[Federal Register Volume 62, Number 144 (Monday, July 28, 1997)]
[Notices]
[Pages 40350-40356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19776]


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FEDERAL COMMUNICATIONS COMMISSION

[CC Docket No. 96-159; FCC 97-244]


Petitions for Limited Modification of LATA Boundaries to Provide 
Expanded Local Calling Service (ELCS) at Various Locations

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: In this Memorandum Opinion and Order adopted July 3, 1997 and 
released July 15, 1997, the Commission grants 23 requests for limited 
modification of local access and transport area (LATA) boundaries to 
permit certain Bell Operating Companies (BOCs) to provide expanded 
local calling service (ELCS) in various communities. The order also 
sets forth guidelines for future LATA modification requests. The order 
will allow the BOCs to provide ELCS in communities whose borders extend 
accross existing LATA boundaries.

FOR FURTHER INFORMATION CONTACT: Pamela Gerr, (202) 418-2357, or Robin 
Smolen, (202) 418-2353, both of the Network Services Division, Common 
Carrier Bureau.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Memorandum Opinion and Order, (FCC 97-244) adopted on July 3, 1997 and 
released on July 15, 1997. The full text of this Order is available for 
inspection and copying during normal business hours in the FCC 
Reference Center (Room 239), 1919 M Street NW, Washington, DC 20554. 
The complete text may also be purchased from the Commission's copy 
contractor, International Transcription Service, Inc., (202) 857-3800, 
1231 20th Street NW, Washington, DC 20036.

Paperwork Reduction Act

     OMB Control No.: 3060-0782.
    Expiration Date: 01/31/98.
    Title: Petitions for Limited Modification of LATA Boundaries to 
Provide Expanded Local Calling Service (ELCS) at Various Locations.
    Form No.: N/A.
    Respondents: Business or other for profit.
    Estimated Annual Burden: 20 respondents; 8 hours per response 
(avg).  x 5 responses annually; 800 total annual burden hours.
    Estimated Annual Reporting and Recordkeeping Cost Burden: $0.
    Frequency of Response: On occasion.
    Needs and Uses: The Commission has provided voluntary guidelines 
for filing expanded local calling service requests. These guidelines 
will allow the Commission to conduct smooth and continuous processing 
of these requests. The collection of information will enable the 
Commission to determine if there is a public need for expanded local 
calling service in each area subject to the request. Your response is 
voluntary.
    Public reporting burden for the collection of information is as 
noted above. Send comments regarding the burden estimate or any other 
aspect of the collection of information, including suggestions for 
reducing the burden to Performance Evaluation and Records Management, 
Washington, DC 20554. An agency may not conduct or sponsor and a person 
is not required to respond to a collection of information unless it 
displays a currently valid control number.

Synopsis of Memorandum Opinion and Order

I. Introduction

    1. Five Bell Operating Companies (BOCs) have filed petitions 
<SUP>1</SUP> with the Commission requesting relief from the effects of 
certain local access and transport area (LATA) boundaries.<SUP>2</SUP> 
The petitions were filed pursuant to section 3(25) of the 
Communications Act of 1934, as amended, which permits modification of 
LATA boundaries by Bell Operating Companies (BOCs), if such 
modifications are approved by the Commission.<SUP>3</SUP> The petitions 
request LATA relief in order to provide expanded local calling service 
(ELCS) <SUP>4</SUP> between communities that lie on different sides of 
existing LATA boundaries (ELCS requests).<SUP>5</SUP> The petitions 
were placed on public notice <SUP>6</SUP> and comments and replies were 
filed.<SUP>7</SUP>
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    \1\ Petitions were filed by Ameritech, Bell Atlantic, BellSouth 
Telecommunications, Inc. (BellSouth), Southwestern Bell Telephone 
Company (SWBT), and US West Communications, Inc. (US West). These 
petitions and the associated LATA modification requests are listed 
in Appendix A. A LATA modification (LM) file number has been 
assigned to each request. See Appendix A.
    \2\ LATAs define the geographic areas within which a BOC may 
provide service. See infra paras. 3, 9. A LATA is defined as ``a 
contiguous geographic area (A) established before the date of 
enactment of the Telecommunications Act of 1996 by a Bell operating 
company such that no exchange area includes points within more than 
1 metropolitan statistical area, consolidated metropolitan 
statistical area, or State, except as expressly permitted under the 
AT&T Consent Decree; or (B) established or modified by a Bell 
operating company after such date of enactment and approved by the 
Commission.'' Section 3(25) of the Communications Act of 1934, as 
amended, 47 U.S.C. 153(25).
    \3\ See 47 U.S.C. 153(25).
    \4\ A local calling area consists of one or more telephone 
exchanges and is an area within which subscribers can place calls 
without incurring any additional charge over their regular monthly 
service charge. See United States v. Western Electric, 569 F. Supp. 
990, 1003 n.59 (D.D.C. 1983) (hereinafter Western Electric). Local 
calling areas are established by state regulatory commissions. See 
id. at 990, 1002 n.54. ELCS (also known as extended area service or 
EAS) allows local telephone service rates to apply to nearby 
telephone exchanges, thus providing an expanded local calling area. 
See id.
    \5\ These LATA modification requests are summarized in Appendix 
B.
    \6\ See Public Notice, ``Commission Seeks Comment on Petitions 
for Waiver of LATA Boundaries to Provide Expanded Local Calling 
Service in Texas and North Carolina,'' DA 96-1190, released July 26, 
1996 (First Public Notice); Public Notice, ``Comment Requested on 
Petitions for Limited Modification of LATA Boundaries to Provide: 
(1) Expanded Local Calling Service (ELCS) in Nebraska, North 
Carolina, Ohio, Oregon, Pennsylvania, Texas, and Virginia, and 
Between Ohio and West Virginia, and Virginia and West Virginia; and 
(2) Integrated Services Digital Network (ISDN) in Hearne, Texas,'' 
DA 97-109, released January 15, 1997 (Second Public Notice).
    \7\ Comments were filed by AT&T Corp. (AT&T), Intelcom Group 
(U.S.A.), Inc. (Intelcom), the North Carolina Utilities Commission 
and the Public Staff-North Carolina Utilities Commission (North 
Carolina PUC), the Public Utilities Commission of Ohio (Ohio PUC), 
the Virginia State Corporation Commission (Virginia Commission), and 
Western Reserve Telephone Company (Western Reserve). Reply comments 
were filed by BellSouth, the North Carolina PUC, and Southwestern 
Bell. Numerous informal comments were also filed by individuals, 
businesses, and local government entities in support of individual 
LATA modification requests.
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    2. There are 24 ELCS requests before the Commission.<SUP>8</SUP> 
For the reasons discussed below, we grant 23 of the ELCS requests and 
order amendment of one request.<SUP>9</SUP> We also provide guidelines 
for future ELCS requests.
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    \8\ SWBT's petition for LATA relief in order to provide 
integrated services digital network (ISDN) in the Hearne, Texas 
LATA, see supra note 6, and Ameritech's request to provide ELCS from 
the Aurora, Northfield and Twinsburg, Ohio exchanges to the Akron, 
Ohio exchange, see id.; see also Public Notice, ``Commission 
Requests Comment on Whether Section 271 of the Communications Act 
Authorizes Ameritech to Carry Certain ELCS Traffic Across a LATA 
Boundary,'' released June 27, 1997, will be addressed in separate 
orders.
    \9\ See US West's Scio/Albany request, NSD-LM-97-25, Appendix A.
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II. Background

