Federal Register / Vol. 72, No. 197 / Friday, October 12, 2007 / Rules and Regulations 58021 

Disaster Protection Act of 1973, 42 

U.S.C. 4106(a), as amended). This 

prohibition against certain types of 

Federal assistance becomes effective for 

the communities listed on the date 

shown in the last column. The 

Administrator finds that notice and 

public comment under 5 U.S.C. 553(b) 

are impracticable and unnecessary 

because communities listed in this final 

rule have been adequately notified. 

Each community receives 6-month, 

90-day, and 30-day notification letters 

addressed to the Chief Executive Officer 

stating that the community will be 

suspended unless the required 

floodplain management measures are 

met prior to the effective suspension 

date. Since these notifications were 

made, this final rule may take effect 

within less than 30 days. 

National Environmental Policy Act. 

This rule is categorically excluded from 

the requirements of 44 CFR part 10, 

Environmental Considerations. No 

environmental impact assessment has 

been prepared. 

Regulatory Flexibility Act. The 

Administrator has determined that this 

rule is exempt from the requirements of 

the Regulatory Flexibility Act because 

the National Flood Insurance Act of 

1968, as amended, 42 U.S.C. 4022, 

prohibits flood insurance coverage 

unless an appropriate public body 

adopts adequate floodplain management 

measures with effective enforcement 

measures. The communities listed no 

longer comply with the statutory 

requirements, and after the effective 

date, flood insurance will no longer be 

available in the communities unless 

remedial action takes place. 

Regulatory Classification. This final 

rule is not a significant regulatory action 

under the criteria of section 3(f) of 

Executive Order 12866 of September 30, 

1993, Regulatory Planning and Review, 

58 FR 51735. 

Executive Order 13132, Federalism. 

This rule involves no policies that have 

federalism implications under Executive 

Order 13132. 

Executive Order 12988, Civil Justice 

Reform. This rule meets the applicable 

standards of Executive Order 12988. 

Paperwork Reduction Act. This rule 

does not involve any collection of 

information for purposes of the 

Paperwork Reduction Act, 44 U.S.C. 

3501 et seq. 

List of Subjects in 44 CFR Part 64 

Flood insurance, Floodplains. 

■ Accordingly, 44 CFR part 64 is 

amended as follows: 

PART 64—[AMENDED] 

■ 1. The authority citation for part 64 

continues to read as follows: 

Authority: 42 U.S.C. 4001 et seq.; 

Reorganization Plan No. 3 of 1978, 3 CFR, 

1978 Comp.; p. 329; E.O. 12127, 44 FR 19367, 

3 CFR, 1979 Comp.; p. 376. 

§ 64.6 [Amended] 

■ 2. The tables published under the 

authority of § 64.6 are amended as 

follows: 

State and location Community 

No. 

Effective date authorization/cancellation of sale 

of flood insurance in community 

Current effective map date 

Date certain 

Federal assistance no 

longer available in 

SFHAs 

Region IV: 

North Carolina: Hamlet, City of, Richmond 

County.

370200 April 4, 1975, Emerg; July 2, 1987, Reg; October 16, 2007, Susp.October 16, 

2007.

October 16, 

2007. 

Richmond County, Unincorporated Areas .. 370348 September 6, 1985, Emerg; September 6, 

1989, Reg; October 16, 2007, Susp.

......*do .......... Do. 

Rockingham, City of, Richmond County ..... 370201 February 5, 1974, Emerg; September 6, 1989, 

Reg; October 16, 2007, Susp.

......do ........... Do. 

*do =Ditto. 

Code for reading third column: Emerg.—Emergency; Reg.—Regular; Susp.—Suspension. 

Dated: October 3, 2007. 

David I. Maurstad, 

Assistant Administrator, Mitigation, 

Department of Homeland Security, Federal 

Emergency Management Agency. 

[FR Doc. E7–20129 Filed 10–11–07; 8:45 am] 

BILLING CODE 9110–12–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Parts 53 and 64 

[WC Docket No. 02–112; CC Docket No. 00–

175; FCC 07–159] 

Sunset of the BOC Separate Affiliate 

and Related Requirements and 2000 

Biennial Regulatory Review Separate 

Affiliate Requirements 

AGENCY: Federal Communications 

Commission. 

