
has fully implemented several items of the competitive checklist in section 271(c)(2)(B) or that
the requested authorization will be carried out in accordance with the requirements of section
272.  We, therefore, must deny, pursuant to section 271(d)(3), Ameritech's application to provide
in-region, interLATA services in Michigan.  We, nevertheless, commend Ameritech for its
efforts to date, and urge Ameritech to continue to work closely with new entrants, the
Department of Justice, and the Michigan Commission to satisfy the requirements of section 271
for entry into the interLATA services market in Michigan.
III. CONSULTATION WITH THE MICHIGAN PUBLIC SERVICE
     COMMISSIONAND THE UNITED STATES DEPARTMENT OF JUSTICE
      A.State Verification of BOC Compliance with Section 271(c)
      30.  Under section 271(d)(2)(B), the Commission "shall consult with the State
commission of any State that is the subject of the application in order to verify the compliance of
the Bell operating company with the requirements of subsection (c)."  In requiring the
Commission to consult with the states, Congress afforded the states an opportunity to present
their views regarding the opening of the BOCs' local networks to competition.  In order to fulfill
this role as effectively as possible, state commissions must conduct proceedings to develop a
comprehensive factual record concerning BOC compliance with the requirements of section 271
and the status of local competition in advance of the filing of section 271 applications.  We
believe that the state commissions' knowledge of local conditions and experience in resolving
factual disputes affords them a unique ability to develop a comprehensive, factual record
regarding the opening of the BOCs' local networks to competition.  The state commission's
development of such a record in advance of a BOC's application is all the more important in light
of the strict, 90-day deadline for Commission review of section 271 applications.  Most state
commissions, recognizing the importance of their role in the section 271 process, have initiated
proceedings to develop a comprehensive record on these issues.  Others, however, have not yet
initiated such proceedings, or have undertaken only a cursory review of BOC compliance with
section 271.  We note that the Act does not prescribe any standard for Commission consideration
of a state commission's verification under section 271(d)(2)(B).  The Commission, therefore, has
discretion in each section 271 proceeding to determine what deference the Commission should
accord to the state commission's verification in light of the nature and extent of state proceedings
to develop a complete record concerning the applicant's compliance with section 271 and the
status of local competition.  We will consider carefully state determinations of fact that are
supported by a detailed and extensive record, and believe the development of such a record to be
of great importance to our review of section 271 applications.  We emphasize, however, that it is
our role to determine whether the factual record supports a conclusion that particular
requirements of section 271 have been met.
      31.  On June 10, 1997, the Michigan Commission submitted its comments concerning
Ameritech's application.  The Michigan Commission greatly assisted the Commission in this
section 271 application by developing an extensive record and making factual findings based on
that record concerning each of the requirements of section 271(c).
      32.  In its comments on Ameritech's initial January 1997 application, the Michigan
Commission evaluated Ameritech's compliance with the requirements of section 271(c), and,
based on available evidence at that time, found that Ameritech had entered into state-approved
interconnection agreements that satisfied each of the elements of the competitive checklist.
After Ameritech withdrew its initial application, the Michigan Commission was able to develop
a more complete record on Ameritech's compliance with the requirements of section 271(c).  In
its consultation on Ameritech's current application, the Michigan Commission updated its
comments to account for new information contained in Ameritech's application and the record in
Michigan Case No. U-11104 as of the date the Michigan Commission's consultation was filed,
June 10, 1997.  Based on its continued review, the Michigan Commission concluded that
Ameritech has not fully implemented four checklist items.  In particular, the Michigan
Commission found that Ameritech fails to provide nondiscriminatory access to its operations
support systems, transport and switching, and access to its 911 and E911 services, as required by
the competitive checklist.
      33.  The Michigan Commission provides a detailed, critical assessment of Ameritech's
provision of access to its operations support systems, based on information produced in an
informational hearing on Ameritech's operations support systems conducted on May 28, 1997.
In addition, the Michigan Commission recommends a comprehensive list of factors that should
be considered in the development of performance standards for operations support systems.
The Michigan Commission's consultation also includes a detailed analysis of other checklist-
related issues that arose after withdrawal of Ameritech's initial application, such as Ameritech's
provision of access to 911 and E911 services.  The Michigan Commission also noted that some
competing local exchange carriers have complained about higher blockage rates on trunks that
interconnect such carriers' facilities to Ameritech's network.  The Michigan Commission's clear
and incisive evaluation of these and other issues has been extremely helpful to our analysis of
Ameritech's compliance with the competitive checklist.
      34.  We note, however, that the Michigan Commission's consultation did not include
an analysis of the state of local competition in Michigan.  This information is not germane to the
competitive checklist, which is the one subject on which the Commission is required to consult
with the state commissions.  But this information will be valuable to our assessment of the public
interest, and it is information which the state commissions are well-situated to gather and
evaluate.  Accordingly, in future applications, we suggest that the relevant state commission
develop, and submit to the Commission, a record concerning the state of local competition as
part of its consultation.  In particular, state commissions should, if possible, submit information
concerning the identity and number of competing providers of local exchange service, as well as
the number, type, and geographic location of customers served by such competing providers.
We recognize that carriers may view much of this information as proprietary and that different
states have different procedures for obtaining and handling such information.  Nevertheless, we
encourage states to develop and submit to the Commission as much information as possible,
consistent with state procedural requirements.
      B.Department of Justice's Evaluation
      35.  Section 271(d)(2)(A) requires the Commission, before making any determination
approving or denying a section 271 application, to consult with the Attorney General.  The
Attorney General is entitled to evaluate the application "using any standard the Attorney General
considers appropriate," and the Commission is required to "give substantial weight to the
Attorney General's evaluation."  Section 271(d)(2)(A) specifically provides, however, that
"such evaluation shall not have any preclusive effect on any Commission decision."
      36.  Several of the BOCs maintain that the Department of Justice's evaluation in this
proceeding is entitled to no special weight, because, they claim, the Commission is required to
give substantial weight only to the Department of Justice's evaluation of the effect of BOC entry
on long distance competition.  These BOCs contend that the Department of Justice's evaluation
of Ameritech's application impermissibly includes an assessment, among other things, of
Ameritech's implementation of the competitive checklist.  SBC, for example, argues that "[i]t
was only with respect to the effect of [BOC] entry on long distance competition that Congress
provided a role for the Department of Justice."  SBC claims that the Joint Explanatory
Statement indicates that, while the Department is free to choose a standard for evaluating a
section 271 application, "the focus of its analysis should be the competitive effects of Bell
company interLATA entry."  SBC concludes that the Department's discretion thus extends only
to selecting an antitrust standard and evaluating the competitive effects of Bell company entry
into the interLATA market under that standard.
      37.We find that the Commission is required to give substantial weight not only to the
Department of Justice's evaluation of the effect of BOC entry on long distance competition, but
also to its evaluation of each of the criteria for BOC entry under section 271(d)(3) if addressed by
the Department of Justice.  As noted above, section 271(d)(2) provides that, "[b]efore making
any determination" under subsection (d) approving or denying a BOC application for
authorization to provide in-region, interLATA services, "the Commission shall consult with the
Attorney General, and . . . shall give substantial weight to the Attorney General's evaluation, but
such evaluation shall not have any preclusive effect on any Commission decision."
Significantly, section 271(d)(2) does not limit the Attorney General's evaluation to any one of the
conditions for BOC entry, to any particular portion of a BOC application, or to an appraisal of
the competitive effects of BOC entry on the long distance market.  Rather, that section states that
the Attorney General is to provide an evaluation of the "application" using any standard the
Attorney General considers appropriate.  In addition, subsection (d)(2) does not limit the
Commission's consultation with the Attorney General only to particular requirements for BOC
entry, but rather provides that the Commission may not make "any determination" under
subsection (d) before consulting with the Attorney General.  We note that Congress limited the
consultative role of state commissions to verification of BOC compliance with section 271(c),
but imposed no such constraint on the Attorney General.  Therefore, the plain language of
section 271(d) requires the Commission to accord substantial weight to the Department of
Justice's entire evaluation, including its evaluation of each of the criteria for BOC entry under
section 271(d)(3) if addressed by the Department of Justice, under whatever standard the
Department of Justice considers appropriate.
      38.  Despite the plain language of section 271(d), several BOCs contend that the
legislative history makes clear that the focus of the Department of Justice's analysis under section
271(d)(2) should be the competitive effects of BOC interLATA entry on long distance
competition.  In support of their interpretation of section 271(d)(2), these BOCs contend that
Congress offered in the Joint Explanatory Statement specific examples of the type of antitrust
standard and inquiry the Department of Justice could appropriately pursue, including:  "(1) the
standard included in the House amendment, whether there is a dangerous probability that the
BOC or its affiliates would successfully use market power to substantially impede competition in
the market such company seeks to enter; [or] (2) the standard contained in section VIII(C) of the
AT&T Consent Decree, whether there is no substantial possibility that the BOC or its affiliates
could use monopoly power to impede competition in the market such company seeks to enter."
Additionally, these BOCs maintain that floor statements by several legislators confirm that the
substantial weight to be accorded to the views of the Department of Justice is limited to its
"expertise in antitrust matters."
      39.  These BOCs fail, however, to quote completely the relevant Joint Explanatory
Statement language.  The quoted passage goes on specifically to state that, "[i]n making an
evaluation, the Attorney General may use . . . (3) any other standard the Attorney General deems
appropriate."  This passage does not limit such other standard to an antitrust standard.  Thus,
read in its entirety, the legislative history cited by these BOCs does not support their position that
the Department of Justice's evaluation must be limited solely to the competitive effects of BOC
entry on the interLATA market, or even to antitrust-related matters.  It is a fundamental canon of
statutory construction that the legislative history of a statute cannot undermine the plain meaning
of a statute unless it clearly and unequivocally expresses a legislative intent contrary to that
language.  Because we find the legislative history does not clearly and unequivocally manifest
an intent by Congress to limit the Commission's reliance on the Attorney General's evaluation to
the competitive effects of BOC interLATA entry on long distance competition, contrary to the
plain language of section 271, we reject these BOCs' interpretation of section 271(d).
      40.  Even if we were to accept these BOCs' position, however, we would still be
required to give substantial weight to the Attorney General's evaluation of, among other things,
the state of local competition and the applicant's compliance with the competitive checklist.
Assessing the effects on long distance competition of BOC entry into the in-region, interLATA
services market necessarily includes an analysis of whether the BOC retains the ability to
leverage market power, if any, in the local exchange into the long distance market, because a
BOC could use its control over bottleneck local exchange facilities to undermine competition in
the long distance market.  For example, a BOC could limit competition in the long distance
market by providing its long distance competitors lower quality access services, by raising its
competitors' costs in order to effect a price squeeze, or by improperly shifting costs from its long
distance affiliate to the local exchange.  In addition, we note that each of the antitrust standards
cited with approval by these BOCs focuses specifically on whether a BOC can use monopoly or
market power in the local exchange to impede competition in the market the BOC seeks to enter
(that is, the market for in-region, interLATA services).  Thus, a critical question in assessing
the effects of BOC entry on long distance competition is whether the local exchange is open to
competition.  As a practical matter, that analysis would require the Attorney General to evaluate
whether the BOC has complied with the competitive checklist and other requirements of sections
271 and 272, and whether such compliance has, in fact, sufficiently reduced the BOC's
bottleneck control of the local exchange.  Thus, in order to give substantial weight to the
Attorney General's evaluation of "the effect of Bell company entry on long distance
competition," as advocated by these BOCs, we must accord substantial weight to the Attorney
General's assessment of BOC compliance with the competitive checklist and other requirements
of sections 271 and 272, as well as the impact of such compliance on the state of competition in
the local exchange.
      41.   In its evaluation of Ameritech's current application, the Department of Justice
focused on certain deficiencies in Ameritech's application.  The Department of Justice concluded
that, although Ameritech has made significant progress toward satisfying the requirements of
section 271, Ameritech has failed in several respects.  First, the Department of Justice concluded
that Ameritech has not fully implemented several elements of the competitive checklist,
including the requirements that it provide unbundled local switching, unbundled transport,
interconnection equal in quality to that provided to itself, and access to operations support
systems.  The Department of Justice's detailed and thoughtful evaluation on these issues has
been very helpful to our analysis.
      42.  Second, the Department of Justice concluded that granting Ameritech's
application would not be consistent with the public interest, because local markets in Michigan
are not irreversibly open to competition.  Specifically, the Department of Justice found that,
although limited competitive entry is occurring in Michigan under all entry paths contemplated
by the 1996 Act (construction of networks and interconnection with incumbent LECs, use of
unbundled elements, and resale), there is not yet sufficient local competition to presume the
market is open to competition.  The Department of Justice, therefore, examined whether
barriers to entry in Michigan exist that would impede the growth of local competition, and
concluded that such barriers remain.  In addition, the Department of Justice concluded that the
absence of adequate performance measures and enforceable benchmarks suggests that local
competition in Michigan is not yet irreversible.  Although we do not reach the question of
whether the authorization requested by Ameritech is consistent with the public interest,
convenience, and necessity, the Department of Justice's examination of the state of local
competition in Michigan is the type of analysis that we will find useful in its evaluations of
future applications.  We also would find it useful in such evaluations for the Department of
Justice to assess the impact of BOC entry on long distance competition, and, in particular, to
analyze the expected consumer welfare benefits resulting from additional long distance
competition.
IV.  STANDARD FOR EVALUATING SECTION 271 APPLICATIONS
      A.Burden of Proof for Section 271 Applications
      43.  Section 271 places on the applicant the burden of proving that all of the
requirements for authorization to provide in-region, interLATA services are satisfied.  Section
271(d)(3) provides that "[t]he Commission shall not approve the authorization requested in an
application . . . unless it finds that [the petitioning BOC has satisfied all the requirements of
section 271]."  Because Congress required the Commission affirmatively to find that a BOC
application has satisfied the statutory criteria, the ultimate burden of proof with respect to factual
issues remains at all times with the BOC, even if no party opposes the BOC's application.
      44.  In the first instance, therefore, a BOC must present a prima facie case in its
application that all of the requirements of section 271 have been satisfied.  Once the applicant
has made such a showing, opponents of the BOC's entry must, as a practical matter, produce
evidence and arguments necessary to show that the application does not satisfy the requirements
of section 271 or risk a ruling in the BOC's favor.  We emphasize, however, that the BOC
applicant retains at all times the ultimate burden of proof that its application satisfies section 271.
      45.  With respect to assessing evidence proffered by a BOC applicant and by
opponents to a BOC's entry in a section 271 proceeding, neither section 271 nor its legislative
history prescribes a particular standard of proof for establishing whether a BOC applicant has
satisfied the conditions required for authorization to provide in-region, interLATA services.  The
standard of proof applicable in most administrative and civil proceedings, unless otherwise
prescribed by statute or where other countervailing factors warrant a higher standard, is the
"preponderance of the evidence" standard.  Accordingly, we conclude that the "preponderance
of the evidence" standard is the appropriate standard for evaluating a BOC section 271
application.
      46.Generally, the preponderance of the evidence standard in civil and administrative
actions means the "greater weight of evidence, evidence which is more convincing than the
evidence which is offered in opposition to it."  As discussed above, the Commission must
accord substantial weight to the Department of Justice's evaluation of a section 271 application.
Consequently, if the Department of Justice concludes that a BOC has not satisfied the
requirements of sections 271 and 272, a BOC must submit more convincing evidence than that
proffered by the Department of Justice in order to satisfy its burden of proof.  If we find that the
evidence is in equipoise after considering the record as a whole, we must reject the BOC's
section 271 application, because the BOC will not have satisfied its burden of proof.
      47.  In our December 6, 1996, Public Notice describing the procedures we would
follow in processing section 271 applications, we required each application to "conform to the
Commission's general rules relating to applications," and to include an "affidavit signed by an
officer or duly authorized employee certifying that all information supplied in the application is
true and accurate."  We did not, however, direct parties commenting on a section 271
application to include such an affidavit or verified statement in support of the factual assertions
in their comments.  While our December 6 Public Notice did not require parties that comment on
section 271 applications to certify the accuracy of the factual assertions in their comments, we
will consider the lack of such a certification in assessing the probative value of their comments.
Thus, we will attach greater weight to comments and pleadings supported by an affidavit or
sworn statement than we will to an unsupported contrary pleading.
      48.  On July 7, 1997, Ameritech filed a motion to strike in its entirety the opposition
of Brooks Fiber Communications of Michigan to Ameritech's application, on the ground that
Brooks Fiber's opposition did not include an affidavit or verified statement certifying the
accuracy of the factual assertions in its opposition.  Ameritech argues that the Commission
should strike Brooks Fiber's opposition in its entirety, because "Brooks' unsupported factual
assertions are inextricably intertwined with, and indeed form the basis for, each of the legal
arguments in the Opposition."  Because we believe that the failure by a party to certify the
accuracy of the factual assertions contained in its comments goes to the weight, and not the
admissibility, of its comments, we decline to grant Ameritech's motion.  In any event, we note
that, on August 4, 1997, Brooks Fiber filed an affidavit verifying the accuracy of the facts
contained in the comments, reply comments, and ex parte communications submitted by Brooks
Fiber in this docket.
      B.Compliance with Requirement that Application Be Complete When Filed
      1.Weight Accorded to New Factual Evidence
      49.In our December 6th Public Notice announcing procedures governing BOC
section 271 applications, we unequivocally stated that "[w]e expect that a section 271
application, as originally filed, will include all of the factual evidence on which the applicant
would have the Commission rely in making its findings thereon."  We affirmed this
requirement in our Ameritech February 7th Order where we recognized that, "[b]ecause of the
90-day statutory review period, the section 271 review process is keenly dependent on . . . an
applicant's submission of a complete application at the commencement of a section 271
proceeding."
      50.In this proceeding, Ameritech submitted over 2,200 pages of reply comments
(including supporting documentation), portions of which several parties challenged in two
motions to strike.  These parties contend that Ameritech has presented material new
information that should not be considered by the Commission in making its decision.  In light of
these disputes, we find it necessary once again to emphasize the requirement that a BOC's section
271 application must be complete on the day it is filed.  As AT&T asserts, this "is the only
workable rule given the unique scheme of accelerated and consultative agency review that
Congress crafted for [s]ection 271."  We stress that an applicant may not, at any time during the
pendency of its application, supplement its application by submitting new factual evidence that is
not directly responsive to arguments raised by parties commenting on its application.  This
includes the submission, on reply, of factual evidence gathered after the initial filing.  If a BOC
applicant chooses to submit such evidence, we reserve the discretion either to restart the 90-day
clock, as was done with respect to Ameritech's initial, January 2, 1997, application, or to accord
the new evidence no weight in making our determination.
      51.Under our procedures governing BOC applications, all participants in a
proceeding, including the BOC applicant itself, may file a reply to any comment made by any
other participant.  We explicitly stated in our December 6th Public Notice, however, that reply
comments "may not raise new arguments that are not directly responsive to arguments other
participants have raised . . . ."  That same principle applies to the submission of new factual
information by the BOC after the filing of its application:  a BOC may not submit new evidence
after its application has been filed that is not directly responsive to evidence or arguments raised
by other parties.  The right of the applicant to submit new factual information after its application
has been filed is narrowly circumscribed.  A BOC may submit new factual evidence if the sole
purpose of that evidence is to rebut arguments made, or facts submitted, by commenters,
provided the evidence covers only the period placed in dispute by commenters and in no event
post-dates the filing of those comments.  That is, a BOC is entitled to challenge a commenter's
version of certain events by presenting its own version of those same events.  In an effort to meet
its burden of proof, therefore, a BOC may submit new facts relating to a particular incident that
contradict a commenter's version of that incident.  A BOC's ability to submit new information,
however, is limited to this circumstance.  Because parties are required to file comments within 20
days after a BOC files its section 271 application, commenters will not have placed at issue facts
which post-date day 20 of the application.  For this reason, under no circumstance is a BOC
permitted to counter any arguments with new factual evidence post-dating the filing of
comments.  As indicated, such evidence, if submitted, will not receive any weight.  For example,
in the instant order we give no weight to the May interconnection data that Ameritech filed on
reply because it reflects performance for a period after Ameritech submitted its application and
no party submitted May interconnection data or otherwise raised arguments concerning
Ameritech's compliance with this checklist item during that month.
      52.We hold that it is appropriate to accord new factual evidence no weight for several
reasons.  First, as we have stated before, we find that allowing a BOC to supplement its
application with new information at any time during the proceeding would be "unfair to
interested third parties seeking to comment on a fixed record triggered by the date that a section
271 application is filed."  When new factual information is filed either in the applicant's reply
comments, or after the reply period, other parties have no opportunity to comment on the
veracity of such information except through the submission of ex partes.  Even if we were to
waive the current 20-page limit on written ex parte submissions, "reliance on [ex partes] to
'update the record' would simply exacerbate the problem, since each attempt by commenting
parties to correct [alleged] BOC misstatements or oversights would unquestionably prompt the
BOCs to file new ex partes themselves."  In addition, we agree with MCI that allowing BOCs
to rely on new factual evidence to demonstrate compliance with the requirements of section 271
may "encourage [them] to game the system by withholding evidence until the reply round of
comments, when they are immune from attack."
      53.Second, we find that permitting the BOC applicant to submit new information,
particularly at the reply stage, would "impair the ability of the state commission and of the
Attorney General to meet their respective statutory consultative obligations."  As we
recognized in the Ameritech February 7th Order, it is essential that these parties have the ability
to evaluate a full and complete record.  Under our procedures for BOC applications, neither the
state commission nor the Department of Justice would have the opportunity to comment upon
new factual evidence submitted in the BOC's reply on day 45.
      54.Third, we find that during a 90-day review period, the Commission has neither the
time nor the resources to evaluate a record that is constantly evolving.  We examine the
comments of the parties as part of our assessment of the credibility and accuracy of the BOC's
assertions.  An applicant's submission of new evidence after the filing of its application,
particularly when such information is submitted in reply comments, impairs the Commission's
ability to evaluate the credibility of such new information.  As we observed in the Ameritech
February 7th Order, allowing a BOC applicant continually to file new evidence would
undermine this Commission's ability to render a decision within the 90-day statutory period.
Given these concerns, we find that using our discretion to accord BOC submissions of new
factual evidence no weight will ensure that our proceedings are conducted in "such manner as
will best conduce to the proper dispatch of business and to the ends of justice."
      55.On a separate but related matter, we find that a BOC's promises of future
performance to address particular concerns raised by commenters have no probative value in
demonstrating its present compliance with the requirements of section 271.  Paper promises do
not, and cannot, satisfy a BOC's burden of proof.  In order to gain in-region, interLATA entry,
a BOC must support its application with actual evidence demonstrating its present compliance
with the statutory conditions for entry, instead of prospective evidence that is contingent on
future behavior.  Significantly, the timing of a section 271 filing is one that is solely within the
applicant's control.  We therefore expect that, when a BOC files its application, it is already in
full compliance with the requirements of section 271 and submits with its application sufficient
factual evidence to demonstrate such compliance.  Evidence demonstrating that a BOC intends to
come into compliance with the requirements of section 271 by day 90 is insufficient.  If, after the
date of filing, the BOC concludes that additional information is necessary, or additional actions
must be taken, in order to demonstrate compliance with the requirements of section 271, then the
BOC's application is premature and should be withdrawn.  Thus, for instance, we conclude in
this order that we cannot find that Ameritech presently provides nondiscriminatory access to its
911 database based on the fact that it "is developing" a service to allow competitors equivalent
access.
      56.We find that enforcing our requirement that all BOC applications be factually
complete when filed is fair and does not pose an undue hardship to the BOC.  We note that our
procedural requirements governing section 271 applications have been in effect since December
6, 1996.  Moreover, they were recently enforced against Ameritech in February 1997.  Thus,
there can be no doubt that Ameritech and other BOCs have had sufficient notice of the
Commission's procedural requirements and our intention of enforcing them.  Further, if a BOC
elects to withdraw its application during the 90-day review period, we would consider this, as we
have done in the past, to be a withdrawal without prejudice.  In this instance, barring the
imposition of any conditions on refiling, we would expect Ameritech to refile its application
once it has a factual basis to demonstrate fully in its initial filing that it complies with the
requirements of section 271.  Once it has refiled, Ameritech will then obtain a determination
on its application in the next 90 days that is based on a full and complete submission.
Ameritech, therefore, is "not at the mercy of either an indefinite agency proceeding or a dismissal
with prejudice."
      57.By retaining the discretion to accord new factual evidence no weight, we do not
suggest that Ameritech should have included all 2,200 pages of its reply submission in its initial
application.  We agree with Ameritech's contention that it is not obligated in its initial application
to anticipate and address every argument and allegation its opponents might make in their
comments.  Indeed, we are mindful of the page limits that we have placed on an applicant's
brief in support.  At the same time, however, we find that a BOC must address in its initial
application all facts that the BOC can reasonably anticipate will be at issue.  As mentioned
above, it is our expectation that state commissions will initiate proceedings to evaluate a BOC's
compliance with the requirements of section 271 prior to the BOC filing a section 271
application with the Commission.  In those proceedings, certain factual disputes will come to
light, and certain concerns will likely be expressed by the state commission.  Although we expect
that a BOC will take appropriate efforts to settle any factual disputes and rectify concerns
expressed by the state commission prior to its section 271 filing, there are likely to be
outstanding areas of contention.  Through these state proceedings, therefore, BOCs are able to
identify and anticipate certain arguments and allegations that parties will make in their filings
before the Commission.
      58.Similarly, if a formal complaint against a BOC is pending before us or the state
commission, the BOC should be able to anticipate that the subject matter of the complaint will be
at issue in the section 271 proceeding and should, therefore, include in its initial filing before the
Commission facts and arguments addressing this issue.  For example, because Ameritech's 911
service is the subject of a formal complaint before the Michigan Commission, Ameritech, at the
very least, should have acknowledged in its initial application that it has experienced problems in
its 911 database and anticipated the arguments that commenters raised regarding Ameritech's
provision of 911 service.  We therefore disagree with Ameritech that it would have to be
"marvelously -- indeed, perfectly -- clairvoyant" to foresee certain comments and address them in
its initial application.
      59.Because we will exercise our discretion in determining whether to accord new
factual evidence any weight, we deny AT&T's motion and the Joint Motion of MCI, MFS
WorldCom, and ALTS to strike from the record the portions of Ameritech's reply that contain
new evidence.  Because we deny the motions to strike, we do not address Ameritech's argument
that these motions are improper because they lack specificity.  We also deny MCI's motion to
restart the 90-day clock because we find that such a remedy is not necessary in this case to
preserve the integrity of the section 271 process.
      2.Obligation To Present Evidence and Arguments Clearly
      60.When a BOC presents factual evidence and arguments in support of its application
for in-region, interLATA entry, we expect that such evidence will be clearly described and
arguments will be clearly stated in its legal brief with appropriate references to supporting
affidavits.  Although we are mindful of the page limitations on the BOC applicant, we
nevertheless find that evidence and arguments, at a minimum, should be referenced in the BOC's
legal briefs and not buried in affidavits and other supporting materials.  We note that Ameritech's
initial application totalled over 10,000 pages and, as noted above, its reply comments totalled
over 2,200 pages.  As the United States Court of Appeals for the District of Columbia Circuit
recently found, "[t]he Commission 'need not sift pleadings and documents to identify' arguments
that are not 'stated with clarity' by a petitioner."  The petitioner has "the 'burden of clarifying
its position' before the agency."  We find this to be particularly true in the context of section
271 proceedings in which the Commission is operating under a 90-day statutory deadline and the
BOC applicant bears the burden of proof.  Moreover, the obligation to present evidence and
arguments in a clear and concise manner also extends to commenting parties.  The Commission
simply has neither the time nor the resources to search through thousands of pages to discern the
positions of the parties, particularly that of the applicant.  For example, although there was no
indication in Ameritech's reply brief that it intended to respond to the allegations made in the
record with respect to its provision of intraLATA toll service, careful examination of Ameritech's
supporting documentation revealed five pages of arguments on this issue in one of Ameritech's
28 reply affidavits.
      61.In addition, we conclude that, when a BOC submits factual evidence in support of
its application, it bears the burden of ensuring that the significance of the evidence is readily
apparent.  During the short 90-day review period, the Commission has no time to review
voluminous data whose relevance is not immediately apparent but can only be understood after
protracted analysis.  For example, in the instant application, although Ameritech submits
performance data on trunk blockage that appears on its face to be Michigan-specific, further
investigation revealed that the data was actually calculated on a region-wide basis.  As stated
above, a BOC has the burden of demonstrating by a preponderance of the evidence that it is in
compliance with the requirements of section 271.  A BOC cannot meet its burden of proof
without clearly establishing the relevance and meaning of the data it submits to rebut arguments
made in the record.
V.   COMPLIANCE WITH SECTION 271(c)(1)(A)
      A.Introduction
      62.In order for the Commission to approve a BOC's application to provide in-region
interLATA services, a BOC must first demonstrate that it satisfies the requirements of either
section 271(c)(1)(A) or 271(c)(1)(B).  In this instance, Ameritech contends that "it has met all
of the requirements of Section 271(c)(1)(A) of the Act."  Section 271(c)(1)(A) provides:
     (A) PRESENCE OF A FACILITIES-BASED COMPETITOR.--A Bell operating
     company meets the requirements of this subparagraph if it has entered into one or
     more binding agreements that have been approved under section 252 specifying
     the terms and conditions under which the Bell operating company is providing
     access and interconnection to its network facilities for the network facilities of one
     or more unaffiliated competing providers of telephone exchange service (as
     defined in section 3(47)(A), but excluding exchange access) to residential and
     business subscribers.  For the purpose of this subparagraph, such telephone
     exchange service may be offered by such competing providers either exclusively
     over their own telephone exchange service facilities or predominantly over their
     own telephone exchange service facilities in combination with the resale of the
     telecommunications services of another carrier.
      63.According to Ameritech, its implemented agreements with Brooks Fiber, MFS
WorldCom, and TCG satisfy "all of the requirements of subsection 271(c)(1)(A)."  Because
Ameritech relies exclusively on Brooks Fiber, MFS WorldCom, and TCG for purposes of
satisfying section 271(c)(1)(A), we will focus in this section only on the record evidence
concerning these carriers' activities in Michigan.  We conclude below that Ameritech has
demonstrated that it complies with section 271(c)(1)(A).
     B.   Factual Summary of Competing Providers' Operations in Michigan
      64.For purposes of demonstrating compliance with section 271(c)(1)(A), Ameritech
relies on its negotiated interconnection agreements with Brooks Fiber and MFS WorldCom, and
its interconnection agreement with TCG that was negotiated in part and arbitrated in part.  The
Michigan Commission, pursuant to section 252, approved Ameritech's agreement with Brooks
Fiber on November 26, 1996; with MFS WorldCom on December 20, 1996; and with TCG on
November 1, 1996.
      65.Brooks Fiber currently serves both business and residential customers through
either:  (1) fiber optic rings, which are connected to its switches; or (2) unbundled loops obtained
from Ameritech, which are connected to Brooks Fiber's switches.  Brooks Fiber does not
provide service through resale of Ameritech's telecommunications services.  Brooks Fiber's
major area of operation is in the Grand Rapids area, and it has also recently begun offering
service in a few other Michigan cities.  According to Brooks Fiber, as of June 6, 1997, it had
21,786 access lines in service in Grand Rapids -- 15,876 business lines and 5910 residential
lines.  Brooks Fiber states that it serves 61 percent of its business lines, i.e., approximately
9864 lines, and 90 percent of its residential lines, i.e., approximately 5319 lines, through its
switch along with the purchase of unbundled loops from Ameritech.  The other lines --
approximately 6192 business and 591 residential -- are served exclusively through facilities
constructed by Brooks Fiber.
      66.TCG serves business customers in the Detroit metropolitan area through either:
(1) its switch and fiber optic network; or (2) dedicated DS1 and DS3 lines purchased under
Ameritech's interstate access tariff, which are connected to TCG's switch in the Detroit area.
TCG is not offering service through the resale of Ameritech's telecommunications services.
According to Ameritech, TCG serves 5280 business lines.
      67.MFS WorldCom serves business customers in the Detroit metropolitan area
through the following three methods:  (1) its switch and fiber optic ring; (2) unbundled loops
obtained from Ameritech, which are connected to MFS WorldCom's switch; and (3) resale of
Ameritech's telecommunications services.  Ameritech claims that MFS WorldCom serves
26,400 business lines exclusively through facilities constructed by MFS WorldCom and 2145
non-Centrex business lines through resale.
      68.MFS WorldCom contends that Ameritech used unrealistic assumptions to
estimate the number of access lines served by MFS WorldCom, and as a result, vastly overstated
the number of lines.  MFS WorldCom claims that it actually serves 79 percent of its business
lines through resale of Ameritech's services, 2.2 percent of its business lines exclusively through
MFS facilities, and the remaining lines -- approximately 19 percent -- through its switching
facilities and the purchase of unbundled loops from Ameritech.  In reply, Ameritech does not
contest MFS WorldCom's statements, contending instead that MFS WorldCom has "purchased
or constructed . . . local switching facilities, fiber optic networks, and thousands of loops and
trunk lines over which [it] predominantly or exclusively provide[s] local service."
     C.   Ameritech's Compliance with Section 271(c)(1)(A)
      69.Ameritech claims that it has "met the requirements of Section 271(c)(1) by
entering into interconnection agreements with MFS WorldCom, TCG, and Brooks Fiber, all of
which have been approved by the [Michigan Commission] under Section 252(e) of the Act."
Moreover, Ameritech maintains that "[t]hese agreements satisfy the requirements of Section
271(c)(1)(A) that they be with competing providers of telephone exchange service, offered
exclusively or predominantly over their own facilities, to residential and business customers."
      70.In response, numerous parties argue that Ameritech has failed to satisfy various
aspects of the section 271(c)(1)(A) requirement.  In particular, these parties contest:  (1) whether
Ameritech has signed one or more binding agreements that have been approved under section
252; (2) whether Ameritech is providing access and interconnection to unaffiliated competing
providers of telephone exchange service; (3) whether there are unaffiliated competing providers
of telephone exchange service to residential and business customers; and (4) whether the
unaffiliated competing providers offer telephone exchange service exclusively over their own
telephone exchange service facilities or predominantly over their own telephone exchange
service facilities in combination with the resale of the telecommunications services of another
carrier.  We address these issues separately in order to determine whether Ameritech meets
section 271(c)(1)(A).
          1.   Existence of One or More Binding Agreements That Have Been
               Approved Under Section 252
      71.Section 271(c)(1)(A) requires Ameritech to have entered into binding
interconnection agreements that have been approved by the Michigan Commission.  Ameritech
contends, and the Michigan Commission concurs, that Ameritech meets this requirement through
its agreements with Brooks Fiber, MFS WorldCom, and TCG.  Only one party disputes
Ameritech's claim.  Brooks Fiber argues that Ameritech's interconnection agreements cannot be
considered binding agreements, because:  (1) the agreements contain interim prices rather than
final cost-based prices; and (2) the agreements do not contain all of the elements necessary to
satisfy the competitive checklist, but instead rely on a "most favored nation" provision to
incorporate missing elements into the agreements.  Brooks Fiber maintains that it has not yet
exercised its rights under this provision.  In addition, Brooks Fiber argues that, because
competing carriers have experienced difficulties using the "most-favored nation" clauses in their
interconnection agreements, there is "significant doubt" as to whether these clauses actually
provide competing carriers with access to checklist items in other agreements.
      72.We conclude that Ameritech's agreements with Brooks Fiber, MFS WorldCom,
and TCG that have been approved by the Michigan Commission pursuant to section 252 are
"binding agreements" within the meaning of section 271(c)(1)(A).  These agreements specify the
rates, terms, and conditions under which Ameritech will provide access and interconnection to its
network facilities.  Moreover, according to the uncontroverted record in this proceeding,
Brooks Fiber, MFS WorldCom, and TCG are currently receiving access and interconnection to
Ameritech's network facilities pursuant to these agreements.  We reject Brooks Fiber's
contention that Ameritech cannot be found to have entered into a binding agreement with
competing providers until the agreements include final cost-based prices and all items of the
competitive checklist.  The agreements define the obligations of each party and the terms of the
relationship as they currently exist.   Although the rates, terms, and conditions in the agreements
may be modified through an action of the Michigan Commission, or by action of Brooks Fiber,
MFS WorldCom, or TCG, if they exercise their rights under the "most-favored nation" clauses,
that does not affect the binding nature of the current agreements or provide a reason for
nonperformance of a party's obligation under an agreement.  Moreover, we find nothing in
section 271(c)(1)(A) that requires each interconnection agreement to include every possible
checklist item, even those that a new entrant has not requested, in order to be a binding
agreement for purposes of section 271(c)(1)(A).  We therefore agree with Ameritech that its
interconnection agreements with Brooks Fiber, MFS WorldCom, and TCG are "binding
agreements."
      73.In addition, although section 271(c)(1)(A) does not require that each agreement
contain all elements of the competitive checklist and permanent cost-based prices to be "binding"
agreements, we note that our decision here does not resolve issues raised in the record as to the
effect of the interim nature of certain prices in the agreements or Ameritech's reliance on "most-
favored nation" provisions on our evaluation of whether Ameritech has met the other
requirements of section 271.  To the extent Brooks Fiber is contending that Ameritech has not
fully implemented the competitive checklist in section 271(c)(2)(B), we address these concerns
in our discussion below of Ameritech's compliance with the competitive checklist.
          2.   Provision of Access and Interconnection to Unaffiliated Competing
               Providers of Telephone Exchange Service
      74.We next consider Ameritech's assertions that it is providing access and
interconnection to Brooks Fiber, MFS WorldCom, and TCG, and that those carriers are
"unaffiliated competing providers of telephone exchange service."  Several parties contest this
assertion, arguing that Brooks Fiber, MFS WorldCom, and TCG cannot be considered to be
"competing providers" as required by section 271(c)(1)(A), because they serve a small number of
the access lines in Michigan and because the majority of customers in Michigan do not have a
choice for local exchange service.  Ameritech responds that section 271(c)(1)(A) does not
require that a competing carrier "be a certain size, serve any particular number of customers, or
cover a certain geographic area."  Moreover, Ameritech argues that, even if section
271(c)(1)(A) requires a specified level of local competition, Ameritech has met the requirement,
because Brooks Fiber, MFS WorldCom, and TCG compete against Ameritech in Detroit and
Grand Rapids -- the two most populous local markets in Michigan.
      75.We determined in the SBC Oklahoma Order that "the use of the term 'competing
provider[ ]' in section 271(c)(1)(A) suggests that there must be an actual commercial alternative
to the BOC."  We further concluded that "the existence of [a carrier's] effective local exchange
tariff is not sufficient to satisfy section 271(c)(1)(A)."  Rather, we determined that, at a
minimum, a carrier must actually be in the market and operational (i.e., accepting requests for
service and providing such service for a fee), although we did not address whether a new entrant
must meet additional criteria to be considered a "competing provider" under section
271(c)(1)(A).  Specifically, we did not determine whether a competing LEC must attain a
certain size or geographic scope.
      76.We do not read section 271(c)(1)(A) to require any specified level of geographic
penetration by a competing provider.  The plain language of that provision does not mandate
any such level, and therefore, does not support imposing a geographic scope requirement.
Consistent with this interpretation, we note that the House Commerce Committee's Report
indicated that "[t]he Committee expects the Commission to determine that a competitive
alternative is operational and offering a competitive service somewhere in the State prior to
granting a BOC's petition for entry into long distance."
      77.We also do not read section 271(c)(1)(A) to require that a new entrant serve a
specific market share in its service area to be considered a "competing provider."  Consistent
with this interpretation, we note that the Senate and House each rejected language that would
have imposed such a requirement in section 271(c)(1)(A).  Nevertheless, we recognize that
there may be situations where a new entrant may have a commercial presence that is so small that
the new entrant cannot be said to be an actual commercial alternative to the BOC, and therefore,
not a "competing provider."