A. ELCS Requests Under the Consent Decree
    3. On August 24, 1982, the United States District Court for the 
District of Columbia (Court) entered an order (Consent Decree) that 
required AT&T to divest its ownership of the BOCs.<SUP>10</SUP> The

[[Page 40351]]

Court divided all Bell territory in the continental United States into 
geographic areas called LATAs.<SUP>11</SUP> Under the Consent Decree, 
the BOCs were permitted to provide telephone service within a LATA 
(intraLATA service), but were not permitted to carry traffic across 
LATA boundaries (interLATA service).<SUP>12</SUP> InterLATA traffic was 
to be carried by interexchange carriers.<SUP>13</SUP>
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    \10\ United States v. American Telephone and Telegraph Co., 552 
F. Supp. 131 (D.D.C. 1982), aff'd sub nom. Maryland v. United 
States, 460 U.S. 1001 (1983).
    \11\ See Western Electric, 569 F. Supp. at 993, 994.
    \12\ Id. at 994.
    \13\ Id.
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    4. The LATAs did not cover territory served by independent 
telephone companies (ITCs).<SUP>14</SUP> The Court, however, did 
classify some independent exchanges as ``associated'' with a particular 
LATA.<SUP>15</SUP> Traffic between a LATA and an associated exchange 
was treated as intraLATA, and could be carried by the BOC, while 
traffic between a LATA and an unassociated exchange was treated as 
interLATA, and could not be carried by the BOC.<SUP>16</SUP> The ITCs 
were not subject to the restrictions imposed by the Consent Decree, and 
could carry traffic regardless of whether that traffic crossed LATA 
boundaries.<SUP>17</SUP>
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    \14\ See id. at 1008 n.85.
    \15\ See United States v.Western Electric Co., Inc., 569 F. 
Supp. 1057, 1110-13 & n.234 (D.D.C. 1983).
    \16\ See id.; Western Electric, 569 F. Supp. at 1008-09.
    \17\ Western Electric, 569 F. Supp. at 1008, 1010, 1113.
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    5. In establishing the LATAs, the Court recognized that there were 
existing local calling areas <SUP>18</SUP> that would cross the newly 
created LATA boundaries.<SUP>19</SUP> The Court stated that the LATAs 
were not intended to interfere with local calling areas that had been 
established by state regulators.<SUP>20</SUP> Accordingly, the Court 
granted ``exceptions'' to permit BOCs to carry interLATA traffic if 
necessary to preserve existing ELCS arrangements.<SUP>21</SUP> The 
Court found that such exceptions were consistent with the purposes of 
the Consent Decree because (1) they were limited in scope, (2) they 
would avoid additional charges being imposed on ratepayers, and (3) it 
was unlikely that toll traffic potentially subject to competition would 
be affected.<SUP>22</SUP>
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    \18\ See supra note 4.
    \19\ Western Electric, 569 F. Supp. at 995, 1002 n.54.
    \20\ Id. at 995.
    \21\ Id. at 1002 n.54.
    \22\ Id.
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    6. The Court subsequently received more than a hundred requests for 
waivers of the Consent Decree to permit new interLATA ELCS routes. The 
requests for new ELCS routes were generally initiated by local 
subscribers who asked their state commission to approve an expanded 
local calling area. If the proposed ELCS route was intraLATA it could 
be ordered by the state commission; if the route was interLATA, the BOC 
would also have to obtain a waiver from the Court. The Court developed 
a streamlined process for handling such requests both because of the 
large number of requests involved and because most of the requests were 
non-controversial. Under this process, the BOC would submit its waiver 
request to the Department of Justice (DOJ). DOJ would review the 
request and then submit the request to the Court along with DOJ's 
recommendation.
    7. In evaluating such requests, DOJ and the Court considered the 
number of customers or access lines involved.<SUP>23</SUP> They also 
considered whether there was a sufficiently strong community of 
interest between the exchanges to justify granting a waiver of the 
Consent Decree to allow local calling.<SUP>24</SUP> In particular, they 
considered the state commission's community of interest finding and any 
additional evidence supporting this finding. A community of interest 
could be demonstrated by such evidence as: (1) Poll results indicating 
that customers in the affected exchange were willing to pay higher 
rates to be included in an expanded local calling area; <SUP>25</SUP> 
(2) usage data indicating a high level of calling between the 
exchanges; and (3) narrative statements describing how the two 
exchanges were part of one community and how the lack of local calling 
between the exchanges caused problems for community 
residents.<SUP>26</SUP> The Court was willing to grant waivers when the 
competitive effects were minimal and a sufficient community of interest 
across LATA boundaries was shown.<SUP>27</SUP> The Court frequently 
granted waivers to permit interLATA ELCS.
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    \23\ See United States v. Western Electric Company, Inc., No. 
82-0192, slip op. at 3 n.8 (D.D.C. July 19, 1984) (hereinafter July 
1984 Order).
    \24\ See e.g., United States v. Western Electric Company, Inc., 
No. 82-0192 slip op. at 2, 3 n.3 (D.D.C. Jan. 31, 1985) (hereinafter 
Jan. 1985 Order); United States v. Western Electric Company, Inc., 
No. 82-0192 (D.D.C. Dec. 3, 1993) (hereinafter Dec. 3, 1993 Order); 
United States v. Western Electric Company, Inc., No. 82-0192 (D.D.C. 
Dec. 17, 1993) (hereinafter Dec. 17, 1993 Order).
    \25\  See July 1984 Order, at 2 n.5.
    \26\  See Jan. 1985 Order, at 2-3 & n.3.
    \27\ See July 1984 Order; Jan. 1985 Order; United States v. 
Western Electric Company, Inc., No. 82-0192, slip op. at 2 (D.D.C. 
May 18, 1993) (hereinafter May 1993 Order).
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    8. The Court granted waivers for more than a hundred flat-rate, 
non-optional ELCS plans <SUP>28</SUP> that allow the provision of 
traditional local telephone service between nearby exchanges. Under 
such plans, subscribers pay no extra charge for calls beyond their 
established monthly service charge (the plan involves a flat-rate), and 
all subscribers in the exchange are included in the plan (the plan is 
non-optional).<SUP>29</SUP> The Court refused, however, to grant 
waivers for optional or measured-rate ELCS plans.<SUP>30</SUP> Under 
optional plans, subscribers may chose to pay an additional monthly 
charge for an expanded local calling area,<SUP>31</SUP> while under 
measured-rate plans, subscribers pay measured-rates based on such 
factors as duration, distance, and time of day.<SUP>32</SUP> The Court 
found that granting waivers for such ELCS arrangements could have an 
anticompetitive effect because these services were similar to the toll 
service normally provided by interexchange carriers, and that these 
arrangements were basically discounted toll service for calls that 
would otherwise be carried competitively.<SUP>33</SUP> The Court was 
especially concerned that the discount appeared to result from the fact 
that BOCs, unlike interexchange carriers, did not have to pay access 
charges on such calls.<SUP>34</SUP> The Court also noted that, in the 
case of optional or measured-rate plans, the state commission had not 
found a sufficient community of interest between the exchanges to 
justify traditional local service, (i.e., flat-rate, non-optional 
ELCS).<SUP>35</SUP> Finally, the Court expressed concern that allowing 
new exceptions for measured-rate or optional plans could lead to a 
``piecemeal dismantling'' of the prohibition on the BOCs'' provision of 
interLATA service.<SUP>36</SUP>
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    \28\  See e.g., Western Electric, 569 F. Supp. at 1002 n.54; 
July 1984 Order; Jan. 1985 Order.
    \29\ Id.
    \30\  See e.g., Western Electric, 569 F. Supp. at 1002 n.54 
(optional ELCS plans denied); May 1993 Order (optional ELCS plan 
denied); Dec. 3, 1993 Order (measured-rate ELCS plan denied); Dec. 
17, 1993 Order (measured-rate, optional ELCS plan denied).
    \31\  Id. 
    \32\  See Dec. 3, 1993 Order.
    \33\  See Western Electric, 569 F. Supp. at 1001, 1002 n.54; 
Dec. 17, 1993 Order at 3-4; Dec. 3, 1993 Order.
    \34\  Dec. 17, 1993 Order at 5.
    \35\  See id. at 4; See also May 1993 Order, at 4.
    \36\  See May 18, 1993 Order at 4.
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B. ELCS Requests Under the Telecommunications Act of 1996