ACTION: Final rule. 

SUMMARY: In this Order, the Commission 

establishes a new framework to govern 

the provision of in-region, long distance 

services by the Bell Operating 

Companies (BOCs) and their 

independent incumbent local exchange 

carrier (incumbent LEC) affiliates. The 

new framework permits the BOCs to 

provide in-region, interstate, long 

distance services either directly or 

through affiliates that are neither section 

272 separate affiliates nor Commission 

rule 64.1903 separate affiliates, subject 

to nondominant carrier regulation, as 

long as they comply with certain 

targeted safeguards and other 

continuing statutory and regulatory 

obligations. 

DATES: The Report and Order is effective 

November 13, 2007, subject to Office of 

Management and Budget (OMB) 

approval for new or modified 

information collection requirements 

contained in the Report and Order. The 

FCC will publish a document in the 

Federal Register announcing the 

effective date for those sections. 

ADDRESSES: Federal Communications 

Commission, 445 12th Street, SW., 

Washington, DC 20554. 

FOR FURTHER INFORMATION CONTACT: 

Melissa Kirkel, Wireline Competition 

Bureau, (202) 418–1580. 

For additional information concerning 

the Paperwork Reduction Act 

information collection requirements 

contained in this document, contact 

Jerry R. Cowden at (202) 418–0447, or 

via the Internet at PRA@fcc.gov. 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Commission’s Report 

and Order and Memorandum Opinion 

and Order (Order) in WC Docket Nos. 

02–112 and 06–120, and CC Docket No. 

00–175, FCC 07–159, adopted August 

30, 2007, and released August 31, 2007. 

The text of this document is available 

for inspection and copying during 


rfrederick on PROD1PC67 with RULES
58022 Federal Register / Vol. 72, No. 197 / Friday, October 12, 2007 / Rules and Regulations 

normal business hours in the FCC 

Reference Information Center, Portals II, 

445 12th Street, SW., Room CY–A257, 

Washington, DC 20554. This document 

may also be purchased from the 

Commission’s duplicating contractor, 

Best Copy and Printing, Inc., 445 12th 

Street, SW., Room CY–B402, 

Washington, DC 20554, telephone (800) 

378–3160 or (202) 863–2893, facsimile 

(202) 863–2898, or via e-mail at http:// 

www.bcpiweb.com. It is also available 

on the Commission’s Web site at http:// 

www.fcc.gov. 

Synopsis of the Report and Order and 

Memorandum Opinion and Order 

1. In May 2002, the Commission 

initiated a rulemaking proceeding (the 

Section 272 Sunset proceeding (67 FR 

42211, June 21, 2002)) to determine 

what regulatory framework should 

apply to BOC provision of in-region, 

interLATA telecommunications services 

after the section 272 safeguards (other 

than those in section 272(e)) had sunset 

pursuant to section 272(f)(1). The 

Commission invited comment on 

whether it should extend those 

safeguards beyond the three-year period 

Congress established for each state. The 

Commission also invited comment on 

what, if any, alternative safeguards it 

might apply to the BOCs’ provision of 

in-region, interLATA, 

telecommunications services. 

2. In May 2003, the Commission 

issued a Further Notice (68 FR 32007, 

May 29, 2003) seeking comment on 

whether the BOCs should be classified 

as dominant if they provided in-region, 

interstate and international, long 

distance services in a way that did not 

comply with the section 272 separate 

affiliate requirements. This Further 

Notice also invited further comment on 

the issues raised in the Independent 

Incumbent LEC proceeding (66 FR 

50139, Oct. 2, 2001), concerning 

whether independent incumbent LECs 

should be classified as dominant in 

their provision of in-region, interstate 

and international, interexchange 

telecommunications services if the 

Commission eliminated or modified the 

separate affiliate requirements in 

§ 64.1903 of the Commission’s rules. 

3. In this Order, the Commission 

establishes a new framework to govern 

the provision of in-region, long distance 

services by the BOCs and their 

independent incumbent LEC affiliates. 

