[Federal Register Volume 62, Number 3 (Monday, January 6, 1997)]
[Rules and Regulations]
[Pages 662-664]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-50]


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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 51

[CC Docket No. 96-98; FCC 96-483]


Implementation of the Local Competition Provisions in the 
Telecommunications Act of 1996

AGENCY: Federal Communications Commission.

ACTION: Final rule; motion for stay and notification of court stay.

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SUMMARY: The Order released December 18, 1996 dismisses the motion for 
stay of three rules adopted in the First Report and Order, (August 29, 
1996), filed by the Rural Telephone Coalition (RTC) to the extent that 
RTC seeks a stay of 47 CFR 51.809, and otherwise denies the motion for 
stay. Denial of the motion for stay allows the rules relating to local 
competition which have not been stayed by the United States Court of 
Appeals for the Eighth Circuit (Iowa Utilities Board v. Federal 
Communications Commission, No. 96-3321 et al., 1996 WL 589284 (8th Cir. 
1996 Oct. 15, 1996)) to go into effect without delay.

EFFECTIVE DATE: Sections 51.501-51.515 (inclusive), 51.601-51.611 
(inclusive), 51.705-51.715 (inclusive), and 51.809 are stayed effective 
October 15, 1996 pursuant to court order. Motion for stay by the Rural 
Telephone Coalition is dismissed effective January 6, 1997.

FOR FURTHER INFORMATION CONTACT: Lisa Gelb, Attorney, Common Carrier 
Bureau, Policy and Program Planning Division, (202) 418-1580.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
adopted December 18, 1996, and released December 18, 1996. 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 
St., NW., Washington, DC. The complete text also may be obtained 
through the World Wide Web, at http://www.fcc.gov/Bureaus/Common 
Carrier/Orders/fcc96483.wp, or may be purchased from the Commission's 
copy contractor, International Transcription Service, Inc., (202) 857-
3800, 2100 M St., NW., Suite 140, Washington, DC 20037.

Regulatory Flexibility Analysis

    There are no new rules or modifications to existing rules adopted 
in this Order.

Paperwork Reduction Act

    There are no new or modified collections of information required by 
this Order.

Synopsis of Order

I. Introduction

    1. On August 1, 1996, the Commission adopted rules implementing the 
local competition provisions of the Telecommunications Act of 1996 
(1996 Act). On October 2, 1996, the Rural Telephone Coalition (RTC) 
filed a motion for stay of three rules adopted in the First Report and 
Order, 61 FR 45476 (August 29, 1996), pending judicial review. 
Oppositions to the motion for stay were filed by MCI, the Association 
for Local Telecommunications Service (ALTS), and the National Cable 
Television Association (NCTA). For the reasons set forth below, we 
dismiss the motion in part, and otherwise deny the motion for stay.

II. Background

    2. Section 251(c) of the Communications Act of 1934, as amended, 
(the Act) imposes on incumbent local exchange carriers (LECs) 
obligations regarding interconnection, resale of services, and 
unbundled network elements. Section 251(f)(1) of the Act provides that 
a rural telephone company is exempt from the requirements of section 
251(c) unless the state commission finds that the rural carrier has 
received a bona fide request for interconnection, services, or network 
elements, and the state commission determines that the request ``is not 
unduly economically burdensome, is technically feasible, and is 
consistent with section 254 (other than subsections (b)(7) and 
(c)(1)(D) thereof).'' Section 251(f)(2) of the Act permits LECs ``with 
fewer than 2 percent of the Nation's subscriber lines installed 
nationwide'' to petition a state commission for suspension or 
modification of application of one or more requirements of sections 
251(b) or 251(c). The petition

[[Page 663]]

shall be granted to the extent that, and for such duration as, the 
state commission determines that the suspension or modification:
    (A) is necessary--
    (i) to avoid a significant adverse economic impact on users of 
telecommunications services generally;
    (ii) to avoid imposing a requirement that is unduly economically 
burdensome; or
    (iii) to avoid imposing a requirement that is technically 
infeasible; and
    (B) is consistent with the public interest, convenience, and 
necessity.
    3. In the First Report and Order, and in Sec. 51.405 of the 
Commission's rules, the Commission held that, once a requesting carrier 
has made a bona fide request for interconnection, services, or network 
elements, incumbent rural LECs bear the burden of proving that they 
should continue to be exempt from the requirements of section 251(c). 
The Commission also offered guidance on what would constitute an 
``unduly'' economically burdensome requirement for purposes of sections 
251(f)(1) and 251(f)(2), holding that the incumbent rural carrier must 
offer evidence that the application of the requirements of section 
251(c) of the Act would be likely to cause economic burden ``beyond the 
economic burden that is typically associated with efficient competitive 
entry.''
    4. Section 252(a) of the Act, entitled ``Agreements Arrived at 
Through Negotiation,'' provides, in part, that, ``[t]he agreement, 
including any interconnection agreement negotiated before the date of 
enactment of the Telecommunications Act of 1996, shall be submitted to 
the State commission under subsection (e) of this section.'' In the 
First Report and Order, and as set forth in Section 51.303 of its 
rules, the Commission concluded that interconnection agreements that 
were reached before the 1996 Act was enacted must be submitted to the 
state commission for review under section 252, including agreements 
between adjacent incumbent local service providers. In addition, 
section 252(i) of the Act requires an LEC to make available ``any 
interconnection, service, or network element provided under an 
agreement approved under'' section 252 to which the LEC is a party to 
any other requesting telecommunications carrier upon the same terms and 
conditions as those provided in the agreement. In the First Report and 
Order and Sec. 51.809 of its rules, the Commission interpreted that 
provision to require an incumbent LEC to make available to a requesting 
telecommunications carrier, upon the same rates, terms, and conditions, 
any individual interconnection, service, or network element arrangement 
contained in any agreement approved by the state under section 252 to 
which the incumbent LEC is a party.