    9. On February 8, 1996, the Telecommunications Act of 1996 (1996 
Act) became law, amending the Communications Act of 1934 
(Act).<SUP>37</SUP> Pursuant to the 1996 Act, matters previously 
subject to the Consent Decree are now governed by the Act.<SUP>38</SUP> 
Section

[[Page 40352]]

271(b)(1) of the Act prohibits a BOC from providing ``interLATA 
services originating in any of its ``in-region'' States'' <SUP>39</SUP> 
until the BOC takes certain steps to open its own market to competition 
and the Commission approves the BOC's application to provide such 
service.<SUP>40</SUP> In addition, while the Commission may forbear 
from applying certain provisions of the Act under certain 
circumstances,<SUP>41</SUP> the Commission may not forbear from section 
271.<SUP>42</SUP> Section 3(25)(B) of the Act provides that BOCs may 
modify LATA boundaries, if such modifications are approved by the 
Commission.<SUP>43</SUP>
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    \37\ Pub. L. 104-104, 110 Stat. 56 (1996).
    \38\ Section 601(a)(1) of the 1996 Act states that ``(a)ny 
conduct or activity that was, before the date of enactment of this 
Act, subject to any restriction or obligation imposed by the AT&T 
Consent Decree shall, on and after such date, be subject to the 
restrictions and obligations imposed by the Communications Act of 
1934 as amended by this Act and shall not be subject to the 
restrictions and obligations imposed by such Consent Decree.'' On 
April 11, 1996, the Court issued an order terminating the AT&T 
Consent Decree and dismissing all pending motions under the Consent 
Decree as moot, effective February 8, 1996. See United States v. 
Western Electric Company, Inc., No. 82-0192, 1996 WL 255904 (D.D.C. 
Apr. 11, 1996).
    \39\ Section 271(i)(1) of the Act defines ``in-region State'' as 
a state in which a Bell operating company or any of its affiliates 
was authorized to provide wireline telephone exchange service 
pursuant to the reorganization plan approved under the Consent 
Decree, as in effect on the day before the date of enactment of the 
Telecommunications Act of 1996. 47 U.S.C. 271(i)(1). Section 3(21) 
of the Act defines ``interLATA service'' as ``telecommunications 
between a point located in a local access and transport area and a 
point located outside such area.'' 47 U.S.C. 153(21).
    \40\ 47 U.S.C. 271(b)(1). Section 271(f), however, provides that 
BOCs are not prohibited from engaging in an activity to the extent 
that such activity was previously authorized by the Court. See 47 
U.S.C. 271(f). Thus, BOCs may continue to serve previously 
authorized interLATA ELCS routes. Id.
    \41\ See 47 U.S.C. Sec. 160(a).
    \42\ See 47 U.S.C. Sec. 160(d).
    \43\ See 47 U.S.C. Sec. 153(25)(B).
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    10. Since passage of the 1996 Act, the Commission has received six 
petitions requesting LATA relief in order that ELCS can be offered. On 
July 26, 1996 the Commission issued a public notice requesting comment 
on petitions filed by BellSouth and SWBT for a ``waiver'' of LATA 
boundaries.<SUP>44</SUP> On January 15, 1997 the Commission issued a 
Second Public Notice requesting comment on petitions filed by 
Ameritech, Bell Atlantic, and US West, and allowing additional comment 
on the petitions previously filed by BellSouth and SWBT.<SUP>45</SUP> 
The Second Public Notice stated that, although several of the petitions 
describe the relief requested as a ``waiver'' of LATA boundaries, all 
of the petitions cited section 3(25) as the basis of the Commission's 
jurisdiction to act upon these requests. Accordingly, the Commission 
stated that it would treat all of these petitions as requests for 
modification of LATA boundaries for the limited purpose of providing 
the specific service indicated in the request. The Commission further 
stated that the LATA boundaries would remain unchanged for all other 
purposes.
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    \44\  See supra note 6.
    \45\  Id.
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III. Comments