      78.In this Order, we need not and do not reach the question of whether a carrier that
is serving a de minimis number of access lines is a "competing provider" under section
271(c)(1)(A).  In this instance, Ameritech relies on three operational carriers, each of which is
serving thousands of access lines in its service area.  Because Brooks Fiber, MFS WorldCom,
and TCG are each accepting requests for telephone exchange service and serving more than a de
minimis number of end-users for a fee in their respective service areas, we find that each of these
carriers is an actual commercial alternative to the BOC.  We therefore agree with Ameritech that
it is providing access and interconnection to Brooks Fiber, MFS WorldCom, and TCG, and that
these carriers are "competing providers of telephone exchange service."
      79.We note that numerous parties also argue that we should consider the state of
local competition in Michigan, as a whole, as part of our determination of whether "the requested
authorization is consistent with the public interest, convenience, and necessity" under section
271(d)(3)(C).  Our decision here interpreting section 271(c)(1)(A) does not  preclude us from
considering competitive conditions or geographic penetration as part of our inquiry under section
271(d)(3)(C).
          3.   Provision of Telephone Exchange Service to Residential and Business
               Subscribers
      80.Having determined that Ameritech has "binding agreements" under which it is
providing access and interconnection to Brooks Fiber, MFS WorldCom, and TCG, and that these
carriers are "unaffiliated competing providers," we next consider whether Brooks Fiber, MFS
WorldCom, and TCG are providing "telephone exchange service . . . to residential and business
subscribers."  Ameritech claims that it has "satisfied this requirement because Brooks Fiber,
MFS, and TCG are unaffiliated competing providers of telephone exchange services that together
serve business and residential customers."  ALTS, CompTel, the Department of Justice, TRA,
and MFS WorldCom disagree with this statutory interpretation, arguing that neither MFS
WorldCom nor TCG can be deemed to satisfy this aspect of section 271(c)(1)(A), because these
providers compete to serve only business customers.  These parties argue that section
271(c)(1)(A) requires that a BOC provide access and interconnection to its network facilities for
the network facilities of one or more carriers, each of which serves both residential and business
subscribers.  These parties further contend that the fact that MFS WorldCom and TCG are
certified by the Michigan Commission to provide service to residential subscribers and have an
effective local exchange tariff in place for the provision of residential and business services is not
adequate to satisfy section 271(c)(1)(A).  They therefore contend that only Brooks Fiber is a
"competing provider of telephone exchange services . . . to residential and business
subscribers."
      81.In response, Ameritech argues that "[n]othing in section 271(c)(1)(A) requires that
residential and business customers be served by the same competitor."  Ameritech further
contends that the 1996 Act's goal of opening the local exchange and exchange access markets is
achieved "whether there is (1) a single competitor serving both residential and business
customers, or (2) two competitors, one serving business customers and the other residential
customers."  SBC and BellSouth agree with Ameritech, arguing that "Congress' goal of
ensuring that facilities-based service is feasible for all types of subscribers is achieved just as
effectively by multiple carriers as by one."
      82.We conclude that, when a BOC relies upon more than one competing provider to
satisfy section 271(c)(1)(A), each such carrier need not provide service to both residential and
business customers.  We conclude, for the reasons stated below, that this aspect of section
271(c)(1)(A) is met if multiple carriers collectively serve residential and business customers.  We
therefore find that Brooks Fiber, MFS WorldCom, and TCG collectively are "unaffiliated
competing providers of telephone exchange service . . . to residential and business subscribers."
      83.To interpret this part of section 271(c)(1)(A), we begin with the language of the
statute.  This section requires the BOC to establish that it has entered into "one or more binding
agreements" under which it is providing access and interconnection for the facilities of "one or
more unaffiliated competing providers of telephone exchange service . . .  to residential and
business subscribers."  The statutory language, read alone, can support either interpretation of
the statute:  (1) one or more competing providers must collectively serve residential and business
subscribers; or (2) each individual competing carrier must provide service to both residential and
business subscribers.  In light of the legislative history and Congress' policy objective in the 1996
Act of promoting competition in all telecommunications markets, as discussed below, we
conclude that the former is the better interpretation of the statute and will further to a greater
extent Congress' objectives.
      84.The Report that accompanied the bill that was reported out of the House
Commerce Committee contains the only unambiguous indication in the legislative history of the
Act that Congress intended to require that one competitor individually serve both residential and
business subscribers.  As reported by the House Commerce Committee, the bill required that
there be "an unaffiliated competing provider of telephone exchange service . . .  to residential and
business subscribers."  The Committee Report explained that "the Commission must determine
that there is "a facilities-based competitor that is providing service to residential and business
subscribers."  This provision was amended on the floor of the House to require, as does the
1996 Act as enacted, that there be "one or more unaffiliated competing providers of telephone
exchange service . . . to residential and business subscribers."  In our view, this amendment
gave the BOCs greater flexibility in complying with section 271(c)(1)(A), by eliminating the
requirement that one carrier serve both residential and business customers, and allowing instead,
multiple carriers to serve such subscribers.  In light of this legislative history, we find that our
interpretation of this aspect of section 271(c)(1)(A) is more consistent with congressional intent
than the approach advocated by ALTS, CompTel, and others.
      85.Moreover, as a matter of policy, we believe that interpreting section 271(c)(1)(A)
to allow one or more competing providers collectively to serve both residential and business
subscribers more effectively promotes Congress' objective in the 1996 Act of opening the local
exchange and exchange access markets to competition and promoting competition in those
markets already open to competition, including the long-distance market.  Section 271
demonstrates that Congress intended to allow the BOCs into the in-region interLATA market
upon their demonstration that their in-region local markets are open to competition and the other
statutory requirements have been met.  Interpreting section 271(c)(1)(A) to require competing
carriers collectively to serve business and residential customers fulfills Congress' objective in
section 271(c)(1)(A) by ensuring the presence of a competing provider for both residential and
business subscribers.  We agree with Ameritech that requiring one carrier to serve both
residential and business customers is not necessary to further Congress' objectives, because the
local market would be as effectively open to competition whether one competitor is serving both
residential and business subscribers, or multiple carriers are collectively serving both types of
subscribers.  Indeed, a requirement that each competitor individually serve both types of
customers would raise the illogical possibility that there could exist several competing providers
serving a large percentage of residential and business subscribers in a state, but the BOC would
still not meet the requirements for in-region interLATA entry, simply because of business
decisions made by competing providers with respect to which segments of the market to serve.
For these reasons, we conclude that this requirement of section 271(c)(1)(A) is satisfied if one or
more competing providers collectively serve residential and business subscribers.  We therefore
find that Brooks Fiber, MFS WorldCom, and TCG collectively are "unaffiliated competing
providers of telephone exchange service . . . to residential and business subscribers."
          4.   Offer by Competing Providers of Telephone Exchange Service Either
               Exclusively Over Their Own Telephone Exchange Service Facilities or
               Predominantly Over Their Own Telephone Exchange Service
               Facilities in Combination with Resale
      86.Section 271(c)(1)(A) further requires that competing providers offer telephone
exchange service "either exclusively over their own telephone exchange service facilities or
predominantly over their own telephone exchange service facilities in combination with the
resale of the telecommunications services of another carrier."  Ameritech claims that neither
Brooks Fiber nor TCG offers any services through resale, and therefore, they each satisfy the
requirements of section 271(c)(1)(A).  Ameritech asserts that MFS WorldCom also meets the
requirements of section 271(c)(1)(A), because its "resale of service of approximately 2145 non-
Centrex lines is modest in comparison to the facilities-based service that MFS WorldCom
provides."  In arguing that it satisfies this aspect of section 271(c)(1)(A), Ameritech notes that
these competing providers all provide telephone exchange services to some customers through
the use of unbundled network elements, in combination with facilities these carriers have
constructed.  Ameritech maintains that the term "own telephone exchange service facilities"
includes the provision of service through the use of unbundled network elements.  Other
parties, in response, contend that unbundled network elements obtained from a BOC are not a
competing carrier's "own telephone exchange service facilities," and that under this
interpretation, Brooks Fiber, MFS WorldCom, and TCG cannot be deemed to be exclusively or
predominantly facilities-based.  Accordingly, we must first construe "own telephone exchange
service facilities," and in particular, consider whether that phrase includes unbundled network
elements obtained from Ameritech.
      87.In support of its claim that unbundled network elements are a competing carrier's
"own telephone exchange service facilities," Ameritech argues that section 271(c)(1)(A)
juxtaposes two possible arrangements to provide telephone exchange service:  (1) through a
carrier's own telephone exchange service facilities; and (2) through resale.  As a result,
Ameritech contends that "facilities-based" encompasses all telephone exchange services other
than resold services.  Thus, Ameritech argues that "own telephone exchange service facilities"
includes both facilities to which a carrier has title and unbundled elements obtained from a
BOC.  Ameritech further maintains that unbundled network elements are a carrier's own
facilities because resellers do not have control over the facilities they use to provide service,
whereas carriers have control over facilities they construct and over unbundled network elements
they purchase.  Ameritech further notes that, in the Commission's recent Universal Service
Order, we interpreted a substantially similar term "own facilities," in section 214(e), to include
unbundled network elements obtained from an incumbent LEC.  Ameritech argues that there is
no reason to interpret differently the language in section 271(c)(1)(A).  Ameritech points out
that, although we stated in the Universal Service Order that we were not interpreting "the
language in section 271," we noted that "the 'own facilities' language in section 214(e)(1)(A) is
very similar to language in section 271(c)(1)(A)."
      88.The Michigan Commission, BellSouth, and SBC support Ameritech's argument.
BellSouth and SBC contend that not treating unbundled network elements as a competing
provider's "own telephone exchange service facilities" would mean that, even if a BOC makes all
items on the competitive checklist available to competing providers, that BOC may not be able to
enter the in-region interLATA market, simply because competing providers choose to buy an
unbundled network element from the BOC instead of constructing a particular facility.
BellSouth and SBC argue that Congress intended to treat unbundled network elements as a
competing provider's own facilities in order to give the BOC the incentive to make all checklist
items available and provide competing providers with the flexibility to choose whether to build a
particular facility or purchase unbundled network elements from the BOC.
      89.Competing providers and other parties dispute these claims that the purchase of
unbundled network elements from the BOC is sufficient to meet the section 271(c)(1)(A) "own
telephone exchange service facilities" requirement.  Several of these parties argue that the
Commission need not define this term in section 271 in the same manner as it defined the term
"own facilities" in section 214(e) in the Universal Service Order, because the two statutory
provisions serve different purposes.  Several parties argue that the language of section
271(c)(1)(A), which states that a BOC must provide "access and interconnection to its network
facilities for the network facilities of one or more unaffiliated competing providers" demonstrates
that unbundled network elements are not the competitor's facilities, but the BOC's facilities.
Furthermore, these parties contend that the "own telephone exchange service facilities"
requirement in section 271 is intended to distinguish between the facilities constructed by a
competing provider and the facilities that a BOC provides, because facilities obtained from the
BOC are still subject to the BOC's control.  They argue that there can be meaningful
competition only when a competing provider builds facilities through which it can offer unique
services and provide consumers with genuine competitive choices.  Thus, these parties contend
that the term "own telephone exchange service facilities" means only those facilities that are
independent of the BOC, and not unbundled network elements that are leased from the BOC.
      90.The Department of Justice argues that the Commission need not decide  whether
the use of unbundled network elements constitutes facilities-based service.  The Department of
Justice contends that, because Brooks Fiber, which serves both residential and business
customers, does not serve any local customers through resale and provides significant switching
and transport facilities, "it is reasonable to conclude that Brooks [Fiber] is predominantly a
facilities-based provider," thereby meeting the requirements of section 271(c)(1)(A).
      91.Despite the Department of Justice's argument that we need not determine whether
unbundled network elements are treated as a competing carrier's "own telephone exchange
service facilities" for purposes of this application, we think it is useful to decide the issue in this
Order to provide guidance to future applicants.  We note that the determination of whether
competing providers are offering telephone exchange service exclusively or predominantly "over
their own telephone exchange service facilities" will in many instances depend on the
construction of the phrase "own telephone exchange service facilities."  Indeed, in this
application, as discussed below, the determination of whether Brooks Fiber offers telephone
exchange services "exclusively over [its] own telephone exchange service facilities" turns on
whether the phrase "own telephone exchange service facilities" in section 271(c)(1)(A) includes
unbundled network elements.
      92.To determine whether "own telephone exchange service facilities" includes
unbundled network elements, we look first to the text of the statute.  We agree with Ameritech
that section 271(c)(1)(A) recognizes only two methods of providing service:  through a carrier's
own telephone exchange service facilities and through resale.  Undoubtedly, facilities that a
carrier constructs would be that carrier's own telephone exchange service facilities, and service
provided through resale of Ameritech's telecommunications services pursuant to section
251(c)(4) would be resale.  Section 271(c)(1)(A) does not discuss a third category for provision
of service through unbundled network elements.  The question, then, is whether service using
unbundled network elements purchased from Ameritech counts as service over a competing
provider's own telephone exchange service facilities or resale.
      93.Neither the statute nor the legislative history expressly defines "own telephone
exchange service facilities."  Thus, it is not clear from the text of the statute whether the phrase
"own telephone exchange service facilities" includes only those facilities to which a competing
carrier has legal title or which a competing carrier leases from a provider not affiliated with a
BOC, or, alternately, also includes unbundled network elements obtained from a BOC, because
the competing carrier has the "use of that facility for a period of time."  As we stated in the
Universal Service Order, "the word 'own' . . . is a 'generic term' that 'varies in its significance
according to its use' and 'designate[s] a great variety of interests in property.'"  We further
noted in the Universal Service Order, that the use of the term "own facilities," rather than
facilities "owned by" a carrier, suggests that the term "own facilities" could refer "to property
that a carrier considers its own, such as unbundled network elements, but to which the carrier
does not hold absolute title."  Thus, the phrase "own telephone exchange service facilities" in
section 271(c)(1)(A) is ambiguous with respect to whether it includes unbundled network
elements.
      94.Because the meaning of the phrase "own telephone exchange service facilities" is
unclear from the text of section 271(c)(1)(A), we look to other sections of the Act, the legislative
history, and the underlying policy objectives to resolve the ambiguity.  In light of the specific
context in which this language is used, the broader statutory scheme, and Congress' policy
objectives, we conclude that the only logical statutory interpretation is that unbundled network
elements purchased from a BOC are a competing provider's "own telephone exchange service
facilities."
      95.Specifically, section 271(c)(1)(A) refers to "resale of the telecommunications
services of another carrier," and not resale of the facilities of another carrier.  As we determined
in the Universal Service Order, the provision of an unbundled network element is not the
provision of a telecommunications service.  A "network element" is defined in the Act as a
"facility or equipment used in the provision of a telecommunications service."  Thus, use of
unbundled network elements is not resale of the telecommunications services of another carrier.
      96.Furthermore, section 251 clearly distinguishes between resale and access to
unbundled network elements.  The Act contemplates three paths of entry into the local market --
the construction of new networks, the use of unbundled elements of the incumbent's network,
and resale.  The term "resale" in section 251 refers to an incumbent local exchange carrier's duty
to offer at wholesale rates "any telecommunications service that the carrier provides at retail."
As we recognized in the Universal Service Order, section 251 imposes an obligation on
incumbent LECs to offer retail services at wholesale rates for resale, and in a different
subsection, imposes an independent obligation on incumbent LECs to provide
"nondiscriminatory access to network elements on an unbundled basis."  Given that the term
"resale" is defined and distinguished from the provision of unbundled network elements in
section 251, Congress' use of the term "resale" in section 271(c)(1)(A) suggests that Congress did
not intend that term to encompass unbundled network elements.  Rather, it appears that telephone
exchange service provided through unbundled network elements is service over the competing
provider's "own telephone exchange service facilities."
      97.We are not persuaded by the argument that the requirement in section
271(c)(1)(A) that a BOC "is providing access . . . to its network facilities" means that unbundled
network elements must be considered the facilities of the BOC, not the competitor.  This phrase
does not clarify the meaning of the words "own telephone exchange service facilities" used later
in the section.  The requirement that a BOC provide access to its network facilities does not
indicate whether or not those facilities should be deemed the BOC's facilities or the competing
provider's facilities, once the competing provider has obtained them.
      98.We are also not persuaded by the argument, advanced by several parties, that
the following statement in the Joint Explanatory Statement supports the interpretation that the
provision of service through unbundled network elements should be considered resale:
     This conference agreement recognizes that it 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 (e.g.,
     central office switching) will need to be obtained from the incumbent local
     exchange carrier as network elements pursuant to new section 251.  Nonetheless,
     the conference agreement includes the "predominantly over their own telephone
     exchange service facilities" requirement to ensure a competitor offering service
     exclusively through the resale of the BOC's telephone exchange service does not
     qualify, and that an unaffiliated competing provider is present in the market.
Although this statement makes clear that a new entrant offering service exclusively through
resale of the BOC's telephone exchange service does not satisfy section 271(c)(1)(A), the quoted
passage does not address whether unbundled network elements constitute a competing carrier's
"own telephone exchange service facilities."  As discussed above, use of unbundled network
elements is not resale of the BOC's telephone exchange service.  Thus, the statement does not
clarify whether "own telephone exchange service facilities" includes unbundled network
elements.
      99.Furthermore, as a matter of policy, we believe that interpreting "own telephone
exchange service facilities" to include unbundled network elements will further Congress'
objective of opening the local exchange and exchange access markets to competition.
Congress sought to ensure that new entrants would be able to take advantage of any, or all three,
of the entry strategies which the Act established.  Interpreting the phrase "own telephone
exchange service facilities" to include unbundled network elements will provide the BOCs a
greater incentive to cooperate with competing providers in the provision of unbundled network
elements, because they will be able to obtain in-region interLATA authority under Track A
regardless of whether competing carriers construct new facilities or provide service using
unbundled network elements.  Thus, on balance, we find that this statutory interpretation will
better promote Congress' objectives.
      100.We reject the argument raised by several parties that, because competing
providers can offer unique services and provide consumers with genuine competitive choices
only when they build facilities, policy considerations support the conclusion that "own telephone
exchange service facilities" do not include unbundled network elements.  A new entrant using
solely unbundled network elements has the incentive and ability to package and market services
in ways that differ from the BOC's existing service offerings in order to compete in the local
telecommunications market.  In contrast, carriers reselling an incumbent LEC's services are
limited to offering the same services that the incumbent offers at retail.  As a result, many of
the benefits that consumers would realize if competing providers build facilities can also be
realized through the use of unbundled network elements.  Moreover, competing providers may
combine unbundled network elements with facilities they construct to provide a wide array of
competitive choices.
      101.Thus, for the foregoing reasons, we interpret the phrase "own telephone exchange
service facilities," in section 271(c)(1)(A), to include unbundled network elements that a
competing provider has obtained from a BOC.  Although we define this term in the same manner
as we defined "own facilities" in section 214(e) in the Universal Service Order, we base our
decision here on the text of section 271(c)(1)(A), the legislative history of this provision, and the
overall statutory scheme of the 1996 Act.  Thus, the issue, raised by several parties, of whether
we may interpret "own telephone exchange service facilities" in section 271(c)(1)(A) in a
different manner than we interpreted "own facilities" in section 214(e) is moot, and therefore, we
need not decide this issue.
      102.Having determined that unbundled network elements are a competing provider's
"own telephone exchange service facilities" for purposes of section 271(c)(1)(A), we find that
Brooks Fiber is offering service "exclusively over [its] own telephone exchange service
facilities."  Brooks Fiber is not offering service through resale of the telecommunications
services of another carrier, but instead, currently serves both business and residential customers
through either:  (1) fiber optic rings, which are connected to its switches; or (2) unbundled loops
obtained from Ameritech, which are connected to Brooks Fiber's switches.
      103.Because we find that Brooks Fiber is offering service "exclusively over [its] own
telephone exchange service facilities," we need not determine whether MFS WorldCom and
TCG are also offering service "exclusively over their own telephone exchange service facilities
or predominantly over their own telephone exchange service facilities in combination with the
resale of the telecommunications services of another carrier."  Accordingly, we need not reach
the issue, raised by certain parties, of the meaning of the term "predominantly" as used in section
271(c)(1)(A).
          5.   Summary and Conclusion
      104.We find, for the reasons discussed above, that Ameritech has entered into binding
agreements with Brooks Fiber, MFS WorldCom, and TCG that have been approved under
section 252 and that specify the terms and conditions under which Ameritech is providing access
and interconnection to its network facilities for the network facilities of these three competing
providers of telephone exchange service to residential and business subscribers.  In addition, we
determine that Brooks Fiber is offering such telephone exchange service exclusively over its own
telephone exchange service facilities.  Thus, we conclude that Ameritech has satisfied the
requirements of section 271(c)(1)(A) through its interconnection agreement with Brooks Fiber.
Because Ameritech has satisfied section 271(c)(1)(A) through its agreement with Brooks Fiber,
we need not determine whether Ameritech has also satisfied this provision through its
agreements with MFS WorldCom and TCG.
  VI.CHECKLIST COMPLIANCE
      105.Because we have concluded that Ameritech satisfies section 271(c)(1)(A), we
must next determine whether Ameritech has "fully implemented the competitive checklist in
subsection (c)(2)(B)."  For the reasons set forth below, we conclude that Ameritech has not yet
demonstrated by a preponderance of the evidence that it has fully implemented the competitive
checklist.  In particular, we find that Ameritech has not met its burden of showing that it is
providing access to operations support systems functions, interconnection, and access to 911 and
E911 services, in accordance with the requirements of section 271(c)(2)(B).  Like the
Department of Justice, which observed that "Ameritech has made significant and important
progress toward meeting the preconditions for in-region interLATA entry under [s]ection 271 in
Michigan, and has satisfied many of those preconditions," we do recognize, however,
Ameritech's considerable efforts to implement the 1996 Act's goal of opening local markets to
competition.
      106.Given our finding that Ameritech has not demonstrated that it has fully
implemented the competitive checklist, we need not decide in this Order whether Ameritech is
providing each and every checklist item at rates and on terms and conditions that comply with
the Act.  Accordingly, we include here a complete discussion of only certain checklist items --
access to operations support systems functions, interconnection, and access to 911 and E911
services.  Nonetheless, in order to provide further guidance with respect to Ameritech's checklist
compliance, we briefly summarize in Section B Ameritech's showing on several checklist items
for which there is very little comment, and highlight below, in Section F, our concerns regarding
certain other checklist items.  We note that we make no findings or conclusions with respect to
those checklist items addressed in Sections B and F.
      A.Implementation of the Checklist
      1.Introduction
      107.Before turning to an examination of Ameritech's showing on specific checklist
items, we first must address what it means to "provide" checklist items.  We conclude that a
BOC provides a checklist item if it makes that item available as a legal and practical matter, as
described below.
      2.Discussion
      108.As noted above, to satisfy the requirement of section 271(d)(3)(A)(i), Ameritech
must demonstrate that it has fully implemented the competitive checklist by providing access and
interconnection as described therein.  Accordingly, we must consider whether Ameritech "is
providing" access and interconnection pursuant to the terms of the checklist.
      109.The parties advocate divergent views regarding what it means to "provide" a
checklist item.  Ameritech cites dictionary definitions of "provide" to argue that the term may
mean "make available" or "furnish."  Ameritech and Bell Atlantic contend that a BOC
"provides" a given checklist item either by actually furnishing the item to carriers that have
ordered it or by making the item available, through an approved interconnection agreement, to
carriers that may elect to order it in the future.  The interexchange carriers and competing
LECs participating in this proceeding generally construe "provide" to mean "actually furnish,"
not merely "offer" or "make available."  The Department of Justice concludes, however, that,
"[i]n a situation where a BOC is not furnishing a checklist item due to the absence of current
orders, it can still `provide' that item by making it available both as a legal matter (i.e.,
contractually through complete terms in binding approved interconnection agreements that
comply with all applicable legal requirements) as well as a practical matter (i.e., it must stand
ready to fulfill a competitor's request on demand)."  Several parties endorse the statutory
analysis of the Department of Justice.
      110.We agree with Ameritech that "provide" is commonly understood to mean both
"furnish" and "make available."  Therefore, we must look to the statutory context in which the
term is used to determine its precise meaning in this instance.  For the reasons discussed below,
we conclude that a BOC "provides" a checklist item if it actually furnishes the item at rates and
on terms and conditions that comply with the Act or, where no competitor is actually using the
item, if the BOC makes the checklist item available as both a legal and a practical matter.  Like
the Department of Justice, we emphasize that the mere fact that a BOC has "offered" to provide
checklist items will not suffice for a BOC petitioning for entry under Track A to establish
checklist compliance.  To be "providing" a checklist item, a BOC must have a concrete and
specific legal obligation to furnish the item upon request pursuant to state-approved
interconnection agreements that set forth prices and other terms and conditions for each checklist
item.  Moreover, the petitioning BOC must demonstrate that it is presently ready to furnish
each checklist item in the quantities that competitors may reasonably demand and at an
acceptable level of quality.  For instance, the BOC may present operational evidence to
demonstrate that the operations support systems functions the BOC provides to competing
carriers will be able to handle reasonably foreseeable demand volumes for individual checklist
items.  As discussed below, such evidence may include carrier-to-carrier testing, independent
third-party testing, and internal testing of operations suppport systems functions, where there is
no actual commercial usage of a checklist item.
      111.Like the Department of Justice, we conclude that this interpretation of section
271(d)(3)(A)(i) "furthers the Congressional purpose of maximizing the options available to new
entrants, without foreclosing BOC long distance entry simply because . . . [the BOC's]
competitors choose not to use all of the options."  Requiring a BOC petitioning for entry under
Track A actually to furnish each checklist item would make BOC entry contingent on competing
LECs' decisions about when to purchase checklist items and would provide competing carriers
with an opportunity to delay BOC entry.  We believe that such a result would be contrary to
congressional intent.  We do not believe that competing LECs and interexchange carriers
necessarily will purchase each checklist item in every state, as AT&T and MCI suggest.
Competitors may need different checklist items, depending upon their individual entry strategies.
The Act contemplates three methods of entry into the local market -- the construction of new
networks, the use of unbundled elements of the incumbent's network, and resale -- but does not
express a preference for one particular strategy.  We thus believe that the reading of section
271(d)(3)(A)(i) proposed by the interexchange carriers is inconsistent with the statutory scheme,
because it could create an incentive for potential local exchange competitors to refrain from
purchasing network elements in order to delay BOC entry into the in-region, interLATA services
market.
      112.AT&T suggests that interpreting "provide" to mean "furnish" is not an
unreasonably narrow reading of the statute, because BOCs have ultimate control over a
competing LEC's decision to purchase a checklist item.  Contrary to AT&T's suggestion,
however, a BOC cannot compel a competing LEC to contract to purchase a specific checklist
item, absent an implementation schedule for the purchase of that item in the interconnection
agreement between the BOC and competing LEC.  AT&T asserts that a BOC has a legal remedy
if competing LECs refuse to purchase a particular checklist item covered by their interconnection
agreements with a BOC.  AT&T states the remedy is the ability "to invoke the exceptions to
Track A which trigger Track B."  We disagree, because the failure of a competing LEC to
purchase a particular checklist item is not grounds for proceeding under Track B unless the
competing carrier's failure amounts to a breach of the interconnection agreement.  Once a BOC
has received a qualifying request for access and interconnection, Track B is available, by its
terms, only "if the provider or providers making such a request have (i) failed to negotiate in
good faith . . . , or (ii) violated the terms of an [approved] agreement . . . by failure to comply,
within a reasonable period of time, with the implementation schedule contained in such
agreement."
      113.Several parties contend that operational implementation is necessary to expose the
limitations and omissions in a BOC's offering of a network element.  They assert that
interpreting "provide" to mean something less than "furnish" allows incumbent LECs to delay
competitors' access to particular network elements and otherwise avoid checklist obligations.
Others maintain that competitors may not have requested a given checklist item because the
BOC's offering is deficient, unusable, or unreasonably priced.  We emphasize that the
Commission will examine the terms and conditions, as well as the prices, for the BOC's offering
of individual checklist items, regardless of whether the BOC is actually furnishing the checklist
items.  With regard to each checklist item, the Commission must first determine whether the
terms of the interconnection agreement establishing the BOC's obligation to provide a particular
checklist item comply with the Act.  In the case of checklist items that have not been furnished,
the Commission must make a predictive judgment to determine whether a petitioning BOC could
actually furnish the requested checklist item upon demand.  Although we recognize that such a
judgment may be difficult to make, we believe that it is required by the terms of section 271 and
is consistent with the statutory scheme that Congress envisioned.  As we noted in the SBC
Oklahoma Order, "the Commission is called upon in many contexts to make difficult
determinations and has the statutory mandate to do so."
      114.Several parties claim that Congress's contrasting use of "provide" and "generally
offer" throughout section 271 reflects the fundamental structural difference between entry under
Track A and entry under Track B.  They assert that the critical difference is that, under Track A,
a BOC must actually be furnishing each of the elements in a timely and nondiscriminatory
fashion; in contrast, under Track B, the BOC need not actually furnish an element that has not
yet been requested, but must nonetheless prove that it could do so if asked.  Reading the statute
as a whole, we think it is clear that Congress used the term "provide" as a means of referencing
those instances in which a BOC furnishes or makes interconnection and access available
pursuant to state-approved interconnection agreements and the phrase "generally offer" as a
means of referencing those instances in which a BOC makes interconnection and access available
pursuant to a statement of generally available terms and conditions.  A statement of generally
available terms and conditions on its face is merely a general offer to make access and
interconnection available, reflecting the fact that no competing provider has made a qualifying
request therefor.  Because we conclude that Congress used the terms "provide" and "generally
offer" to distinguish between two methods of entry, we believe that the contrasting use of
"provide" and "generally offer" in section 271 does not require us to define "provide" to mean
only "furnish."
      115.Several parties cite legislative history to support their contention that Congress
intended a BOC petitioning for interLATA entry under section 271(c)(1)(A) to be furnishing
each checklist item.  In particular, they point to the Joint Explanatory Statement of the
Conference Committee, which states that "[t]he requirement that the BOC `is providing access
and interconnection' means that the competitor has implemented the agreement and the
competitor is operational."  We conclude that the requirement that a BOC petitioning for entry
under Track A demonstrate the presence of a facilities-based competitor is consistent with
congressional intent that a BOC face competition from an operational competitor before gaining
entry into the in-region, interLATA services market.  The fact that the legislative history refers to
operational competition does not mean that a competitor of the BOC must actually be using
every checklist item in order to be operational.  Moreover, we conclude that a BOC may be
found to have implemented an agreement without a competing LEC's having actually requested
every item provided for therein.  Given the varying needs of competing LECs, we believe that
Congress did not intend to require a petitioning BOC to be actually furnishing each checklist
item.
     B.   Checklist Items of Limited Dispute
      116.As noted above, before discussing Ameritech's failure to comply with certain
checklist items, we summarize here those checklist items for which there is very little comment
in the record.  Specifically, few parties raise issues regarding Ameritech's provision of:
nondiscriminatory access to poles, ducts, conduits, and rights of way (section 271(c)(2)(B)(iii)),
nondiscriminatory access to directory assistance and operator call completion services (section
271(c)(2)(B)(vii)(II) and (III)), white pages directory listings for competing LECs' customers
(section 271(c)(2)(B)(viii)), nondiscriminatory access to telephone numbers (section
271(c)(2)(B)(ix)), nondiscriminatory access to databases and associated signaling necessary for
call routing and completion (section 271(c)(2)(B)(x)), services or information necessary to allow
a requesting carrier to implement local dialing parity (section 271(c)(2)(B)(xii)) and reciprocal
compensation arrangements (section 271(c)(2)(B)(xiii)).  We urge Ameritech to work with
those few parties that raised concerns about these checklist items to resolve any remaining
disputes prior to filing a new section 271 application.  We are encouraged by the fact that at least
one competing provider -- Brooks Fiber -- contends that Ameritech has met checklist items (iii),
(viii), and (ix).  In order to assist us in future proceedings, we urge commenters, including the
relevant state commission and the Department of Justice, to analyze the applicant's compliance
with each of the fourteen checklist items.
      117.Section 271(c)(2)(B)(iii) requires BOCs to provide "nondiscriminatory access to
the poles, ducts, conduits, and rights-of-way owned by the [BOC] at just and reasonable rates in
accordance with the requirements of section 224."  Section 224(f)(1) of the Act imposes upon
all utilities, including LECs, the duty to "provide  . . . any telecommunications carrier with
nondiscriminatory access to any pole, duct, conduit or right-of-way owned or controlled by it."
Ameritech states in its application that it provides nondiscriminatory access to poles, ducts,
conduits and rights-of-way by three means:  by providing access to its maps and records; by
employing a nondiscriminatory methodology for assigning existing spare capacity between
competing carriers; and by ensuring comparable treatment in completing the steps for access to
these items through Ameritech's "Structure Access Coordinator."  Ameritech also asserts that it
will comply with the applicable state requirements of any state, such as Michigan, that elects to
regulate directly poles, ducts, conduits, and rights-of-way.
      118.The Michigan Commission finds, based on Ameritech's provision of this checklist
item to Brooks Fiber, that it "appears Ameritech satisfies this checklist item."  The Department
of Justice states that it does not have sufficient independent information to conclude whether
Ameritech is presently in compliance with this checklist item.  In contrast, MCTA contends
that Ameritech is not providing nondiscriminatory access to poles at just and reasonable rates.
Similarly, AT&T asserts that Ameritech has no record of "proven compliance" with its obligation
to provide nondiscriminatory access to poles, ducts, conduits, and rights-of-way, and in the
absence of such a record, the Commission may find compliance with this checklist item only if
there are adequate written procedures for access to poles, ducts, conduits, and rights-of-way in
Michigan as well as enforceable provisioning intervals at just and reasonable rates.
Nonetheless, Brooks Fiber, the carrier to whom Ameritech is actually furnishing access to poles,
ducts, conduits, and rights of way, states that Ameritech is in compliance with this checklist
item.
      119.Section 271(c)(2)(B)(vii) requires BOCs to provide "[n]ondiscriminatory access
to - . . . (II) directory assistance services to allow the other carrier's customers to obtain telephone
numbers; and (III) operator call completion services."  With respect to its provision of
directory assistance and operator services, Ameritech asserts that it furnishes directory assistance
services to Brooks Fiber, MFS WorldCom, and MCI, and operator services to Brooks Fiber.
Ameritech maintains that it has established procedures to ensure that these services are provided
at parity with the service that Ameritech provides to itself.  The Michigan Commission finds
that "Ameritech appears to comply with the directory assistance and operator call completion
requirements of the checklist."  The Department of Justice did not evaluate Ameritech's
showing on these checklist items.  Several commenters object to Ameritech's failure to provide
the "customized routing" capability of its local switch that allows directory assistance and
operator services to be routed to the directory assistance and operator services platform of the
requesting carrier.  We address that issue in our discussion below regarding unbundled local
switching.
      120. In addition to that concern, MCI asserts that Ameritech will only provide
unbundled access to its directory assistance database through the bona fide request process, and
that this adds unnecessary expense and delay.  Instead, MCI contends, access to directory
assistance databases should be provided through established procedures on a predictable basis.
In response, Ameritech maintains that a bona fide request process is necessary because
Ameritech has no idea what specific type of electronic access a carrier wants to access
Ameritech's directory assistance services until it receives an order for such access.  Ameritech
states further that this type of request is one that is best defined, designed, and priced through the
bona fide request process.  Consequently, Ameritech asserts, it would make no sense to design
a standard product.  The record contains no comments with respect to Ameritech's provision of
operator services.
      121.Section 271(c)(2)(B)(viii) requires BOCs to provide "white pages directory
listings for customers of the other carrier's telephone exchange service."   Ameritech asserts
that it satisfies this requirement by ensuring that its directory publishing affiliate will:  publish
the listings of competing LECs in the same geographic scope at no charge; provide initial and
secondary delivery of white page directories to customers of resellers on the same basis as its
own customers; license its white pages listing on a current basis to competing carries for use in
publishing their own directories; and provide access to its directory listings in readily accessible
magnetic tape or electronic format for the purpose of providing directory assistance.  The
Michigan Commission finds that it "appears that Ameritech meets this checklist item."  The
Department of Justice did not evaluate Ameritech's showing on this checklist item.  No
commenters, with the exception of Brooks Fiber, addressed Ameritech's compliance with this
checklist item in the instant proceeding.  Brooks Fiber asserts that Ameritech complies with this
checklist requirement.
      122.Section 271(c)(2)(B)(ix) provides that "[u]ntil the date by which
telecommunications numbering administration guidelines, plan, or rules are established, [a BOC
must provide] nondiscriminatory access to telephone numbers for assignment to the other
carrier's telephone exchange service customers."  After that date, this section further provides, a
BOC must comply with such guidelines, plan, or rules.  Ameritech states that in its capacity as
Central Office Code Administrator in Michigan, it furnishes nondiscriminatory access to
telephone numbers for assignment to the networks of competing carriers, in accordance with the
Central Office Code Assignment Guidelines and the NPA Code Relief Planning Guidelines,
under the oversight and complaint jurisdiction of the Commission.  Ameritech states that it has
furnished, and continues to furnish, telephone numbers to Brooks Fiber, MFS WorldCom and
TCG.  In addition, Ameritech maintains it has assigned 150 NXX codes to new local exchange
providers including Brooks Fiber, MFS WorldCom, TCG, MCI, and Phone Michigan.  The
Michigan Commission contends that Ameritech "has responded to requests for numbers in each
area code and has the capability to meet the demand when asked by known providers."  The
Michigan Commission concludes that "[i]t therefore continues to appear that Ameritech has met
this checklist item."  Brooks Fiber also maintains that Ameritech satisfies the requirements of
this checklist item.  The Department of Justice did not evaluate Ameritech's showing on this
checklist item.   Phone Michigan, however, asserts that "Ameritech delayed Phone Michigan's
entry in the Saginaw, Bay City, and Midland exchanges by several months by refusing to assign .
. . NXX's for its collocation site" at Ameritech's Saginaw tandem switch.
      123.Section 271(c)(2)(B)(x) requires the BOC to provide "[n]ondiscriminatory access
to databases and associated signaling necessary for call routing and completion."   Ameritech
asserts that it provides unbundled nondiscriminatory access to its signaling networks, its call-
related databases used in its signaling networks for billing and collection or the transmission,
routing or other provision of telecommunications service, and to its Service Management System
(SMS).  Ameritech maintains that it is currently furnishing access to call-related databases and
signaling to several carriers, including Brooks Fiber, MFS WorldCom, and TCG.  Each of its
call-related databases, according to Ameritech, is accessed in the same manner and via the same
signaling links that are used by Ameritech itself.  The Michigan Commission finds that
Ameritech "appears to comply with this checklist item."  The Department of Justice did not
evaluate Ameritech's showing on this checklist item.  According to Brooks Fiber, it has
experienced recent problems in coordinating the provision of Ameritech's signaling network that
have caused serious service interruptions for customers of Brooks Fiber.  For example, Brooks
Fiber asserts that, on one occasion, more than 14,000 telephone calls were blocked.  MCI
questions whether competing LECs "could get access to Ameritech's Advanced Intelligent
Network databases today, much less create programs via Ameritech's Service Creation
Environment/SMS."
      124.Section 271(c)(2)(B)(xii) requires a BOC to provide "[n]ondiscriminatory access
to such services or information as are necessary to allow the requesting carrier to implement local
dialing parity in accordance with the requirements of section 251(b)(3)."  Section 251(b)(3), in
turn, imposes on all LECs the duty to provide dialing parity to competing providers of telephone
exchange service and telephone toll service with "nondiscriminatory access to telephone
numbers, operator services, directory assistance, and directory listing, with no unreasonable
dialing delays."  Ameritech maintains that it meets these requirements, and that local dialing
parity is currently being furnished in 100 percent of Ameritech's switches and access lines.
The Michigan Commission finds that "it appears that Ameritech complies with this checklist
item."  The Department of Justice did not evaluate Ameritech's showing on this checklist item.
Although a number of commenters find fault with Ameritech's provision of intraLATA toll
dialing parity in Michigan, only MCI addresses Ameritech's provision of local dialing parity.