III. Summary of the Motion and Oppositions

    5. RTC requests a stay of the Commission rules described above. RTC 
contends that the Commission unlawfully modified the standard to be 
used by states in considering whether to terminate the rural exemption. 
RTC contends that placing the burden of proof on the incumbent LEC, and 
the Commission's definition of ``unduly economically burdensome,'' will 
cause rural LECs to suffer irreparable harm. RTC claims that certain 
rural LECs will lose exemptions that they would not have lost if the 
requesting carrier bore the burden of proof. RTC also asserts that the 
Commission's rules will cause rural LECs to incur costs and expend 
resources to retain exemptions from section 251(c) obligations. RTC 
further argues that the Commission's rules ignore two of the three 
statutory factors that must be considered in deciding whether to 
terminate a rural LEC's exemption. RTC also contends that the 
Commission failed to give adequate public notice of its intent to 
establish a test concerning the burden of proof and its intent to 
establish a rule interpreting the phrase ``unduly economically 
burdensome.''
    6. In addition, RTC maintains that the Commission exceeded its 
authority by requiring incumbent LECs to file with state commissions 
interconnection agreements with neighboring LECs that predate the 1996 
Act, and by requiring incumbent LECs to make the individual provisions 
of such agreements available to competing carriers. RTC asserts that 
requiring incumbent LECs to file interconnection agreements negotiated 
prior to the 1996 Act ultimately will force rural LECs to pay higher 
interconnection rates that in turn will result in higher rates for 
rural LEC's customers.
    7. In general, parties opposing the stay motion contend that RTC's 
motion does not meet the four-part test for granting a stay of an 
agency order. These parties contend that RTC is unlikely to prevail on 
the merits of its claims; that it will suffer no irreparable harm if a 
stay is not granted; that grant of a stay will harm third parties; and 
that the public interest weighs in favor of denying a stay.

IV. Discussion

    8. As a threshold matter, the United States Court of Appeals for 
the Eighth Circuit granted a stay of certain rules the Commission 
adopted in the First Report and Order (i.e., 47 CFR 51.501-51.515, 
51.601-51.611, 51.705-51.715, and 51.809). Therefore, we need not 
address RTC's motion for administrative stay of Sec. 51.809.
    9. We examine the remaining portions of RTC's motion for stay 
pursuant to well-established legal principles. A party seeking a stay 
is required to demonstrate: (1) That it is likely to prevail on the 
merits; (2) that it will suffer irreparable harm if a stay is not 
granted; (3) that other interested parties will not be harmed if the 
stay is granted; and (4) that the public interest favors the grant of a 
stay.
    10. With respect to RTC's motion for stay of Secs. 51.303, 
concerning filing of interconnection agreements negotiated before the 
1996 Act became law, and 51.405, concerning rural carriers' burden of 
proof under section 251(f)(1) of the Act, we conclude that RTC has not 
shown that it will suffer irreparable harm absent a stay. A concrete 
showing of irreparable harm is an essential factor in any request for a 
stay. As the U.S. Court of Appeals for the District of Columbia Circuit 
has observed, ``economic loss does not, in and of itself, constitute 
irreparable harm.'' Moreover, competitive harm is merely a type of 
economic loss, and ``revenues and customers lost to competition which 
can be regained through competition are not irreparable.'' Even if the 
alleged harm is not fully remediable, the irreparable harm factor is 
not satisfied absent a demonstration that the harm is ``both certain 
and great; * * * actual and not theoretical.'' We find that RTC's 
claims of harm do not satisfy these exacting standards.
    11. RTC argues that certain rural LECs will be irreparably harmed 
by our finding that the LECs seeking to avoid application of section 
251(c) bear the burden of proof under section 251(f), and by our 
interpretation that, in order for a requirement to be ``unduly 
economically burdensome'' within the meaning of section 251(f), it must 
cause economic burden beyond the economic burden typically associated 
with efficient competitive entry. RTC complains that the Commission's 
``burden of proof and standards requirements substantially increase the 
probability that the exemption will be terminated.''
    12. We find that RTC has not demonstrated that application of these 
rules has caused or will cause harm to rural incumbent LECs that is 
certain, irreparable, or great. As NCTA and MCI assert, RTC has not 
shown that rural LECs would otherwise be exempt from the obligations of 
section 251(c), absent