This framework replaces unnecessarily 

burdensome regulation with less 

intrusive measures that protect 

important customer interests while 

allowing the BOCs and their 

independent incumbent LEC affiliates to 

respond to marketplace demands 

efficiently and effectively. The 

Commission finds that this new 

framework will increase the BOCs’ and 

the BOC affiliates’ ability to develop and 

deploy innovative long distance services 

that meet their customers’ needs. 

4. The new framework, which applies 

to AT&T, Qwest, and Verizon, is 

consistent with the Commission’s 

decision in the Qwest Section 272 

Sunset Forbearance Order, 22 FCC Rcd 

5207 (2007). As discussed in that Order, 

the Commission’s current rules force a 

BOC to choose between two different 

regulatory regimes in providing inregion, long distance services, both of 

which impose significant burdens and 

costs: the BOC can provide these 

services on a nondominant carrier basis 

through a section 272 separate affiliate; 

alternatively, it can provide these 

services directly or through an affiliate 

that is not a section 272 separate 

affiliate subject to dominant carrier 

regulation, including rate regulation and 

tariff-filing requirements. AT&T’s and 

Verizon’s independent incumbent LEC 

affiliates must provide in-region, 

domestic, interexchange 

telecommunications services and inregion, international 

telecommunications services only 

through Commission rule 64.1903 

separate affiliates. The Commission 

concludes that a new regulatory 

framework is more appropriate. The 

new framework allows AT&T, Qwest, 

and Verizon to provide in-region, 

interstate, long distance services either 

directly or through affiliates that are 

neither section 272 separate affiliates 

nor Commission rule 64.1903 separate 

affiliates, subject to nondominant carrier 

regulation, as long as they comply with 

certain targeted safeguards as well as 

with other continuing statutory and 

regulatory obligations. 

5. In the Order, the Commission 

considers whether each BOC, if it 

provides in-region, interstate and 

international, long distance services 

through an affiliate that is not compliant 

with section 272, could exercise market 

power with respect to such services by 

either: (1) Unilaterally raising the retail 

price of its in-region, interstate, long 

distance services (i.e., exercising 

‘‘classical’’ market power); or (2) using 

its control over bottleneck local 

facilities to raise its rivals’ costs (i.e., 

exercising ‘‘exclusionary’’ market 

power). The Commission concludes that 

the BOCs lack market power with 

respect to interstate, long distance 

services and in-region, international 

telecommunications services. The 

Commission further concludes, 

however, that the BOCs have failed to 

demonstrate that they lack exclusionary 

market power with regard to these 

services by reason of their control over 

ubiquitous telephone exchange service 

and exchange access networks. The 

Commission therefore assumes, for the 

purposes of this proceeding, that each of 

the BOCs individually continues to 

possess exclusionary market power 

within its respective region by reason of 

its control over these bottleneck access 

facilities. 

6. In the Order, the Commission finds 

that application of dominant carrier 

regulation to AT&T’s, Verizon’s, and 

Qwest’s in-region, interstate, long 

distance services is unwarranted. First, 

as the market analysis indicates, AT&T, 

Qwest, and Verizon do not possess 

classical market power in the provision 

of in-region, interstate, long distance 

services, which is the type of market 

power that dominant carrier regulation 

is designed to address. Second, as the 

Commission recognized in the LEC 

Classification Order (66 FR 35974, July 

3, 1997), dominant carrier regulation is 

not designed to guard against potential 

abuse of exclusionary market power. 

Instead, the Commission finds that 

existing safeguards, combined with the 

additional safeguards adopted in the 

Order, adequately address the ability of 

AT&T, Qwest, and Verizon to raise their 

long distance rivals’ costs through their 

control of bottleneck access facilities. 