MCI asserts that, because Ameritech does not provide unbundled directory assistance databases
on an equal-in-quality basis, it is not in compliance with the checklist requirement of dialing
parity.
      125.Section 271(c)(2)(B)(xiii) requires a BOC to provide "[r]eciprocal compensation
arrangements in accordance with the requirements of section 252(d)(2)."  Ameritech asserts
that it currently furnishes reciprocal compensation for the exchange of local traffic to Brooks
Fiber, MFS, and TCG under their respective interconnection agreements.  Ameritech explains
that it provides reciprocal compensation rates for both tandem office-based and end office-based
transport and termination of local traffic originating on the other carriers' network.  Despite the
existence of a formal complaint against Ameritech presently pending before the Michigan
Commission filed by Brooks Fiber regarding Ameritech's compliance with its reciprocal
compensation obligations, the Michigan Commission states that it "continues to believe that
Ameritech complies with the checklist item."  The Department of Justice did not evaluate
Ameritech's showing on this checklist item.
      126.Parties have raised two areas of factual dispute regarding Ameritech's compliance
with this obligation.  First, TCG and Brooks Fiber claim that they have not been paid funds due
to them under the reciprocal compensation provisions of their interconnection agreements with
Ameritech.  Second, MCI claims that the Michigan Commission failed to take into account the
fact that MCI's switches perform essentially the same functions as Ameritech's tandem switches,
therefore entitling MCI to Ameritech's tandem termination rate rather than Ameritech's end office
termination rate when MCI terminates Ameritech traffic.  Although Ameritech admits on reply
that it has not paid TCG and Brooks Fiber for certain reciprocal compensation bills, it claims that
it has not done so because these bills contain obvious errors and are presently in dispute.  In
response to MCI's claims, Ameritech argues  that the Michigan Commission twice found against
MCI on the subject of tandem interconnection rates, and that MCI is merely attempting to
relitigate this issue in the instant proceeding.
      127.Finally, we note that, in light of our findings with respect to Ameritech's failure to
satisfy other checklist requirements as discussed below, we are not required to make, and we do
not make, any findings or conclusions with respect to Ameritech's compliance with the foregoing
checklist items.  We recognize, however, the considerable steps that Ameritech has taken in
many of these areas, and we urge Ameritech and the other parties to continue to resolve any
remaining disputes.
      C.Operations Support Systems
          1.   Summary
      128.As discussed below, we conclude that Ameritech has failed to demonstrate that it
provides nondiscriminatory access to all of the operations support systems (OSS) functions
provided to competing carriers, as required by the competitive checklist.  First, we outline our
general approach to analyzing the adequacy of a BOC's operations support systems.  Second, we
briefly describe the evidence in the record on this issue.  Third, we analyze Ameritech's provision
of access to OSS functions.  We emphasize our expectation that Ameritech or any other BOC
applicant must adequately document in any future section 271 application that it is able to
provide OSS functions to support the provision of network elements, including combinations of
network elements.  We conclude that Ameritech has not demonstrated that the access to OSS
functions that it provides to competing carriers for the ordering and provisioning of resale
services is equivalent to the access it provides to itself.  Because Ameritech fails to meet this
fundamental obligation, we need not decide, in the context of this application, whether
Ameritech separately complies with its duty to provide nondiscriminatory access to each and
every OSS function.  Therefore, although we do not address every OSS-related issue raised in the
context of this application, we wish to make clear that we have not affirmatively concluded that
those OSS functions not addressed in this decision are in compliance with the requirements of
section 271.  Fourth, we conclude that Ameritech has failed to provide us with empirical data
necessary for us to analyze whether Ameritech is providing nondiscriminatory access to all OSS
functions, as required by the Act.  Finally, we conclude by highlighting a number of other OSS-
related issues that we do not reach as a decisional basis, but which we raise as concerns in order
to provide guidance for any future Ameritech applications.
          2.   Background
      129.In order to compete in the local exchange market, new entrants must be able to
provide service at a price and quality level that is attractive to potential customers.  Incumbent
LECs use a variety of systems, databases, and personnel to ensure that they provide
telecommunications services to their customers at a certain level of quality, timeliness and
accuracy.  New entrants that use resale services or unbundled network elements obtained from
the incumbent LEC depend heavily on the incumbent LEC to be able to provide a competitive
level of service.  In particular, new entrants must have access to the functions performed by the
systems, databases and personnel, commonly referred to collectively as operations support
systems, that are used by the incumbent LEC to support telecommunications services and
network elements.
      130.Indeed, in the Local Competition Order, the Commission concluded that
operations support systems and the information they contain are critical to the ability of
competing carriers to use network elements and resale services to compete with incumbent
LECs.  The Commission determined that providing access to OSS functions falls squarely
within an incumbent LEC's duty under section 251(c)(3) to provide unbundled network elements
under terms and conditions that are nondiscriminatory, just and reasonable, and its duty under
section 251(c)(4) to offer resale services without imposing any limitations or conditions that are
discriminatory or unreasonable.  The Commission concluded that, in order to meet the
nondiscriminatory standard for OSS, an incumbent LEC must provide to competing carriers
access to OSS functions for pre-ordering, ordering, provisioning, maintenance and repair, and
billing that is equivalent to what it provides itself, its customers or other carriers.  Additionally,
the Commission concluded that incumbent LECs must generally provide network elements,
including OSS functions, on terms and conditions that "provide an efficient competitor with a
meaningful opportunity to compete."
      131.Section 271 requires the Commission to determine whether a BOC has satisfied
its duty under section 251 to provide nondiscriminatory access to OSS functions.  First, sections
271(c)(2)(B)(ii) and (xiv) expressly require a BOC to provide "nondiscriminatory access to
network elements in accordance with the requirements of sections 251(c)(3) and 252(d)(1)" and
to demonstrate that "telecommunications services are available for resale in accordance with the
requirements of sections 251(c)(4) and 252(d)(3)."  Because the duty to provide access to
network elements under section 251(c)(3) and the duty to provide resale services under section
251(c)(4) include the duty to provide nondiscriminatory access to OSS functions, an examination
of a BOC's OSS performance is necessary to evaluate compliance with section 271(c)(2)(B)(ii)
and (xiv).
      132.Second, the duty to provide nondiscriminatory access to OSS functions is
embodied in other terms of the competitive checklist as well.  As discussed above, the duty to
"provide" items under the checklist requires a BOC to furnish the item at rates and on terms and
conditions that comply with the Act or, where no competitor is actually using the item, to make
the item available as both a legal and practical matter.  In the Local Competition Order, the
Commission concluded that providing nondiscriminatory access to OSS functions was a "'term
or condition' of unbundling other network elements under section 251(c)(3), or resale under
section 251(c)(4)."  In order for a BOC to be able to demonstrate that it is providing the items
enumerated in the checklist (e.g., unbundled loops, unbundled local switching, resale services), it
must demonstrate, inter alia, that it is providing nondiscriminatory access to the systems,
information, and personnel that support those elements or services.  Therefore, an examination of
a BOC's OSS performance is integral to our determination whether a BOC is "providing" all of
the items contained in the competitive checklist.  Without equivalent access to the BOC's
operations support systems, many items required by the checklist, such as resale services,
unbundled loops, unbundled local switching, and unbundled local transport, would not be
practically available.
          3.   General Approach to Analyzing Adequacy of OSS
      133.In determining whether a BOC has met its OSS obligation under section 271, the
Commission generally must determine whether the access to OSS functions provided by the
BOC to competing carriers sufficiently supports each of the three modes of competitive entry
strategies established by the Act:  interconnection, unbundled network elements, and services
offered for resale.  In so doing, we seek to ensure that a new entrant's decision to enter the local
exchange market in a particular state is based on the new entrant's business considerations, rather
than the availability or unavailability of particular OSS functions to support each of the modes of
entry.  Currently, competitive carriers in Michigan are pursuing a mix of entry strategies,
including the use of resale services, unbundled network elements, and facilities they have
installed themselves.  The OSS functionalities to which Ameritech provides access, as part of its
OSS obligations, must support each of the three modes of entry and must not favor one strategy
over another.
      134.In assessing a BOC's operations support systems, we conclude that it is necessary
to consider all of the automated and manual processes a BOC has undertaken to provide access to
OSS functions to determine whether the BOC is meeting its duty to provide nondiscriminatory
access to competing carriers.  A BOC's provision of access to OSS functions necessarily includes
several components, beginning with a point of interface (or "gateway") for the competing
carrier's own internal operations support systems to interconnect with the BOC; any electronic or
manual processing link between that interface and the BOC's internal operations support systems
(including all necessary back office systems and personnel); and all of the internal operations
support systems (or "legacy systems") that a BOC uses in providing network elements and resale
services to a competing carrier.
      135.In contrast to our approach, Ameritech appears to claim that its duty to provide
nondiscriminatory access to OSS functions extends only to the interface component.  We
conclude that Ameritech's interpretation of our rules is incorrect.  The Commission's rules clearly
require that an incumbent LEC's duty to provide nondiscriminatory access extends beyond the
interface component.  It is the access to all of the processes, including those existing legacy
systems used by the incumbent LEC to provide access to OSS functions to competing carriers,
that is fundamental to the requirement of nondiscriminatory access.  For example, although the
Commission has not required that incumbent LECs follow a prescribed approach in providing
access to OSS functions, we would not deem an incumbent LEC to be providing
nondiscriminatory access if limits on the processing of information between the interface and the
legacy systems prevented a competitor from performing a specific function in substantially the
same time and manner as the incumbent performs that function for itself.  Accordingly, we
conclude that our rules require that we review all of the processes used by the BOC to provide
access to OSS functions.
      136.In making this evaluation, we generally agree with the Department of Justice and
the Michigan Commission that we must make a two-part inquiry.  First, the Commission must
determine whether the BOC has deployed the necessary systems and personnel to provide
sufficient access to each of the necessary OSS functions and whether the BOC is adequately
assisting competing carriers to understand how to implement and use all of the OSS functions
available to them.  Second, the Commission must determine whether the OSS functions that the
BOC has deployed are operationally ready, as a practical matter.
      137.Under the first part of this inquiry, a BOC must demonstrate that it has developed
sufficient electronic and manual interfaces to allow competing carriers to access all of the
necessary OSS functions.  For those functions that the BOC itself accesses electronically, the
BOC must provide equivalent electronic access for competing carriers.  We recognize,
however, that for some functions, manual access may need to remain available as an additional
mode of access.  A BOC also is obligated to provide competing carriers with the specifications
necessary to instruct competing carriers on how to modify or design their systems in a manner
that will enable them to communicate with the BOC's legacy systems and any interfaces utilized
by the BOC for such access.  The BOC must provide competing carriers with all of the
information necessary to format and process their electronic requests so that these requests flow
through the interfaces, the transmission links, and into the legacy systems as quickly and
efficiently as possible.  In addition, the BOC must disclose to competing carriers any internal
"business rules," including information concerning the ordering codes that a BOC uses that
competing carriers need to place orders through the system efficiently.  Finally, the BOC must
ensure that its operations support systems are designed to accommodate both current demand and
projected demand of competing carriers for access to OSS functions.
      138.Under the second part of the inquiry, the Commission will examine operational
evidence to determine whether the OSS functions provided by the BOC to competing carriers are
actually handling current demand and will be able to handle reasonably foreseeable demand
volumes.  We agree with the Department of Justice that the most probative evidence that OSS
functions are operationally ready is actual commercial usage.  Carrier-to-carrier testing,
independent third-party testing, and internal testing also can provide valuable evidence pertaining
to operational readiness, but are less reliable indicators of actual performance than commercial
usage.  We recognize that, although a BOC has a duty to provide items on the checklist to
competing carriers, this duty does not include the duty to ensure that competing carriers are
currently using each and every OSS function.  As long as the BOC can demonstrate that the
reason competing carriers are not currently using a particular OSS function is because of the
competing carriers' business decisions, rather than the lack of the practical availability of the
necessary OSS functions, the Commission may consider carrier-to-carrier testing, independent
third-party testing, and internal testing, without commercial usage, as evidence of commercial
readiness.
      139.For those OSS functions provided to competing carriers that are analogous to OSS
functions that a BOC provides to itself in connection with retail service offerings, the BOC must
provide access to competing carriers that is equal to the level of access that the BOC provides to
itself, its customers or its affiliates, in terms of quality, accuracy and timeliness.  We conclude
that equivalent access, as required by the Act and our rules, must be construed broadly to include
comparisons of analogous functions between competing carriers and the BOC, even if the actual
mechanism used to perform the function is different for competing carriers than for the BOC's
retail operations.  We reject Ameritech's contention that equivalent access is not the appropriate
standard for measuring access to certain OSS functions because competing carriers obtain access
to these functions through a gateway, whereas Ameritech obtains access to them directly.
Ameritech's approach would allow an incumbent LEC to avoid its duty to provide equivalent
access by claiming that the form of access it has adopted does not permit a parity comparison.
As discussed above, Ameritech's approach would render the nondiscriminatory access standard
meaningless, given that the Commission has not required that incumbent LECs follow a
prescribed method of providing access to OSS functions.
      140.We find that OSS functions associated with pre-ordering, ordering and
provisioning for resale services, and repair and maintenance for both resale services and
unbundled network elements all have retail analogues.  Similarly, because measuring daily
customer usage for billing purposes requires essentially the same OSS functions for both
competing carriers and incumbent LECs, equivalent access is the standard required by section
271 and section 251 of the Act for this billing subfunction as well.
      141.For those OSS functions that have no retail analogue, such as the ordering and
provisioning of unbundled network elements, the BOC must demonstrate that the access it
provides to competing carriers satisfies its duty of nondiscrimination because it offers an
efficient competitor a meaningful opportunity to compete.  In examining whether the quality of
access provided to such functions "provides an efficient competitor a meaningful opportunity to
compete," we will, in the first instance, examine whether specific performance standards exist for
those functions.  In particular, we will consider whether appropriate standards for measuring
the performance of particular OSS functions have been adopted by the relevant state commission
or agreed upon by the parties in an interconnection agreement or during the implementation of
such an agreement.  As a general proposition, specific performance standards adopted by a state
commission in an arbitration decision would be more persuasive evidence of commercial
reasonableness than a standard unilaterally adopted by the BOC outside of its interconnection
agreement.  Win-backs of customers serviced by unbundled network elements might provide
sufficient data with which to develop an appropriate measurement of equivalent access when
there has been enough churn in the marketplace.  In addition, the Commission determined in
the Local Competition Order that, for the provisioning of unbundled local switching that only
involves software changes, customers should be changed over in the same interval as LECs
currently change over end users between interexchange carriers.
      142.Because section 271 of the Act requires BOCs to comply with the statutory
standard of providing nondiscriminatory access to OSS functions, evidence showing that a BOC
is satisfying the performance standards contained in its interconnection agreements does not
necessarily demonstrate compliance with the statutory standard.  If a BOC chooses to rely solely
on compliance with performance standards required by an interconnection agreement, the
Commission must also find that those performance standards embody the statutorily-mandated
nondiscrimination standard.  Regardless of the existence of contractually-based performance
standards, however, the Commission presumes, as noted above, that a number of the OSS
functions provided to competing carriers have an analogue associated with a BOC's retail
operations and, therefore, equivalent access, as measured by those analogues, would be the
standard of performance required by section 271 for those OSS functions.
      143.In sum, our requirements with respect to access to OSS functions are readily
achievable.  We require, simply, that the BOC provide the same access to competing carriers that
it provides to itself.
          4.   Evidence in the Record
      144.Ameritech represents that it "has developed, tested, and implemented access to its
OSS functions and other support processes which are used in providing checklist items."  With
respect to the five broad categories of OSS functions -- pre-ordering, ordering, provisioning,
maintenance and repair, and billing -- Ameritech claims that it is providing competing carriers
with "equivalent access to information, elements, products and services that Ameritech provides
to itself, its affiliates, and other carriers . . . ."  Ameritech also claims that the interfaces it has
deployed to allow competing carriers to obtain access to OSS functions comply with existing
industry standards and guidelines.
      145.Ameritech further contends that:  (1) it has made available the technical and
business information that carriers can use to access Ameritech's interfaces; (2) all of the
interfaces are operationally ready, and many are being used on a commercial basis; and (3) there
is sufficient electronic and manual capacity to meet expected future usage volumes.  Ameritech
claims that it has provided competing carriers with detailed specifications that contain the
technical information necessary for other carriers to be able to build systems that can
communicate with Ameritech's interfaces.  Ameritech also contends that it maintains close and
regular contact with competing carriers in order to assure that those carriers understand how
Ameritech's OSS interfaces and processes operate.
      146.Ameritech asserts that "operational readiness is properly defined as whether [its
OSS] interfaces have undergone sufficient testing or use to provide reasonable assurance that
requesting carriers can obtain timely access to the OSS functions needed to enter the marketplace
and successfully service end users at anticipated demand levels."  Ameritech claims that its
OSS interfaces work properly, as demonstrated by the results of internal testing, carrier-to-carrier
testing, and/or actual commercial usage.  Ameritech emphasizes that systems experts from
Andersen Consulting have independently reviewed the results from both testing and actual use to
conclude that Ameritech's interfaces are operationally ready.
      147.Commenters generally dispute Ameritech's assessment that all of its OSS
functions are operationally ready.  Several parties complain about the delay in receiving
Ameritech's OSS specifications and the inadequacy of the information provided to competing
carriers in order to use Ameritech's OSS interfaces.  MCI also complains about Ameritech's
use of proprietary and non-industry standard interfaces for OSS access.  Phone Michigan
asserts that Ameritech's interfaces for OSS access are complicated and expensive, and therefore
unworkable for small businesses.  Several parties also contend that Ameritech's systems cannot
be considered operational until they are used successfully in a commercial setting and, therefore,
internal and carrier-to-carrier testing is not sufficient.
      148.Commenters, in general, assert that Ameritech's provision of access to its
operations support systems for requesting carriers is not equivalent to the OSS access it provides
to itself, and object to the amount of manual intervention that is involved in processing many
of the orders that requesting carriers submit via the electronic interfaces.  AT&T, for example,
contends that there are two fundamental defects with Ameritech's operations support systems:
(1) Ameritech has not performed the systems design, development, and implementation work to
ensure that, after a competing carrier's order moves through the interface, it will be processed
properly by Ameritech's legacy systems; and (2) the access Ameritech provides to its operations
support systems is overly dependent on manual processing, which is labor intensive, time
consuming, costly, error prone, and inconsistent.
      149.The Communications Workers of America (CWA) asserts that, "[a]t this time,
backlogs in service orders, very low service levels, and billing errors indicate that CLECs do not
receive OSS service at parity with Ameritech's own customers, and that [m]ore time is necessary
to improve the computer systems and to hire and to train sufficient numbers of employees to
handle the growing volume of orders."  The CWA contends that Ameritech is experiencing a
number of problems with its electronic interfaces, causing Ameritech to process manually many
of the orders placed by competing carriers.  The CWA argues that, as a result, many orders
have been backlogged and have not been processed by the expected due date.  In addition, the
CWA asserts that the wholesale service center established by Ameritech to service competing
carriers is understaffed and inadequately staffed by a large number of new hires and temporary
contract employees.  Moreover, the CWA contends that the service representatives assigned to
the service center receive insufficient training in comparison to those service representatives who
work for Ameritech's retail operations.
      150.Other commenters contend that Ameritech's operations support systems do not
have sufficient capacity to process efficiently orders submitted by competing carriers, and that
the access Ameritech is providing to OSS functions is not actually meeting the performance
standards Ameritech claims to be satisfying.  Several parties assert that Ameritech's OSS
systems are failing, and not meeting the expectations of competing carriers.  Parties complain
about recurring problems such as inconsistent ordering results, late-delivered bills, double-billing
of new customers of competing carriers, and high order rejection rates.  Other parties contend
that Ameritech has not deployed adequate OSS functions for the ordering, provisioning, and
billing of combinations of unbundled network elements.  Sprint contends that Ameritech
appears to have devoted its resources to supporting resale services and not unbundled network
elements.  Finally, many parties contend that Ameritech does not have adequate performance
measures in place to allow Ameritech to demonstrate that it is providing nondiscriminatory
access.
      151.In its reply, Ameritech submits new OSS-related performance data (i.e., data
tracking OSS performance after May 21st), and states that it is now committed to reporting its
performance on a number of the measures requested by the Department of Justice and the
Michigan Commission.  Ameritech also claims that it has undertaken a number of remedial
measures to resolve recurring problems with certain of its operations support systems.  In
addition, Ameritech has made a number of new commitments to provide additional information
and analysis upon request.  Finally, Ameritech relies heavily on the proposed order issued by
an Illinois Commerce Commission (Illinois Commission) hearing examiner on June 20, 1997,
which concluded that Ameritech's operations support systems are available and operational.
      152.Before examining the specific concerns we have with Ameritech's OSS showing,
we emphasize again that we judge Ameritech's checklist compliance based on the evidence
submitted in its application.  Given the statutory time constraints, it is unacceptable for
Ameritech to present new evidence and make new commitments at a point more than half-way
through the 90-day statutory review period.  It also is not acceptable for Ameritech to claim on
reply that it has resolved a number of OSS-related problems that were recurring problems at the
time of, or prior to, the filing of its application.
      153.We recognize that the development of OSS functions is not a static process, and
we encourage and expect Ameritech continually to make improvements to its operations support
systems, even after it has filed a section 271 application.  There is, however, a fundamental
difference between making improvements to the OSS access that, at the time of the application,
meets the nondiscriminatory requirement, and taking post-filing remedial measures to try to
bring the OSS access into compliance during the pendency of the application.  The record in this
case shows that at least some of the post-filing actions Ameritech has taken likely fall under this
latter category.  By filing new information on reply and making new commitments on reply
that go beyond supporting the arguments made in its original application, Ameritech in effect
seeks to supplement its original case.  As we made clear in our December 6th Public Notice
regarding section 271 applications, and subsequently emphasized in our Ameritech February 7th
Order, "[w]e expect that a section 271 application, as originally filed, will include all of the
factual evidence on which the applicant would have the Commission rely in making its findings
thereon."
      154.Accordingly, in our analysis in this Order of the adequacy of Ameritech's OSS,
we scrutinize carefully the factual information that post-dates the filing of the application,
submitted by Ameritech on reply, to determine whether it is directly responsive to arguments or
factual information submitted by commenters.  To the extent Ameritech's submission is not
directly responsive, we will give it no weight.  Any information filed on reply must not go
beyond the time-frame covered by the information submitted by commenting parties and in any
event must not post-date the filing of their comments.  Similarly, we do not consider any new
commitments made by Ameritech or remedial measures taken by Ameritech after May 21, 1997,
the date Ameritech filed its application, in evaluating whether Ameritech has demonstrated it
provides nondiscriminatory access to its OSS.
      155.Finally, we note that Ameritech's reliance in its reply on the Illinois Commerce
Commission hearing examiner's proposed order issued on June 20, 1997 is now irrelevant.
Subsequent to the proposed order issued by the hearing examiner on June 20, 1997, the hearing
examiner issued a further revised proposed order on August 4, 1997.  In the August 4th proposed
order, the hearing examiner revises the findings made with regard to OSS and concludes that
"more time is needed before [the Illinois Commission] can find that OSS is being provided at
parity."  The hearing examiner's August 4th proposed order also finds that "[a]t this point in
time, the record does not support a finding that OSS will function as expected without serious
problems" and that "the record does not establish that Ameritech can handle increases in demand
without serious delays."  Therefore, because the conclusions in the hearing examiner's June
20th proposed order regarding Ameritech's OSS have been revised, Ameritech reliance in its
reply on the June 20th proposed order to support its claim that it provides nondiscriminatory
access to OSS functions has been rendered moot.
      156.As a general matter, we acknowledge that any determinations regarding OSS
made by state commissions in the Ameritech region may be relevant to our inquiry in this
application because Ameritech provides access to OSS functions on a region-wide basis from a
single point of contact.  We note that the Illinois Commission hearing examiner's August 4th
proposed order is not a final order as it has not been adopted by the Illinois Commerce
Commission, and therefore, although it provides evidence relevant to our inquiry regarding the
readiness of Ameritech's OSS for Michigan, it does not carry the same weight as a final order or
decision issued by a state commission.
          5.   Analysis of Ameritech's Provision of Access to OSS Functions
               a.   Introduction
      157.Like the Department of Justice, we recognize that Ameritech has undertaken
numerous measures to construct the interfaces, both electronic and manual, necessary to provide
OSS functions to competing carriers.  In general, as problems or complications have appeared,
Ameritech has sought to implement solutions in an expeditious manner.  Moreover, Ameritech
has attempted to ensure that its systems have undergone some form of testing, whether internal,
carrier-to-carrier, or independent third party, in order to determine the readiness of its systems.
Finally, Ameritech has committed to measuring and reporting its performance for a number of
OSS-related activities in order to demonstrate its compliance with the Act's nondiscrimination
requirement.
      158.Nevertheless, we conclude that Ameritech has not proven by a preponderance of
the evidence that, as of the filing of its application, it provides nondiscriminatory access to all
OSS functions, as required by section 271 and section 251 of the Act.  As noted above,
Ameritech has the burden of demonstrating that it has met all of the requirements of section
271.  We find, on the basis of the record developed in this proceeding, that Ameritech has not
met this burden.  We first discuss the evidentiary showing on provision of OSS functions for
unbundled network elements that we expect Ameritech to make in its next section 271
application.  We then focus our discussion on Ameritech's OSS functions for the ordering and
provisioning of resale services.  Because competing carriers have used resale OSS functions
more than the other OSS functions made available by Ameritech, the evidence in the record
regarding the quality of access provided by Ameritech to the resale OSS functions is more fully
developed.  We are unable to find that the access Ameritech currently provides for resale services
is equivalent to the access that it provides to itself in connection with its retail local exchange
operations, nor are we sufficiently confident that the access it will provide in the future will be
nondiscriminatory.  Moreover, we conclude that the evidence strongly suggests that, at least with
regard to the OSS functions for the ordering and provisioning of resale services, the quality of
access that Ameritech is currently providing to competing carriers may decline as commercial
usage increases.  Utilizing the framework outlined in the preceding section, we conclude that,
because Ameritech has failed to demonstrate that its OSS functions for the ordering and
provisioning of resale services are operationally ready, Ameritech is unable to demonstrate that it
is providing nondiscriminatory access to its OSS, as required by section 271(c)(2)(B)(xiv).
               b.   OSS Functions for Unbundled Network Elements
      159.Although we focus our decision in this section on the OSS functions associated
with the ordering and provisioning of resale services, we wish to make clear that, in future
applications, Ameritech also must be able to demonstrate that it is providing nondiscriminatory
access to OSS functions associated with unbundled network elements.  As we noted above, a
BOC must be able to demonstrate that the OSS functions that it has deployed adequately support
each of the modes of entry envisioned by the Act.  Therefore, a BOC has not met its OSS
obligation, under section 271 of the Act, until it demonstrates that its provision of OSS for
unbundled network elements, as well as for resale, complies with the nondiscrimination
requirement of the Act.  We share the Department of Justice's concern about the paucity of
Ameritech's showing on the issue of whether Ameritech's provision of OSS functions for
unbundled network elements complies with the nondiscrimination duty required by the Act.
      160.As part of its duty to provide unbundled network elements to competing carriers,
Ameritech must be able to provide to competing carriers individual network elements.
Ameritech also must be able to provide combinations of network elements, including the
combination of all network elements, which some parties refer to as the "UNE Platform" or the
"Platform."  Deploying the necessary OSS functions that allow competing carriers to order
network elements and combinations of network elements and receive the associated billing
information is critical to provisioning those unbundled network elements.  In Ameritech's
application, Ameritech relies on internal testing as evidence that its OSS functions for the
ordering, provisioning and billing of combinations of network elements are operationally
ready.  During the pendency of its application, Ameritech began carrier-to-carrier testing of
some, but not all, of these functions.  Currently, AT&T, as well as others, are testing the OSS
functions for the ordering, provisioning, and billing of combinations of network elements with
Ameritech.  There is no dispute in the record, however, regarding the lack of commercial usage
of OSS functions associated with combinations of network elements.
      161.As discussed above, we find that commercial usage is the most probative type of
empirical evidence when considering whether a BOC has met its burden of demonstrating
compliance with this checklist item.  Absent data on commercial usage, we will examine
carefully the results of carrier-to-carrier testing.  With regard to Ameritech's OSS functions for
the ordering, provisioning and billing of combinations of network elements, we note that carrier-
to-carrier testing began after the submission of Ameritech's application and even now has not yet
been completed.  Evidence in the record clearly indicates that a number of competing carriers,
prior to the filing of Ameritech's application, sought to develop and test the necessary OSS
functions to order, provision, and bill combinations of network elements.  Under such
circumstances, we are unwilling to make a decision, based only on evidence relating to internal
testing, regarding the readiness of Ameritech's OSS functions to support the provision of
combinations of network elements.  Given the demand by competing carriers to purchase
combinations of network elements, we would expect to examine evidence other than mere
internal testing results in any future section 271 application.  We would expect Ameritech to
demonstrate, at a minimum, that both individual and combinations of network elements can be
ordered, provisioned, and billed in an efficient, accurate, and timely manner, and that its
operations support systems supporting such functions are designed to accommodate both current
demand and projected demand of competing carriers.
               c.   OSS Functions for the Ordering and Provisioning of Resale
                    Services
      162.Competing carriers have primarily used Ameritech's OSS functions for the
ordering and provisioning of resale services.  Ameritech has deployed an interface utilizing an
Electronic Data Interchange (EDI) protocol to receive resale service orders electronically from
competing carriers.  In its application, Ameritech represents that, between January 1, 1997, and
May 1, 1997, it received 19,671 resale orders electronically over the EDI interface, and that it
accepted and processed 17,879 of those orders.  Since the beginning of the year, most of these
orders have been placed by AT&T.  The interface also is currently being used by MCI Metro,
Network Recovery Services, and USN Communications.
      163.For the reasons set forth below, we conclude that Ameritech has failed to provide
the type of data necessary to establish that it is providing nondiscriminatory access to OSS
functions for the ordering and provisioning of resale services.  Moreover, we conclude that
Ameritech's reliance on manual processing for the ordering and provisioning of resale services
has resulted in a number of problems with its OSS performance that preclude us from finding
that Ameritech has met its burden of demonstrating compliance with this checklist item.
                    (1)  Need to Provide Actual Installation Intervals
      164.In order to demonstrate that it provides nondiscriminatory access to OSS
functions for the ordering and provisioning of resale services, Ameritech provides empirical
evidence in its application showing due dates not met and installations completed outside of a
six-day interval, for both competing carriers and itself.  Ameritech contends that, in its
experience as a local exchange carrier, it has determined that "when Ameritech performs well on
these measures, its end user customers are satisfied."  Therefore, Ameritech claims that,
because it measures those factors that have the most direct impact on the customer, its
performance measurements are the most appropriate standards for demonstrating
nondiscriminatory access, in the context of ordering and provisioning resale services.
Ameritech contends that its data measuring such performance demonstrate that Ameritech is
providing nondiscriminatory access to OSS functions to competing carriers.
      165.Commenters generally contend that Ameritech's performance measurements for
the ordering and provisioning of resale services do not demonstrate that Ameritech provides
access to OSS functions on a nondiscriminatory basis.  To the contrary, commenters argue that
the measurements chosen by Ameritech could easily mask discriminatory conduct.  In
addition, both the Department of Justice and the Michigan Commission assert that performance
measurements tracking average intervals are necessary to make a finding that Ameritech is
providing nondiscriminatory access to OSS functions. Specifically, the Michigan Commission
notes that "[m]easurements must permit determinations of parity to be made with Ameritech's
own retail operations.  Measuring rates of completion within a target period of time rather than
determining actual average time to complete a task does not permit direct comparisons to
Ameritech's retail performances."
      166.Because the ordering and provisioning of resale services is analogous to the
ordering and provisioning of Ameritech's retail services, we find that Ameritech must provide to
competing carriers access to such OSS functions equal to the access that it provides to its retail
operations.  In our view, the performance data submitted by Ameritech fail to demonstrate that
Ameritech is providing such equivalent access.  Most significantly, Ameritech does not measure
and report average installation intervals for Ameritech's retail operations or for competing
carriers.  We conclude that Ameritech's failure to submit such evidence prevents the Commission
from making a decision based on this factual record, and provides Ameritech with an ability to
mask discriminatory behavior.  Because Ameritech only tracks installations completed outside of
a six-day interval, rather than average installation intervals, the Department of Justice notes that,
"if 100 percent of Ameritech's retail customers receive service on day one, while 100 percent of
the CLEC's customers do not receive their service until day five, then a report of installations
outside of six days will show parity of performance, not revealing the discriminatory difference
in performance between Ameritech and the CLEC."  We conclude, therefore, that in order to
demonstrate nondiscriminatory access to OSS functions, Ameritech must demonstrate that it is
provisioning resale orders within the same average installation interval as that achieved by its
retail operations.
      167.As the Department of Justice notes, "[p]roviding resale services in substantially
the same time as analogous retail services is probably the most fundamental parity requirement in
Section 251."  If Ameritech is, to a significant extent, processing retail orders for itself more
quickly than it is processing resale orders for competitive carriers, Ameritech would not be
meeting its obligation to provide equivalent access to those OSS functions.  Without data on
average installation intervals comparing Ameritech's retail performance with the performance
provided to competing carriers, the Commission is unable to conclude that Ameritech is
providing nondiscriminatory access to OSS functions for the ordering and provisioning of resale.
      168.The average installation interval is a critical measurement in determining whether
nondiscriminatory access to these OSS functions has been provided to competing carriers.
Ameritech has not provided such evidence in this record.  While Ameritech's argument that
customers are most concerned about due dates missed and installations completed outside of one
week may apply in a single-supplier market, it is likely, in a competitive marketplace, that
customer decisions increasingly will be influenced by which carrier is able to offer them service
most swiftly.  While we acknowledge that due dates missed and installations completed outside
of one week may supply useful information regarding the quality of access that Ameritech is
providing to competing carriers, such measurements do not, in and of themselves, demonstrate
that Ameritech is providing equivalent access to OSS functions.
      169.We also fundamentally disagree with Ameritech's position that measuring average
installation intervals for both competitive carriers and Ameritech's retail operations is
meaningless as a measurement of nondiscriminatory access because the circumstances and
business objectives of each carrier are different.  Ameritech argues that, because some
customers may not choose the first available installation date, and Ameritech cannot
independently determine which customers served by competing carriers request dates other than
the first available, average installation intervals may differ between carriers, depending upon the
number of customers who choose due dates beyond the first available.  Ameritech also
contends that, because orders may vary in level of complexity, average installation intervals can
be further skewed, depending upon the different types of orders received by particular carriers.
      170.We believe Ameritech's arguments disputing the probative value of data
measuring average installation intervals should be made in conjunction with the filing of such
data in its application, rather than as a justification for not filing such data at all.  In order for the
Commission to determine if Ameritech's arguments have some validity, we must first be able to
examine data that measure average installation intervals.  As noted by the Department of Justice,
Ameritech can and should exclude from its data those customers who requested due dates beyond
the first available due date.  In addition, Ameritech can and should disaggregate its data to
account for the impact different types of services may have on the average installation interval.
Moreover, Ameritech is free to use data on due dates not met to explain any inconsistencies
between the average installation intervals for itself and other carriers.  For example, if a
particular competing carrier consistently requests a standard, longer interval for completion of all
of its orders, rather than the first available installation date, such data may explain that any
differences in the average installation intervals between Ameritech and the other carrier are not
due to discriminatory conduct on the part of Ameritech.  Finally, we recognize that Ameritech is
willing to audit, upon request, the due dates offered to its retail units and to competing carriers to
determine whether such dates are offered on a nondiscriminatory basis.  We agree with the
Department of Justice that a commitment to conduct an audit in the future does not constitute
evidence of current nondiscriminatory treatment.  In addition, although an audit may provide
useful information, Ameritech has not fully explained the parameters of such an audit for us to
conclude that its audit proposal would provide an adequate substitute for measuring actual
installation intervals.
      171.In sum, we find that submission of data showing average installation intervals is
fundamental to demonstrating that Ameritech is providing nondiscriminatory access to OSS
functions.  Such data is direct evidence of whether it takes the same time to complete
installations for competing carriers as it does for Ameritech, which is integral to the concept of
equivalent access.  By failing to provide such data in this application, Ameritech has failed to
meet its evidentiary burden.  We conclude that, if Ameritech chooses to resubmit its application
for Michigan, Ameritech should submit data measuring the average installation intervals for its
retail operations and competing carriers so that the Commission may determine whether
Ameritech is providing nondiscriminatory access to OSS functions for the ordering and
provisioning of resale services.
                    (2)  Reliance on Manual Processing
      172.We further conclude that Ameritech has failed to demonstrate it is providing
nondiscriminatory access to its OSS functions because there is convincing evidence in the record
indicating that Ameritech's OSS functions for the ordering and provisioning of resale services
may contain serious system deficiencies that will likely magnify as the volume of commercial
use increases.  In particular, commenters argue that there is a direct correlation between
Ameritech's reliance on manual processing and both Ameritech's inability to return a significant
number of firm order confirmations (FOCs) and order rejections on time, as well as
Ameritech's modification of a significant number of due dates.  Commenters contend that
experience has shown that, as the number of resale orders increases, more orders will be
processed manually and, as a result, more orders will be backlogged, remain pending, or
processed more slowly than Ameritech's own orders.
      173.As discussed more fully below, we find that Ameritech's reliance on manual
processing is substantial and appears to cause a significant deterioration in Ameritech's
performance as orders increase.  Given that the problems currently faced by Ameritech
generally have arisen from a limited number of orders for simple POTS resale service, we are
concerned that the problems Ameritech is experiencing will multiply, as more competing carriers
enter the marketplace and increase both the total number of orders and the number of orders
involving more complex services.  We identify and discuss below the major problems that have
been, at least partially, caused by Ameritech's reliance on manual processing for the ordering and
provisioning of resale services.
                         (a)  Orders in "1PE" Status and Split Accounts
      174.Evidence in the record indicates that Ameritech processes manually a significant
number of the orders that it receives over its EDI interface.  For example, Ameritech's own
data indicate that, from January through April of this year, approximately 39 percent of the resale
orders received electronically over the EDI interface were processed manually before the orders
entered Ameritech's legacy systems.  The rest of the orders were either rejected electronically
by the interface or were processed electronically into the legacy systems.
      175.Ameritech represents that the most significant number of orders processed
manually are orders that the interface accepts, but that could not be processed into the legacy
systems without additional changes or edits being made to the orders, known as orders in "1PE"
(or "1P") status.  Ameritech explains that, "'1PE' status occurs because Ameritech's service
order processing system edits determine that manual review is required on an order that the
interface thought could be processed electronically."  In addition, Ameritech manually
processes all orders involving split accounts (namely, when resellers provide service to some, but
not all, of a customer's lines) that are received over the electronic interface.  Of the total
number of resale orders that are received electronically over the EDI interface, approximately 9
percent are reviewed manually because they involve split accounts.  Ameritech acknowledges
that a competing carrier has little control over whether an order will require manual review, and
that the manual processing of orders placed in "1PE" status and orders involving split accounts
results solely from decisions made by Ameritech.  Ameritech's own data indicate that orders in
"1PE" status and orders involving split accounts together constitute over 60 percent of the total
number of AT&T orders requiring manual review.
      176.Ameritech contends that, in general, whether orders are processed electronically
or manually is not relevant to determining operational readiness in compliance with the
competitive checklist.  Ameritech also claims, however, that the problems associated with
"1PE" status are not confined to competing carriers, but also affect Ameritech's retail
operations.  Ameritech asserts that the corrections made to orders during manual review are
generally "simple and quick" and made in the same time it takes to make similar adjustments to
retail orders.  Ameritech also argues that, when orders have fallen into "1PE" status in
sufficient volume, Ameritech has added an additional edit to its interface to resolve the problem
electronically.  In addition, Ameritech contends that its decision whether to mechanize certain
functions, such as processing orders involving split accounts, is a business decision made solely
by Ameritech.