    11. In response to the First Public Notice, formal comments or 
reply comments were filed by AT&T, BellSouth, Intelcom, <SUP>46</SUP> 
the North Carolina PUC, and SWBT. AT&T states that the Commission lacks 
authority to waive LATA boundaries and that the petitions can only be 
properly characterized as LATA modification requests if they propose to 
move a LATA boundary so that certain calls previously classified as 
intraLATA are now interLATA, and other calls previously classified as 
interLATA are now intraLATA.<SUP>47</SUP> AT&T further contends that 
such LATA modification requests raise serious competitive issues 
because, if granted, they will completely displace the interexchange 
carrier currently providing that service.<SUP>48</SUP> AT&T also states 
that granting such requests could allow a BOC to ``chip away'' at the 
prohibition against its provision of in-region interLATA service prior 
to meeting the requirements of Section 271, thus reducing the BOCs' 
incentive to open its own local market to competition.<SUP>49</SUP> 
Accordingly, AT&T concludes that LATA modifications should be granted 
``sparingly, if at all.'' <SUP>50</SUP> Like AT&T, Intelcom also has 
expressed concern about possible anticompetitive effects <SUP>51</SUP> 
and states that the Commission should approach these and future LATA 
modification requests with caution.<SUP>52</SUP> Intelcom, however, 
takes no position on the current petitions and states that the proposed 
modifications would appear to have no more than a de minimis effect on 
competition.<SUP>53</SUP> BellSouth, the North Carolina PUC, and SWBT 
all strongly support the grant of particular ELCS requests.
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    \46\  Intelcom states that it is a provider of competitive local 
access services and that it operates networks in numerous parts of 
the country including some of the LATAs affected by the petitions in 
this proceeding. Intelcom Comments at 2-3.
    \47\  AT&T Comments at 2-3.
    \48\ Id. at 4.
    \49\ Id.
    \50\ Id. at 5.
    \51\  Intelcom Comments at 3-4.
    \52\ Id. at 4.
    \53\ Id.
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    12. In response to the Second Public Notice, comments were filed by 
the Ohio PUC, the Virginia Commission and Western Reserve. These 
petitions all support granting particular ELCS requests. The Virginia 
Commission, in its comments, also requests approval for a LATA boundary 
modification to permit ELCS between the Waverly and Wakefield exchanges 
in Virginia (Virginia Commission's Waverly/Wakefield request). 
<SUP>54</SUP> This request was not included in any of the LATA 
modification petitions previously filed with the 
Commission.<SUP>55</SUP>
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    \54\ See Virginia Commission Comments at 1-2.
    \55\ See supra para. 10.
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IV. Discussion

A. General Considerations

    13. Section 3(25) of the Act defines LATA as those areas 
established prior to enactment of the 1996 Act or established or 
modified by a BOC after such date of enactment and approved by the 
Commission. Section 271 of the Act prohibits a BOC from providing 
interLATA services until such time as certain enumerated conditions are 
satisfied. Section 10(d) prohibits the Commission from forbearing from 
applying the requirements of section 271. Thus, for a BOC to provide 
service on a new ELCS route that crosses existing LATA boundaries, the 
statute appears to require that BOC either to modify the LATA so that 
the route no longer crosses a LATA boundary and obtain Commission 
approval therefor, or satisfy the requirements of section 271.
    14. The state commissions have determined that certain communities 
have an immediate need for traditional local telephone 
service.<SUP>56</SUP> None of the BOCs, however, have yet met the 
section 271 requirements and there is no time limit by which they must 
do so. Thus, requiring the BOCs to meet the section 271 requirements 
would not be the most expeditious way to ensure that local telephone 
service can be provided to these communities in a timely manner. 
Furthermore, the section 271 requirements were intended to ensure that 
BOCs do not prematurely enter into the interexchange market. Given the 
small number of access lines involved for each of the proposed ELCS 
areas in the petitions before the Commission, as well as the type of 
service to be offered (i.e., traditional local service), it is highly 
unlikely that provision of ELCS service would reduce a BOC's motivation 
to open its own market to competition. Similarly, the small volume of 
traffic would seem inconsequential to any interexchange carrier. Thus, 
requiring the BOCs to meet the section 271 requirements prior to 
offering this service would not further Congress's intent to guard 
against competitive abuses.
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    \56\ See infra para. 18.
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    15. While it appears that LATA modification is the preferable means 
by