7. While the Commission recognizes 

that dominant carrier regulation of 

AT&T’s, Qwest’s, and Verizon’s inregion, long distance services could 

provide some increased level of 

protection against the exercise of 

exclusionary market power beyond that 

provided by these alternative 

safeguards, such regulation would 

impose significant costs. These costs 

include the administrative costs 

imposed on both the carriers and the 

Commission that are associated with 

price regulation, tariff-filing 

requirements, and reporting 

requirements. Application of dominant 

carrier regulation to these services also 

would restrict AT&T’s, Qwest’s, and 

Verizon’s ability to respond to 

competitors’ pricing and product 

initiatives, and would give competitors 

advance notice of AT&T’s, Qwest’s, and 

Verizon’s own pricing plans and new 

products. By impeding the BOCs’ ability 

to compete, these requirements could 

dampen competition. Given the relative 

inefficiency of dominant carrier 

regulation in constraining the exercise 

of exclusionary market power and the 

significant costs associated with such 

regulation, the Commission finds that 

alternative safeguards adopted in this 

Order are more cost-effective than, and 


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Federal Register / Vol. 72, No. 197 / Friday, October 12, 2007 / Rules and Regulations 58023 

preferable to, imposing dominant carrier 

regulation. 

8. Thus, the Commission finds the 

BOCs to be nondominant in the 

provision of in-region, interstate, long 

distance services that they provide 

either directly or through affiliates that 

are not section 272 separate affiliates as 

long as they comply with certain 

targeted safeguards adopted in the Order 

as well as continuing statutory and 

regulatory obligations. The Commission 

also finds the BOCs’ independent 

incumbent LEC affiliates to be 

nondominant in the provision of inregion, long distance services either 

directly or through affiliates that are not 

Commission rule 64.1903 separate 

affiliates. 

9. The Commission further finds no 

practical distinctions between the BOCs’

incentives and ability to use any inregion market power in their provision 

of international services on the one 

hand, and interstate long distance 

services on the other. Accordingly, to 

the extent the BOCs and their 

independent incumbent LEC affiliates 

are deemed nondominant in the 

provision of any in-region, international 

telecommunications service provided 

through a section 272 or Commission 

rule 64.1903 separate affiliate, the 

Commission finds them to be 

nondominant in the provision of that 

service in the event they choose to 

provide it directly or through an affiliate 

that is not a section 272 or Commission 

rule 64.1903 separate affiliate, subject to 

their compliance with the targeted 

safeguards set forth in the Order. 

10. In view of the Commission’s 

nondominance determinations in the 

Order, the Commission finds that, 

subject to the conditions set forth in the 

Order, AT&T, Verizon, and Qwest are 

no longer subject to the requirements in 

section 203 of the Act (47 U.S.C. 203) 

and certain of the Commission’s price 

cap, rate of return, and tariffing rules 

with respect to in-region, interstate and 

international, long distance services. 

Specifically: (1) AT&T, Verizon, and 

Qwest are not required to, and are in 

fact barred from, filing tariffs for inregion, interstate and international, long 

distance services pursuant to section 

203 of the Act and § 61.31 through 

61.38, and 61.43 of the Commission’s 

rules (47 CFR 61.31 through 61.38; 47 

CFR 61.43); (2) AT&T, Verizon, and 

Qwest are not required to establish an 

‘‘interexchange basket’’ pursuant to 

§ 61.42(d)(4) of the Commission’s rules 

(47 CFR 61.42(d)(4)), to the extent that 

§ 61.42(d)(4) would require the 

establishment of an interexchange 

basket for the services covered by this 

Order when those services are provided 

directly or through an affiliate that is 

neither a section 272 nor a Commission 

rule 64.1903 separate affiliate; and (3) 

AT&T, Verizon, and Qwest need not 

comply with § 61.28 of the 

Commission’s rules (47 CFR 61.28) for 

the provision of in-region, international 

telecommunications services to the 

extent that, and only to the extent that, 

the BOCs or their affiliates that are 

neither section 272 nor Commission 

rule 64.1903 separate affiliates would be 

treated as dominant carriers under 

§ 61.28 for no other reason than their 

provision of in-region, international 

telecommunications services. To the 

extent that the BOCs or their affiliates 

that are neither section 272 nor 

Commission rule 64.1903 separate 

affiliates otherwise would be treated as 

dominant carriers under § 61.28, this 

Order has no effect on that treatment. 