      177.Commenters argue that Ameritech's reliance on manual processing of a significant
number of resale orders is directly relevant to determining whether Ameritech is able to
demonstrate that it is providing nondiscriminatory access to OSS functions.  Commenters
contend that manual processing consistently has been the cause of undue delays in order
processing and order completions.  Commenters explain that such delays have a direct impact
on their ability to serve their customers.
      178.Although it may be true, as Ameritech suggests, that the corrections made to
"1PE" orders are generally "simple and quick" and made in the same time it takes to make
similar adjustments to retail orders, this statement does not account for the time that elapses
between the identification of the problem at the interface and the resolution of the problem
through manual intervention.  Evidence in the record indicates that the time that elapses until a
particular order is eventually reviewed and processed manually into the legacy systems may be,
and has been, significant, depending on the number of existing orders that are pending or
backlogged and the resources Ameritech has allocated to manual processing.  As a
consequence, the time it takes to process manual orders is generally much longer than the time it
takes to process an equivalent Ameritech retail order.  Although there may be limited instances in
which it is appropriate for Ameritech to intervene manually in the processing stage so that orders
are processed correctly into the legacy systems, excessive reliance on this type of manual
processing, especially for routine transactions, impedes Ameritech's ability to provide equivalent
access to these fundamental OSS functions.  Because competing carriers have no control over
whether their orders will be put into "1PE" status, we would generally expect that the
percentage of orders placed in "1PE" status for competing carriers should be equivalent or close
to the percentage of orders rejected by the legacy systems for Ameritech's retail operations,
although we recognize that Ameritech is not responsible for errors made by competing carriers.
      179.In addition, in light of the fact that orders for split accounts have consistently
constituted close to 10 percent of the total resale orders, we question Ameritech's continued
reliance on manual processing for these types of orders.  Although we recognize that Ameritech
has committed to implementing a mechanized solution, this commitment was first made by
Ameritech in its reply comments.  As discussed above, we will not consider commitments
regarding future actions, particularly those made on reply, to demonstrate current compliance
with the checklist requirements.  If Ameritech chooses to resubmit its application for Michigan,
we would expect to see evidence demonstrating that it has carried out this commitment.
      180.We are not persuaded by Ameritech's argument that whether orders are processed
electronically or manually is not relevant to our determination of whether Ameritech is providing
nondiscriminatory access to OSS functions, given that there appears to be a direct correlation
between manual processing and the time it takes Ameritech to process and provision orders for
resale.  While we understand that Ameritech undertakes a cost-benefit approach to determine
when to mechanize order processing, it appears that Ameritech's analysis does not adequately
account for the potential impact manual processing has on competing carriers.  We agree with
the Department of Justice that "manual processing that results in the practicable unavailability of
services or elements at foreseeable demand levels can impede the development of competition,
and thus obviously has a direct bearing on compliance with the competitive checklist and the
Commission's rules."
                         (b)  Modified Due Dates
      181.In addition to the problems with orders in "1PE" status and orders involving split
accounts, we find that Ameritech's reliance on manual processing has caused Ameritech to
modify, in a significant number of instances, the due dates for order completions requested by
competing carriers placing orders over the EDI interface.  The record indicates that, as a result
of resource issues, many orders that fall out to manual processing remain pending past the
requested due date for order completion.  As a result, Ameritech must then modify the due dates
for those orders.  We also note that Ameritech's data tracking "due dates met" appear to hide the
full impact of Ameritech's modification of due dates on competing carriers because Ameritech
considers meeting modified due dates as due dates met.
      182.In response to commenters' criticism regarding changed due dates, Ameritech
contends that it modifies due dates for the following types of orders:  (1) those specifying a due
date that has already passed at the time of submission; (2) those processed after 3 p.m. but
requesting completion the same day; (3) those specifying a due date that falls on a weekend or
holiday; (4) those dependent upon "force and load" levels because they require the dispatch of
engineering personnel; and (5) those that cannot be completed by the requested due date
because of Ameritech service center resource issues.  Ameritech represents that competing
carriers have access to the same due dates available to Ameritech retail representatives through
the pre-ordering interface.  Ameritech claims that these dates are distributed on a first-come-first-
served basis and, therefore, if more carriers made use of the pre-ordering interface for obtaining
due dates, Ameritech's need to modify due dates would diminish.
      183.The evidence shows that Ameritech's need to modify due dates because of
Ameritech resource issues is directly related to Ameritech's extensive reliance on manual review
to process orders.  Ameritech's own data show that the most prevalent cause of due date
modification has been the lack of adequate resources available to process the orders by the
original due date when the orders have fallen out to manual processing.  Ameritech itself admits
that the original due dates requested for these orders were valid at the time the orders were
placed, but had to be changed when the orders were ultimately processed because, by that time
the original due date had already passed.  From the week of March 31, 1997 through the week
of May 26, 1997, the percentage of AT&T orders requiring due date modifications ranged from 7
percent to 61 percent of the total AT&T orders received each week.  Of those orders requiring
modified due dates, the percentage modified due to a lack of Ameritech resources ranged from
17.1 percent to 69.3 percent per week.  We believe that the need to modify due dates is
symptomatic of a Ameritech's broader inability to process a significant number of orders from
competing carriers without continual delays.
      184.We also find that the record does not support Ameritech's claim that increased
usage of the pre-ordering interface by competing carriers would significantly reduce the number
of modified due dates.  If provisioning an order does not require a field visit, there is no need
for a competing carrier to use the pre-ordering interface to reserve a due date.  Ameritech does
not dispute that the vast majority of resale orders placed by AT&T have not required a field visit.
Yet, Ameritech has continually modified the due dates for a significant percentage of the resale
orders placed by AT&T.  As a result, increased usage of the pre-ordering interface would have
little impact on the number of AT&T orders that currently are being processed manually.  We
acknowledge that, in general, it may be necessary for Ameritech to modify due dates when the
dates requested by competing carriers are for some reason invalid, such as when the date
requested has already passed, or when the order requires the dispatch of engineering personnel so
that the requested due date cannot be met.  In addition, while it may be appropriate to modify due
dates because of a lack of resources in certain limited circumstances, we believe that a
continual, consistent trend of significant due date modification for this reason calls into question
whether Ameritech is providing nondiscriminatory access to its OSS functions.
      185.While Ameritech's recurring need to modify due dates, in and of itself, causes us
great concern, the modification of due dates only reinforces our view that Ameritech should
measure average installation intervals for the ordering and provisioning of resale services, as
discussed above.  Because Ameritech largely controls both the availability of due dates and the
use of manual review to process orders for resale services, we must be persuaded by a
preponderance of the evidence that it is not engaging in discriminatory behavior when, as
Ameritech admits, there is a direct correlation between these two activities.  Ameritech's
argument that average installation intervals are not relevant as a measurement of parity is hardly
persuasive, given that Ameritech is modifying a large number of due dates because of a lack of
Ameritech resources.  In this context, it is especially important for Ameritech to measure average
installation intervals because evidence of how due date modification is affecting average
installation intervals would be relevant to the question of whether Ameritech is providing
equivalent access to OSS functions.
                         (c)  Untimely Firm Order Confirmation Notices and
                              Order Rejection Notices
      186.The record indicates that Ameritech's reliance on manual processing has affected
its ability to deliver in a timely fashion a significant number of firm order confirmation notices
and order rejection notices.  A firm order confirmation is sent by Ameritech to competing
carriers over the EDI interface when an order has been entered into Ameritech's legacy
systems.  An order rejection notice is sent by Ameritech to competing carriers over the EDI
interface when an order has been rejected by Ameritech via the interface or by Ameritech
personnel.  FOCs and order rejection notices allow competing carriers to monitor the status of
their resale orders and to track the orders for both their customers and their own records.  As
the Department of Justice notes,
          Orders that flow through electronically, and do not require manual review, trigger
          an almost immediate FOC or rejection.  Because an order cannot be completed
          prior to its entry into Ameritech's systems, and the wait for a FOC or rejection
          indicates the time required for such entry, the time it takes to return FOCs or
          rejections is an indication of the absolute minimum time Ameritech would have
          required to complete the order.  In addition, beyond their use as barometers of
          performance, FOC and rejection notices play a critical role in a CLEC's ability to
          keep its customer apprised of installation dates (or changing thereof) and modify a
     customer's order prior to installation.
      187.In its application, Ameritech submits evidence that shows that the percentage of
FOCs not returned to competing carriers within 96 hours increased from approximately 14
percent in January 1997 to 45 percent in April 1997.  In its reply comments, Ameritech
submits evidence that shows that, from the week of March 31, 1997 through the week of May 26,
1997, the percentage of FOCs returned to AT&T in over 96 hours ranged from 10 percent to 60
percent.  We agree with the Department of Justice that this is an indication that Ameritech is
requiring more time to process orders as the volume of orders has increased.  We are troubled
by Ameritech's failure to submit comparative data indicating how long it takes Ameritech to
receive the equivalent of a FOC for its own orders.  We would expect Ameritech to submit
such data in a future application in support of its claim that it is providing nondiscriminatory
access to OSS functions.  In addition, whether or not FOCs received within 96 hours is an
appropriate benchmark, we are concerned about how often that standard is not met.  This is
significant because, as long as a competing carrier has not received a FOC, the competing carrier,
as well as the customer, is unaware of the status of its order.  Moreover, we are also concerned
that the data regarding the percentage of FOCs returned outside of 96 hours do not indicate that
Ameritech's performance has improved over time or, even, that its performance has stabilized.
      188.Similarly, the evidence indicates that order rejection notices have been
significantly delayed during the months prior to the filing of Ameritech's application.  As the
Department of Justice notes, average order rejection notices were taking over six days in April.
Ameritech claims in its reply comments that the return time for order rejection notices has since
decreased and that the increased processing time in April was caused by a sudden increase in
demand at the end of the month.  We find Ameritech's explanation to be only partially
adequate, however, because order rejection notices generated electronically by the interface
should be relatively instantaneous.  Only those orders that are received by the interface, but
manually processed, receive delayed rejection notices.  Therefore, to the extent an increase in
demand strains Ameritech's resources so that manually generated order rejection notices are
backlogged, we believe that this is another example of the negative impact that manual
processing has on Ameritech' ability to provide to competing carriers equivalent access to OSS
functions.
                         (d)  OSS Capacity Constraints in Response to
                              Increased Demand
      189.Although evidence in the record indicates that Ameritech's reliance on manual
processing has required it, on an ongoing basis, to modify due dates and send late FOCs and
rejection notices in response to a significant number of orders, the evidence further demonstrates
that these problems have been exacerbated as the volume of orders has increased.  Ameritech
represents that it is currently able to process electronically approximately 368,000 orders for
resale service per month over the EDI interface.  Ameritech also asserts that Andersen
Consulting has independently reviewed its capacity requirements and determined that
Ameritech's plan for adding electronic capacity for receiving orders is reasonable.  In addition,
Ameritech represents that Andersen Consulting has reviewed its plan for adding manual capacity
and concluded that Ameritech would need to add between 330 and 410 service representatives
before the end of the year in order to meet its projected requirements for manual processing.
On behalf of Ameritech, Andersen Consulting avers that "it appears reasonable that Ameritech
could hire (or transfer internally) an appropriate number of service representatives to meet
demand."
      190.AT&T represents that, shortly before Ameritech filed its section 271 application
for Michigan, over a period of two weeks, AT&T submitted 4,541 resale orders over Ameritech's
EDI interface for Michigan and a total of 13,325 resale orders region-wide.  Ameritech's own
data show that Ameritech was unable to process all of these orders electronically, and therefore, a
substantial number of orders required manual processing.  A significant number of these orders
remained pending or were backlogged for days.  For example, Ameritech's data indicate that
22 percent of the due dates requested by AT&T during the week of April 28th were modified by
Ameritech.  The same data indicate that, during the next week, 37 percent of the due dates
requested by AT&T were modified by Ameritech, even though the total number of orders placed
by AT&T during this week was significantly less than the previous week.  Moreover,
Ameritech's data indicate that during the weeks of April 21st, April 28th, and May 5th, 57.5
percent, 68.9 percent, and 60.3 percent, respectively, of the total modified due dates were
changed because of Ameritech resource problems.  Such evidence suggests that Ameritech's
resources were still committed to clearing the backlog of orders that remained from the previous
week.
      191.We find that Ameritech's inability to process adequately the increased volume of
orders from AT&T at the end of April is further indication that Ameritech is unable to
demonstrate that it is providing nondiscriminatory access to OSS functions for the ordering and
provisioning of resale services.  Moreover, we find that this incident calls into question
Ameritech's ability to process on a timely basis the number of orders reflected by its stated
monthly electronic capacity.  As a result, the record causes us to have significant doubts about
Ameritech's ability to handle an increasing volume of orders, which will be a critical component
in order for competition to develop in the Michigan local exchange market.
      192.Although the number of orders placed by AT&T over the EDI interface at the end
of April was substantially more than the number of orders it had placed during the previous
weeks, we find it significant that the total number of orders was still well within the range of
Ameritech's stated capacity.  In addition, the vast majority of the orders placed by AT&T were,
and apparently continue to be, almost exclusively residential POTS resale migration orders.
Ameritech attempts to place significance on the fact that most of the AT&T orders are not the
most simple migration orders because, in addition to requiring billing changes, many include
changes in features.  We find it more significant, however, that Ameritech does not contend
that the AT&T orders generally involved more complex services or required field visits, given
that Ameritech points to these factors as the major reasons, other than a lack of Ameritech
resources, for the need for manual processing and the modification of due dates.
      193.The evidence in the record indicates that Ameritech was unable to process in a
timely fashion all of the AT&T orders because the increased order volume triggered a
simultaneous increase in the number of orders requiring manual processing, which severely
strained Ameritech's available resources.  Because Ameritech lacked the resources to handle this
increase, orders were backlogged, delaying Ameritech's ability to deliver FOCs and order
rejection notices, and requiring Ameritech to modify the due dates for those orders it was unable
to process within the time-frame defined by the requested due date.  As noted above, competing
carriers have little control over which orders require manual processing.  As a result, because
competing carriers can do little to reduce the number of orders that are manually processed,
Ameritech's decision whether to mechanize the processing of orders directly impacts its ability to
provide nondiscriminatory access to OSS functions.
      194.  If, as discussed above, 30 to 40 percent of the resale orders placed by competing
carriers over the EDI interface continue to require manual review, Ameritech's capacity to
receive electronic orders over the interface may be unaffected, but its capacity to process those
orders electronically will be reduced.  We agree with the Department of Justice that, "[i]f
Ameritech relies on manual procedures to process a significant portion of orders received via its
EDI interface, the capacity of the electronic processes becomes less important than that of its
manual procedures, as the events in April indicate."
      195.Ameritech contends that, because its capacity planning is based on relatively
stable increases in order volume, the "spike" caused by AT&T's unannounced increase in order
volumes must be discounted as reliable evidence of Ameritech's ability to process large volumes
of orders.  As the Department of Justice aptly notes, however, ". . . the competitive
marketplace, especially during the early stages of entry, may not accommodate Ameritech's
expectations."  Using Ameritech's capacity assumptions, Ameritech's daily capacity for
handling electronic orders placed over the EDI interface is approximately 15,000 orders per
day.  In this instance, the total number of orders placed by AT&T was well within Ameritech's
stated electronic capacity.  Specifically, AT&T placed 4,541 orders for Michigan and 13,325
region-wide over the two-week period.  The number of Michigan orders placed by AT&T over
the EDI interface during the two-week period was approximately 15 percent of Ameritech's
stated electronic capacity.  The number of region-wide orders placed by AT&T over the EDI
interface was only a little more than half of Ameritech's stated capacity.  As a result, we find
Ameritech's assertion that it has the electronic capacity to process 368,000 orders per month to be
unsupported by the existing evidence.
      196.As demonstrated by this incident, Ameritech's significant reliance on manual
processing directly impacts its actual ability to provision orders on a timely basis.  We conclude
that the reliance on a substantial amount of manual processing may violate Ameritech's duty to
provide equivalent access when Ameritech's retail operation processes essentially all of its orders
electronically.  Because it is virtually impossible for orders that are processed manually to be
completed in the same time as orders that flow through electronically, it is difficult to see how
equivalent access could exist when Ameritech processes a significant number of orders from
competing carriers manually.  Although additional manual processing may constitute a
reasonable and necessary short-term solution to address capacity concerns, we do not believe that
substantial and continued reliance on manual capacity as a long-term solution to the ordering and
provisioning of resale services is consistent with the requirement that there be equivalent access.
      197.Moreover, although Ameritech argues that its plan for adding manual capacity has
been reviewed and deemed reasonable by Andersen Consulting, this does not provide us with a
basis for concluding that Ameritech's problems with manual processing would not have occurred
if only Ameritech had added more personnel.  Although an independent review of capacity is
helpful in assessing operational readiness, we cannot simply rely on a hypothetical analysis of
Ameritech's future abilities in the face of actual evidence that calls into question its current
capabilities.
      198.Ameritech contends that, when AT&T and other competing carriers plan to add a
significant number of customers in a short period, these carriers should forewarn Ameritech, so
that it is adequately able to allocate resources to meet the expected demand.  We recognize that
it may be reasonable for Ameritech to request advance notice if a competing carrier seeks to
increase its order volumes to such an extent that the total volume of orders received over
Ameritech's EDI interface would exceed Ameritech's stated capacity, so long as the stated
capacity is reasonable in light of expected demand.  We find, however, that Ameritech's
proposed solution of requiring competing carriers to provide advance notice, even when the total
volume of orders remains well within the range of Ameritech's stated capacity, to be
unreasonable.  Ameritech should be able to handle, without receiving advance notice from
competing carriers, volumes of orders that fall within its stated capacity.  If Ameritech's reliance
on manual processing continues to reduce its ability to process orders from competing carriers in
a timely fashion, then Ameritech should adjust its capacity claims accordingly.
      199.We conclude that Ameritech's OSS functions for ordering and provisioning must
be able to handle reasonable fluctuations in service orders by competing carriers as well as
reasonably foreseeable general increases in ordering volumes.  This is especially true when a
short-term surge in orders does not result in the total number of orders exceeding or even
approaching Ameritech's stated capacity.  We find that Ameritech's inability to handle adequately
AT&T's increase in order volume indicates that Ameritech has not demonstrated that its systems
are capable of handling the order volumes and fluctuations reasonably expected in a competitive
marketplace.  Our concern is heightened by the fact that Ameritech handles OSS functions on a
region-wide basis from a single location.  As more competing carriers enter the local markets in
each state in Ameritech's region, we expect order volumes to continue to be relatively volatile.
In any future application, we would expect to see data indicating that Ameritech has processed in
a timely fashion orders falling within the range of its stated capacity.
               (3)  Double-Billing Problems
      200.Ameritech acknowledges that there have been a number of instances in which new
customers of competing carriers have been double-billed by both Ameritech and the competing
carrier.  Ameritech concedes that not all customers potentially affected by this problem have
yet been identified.  In assessing the cause of double-billing, Ameritech explains that in some
cases, its billing systems rejected orders for which order completion notices had already been
transmitted to the competing carrier.  Because the billing system has rejected the order,
Ameritech continues to bill the customer, while, at the same time, the competing carrier also has
begun to bill the customer.
      201.Nonetheless, Ameritech argues that other parties have overstated the double-
billing problem, while, at the same time, understating the measures Ameritech has taken to
resolve the problem.  Although Ameritech recognizes that double-billing directly affects end
user customers, it claims, without further elaboration, that "most of the customers [double-billed]
will prove to have been AT&T or MCI employees, not commercial accounts."  In addition,
Ameritech claims that, when it realized that there was a potential double-billing problem, it
attached the highest priority to resolving the problem.  In its application, Ameritech asserts
that, beginning on May 12th, it implemented solutions to resolve the problem.  Ameritech
represents that it assigned specialists to clear any existing orders in potential double-billing status
and to verify any erroneous billing, added edits to the interface to catch format errors before the
order reaches the billing system, and dedicated a group of service representatives to review any
future orders in this status.  In its reply, Ameritech further explains that it has identified the
type of order that is the largest contributor to the double-billing problem, and that it has
implemented an electronic fix to prevent these orders from being backlogged in "3E" status for
more than one day, thereby reducing the potential for double-billing.
      202.Commenters, including the Department of Justice, contend that double-billing is a
serious problem that directly impacts the competing carriers' relationships with end-user
customers.  Commenters argue that the double-billing problem is likely to be a symptom of a
broader systemic problem, which involves the legacy systems' ability to process smoothly orders
from competing carriers delivered over the interface, and that Ameritech's solution to "fix" the
double-billing problem does not address the root causes of the underlying systemic problem.
Commenters also note that the double-billing problem has been identified as significant by other
state commissions in the Ameritech region.
      203.We find that the double-billing problem is compelling evidence that Ameritech's
OSS for ordering and provisioning for resale services is not operationally ready, and therefore,
Ameritech is not providing nondiscriminatory access to OSS functions.  While we agree that
Ameritech should not be held to a standard of perfection in demonstrating that its OSS functions
are operationally ready, we find that double-billing, as well as the problems associated with
manual processing discussed above, constitute problems fundamental to Ameritech's ability to
provide nondiscriminatory access to OSS functions.  Although, based on the record before us, it
is unclear whether the double-billing problem is a symptom of a larger systemic problem, we do
find that, in and of itself, double-billing is a serious problem that has a direct impact on
customers and, therefore, must be eliminated.   Because Ameritech took action to solve the
problem only nine days before it filed its application, it was unable to demonstrate by the date of
its filing that it had successfully fixed the problem.  Although we give no weight to new evidence
filed after the submission of Ameritech's application, we note that, during the pendency of its
application, Ameritech has only been able to collect preliminary data regarding the extent of the
problem and the impact of the changes it has made to correct the problem.  Ameritech cannot
rehabilitate its deficient showing on this issue merely by elaborating further in its reply on the
solutions it has implemented.  Rather, we would expect Ameritech to submit evidence in any
future application demonstrating that the corrective actions it so recently implemented have in
fact significantly reduced the number of double-billing incidents.
          6.   Absence of Substantial Evidence to Support Statutory Finding
      204.In addition to our conclusion that Ameritech has failed to demonstrate that it is
providing nondiscriminatory access to particular OSS functions, we also find that Ameritech has
failed to meet a broader and even more fundamental duty with regard to the evidentiary burden
required to demonstrate that it is providing nondiscriminatory access to all OSS functions.
Consistent with the findings of the Department of Justice and the Michigan Commission, we
conclude that Ameritech has not provided the Commission with all of the empirical data
necessary to substantiate Ameritech's asserted provision of nondiscriminatory access to the OSS
functions required by section 271 and section 251 of the Act.  For the Commission to conclude
that Ameritech is providing nondiscriminatory access to OSS functions, we must have a proper
factual basis upon which to make such a finding.  In this case, Ameritech has failed to provide all
of the data that we believe are necessary in order to evaluate its compliance with the statutory
nondiscrimination standard.  As the Department of Justice stated, "proper performance measures
with which to compare BOC retail and wholesale performance, and to measure exclusively
wholesale performance, are a necessary prerequisite to demonstrating compliance with the
Commission's 'nondiscrimination' and 'meaningful opportunity to compete standards.'"
      205.In its evaluation, the Department of Justice states that it is unable to make an
affirmative determination regarding the operational readiness of Ameritech's operations support
systems without further data.  The Department of Justice concludes, inter alia, that Ameritech
must provide data for a number of performance measures (in addition to those already provided
by Ameritech), as well as clearer and more specific definitions for the performance measures it
already uses, before the Department of Justice could render a positive recommendation regarding
Ameritech's OSS functions.  Specifically, the Department of Justice finds that Ameritech
currently fails to provide data on the following measures that the Department of Justice views as
fundamental to making a demonstration of nondiscrimination:  (1) average installation intervals
for resale; (2) average installation intervals for loops; (3) comparative performance information
for unbundled network elements; (4) service order accuracy and percent flow through; (5) held
orders and provisioning accuracy; (6) bill quality and accuracy; and (7) repeat trouble reports for
unbundled network elements.  In addition, the Department of Justice finds that, "before
Ameritech's proposed performance measures can be considered sufficient to judge non-
discrimination and detect post-entry backsliding, they must be specifically and clearly
defined."
      206.Similarly, the Michigan Commission concludes that "complete and appropriate
performance standards" must be in place "before a positive determination can be made"
regarding whether Ameritech's OSS functions comply with the nondiscrimination requirements
of the Commission's rules.  The Michigan Commission recommends that the development of
such performance standards take account of the following:  (1) performance assessments of both
the interface and the internal operations support systems; (2) performance measures that track
those factors within Ameritech's control; (3) performance measures that permit comparisons with
Ameritech's retail operations, such as data measuring the average time to complete a task; (4) the
use of substantially analogous functions for parity measurements; (5) the availability of
alternative interfaces for smaller competing carriers; (6) identification of the functions that
Ameritech performs manually and electronically for its customers; (7) sufficient disaggregation
of the data to permit meaningful parity comparisons; (8) precise clarity in defining the
measurements; (9) OSS performance data for directory assistance, white pages listings, number
portability, operator services and 911; (10) specified reporting schedules and formats; (11) an
agreed-upon period of time in which to measure relevant performance; and (12) remedies and/or
penalties for noncompliance.
      207.In response to the Department of Justice's concern that its performance measures
are not sufficiently detailed and clear, Ameritech contends in its reply that it will begin to
provide more detailed explanations of its performance measures to competing carriers, but that it
has not previously included them in as part of its monthly performance reports.  Ameritech
also disputes the need for the additional data suggested by the Department of Justice and the
Michigan Commission.  For several measures, Ameritech asserts that there are too many
variables involved that prevent those measures from providing meaningful comparisons.  For
example, as discussed above, Ameritech asserts that resale orders vary so greatly in complexity
and in the processing required for their completion as to render average installation intervals
meaningless.
      208.  Ameritech also argues that certain measures proposed by the Department of
Justice are not relevant measures of parity, or that in any case, Ameritech does not monitor
performance under those measures for its own retail operations.  For instance, Ameritech
disputes the need to measure the accuracy of its ordering performance, as suggested by the
Department of Justice.  In addition, Ameritech asserts that it does not provide information
regarding competing carriers' pending orders because it does not provide such information for its
own retail operations.  With regard to a number of the performance measurements suggested
by the Department of Justice and the Michigan Commission, Ameritech claims that it already is
providing similar data through other measures, or that it will provide the data, either as a
special analysis upon request, or on a recurring basis in the future. Additionally, in response
to the Michigan Commission, Ameritech argues that there should be no disagreement among the
parties on what standards should be used to judge the performance of OSS functions because
such standards are specifically addressed in its interconnection agreements.  Finally,
Ameritech asserts that the performance measurements required by its interconnection agreements
do not represent all of the performance information that Ameritech is currently providing to
competing carriers.  In this regard, Ameritech states that it has voluntarily and publicly
committed to reporting several other measurements of performance to ensure that requesting
carriers can fairly monitor Ameritech's performance.
      209.Like the Department of Justice and the Michigan Commission, we find that the
evidence in the record regarding Ameritech's provision of access to OSS functions is plagued by
unclear data and conflicting interpretations.  As an initial matter, we agree with the Department
of Justice and the Michigan Commission that many of the performance measurements that
Ameritech has submitted in its application are not clearly explained in order to make them
meaningful to us and commenting parties.  We find that this is at least partially caused by the
ambiguity in several of the explanations provided by Ameritech to describe the data included in
its performance measures.  For example, as noted by the Department of Justice, "Ameritech's
definition of due dates not met, relating 'the number of missed appointments to the total number
of appointments in the reporting period' does not reveal that the measure includes only
installations completed past due and excludes orders which are pending past due."  As a result,
we are unable to conclude from the data whether Ameritech is providing nondiscriminatory
access to OSS functions.  Clear and precise performance measurements are critical to ensuring
that competing carriers are receiving the quality of access to which they are entitled.
Therefore, we agree with the Department of Justice and the Michigan Commission that the
meaning and scope of the performance measurements submitted by Ameritech to demonstrate
compliance with the statutory standard must be clearly explained before we can properly evaluate
whether the empirical data substantiate Ameritech's claim.
      210.We also conclude that Ameritech's refusal to provide particular data solely on the
basis that it does not currently collect that information in connection with its retail operations is
unpersuasive.  The empirical evidence necessary to demonstrate that Ameritech is providing
nondiscriminatory access to OSS functions may not necessarily be the same as those
performance measurements that Ameritech currently provides to its retail operations.  For
example, as discussed above, we believe that data measuring average installation intervals are
necessary to demonstrate parity for those OSS functions in which timeliness is critical, even
though Ameritech represents that it does not currently measure such performance for its own
retail operations.  While the performance measurements that Ameritech has historically tracked
for its retail operations provide some support for its claim that it is providing nondiscriminatory
access to OSS functions to competing carriers, such measurements alone will not provide us with
sufficient information to decide whether the statutory standard has been met.  To find otherwise,
would permit Ameritech to limit the scope of our inquiry to an examination of the information
that Ameritech believes is relevant, rather than what we deem is both relevant and necessary.
      211.The Commission must be satisfied that the performance measures that Ameritech
relies on in support of its section 271 application actually measure performance in a manner that
shows whether the access provided to OSS functions is nondiscriminatory.  Otherwise,
discriminatory conduct may be masked or go undiscovered.  Therefore, we must find that both
the quantity and quality of the evidence is sufficient in order to make a determination of whether
Ameritech is in compliance with its duty to provide nondiscriminatory access to OSS functions,
as required by section 271.
      212.We therefore conclude that, in order to provide us with the appropriate empirical
evidence upon which we could determine whether Ameritech is providing nondiscriminatory
access to OSS functions, Ameritech should provide, as part of a subsequent section 271
application, the following performance data, in addition to the data that it provided in this
application:  (1) average installation intervals for resale; (2) average installation intervals for
loops; (3) comparative performance information for unbundled network elements; (4) service
order accuracy and percent flow through; (5) held orders and provisioning accuracy; (6) bill
quality and accuracy; and (7) repeat trouble reports for unbundled network elements.  In
addition, Ameritech should ensure that its performance measurements are clearly defined, permit
comparisons with Ameritech's retail operations, and are sufficiently disaggregated to permit
meaningful comparisons.  We recognize that such data alone may not be wholly dispositive,
and that parties may have potentially conflicting interpretations of the data.  We find, however,
that it is essential for us, as both fact-finder and decision-maker, to have the empirical evidence
necessary to make a reasoned and informed decision.  We believe that Ameritech, or any
applicant under section 271, has ample opportunity to present, at the time of its application,
additional measurements or explanatory information to correct any perceived misperceptions that
such data may arguably create.
      213.Section 271 requires the Commission to consider the written evaluation of the
state commission and to give substantial weight to the written evaluation of the Department of
Justice.  We find it significant that both the Michigan Commission and the Department of
Justice have concluded that Ameritech should present additional and improved performance
measurements before they can decide whether Ameritech has satisfied its obligation to provide
nondiscriminatory access to OSS functions.  Ameritech has not persuaded us to diverge from the
findings made by the Department of Justice and the Michigan Commission.
          7.   Other Concerns
      214.The Commission has a number of other concerns relating to the OSS functions
provided by Ameritech to competing carriers.  As discussed above, one of our major concerns
regards the readiness of OSS functions for the provision of combinations of unbundled network
elements.  We highlight a number of other issues below to provide guidance to Ameritech
before it files another section 271 application.
      215.In general, we believe that Ameritech's publication of its electronic service
ordering guide ("ESOG"), coupled with its cooperative training and consultation with competing
carriers on their use of Ameritech's offered interfaces, comports with the spirit of Ameritech's
obligations.  The Commission believes that Ameritech's approach to updating information in
its ESOG and adding supplemental sources of information (i.e., Ameritech's world wide web
site) is appropriate as systems are upgraded and refined.  We are troubled, however, by the
apparent emphasis on providing information and support for OSS functions that support resale as
compared to that offered for the use of network elements.  Ameritech must offer sufficient
access to all methods of entry envisioned by Congress in the 1996 Act, including network
elements and resale services.
      216.We agree with the Department of Justice that, as a general matter, third-party
review of a BOC's OSS functions is relevant, although not required, to determine whether its
systems are operationally ready.  In particular, an independent evaluation of OSS functions
from an objective third-party may provide additional support demonstrating the operational
readiness of those OSS functions that have otherwise only undergone internal testing by the
incumbent.  The persuasiveness of a third-party review is dependent, however, on the conditions
and scope of the review itself.  We emphasize that third-party reviews should encompass the
entire obligation of the incumbent LEC to provide nondiscriminatory access, and, where
applicable, should consider the ability of actual competing carriers in the market to conduct
business utilizing the incumbent's OSS access.
      217.The Commission previously has stated that it did not consider national standards a
prerequisite to the provision of access to any particular OSS function.  The Commission
continues to believe, however, that the use of industry standards is the most appropriate solution
to meet the needs of a competitive local exchange market.  We are encouraged by Ameritech's
commitment to transition to recently agreed-upon industry standards in a timely manner.  We
will continue to monitor the progress of industry groups in achieving agreement on standards for
the provision of OSS access, and will, if necessary, consider appropriate additional Commission
action in the future.
      218.With regard to Ameritech's OSS pre-ordering functions, we note that industry
standard setting bodies expect to arrive at initial agreement on standards by the end of 1997.
We believe that the record in this application raises general concerns about the capacity of
Ameritech's interface for pre-ordering.  We note that Ameritech represents in its reply that it
made changes to its pre-ordering interface during the pendency of its application to increase its
capacity.  We expect that, in any future application, Ameritech will present clear evidence
supporting its capacity claims for its pre-ordering interface, as of the date of filing.
      219.We base our decision on this application, in part, on our finding that Ameritech
has not demonstrated that it is providing nondiscriminatory access for the ordering of resale
services.  Although not reaching other specific ordering function issues, we note that there is
conflicting evidence in the record concerning the access to OSS functions that Ameritech
provides to competing carriers for the ordering of unbundled loops.  Our concerns are focused
on the level of manual processing involved in the access service request (ASR) process utilized
by Ameritech, and the need for competing carriers to utilize three separate interfaces when
moving a customer with existing Ameritech service to a competing carrier's service utilizing an
existing Ameritech unbundled loop.  We recognize that Ameritech has made a public
commitment to migrate to the industry-adopted standard for ordering loops via EDI.
Ameritech, in its reply, has submitted evidence indicating that it has begun meeting with
interested competing carriers to plan the transition to the industry standard.  We believe that
this is a proper approach for Ameritech to take, as the development and adoption of industry
standards continues.  We expect Ameritech to migrate to the EDI interface as expeditiously as
possible, given the apparent limitations associated with Ameritech's current use of the ASR
interface.  We also expect that, in any future application, Ameritech would provide a detailed
explanation of the actions it has undertaken, as of the date of filing, to transition to the EDI
standard.
      220.For repair and maintenance functions, Ameritech provides competing carriers
with access to its T1M1 interface, and in addition, it provides graphical user interface (GUI)
software as an alternative tool to access the T1M1 interface.  The Department of Justice states
that it believes incumbent LECs have an obligation to provide smaller competitors with an
alternative to expensive interfaces such as T1M1.  We generally agree with the Department of
Justice that incumbent LECs have an obligation to provide interfaces that allow competing
carriers of all sizes a meaningful opportunity to compete in the local exchange market.  We do
believe Congress intended an incumbent's nondiscriminatory obligation to apply to smaller
carriers as well as larger carriers.  Nevertheless, we find that an incumbent LEC does not have
an affirmative obligation to provide multiple interfaces to competing carriers if it is able to
demonstrate that its interface is economically efficient to use by both larger and smaller entrants.
Although we do not make a specific determination regarding Ameritech's interface for repair and
maintenance functions, we would expect Ameritech to submit, in any future application, detailed
evidence regarding the operational readiness of both Ameritech's T1M1 interface and the
graphical user interface (GUI) tool that Ameritech represents it provides as an alternative method
of access to the T1M1 interface.
      221.Finally, Ameritech commits, in its reply, to implementing future changes to its
billing systems that will provide competing carriers with more timely and accurate billing data.
As discussed above, Ameritech represents that it will also add capabilities to measure billing
accuracy in the near future.  The evidence in the record indicates that, especially for the delivery
of wholesale bills, Ameritech's performance appears to have been deficient.  Ameritech claims to
have resolved this problem in June, during the pendency of this application.  We would expect
to review carefully evidence regarding actual improvements made to Ameritech's billing
performance in a future application.  Because competing carriers that use the incumbent's resale
services and unbundled network elements must rely on the incumbent LEC for billing and usage
information, the incumbent's obligation to provide timely and accurate information is particularly
important to a competing carrier's ability to serve its customers and compete effectively.  We
expect that, in its next application, Ameritech will provide detailed evidence to support its claim
that it is providing billing on terms and conditions that are nondiscriminatory, just and
reasonable.  Finally, we would expect Ameritech to provide data that compare its performance in
delivering daily usage information for customer billing to both Ameritech's retail operation and
competing carriers.
      D.Interconnection in Accordance with Sections 251(c)(2) and 252(d)(1)
      1.Summary
      222.Section 271(c)(2)(B)(i) of the Act, item (i) of the competitive checklist, requires a
section 271 applicant to provide "[i]nterconnection in accordance with the requirements of
sections 251(c)(2) and 252(d)(1)."  Section 251(c)(2) imposes upon incumbent LECs "the duty
to provide, for the facilities and equipment of any requesting telecommunications carrier,
interconnection with the local exchange carrier's network . . . for the transmission and routing of
telephone exchange service and exchange access."  Such interconnection must be:  (1)
provided "at any technically feasible point within the carrier's network;" (2) "at least equal in
quality to that provided by the local exchange carrier to itself or . . . [to] any other party to which
the carrier provides interconnection;" and (3) provided on rates, terms, and conditions that are
"just, reasonable, and nondiscriminatory, in accordance with the terms and conditions of the
agreement and the requirements of [section 251] . . . and section 252."
      223.In our Local Competition Order, we concluded "that the equal in quality standard
of section 251(c)(2)(C) requires an incumbent LEC to provide interconnection between its
network and that of a requesting carrier that is at least indistinguishable from that which the
incumbent provides itself, a subsidiary, or any other party."  We stated that an incumbent LEC
must design its "interconnection facilities to meet the same technical criteria and service
standards, such as probability of blocking in peak hours and transmission standards, that are used
within [its] . . . own network[]."  Moreover, we clarified that the equal-in-quality obligation is not
limited to quality perceived by end users.  In Iowa Utilities Board v. FCC, the court generally
upheld the Commission's decision regarding incumbent LECs' obligations to provide access to
network elements on an unbundled basis.  Although the court rejected the Commission's rules
requiring incumbent LECs to provide superior interconnection upon request, the court recognized
that the statute requires incumbent LECs to provide interconnection that is equal in quality to the
interconnection they provide themselves.
      224.Based on our review of the record on this issue, we conclude that Ameritech has
not established by a preponderance of the evidence that it is providing interconnection in
accordance with the requirements of the Act.  First, we find that the data Ameritech submitted
provide us with an inadequate basis to compare the quality of the interconnection that Ameritech
provides to other carriers to that which Ameritech provides itself.  For example, Ameritech's data
contain insufficient information regarding the actual level of trunk blockage and no information
about the rate of call completion.  Next, we conclude that, even if we were to evaluate the quality
of interconnection that Ameritech provides based solely on the data that Ameritech submitted,
the difference between the blocking rates on trunks that interconnect competing LECs' networks
with Ameritech's network and the blocking rates on Ameritech's retail trunks suggests that
Ameritech's interconnection facilities do not meet the technical criteria and service standards that
Ameritech uses within its own network, contrary to the requirements imposed by 251(c)(2)(C).
Finally, we question whether Ameritech is providing interconnection arrangements on
nondiscriminatory terms and conditions, as required pursuant to section 251(c)(2)(D).
      2.Evidence on the Record
      225.Ameritech exchanges traffic with Brooks Fiber, MFS WorldCom, and TCG -- the
three carriers on which Ameritech relies to demonstrate compliance with this checklist item --
through end office interconnection (EOI) trunks, which are the trunks that connect Ameritech
end offices and tandems with competing LECs' networks.  In its application and accompanying
affidavits, Ameritech provides extensive narrative evidence concerning its EOI trunk offerings
and the associated wholesale support processes, as well as its recommendations regarding trunk
provisioning and engineering.