[[Page 40353]]

which the BOCs can achieve the goal of providing ELCS service, a 
modification of the boundary for all purposes in order to accommodate 
the ELCS routes could be counterproductive. If an exchange were moved 
to another LATA for all purposes, any existing local calling routes 
between that exchange and the original LATA would be lost because such 
traffic would now be interLATA and could no longer be carried by the 
BOC. Instead the traffic would generally be carried by an interexchange 
carrier charging long distance rates. Consequently, such action could 
merely shift the same problem from one community to another.
    16. Thus, we believe that LATA modifications for a ``limited 
purpose'' that would authorize BOCs to provide only flat-rate, non-
optional local calling service between specific exchanges, would best 
achieve the desired goals discussed in paragraph 14. Modification of 
the LATA for the limited purpose of providing the ELCS routes would 
avoid the anomalous situations described above. In addition, limited 
modifications would reduce the potential for anticompetitive effects to 
a greater degree than general LATA modifications because the former 
limit the amount of additional traffic that the BOC may carry whereas 
the latter would permit the BOC to offer any type of service, including 
toll service, between the new exchange and any other point in its LATA.
    17. LATA modification for a limited purpose is both consistent with 
the statute and serves the public interest. Nothing in the statute or 
legislative history indicates that a LATA cannot be modified for a 
limited purpose. As explained above, LATA waiver requests to permit 
precisely the type of ELCS traffic at issue here were regularly and 
routinely granted by the Court under the terms of the AT&T Consent 
Decree. Although Congress did not include corresponding authority when 
it amended the Communications Act, Congress did acknowledge the 
possible need for changes to the LATA boundaries by enacting section 
3(25). Nothing in either the statute or the legislative history 
suggests a decision by Congress intentionally to eliminate the ability 
of a locality, with a demonstrated community of interest that happens 
to straddle a LATA boundary, to obtain reasonably priced telephone 
service. Thus a broad reading of the term ``modify'' in section 3(25) 
is reasonable. Moreover, we will consider each individual request 
carefully, weighing the community need for the modification against the 
potential harm from BOC anticompetitive activity. We find that this 
weighing can best be accomplished by considering those factors 
previously considered by the Court.<SUP>57</SUP>
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    \57\  See supra paras. 7-8 (describing factors considered by the 
Court).
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B. ELCS Requests

1. Flat-rate, Non-optional ELCS
    18. Twenty-three of the pending requests seek limited modifications 
of LATA boundaries in order to provide flat-rate, non-optional ELCS 
(i.e., traditional local service).<SUP>58</SUP> We find that these 
twenty-three requests demonstrate a strong community need for the 
proposed ELCS routes. We note that each of the proposed ELCS routes, in 
the twenty-three requests, was approved by a state commission. 
Furthermore, each request includes a demonstration of need for the 
proposed modification.<SUP>59</SUP> In particular, each request 
indicates that the ELCS route was approved after the state commission 
found there was a sufficient community of interest between the 
exchanges to justify such service. Each request also documented this 
community of interest through additional evidence including: (1) Poll 
results showing that subscribers were willing to pay higher monthly 
rates in order to be included in the expanded local calling area; (2) 
usage data showing a high level of calling between the potentially 
affected exchanges; and (3) narrative statements explaining why the 
exchanges to be part of the ELCS area should be considered part of one 
community. These statements indicated that many community services 
(such as hospitals, doctors offices, schools, stores, public 
transportation facilities, and government offices) were located in a 
nearby community in the adjacent LATA, and that the need to make 
interLATA toll calls for such services caused significant expenses for 
residents. We note that granting ELCS petitions removes the proposed 
routes from the competitive interexchange market and that some LATA 
modifications could reduce the BOCs' incentive to open their own 
markets to competition pursuant to section 271. The LATA modifications 
proposed here, however, would expand the petitioning BOCs' provision of 
local service to limited areas and each request involves only a small 
number of customers or access lines.<SUP>60</SUP> Given the limited 
amount of traffic and the type of service involved, we find that the 
proposed modifications will not have a significant anticompetitive 
effect on the interexchange market or on the BOCs' incentive to open 
their own markets to competition. Finally, we note that several 
commenters strongly urge the Commission to grant particular ELCS 
requests,<SUP>61</SUP> and that no commenter has argued that any one of 
these 23 requests should be denied.
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    \58\ These 23 requests are summarized in Appendix B.
    \59\ See id.
    \60\ The number of customers in these exchanges ranged from 724 
in the Claremont exchange, see Appendix B (summary of Bell 
Atlantic's Claremont/Waverly request), to 7,495 in the Gloucester 
exchange. Id. (summary of Bell Atlantic's Gloucester requests).
    \61\ See Comments of BellSouth, the North Carolina PUC, the Ohio 
PUC, SWBT, the Virginia Commission and Western Reserve. There were 
also numerous informal comments from local residents, businesses and 
local government entities supporting various ELCS requests.
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    19. We conclude that, in each of the twenty-three requests, the 
need for the proposed ELCS routes outweighs the risk of potential 
anticompetitive effects. Furthermore, we are approving these 
modifications solely for the limited purpose of allowing the BOC to 
provide a particular type of service, namely, flat-rate, non-optional 
local calling service, between specific exchanges or geographic 
areas.<SUP>62</SUP> In each case, the LATA is not modified to permit 
the BOC to offer any other type of service, or calls that originate or 
terminate outside the specified areas. Thus, flat-rate, non-optional 
ELCS between the specified exchanges will be deemed intraLATA, and the 
provisions of the Act governing intraLATA service will 
apply.<SUP>63</SUP> Other types of service between the specified 
exchanges will be deemed interLATA, and the provisions of the Act 
governing interLATA service will apply.<SUP>64</SUP>
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    \62\ See Appendix A.
    \63\ The BOC can provide the service without meeting the section 
271 requirements, see 47 U.S.C. Sec. 271(a), and a separate 
affiliate is not required. See 47 U.S.C. 272(a)(2)(B).
    \64\ The BOC cannot provide other types of service (such as 
measured-rate, optional, or toll service) between the specified 
exchanges without meeting the section 271 requirements, see 47 
U.S.C. 271(a).
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2. Measured-Rate, Optional ELCS
    20. US West requests a LATA modification in order to provide 
measured-rate, optional ELCS from its Albany exchange in the Eugene, 
Oregon LATA to the Scio Mutual Telephone Association's Scio 
exchange.<SUP>65</SUP> US West states that the Oregon state commission 
requires carriers to offer both flat-and measured-rate options for all 
ELCS routes in the state.<SUP>66</SUP> Accordingly, US West's plan 
would offer subscribers the