[[Page 664]]

the Commission's rules. Moreover, even if RTC could establish with 
certainty that rural carriers would lose exemptions as a result of the 
Commission's rules, its contention that LECs would be irreparably 
harmed is speculative. First, economic harm that results from loss of 
customers to competitors does not constitute irreparable harm. Second, 
the Commission stated in the First Report and Order that requesting 
carriers must compensate the incumbent LEC for the costs of services, 
interconnection, or unbundled elements that the incumbent provides upon 
request, and RTC has not shown why, in light of such compensation, it 
would suffer irreparable harm from complying with the requirements of 
section 251(c). Nor has RTC demonstrated that any harm a rural LEC 
arguably might suffer would be substantial.
    13. RTC also asserts that, because the Commission has placed the 
burden of proof on rural carriers that seek to retain exemptions from 
section 251(c), they will incur costs that they would not otherwise 
bear. For example, RTC contends that rural LECs will need to bear costs 
of hiring attorneys, cost consultants, and economists. If the 
Commission's rule is overturned by the court, RTC argues, rural LECs 
will have suffered irreparable harm by incurring these costs. NCTA and 
MCI contend that RTC has provided no evidence that, absent our rules, 
it would not bear similar or identical costs to respond to bona fide 
requests for interconnection, services or network elements. We find no 
basis for concluding that rural carriers will bear costs as a result of 
our rules that they would not otherwise bear. Moreover, courts have 
held that ``[m]ere litigation expense, even substantial and 
unrecoupable cost, does not constitute irreparable injury.''
    14. RTC further argues that the rule requiring the filing of 
interconnection agreements that predate the 1996 Act will irreparably 
harm rural LECs and their customers by ``threaten[ing] higher rates, 
more toll calls, or both, for the affected rural customers.'' This 
argument is speculative, because it assumes without substantiation that 
existing agreements will have to be renegotiated, and that the 
resulting terms will be significantly less favorable to affected rural 
LECs. As the District of Columbia Circuit has noted, in evaluating a 
petitioner's allegations of irreparable harm, ``[b]are allegations of 
what is likely to occur are of no value'' because the critical issue is 
``whether the harm will in fact occur.'' RTC provides no evidence to 
support its allegation that higher rates for customers will in fact 
occur if Sec. 51.303 of the Commission's rules is not stayed.
    15. Because, as discussed above, RTC has failed to demonstrate that 
any rural telephone company would suffer irreparable harm due to the 
application of Sec. 51.303 or 51.405 of our rules, we need not address 
RTC's remaining arguments concerning the other three parts of the test 
governing a motion for stay. Nevertheless, we take this opportunity to 
clarify certain aspects of Sec. 51.405(c) of our rules that RTC 
challenges in its petition for stay. Section 51.405(c) states:

In order to justify continued exemption under section 251(f)(1) of 
the Act once a bona fide request has been made, an incumbent LEC 
must offer evidence that the application of the requirements of 
section 251(c) of the Act would be likely to cause undue economic 
burden beyond the economic burden that is typically associated with 
efficient competitive entry.

RTC erroneously contends that the Commission's rules implementing 
Sec. 251(f)(1) improperly ignore two of the three statutory criteria 
that a state commission must consider in determining whether to remove 
a rural incumbent LEC's exemption from the requirements of Sec. 251(c) 
of the Act. RTC's argument is not based on any affirmative statement in 
our rules that state commissions may disregard evidence of technical 
infeasibility or harm to universal service in deciding whether to 
remove an exemption. Rather, RTC incorrectly infers from the fact that 
our rules address only one of the statutory criteria for evaluating 
such issues that we intended for state commissions to ignore the other 
two criteria. In Sec. 51.405(c) of our rules, we interpreted the 
meaning of the statutory term ``unduly'' as it modifies ``economically 
burdensome,'' because we found that this phrase is susceptible to 
differing interpretations. We did not find it necessary to adopt rules 
that addressed the meaning of ``technical feasibility'' or ``universal 
service.'' That decision, however, does not in any way affect a state's 
responsibility to consider all three of the factors set forth in 
Sec. 251(f)(1)(A). We similarly interpreted the phrase ``unduly 
economically burdensome'' in adopting 47 CFR 51.405(d), and did not 
thereby intend to limit LECs' rights to seek suspensions or 
modifications by other means provided in Sec. 251(f)(2).

V. Ordering Clause

    16. Accordingly, It is ordered that the motion for stay filed by 
the Rural Telephone Coalition is dismissed to the extent that it seeks 
a stay of 47 CFR 51.809, and otherwise is Denied.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-50 Filed 1-3-97; 8:45 am]
BILLING CODE 6712-01-P