      226.Ameritech asserts that it measures the quality of its interconnection arrangements
with other carriers in the same manner that it evaluates the quality of interoffice trunking in its
own network.  In particular, Ameritech states that it measures:  installation intervals for new
trunk groups, the time required to restore trunk outages, and trunk blockage.  Ameritech
provides little general explanation regarding the trunk blocking data that it submitted with its
application.  Ameritech indicates that EOI trunk blocking data measure the blocking on trunk
groups carrying traffic from an Ameritech end office or tandem to a competing LEC's end
office.  Ameritech reports the data separately for trunk groups designated for exchange access
traffic (alternately referred to as interLATA traffic) and for trunk groups designated for local and
intraLATA toll traffic.  Ameritech reports blockage when more than 2 percent of the traffic
routed to a particular trunk group is blocked.  To calculate and report trunk blockage on a
percentage basis, Ameritech divides the number of trunk groups blocking more than 2 percent of
the traffic, measured during the busy hour of the day (i.e., the hour when traffic is heaviest), by
the total number of trunk groups in the reporting period.  Ameritech compares the EOI trunk
blocking percentages to the percentage of Ameritech Retail trunks -- presumably referring to the
transport links within Ameritech's network -- that block more than 2 percent of the traffic.
Ameritech does not provide separate data for Ameritech Retail's interLATA and intraLATA
trunks, but rather provides a single "Ameritech Retail" blocking rate.
      227.In its original filing, Ameritech provides some discussion regarding EOI trunk
blocking rates, as well as some proprietary trunk blocking data, in a supporting affidavit.  The
publicly-filed information included in that affidavit report trunk blocking rates on a region-wide
basis.  Ameritech reports that, for a two-month period between March 1 and April 30, 1997,
trunk blocking occurred in 9.4 percent of the EOI trunk groups used to transport interLATA
traffic and 6.6 percent of the EOI trunk groups used to transport local and intraLATA traffic in
Ameritech's region.  In other words, Ameritech claims that, during the reporting period, 9.4
percent of the EOI interLATA traffic trunk groups and 6.6 percent of the EOI local and
intraLATA toll traffic trunk groups in Ameritech's five-state region experienced incidents where
more than 2 percent of the calls routed to those trunk groups were blocked during the busy hour
of the day.  The comparable blocking rate for Ameritech Retail, Ameritech's retail sales division,
was 1.5 percent during that time period.
      228.Brooks Fiber and TCG assert in their comments in this proceeding that calls to
their customers that originate on Ameritech's network are frequently blocked.  The competing
LECs indicate that they continue to receive complaints from customers regarding blocked
incoming traffic in both Michigan and Illinois.  Brooks Fiber contends that Ameritech has
failed to monitor existing EOI trunks that connect Brooks Fiber's end offices with Ameritech
tandem switches and to coordinate the installation of additional trunks as needed to ensure that
the interconnection facilities between their networks are adequate to handle the volume of traffic.
Specifically, Brooks Fiber states that, although Ameritech installed additional EOI trunks to
alleviate the network blockage, the trunks were improperly installed, resulting in the total failure
of Ameritech's intraLATA toll trunks to Brooks Fiber and, ultimately, in the loss of an important
Brooks Fiber customer.  TCG further alleges that network blockage occurs within Ameritech's
network.  TCG suggests that traffic to TCG customers is blocked on trunk groups connecting
Ameritech's end offices to Ameritech's tandem switches, so that traffic is blocked before it
reaches an Ameritech tandem or the interconnection point between that tandem and TCG's
network.  Citing the record and the interconnection performance data that Ameritech submitted
in its application in particular, the Department of Justice concludes that Ameritech has failed to
demonstrate that it has satisfied this checklist requirement.  Moreover, the Department of
Justice concludes that the evidence suggests that Ameritech has not provided competing LECs
with sufficient ability to control EOI trunk blockage.
      229.The Michigan Commission concludes that Ameritech "appears to comply" with
this checklist item because it provides interconnection and collocation to Brooks, MFS
WorldCom, and TCG pursuant to their agreements.  In reaching this conclusion, the Michigan
Commission notes competing LECs' allegations, raised in the state proceeding, regarding
network blockage.  The Michigan Commission, however, does not analyze the merits of, or make
factual findings with respect to, the competing LECs' allegations.  Nor does it assess whether
Ameritech is providing competing LECs interconnection equal in quality to that which it
provides itself.
      230.In its reply comments and accompanying affidavits, Ameritech contends that the
actions, omissions, and network architecture choices made by competing LECs themselves, and
by TCG in particular, have created existing EOI network blockage problems.  Ameritech
introduces into the public record trunk blocking data for May 1997 that were not included in its
original filing.  Moreover, Ameritech revises its originally reported data.  Ameritech states in
its reply affidavits that an audit of the EOI trunk blocking data submitted in its original filing,
which was conducted "[a]s a result of Department of Justice's expressed concerns about EOI
trunk group blockage," revealed that the blocking rates on EOI intraLATA trunking groups for
the months of March and April 1997 were higher than Ameritech originally reported in its
application.  In particular, Ameritech reports blockage of 10.7 percent region-wide in March
(instead of 9.4 percent, as Ameritech originally reported on a proprietary basis in its application)
and 6.2 percent region-wide in April (instead of 4.4 percent, as originally reported on a
proprietary basis).  In addition, Ameritech introduces Michigan-specific interconnection data
for March, April, and May of 1997 into the public record of this proceeding for the first time in
its reply comments and accompanying affidavits.
      231.The Michigan-specific data indicate that none of the EOI trunk groups used to
transport interLATA traffic in Michigan blocked more than 2 percent of calls during the busy
hour, for the three-month period from March 1 to May 31, 1997.  The data show, however,
that, in March 1997, 7.9 percent of the EOI trunk groups used to transport local and intraLATA
traffic in Michigan blocked more than 2 percent of the calls routed to the group (as compared to
.4 percent of Ameritech Retail trunks in Michigan).  The Michigan figure for April was 4.5
percent (as compared to 1.2 percent of Ameritech Retail trunks in Michigan) and for May was
0.0 percent (as compared to 0.6 percent of Ameritech Retail trunks in Michigan).
      3.Inadequacy of Data Submitted
      232.Based on its review of Ameritech's publicly-filed information regarding network
blockage rates, the Department of Justice stated that it could not conclude that Ameritech
satisfied the checklist standard for interconnection.  We agree.  We find that Ameritech has
provided the Commission with inadequate data by which to compare the quality of the
interconnection that Ameritech provides to others to that which Ameritech provides itself.
Ameritech has supplied trunk blocking data in a way that neither the Commission nor
Ameritech's competitors can validate it or evaluate its significance, as Ameritech's own analysis
indicates.
      233.As Ameritech explains, a reported figure for EOI interLATA final trunk group
blocking of 9.4 percent indicates that on 9.4 percent of the interLATA trunk groups during the
busy hour of the day, more than 2 percent of the calls that travelled over that trunk group were
blocked, but that report does not specify either the actual rate of blockage (i.e., whether 3 percent
or 30 percent of the calls were blocked) or the absolute number of calls that were blocked.
Ameritech contends that the EOI trunk blockage figures overstate the amount of blockage that
competing LECs experience.  Ameritech asserts that, due to the low number of interLATA trunks
for which Ameritech reports, "an isolated and intermittent problem on one or two groups can
have a wildly disproportionate effect" on the region-wide blockage figures.  We agree with
Ameritech that the trunk blocking data may not accurately reflect the impact of trunk group
blockage, but we are unconvinced that the figures overstate the amount of blockage.  Because the
number of trunks in a trunk group may vary by trunk group, the Commission cannot evaluate the
impact of the reported trunk blockage without knowing the number of trunks in the particular
blocked trunk groups.  Clearly, blockage on a large trunk group serving a major metropolitan
area could result in a greater number of blocked calls than would blockage on a smaller trunk
group.  In addition, without more information, the Commission cannot determine the magnitude
of the reported blockage.  Because Ameritech's data only show the percentage of trunk groups in
which more than 2 percent of the calls were blocked during the busy hour, the Commission
cannot ascertain whether these trunk groups blocked closer to 2.1 percent of the calls or 50
percent of the calls during the system busy hour.
      234.Moreover, Ameritech acknowledges that its reports of the frequency with which
call blocking in a particular trunk group exceeds 2 percent do not indicate the actual percentage
or number of calls that are not completed.  Therefore, there is no evidence in the record
regarding the extent to which blockage on EOI trunk groups delivering traffic to competing
LECs has resulted in uncompleted calls.  Even if a call routed to a particular trunk group is
blocked, whether or not a call is ultimately completed depends in part on network architecture.
A blocked call may be re-routed and completed over another trunk group, if the network
architecture is redundant.
      235.Ameritech contends that the local and intraLATA EOI trunk group blockages
reflected in the EOI trunk blocking data did not uniformly result in uncompleted calls, because
Ameritech instituted network management re-routes for these EOI trunks.  We note that
Ameritech presents this argument for the first time in its reply comments.  Moreover,
Ameritech provides evidence only regarding Illinois to support this contention.  In addition,
Ameritech does not even indicate the point at which it began to engage in such re-routing or the
percentage of calls that are successfully completed through such re-routing.  Indeed, Ameritech
has not submitted any data by which the Commission could compare the call completion rates for
calls originating from Ameritech customers and terminating on Ameritech's or competing LECs'
networks, respectively.  Lacking such data, we are unconvinced by Ameritech's unsubstantiated
assertion that, "even if a call is blocked, that does not mean that the customer was prevented from
ultimately completing a call" or that the competing LEC lost the associated revenue, because "in
most instances, the originating caller receives a `fast busy signal' when placing the call, and then
places and completes a call shortly thereafter."  As stated above, there is evidence in the record
indicating that the customers of competing LECs have reported call blocking of in-bound calls,
suggesting that the scenario that Ameritech describes has created unfavorable marketplace
perceptions regarding the service that competing LECs provide.  We conclude that call
completion data would be useful in evaluating whether a petitioning BOC provides
interconnection at parity in accordance with the statutory requirements.
      4.Evaluation of EOI Trunk Blocking Data
      236.Even if we were to assume that the data that Ameritech submitted is a sufficient
measure of whether Ameritech provides interconnection equal in quality to that which it provides
itself, the difference between the blocking rates on trunks that interconnect competing LECs'
networks with Ameritech's network and the blocking rates on Ameritech's retail trunks suggests
that Ameritech's interconnection facilities do not meet the technical criteria and service standards
that Ameritech uses within its own network.
      237.We note that several parties have urged the Commission to strike the May trunk
blocking data from the record.  We reiterate that, to preserve the integrity of the statutory 90-
day review period, we will not consider data that a BOC submits after filing its section 271
application that is not directly responsive to arguments or factual evidence submitted by other
parties.  Accordingly, because no party submitted May trunk blocking data or otherwise raised
arguments concerning Ameritech's record of trunk blocking that month, we will not consider
Ameritech's May data, which reflect performance for a time period after Ameritech submitted its
application.
      238.Ameritech contends that, when evaluating Ameritech's interconnection
performance, the Department of Justice improperly focused on consolidated data for the five-
state Ameritech region, rather than examining Michigan data.  Ameritech asserts that, "[u]nlike
Ameritech's regional operational support systems, it is not reasonable to assume that if an EOI
trunking problem exists in another state, it is fair to assume that the problem exists in
Michigan."  We note that Ameritech itself not only relies on region-wide interconnection data
in its original filing, but also continues to cite region-wide data in its reply comments and
accompanying affidavits to demonstrate its performance.
      239.Moreover, Ameritech's revision of its originally-submitted data in its reply
comments calls into question the accuracy of the data that Ameritech has supplied.  We
emphasize that a petitioning BOC has an obligation to ensure that data submitted in connection
with its application are correct at the time of filing to ensure that parties have an adequate
opportunity to analyze and respond to the relevant information.  In the instant case, however, the
changes in the reported blocking rate percentages buttress the Commission's basic conclusion
that Ameritech has not demonstrated compliance with this checklist item.
      240.Regardless of whether we consider region-wide or Michigan data, we find the
Ameritech data indicate that trunk blocking rates on Ameritech's EOI trunking groups carrying
local and intraLATA toll traffic have been significantly higher than blocking rates for
Ameritech's interoffice trunking groups that carry traffic destined for Ameritech retail customers.
The region-wide data indicate that, in March 1997, the percentage of EOI trunks carrying local
and intraLATA toll traffic that experienced blockage greater than 2 percent was 10.7 percent, as
compared to 1.1 percent of Ameritech Retail trunks.  In April 1997, the EOI blocking rate for
local and intraLATA toll trunks was 6.2 percent, as compared to 1.8 percent for Ameritech
Retail.  The Michigan data indicate that the percentage of trunks carrying local and intraLATA
toll traffic that experienced blockage greater than 2 percent was 7.9 percent in March 1997, as
compared to .4 percent of Ameritech Retail trunks, and 4.5 percent in April 1997, as compared to
1.2 percent of Ameritech retail trunks.  Whether we compare the region-wide blocking rates for
EOI trunks carrying local and intraLATA toll traffic to the region-wide Ameritech Retail figures,
or the Michigan-specific blocking rates for EOI trunks to the Michigan-specific Ameritech Retail
figures, we conclude there are substantial differentials.  These differentials suggest that
Ameritech's interconnection facilities do not meet the technical criteria and service standards that
Ameritech uses within its own network.  Moreover, for the reasons discussed below, we find
unpersuasive Ameritech's justifications for the higher blocking rates on EOI trunks.
      241.In its initial filing, Ameritech argues that a disparity of five to eight percentage
points between blocking rates on EOI trunk groups and blocking rates on Ameritech's interoffice
trunk groups reflected in its interconnection performance data establish no basis for concern.
Ameritech attributes such differentials in part to the relatively smaller size of the competing LEC
networks as compared to Ameritech's network, which Ameritech asserts causes increased
volatility in competing LEC traffic volumes.  Ameritech does not explain the relevance of
traffic volatility to the quality of the interconnection that Ameritech provides but seems to imply
that unanticipated increases in traffic volumes can exhaust the capacity of the interconnection
facilities that competing LECs obtain from Ameritech.  Indeed, Ameritech provides no
empirical or other factual information to support this claim or to explain why it could not
compensate for such traffic volatility as it does in engineering its network to carry its own
customers' traffic.  Like the Department of Justice, we question this explanation for the
differentials in call blockage rates, because it is unsupported by factual evidence on the record.
We emphasize that, even if differences in traffic volatility exist between Ameritech's and
competing LECs' networks, such differences would not justify Ameritech's provision of inferior
interconnection facilities.  As stated above, pursuant to our Local Competition Order, an
incumbent LEC is required to provide interconnection facilities to meet the same technical
criteria and service standards used in the LEC's network, including the probability of blocking
during peak hours.
      242.Ameritech also asserts that the competing LECs' failure to advise Ameritech of
future significant increases in traffic has contributed to the higher call blocking rates on trunks
carrying traffic to competing LECs' customers in March through April, as compared with trunks
carrying traffic to Ameritech's retail customers.  We agree with the Department of Justice "that
EOI trunk blocking rates could potentially be reduced with improved traffic forecasts" and, like
the Department of Justice, urge competing LECs to provide such data to the fullest extent
possible.  Nonetheless, we find that Ameritech has not established on this record that the
competing LECs' failure to provide forecast data has been a primary cause for call blocking to
competing LECs' customers.  Indeed, Ameritech provides only two specific examples of
instances in which competing LECs failed to notify Ameritech of the addition of a large
customer in advance, one of which took place in Illinois.  We note that the Michigan
Commission found that Ameritech's performance measures for interconnection are inadequate
precisely because they "do not distinguish things over which Ameritech has control so deviations
from the goal can be explained away."
      243.We reject Ameritech's suggestion that differentials in call blocking rates on EOI
trunks and Ameritech's interoffice trunks are unimportant because the blockage on EOI trunks is
not "service-affecting."  We reiterate that the relevant question is whether Ameritech is
providing interconnection equivalent to the interconnection it provides itself, not whether a
competing LEC continues to acquire customers or whether a customer notices the difference in
quality in terms of service received from a competing LEC.  As stated above, an incumbent
LEC's duty to provide interconnection equal in quality is not limited to quality perceived by end-
users.
      244.We recognize that Ameritech's performance in providing interconnection to
competing LECs in Michigan (and in the region) has improved over time.  We commend
Ameritech for its improved service, but we cannot ignore the differentials in call blocking rates
simply because Ameritech's performance data indicate that blocking rates on EOI trunks declined
between March 1 and May 31, 1997.  Ameritech states that the total number of one-way trunk
groups from Ameritech's network to the competing LECs' networks increased by 34 percent in
the first quarter of 1997.  The provision of additional EOI trunks may account for the reported
reduction in EOI trunk blocking rates.  Nonetheless, we emphasize that, in order to satisfy its
checklist obligation, Ameritech must demonstrate at the time its application is filed that it is
providing interconnection equivalent to the interconnection it provides itself, not merely that its
interconnection performance data have improved.  Moreover, as discussed above, in order to
ensure the integrity of the 90-day review process, we shall not consider data from Ameritech
demonstrating performance after the date on which Ameritech filed its application, when no
party has put performance during that time at issue.  Even if we were to rely on Ameritech's
data establishing that the EOI blockage rate in Michigan for both intraLATA and interLATA
final trunk groups was 0.0% in May, the figures for May represent only one month of
Ameritech's performance.  We would find such evidence to be more persuasive if a BOC
provides such data over a sufficiently long time to establish stable trends.
      245.In sum, we emphasize that we do not conclude here that Ameritech must meet
particular interconnection performance benchmarks, except as required pursuant to approved
agreements.  Nonetheless, we find that the difference between the blocking rates on trunks
interconnecting competing LECs with Ameritech's network and the blocking rates on
Ameritech's retail trunks suggests that Ameritech interconnection facilities do not meet the
technical criteria and service standards that Ameritech uses within its own network.  Lacking
more information, we cannot conclude that Ameritech has established that it provides competing
LECs interconnection equal in quality to that which it provides itself.
      5.Efforts to Resolve Blockage Problems
      246.Pursuant to section 251(c)(2)(D), Ameritech must provide interconnection
arrangements on nondiscriminatory terms, rates, and conditions.  When there are network
blockage problems, incumbent LECs and competing LECs may resolve the problems by, for
example, modifying their network architectures.  Establishing appropriate trunking architecture
and proper interconnection arrangements is the responsibility of both carriers.  In order to
provide interconnection on nondiscriminatory terms, however, Ameritech has an obligation to
ensure that a competing LEC has sufficient information about its network to remedy network
blockage that occurs within Ameritech's network, but affects both Ameritech's customers and the
competing LEC's customers.  Therefore, Ameritech has an obligation to cooperate with
competing LECs to remedy such network blockage.
      247.While expanding the capacity of EOI trunk groups can help reduce blockage on
the trunks between an Ameritech tandem and a competing LEC's switch, we agree with TCG that
such capacity expansions would not address network blockage within Ameritech's network on
common trunk groups that deliver competing LEC-bound traffic to Ameritech's tandems.
Alternate routing is one possible solution to minimize the impact of such network blockage.  An
in-bound call to a competing LEC's customer often must be carried across several segments of a
link between Ameritech's end office and the competing LEC's switch, of which the EOI trunk
group may be but one.  For instance, the call may travel from the Ameritech end office to the
Ameritech tandem over a common trunk group and then travel from the Ameritech tandem to the
competing LEC's end office over an EOI trunk group.  Ameritech contends that any blocking that
occurs on a common final trunk group behind Ameritech's tandem has an equivalent impact on
competing LECs' and Ameritech's customers.  As TCG suggests, however, the level of
blockage may disproportionately affect competing LECs' customers in some circumstances,
where the network blockage results in a disproportionate number of calls not completing to
competing LECs' customers.
      248.To the extent that Ameritech has a robust network of end office interconnection, a
call originating from an Ameritech end office may be connected via other interoffice trunk
groups, if the common final trunks to which the call is first routed are blocked.  Therefore, a call
to an Ameritech customer could complete over one of several alternative paths.  If there is no
alternate routing connecting the same Ameritech end office where calls originate to the
competing LEC's end office, however, calls to the competing LEC's customers originating in that
end office and travelling over the common trunk groups may not be completed.  Such calls may
be blocked before they reach the EOI trunk groups connecting Ameritech's tandem to the
competing LEC's end office.  Alternate routing could be established by, for example, providing a
direct trunk between the Ameritech and competing LEC's end offices.  Alternatively, as TCG
suggests, calls from Ameritech's customers to a competing LEC's customers could be routed
through more than one Ameritech tandem in the event of blockage.  If there is no alternate
routing and traffic designated for a TCG NXX is blocked, the call may not be completed without
further interference such as the network management re-routes described above.
      249.TCG contends that it has attempted to resolve problems related to blockage
behind Ameritech's tandem for more than six months.  TCG asserts that Ameritech has
installed trunks to carry traffic from Ameritech's network to TCG's network in such a way that
there is a single point of failure at each of the points of interconnection between the two
networks.  That is, TCG maintains that, although Ameritech provides alternative routing for
traffic designated for its own NXXs, there is no alternative routing designated for traffic bound
for a TCG NXX that is blocked in Ameritech's network.  Thus, TCG claims that Ameritech's
handling of traffic destined for TCG's switch is inherently inferior to the multiple routing
architecture used to route traffic to Ameritech's NXXs.  TCG asserts that Ameritech also has
been resistant to working to find a solution to the network blockage problem and has reneged on
a mutual agreement that would change the routing for TCG's NXXs.  TCG also alleges that
Ameritech has failed to provide the trunk group-specific traffic data that TCG needs to assess
trunk blocking problems in Detroit, as well as Chicago.
      250.In its reply comments and affidavits, Ameritech responds that Ameritech is
exclusively responsible for managing traffic flows through its public switched network.
Ameritech further contends that it has worked jointly with TCG to establish direct trunks
between Ameritech and TCG's end offices and to augment EOI tandem trunking, alleging that
TCG itself has been the source of problems and delays.  Ameritech relies largely on a letter to
TCG dated June 17, 1997, as evidence of these efforts to remedy the network blockage problems
that competing LECs have experienced.  In particular, Ameritech relies on that letter to
establish its commitment to provide direct trunking between Ameritech end offices and the TCG
switch.  Moreover, Ameritech cites the letter to establish that, in May and June, Ameritech and
TCG resolved TCG's complaints relating to the competing LEC's efforts to obtain two-way
trunking.
      251.Based on our review of the entire record, we question whether Ameritech has
provided requested interconnection arrangements to competing LECs, and TCG in particular, in a
nondiscriminatory fashion.  We are unpersuaded by Ameritech's reliance on the actions it has
undertaken to remedy network blockage that are described in its June 17, 1997, letter to TCG and
that did not occur until after the date Ameritech filed its application.  As discussed above, we
judge Ameritech's application as of the date it was filed and give no weight in our evaluation of
the sufficiency of the May 21, 1997, application, to the post-filing actions that Ameritech has
taken to correct problems identified by its competitors.  Accordingly, although we are
encouraged by Ameritech's efforts to resolve TCG's complaint regarding two-way trunking,
which Ameritech contends the parties resolved after the application was filed, we do not consider
them in our assessment of whether Ameritech satisfies the requirements of section 271 as of the
date of its filing.  Moreover, we are not persuaded by Ameritech's future commitments to
establish checklist compliance.  The June 17 letter offers vague future promises regarding
Ameritech's efforts to provide direct trunking between Ameritech end offices and the TCG
switch.
      252.In response to TCG's allegation regarding its inability to obtain data needed to
remedy network blockage, Ameritech describes the "typical report" containing trunk blocking
data that it provides to competing LECs.  Ameritech fails to establish, however, that it has
actually provided such data to competing LECs in Michigan or to TCG in particular.  Indeed,
Ameritech relies on a future commitment to TCG to furnish necessary call flow data to
demonstrate compliance with interconnection requirements.  As discussed above, Ameritech
cannot meet its burden of proof with regard to checklist compliance by relying on promises of
future action.
      253.We find that Ameritech has not shown that it provides interconnection on
nondiscriminatory terms, because it has not provided competing LECs with the data they need to
control trunk blockage, data that Ameritech possesses and may use for itself.  Like the
Department of Justice, we are concerned that competing LECs may not have access to
information about the network needed to solve blocking problems when the blocking occurs on
the Ameritech side of the point of interconnection.  We recognize that competing LECs cannot
identify which Ameritech end offices are likely candidates for augmenting existing EOI trunks or
adding direct trunking without access to Ameritech network call flow data.  Moreover, we
agree with the Department of Justice that, without information by which to identify the sources
of blocking, competing LECs may be unable to propose appropriate network reconfigurations.
      6.Conclusion
      254.We conclude that Ameritech has not established by a preponderance of the
evidence that it is providing interconnection that is equal in quality to that which it provides itself
and that is available on nondiscriminatory rates, terms, and conditions, as required under section
271(c)(2)(B)(i).
      255.The data that Ameritech does provide suggest that Ameritech's interconnection
facilities do not meet the technical criteria and service standards that Ameritech uses within its
own network.  We expect that Ameritech will submit more relevant and reliable interconnection
performance data in a future application for Michigan.  In particular, we encourage Ameritech to
provide information by which we can gauge the impact of trunk blocking data.  For example,
Ameritech might indicate the size of the trunk groups that are experiencing blockage and the
percentage of calls that were blocked.  We would find data regarding call completion rates for
calls originating on Ameritech's network and terminating with Ameritech customers and
competing LECs' customers, respectively, to be useful for measuring parity.  Likewise, we urge
Ameritech to provide more detailed information on the extent to which it re-routes calls to
competing LECs' NXXs when they are blocked, as compared to the extent to which it re-routes
calls to its own NXXs.
      E.Nondiscriminatory Access to 911 and E911 Services
      1.Introduction
      256.Section 271(c)(2)(B)(vii)(I) of the competitive checklist requires Ameritech to
provide "nondiscriminatory access to . . . 911 and E911 services."  In the Local Competition
Order, we interpreted the word "nondiscriminatory" to include a comparison between the level of
service the incumbent LEC provides competitors and the level of service it provides to itself.
We interpret the term "nondiscriminatory" for the purposes of section 271 in an identical fashion
and find that section 271 requires a BOC to provide competitors access to its 911 and E911
services in the same manner that a BOC obtains such access, i.e., at parity.  Specifically, we find
that, pursuant to this requirement, Ameritech must maintain the 911 database entries for
competing LECs with the same accuracy and reliability that it maintains the database entries for
its own customers.  This duty includes populating the 911 database with competitors' end user
data and performing error correction for competitors on a nondiscriminatory basis.  For facilities-
based carriers, nondiscriminatory access to 911 and E911 services also includes the provision of
unbundled access to Ameritech's 911 database and 911 interconnection, including the provision
of dedicated trunks from the requesting carrier's switching facilities to the 911 control office at
parity with what Ameritech provides to itself.
      257.One of the Commission's statutory mandates under the Communications Act is
"promoting safety of life and property through the use of wire and radio communication."  As
the Commission has previously recognized, "[i]t is difficult to identify a nationwide wire or radio
communication service more immediately associated with promoting safety of life and property
than 911."  We would therefore be remiss in our statutory duties, particularly given the
expressed concerns of the Michigan Commission, which are discussed below, if we did not
closely examine the steps Ameritech has taken to maintain the accuracy and integrity of the 911
database for competitors in the state of Michigan.
      258.Ameritech represents that it provides customers of competing LECs with access to
the type of 911 service selected by the municipality in which those competing LEC customers
reside in a manner identical to the 911 service supplied to Ameritech's own retail customers.
Further, Ameritech asserts that competing LECs interconnect to Ameritech's 911 service in the
same manner as Ameritech and receive the same service quality.  Specifically, Ameritech
contends that its E911 arrangements provide competing carriers with access to its 911 services
and trunking from the competing carriers' collocation point to the E911 control office.
Moreover, Ameritech maintains that it has established "detailed processes and procedures to
ensure 911 database integrity in a multi-carrier environment."
      259.No commenters dispute that Ameritech is providing unbundled access to its 911
database.  Numerous parties, including Brooks Fiber, MFS WorldCom, and TCG, however,
assert that Ameritech has failed to maintain properly its 911 database with correct end user
information for competing LEC customers.  In addition, Brooks Fiber alleges that Ameritech
has failed to provide nondiscriminatory access and interconnection to its 911 database.
Significantly, the Michigan Commission found the quality of Ameritech's 911 database to be
"suspect" and Ameritech's coordination of data entry with competing carriers and error correction
to be "at best, poor."  In concluding that Ameritech did not satisfy this checklist item, the
Michigan Commission maintained that it would "indicate compliance with [section
271(c)(2)(B)(vii)(I)] only after Ameritech has shown the [Michigan Commission] and/or the
FCC that it has established and pursued methods to ensure accurate 9-1-1 databases and proof
that it is in fact performing the data entry and error correction coordination role required by its
interconnection agreements."  The Department of Justice concluded that, because it lacked
sufficient information, it was unable to determine whether Ameritech is providing E911 services
on an adequate and nondiscriminatory basis.
      260.We conclude that Ameritech has not met its burden of demonstrating, by a
preponderance of the evidence, that it is providing nondiscriminatory access to its 911 services.
Specifically, based on the record in this proceeding, we find that Ameritech maintains entries in
its 911 database for its own customers with greater accuracy and reliability than entries for the
customers for competing LEC entries.  In reaching this conclusion, we find it significant that
there have been at least three instances involving customers of competing carriers, one as
recently as May 21, 1997, where incorrect end user information was sent to emergency services
personnel.  Ameritech, which has acknowledged fault in all three incidents, has presented no
evidence to demonstrate the 911 database error rate for competing LEC information is equivalent
to the error rate for Ameritech's own customers.  We also conclude that Ameritech has not
demonstrated that it provides facilities-based competitors that physically interconnect with
Ameritech access to the 911 database in a manner that is at parity with the access it provides
itself.  In addition to these parity issues, we have concerns regarding Ameritech's efforts to detect
and remedy errors in competitors' end user 911 data and in the proper functioning of competitors'
trunking facilities.  In particular, it appears that Ameritech has not taken adequate preventative
measures to do its part in avoiding future errors in competitors' data in the 911 database.  In
view of our findings that Ameritech does not maintain the accuracy of the 911 database or
provide access to this database in a nondiscriminatory manner, we agree with the Michigan
Commission that Ameritech has failed to demonstrate its compliance with this checklist item.
      2.Discussion
      261.According to Ameritech, there are essentially two key aspects of providing 911 to
end users in Michigan.  First, Ameritech must establish and test the trunks of those facilities-
based competing carriers that physically interconnect with Ameritech.  Second, Ameritech must
maintain the 911 databases by populating them, updating them, and serving in a coordination
role for error resolution.  The provision of 911 service also requires a cooperative effort
between Ameritech and competing LECs that are responsible for, among other things, ordering a
sufficient number of trunks, jointly testing the trunks with Ameritech, and delivering accurate
and complete end user information to Ameritech.
      262.All the commenters on this issue object to the manner in which Ameritech is
maintaining its 911 database.  Several point to the formal complaint, pending before the
Michigan Commission, filed against Ameritech by the City of Southfield, Michigan, which calls
into question the manner in which Ameritech provides access to its 911 database and the
accuracy of its database.  According to the Michigan Commission, the record in the complaint
proceeding identifies two specific instances, both potentially life threatening, where incorrect
automatic location identification information was given to the Public Safety Answering Point
(PSAP) or emergency calls were routed to the improper PSAP.  The Michigan Commission
also cites a third event that occurred on May 21, 1997, the date Ameritech filed its section 271
application.  We find that these incidents, all of which were the result of errors made by
Ameritech, call into question whether Ameritech maintains the accuracy and integrity of
competing LEC entries in the 911 database in the same manner as it does for its own entries.
      263.According to Ameritech, all three incidents stemmed from incorrect competitor
end user information in Ameritech's billing records, which led to errors in competitors' service
records in the 911 database.  Ameritech acknowledges that all three incidents were caused by
separate errors on the part of Ameritech.  The first incident, which occurred October 12, 1996,
involved an end user served by TCG's facilities.  Ameritech explains that, in the situation where
the competing LEC uses its own local switch, the competing LEC is responsible for providing its
end users' information to Ameritech.  These 911 data records are provided to Ameritech by the
competitor on either a manual or mechanized basis.  At the time that TCG was originally
assigned NXX codes for its use, Ameritech's billing system automatically generated service
orders that reserved these telephone numbers.  These service orders, when sent to the 911
database, populated the 911 records with TCG's name and TCG's collocation address (the
Ameritech central office) as if that were the name and address of the TCG end users to whom the
numbers were ultimately assigned.  Thus, when any of those TCG customers placed a 911 call,
"TCG" would appear on the PSAP display screen as the end user name and TCG's collocation
address appeared as the end user address.  The October 12th incident occurred because, while in
the process of resolving this problem, Ameritech inadvertently deleted some TCG customer
information from the 911 database, including the information for a TCG end user.  This
created a potentially life threatening situation when that end user was the victim of a shooting.
      264.Another incident occurred on January 30, 1997, and involved a MFS WorldCom
end user served via resold Centrex service.  Ameritech explains that, if a competing LEC
operates as a reseller or purchases unbundled local switching, Ameritech inputs the competing
LEC's end user's name and address into the 911 database via Ameritech's service order system
based on the competing LEC's service order.  Ameritech claims that the second incident
occurred because Ameritech's service billing records did not contain a special field identifier
indicating that the competing LEC's customer had a different address from the competitor's
billing address.  For example, although MFS WorldCom's end users were provisioned using
Ameritech's Centrex resale services, when they placed a 911 call, "MFS" would appear on the
PSAP display screen as the end user name and MFS WorldCom's billing address would appear as
the end user's address.  The third incident, which occurred on May 21, 1997, also involved a
MFS WorldCom end user.  Ameritech claims that human error caused one of MFS WorldCom's
end user records not to be updated in the manual review of MFS WorldCom's Centrex
accounts.
      265.In response to allegations that it does not provide nondiscriminatory access to its
911 services, Ameritech cites various statistics concerning its provision of 911 service, including
overall error rates for its 911 database, and describes at length the procedures that it either has
established, or is in the process of establishing, to ensure that its competitors' 911 data are
accurately populated and that errors are detected and remedied quickly.  Ameritech does not,
however, provide any statistics or other evidence reflecting the accuracy rate for Ameritech's
own 911 records or otherwise demonstrate that it is maintaining the 911 database entries for
competitors' end users with the same accuracy and reliability that it maintains the database
entries for its customers.  Noting the absence of such information, the Michigan Commission
observed that "no actual reports have been provided to the [Michigan Commission] on which
[OSS performance relative to 911] can begin to be assessed."  Without more information, we
are unable to find that Ameritech has met its burden of demonstrating by a preponderance of the
evidence that it is maintaining the accuracy of its 911 database at parity.
      266.With respect to the evidence in the record, Ameritech observes that the overall
accuracy rate for its 911 database in each of the months between October 1996 and May 1997
was at or near 99.8%.  Ameritech does not indicate, however, what portion of the remaining
.2% is the result of inaccuracies in Ameritech customer records and what portion results from
inaccuracies in competing LEC customer records.  For example, as evidence of its 99.8%
accuracy rate for these months, Ameritech provides a chart entitled "9-1-1 Database Statistics,"
that summarizes, among other things, the number of trouble tickets submitted to Ameritech from
PSAPs each month and the percentage of calls received with reported trouble.  Notably,
Ameritech does not disaggregate these statistics so that one can identify terms of the errors
reported for customers of competing carriers versus the errors reported for its own customers.
      267.Moreover, although Ameritech submits statistics on the error rates for some
competing LECs detected through its verification and reconciliation process, i.e., comparisons of
the data in Ameritech's service billing records or competing LEC data files with the end user
information contained in the 911 database and the correction any discrepancies, it does not
submit similar statistics with respect to its own error rates.  For example, according to
Ameritech, the percentage of errors discovered in a review of the accuracy of end user
information in the 911 database with respect to MFS WorldCom customers who are served on a
facilities basis was 37%.  Without corresponding information concerning the error rates for
Ameritech end users, we have no way to measure Ameritech's performance.  Further, although
TCG contends that many of the errors found with respect to TCG end user data in the 911
database were the result of "improper loading of the data by Ameritech," we have no way of
knowing how many of the errors in the 911 database involving competing LEC end user data
result from improper loading on the part of Ameritech as opposed to incorrect data submitted by
competing LECs.  Nor is there any evidence in the record to suggest that any 911 database errors
resulted from incorrect data submitted by competing LECs.  Accordingly, we have no basis in
this record for concluding that Ameritech is providing nondiscriminatory access to its 911
database.
      268.The only data Ameritech submits by which we can judge its performance for
others against its performance for itself is a chart reflecting 911 database processing statistics for
mechanized sends, i.e., data that is sent to Ameritech electronically.  Specifically, this chart
summarizes the number of minutes from the time a 911 record is received by Ameritech until it
is entered into the 911 database, as well as the percentage of new 911 service records that
Ameritech processes in a single business day.  Although, according to this chart, Ameritech
processes 100% of the mechanized sends it receives in one business day, including its own,
these statistics provide no indication of Ameritech's accuracy rate in processing its own 911
data, as opposed to anyone else's 911 data.
      269.In addition to the shortcomings we have identified with respect to the evidence on
which Ameritech relies to establish nondiscrimination, we believe that certain evidence
submitted by Ameritech actually demonstrates that Ameritech is not presently providing access
to its 911 database at parity.  First, Ameritech explains that, in response to "expressed interest" to
have query access to the 911 database, it is developing a service that will provide competing
LECs with electronic, view-only access to the 911 database in order to allow them real-time data
validation.  Ameritech then asserts that this query access "will be the same as used by
Ameritech 911 personnel."  This statement suggests that Ameritech, as of the day of its section
271 filing, and indeed as of the day of its reply comments, was not providing competing carriers
equivalent access to the 911 database.  As discussed above, the fact that it "is developing" such a
service is inadequate to meet Ameritech's evidentiary burden of demonstrating that it currently
provides equivalent 911 database access to competitors.  Paper promises of future
nondiscrimination are not sufficient.
      270.Second, Brooks Fiber asserts that Ameritech has been providing, and continues to
provide, it with a mechanized feed to Ameritech's 911 system that is inferior to the one
Ameritech uses for its own 911 database entries.  Although there is a dispute in the record as to
when Brooks Fiber actually requested an upgrade to its 911 feed, Ameritech does not deny that
Brooks Fiber has requested such an upgrade.  In fact, in its reply comments, Ameritech asserts
that implementation of this upgrade, which may address data exchange needs for other services
as well, "is still in progress."  There is no indication in the record that the access that Brooks
Fiber is presently receiving is equivalent to Ameritech's access to the 911 database.  Moreover,
there is no evidence in the record to suggest that, once Brooks Fiber receives the upgrade, it will
be receiving equivalent access.  Ameritech, in response, points only to the fact that Brooks
Fiber has been submitting 911 data to Ameritech in a mechanized format since 1995, "using an
alternative process developed by [Ameritech] specially for Brooks Fiber."  The relevant issue
for checklist compliance, however, is not whether Brooks Fiber has the capability to submit 911
data to Ameritech in a mechanized format, but whether Ameritech is presently providing
equivalent access to its 911 database.  We find that, even if we were to assume that the requested
upgrade would provide Brooks Fiber with equivalent access to the 911 database, Ameritech has
failed to satisfy its burden of proving by a preponderance of the evidence that it is "providing"
nondiscriminatory access to its 911 database.