[[Page 40354]]

following options: (1) Unlimited calling for a flat monthly charge; (2) 
a ``usage only'' option in which calls are charged at a set rate per 
minute; and (3) a three or six hour ``measured usage'' 
package.<SUP>67</SUP> US West argues that the proposed ELCS plan is not 
the type of ``optional'' plan previously rejected by the Court because 
subscribers would have to select one of the ELCS plans, and could not 
choose between the ELCS plan and the service offered by an 
interexchange carrier.<SUP>68</SUP> US West also states that the Scio 
exchange has approximately 1600 access lines,<SUP>69</SUP> and that the 
state commission found there was a ``community of interest'' between 
the exchanges and that the ELCS route was necessary to meet the 
``critical needs'' of Scio exchange customers.<SUP>70</SUP>
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    \65\ See US West's Scio/Albany request, Appendices A and B.
    \66\ This policy is intended to ``avoid the potential inequity 
created by flat-rate (ELCS) whereby low-volume users support the 
high volume (ELCS) users.'' See US West Petition, Appendix A at 8.
    \67\ See Letter from John L. Traylor, Senior Attorney, US West, 
Inc., to Common Carrier Bureau, Federal Communications Commission 
(Feb. 14, 1997). These options and rates are for residential 
subscribers. There are different rates and options offered to 
business subscribers. Id.
    \68\ Id.
    \69\ See US West Petition at 4.
    \70\ Id.
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    21. We do not approve this proposed LATA modification. US West's 
request is related to a measured-rate optional ELCS plan. Furthermore, 
although the state commission found that there was a ``community of 
interest'' between the exchanges, it did not make a specific finding 
that there was a sufficient community of interest to warrant 
traditional local service (i.e., flat-rate, non-optional ELCS). 
Subscribers generally can be expected to prefer, and to benefit from, 
reduced rate service to nearby areas but ELCS plans with optional or 
measured-rate elements are similar to the toll services traditionally 
offered by interexchange carriers. We find that modifying a LATA 
boundary in order to permit a BOC to provide measured-rate service 
would allow the BOC to provide what would otherwise be interLATA toll 
service without first meeting the requirements of section 271. Allowing 
LATA modifications for such ELCS plans might well lead to substantial 
expansion of BOC service, without the BOC satisfying the section 271 
requirements.<SUP>71</SUP> The potential anticompetitive effect of 
optional and measured-rate plans, and the lack of any showing of a need 
for traditional local telephone service (i.e., flat-rate, non-optional 
ELCS) between the Albany and Scio exchanges, leads us to deny US West's 
request. While we recognize the state commission's interest in 
providing additional choices to consumers, we will not approve such 
optional or measured-rate plans for the reasons discussed above.
---------------------------------------------------------------------------

    \71\ Cf. May 1993 Order at 4.
---------------------------------------------------------------------------

    22. We note, however, that the Scio/Albany request was placed on 
public notice and that no objections were filed. Moreover, because of 
its general policy requiring both flat-and measured-rate options on all 
ELCS routes, the state commission apparently never considered whether a 
sufficient community of interest existed between the Albany and Scio 
exchanges to justify flat-rate, non-optional ELCS. Under these 
circumstances, we find that the public interest will best be served by 
our giving US West an opportunity to seek further clarification from 
the state commission. Accordingly, we direct US West to amend its 
request within 60 days of the release date of this order to state 
whether it has obtained a further ruling from the state commission that 
addresses whether there is a sufficient community of interest to 
warrant flat-rate, non-optional ELCS between the Albany and Scio 
exchanges and states whether such service has been 
approved.<SUP>72</SUP> If no amendment is filed within the 60 day 
period, the request will be dismissed without prejudice pursuant to 
Section 1.748 of the Commission's rules.<SUP>73</SUP>
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    \72\ We note that even if US West does not file such an 
amendment at this time, our ruling here does not preclude relief to 
residents of the Albany and Scio exchanges. First, the request may 
be resubmitted at any time if the state commission determines that 
the required community of interest exists. This service could also 
be offered by an alternative provider, if available, and US West 
will be able to offer interLATA service if it meets the requirements 
of section 271.
    \73\ 47 CFR 1.748(a). Section 1.748(a) provides that an 
application may be dismissed without prejudice if the applicant 
fails to comply with a request for additional information.
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V. Future LATA Modification Requests

    23. The Common Carrier Bureau has authority to act on petitions to 
modify LATA boundaries, consistent with the principles established in 
this order, pursuant to the delegation of authority contained in 
Secs. 0.91 and 0.291 of the Commission's rules.<SUP>74</SUP> We 
conclude that the following set of guidelines will assist the BOCs in 
filing those LATA modification petitions that involve ELCS and the 
Bureau in acting on those petitions.<SUP>75</SUP> First, we request 
that each ELCS petition be filed by the BOC <SUP>76</SUP> pursuant to 
the application filing requirements set forth in Secs. 1.742 and 1.743 
of the Commission's rules.<SUP>77</SUP> Second, we ask that each 
individual ELCS LATA modification request be the subject of a separate 
petition.<SUP>78</SUP> Third, we request that each petition be labeled 
``Request for Limited Modification of LATA Boundaries to Provide ELCS 
Between the (exchange name) and the (exchange name).'' Finally, we 
request that each ELCS petition include the following information, 
under separately numbered and labeled categories, as indicated below:
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    \74\ 47 CFR 0.91, 0.291.
    \75\ These guidelines have been approved by the Office of 
Management and Budget (OMB) under OMB control number 3060-0782. See 
Paperwork Reduction Act of 1995, Pub. L. 104-13.
    \76\ See section 25(3) (LATAs may be ``modified by a Bell 
operating company'').
    \77\ 47 CFR 1.742-43.
    \78\ See the 24 individual requests listed in Appendix A.
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    (1) Type of service (e.g., flat-rate, non-optional ELCS);
    (2) Direction of service (one-way, two-way; if one-way, indicate 
direction of service);
    (3) Exchanges involved (identity name of each exchange, the LATA 
and state in which each exchange is located; if an exchange is located 
in independent territory, indicate the LATA, if any, with which the 
exchange is associated);<SUP>79</SUP>
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    \79\ See supra para. 4.
---------------------------------------------------------------------------