      271.As discussed above, a BOC "provides" a checklist item if it provides the item at
rates and on terms and conditions that comply with the Act.  In order to be "providing" an
item, the petitioning BOC must demonstrate that it is presently ready to furnish each checklist
item in the quantities that competitors may reasonably demand and at an acceptable level of
quality.  Thus, even if Brooks Fiber requested an "inferior" feed in 1995, in order for
Ameritech to demonstrate in its section 271 application that it is providing nondiscriminatory
access to its 911 database, Ameritech must be "presently ready to furnish" equivalent access to
its 911 database upon request.  Although Ameritech contends that Brooks Fiber did not make the
request for an upgrade until February 1997, it admits that as of July 1, 1997, the implementation
of Brooks Fiber's request was "still in progress."  The exact status of the "implementation,"
however, is unclear from the record.  That is, it is not evident whether Ameritech has actually
developed the upgrade, whether the upgrade has been tested, or when the upgrade will be
available to Brooks Fiber.  There is no basis in the record, therefore, to conclude that Ameritech
is "presently ready to furnish" equivalent access its 911 database.  For this reason, we conclude
that Ameritech is not providing nondiscriminatory access to its 911 database.
      272.In addition to the parity issues discussed so far with respect to 911 database
accuracy and access, we have concerns regarding the manner in which Ameritech detects and
remedies errors in competitors' end user 911 data and in the proper functioning of competing
LEC's trunking facilities.  With regard to error detection, the record indicates that Ameritech
stopped providing Brooks Fiber the daily error reports necessary for Brooks Fiber to correct
discrepancies in its customers' 911 data for a period of six months.  According to  Ameritech, it
was unaware that Brooks Fiber had not been receiving error reports until April 25, 1997, when it
learned of the situation from a Brooks Fiber representative at an industry forum in Michigan.
Further, despite Ameritech's contention that no errors went uncorrected during this time, Brooks
Fiber asserts that it received an error report totalling over several hundred pages from
Ameritech's vendor shortly after the provision of reports was restored.   The Michigan
Commission found this breakdown in the provision of error reports to be indicative of the fact
that there is "little or no confirmation of data entry or error correction" provided to competitors
with respect to their customers.  Although Ameritech ultimately reinstated the provision of
daily reports, it has not indicated what actions it has taken to detect such a breakdown in a more
timely manner or identified what procedures it has implemented to ensure that a similar
breakdown will not occur.  Moreover, we note that it was nearly two weeks later, May 7, 1997,
before the provision of these reports was reinstated.
      273.In another incident, Ameritech, in order to complete "call-through" testing on
Brooks Fiber's dedicated trunking facilities, unilaterally deactivated all 911 trunks serving
Brooks Fiber's switch without notice.  As a result, according to Brooks Fiber, Ameritech
terminated 911 service to all of Brooks Fiber's Lansing customers for nine days.  Although
Ameritech claims that it was unaware that the trunks it deactivated were carrying live traffic,
there is no evidence to suggest that Ameritech has taken any actions to ensure that, in the future,
it will determine whether there is live traffic on 911 trunks before proceeding to deactivate
them.  Similarly, Ameritech has provided no evidence indicating what procedures it has
implemented to ensure that it will not deactivate a competitor's 911 trunks without warning.
      274.This incident, as well as the other incidents described above, pose very serious
public safety and competitive concerns.  For example, by deactivating Brooks Fiber's 911 trunks
in the manner that it did, Ameritech placed the health, safety, and welfare of Brooks Fiber's
customers in jeopardy for the nine days they were without 911 service.  Moreover, it is
indisputable that any adverse disparity between the type of 911 service received by competitors'
customers and the 911 service received by Ameritech's customers places competing carriers at a
competitive disadvantage.  As MFS WorldCom asserts, "competitors like [MFS] WorldCom
clearly stand to lose more good will than Ameritech when the public is alerted to [these 911
problems]."  Incidents such as the ones described above inevitably give customers the
impression that a competing LEC's network is not as reliable as the incumbent's when matters of
life and death are at stake.  Errors by Ameritech in the provision of 911 service, therefore,
threaten the ability of its competitors to effectively compete.  More importantly, such errors, as
demonstrated by the record in this proceeding, endanger lives.
      275.With respect to remedial measures, as TCG points out, "it is not only the error
checking routines prior to entry of the information into the [911] database which is critical, but
how . . .  rapidly and effectively discovered errors are corrected which is of great concern."
For example, Ameritech's solution to the problems discovered in its service billing records was to
manually reload the data of the competing carriers' customers.  This, however, was an
extremely time-consuming, and in Ameritech's own words, "laborious" process.  In fact, it took
Ameritech nearly four months to reload manually the 911 data related to TCG end users.
Notably, it was while Ameritech was reloading this data that a TCG customer's life was placed in
jeopardy when 911 dispatchers were unable to receive information as to the customer's location
because the record had been inadvertently purged from Ameritech's database.  It is far from clear
that Ameritech would undertake this type of "laborious" manual reload if it were correcting its
own 911 data.
      276.  According to Ameritech's reply, it has "instituted a number of checks, balances,
and verification procedures to address database integrity and is continuously searching for
process improvements."  We agree with MFS WorldCom, however, that, although Ameritech
appears to be genuinely trying to resolve the problems it has thus far experienced in integrating
competing LEC customer information into the E911 system, the continuing difficulties show that
the problems have not yet been resolved.  We recognize, as Ameritech repeatedly indicates,
that the maintenance of the 911 database is a cooperative process that is dependent on competing
LECs providing accurate and complete data to Ameritech in a timely manner.  As mentioned
above, however, by Ameritech's own admission, none of the three incidents described by the
Michigan Commission was the fault of a competing carrier.  It appears therefore that, as the
Michigan Commission suggests, it is incumbent upon Ameritech to take additional preventative
measures.  Preventative, rather than remedial, measures are particularly imperative where, as
Brooks Fiber points out, matters of health, safety, and welfare are at issue.  Until such measures
are taken, we agree with the Michigan Attorney General that the emergency services situation in
Michigan will continue to be "fraught with significant public health and safety concerns."
      277.Ameritech states that accuracy in the 911 database is its "primary objective."  We
applaud this goal and note that Ameritech appears to have taken significant actions to address
database integrity concerns when it became aware of them.  We note, however, that some of
these actions have not gone far enough.  Although we have no doubt that Ameritech is
"constantly working to make [its procedures and safeguards] better," it cannot meet its burden
of proof with paper promises of actions it plans to take either during the 90-day review process
for this application or at some future date.  For example, Ameritech asserts that it "is developing"
a reporting mechanism to be provided to competing LECs summarizing the accuracy of
Ameritech's manual inputs for each competing LEC on a business day, that it "will continue to
pursue and develop processes to mechanically verify the data for end users served via Centrex
resale," that it "is developing" an electronic, view-only access to the 911 database for
competitors, and that the implementation of Brooks Fiber's 911 upgrade "is still in progress."
Should Ameritech refile its section 271 application at some future date and provide evidence of
its completion of these improvements as part of its showing to demonstrate its compliance with
this checklist item, we will fully consider such evidence.
      278.We do not suggest, however, that Ameritech's 911 database must be error free in
order to achieve checklist compliance.  We recognize, as Ameritech asserts, that holding
Ameritech to an absolute-perfection standard is not required by the terms of the competitive
checklist.  Rather, Ameritech's statutory obligation under section 271(c)(2)(B)(vii)(I) is to do
what is necessary to ensure that its 911 database is populated as accurately, and that errors are
detected and remedied as quickly, for entries submitted by competing carriers as it is for its own
entries.  For facilities-based carriers that physically interconnect with Ameritech, Ameritech has
the additional duties of providing nondiscriminatory access to the 911 database and dedicated
911 trunking.  We cannot find on the current record that Ameritech is providing
nondiscriminatory access to 911 services because, as discussed above, it has not demonstrated by
a preponderance of the evidence that it provides competitors with the same level of accuracy and
access that it provides to itself.
      279. We do not, based on the record received in the instant proceeding, enunciate
specific actions that Ameritech should take to demonstrate its compliance with this checklist
item.  As mentioned above, the manner in which 911 access is provided and the accuracy of the
911 database is at issue in a formal complaint before the Michigan Commission.  It appears that a
far more extensive record on this topic has been submitted to the Michigan Commission in that
complaint action and, according to the Michigan Commission, the record there presents options
that "should minimize the potential for . . . difficulties [like the ones experienced by the City of
Southfield] in the future."  We expect that Ameritech will work closely with the Michigan
Commission to take the appropriate steps to improve the accuracy of and access to its 911
database and to protect the integrity of competitors' end user data.  Then and only then can
Ameritech fulfill its obligation to provide competitors with nondiscriminatory access to 911 and
E911 services.  Although we recognize that Ameritech has already instituted some processes and
procedures to achieve these objectives, we nevertheless concur with the City of Southfield that
"[i]t is unacceptable to jeopardize public safety as Ameritech struggles to integrate their network
with their competitors."
      F.Additional Concerns
      280.Because we find that Ameritech has not demonstrated that it has fully
implemented the competitive checklist with respect to OSS, interconnection, and 911 and E911
services, we need not decide in this Order whether Ameritech is providing the remaining
checklist items.   Still, as stated above, in order to provide further guidance with respect to
Ameritech's checklist compliance, we address here our concerns regarding certain other checklist
items.  We reiterate that we make no findings with respect to Ameritech's compliance with those
items discussed herein.
      1.Pricing of Checklist Items
      281. We do not reach the question of whether Ameritech's pricing of checklist items
complies with the requirements of section 271 given our findings above concerning Ameritech's
failure to comply with the checklist on other grounds.  Nonetheless, given that efficient
competitive entry into the local market is vitally dependent upon appropriate pricing of the
checklist items, we believe it important to discuss our general concerns about pricing.  Our hope
is that this discussion will help expedite Ameritech's entry into long distance in Michigan and the
entry of the other BOCs into the in-region interLATA market by providing more guidance as to
what showing is required in future applications to demonstrate full compliance with the
checklist.  We hope that Ameritech will demonstrate compliance with the principles set forth
below in its next application, and we urge the Department of Justice and the state commission to
address Ameritech's showing on pricing of checklist items in the future.
      282.  Section 271(d) requires the Commission to determine that Ameritech has fully
implemented the competitive checklist.  The competitive checklist, in turn, requires the BOC to
provide interconnection, access to unbundled network elements, transport and termination, and
resale at prices that are "in accordance with" section 252(d).  Section 252(d) provides that rates
for interconnection, unbundled network elements, and transport and termination must be cost-
based.  Specifically as to interconnection and unbundled network elements, section 252(d)
provides that rates must be "based on the cost . . . of providing the interconnection or network
element . . . and may include a reasonable profit."  Section 252(d)(3) provides that the price for
resold service pursuant to section 251(c)(4) shall be based on "retail rates . . . excluding the
portion thereof attributable to any marketing, billing, collection, and other costs that will be
avoided by the local exchange carrier."   The Act vests in the Commission the exclusive
responsibility for determining whether a BOC has in fact complied with the competitive
checklist.  In so doing, we must assess whether a BOC has priced interconnection, unbundled
network elements, transport and termination, and resale in accordance with the pricing
requirements set forth in section 252(d) and, therefore, whether the BOC has fully implemented
the competitive checklist.
      283. We recognize that the Eighth Circuit has held that the Commission lacks
jurisdiction to issue national rules establishing a methodology by which the states determine the
rates for interconnection, unbundled network elements, resale, and transport and termination in
state-arbitrated interconnection agreements pursuant to section 252.  The court, however,
addressed the challenge to the Commission's pricing rules on jurisdictional grounds and
expressly did not address the substantive merits of the Commission's rules.  The court, therefore,
made no ruling concerning the proper meaning of the statutory requirement in section 252(d) that
rates must be cost-based.
      284.  Because the Eighth Circuit concluded that the Commission lacked authority to
prescribe a national pricing methodology to implement the requirements of section 252(d), if that
decision stands, the meaning of section 252(d) ultimately will be determined through de novo
review of state determinations by the federal district courts.  The Act provides that parties
aggrieved by state determinations under section 252 may sue in federal district court.
Consequently, the district courts will review numerous interconnection agreements from some, if
not all, of the states and the District of Columbia.  The Courts of Appeals and, perhaps
ultimately, the Supreme Court, will resolve the issue of what the statutory requirement that rates
be cost-based means.  This litigation will take years, however, and inevitably will run the risk of
impeding or significantly delaying the development of competition in the local exchange market,
and, consequently, delaying the deregulation of the telecommunications markets that Congress
envisioned.
      285.  While the question of what constitutes cost-based pricing under section 252(d)
wends it way through the courts, the Commission, pursuant to section 271, must determine
whether the BOCs have fully implemented the competitive checklist, which incorporates the
section 252(d) cost-based standard.  The BOCs will file section 271 applications in the
meantime, and the Commission is obligated by section 271 to issue a written determination
approving or denying the authorization requested not later than 90 days after receiving an
application.
      286.  The cost-based standard is contained in a federal statute.  It is, therefore,
presumed to have a uniform meaning nationwide.  As the Supreme Court has often stated,
"federal statutes are generally intended to have uniform nationwide application."  Moreover,
there is nothing in section 271 to suggest that the Commission's bases for determining checklist
compliance should be vary throughout the country.  The Commission, pursuant to its
responsibility under section 271, therefore must apply uniform principles to give content to the
cost-based standard in the competitive checklist for each state-by-state section 271 application.
      287.  Such a reading of our responsibilities under section 271 is also sound policy.
Determining cost-based rates has profound implications for the advent of competition in the local
markets and for competition in the long distance market.  Because the purpose of the checklist is
to provide a gauge for whether the local markets are open to competition, we cannot conclude
that the checklist has been met if the prices for interconnection and unbundled elements do not
permit efficient entry.  That would be the case, for example, if such prices included embedded
costs.  Moreover, allowing a BOC into the in-region interLATA market in one of its states when
that BOC is charging noncompetitive prices for interconnection or unbundled network elements
in that state could give that BOC an unfair advantage in the provision of long distance or bundled
services.
      288.  We believe that Congress did not intend us to be so constrained in conducting our
prescribed assessment of checklist compliance in section 271.  We conclude that Congress must
have intended the Commission, in addressing section 271 applications, to construe the statute and
apply a uniform approach to the phrase "based on cost" when assessing BOC compliance with
the competitive checklist.  We will consider carefully the state commission's assessment of
pricing contained in its checklist compliance verification, the methodology used to derive prices
for checklist items, and the allegations of interested parties in the section 271 proceeding.  It is
our understanding that a large majority of state commissions have stated that they have adopted
or intend to adopt forward-looking economic cost approaches.  Our ultimate objective, for the
purpose of section 271 compliance, is to determine whether the BOC's prices for checklist items
in fact meet the relevant statutory requirements.  We note, moreover, that even if it were decided
that we lacked authority to review BOC prices as an aspect of our assessment of checklist
compliance under section 271(d)(3)(A), we would certainly consider such prices to be a relevant
concern in our public interest inquiry under section 271(d)(3)(C).  We discuss below our
conclusions concerning the appropriate pricing for these checklist items.
      289.  TELRIC-Based Pricing of Interconnection Services, Unbundled Network
Elements, and Transport and Termination.  In ascertaining whether a BOC has complied with the
competitive checklist regarding pricing for interconnection, unbundled network elements, and
transport and termination pursuant to section 251, it is critical that prices for these inputs be set at
levels that encourage efficient market entry.  New entrants should make their decisions whether
to purchase unbundled elements or to construct facilities based on the relative economic costs of
these options.  New entrants cannot make such decisions efficiently unless prices for unbundled
elements are based on forward-looking economic costs.  Similarly, prices for interconnection and
transport and termination must be based on forward-looking economic costs in order to
encourage efficient entry.  In order for competition to drive retail prices to cost-based levels, as
occurs in efficient, competitive markets, new entrants must be able to purchase interconnection
services, unbundled network elements, and transport and termination at rates that reflect forward-
looking costs.  Adopting a pricing methodology based on forward-looking costs best replicates,
to the extent possible, the conditions of a competitive market.  In addition, a forward-looking
cost methodology reduces the ability of an incumbent to engage in anticompetitive behavior,
permits new entrants to take advantage of the incumbent's economies of scale, scope, and
density, and encourages efficient market entry and investment by new entrants.  We conclude,
therefore, that a BOC cannot be deemed in compliance with sections 271(c)(2)(B)(i), (ii), and
(xiii) of the competitive checklist unless the BOC demonstrates that prices for interconnection
required by section 251, unbundled network elements, and transport and termination are based on
forward-looking economic costs.
      290. We have previously set forth our view that the requirement for the use of foward-
looking economic costs is to be implemented through a method based on total element long-run
incremental cost or TELRIC.  TELRIC principles ensure that the prices for interconnection and
unbundled network elements promote efficient entry decisions.  Pursuant to TELRIC principles,
prices for interconnection and unbundled network elements recover the forward-looking costs
over the long run directly attributable to the specified element, as well as a reasonable allocation
of forward-looking common costs.  TELRIC pricing also specifically provides for a reasonable
profit.  We conclude that, for purposes of checklist compliance, prices for interconnection and
unbundled network elements must be based on TELRIC principles.  We emphasize, however,
that it is not the label that is critical in making our assessment of checklist compliance, but rather
what is important is that the prices reflect TELRIC principles and result in fact in reasonable,
procompetitive prices.  It is our understanding that the large majority of state commissions have
stated that they have adopted or intend to adopt forward-looking economic cost approaches.  For
instance, the principles that the Michigan PSC applied in its recent decision on permanent prices
for interconnection appear to be fully consistent with TELRIC principles.
      291.  We recognize that use of TELRIC principles will necessarily result in varying
prices from state to state because the parameters of TELRIC may vary from state to state.  Costs
may vary, for example, due to differences in terrain, population density, and labor costs from one
state to the next.  TELRIC principles will not generate the same price in every state; indeed it
will not even generate the same formula for pricing in every state.  But such principles are fair
and procompetitive and should create even opportunities for entry in every state, while
permitting, indeed obliging, each state commission to determine prices on its own.  In order for
us to conduct our review, we expect a BOC to include in its application detailed information
concerning how unbundled network element prices were derived.
      292.  Establishing prices based on TELRIC is a necessary, but not sufficient, condition
for checklist compliance.  In order for us to conclude that sections 271(c)(2)(B)(i) and (ii) are
met, rates based on TELRIC principles for interconnection and unbundled network elements
must also be geographically deaveraged to account for the different costs of building and
maintaining networks in different geographic areas of varying population density.  Deaveraged
rates more closely reflect the actual costs of providing interconnection and unbundled elements.
Deaveraging should, therefore, lead to increased competition and ensure that competitors make
efficient entry decisions about whether they will use unbundled network elements or build
facilities.
      293.  There also must be "just and reasonable" reciprocal compensation for the transport
and termination of calls between an incumbent's and a new entrant's network.  In order for us
to find that the statutory standard has been met for section 271(c)(2)(B)(xiii),  the rates not only
must be based on TELRIC principles, but new entrants and BOCs must also each be
compensated for use of the other's network for transport and termination.
      294.  Finally, we believe that it is important to our assessment of checklist compliance
to know the basis for the prices submitted by the BOC in the application.  In particular, we would
want to know whether those prices were based on completed cost studies, as opposed to interim
prices adopted pending the completion of such studies.
      295.  Pricing for Resold Services.  We conclude that a BOC cannot demonstrate
compliance with the competitive checklist unless it has appropriate rates for resale services,
which the Act defines as "wholesale rates [based on] retail rates charged to subscribers for the
telecommunications service requested, excluding the portion thereof attributable to any
marketing, billing, collection, and other costs that will be avoided by the local exchange
carrier."  Accordingly, resellers should not be required to compensate a BOC for the cost of
services, such as marketing, that resellers perform.  Moreover, just as recurring wholesale rates
should not reflect reasonably avoidable costs, neither should non-recurring charges associated
with the service being resold reflect costs that would be reasonably avoidable if the BOC were no
longer to offer the service on a retail basis.  We will not consider a BOC to be in compliance
with section 271(c)(2)(B)(xiv) of the competitive checklist unless the BOC demonstrates that its
recurring and non-recurring rates for resold services are set at the retail rates less the portion
attributable to reasonably avoidable costs.
      296.  Non-recurring Charges.  Unreasonably high non-recurring charges for unbundled
loops and other essential inputs can have as much of a chilling effect on local competition as
unreasonably high recurring fees.  Both types of charges must be cost-based in order for local
competition to take root and flourish.  Non-recurring charges may be assessed in the provision of
unbundled network elements and interconnection (in providing collocation, for example), and in
the provision of resale.  Consequently, we conclude that a BOC will not be deemed in
compliance with sections 271(c)(2)(B)(i),(ii) and (xiv) of the competitive checklist unless it has
shown that its non-recurring charges reflect forward-looking economic costs.
      297.  Continuing Compliance.  We must be confident that a BOC will continue to
comply with the pricing requirements contained in the competitive checklist after it has been
authorized to provide in-region interLATA service.  We anticipate, therefore, that it may be
necessary to require, as a condition of authorization, that the BOC continue to price
interconnection, unbundled network elements, transport and termination, and resold services in
accordance with the competitive checklist as we have described above if it wishes to remain in
the long distance market.  Imposition of such conditions may be particularly important where we
anticipate continuing negotiations with individual carriers over pricing terms and conditions such
as non-recurring charges.  We believe that we have authority to impose such conditions pursuant
to sections 271(d)(6) and 303(r) of the Communications Act.
     2.   Unbundled Local Transport
                a.  Introduction
      298.Section 271(c)(2)(B)(v) of the competitive checklist requires Ameritech to
provide "[l]ocal transport from the trunk side of a wireline local exchange carrier switch
unbundled from switching or other services."  The checklist further requires Ameritech to
provide [n]ondiscriminatory access to network elements in accordance with the requirements of
sections 251(c)(3) and 252(d)(1)."  In the Local Competition Order, the Commission required
incumbent LECs to provide requesting telecommunications carriers with access to both dedicated
and "shared" interoffice transmission facilities as an unbundled network element pursuant to
section 251(c)(3).
      299.  There was significant controversy in this proceeding concerning whether
Ameritech's shared transport offerings satisfy the requirements of section 251(c)(3) and our
implementing regulations, as mandated by sections 271(c)(2)(B)(ii) and (v) of the Act.  In light
of our conclusions in this Order that Ameritech has failed to satisfy other checklist requirements
of section 271(c)(2)(B), we need not reach this issue.  As discussed below, we believe, however,
that Ameritech is not in compliance with the requirements that were established in the Local
Competition Order.
      300.  Since the release of the Local Competition Order, moreover, the Commission has,
on reconsideration, clarified the incumbent LECs' obligation to provide shared transport pursuant
to section 251(c)(3) of the Act. Although the Local Competition Order clearly required
incumbent LECs to provide shared transport between incumbent LEC end offices and the tandem
switch, the order was not clear on all other portions of the network to which the shared transport
obligation applied. As discussed below, the Commission, on reconsideration in the Local
Competition Third Reconsideration Order, concluded that incumbent LECs are required to
provide "shared transport among all end offices or tandem switches in the incumbent LEC's
network (i.e., between end offices, between tandems, and between tandems and end offices)."
We also concluded that "a requesting carrier may use the shared transport unbundled element to
provide exchange access service to customers for whom the carrier provides local exchange
service." In this Order, we are not evaluating Ameritech's application against the requirements
the Commission established in the Local Competition Third Reconsideration Order. We note,
however, that all BOCs, including Ameritech, are now on notice as to the clarified shared
transport obligations and are required to comply with the revised rules prior to filing any future
applications for interLATA entry pursuant to section 271 of the Act.
                    b.   Background
      301.  Section 251(c)(3) of the Act requires incumbent LECs to "provide, to any
requesting telecommunications carrier . . . nondiscriminatory access to network elements on an
unbundled basis."  In the Local Competition Order, the Commission identified seven network
elements that incumbent LECs were required to provide to requesting carriers on an unbundled
basis.  These network elements included unbundled local switching and interoffice transmission
facilities.  In Iowa Utilities Board v. FCC, the United States Court of Appeals for the Eighth
Circuit, while vacating certain provisions of the Local Competition Order, affirmed the
Commission's authority to identify network elements to which incumbent LECs must provide
access on an unbundled basis.
      302.In the Local Competition Order, the Commission defined "interoffice
transmission facilities" as:
     incumbent LEC transmission facilities dedicated to a particular customer or
     carrier, or shared by more than one 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.
The Commission stated that, "[f]or some elements, especially the loop, the requesting carrier will
purchase exclusive access to the element for a specific period," and for "other elements,
especially shared facilities such as common transport, carriers are essentially purchasing access
to a functionality of the incumbent's facilities on a minute-by-minute basis."  The Commission
found that "the embedded features and functions within a network element are part of the
characteristics of that element and may not be removed from it.  Accordingly, incumbent LECs
must provide network elements along with all of their features and functions, so that new entrants
may offer services that compete with those offered by incumbents as well as new services."
      303.  Ameritech contends that the Act defines "network element" as "a facility or
equipment" used to provide a telecommunications service.  Ameritech states that a network
element also includes features, functions, and capabilities that are provided by "such facility or
equipment."  Ameritech claims, however, that, in order to obtain a feature, function, or
capability of a network element, the requesting carrier must first designate a discrete facility or
piece of equipment, in advance.
      304.  Several competitive carriers and the Department of Justice dispute Ameritech's
assertion that unbundled network elements are limited to a discrete facility or piece of
equipment.  These competitive carriers further contend that Ameritech is not offering shared
transport as required by the Commission's rules.  These carriers argue that Ameritech's view of
shared transport is transport shared among competitive carriers only, not transport shared with
Ameritech.  These commenters further assert that Ameritech's view of shared transport violates
the requirements of our Local Competition Order.  CompTel, for example, contends that the
Commission's rules require incumbent LECs to provide shared interoffice transmission facilities
on an unbundled basis to requesting carriers.  CompTel claims that this includes the right to share
the transport facilities that Ameritech uses to provide service to its own subscribers.
      305.  In the Local Competition Order, we concluded that the requirement that
incumbent LECs provide access to shared transport on an unbundled basis encompassed the
sharing of facilities between the incumbent LEC and requesting carriers, and not just, as
Ameritech asserts, sharing among requesting carriers.  The Local Competition Order thus
requires incumbent LECs to offer requesting carriers access, on a shared basis, to the same
interoffice transport facilities that the incumbent LEC uses for its own traffic, between the
incumbents' end offices and tandems.
      306.  In the Local Competition Third Reconsideration Order, we affirmed that the our
initial Local Competition Order requires incumbent LECs to provide requesting carriers with
access to the same transport facilities, between the end office switch and the tandem switch, that
incumbent LECs use to carry their own traffic.  We further affirmed that, when a requesting
carrier obtains local switching as an unbundled network element, it is entitled to gain access to
all of the features and functions of the switch, including the routing table resident in the
incumbent LEC's switch.  In that order, we also reconsidered the requirement that incumbent
LECs only provide "shared transport" between the end office and tandem.  On reconsideration,
we concluded that incumbent LECs should be required to provide requesting carriers with access
to shared transport for all transmission facilities connecting incumbent LECs' switches -- that is,
between end office switches, between an end office switch and a tandem switch, and between
tandem switches.  We further reaffirmed our conclusion in the Local Competition Order that
incumbent LECs must permit requesting carriers that purchase unbundled shared transport and
unbundled switching to use the same routing table that is resident in the incumbent LEC's switch.
We further concluded that the incumbent LEC must provide access not only to the routing table
in the switch but also to the transport links that the incumbent LEC uses to route and carry its
own traffic.  By requiring incumbent LECs to provide requesting carriers with access to the
incumbent LEC's routing table and to all its interoffice transmission facilities on an unbundled
basis, we ensure that requesting carriers can route calls in the same manner that an incumbent
routes its own calls and thus take advantage of the incumbent LEC's economies of scale, scope,
and density.  Finally, we required that incumbent LECs permit requesting carriers to use shared
transport as an unbundled element to carry originating access traffic from, and terminating access
traffic to, customers to whom the requesting carrier is also providing local exchange service.
               c.   Ameritech's Transport Offerings
      307.Ameritech contends that it offers both shared and dedicated transport as a network
element.  It states that it offers dedicated transport at a flat monthly rate, and that it offers three
"pricing options" that satisfy its obligation to provide "shared transport."  First, Ameritech offers
"a flat-rate circuit capacity charge based on the pro-rata capacity of the shared facility."
According to Ameritech, this option "required use of dedicated facilities at a DS1 or higher level
for direct connections to other end offices or to a tandem on either a dedicated or shared basis
with other [requesting] carriers."
      308.  Second, Ameritech states that it offers an option it calls "Shared Company
Transport" that permits requesting carriers to "obtain dedicated transport services at less than the
DS1 level."  Ameritech states that it offers Shared Company Transport with two billing
options:  a flat rate per trunk monthly charge that is 1/24th of the DS1 rate, and a usage sensitive
option, based on minutes of use.  In conjunction with Shared Company Transport, Ameritech
states that it will make available single activated trunk port increments up to a total of 23, so that
purchasers of Shared Company Transport do not have to pay for a full DS1 trunk port.
      309.Third, Ameritech states that it offers a per-minute-of-use option under its FCC
Tariff No. 2, section 6.9.1 (switched transport).  Ameritech claims that no competing carriers
have "properly" ordered unbundled local transport pursuant to their interconnection
agreements.  Rather, Ameritech asserts that it "currently is furnishing local transport to Brooks
Fiber, MFS and TCG under Ameritech's access tariff, along with other services included in that
tariff."  Ameritech further asserts that "the transport service under Ameritech's access tariff is
identical to unbundled local transport . . . ."
      310.  Finally, Ameritech contends that, contrary to the claims of some requesting
carriers, it is not required to provide what it calls "common transport" as a network element.
According to Ameritech, "common transport" is a service, not a discrete network element,
because it "is in fact undifferentiated access to transport and switching blended together."
Ameritech adds that it "stands ready to provide this service when ordered as such, but not as an
unbundled element."
                     d.Discussion
      311.Ameritech does not dispute that it is required to provide both shared and dedicated
transport in order to satisfy its obligations under the competitive checklist.  For the reasons given
below, we conclude that Ameritech's current shared transport offerings do not satisfy the
obligation of incumbent LECs to provide shared transport.  The three options that Ameritech
offers do not constitute shared transport as defined in the Local Competition Order and the Local
Competition Third Reconsideration Order.
      312.The first option, under which a requesting carrier uses, and pays for, an entire
transport facility, does not constitute shared transport, because, as Ameritech concedes, this
option does not permit requesting carriers to use the same transport facilities that Ameritech uses
to transport its own traffic.  Thus, this option does not comply with the definition of "shared"
transport set forth in the Local Competition Order and clarified in the Local Competition Third
Reconsideration Order.  The only distinction between Ameritech's first "shared" transport
option and dedicated transport is that Ameritech would act as the billing agent for multiple
requesting carriers that use a dedicated transport facility, rather than assess the entire cost of the
transport facility to a single requesting carrier.
      313.Ameritech's second option, "Shared Company Transport," appears to be almost
identical to Ameritech's first "shared" transport option and suffers from the same flaws.  The only
substantive difference that Ameritech has identified is that, under Shared Company Transport,
requesting carriers may obtain access to dedicated facilities that are divided into units smaller
than a DS1 capacity trunk.  Ameritech also states that it will provide Shared Company Transport
either on a flat-rated or a minute-of-use basis.  The method of pricing is not dispositive to
determining whether a facility is shared or dedicated, however.  The cost of a dedicated facility
may be recovered through a flat-rate charge or through a minute-of-use charge that is based on
the cost of the dedicated facility divided by the estimated average minutes the facility will be
used.  Whether the cost of a dedicated transport facility is recovered on a flat-rated or minute-
of-use basis does not therefore change the fact that the facility is dedicated to the use of a
particular customer or carrier.  In fact, Ameritech itself describes Shared Company Transport as
access to "dedicated transport services at less than the DS1 level."  As we explained above,
however, shared transport facilities are transport facilities that are shared among the incumbent
LEC and requesting carriers.  We thus conclude that Ameritech's Shared Company Transport
option constitutes dedicated transport, and fails to meet Ameritech's obligation to provide
unbundled shared transport for the same reasons as Ameritech's first option.
      314.Ameritech suggests, but does not affirmatively contend, that requesting carriers
that purchase Shared Company Transport use the same transport facilities that Ameritech uses to
transport its own traffic.  Ameritech does not assert, however, that, under this option,
requesting carriers can use the same DS-0 level transmission paths as Ameritech or the same
trunk ports as Ameritech.  In fact, as we previously noted, Ameritech concedes that under this
option, requesting carriers would obtain "dedicated transport services."  Accordingly, we
reiterate our finding that Ameritech's Shared Company Transport does not fall within the
definition of shared transport, as required by our Local Competition Order and the Local
Competition Third Reconsideration Order.
      315.As a third option, Ameritech contends that its tariffed "switched transport" access
service also satisfies its obligation to provide shared transport.  Ameritech further asserts that it
currently provides what it refers to as "common transport" in the form of tariffed wholesale and
access usage services.  Ameritech argues at length, however, that it is not required to provide
such services under section 251(c)(3).  Ameritech nevertheless asserts that, if required to
provide its access service (in the form of "common transport") as a network element, it "is both
committed and operationally ready to do whatever the law requires."
      316.We find that Ameritech's tariffed "switched transport" access service does not
satisfy its obligation to provide shared transport as an unbundled network element in accordance
with the competitive checklist.  Ameritech concedes that it does not currently offer its access
service as a network element, but rather as a service.  We find that Ameritech's obligation to
provide access to shared transport as a network element is independent of, and in addition to, any
service it may offer.  Therefore, until Ameritech demonstrates that it offers its access service in
accordance with sections 251(c)(3) and 252(d)(1), it cannot rely on that service to demonstrate
compliance with subsections (ii) and (v) of the competitive checklist.
      317.Even assuming that Ameritech were offering its "switched transport" access
service as a network element, we find that Ameritech has not demonstrated that this service
complies with the competitive checklist.  In particular, Ameritech has presented no evidence that
its "switched transport" access service satisfies the requirement, set forth in section 252(d)(1) (as
required by subsection (ii) of the competitive checklist) that the rates for unbundled network
elements be "based on the cost . . .  of providing the . . .  network element."  Moreover,
because Ameritech offers "switched transport" as a service, rather than a network element, it does
not permit requesting carriers that use "switched transport" to collect access charges for exchange
access service provided over the transport facilities.  In the Local Competition Order, however,
we concluded that requesting carriers that provide exchange access service over network
elements are entitled to collect access charges associated with those network elements.
Contrary to Ameritech's contention, we find that this is relevant to determining whether
Ameritech satisfies the competitive checklist, and in particular, subsection (ii) of the checklist.
Section 251(c)(3), and by implication, subsection (ii) of the checklist, require incumbent LECs to
provide access to network elements "in a manner that allows requesting carriers to combine such
elements in order to provide" a telecommunications service.  Ameritech's refusal to permit
requesting carriers that purchase its "switched transport" service to provide exchange access
service (and collect access charges) as well as local exchange service over its transport facilities
violates the requirement that incumbent LECs provide access to unbundled network elements in
a manner that allows requesting carriers to combine such elements in order to provide
telecommunications services, including exchange access service.
      318.As set forth in its application, none of the options discussed in Ameritech's
application permits requesting carriers to obtain nondiscriminatory access to shared transport,
that is, access to the same interoffice transport facilities that Ameritech uses to transport traffic
between end offices and tandem switches.  After examining all of Ameritech's offerings, we find
that none of Ameritech's current shared transport offerings meets subsections (ii) and (v) of the
competitive checklist.
3.   Local Switching Unbundled from Transport, Local Loop Transmission, or Other
     Services
      a.Introduction
      319.Section 271(c)(2)(B)(vi) of the Act, item (vi) of the competitive checklist,
requires a section 271 applicant to provide "[l]ocal switching unbundled from transport, local
loop transmission, or other services."  In addition, section 271(c)(2)(B)(ii) of the Act, item (ii)
of the competitive checklist, requires section 271 applicants to provide "[n]ondiscriminatory
access to network elements in accordance with the requirements of sections 251(c)(3) and
252(d)(1)."  Section 251(c)(3) establishes an incumbent LEC's "duty to provide, to any
requesting telecommunications carrier for the provision of a telecommunications service,
nondiscriminatory access to network elements on an unbundled basis at any technically feasible
point on rates, terms, and conditions that are just, reasonable, and nondiscriminatory in
accordance with the terms and conditions of the agreement and the requirements of [section 251]
. . . and section 252."  That section further provides that an incumbent LEC "shall provide such
unbundled elements in a manner that allows requesting carriers to combine such elements in
order to provide such telecommunications service."  Because we concluded in our Local
Competition Order that "incumbent LECs must provide local switching as an unbundled network
element," to fully implement items (ii) and (vi) of the competitive checklist, an incumbent
LEC must provide nondiscriminatory access to unbundled local switching.
      320.In our Local Competition Order, we defined unbundled local switching to include
"line-side and trunk-side facilities plus the features, functions, and capabilities of the switch."
We explained that the features, functions, and capabilities of a "local switch include the basic
switching function of connecting lines to lines, lines to trunks, trunks to lines, trunks to trunks."
Moreover, we stated that "[i]t also includes the same basic capabilities that are available to the
incumbent LEC's customers, such as a telephone number, directory listing, dial tone, signaling,
and access to 911, operator services, and directory assistance."  We concluded that "the local
switching element includes all vertical features that the switch is capable of providing, including
custom calling, CLASS features, and Centrex, as well as any technically feasible customized
routing functions."  As we explained, "when a requesting carrier purchases the unbundled local
switching element, it obtains all switching features in a single element on a per-line basis."
We clarified, in our Local Competition First Reconsideration Order, that "a carrier that
purchases the unbundled local switching element to serve an end user effectively obtains the
exclusive right to provide all features, functions, and capabilities of the switch, including
switching for exchange access and local exchange service, for that end user."  As stated above,
in Iowa Utilities Board v. FCC, the court generally upheld the Commission's decision regarding
incumbent LECs' obligations to provide access to network elements on an unbundled basis.
      321.Although we do not reject Ameritech's application based upon Ameritech's
unbundled local switching offering, we are concerned that Ameritech has not provided this
unbundled network element in a manner consistent with its obligations under sections 251 and
271 of the Act, the Commission's regulations, and our Local Competition Third Reconsideration
Order on shared transport.  As explained above and discussed in our recent order on shared
transport, the Commission has concluded that shared transport is a network element and has
rejected Ameritech's arguments to the contrary.  Ameritech has publicly committed to provide
unbundled local switching in a manner consistent with the Act and the Commission's
requirements.  Accordingly, we expect that Ameritech will take the appropriate steps to
provide unbundled local switching in accordance with our requirements and the terms of the Act,
prior to refiling its application.  We expect that the Michigan Commission and the Department of
Justice will examine this issue very carefully in their consideration of Ameritech's next
application for Michigan.
      b.Discussion
      322.In its application, Ameritech acknowledges that it does not currently furnish
unbundled local switching to any of its local exchange competitors.  Ameritech asserts that,
although no competitor has chosen to order unbundled local switching, it makes this checklist
item available through its interconnection agreements and would provide it upon request.  The
Michigan Commission agreed with these assertions and found Ameritech's unbundled local
switching offering in compliance with the checklist requirements.  Several potential
competitors, including MCI, AT&T, and LCI, assert that they have sought unbundled switching,
in connection with other elements, when requesting interconnection agreements.  They contend
that Ameritech is not "providing" unbundled local switching for a variety of reasons, including
Ameritech's refusal to allow competing LECs purchasing unbundled switching to collect access
charges in some circumstances, to purchase trunk ports on a shared basis, or to access routing
tables resident in the local switch.  The Department of Justice concluded that Ameritech has
not provided unbundled local switching as a legal or a practical matter to competing LECs in
Michigan.  Moreover, the Department of Justice found that Ameritech has not yet
demonstrated its practical ability to provide unbundled local switching in the manner required by
the checklist.