    (4) Name of carriers (name of carrier providing local service in 
each exchange);
    (5) State commission approval (include a copy of that approval);
    (6) Number of access lines or customers (for each exchange);
    (7) Usage data (e.g., average number of calls per access line per 
month from exchange A to exchange B, from exchange B to exchange A, 
and, if available, percent of subscribers making such calls each 
month);
    (8) Poll results (for each exchange in which a poll was required by 
applicable state procedures and conducted in accordance with those 
procedures. Indicate the amount of proposed rate increase in those 
exchanges);
    (9) Community of interest statement (a statement explaining why the 
two exchanges should be considered part of a single community and why 
community residents need the ELCS);
    (10) Map (showing the exchanges and LATA boundary involved and 
including a scale showing distance); and
    (11) Other pertinent information (e.g., copies of state commission 
reports, summary of hearing testimony).
    24. If any of the above information is unavailable or inapplicable 
to a particular ELCS petition (for example, if polling is not required 
by state procedures), the petition should so indicate. A carrier will 
be deemed to have made a prima facie case supporting grant of the 
proposed modification if the ELCS petition: (1) Has been approved by 
the state commission; (2) proposes only

[[Page 40355]]

traditional local service (i.e., flat-rate, non-optional ELCS); (3) 
indicates that the state commission found a sufficient community of 
interest to warrant such service; (4) documents this community of 
interest through such evidence as poll results, usage data, and 
descriptions of the communities involved; and (5) involves a limited 
number of customers or access lines.<SUP>80</SUP>
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    \80\ See supra para. 18 and note 60.
---------------------------------------------------------------------------

    25. We request that ELCS requests filed with the Commission, but 
not addressed in this order (including the Virginia Commission's 
Waverly/Wakefield request),<SUP>81</SUP> be re-filed so that they 
comply with these guidelines. Each petition will be assigned a LATA 
modification (LM) file number and placed on public notice.
---------------------------------------------------------------------------

    \81\ See supra para. 12.
---------------------------------------------------------------------------

VI. Conclusion

    26. For the reasons set forth above, we approve the 23 requests for 
LATA relief in order to provide flat-rate, non-optional ELCS. These 
LATAs are modified solely for the limited purposes indicated in the 
requests, and shall remain unchanged for all other purposes. In 
addition, we allow US West an additional 60 days in which to amend its 
Scio/Albany request. Finally, we establish guidelines to direct the 
filing of future ELCS requests. These actions serve the public interest 
by permitting minor LATA modifications when such modifications are 
necessary to meet the needs of local subscribers and will not have any 
significant effect on competition.

VII. Ordering Clauses

    27. Accordingly, it is ordered, pursuant to sections 3(25) and 4(i) 
of the Communications Act of 1934, as amended, 47 U.S.C. 153(25), 
154(i), that the requests of Ameritech, Bell Atlantic, BellSouth 
Telecommunications, Inc. (BellSouth), Southwestern Bell Telephone 
Company (SWBT), and US West Communications, Inc. (US West), for LATA 
modifications for the limited purpose of providing flat-rate, non-
optional ELCS at specific locations, identified in File Nos. NSD-LM-97-
2 through NSD-LM-97-24, are approved. These LATA boundaries are 
modified solely for the purpose of providing flat-rate, non-optional 
ELCS between points in the specific exchanges or geographic areas 
indicated in the requests. The LATA boundary for all other services 
shall remain unchanged.
    28. It is further ordered, pursuant to sections 3(25) and 4(i) of 
the Communications Act of 1934, as amended, 47 U.S.C. 153(25), 154(i), 
that the Virginia State Corporation Commission's request for a LATA 
modification to permit ELCS between the Waverly and Wakefield exchanges 
is dismissed without prejudice.
    29. It is further ordered, pursuant to sections 3(25) and 4(i) of 
the Communications Act of 1934, as amended, 47 U.S.C. 153(25), 154(i), 
that US West Communications, Inc. (US West) shall amend its request for 
approval of a LATA modification to provide ELCS from the Albany 
exchange in the Eugene, Oregon LATA to the Scio Mutual Telephone 
Association's Scio exchange, File No. NSD-LM-97-25, as indicated 
herein, within 60 days of the release date of this order. If no 
amendment is filed, US West's LATA modification request will be 
dismissed without prejudice.
    30. It is further ordered that pursuant to section 416(a) of the 
Act, 47 U.S.C. 416(a), the Secretary shall serve a copy of this order 
upon the petitioners listed in Attachment A.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Attachment A--List of Petitions and LATA Modification Requests

Ameritech's November 12, 1996 Petition

    1. Request to provide one-way, flat-rate, non-optional ELCS from 
Ameritech's Duffy exchange in the Columbus, Ohio LATA to Bell 
Atlantic's New Martinsville exchange in the Clarksburg, West 
Virginia LATA (Ameritech's Duffy/New Martinsville request)--File No. 
NSD-LM-97-2.