      323.The Department of Justice rejected Ameritech's legal position regarding what
constitutes unbundled local switching largely because Ameritech does not allow competing
carriers that purchase local switching to collect access charges from interexchange carriers if the
competing carriers' calls are transported from an interexchange carrier's point of presence to the
unbundled switch over trunks that also carry Ameritech's customers' calls.  Ameritech sets
forth the conditions under which it would permit purchasers of unbundled local switching to
collect access charges in affidavits accompanying its Brief.  Ameritech explains that
competitors that purchase what it describes as its "Network Platform-UNE" offering may collect
both originating and terminating access charges.  This network configuration includes unbundled
local switching in combination with unbundled interoffice transport facilities that are dedicated
or "shared" with other competing LECs on a per-minute of use or per DS-O basis.  In contrast,
Ameritech explains that competitors purchasing its "Network Combination-Common Transport
Service," which Ameritech describes as "unbundled switching-line ports in conjunction with
wholesale usage services," would not be entitled to collect access charges for exchange access
traffic.
      324.Thus, Ameritech appears to take the position that unless a competing LEC that
purchases the local switching element also purchases a dedicated trunk terminating on a
dedicated trunk port -- i.e., purchases both a line port and a dedicated trunk port on the local
switch -- Ameritech is entitled to collect both originating and terminating access.  Pursuant to
Ameritech's approach, a competing LEC can only collect terminating access if it purchases
dedicated transmission facilities or transmission facilities shared only with other competing
LECs.  This view reflects Ameritech's position that shared transport is a service, not a network
element, and that, when a competing LEC purchases the shared transport service, it must
likewise purchase exchange access service.
      325.AT&T contends that Ameritech's position improperly ties the right of a purchaser
of local switching to charge for access services to its purchase of a dedicated trunk port and
dedicated transmission facilities.  Moreover, the interexchange carriers and competing LECs
participating in this proceeding generally contend that Ameritech's position denies purchasers of
local switching the right to use the entire switching capability provided by the LEC's switch, as
the Commission intended.
      326.We conclude that Ameritech's position on unbundled local switching is contrary
to section 251(c)(3) of the Act and the Commission's rules.  Ameritech's definition of local
switching as an unbundled network element is inconsistent with the Commission's, because
Ameritech does not define unbundled local switching to include access to the "line-side and
trunk-side facilities plus the features, functions, and capabilities of the switch."  In particular,
Ameritech improperly limits the ability of competitors to use local switching to provide
exchange access.  The Commission has established "that where new entrants purchase access
to unbundled network elements to provide exchange access services, whether or not they are also
offering toll services through such elements, the new entrants may assess exchange access
charges to IXCs [interexchange carriers] originating or terminating toll calls on those
elements."  Moreover, the Commission has stated that, "[i]n these circumstances, incumbent
LECs may not assess exchange access charges to such IXCs because the new entrants, rather
than the incumbents, will be providing exchange access services, and to allow otherwise would
permit incumbent LECs to receive compensation in excess of network costs in violation of the
pricing standard in section 252(d)."  The Commission's rules make clear that competing LECs
may use unbundled network elements to provide exchange access service, as well as local
exchange service.
      327.Ameritech's position on unbundled local switching likewise denies competitors
access to the trunk-side facilities of the switch.  As AT&T contends, Ameritech's position
denies competing LECs access to the trunk port facilities that are part of the unbundled switch.
We held in the Local Competition Order that some network elements, such as loops, are
provided exclusively to one requesting carrier, and some network elements, like shared transport,
are provided on a minute-of-use basis and are shared with other carriers.  In our Local
Competition Order, we required incumbent LECs "to provide unbundled access to shared
transmission facilities between end offices and the tandem."  In addition, as we clarified in our
recent order on shared transport, incumbent LECs must provide unbundled access to shared
transmission facilities between two end office switches and between two tandem switches.
Given that an incumbent LEC must make such transport facilities available on a shared basis, the
trunk ports to which such trunks are attached must likewise be made available on a shared basis.
Therefore, Ameritech may not, consistent with the Commission's requirements, require a
purchaser of unbundled switching to purchase a dedicated trunk port.
      328.We note that several parties indicate that Ameritech's unbundled local switching
offering does not grant purchasers the ability to employ the existing routing instructions resident
in Ameritech's end office switches.  Both end office and tandem switches contain routing
tables, which provide information about how to route each call.  The routing instructions notify
the switch as to which trunks are to be used in transporting a call.  Since we defined unbundled
local switching in our Local Competition Order to include the "features, functions, and
capabilities of the switch," purchasers of unbundled local switching are entitled to obtain
access to the same routing table that the incumbent LEC uses to route its own traffic over its
switched network.  As we explain in our order on shared transport, routing is a critical and
inseverable function of the local switch.  Accordingly, Ameritech must grant requesting
telecommunications providers that purchase local switching access to its routing tables.
      329.We emphasize that Ameritech must establish by a preponderance of the evidence
that it provides the entire switching capability on nondiscriminatory terms in order to comply
with the competitive checklist.  As part of this obligation, Ameritech must permit competing
carriers to provide exchange access, to purchase trunk ports on a shared basis, and to access the
 routing tables resident in its switches.
      330.Other issues.  The parties raise other factual and legal issues on the record
regarding Ameritech's provision of unbundled local switching.  For instance, MCI has expressed
concerns regarding Ameritech's technical ability to provide unbundled local switching in a
manner consistent with its entry strategy.  We anticipate that many such issues will be resolved
as Ameritech conforms its provision of unbundled local switching to the Commission's
requirements.  We also expect that the Michigan Commission and the Department of Justice will
provide clear and specific records on these issues, to the extent that they arise in Michigan's next
application.  We are particularly concerned, however, about the dispute in the record regarding
Ameritech's technical ability and obligation to provide usage information to competing LECs
purchasing unbundled local switching with shared transport in a manner that permits competing
LECs to collect access revenues.  We note that Ameritech asserts that it is not now technically
feasible for Ameritech's local switches to provide precise usage data or originating carrier
identity for terminating local usage or to identify terminating access usage with the called
number.  AT&T asserts that Ameritech could develop appropriate software to generate such
data.  Ameritech proposes an interim approach for estimating terminating usage, pursuant to
which it has said it will continue to bill interexchange carriers for terminating usage based upon a
mutually agreed-upon factor that would establish a ratio of originating to terminating access
minutes of use.  Moreover, Ameritech proposes to begin developing a long-term solution for
providing such data when the Commission enters a reconsideration order on shared transport.
Ameritech states that it will implement a long-term solution only after it has exhausted its
judicial remedies.  If these issues arise in future applications, as we expect they will, we will
look at them very closely.
      331.We are likewise concerned by AT&T's allegation that Ameritech has restricted its
competitors' ability to access the vertical features of the switch by constructing a burdensome
"Switch Feature Request" process.  While we do not determine the merits at this time, we
would examine carefully any such allegations in any future Ameritech application.  In
addition, we would consider the interexchange carriers' allegation that Ameritech has refused to
provide the customized routing capability of the unbundled switch element, as required by the
Local Competition Order, should this complaint persist.
     4.   Combinations of Unbundled Network Elements
      332.In the 1996 Act, Congress sought to hasten the development of competition in
local telecommunications markets by including provisions to ensure that new entrants would be
able to choose among three entry strategies -- construction of new facilities, the use of unbundled
elements of an incumbent's network, and resale.  Congress included the second entry strategy
because it recognized that many new entrants will not have constructed local networks when they
enter the market.  As a result, the ability of new entrants to use  unbundled network elements,
as well as combinations of unbundled network elements, is integral to achieving Congress'
objective of promoting competition in the local telecommunications market.
      333.To achieve its objective of ensuring that new entrants would have access to
unbundled network elements, as well as combinations of such elements, Congress adopted
section 251(c)(3).  This provision establishes an incumbent LEC's "duty to provide, to any
requesting telecommunications carrier for the provision of a telecommunications service,
nondiscriminatory access to network elements on an unbundled basis at any technically feasible
point on rates, terms, and conditions that are just, reasonable, and nondiscriminatory in
accordance with the terms and conditions of the agreement and the requirements of [section 251]
. . . and section 252."   That section further provides that an incumbent LEC "shall provide
such unbundled elements in a manner that allows requesting carriers to combine such elements in
order to provide such telecommunications service."  We concluded in the Local Competition
Order that section 251(c)(3) does not require a new entrant to construct local exchange facilities
before it can use unbundled network elements to provide a telecommunications service.  We
determined that such limitations on access to combinations of unbundled network elements
would seriously inhibit the ability of potential competitors to enter local telecommunications
markets through the use of unbundled elements, and would therefore significantly impede the
development of local exchange competition.  We further determined that incumbent LECs may
not separate network elements that the incumbent LEC currently combines.  The Eighth
Circuit recently upheld these determinations.
      334.Congress required the Commission to verify that a section 271 applicant is
meeting its obligation to provide nondiscriminatory access to unbundled network elements, as
well as combinations of networks elements, prior to granting in-region interLATA authorization
to the applicant.  Section 272(c)(2)(B)(ii) of the Act, item (ii) of the competitive checklist,
requires the Commission to ensure that a section 271 applicant is meeting its obligation to
provide to provide "[n]ondiscriminatory access to network elements in accordance with the
requirements of sections 251(c)(3) and 252(d)(1)."
      335.Ameritech claims that it meets checklist item (ii), because it is providing "all of
the individual network elements that the Commission requires to be unbundled, as well as
combinations of elements."  Numerous parties vigorously dispute Ameritech's claim that it
meets checklist item (ii).  These parties argue that Ameritech's refusal to provide unbundled local
transport and unbundled local switching in accordance with the Act and the Commission's
regulations seriously impairs the ability of new entrants to enter the local telecommunications
markets in Michigan through the use of combinations of unbundled network elements.  These
parties further contend that Ameritech has not deployed adequate OSS functions for the ordering,
provisioning, and billing of combinations of unbundled network elements.
      336.As discussed elsewhere in this Order, we determine that Ameritech has failed to
provide access to OSS functions in accordance with the Act and the Commission's regulations.
In addition, although we do not reject Ameritech's application based on Ameritech's provision of
access to unbundled local switching and unbundled local transport, we discuss above our
concerns about Ameritech's provision of these unbundled network elements.  We anticipate
that many of these disputes concerning the ability of competing carriers to enter the local
telecommunications markets through the use of combinations of unbundled network elements
will be resolved as Ameritech conforms its provision of these elements to the Act's and the
Commission's requirements.  We emphasize that, under our rules, when a competing carrier
seeks to purchase a combination of network elements, an incumbent LEC may not separate
network elements that the incumbent LEC currently combines.
      337.We note also that Ameritech is currently involved in a series of carrier-to-carrier
tests of its OSS functions for the ordering, provisioning, and billing of combinations of
unbundled network elements.  We expect that, in future applications, Ameritech will present
the results of these tests and demonstrate that new entrants are able to combine network elements
to provide telecommunications services, as required by the Act and the Commission's
regulations.  Because the use of unbundled network elements, as well as the use of combinations
of unbundled network elements, is an important entry strategy into the local telecommunications
market, we will examine carefully these issues in any future section 271 applications.
     5.   Number Portability
      338.Section 271(c)(2)(B)(xi), item (xi) of the competitive checklist, states that "[u]ntil
the date by which the Commission issues regulations pursuant to section 251 to require number
portability," a section 271 applicant must provide "interim telecommunications number
portability through remote call forwarding, direct inward dialing trunks, or other comparable
arrangements, with as little impairment of functioning, quality, reliability, and convenience as
possible."  Section 271(c)(2)(B)(xi) further provides that, after the Commission issues such
regulations, a section 271 applicant must be in "full compliance with such regulations."  The
Commission adopted regulations implementing the number portability requirements in section
251 on June 27, 1996.  The rules for interim number portability adopted in the Number
Portability Order provide, in relevant part:
     All LECs shall provide transitional measures, which may consist of Remote Call
     Forwarding (RCF), Flexible Direct Inward Dialing (DID), or any other
     comparable and technically feasible method, as soon as reasonably possible upon
     receipt of a specific request from another telecommunications carrier, until such
     time as the LEC implements a long-term database method for number portability
     in that area.
      339.Ameritech claims that it meets the requirements of checklist item (xi) because it is
providing interim number portability to competing carriers primarily via Remote Call
Forwarding and Direct Inward Dialing and "plans to begin implementation of long-term number
portability in Michigan in the fourth quarter of 1997."  The Michigan Commission states that
"[i]nterim number portability (INP) continues to be available via remote call forwarding and
direct inward dialing . . . .  As of April 30, 1997, Ameritech represents over 24,000 numbers have
been ported in Michigan."   The Michigan Commission further notes that "[i]mplementation of
true or long-term number portability in Michigan is to take place when implementation in Illinois
takes place."  Based on the foregoing, the Michigan Commission concludes that "[i]t appears
Ameritech complies with check list item (xi)."  The Department of Justice did not evaluate
Ameritech's showing on this checklist item.
      340.AT&T, Brooks Fiber, and Sprint raise a number of factual and legal issues on the
record regarding Ameritech's provision of number portability.  Specifically, these parties contend
that Ameritech fails to comply with its obligation to provide number portability by:  (1) not
offering Route Index - Portability Hub as an interim number portability method; (2) delaying
for more than a year the provision of Direct Inward Dialing with signalling using Signalling
System 7 (SS7) protocol; and (3) using interim rates for number portability, pending the
Michigan Commission's decision on the appropriate cost recovery for number portability.
      341.In light of our conclusion that Ameritech does not satisfy other elements of the
competitive checklist, we do not reach the merits of these allegations at this time.  Nevertheless,
we will examine carefully such disputes among the parties if they arise in any future section 271
application.  As we recognized in the Number Portability Order, "number portability is essential
to meaningful competition in the provision of local exchange services."  As a result, we will
take very seriously any allegation that a BOC is failing to meet its current obligation to provide
number portability through transitional measures pending deployment of a long-term number
portability method.
      342.Sprint also argues that Ameritech has failed to demonstrate that it will be able to
implement long-term number portability.  Because number portability is critical to the
development of meaningful competition, we must be confident that the BOC will meet its
obligations to deploy long-term number portability consistent with the Commission's deployment
schedule, as modified in the Commission's Number Portability First Reconsideration Order.
When reviewing a section 271 application, we will examine carefully the status of the BOC's
implementation of a long-term number portability method.  It is not sufficient for an applicant to
assert summarily in its application that it plans to deploy long-term number portability, without
providing adequate documentation that it has undertaken reasonable and timely steps to meet its
obligations in this area.  We would expect to review a detailed implementation plan addressing,
at minimum, the BOC's schedule for intra- and inter-company testing of a long-term number
portability method, the current status of the switch request process, an identification of the
particular switches for which the BOC is obligated to deploy number portability, the status of
deployment in requested switches, and the schedule under which the BOC plans to provide
commercial roll-out of a long-term number portability method in specified central offices in the
relevant state.  We also would expect to review evidence demonstrating that the BOC will
provide nondiscriminatory access to OSS to support the provision of number portability.
      343.  Finally, we note that, although our rules do not require a LEC to provide wide-
scale commercial deployment of long-term number portability prior to the deadline for the
relevant phase in our deployment schedule, any carrier that chooses to deploy long-term number
portability on a flash-cut basis at a time close to the deadline for a particular phase will not be in
a position to request an extension of the deadline if unforeseen problems arise upon commercial
deployment.  Our rules specify that "[i]n the event a carrier . . . is unable to meet the
Commission's deadlines for implementing a long-term number portability method, it may file
with the Commission at least 60 days in advance of the deadline a petition to extend the time by
which implementation in its network will be completed."  Any BOC that is unable to meet its
long-term number portability implementation obligations, and has failed to file in a timely
fashion a request for an extension of the deadline, would not be deemed in compliance with item
(xi) of the competitive checklist.
VII. COMPLIANCE WITH SECTION 272 REQUIREMENTS
     A.   Introduction
      344.In light of our conclusion that Ameritech has not fully implemented the
competitive checklist, as required by section 271(d)(3)(A), we need not address whether
Ameritech has satisfied the other requirements of section 271(d)(3).  Nevertheless, because
section 271(d)(3)(B) sets forth a separate determination that we must make to approve an
application, we believe it is appropriate to decide whether Ameritech has complied with the
requirements of this provision.  Section 271(d)(3)(B) provides that the Commission shall not
approve a BOC's application for authorization to provide interLATA services unless the BOC
demonstrates that "the requested authorization will be carried out in accordance with the
requirements of section 272."  Section 272 requires a BOC to provide certain interLATA
telecommunications services through a separate affiliate, and establishes structural and
nondiscrimination safeguards that are designed to prevent anticompetitive discrimination and
cost-shifting.
      345.As we observed in the Non-Accounting Safeguards Order, "BOC entry into in-
region interLATA services raises issues for competition and consumers, even after a BOC has
satisfied the requirements of section 271(d)(3)."  We further noted that:
     a BOC may have an incentive to discriminate in providing exchange access
     services and facilities that its affiliate's rivals need to compete in the interLATA
     telecommunications services and information services markets.  For example, a
     BOC may have an incentive to degrade services and facilities furnished to its
     affiliate's rivals, in order to deprive those rivals of efficiencies that its affiliate
     enjoys.  Moreover, to the extent carriers offer both local and interLATA services
     as a bundled offering, a BOC that discriminates against the rivals of its affiliates
     could entrench its position in local markets by making these rivals' offerings less
     attractive.
      346.For these reasons, Congress required us to find that a section 271 applicant has
demonstrated that it will carry out the requested authorization in accordance with the
requirements of section 272.  We view this requirement to be of crucial importance, because
the structural and nondiscrimination safeguards of section 272 seek to ensure that competitors of
the BOCs will have nondiscriminatory access to essential inputs on terms that do not favor the
BOC's affiliate.  These safeguards further discourage, and facilitate detection of, improper cost
allocation and cross-subsidization between the BOC and its section 272 affiliate.  These
safeguards, therefore, are designed to promote competition in all telecommunications markets,
thereby fulfilling Congress' fundamental objective in the 1996 Act.
      347.Section 271(d)(3)(B) requires the Commission to make a finding that the BOC
applicant will comply with section 272, in essence a predictive judgment regarding the future
behavior of the BOC.  In making this determination, we will look to past and present behavior of
the BOC applicant as the best indicator of whether it will carry out the requested authorization in
compliance with the requirements of section 272.  Moreover, section 271 gives the Commission
the specific authority to enforce the requirements of section 272 after in-region interLATA
authorization is granted.
      348.For the reasons set forth below, we conclude that, based on its current and past
behavior, Ameritech has failed to demonstrate that it will carry out the requested authorization in
accordance with the requirements of section 272.  In addition, we indicate areas of concern that
we may examine more closely when Ameritech files another application pursuant to section 271
in the future.  To the extent this Order does not expressly address every section 272-related issue
raised in the context of this application, we make no findings with respect to those issues.
      B.Compliance with Section 272(b)(3) Requirements
      1.Introduction
      349.Section 272(b)(3) requires that ACI (Ameritech's in-region interLATA affiliate)
and Ameritech Michigan (the local exchange company) "have separate officers, directors, and
employees . . . ."  Ameritech claims that it satisfies this obligation, stating that ACI and
Ameritech Michigan (as well as all other Ameritech Bell operating companies) each "has no
board of directors" and, as a result, ACI complies with the separate director requirement.
Ameritech's affiant Patrick J. Earley states that "[n]either ACI nor any of the AOCs currently has
a Board of Directors," and therefore "no director of ACI is also a director of an AOC."
      350.Several parties argue that Ameritech's application is deficient because Ameritech
Michigan and ACI do not have separate boards of directors.  These parties argue that because
Ameritech Corporation apparently manages both Ameritech Michigan and ACI, ACI lacks the
kind of independent decision-makers Congress demanded.  In particular, Sprint argues that ACI
is ultimately managed by the same board of directors that controls Ameritech Michigan.
Sprint points out that, pursuant to ACI's certificate of incorporation, Ameritech Corporation,
ACI's sole shareholder, controls the business of ACI, and that Ameritech Corporation "'may
exercise all such powers of the corporation and do all such lawful acts and things as the
corporation [ACI] might do.'"  Disputing Ameritech's argument that the absence of any
directors for ACI and Ameritech is sufficient to be in compliance with section 272(b)(3), KMC
Telecommunications argues that, absent Ameritech's explanation of the management structure it
employs in lieu of a board of directors, the Commission must assume that both subsidiaries
operate by direct stockholder management, and therefore Ameritech Michigan's and ACI's
shareholder, Ameritech Corporation, manages both those companies.
      351.These parties argue that the separate board requirement of section 272(b)(3)
represents Congress' determination that separation is necessary to ensure that the interLATA
subsidiary is run independently of the BOC.  KMC and MFS WorldCom also state that
Congress deliberately decided not to allow the Commission to waive this requirement.  Sprint
argues that independence is critical because directors owe an unyielding fiduciary duty to the
corporation, have a duty to monitor the corporation in order to ensure that it is run according to
the law, and have a duty to make decisions on behalf of that company.  TCG expresses concern
that ACI has shared employees and officers with other Ameritech affiliates.  TCG also asserts
that the reporting relationships between ACI, Ameritech Michigan and Ameritech Corporation
are interdependent, because the Presidents of Ameritech and ACI report to the same Ameritech
Corporation Vice President and that Ameritech Vice President-Regulatory reports to the same
Ameritech Corporation Vice President as the ACI Regulatory Director.
      352.Ameritech responds to these arguments by stating that Ameritech Michigan and
ACI "are not required" to have separate directors under section 272(b)(3) or the Commission's
rules implementing that provision, and therefore the fact that these entities both have no directors
indicates compliance with this provision.  Ameritech also states that the requirement of
separate directors is "to guard against improper commingling between a BOC and its long
distance affiliate, not to impose an affirmative obligation for each to form its own board of
directors."  Ameritech also responds to TCG's contentions regarding ACI and Ameritech
Michigan's reporting relationships.  Ameritech states that although Ameritech Michigan's Vice
President-Regulatory used to report to the same Ameritech Corporation Vice President as ACI's
Regulatory Director, that is no longer the case.  Instead, the Ameritech Michigan Vice President-
Regulatory reports to the President of Ameritech Michigan and to a Senior Vice President of
Ameritech Corporation.  According to Ameritech, the position of Regulatory Director at ACI has
been eliminated, and those responsibilities have been transferred to the ACI General Counsel,
who reports to the President of ACI and Ameritech Corporation's General Counsel.  Ameritech
acknowledges, however, that the President of Ameritech Michigan and the President of ACI
report to the same Executive Vice President of Ameritech Corporation.
      2.Discussion
      353.We conclude that Ameritech's corporate structure is not in compliance with the
section 272(b)(3) requirement that its interLATA affiliate (ACI) maintain "separate" directors
from the operating company (Ameritech Michigan).  In particular, we find that under Delaware
and Michigan corporate law, Ameritech Corporation has the duties, responsibilities, and
liabilities of a director for both ACI and Ameritech Michigan.  As a result, ACI lacks the
independent management that Congress clearly intended in enacting the separate director
requirement.
      354.As Ameritech describes in its application, ACI is a Delaware close corporation,
originally incorporated in 1994 as "Ameritech Global Link, Inc." (changed in 1995 to
"Ameritech Communications, Inc.", or "ACI").  Ameritech states that the stock of ACI is 100
percent owned by Ameritech Corporation.  Ameritech Michigan is a Michigan close
corporation, originally incorporated in 1904 as the "Michigan State Telephone Company."
Ameritech Corporation owns 100 percent of Ameritech Michigan's stock.  The certificates of
incorporation of both companies do not provide for boards of directors.
      355.Ameritech argues that ACI, being a closely-held corporation, is not required by
Delaware law to have a separate board of directors.  Ameritech also argues that it is not
required by section 272(b)(3) or Commission rule to have a board of directors for ACI.  The
implication of this argument is that, because there are no formal directors for ACI, the separate
director requirement of section 272(b)(3) is not at issue.  We agree with Ameritech that section
272 and our rules do not require that ACI maintain any particular form of corporate organization.
However, the relevant state corporate law of Delaware and Michigan assign the responsibilities
and liabilities of directors to shareholders under the form of organization that Ameritech has
chosen for ACI and Ameritech Michigan.
      356.We believe that in passing section 272(b)(3), with its express reference to
corporate "directors," Congress clearly intended for the Commission to read section 272(b)(3) in
concert with relevant state law regarding corporate governance.  Therefore, to the extent that
state corporate law deems or imposes upon other entities the responsibilities of corporate
directors in the absence of a formal board, we believe that section 272(b)(3) requires that those
other entities be "separate."  Since ACI is incorporated pursuant to Delaware law and Ameritech
Michigan is incorporated pursuant to Michigan law, we must look to Delaware and Michigan
corporate law to determine whether ACI has "separate" directors from Ameritech Michigan.
      357.Ameritech correctly argues that Delaware law does not require that a "closely
held" corporation, such as ACI, maintain a separate board of directors.  Section 351 of the
Delaware General Corporate Law states that "[t]he certificate of incorporation of a close
corporation may provide that the business of the corporation shall be managed by the
stockholders of the corporation rather than by a board of directors."  Section 7 of the Articles
of Incorporation of Ameritech Global Link, Inc. (later renamed ACI) states that "the business of
the corporation shall be managed by the stockholders of the corporation rather than a board of
directors, as permitted under section 351 . . . ."
      358.In the event that a close corporation does not appoint a board of directors,
Delaware law establishes that the shareholders of close corporations adopting this management
structure are deemed directors for purposes of corporate governance and liability.  Section 351(2)
states that the stockholders of such a corporation "shall be deemed to be directors for purposes of
applying provisions of this chapter," and section 351(3) states that "[t]he stockholders of the
corporation shall be subject to all liabilities of directors."  Indeed, section 7 of the ACI
Certificate of Incorporation restates these obligations of the stockholders of ACI and designates
the stockholders of ACI as directors for purposes of Delaware law and for director liability.
Therefore, we conclude that Ameritech Corporation (the sole shareholder of ACI) is, by
operation of Delaware corporate law, the "director" of ACI.
      359.The same result holds for Ameritech Michigan.  As indicated above, Ameritech
Michigan is incorporated pursuant to Michigan corporate law, and Ameritech Corporation is the
sole shareholder of Ameritech Michigan.  Like Delaware law, Michigan law permits
corporations to elect direct management by the shareholders in lieu of appointing a board of
directors.  Michigan law also imposes upon the shareholders of such a corporation the
responsibilities and liabilities of corporate directors.  In particular, section 450.1463(3) of the
Michigan Compiled Laws states that, if the articles of incorporation do not create a board, that
action "impose[s] upon the shareholders the liability for managerial acts or omissions that is
imposed on directors by law . . . ."  Therefore, we conclude that, in effect, Ameritech
Corporation is, by operation of Michigan corporate law, the "director" of Ameritech Michigan.
Because Ameritech Corporation has the managerial obligations and liabilities of a director of
both ACI and Ameritech Michigan, ACI does not satisfy the requirement of section 272(b)(3)
that it have "separate . . . directors . . . from the Bell operating company of which it is an
affiliate."
      360.Ameritech argues that Michigan corporate law does not explicitly "deem"
Ameritech Corporation to be a director, but only "impose[s]" director responsibilities on
Ameritech Corporation.  Accordingly, Ameritech concludes that, even as a legal matter,
Ameritech Michigan and ACI do not have the same directors.  We are not persuaded by
Ameritech's argument, and we do not consider the assignment of director obligations and
liabilities of Ameritech Michigan and ACI to Ameritech Corporation to be a "purely formal
matter."  By requiring that the BOC and the interLATA affiliate have "separate" directors,
Congress required that there be some form of independent management and control of the two
entities.  As a general matter of corporate law, directors have the formal legal power to manage
the corporation.  The separation between shareholders and directors in modern corporations
reflects the separation of ownership and management that the corporate structure offers.  The
corporate law of some states such as Delaware and Michigan recognizes that, for closely-held
corporations, ownership and control need not be separated and permits shareholders to manage
and control the corporation directly.  Although Michigan law does not formally "deem" the
shareholders of such a corporation to be directors, those shareholders do have the managerial
obligations and liabilities of directors "impose[d]" on them.  Therefore, the legal and practical
effect of both the Delaware and Michigan statutes is to effectively transfer the management
duties and liabilities of directors to the shareholders of the corporation when a corporation
chooses this form of corporate governance.
      361.We recognize that corporations are ultimately responsible to their shareholders
and that, in the context of any parent-subsidiary relationship, complete independence of
management of the subsidiary will not always be possible.  However, in enacting section
272(b)(3), Congress obviously required that the BOC and the interLATA affiliate be separately
managed to at least some degree, and one of the affirmative requirements of that provision is the
separate director requirement.  Since Delaware and Michigan law impose on Ameritech
Corporation -- the sole shareholder of both ACI and Ameritech Michigan -- the responsibilities
of a "director" of both corporations, we conclude that Ameritech's application is not in
accordance with section 272(b)(3).  Simply because state law permits Ameritech to vest
traditional director duties and liabilities in the shareholders of these corporations does not relieve
Ameritech of the 272(b)(3) obligation that the entities that possess those rights and obligations of
directors to be separate entities.  In short, we find that Congress intended that its separate director
requirement not be easily nullified merely through a legal fiction.
      362.We do not find it necessary to examine in detail the various corporate reporting
relationships that TCG and Ameritech debate in their pleadings to find that Ameritech does not
comply with section 272(b)(3).  The fact, however, that the Presidents of both Ameritech
Michigan and ACI report to the same Ameritech Corporation Executive Vice President, as
Ameritech acknowledges, underscores the importance of the separate directors requirement.
Generally, corporate officers report to their board of directors, and, in the case of the BOC
interLATA affiliate, that board is to be a separate body than the BOC's board.  Given that the
principal corporate officers of Ameritech Michigan and ACI report to the same Ameritech
Corporation officer, it is clear that as a practical matter (as well as a matter of law), Ameritech
Corporation is the corporate director for both Ameritech and ACI.
      C.Compliance with Section 272(b)(5) Requirements
      1.Introduction
      363.Section 272(b)(5) of the Communications Act provides that the BOC's section
272 affiliate "shall conduct all transactions with the Bell operating company of which it is an
affiliate on an arm's length basis with any such transactions reduced to writing and available for
public inspection."  To satisfy the requirement that transactions between a BOC and its section
272 affiliate be "reduced to writing and available for public inspection," the Accounting
Safeguards Order requires the section 272 affiliate, "at a minimum, to provide a detailed written
description of the asset or service transferred and the terms and conditions of the transaction on
the Internet within 10 days of the transaction through the company's home page."  In addition,
this information concerning the transaction "must also be made available for public inspection at
the principal place of business of the BOC."  We further determined that "the description of the
asset or service and the terms and conditions of the transaction should be sufficiently detailed to
allow us to evaluate compliance with our accounting rules."
      364.In its application, Ameritech asserts that it has complied, and will continue to
comply, with the requirements of section 272(b)(5) and the Accounting Safeguards Order.
Ameritech states that, although the accounting and public disclosure requirements of the
Accounting Safeguards Order were not scheduled to become effective until July 21, 1997, at the
earliest, Ameritech implemented the requirements on May 12, 1997.  Ameritech therefore
maintains that it had implemented the requirements of the Accounting Safeguards Order before it
filed its application, and that it currently complies with all the requirements of section 272(b)(5)
and the Accounting Safeguards Order.
      365.AT&T and TCG contest this assertion, contending that Ameritech does not
comply with the requirements of section 272(b)(5) and the Accounting Safeguards Order.
AT&T argues that several of the transactions that Ameritech and ACI have publicly disclosed do
not include rates.  AT&T and TCG also argue that it appears that Ameritech and ACI have not
disclosed all of their transactions with each other, including those related to preparations by ACI
to enter the interLATA market.
      2.Discussion
      366.As discussed above, section 271(d)(3)(B) requires the Commission to make a
predictive judgment regarding the future behavior of a section 271 applicant.  We further
indicated that the past and present behavior of the BOC applicant is highly relevant to this
assessment.  Ameritech maintains that, since May 12, 1997, it has complied fully with section
272(b)(5) and the requirements in the Accounting Safeguards Order, even those requirements
that were not in effect on that date.  Because Ameritech asserts that it has complied with the
Accounting Safeguards Order, we examine Ameritech's compliance with the requirements
adopted in that order.  We emphasize, however, that we examine Ameritech's asserted
compliance with the requirements in the Accounting Safeguards Order that had not yet taken
effect on the date of Ameritech's application only as an indicator of Ameritech's future behavior.
      367.After examining the record evidence in this proceeding, we conclude that
Ameritech has failed to demonstrate that it will carry out the requested authorization in
accordance with section 272(b)(5), because it has failed to disclose publicly the rates for all of
the transactions between Ameritech and ACI.  Moreover, it appears that Ameritech and ACI have
not disclosed publicly all of their transactions as required by section 272(b)(5).  Accordingly, if
Ameritech continues its present behavior, and does not remedy these problems, it would not be in
compliance with the requirements of section 272(b)(5).
      368.In response to AT&T's assertion that Ameritech has not disclosed rates for
transactions between Ameritech and ACI, Ameritech maintains that "there is no requirement in
the Accounting Safeguards Report and Order to disclose rates for services to ensure compliance
with the Commission's accounting rules."  Rather, Ameritech argues that "the specific
requirement is to provide a '. . . detailed written description of the asset or service transferred and
the terms and conditions of the transaction . . . .'"  Ameritech further maintains that the terms
and conditions of the transaction include only the valuation rules that will be applied to the
transaction, and do not include the actual rates.  Ameritech therefore argues that it has
complied with the requirements of section 272 and the Accounting Safeguards Order by posting
the terms and conditions of the transaction, including a description of the valuation method used,
but not the actual rates.
      369.We find, contrary to Ameritech's claim, that our Accounting Safeguards Order
requires Ameritech to disclose the actual rates for its transactions with its section 272 affiliate.
Ameritech's argument fails to acknowledge the Accounting Safeguards Order's directive that "the
description of the asset or service and the terms and conditions of the transaction should be
sufficiently detailed to allow us to evaluate compliance with our accounting rules."  Instead,
Ameritech appears to be relying on the terminology in the Commission's Joint Cost Order for
describing affiliate transactions in a cost allocation manual (CAM), which specifically stated that
disclosure of the price of a transaction was not necessary.  In the Accounting Safeguards
Order, however, we expressly stated that the information contained in a BOC's CAM is not
sufficiently detailed to satisfy section 272(b) because the BOC's CAM contains only a general
description of the asset or service and does not describe the terms and conditions of each
individual transaction.  Therefore, a statement of the valuation method used, without the
details of the actual rate, does not provide the specificity we required in the Accounting
Safeguards Order.  Because Ameritech has failed to provide a sufficiently detailed description of
the transactions to allow us to evaluate compliance with our accounting rules, we are unable to
find that Ameritech  will carry out the requested authorization in accordance with section 272.
      370.In addition, we are concerned about the complaint that Ameritech has failed to
disclose all of the transactions between Ameritech and ACI.  Ameritech responds that it has
disclosed on its Internet website all transactions entered into between Ameritech and ACI that
occurred on or after May 12, 1997, and all transactions entered into prior to that date that were
still in effect on that date.  Ameritech further maintains that all transactions entered into
between these parties and concluded prior to May 12, 1997, were accounted for in accordance
with the Commission's existing accounting rules.  Ameritech, however, does not affirmatively
state that this latter group of transactions was disclosed publicly.
      371.Although BOCs need not comply with the requirements we adopted in the
Accounting Safeguards Order prior to the effective date of that order, BOCs were still obligated
to comply with the statute as of the date it was enacted.  Section 272(b)(5) expressly states that
all transactions between a BOC and its section 272 affiliate shall be "available for public
inspection."  Consequently, although Ameritech and ACI need not disclose transactions in the
manner specified in the Accounting Safeguards Order prior to that order's effective date,
Ameritech and ACI must make those transactions available for public inspection in some
manner, as required by section 272(b)(5).  Accordingly, in order to demonstrate compliance with
section 272(b)(5) in a future application, we expect that Ameritech and ACI will make available
for public inspection all transactions between them that occurred after February 8, 1996.
      372.Furthermore, Ameritech maintains that "transactions entered into between ACI
and any of its non-BOC affiliates not involving the BOC affiliates are not required to be
disclosed on Ameritech's Internet website nor are they required to be made available for public
inspection."  We note that Ameritech has established two divisions that will process orders for
network elements and wholesale services, Ameritech Information Industry Services (AIIS) and
Ameritech Long Distance Industry Services (ALDIS).  AIIS offers, at wholesale, "services for
resale and network components" to competing telecommunications carriers and to ACI.
Ameritech states that "ALDIS is an Ameritech business unit that serves as Ameritech's exclusive
sales channel for the sale of switched and special access services to interexchange carriers,"
including ACI.
      373.We concluded in the Non-Accounting Safeguards Order that "a BOC cannot
circumvent the section 272 requirements by transferring local exchange and exchange access
facilities and capabilities to an affiliate."  We therefore determined that, "if a BOC transfers to
an affiliated entity ownership of any network elements that must be provided on an unbundled
basis pursuant to section 251(c)(3), we will deem such entity to be an 'assign' of the BOC under
section 3(4) of the Act with respect to those network elements.  Any successor or assign of the
BOC is subject to the section 272 requirements in the same manner as the BOC."  We do not
have adequate information in the record to determine whether Ameritech has transferred local
exchange and exchange access facilities and capabilities to AIIS or ALDIS.  We expect that, in
any future section 271 application, Ameritech will state whether it has transferred to AIIS or
ALDIS, at any time, any network facilities that are required to be unbundled pursuant to section
251(c)(3), and if so, the timing and terms of any such transfer.  If Ameritech has transferred
facilities and capabilities such that AIIS or ALDIS is a successor or assign of Ameritech, we
expect Ameritech to disclose the transactions between these divisions and ACI, in compliance
with section 272(b)(5) and our implementing rules.
VIII.     OTHER CONCERNS RAISED IN THE RECORD
      374.Several other issues have arisen in the context of Ameritech's application.  These
issues are based on allegations made by various commenters that Ameritech has violated certain
Commission rules and has engaged in anticompetitive conduct.  These issues include Ameritech's
inbound telemarketing script, its provision of intraLATA toll service, and its compliance with the
customer proprietary network information (CPNI) requirements of section 222.  As we discuss in
Section IX below, evidence that a BOC applicant has violated federal telecommunications
regulations or engaged in anticompetitive conduct is relevant to our inquiry under section 271,
and would be considered in the public interest analysis to the extent it arises in future
applications.
      375.With respect to its inbound telemarketing script, Ameritech states that, once it
receives section 271 authorization, when a customer calls Ameritech to establish new local
exchange service or switch the location of its existing service, Ameritech's service representative
will inform the customer:
     You have a choice of companies, including Ameritech Long Distance, for long
     distance service.  Would you like me to read from a list of other available long
     distance companies or do you know which company you would like?
If the customer chooses Ameritech Long Distance or another long distance company, the order
will be processed accordingly.  If the customer requests a listing or telephone numbers of other
available companies, the service representative will read from the entire list and ask the customer
for its choice of long distance carrier.
      376. We conclude that this script, if actually used by Ameritech, would violate the
"equal access" requirements of section 251(g).  Mentioning only Ameritech Long Distance
unless the customer affirmatively requests the names of other interexchange carriers is
inconsistent on its face with our requirement that a BOC must provide the names of
interexchange carriers in random order.  Such a practice would allow Ameritech Long
Distance to gain an unfair advantage over other interexchange carriers.  As explained in our
Non-Accounting Safeguards Order, "the obligation to continue to provide such
nondiscriminatory treatment stems from section 251(g) of the Act."   In that order, we
concluded that a BOC must "provide any customer who orders new local exchange service with
the names and, if requested, the telephone number of all the carriers offering interexchange
services in its service area."  Moreover, we concluded that the "BOC must ensure that the
names of the interexchange carriers are provided in random order."  Thus, not only are BOCs
required to provide customers requesting new local exchange service the names of competing
interexchange carriers, but they must provide these names in random order.