Bell Atlantic's January 14, 1997 Petition

    2. Request to provide two-way, flat-rate, non-optional ELCS 
between Bell Atlantic's Waverly exchange in the Norfolk, Virginia 
LATA and GTE's Claremont exchange (Bell Atlantic's Claremont/Waverly 
request)--File No. NSD-LM-97-3.
    3. Request to provide two-way, flat-rate, non-optional ELCS 
between Bell Atlantic's Hampton zone of the Metropolitan exchange 
area in the Norfolk, Virginia LATA and GTE's Gloucester exchange 
(Bell Atlantic's Gloucester/Hampton zone request)--File No. NSD-LM-
97-4.
    4. Request to provide two-way, flat-rate, non-optional ELCS 
between Bell Atlantic's Newport News zone of the Metropolitan 
exchange area in the Norfolk, Virginia LATA and GTE's Gloucester 
exchange (Bell Atlantic's Gloucester/Newport News zone request)--
File No. NSD-LM-97-5.
    5. Request to provide two-way, flat-rate, non-optional ELCS 
between Bell Atlantic's Peninsula zone of the Metropolitan exchange 
area in the Norfolk, Virginia LATA and GTE's Gloucester exchange 
(Bell Atlantic's Gloucester/Peninsula zone request)--File No. NSD-
LM-97-6.
    6. Request to provide two-way, flat-rate, non-optional ELCS 
between Bell Atlantic's Poquoson zone of the Metropolitan exchange 
area in the Norfolk, Virginia LATA and GTE's Gloucester exchange 
(Bell Atlantic's Gloucester/Poquoson zone request)--File No. NSD-LM-
97-7.
    7. Request to provide two-way, flat-rate, non-optional ELCS 
between Bell Atlantic's Hampton zone of the Metropolitan exchange 
area in the Norfolk, Virginia LATA and GTE's Hayes exchange in the 
Richmond, Virginia LATA (Bell Atlantic's Hayes/Hampton zone 
request)--File No. NSD-LM-97-8.
    8. Request to provide two-way, flat-rate, non-optional ELCS 
between Bell Atlantic's Newport News zone of the Metropolitan 
exchange area in the Norfolk, Virginia LATA and GTE's Hayes exchange 
in the Richmond, Virginia LATA (Bell Atlantic's Hayes/Newport News 
zone request)--File No. NSD-LM-97-9.
    9. Request to provide two-way, flat-rate, non-optional ELCS 
between Bell Atlantic's Peninsula zone of the Metropolitan exchange 
area in the Norfolk, Virginia LATA and GTE's Hayes exchange (Bell 
Atlantic's Hayes/Peninsula zone request)--File No. NSD-LM-97-10.
    10. Request to provide two-way, flat-rate, non-optional ELCS 
between Bell Atlantic's Poquoson zone of the Metropolitan exchange 
area in the Norfolk, Virginia LATA and GTE's Hayes exchange (Bell 
Atlantic's Hayes/Poquoson zone request)--File No. NSD-LM-97-11.
    11. Request to provide two-way, flat-rate, non-optional ELCS 
between Bell Atlantic's Honaker exchange in the Roanoke, Virginia 
LATA and GTE's Richlands exchange in the Bluefield, West Virginia 
Independent Market Area (Bell Atlantic's Honaker/Richlands 
request)--File No. NSD-LM-97-12.
    12. Request to provide one-way, flat-rate, non-optional ELCS 
from Bell Atlantic's Mason exchange in the Charleston, West Virginia 
LATA to the Pomeroy and Middleport exchanges in Ohio (Bell 
Atlantic's Mason/Pomeroy-Middleport request)--File No. NSD-LM-97-13.
    13. Request to provide one-way, flat-rate, non-optional ELCS 
from Bell Atlantic's New Florence exchange in the Pittsburgh, 
Pennsylvania LATA to GTE's Johnstown exchange (Bell Atlantic's New 
Florence/Johnstown request)--File No. NSD-LM-97-14.
    14. Request to provide two-way, flat-rate, non-optional ELCS 
between Bell Atlantic's Stone Mountain exchange in the Roanoke, 
Virginia LATA and the Lynchburg exchange in the Lynchburg, Virginia 
LATA (Bell Atlantic's Stone Mountain/Lynchburg request)--File No. 
NSD-LM-97-15.

BellSouth Telecommunications' (BellSouth) July 2, 1996 Petition

    15. Request to provide two-way, flat-rate, non-optional ELCS 
between BellSouth's Raleigh exchange in the Raleigh, North Carolina 
LATA and Carolina Telephone and Telegraph Company's (Carolina 
Telephone) Franklinton and Louisburg exchanges (BellSouth's 
Franklinton-Louisburg/Raleigh request)--File No. NSD-LM-97-16.
    16. Request to provide two-way, flat-rate, non-optional ELCS 
between BellSouth's Zebulon exchange in the Raleigh, North Carolina 
LATA and Carolina Telephone's

[[Page 40356]]

Louisburg exchange (BellSouth's Louisburg/Zebulon request)--File No. 
NSD-LM-97-17.
    17. Request to provide two-way, flat-rate, non-optional ELCS 
between BellSouth's Apex, Cary, and Raleigh exchanges in the 
Raleigh, North Carolina LATA and Carolina Telephone's Pittsboro 
exchange (BellSouth's Pittsboro/Apex-Cary-Raleigh request)--File No. 
NSD-LM-97-18.
    18. Request to provide two-way, flat-rate, non-optional ELCS 
between BellSouth's Chapel Hill exchange in the Raleigh, North 
Carolina LATA and the Saxapahaw exchange in the Greensboro, North 
Carolina LATA (BellSouth's Saxapahaw/Chapel Hill request)--File No. 
NSD-LM-97-19.
    19. Request to provide two-way, flat-rate, non-optional ELCS 
between BellSouth's Wilmington exchange and that portion of the 
Scotts Hill exchange served by the 270 prefix in the Wilmington, 
North Carolina LATA, and Carolina Telephone's Holly Ridge exchange 
(BellSouth's Scotts Hill-Holly Ridge/Wilmington request)--File No. 
NSD-LM-97-20.

Southwestern Bell Telephone Company's (SWBT) June 25, 1996 Petition

    20. Request to provide two-way, flat-rate, non-optional ELCS 
between SWBT's Albany exchange in the Abilene, Texas LATA and SWBT's 
Breckenridge exchange in the Dallas, Texas LATA (SWBT's Albany/
Breckenridge request)--File No. NSD-LM-97-21.
    21. Request to provide two-way, flat-rate, non-optional ELCS 
between United/Centel's Pawnee exchange and SWBT's Kenedy and 
Karnes/Fall City exchanges in the San Antonio, Texas LATA (SWBT's 
Pawnee/Kenedy-Karnes-Fall City request)--File No. NSD-LM-97-22.

US West Communications' (US West) November 4, 1996 Petition

    22. Request to provide flat-rate, non-optional ELCS from US 
West's Omaha common service area in the Omaha, Nebraska LATA to 
Lincoln Telephone & Telegraph Company's (LT&T's) 234 exchange 
(serving the communities of Cedar Creek, Louisville, and Manley, 
Nebraska) (US West's 234/Omaha request)--File No. NSD-LM-97-23.
    23. Request to provide flat-rate, non-optional ELCS from US 
West's Omaha common service area in the Omaha, Nebraska LATA to 
LT&T's Murray exchange (US West's Murray/Omaha request)--File No. 
NSD-LM-97-24.

US West Communications' (US West) November 4, 1996 Petition

    24. Request to provide measured-rate, optional ELCS from US 
West's Albany exchange in the Eugene, Oregon LATA to the Scio Mutual 
Telephone Association's Scio exchange (US West's Scio/Albany 
request)--File No. NSD-LM-97-25.

[FR Doc. 97-19776 Filed 7-25-97; 8:45 am]
BILLING CODE 6712-01-U