      377.We also have concerns about allegations that Ameritech is effectively stifling
competition in the local exchange market by refusing to provide intraLATA toll service to
competing LEC customers.  Such actions on the part of Ameritech have led to the filing of several complaint proceedings before the Michigan Commission.  For example, in its
complaint before the Michigan Commission, Brooks Fiber alleges that although Ameritech
provides intraLATA toll service to customers of certain independent LECs that do not compete
with Ameritech in its service area, it has refused to allow customers of Brooks Fiber's local
exchange service to elect Ameritech for the provision of intraLATA toll services.  Ameritech,
in its answer to Brooks Fiber's complaint, contends that whether to provide intraLATA toll
service to Brooks Fiber customers is a management decision solely within the discretion of
Ameritech.   In addition, Brooks Fiber, LCI, and MFS WorldCom allege that Ameritech has
used its intraLATA "Value Link Calling Plus Plans" (ValueLink) to lock in its customers to
Ameritech as their local exchange provider.  For example, they claim that, if Ameritech
ValueLink customers want to switch to a competing LEC for local service and still retain
Ameritech for intraLATA toll service, they must terminate their ValueLink plan, which contain
significant termination penalties, in order to switch to another local service provider.  In
response, Ameritech asserts that it has put in place arrangements that will allow customers to
switch to Brooks Fiber as their local carrier and retain their intraLATA toll service under their
ValueLink plan and that it is "fully prepared to arrange similar solutions for other [competing
LECs]."
      378.Despite Ameritech's assurances that it is willing to work out arrangements similar
to the one it arranged for Brooks Fiber, it remains unclear from the record the extent to which
this issue has been resolved.  For example, although Ameritech appears to have implemented a
solution for Brooks Fiber, there is no evidence to suggest that it has implemented similar
arrangements any other competing carriers.  Regardless of how the Michigan Commission
resolves the pending complaints, we have concerns that discontinuing or refusing to provide
intraLATA toll service to customers that elect to switch to another local service provider may
threaten a competing LEC's ability to compete effectively in the local market and thus may be
inconsistent with the procompetitive goals of the 1996 Act.    Moreover, we are also concerned
about the potentially anticompetitive effects of Ameritech's ValueLink plans.
      379.Raising a third issue, Brooks Fiber and CWA contend that Ameritech has
instituted a "Winback program," pursuant to which Ameritech representatives call former
Ameritech customers that have switched their local service to competing LECs to offer more
competitive pricing packages.  Specifically, Brooks Fiber alleges that, after Brooks Fiber has
sent Ameritech requests for the customer service records of Ameritech customers, Ameritech
retail sales representatives have telephoned those same customers.  We are concerned about
Brooks Fiber's suggestion that Ameritech has misused confidential and proprietary information
to gain a competitive advantage.  We emphasize that Ameritech's use of customer information
for marketing purposes must comply with section 222 of the Act and the Commission's
implementing regulations.
      380.In the affidavits accompanying its application, Ameritech notes that some
customers have authorized Ameritech to share CPNI with Ameritech affiliates (including ACI).
Ameritech states, however, that ACI will not request or receive any CPNI from the Ameritech
operating companies pursuant to such approval until the Commission issues its rules
implementing section 222 of the Act, or ACI has obtained directly customer authorization to
receive the information.  Like the Department of Justice, we support Ameritech's commitment
and believe that it is necessary pending the Commission's adoption of regulations clarifying
Ameritech's obligations under section 222 of the Act.
  IX.PUBLIC INTEREST
      381.In the preceding sections of this Order, we concluded that Ameritech has not
implemented fully the competitive checklist and has not complied with the requirements of
section 272.  We, therefore, must deny Ameritech's application for authorization to provide in-
region, interLATA telecommunications services in Michigan.  As a result, we need not reach the
further question of whether the requested authorization is consistent with the public interest,
convenience and necessity, as required by section 271(d)(3)(C).  We believe, however, that,
provided the competitive checklist, public interest, and other requirements of section 271 are
satisfied, BOC entry into the long distance market will further Congress' objectives of promoting
competition and deregulation of telecommunication markets.  In order to expedite such entry,
we believe it would be useful to identify certain issues and make certain inquiries for the benefit
of future applicants and commenting parties, including the relevant state commission and the
Department of Justice, relating to the meaning and scope of the public interest inquiry mandated
by Congress.  We emphasize, however, that we are not here examining the public interest
showing made in Ameritech's application, nor is our discussion intended to be an exhaustive
analysis of the scope of our public interest inquiry generally.
      382.  Commenters in this proceeding have proposed various standards for analyzing
whether granting an application for in-region, interLATA authority is consistent with the public
interest requirement.  The Department of Justice, for example, states that grant of a section 271
application is not consistent with the public interest absent a demonstration that the local market
is "irreversibly open to competition."  Sprint suggests that the public interest requirement is
satisfied once a BOC shows that local competition has been "enabled," and CPI maintains that
the Commission "should examine . . . whether consumers in the state have a realistic choice for
local telephone service."  Ameritech asserts that the "proper 'public interest' standard for
approval of [a section 271] Application is whether the local exchange market . . . is open to
competition."  Several other BOCs, however, contend that the relevant inquiry is limited to the
effect of BOC entry on competition in the long distance marketplace.  It is clear from the
variety of standards proposed that there is substantial disagreement among the parties about the
scope and meaning of this critical requirement in section 271.
      383.  As discussed below, we believe that section 271 grants the Commission broad
discretion to identify and weigh all relevant factors in determining whether BOC entry into a
particular in-region, interLATA market is consistent with the public interest.  Before making a
determination of whether the grant of a particular section 271 application is consistent with the
public interest, we are required to consult with the Attorney General, and to give substantial
weight to the Attorney General's evaluation.  The Commission, therefore, must give substantial
weight to the Department of Justice's recommendation concerning what factors we should
consider when determining whether the public interest criterion is satisfied, including the
standard that the Department of Justice urges us to use in evaluating such factors, its analysis of
the evidence going to that issue, and its conclusion on whether authorization should be granted.
Section 271, however, expressly provides that the Commission should not give "any preclusive
effect" to the Department of Justice's evaluation.  Accordingly, section 271 ultimately
obligates the Commission to decide which factors are relevant to our public interest inquiry, how
to balance these factors, and whether BOC entry into a particular in-region, interLATA market is
consistent with the public interest.  In short, the Commission will determine, based upon the
record before it, whether the statutory requirement in section 271(d)(3)(C) is met.
      384.  The Communications Act is replete with provisions requiring the Commission, in
fulfilling its statutory obligation to regulate interstate and foreign communications by wire and
radio, to assess whether particular actions are consistent with the public interest, convenience,
and necessity.  Courts have long held that the Commission has broad discretion in undertaking
such public interest analyses.  For example, in Washington Utilities and Transportation
Commission v. FCC, the United States Court of Appeals for the Ninth Circuit, in addressing the
public interest standard under section 214, stated that "this broad standard is to be interpreted in
light of the Commission's sweeping mandate to regulate" pursuant to the underlying purposes of
the Communications Act as stated in section 151, and that the Commission's "authority is stated
broadly to avoid the need for repeated congressional review and revision of the Commission's
authority to meet the needs of a dynamic, rapidly changing industry."
      385.The legislative history of the public interest requirement in section 271 indicates
that Congress intended the Commission, in evaluating section 271 applications, to perform its
traditionally broad public interest analysis of whether a proposed action or authorization would
further the purposes of the Communications Act.  We also conclude that Congress granted the
Commission broad discretion under the public interest requirement in section 271 to consider
factors relevant to the achievement of the goals and objectives of the 1996 Act.  Moreover,
requiring petitioning BOCs to satisfy the public interest standard prior to obtaining in-region,
interLATA authority demonstrates, in our view, that Congress did not repeal the MFJ in order to
allow checklist compliance alone to be sufficient to obtain in-region, interLATA authority.  In
section 271, Congress granted the Commission the authority to exercise its expert judgment as to
relevant issues in determining whether BOC entry into a particular in-region, interLATA market
is consistent with the public interest.  We believe that such an inquiry should focus on the status
of market-opening measures in the relevant local exchange market.  In so doing, the
Commission may not, of course, "limit or extend the terms used in the competitive checklist."
      386.  We reject the view that our responsibility to evaluate public interest concerns is
limited narrowly to assessing whether BOC entry would enhance competition in the long
distance market.  We believe that our inquiry must be a broader one.  The overriding goals of the
1996 Act are to open all telecommunications markets to competition by removing operational,
economic, and legal barriers to entry, and, ultimately, to replace government regulation of
telecommunications markets with the discipline of the market.  In order to promote
competition in the local exchange and exchange access markets in all states, Congress required
incumbent LECs, including the BOCs, to provide access to their networks in a manner that
allows new entrants to enter local telecommunications markets through a variety of methods.
In adopting section 271, Congress mandated, in effect, that the Commission not lift the
restrictions imposed by the MFJ on BOC provision of in-region, interLATA services, until the
Commission is satisfied on the basis of an adequate factual record that the BOC has undertaken
all actions necessary to assure that its local telecommunications market is, and will remain, open
to competition.
      387.  In providing new entrants multiple avenues for entry into local
telecommunications markets, Congress recognized that new entrants will adopt different entry
strategies that rely to varying degrees on the facilities and services of the incumbent, and that
such strategies are likely to evolve over time.  Moreover, Congress did not explicitly or
implicitly express a preference for one particular entry strategy, but rather sought to ensure that
all procompetitive entry strategies are available.  Our public interest analysis of a section 271
application, consequently, must include an assessment of whether all procompetitive entry
strategies are available to new entrants.
      388.  In addition, our public interest analysis will include an assessment of the effect of
BOC entry on competition in the long distance market.  We believe that BOC entry into that
market could further long distance competition and benefit consumers.  As we have
previously observed, "the entry of the BOC interLATA affiliates into the provision of interLATA
services has the potential to increase price competition and lead to innovative new services and
marketing efficiencies."  Section 271, however, embodies a congressional determination that,
in order for this potential to become a reality, local telecommunications markets must first be
open to competition so that a BOC cannot use its control over bottleneck local exchange facilities
to undermine competition in the long distance market.  Only then is the other congressional
intention of creating an incentive or reward for opening the local exchange market met.
      389.  In making our public interest assessment, we cannot conclude that compliance
with the checklist alone is sufficient to open a BOC's local telecommunications markets to
competition.  If we were to adopt such a conclusion, BOC entry into the in-region interLATA
services market would always be consistent with the public interest requirement whenever a
BOC has implemented the competitive checklist.  Such an approach would effectively read the
public interest requirement out of the statute, contrary to the plain language of the section 271,
basic principles of statutory construction, and sound public policy.  Section 271(d)(3) provides
that the Commission "shall not approve [a BOC application to provide in-region, interLATA
services] . . . unless it finds that -- (A) the petitioning [BOC] has . . . fully implemented the
competitive checklist . . . ; and (C) the requested authorization is consistent with the public
interest, convenience, and necessity."  Thus, the text of the statute clearly establishes the
public interest requirement as a separate, independent requirement for entry.  In addition,
Congress specifically rejected an amendment that would have stipulated that full implementation
of the checklist satisfies the public interest criterion.  Consequently, Congress' adoption of the
public interest requirement as a separate condition for BOC entry into the in-region, interLATA
market demonstrates that Congress did not believe that compliance with the checklist alone
would be sufficient to justify approval under section 271.
      390.  Although the competitive checklist prescribes certain, minimum access and
interconnection requirements necessary to open the local exchange to competition, we believe
that compliance with the checklist will not necessarily assure that all barriers to entry to local
telecommunications market have been eliminated, or that a BOC will continue to cooperate with
new entrants after receiving in-region, interLATA authority.  While BOC entry into the long
distance market could have procompetitive effects, whether such benefits are sustainable will
depend on whether the BOC's local telecommunications market remains open after BOC
interLATA entry.  Consequently, we believe that we must consider whether conditions are such
that the local market will remain open as part of our public interest analysis.
      391.In making a case-by-case determination of whether the public interest would be
served by granting a section 271 application, we anticipate that we would examine a variety of
factors in each case.  We emphasize that, unlike the requirements of the competitive checklist,
the presence or absence of any one factor will not dictate the outcome of our public interest
inquiry.  Because such factors are not preconditions to BOC entry into the in-region, interLATA
market, our consideration of such factors does not "limit or extend the terms used in the
competitive checklist," contrary to section 271(d)(4).  Accordingly, in conducting our public
interest inquiry, we will consider and balance various factors to determine if granting a particular
section 271 application is consistent with the public interest.  For example, as we noted at the
outset of this Order, it is essential to local competition that the various methods of entry
contemplated by the 1996 Act be truly available.  The most probative evidence that all entry
strategies are available would be that new entrants are actually offering competitive local
telecommunications services to different classes of customers (residential and business) through
a variety of arrangements (that is, through resale, unbundled elements, interconnection with the
incumbent's network, or some combination thereof), in different geographic regions (urban,
suburban, and rural) in the relevant state, and at different scales of operation (small and large).
We emphasize, however, that we do not construe the 1996 Act to require that a BOC lose a
specific percentage of its market share, or that there be competitive entry in different regions, at
different scales, or through different arrangements, before we would conclude that BOC entry is
consistent with the public interest.  Rather, we believe that data on the nature and extent of actual
local competition, as described above, are relevant, but not decisive, to our public interest
inquiry, and should be provided.  If such data are not in the record or available for official notice,
we would be forced to conclude that the BOC is not facing local competition.  Our inquiry then
would necessarily focus on whether the lack of competitive entry is due to the BOC's failure to
cooperate in opening its network to competitors, the existence of barriers to entry, the business
decisions of potential entrants, or some other reason.
      392.  Evidence that the lack of broad-based competition is not the result of a BOC's
failure to cooperate in opening local markets could include a showing by the BOC that it is
ready, willing, and able to provide each type of interconnection arrangement on a commercial
scale throughout the state if requested.  We believe that the existence of certain other factors
conducive to efficient, competitive entry would indicate that local telecommunications markets
are and will remain open to competition, even if broad-based competitive entry has not yet
occurred.  We would, for example, be interested in evidence that a BOC is making available,
pursuant to contract or otherwise, any individual interconnection arrangement, service, or
network element provided under any interconnection agreement to any other requesting
telecommunications carrier upon the same rates, terms, and conditions as those provided in the
agreement.  Such evidence would demonstrate that competitive alternatives can flourish rapidly
throughout a state, by assuring that new entrants can enter the market quickly without having to
engage in lengthy and contentious negotiations or arbitrations with the BOC.
      393.In addition, evidence that a BOC has agreed to performance monitoring (including
performance standards and reporting requirements) in its interconnection agreements with new
entrants would be probative evidence that a BOC will continue to cooperate with new entrants,
even after it is authorized to provide in-region, interLATA services.  Performance monitoring
serves two key purposes.  First, it provides a mechanism by which to gauge a BOC's present
compliance with its obligation to provide access and interconnection to new entrants in a
nondiscriminatory manner.  Second, performance monitoring establishes a benchmark against
which new entrants and regulators can measure performance over time to detect and correct any
degradation of service once a BOC is authorized to enter the in-region, interLATA services
market.
      394.  We would be particularly interested in whether such performance monitoring
includes appropriate, self-executing enforcement mechanisms that are sufficient to ensure
compliance with the established performance standards.  That is, as part of our public interest
inquiry, we would want to inquire whether the BOC has agreed to private and self-executing
enforcement mechanisms that are automatically triggered by noncompliance with the applicable
performance standard without resort to lengthy regulatory or judicial intervention.  The absence
of such enforcement mechanisms could significantly delay the development of local exchange
competition by forcing new entrants to engage in protracted and contentious legal proceedings to
enforce their contractual and statutory rights to obtain necessary inputs from the incumbent.
      395.  Moreover, we would be interested in knowing whether a BOC has provided new
entrants with optional payment plans for the payment of non-recurring charges that would allow
new entrants, upon request, to avoid having to pay such charges as a single, up-front payment.
As we noted above, unreasonably high non-recurring charges could chill competition.
      396.  We would also want to know about state and local laws, or other legal
requirements, that may constitute barriers to entry into the local telecommunications market, or
that are intended to promote such entry.  We would, for example, be interested in knowing
whether state or local governments have imposed discriminatory or burdensome franchising fees
or other requirements on new entrants.  We also would want to know if states or municipalities
have denied new entrants equal access to poles, ducts, conduits, or other rights of way.  In
addition, we would be interested in whether a state has adopted policies and programs that favor
the incumbent, for example, those relating to universal service.  Although we recognize that a
BOC may not have the ability to eliminate such discriminatory or onerous regulatory
requirements, we believe that local competition will not flourish if new entrants are burdened by
such requirements.
      397.  Furthermore, we would be interested in evidence that a BOC applicant has
engaged in discriminatory or other anticompetitive conduct, or failed to comply with state and
federal telecommunications regulations.  Because the success of the market opening
provisions of the 1996 Act depend, to a large extent, on the cooperation of incumbent LECs,
including the BOCs, with new entrants and good faith compliance by such LECs with their
statutory obligations, evidence that a BOC has engaged in a pattern of discriminatory conduct or
disobeying federal and state telecommunications regulations would tend to undermine our
confidence that the BOC's local market is, or will remain, open to competition once the BOC has
received interLATA authority.
      398.  In the preceding paragraphs, we have identified various factors that we believe
would be probative of whether a BOC's local telecommunication market is open to competition.
We emphasize that this list is merely illustrative, and not exhaustive, of the factors we may
consider when determining whether a BOC's local market is open to competition.  We encourage
interested parties, including the Department of Justice and the relevant state commission, to
identify other factors that we might consider in the context of a specific application, and the
weight that we should attach to the various factors, in making this assessment.
      399.  Moreover, as we have previously noted, we need to be confident that we can rely
on the petitioning BOC to continue to comply with the requirements of section 271 after
receiving authority to enter into the long distance market.  A BOC could alleviate substantially
these concerns by making specific commitments in its application that would ensure its
continued cooperation with new entrants.  A BOC could, for example, commit to comply with
reporting requirements, performance standards, and appropriate, self-executing enforcement
mechanisms, to the extent such requirements, standards and mechanisms are not included in the
BOC's interconnection agreements.
      400.  In the absence of adequate commitments from a BOC, we believe that we have
authority to impose such requirements as conditions on our grant of in-region, interLATA
authority.  We believe that at least two separate statutory provisions give us authority to impose
such conditions.  First, section 271 expressly contemplates that Commission approval of a
section 271 application might contain "conditions."  Subsection 271(d)(6), which is captioned
"ENFORCEMENT OF CONDITIONS," provides that if, after approval of an application, "the
Commission determines that a Bell operating company has ceased to meet any of the conditions
required for such approval," it may take any of several actions, including requiring correction of
the deficiency, suspending or revoking the approval, or imposing a penalty.  We find that the
term "conditions" in paragraph (6)(A) should not be read to mean simply those explicit
"requirements" for approval under subsection (c).  Rather, we note that, elsewhere in section 271,
when reference is made to the specific requirements of section 271(c), the statute consistently
uses the term "requirements" and not the term "conditions."
      401.  Second, the Commission independently derives authority for the imposition of
conditions in the section 271 context from Section 303(r) of the Communications Act, which
expressly grants the Commission the authority to "[m]ake such rules and regulations and
prescribe such restrictions and conditions, not inconsistent with law, as may be necessary to carry
out the provisions of this Act . . . ."  Because section 271 is part of the Communications Act,
the Commission's authority under section 303(r) to prescribe conditions plainly extends to
section 271.  Moreover, as noted, we do not read section 271 as containing any prohibitions on
conditions but, rather, find express support for conditioning approval of section 271 applications
in the language of section 271(d)(6)(A).
      402.  In sum, our public interest inquiry requires us to examine carefully a number of
factors, including the nature and extent of competition in the applicant's local market, in order to
determine whether that market is and will remain open to competition.  The more vigorous the
competition is in the BOC's local market, the greater is the assurance that the BOC is cooperating
in opening its market to competition and that entry through the various methods set forth in
section 251(c) of the 1996 Act is possible.  In the absence of broad-based competition, however,
we will carefully examine the record, and weigh the evidence before us, to determine whether the
lack of such competition is the result of continuing barriers to entry, the BOC's lack of
cooperation, the business decisions of new entrants, or some other reason.
X.   CONCLUSION
      403.For the reasons discussed above, we deny Ameritech's application for
authorization under section 271 of the Act to provide in-region, interLATA services in the state
of Michigan.  In making this decision, however, we recognize that Ameritech has made a number
of strides in fulfilling its obligation under the Telecommunications Act of 1996 to open the local
exchange market to competition.  Ameritech has committed considerable resources and has
expended tremendous effort in implementing many of the steps necessary to receive in-region,
interLATA authority.  For example, although we conclude above that Ameritech has not
demonstrated that it provides nondiscriminatory access to all OSS functions, we acknowledge
that Ameritech has taken substantial measures to develop the electronic interfaces necessary to
facilitate the use of resale services and unbundled network elements by competing carriers.  We
also are aware of the effort and expense associated with preparing the actual application on
which Ameritech bases its claim for authorization, and expect that our decision will provide
substantial guidance for future applications.
XI.  ORDERING CLAUSES
      404.Accordingly, IT IS ORDERED that, pursuant to sections 4(i), 4(j), and 271 of the
Communications Act, as amended, 47 U.S.C.  154(i), 154(j), 271, Ameritech Michigan's
application to provide in-region interLATA service in the State of Michigan filed on May 21,
1997, IS DENIED.
      405.IT IS FURTHER ORDERED that the motion to dismiss filed by the Association
for Local Telecommunications Services on June 10, 1997, IS DENIED.
      406.IT IS FURTHER ORDERED that the motion to strike filed by Ameritech
Michigan on July 7, 1997, IS DENIED.
      407.IT IS FURTHER ORDERED that the motion to strike filed by AT&T Corp. on
July 15, 1997, IS DENIED.
      408.IT IS FURTHER ORDERED that the joint motion to strike filed by MCI
Telecommunications Corporation, et al. on July 16, 1997, IS DENIED.
     FEDERAL COMMUNICATIONS COMMISSION
     William F. Caton
     Acting Secretary                             APPENDIX
   Ameritech Michigan's 271 Application for Service in Michigan
                       CC Docket No. 97-137
                        List of Commenters
1.   Ameritech
2.   Association for Local Telecommunication Services (ALTS)
3.   AT&T Corp. (AT&T)
4.   Bell Atlantic Telephone Companies (Bell Atlantic)
5.   Bell Atlantic and NYNEX
6.   BellSouth Corporation and SBC Communications Inc.
7.   Brooks Fiber Communications (Brooks Fiber)
8.   Communications Workers of America (CWA)
9.   Competition Policy Institute (CPI)
10.  Competitive Telecommunications Association (CompTel)
11.  Governor of Michigan
12.  Intermedia Communications Inc. (Intermedia)
13.  KMC Telecommunications, Inc. (KMC)
14.  LCI International Telecom Corp. (LCI)
15.  MCI Telecommunications Corporation (MCI)
16.  Michigan Attorney General Frank J. Kelley
17.  Michigan Cable Telecommunications Association (MCTA)
18.  Michigan Consumer Federation (MCF)
19.  Michigan Public Service Commission (Michigan Commission)
20.  National Association of Commissions for Women (NACW)
21.  National Cable Television Association (NCTA)
22.  Ohio Consumers' Counsel
23.  Paging & Narrowband PCS Alliance of the Personal Communications Industry
     Association (PCIA)
24.  Phone Michigan
25.  SBC Communications Inc. (SBC)
26.  Sprint Communications Company L.P. (Sprint)
27.  Telecommunications Resellers Association (TRA)
28.  Teleport Communications Group Inc. (TCG)
29.  Time Warner Communications Holdings, Inc. (Time Warner)
30.  Triangle Coalition for Science and Technology Education (Triangle)
31.  Trillium Cellular Corporation (Trillium)
32.  United Homeowners Association (UHA)
33.  United Seniors Health Cooperative (USHC)
     34.  WorldCom, Inc. (MFS WorldCom)
           SEPARATE STATEMENT OF  CHAIRMAN REED HUNDT
Re:  Application of Ameritech Michigan Pursuant to Section 271 of the Communications Act of
1934, as Amended, To Provide In-Region, InterLATA Services in Michigan
     In today's decision, we provide a detailed, comprehensive roadmap that makes clear what
Bell Operating Companies (BOCs) must do in order to satisfy the open market checklist enacted
by Congress in the Telecommunications Act of 1996.  I applaud the work of our talented and
dedicated Common Carrier Bureau, which, working within the tight time limits mandated by
Congress, has drafted the clearest, most comprehensive roadmap that any pro-competition
cartographer has ever produced within 90 days.
     This Order describes in great detail the steps the BOCs must take to satisfy Congress'
checklist.  The Order reaffirms that where a Bell Operating Company has the will, there is a way.
Any BOC that wishes to take the steps necessary to follow the roadmap will have the opportunity
to enter the long distance market. This is the bargain Congress struck in the Telecom Act:  when
a BOC has reliably, practically, and fully opened its local market to competition and permanently
allowed competitors fair access to the economies of scale and scope it generated during the
previous monopoly era, it should be permitted to enter the long distance market.
     When a BOC is supplying network elements or services to competitors, it must make
available those elements and services on the same nondiscriminatory basis it provides to itself.
Because incumbents characteristically use these elements in combination, incumbents must
therefore offer the elements in combination to their competitors in order to meet the requirements
of section 271.
     The standard for evaluating the incumbents' offerings is parity, not perfection.  A BOC
cannot merely announce, moreover, that it is capable of selling or leasing its network services
and elements.  The BOC must demonstrate that it has the operations support systems actually to
deliver those services and elements to competitors.  The prices that a BOC charges its
competitors for interconnection, unbundled elements, and resale are also extremely relevant.  We
believe that in order to promote efficient, competitive entry and comply with section 271, a BOC
must offer its competitors prices that are set on the basis of forward-looking economic costs,
using TELRIC (total element long run incremental cost) principles.
     Moreover, a uniform national reading of section 271, of course, is necessary.  This
necessitates having a single national pricing methodology (which would generate different
specific prices within states and within regions inside states), as is set forth in our Order. A
uniform pricing methodology has flexibility to accommodate local issues, such as varying costs
of capital and other parameters.  But the statute cannot be fairly read to permit different states to
use different pricing methodologies for the purpose of compliance with section 271. Such an
approach would be an insupportable reading of the statute.
     Interpreting section 271 to encompass different and conflicting pricing methodologies
would generate inequities among the different BOCs, in that some might enter long distance only
when a pro-competition pricing methodology for unbundled elements and interconnection truly
and effectively opened that BOC's local market.  By contrast, other BOCs would be able to enter
when their local markets were less open to new entry as a result of a state's election of a pricing
methodology that was more inimical to new entry (such as a methodology that sought to recover
historic cost from new entrants, instead of in some competitively neutral manner). Such a result
would be bad policy as well as a bad reading of the law.
     I recognize and applaud the steps that Ameritech and the state of Michigan have taken to
open the local market in Michigan to competition, and I welcome the competition that BOC
entry into long distance should promote in that market. It also is possible that the anticipation of
BOC entry into long distance in a particular market could create a greater incentive for the long
distance companies to respond by entering the local market in that state.
     It should also be noted that today's roadmap plainly extends to Ameritech and the other
BOCs the opportunity to enter the long distance market well before the three-year "date certain"
deadline (which would have been February 1999, given the date the law was signed) that the
BOCs lobbied Congress to adopt -- and which Congress in fact rejected.
                   Statement of Commissioner
                        James H. Quello
Re:  Application of Ameritech Michigan Pursuant to Section 271 of the
     Communications Act of 1934, as amended, To Provide In-Region, InterLATA
     Services in Michigan
     Although today's Order by the Commission rejects Ameritech's application to
enter the long distance market in Michigan, I am pleased that it provides Ameritech
and other Bell operating companies with clear guidance on the Commission's 271
review process.  It would be unreasonable, in my opinion, for this Commission to
reject Ameritech's application without also providing our interpretation of many of
the key elements of section 271.  In addition to furnishing substantial guidance on
checklist items that we found Ameritech did not meet, we have interpreted several
other provisions of section 271, including the public interest test.  I believe this
guidance will assist BOC applicants and their competitors in understanding their
rights and obligations under the pro-competitive framework established by
Congress.
     I commend Ameritech for its efforts to open its network to competitors.
Even before Congress passed the Telecommunications Act of 1996, it had become
clear that incumbent local telephone companies would not retain their monopolies
forever.  Ameritech understood this and responded by seeking to work reasonably
with its competitors through its Customers First initiative in 1993, which would
have permitted competitors to gain access to Ameritech's network.  It has been my
experience, both in the private sector and as a regulator, that the most successful
companies try to embrace and manage change rather than resist it at every turn.
Since the passage of the 1996 Act, we have seen plenty of resistance from some
incumbent local carriers.  I believe a progressive approach, as demonstrated by
Ameritech in this application, will ultimately prove the more effective model.
     Nonetheless, I fully support the Commission's decision to reject Ameritech's
271 application.  The Order we adopt today identifies several important defects in
Ameritech's application.  If we were to grant Ameritech's application at this time,
other carriers would be significantly disadvantaged in competing with Ameritech.
This would be contrary to Congress' intent and unfair to Michigan's local telephone
customers.  I am committed to faithfully implementing our directive from Congress
as described in section 271.
     Some of the deficiencies in Ameritech's application appear easily fixed -- for
example, Ameritech must furnish more complete data on trunk blockage rates for
calls between its network and its competitors' networks.  Other shortcomings,
such as the need for Ameritech to improve its operations support systems to
accommodate fluctuating volumes of competitors' orders, may require more
significant effort before Ameritech complies with our requirements.  I am confident
that none of the problems that we have identified in Ameritech's application is
insurmountable, and I hope that Ameritech will take the necessary steps as soon as
possible.
     Finally, I wish to acknowledge the tremendous effort of the Commission's
Common Carrier Bureau in this proceeding.  They have taken a nearly
unmanageable record and produced, under significant time pressure, a clear,
well-reasoned blueprint for future 271 applications.
     # # #
                       Separate Statement
                               of
                     Commissioner Susan Ness
Re:  Application of Ameritech Michigan Pursuant to Section 271 of the Communications Act of
1934, as Amended, To Provide In-Region, InterLATA Services in Michigan
     I look forward to the day when I can cast my vote to approve a petition by a Bell
company to offer in-region, interLATA service.  When that day comes, the conditions for
robust and enduring local competition within a state will have been created, and to the benefits
of that competition will be added the introduction of a powerful new competitor in the long
distance market and the elimination of a restriction that will have outlived its usefulness.
     That time has not yet arrived, despite commendable progress in the State of Michigan.
The state commission has been a pioneer in the development and implementation of
competition policy.  In the new state-federal partnership that is still being forged, Michigan
remains a leader.  Ameritech, too, deserves recognition for its early commitment to a pro-
competitive course.  The company has made enormous progress over the past few years,
although the immense task of transforming the local telephone network to accommodate
efficient competitive entry remains as yet unfinished.  Today's decision provides valuable
guidance that will help Ameritech to reach its desired goal more expeditiously.
     Our decision today is faithful to the statutory scheme established by Congress.  Aided
by the record developed in the pre-application proceeding conducted by the Michigan
commission and the detailed and insightful analysis furnished by the Department of Justice, our
staff has conducted a painstaking review of a lengthy record to evaluate Ameritech's
compliance with the mandatory elements of the "competitive checklist."  The detailed
discussion of checklist compliance in our order will enable Ameritech to focus its energies on
those tasks that need to be completed before interLATA entry can be approved.
     Although not strictly necessary for purposes of today's decision, our order also sets
forth our initial views on the additional statutory requirement that Ameritech prove that its
entry satisfies the public interest.  Again, this guidance should help to pave the way for a
successful application in the future.  I emphasize, as does the order, that we are not adding to
the competitive checklist.  Instead, we are merely identifying various pertinent considerations
that have the potential to influence, positively or negatively, our overall conclusion as to
whether Bell company entry into the interLATA market within a particular state will serve the
public interest.
     As our decision demonstrates, the Commission intends to apply the statutory scheme
rigorously but fairly.  This will not be welcome news for any company that might have hoped
to secure authority for interLATA entry without really opening its local market to competition
-- or that might have hoped to game the process to forestall entry indefinitely.  But, for those
that really intend to live up to the bargain that is embodied in the Telecommunications Act,
today's decision should accelerate fulfillment of both parts of that bargain.
                      Separate Statement of
                 Commissioner Rachelle B. Chong
Re:  In the Matter of Application of Ameritech Michigan Pursuant to Section 271 of the
     Communications Act of 1934, as amended, to Provide In-Region, InterLATA Services in
     Michigan
     It is a rare privilege to interpret a new piece of major legislation.  As this Commission
has implemented the historic Telecommunications Act of 1996 (1996 Act) over the last year
and a half, our work has been arduous and controversial.  In today's decision, we provide
significant guidance on how we view our responsibilities pursuant to section 271 of the 1996
Act.  I write separately to discuss my support of this decision, and to emphasize why the
Commission is taking a strict approach on section 271 applications.  Without such an
approach, local networks will not be opened to competitors any time soon, competition will
not be fair, and the careful statutory scheme set up by Congress will not be successfully
implemented.
     In today's order, we have interpreted the language of section 271 as viewed in the
context of the 1996 Act as a whole.  To best understand Congress' goals in section 271, some
background is necessary to put Bell Operating Company (BOC) entry into long distance into
perspective.  In the era following the breakup of the AT&T telephone monopoly, regulators
viewed the local telephone markets as natural monopolies.  Most local telephone companies,
including the seven BOCs and other incumbent local exchange carriers (LECs), held exclusive
franchises for their service areas.  The ban on BOC entry into the long distance market was
based on the belief that the restriction was necessary to preserve competition in the newly
competitive long distance market.  If the BOCs were permitted to compete in the long
distance market, it was believed they would have substantial incentives and opportunities
through their bottleneck control of local exchange facilities to unduly discriminate against
their long distance competitors and to cross subsidize their long distance ventures to the
detriment of local telephone consumers.
     The 1996 Act represents the first major comprehensive reform of the federal
telecommunications statute since the 1930's.  The 1996 Act radically departs from the
monopoly mindset and directs the FCC to establish a new "procompetitive, deregulatory"
framework that, in time, allows any player to participate in any telecommunications market.
In the past year and a half, the Commission has been engaged in interpreting sections 251, 252
and 253 of the 1996 Act, which, in effect, open local telecommunications markets to
previously precluded competitors by removing legal impediments and inherent economic and
operational advantages possessed by the incumbents.  These provisions require incumbent
LECs, including the BOCs, to share their local networks in a manner that allows competitors
to swiftly enter the local telecommunications market, without initially having to completely
duplicate the incumbent LEC's entire local network. Congress clearly intended that new
entrants be able to compete on a fair playing field with the incumbent LECs, and thus these
provisions include strict requirements to ensure that the incumbent LEC will open its local
network to competition.  Because the BOCs have little natural incentive to help new rivals
gain a foothold in the local telephone market, the 1996 Act contains various measures to
provide this incentive.  The key measure is section 271.
     Section 271 is the "carrot" that is offered to the BOCs to cooperate in the opening of
their local network to competitors.  Congress conditioned BOC entry into the in-region long
distance market in a particular state on compliance with the section 271 application process.
After consultation with the relevant state commission and the Department of Justice (DOJ),
the Commission is required by section 271 to make various findings within a 90-day
timeframe from the filing date of the BOC's application.  Specifically, the Commission "shall
not approve" a 271 application unless it finds that:  (1) the BOC meets the requirements of
Track A or Track B; (2) the BOC has fully implemented the competitive checklist contained
in section 271(c)(2)(B); (3) the requested authorization will be carried out in accordance with
the requirements of section 272; and (4) the BOC's entry into the in-region interLATA
market is "consistent with the public interest, convenience and necessity."
     To date, we have had three section 271 applications filed.  Ameritech's first application
for Michigan was withdrawn voluntarily, and we recently rejected SBC's section 271
application for Oklahoma as not meeting Track A.  In this Ameritech Michigan application,
we find that Ameritech meets the Track A requirement, but has not yet demonstrated full
compliance with the checklist.  Although we ultimately deny Ameritech's application,
Ameritech's progress deserves praise.  It is my view that Ameritech has made significant, good
faith efforts to open its networks to competitors.  In addition, I want to commend the work
of DOJ and the Michigan Public Service Commission for their invaluable input in this
proceeding.
     As we prepared this decision, many have asked the Commission to provide more
guidance as to how we will evaluate compliance with section 271 in future applications.  I am
glad that we have made a substantial effort in this decision to provide guidance on a number of
the issues in the record before us.  We hope this guidance proves helpful to the BOCs, DOJ,
the state commissions, and other interested parties.
     For example, in this decision, we have provided some new guidance on the Track A
requirements contained in section 271(c)(1)(A).  We build upon our finding in SBC Oklahoma
that the use of the term "competing provider" in that subsection suggests that there must be an
actual commercial alternative to the BOC.  Today, we make it clear that this subsection does
not require a new entrant to attain any specified level of market share or geographic
penetration to be considered a "competing provider."  I believe this interpretation is consistent
with Congressional intent, and that any contrary interpretation would not be faithful to the
plain statutory language or the legislative history.
     Today's decision also reflects the Commission taking a "hard line" as to BOC
provision of access to operations support system (OSS) functions that comply with sections
251(c)(3) and (c)(4), as required by the checklist.  New entrants have made a strong case to me
that provision of access to OSS functions is absolutely critical to their competitive entry.  In
this decision, we found that Ameritech did not establish by a preponderance of evidence that
it is providing access to all OSS functions in a way that is nondiscriminatory.  Along with the
Michigan Public Service Commission and DOJ, we find that Ameritech did not provide
adequate OSS performance measurements for competing carriers and for itself, which is a
necessary prerequisite for us to make an informed decision on OSS compliance.  In the future,
it will be helpful if the BOCs file the necessary information to allow us to make a reasoned
decision on this key point.  Given the Commission's deep concern about this item, we expect
to see detailed and verifiable evidence that this checklist item has been met.
     Although we do not reach a decision on the merits of Ameritech's pricing of checklist
items, we recognize that efficient pricing of checklist items is vitally important to competitive
entry into the local market.  Under section 271(c)(2)(B), the Commission is required to
determine whether an applicant has complied with the pricing standards set forth in sections
251(c) and  252(d) of the Act.  In this order, we state that such determinations by the
Commission must be made in a uniform manner nationwide.  I recognize that this section of
today's order may be considered controversial, but this is not our intent.  I agree with my
colleagues that the Commission must be concerned about the uniformity of our section 271
decisions on the issue of pricing.  I hope that when states are addressing pricing issues pursuant
to their authority under section 252(d), they will consider our views on the appropriate
pricing methodology.   I am very encouraged that many states to date have indicated that
they have adopted or plan to adopt forward-looking economic cost approaches.  I emphasize
my view that the FCC and the state commissions have been given the same ultimate
assignment by Congress -- to introduce competition into the local market -- and the best way
to achieve this goal is to put aside jurisdictional disputes and work together to make this goal a
reality.
     In this decision, we also have provided some guidance on how we plan to approach the
public interest component of section 271.  I read section 271 as requiring our traditional broad
public interest review, weighing the overall benefits of BOC entry versus any detriments.  We
set forth in this item the types of factors that we believe are relevant in determining whether
the grant of an application is in the public interest.  These factors include (but are not limited
to) the impact on both the local and long distance markets, whether the evidence reflects that
the BOC will remain in compliance with section 271, the scope of local competition in the
state and efforts by the BOC to facilitate entrance by competitors into the local market.  I
emphasize that the factors we discuss are for illustrative purposes only and that no one factor
must be met in order for an application to be granted.  Thus, we are consistent with Congress'
directive that we do not "limit or expand the checklist."
     Although we have denied two section 271 applications to date, this Commission is
committed to helping the BOCs achieve the "carrot" they so desire -- entry into long distance.
Thus, this order goes beyond those issues on which we based our denial of the application to
provide additional guidance on other issues raised in the record.  We expect that, as a result, a
BOC should be able to make a persuasive and factually-supported showing that it has
complied with both the letter and the spirit of section 271, and the 1996 Act as a whole.
Thus, I remain confident that BOCs will be able to achieve long distance entry in the near
future.  Finally, our decision to set the bar high for section 271 applications is the right one,
because the very success of the 1996 Act depends on local networks being open, in order for
competition in all markets to be fair and to flourish.