11. The Commission also finds that, 

subject to the conditions set forth in the 

Order, AT&T, Qwest, and Verizon are 

not subject to certain of the 

Commission’s discontinuance and 

streamlined transfer of control rules in 

connection with their in-region, 

interstate and international, long 

distance services. Specifically, AT&T, 

Qwest, and Verizon are not subject to 

§§ 63.03, 63.19, 63.21, 63.23, and 63.60 

through 63.90 of the Commission’s rules 

(47 CFR 63.03, 63.19, 63.21, 63.23, 63.60 

through 63.90) for their provision of inregion, interstate and international, long 

distance services to the extent that, and 

only to the extent that, the BOCs or their 

affiliates would be treated as dominant 

carriers under these rules for no reason 

other than their provision of those 

services directly or through an affiliate 

that is neither a section 272 nor a 

Commission rule 64.1903 separate 

affiliate. To the extent that the BOCs or 

their affiliates otherwise would be 

treated as dominant carriers under these 

rules, that treatment shall continue. 

12. The Commission further finds 

that, subject to the conditions set forth 

in the Order, AT&T, Qwest, and Verizon 

are not subject to § 43.51 of the 

Commission’s rules (47 CFR 43.51) with 

respect to their provision of in-region, 

interstate or international, long distance 

services directly or through an affiliate 

that is neither a section 272 nor a 

Commission rule 64.1903 separate 

affiliate. Specifically, the BOCs and 

their affiliates are not subject to § 43.51 

of the Commission’s rules with respect 

to their provision of in-region, interstate 

or international, long distance services 

directly or through an affiliate that is 

neither a section 272 nor a Commission 

rule 64.1903 separate affiliate to the 

extent that, and only to the extent that, 

the BOCs or their affiliates would be 

treated as dominant carriers under 

§ 43.51 for no other reason than their 

provision of in-region, interstate or 

international, long distance services 

directly or through an affiliate that is 

neither a section 272 nor a Commission 

rule 64.1903 separate affiliate. To the 

extent that the BOCs or their affiliates 

otherwise would be treated as dominant 

carriers under § 43.51, that treatment 

shall continue. 

13. Because the Commission finds 

that the section 272 safeguards impose 

significant costs and that other less 

costly safeguards adequately address the 

concerns raised by the BOCs’ possession 

of exclusionary market power, the 

Commission declines to impose on the 

BOCs the section 272 safeguards that 

have sunset. The Commission finds that 

the section 272 safeguards impose a 

variety of costs, including 

administrative costs on both the BOCs 

and the Commission. For example, 

providing interstate, interLATA 

telecommunications services through a 

section 272 separate affiliate requires 

the BOCs, inter alia, to operate these 

services independently of their 

telephone exchange service and 

exchange access operations, and to 

maintain duplicate sets of officers, 

directors, and employees. These 

restrictions not only impose additional 

costs, but also prevent the BOCs from 

taking advantage of the economies of 

scope and scale associated with 

integrated operation that their 

competitors are able to realize. 

Moreover, structural separation between 

a BOC’s local telephone and long 

distance operations is at odds with a 

market environment where the 

distinction between those local and long 

distance services has been blurred by 

the way those services are marketed and 

delivered to consumers. As a general 

matter, these restrictions and their 

associated costs make the BOCs less 

effective competitors in the market. 

These restrictions also may prevent the 

BOCs and their affiliates from quickly 

responding to technological and 

marketplace developments. 

14. The Commission also finds good 

cause to waive § 64.1903 of the 

Commission’s rules for the BOCs’

independent incumbent LEC affiliates, 

SNET, including Woodbury, and former 

GTE. The Commission finds that the 

concerns regarding the costs of the 

section 272 safeguards effectively apply 

to both the BOCs and their independent 

incumbent LEC affiliates. Therefore, the 

Commission finds that AT&T and 

Verizon can more effectively implement 

the new regulatory framework adopted 

in the Order if their independent 

incumbent LEC affiliates are subject to 


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58024 Federal Register / Vol. 72, No. 197 / Friday, October 12, 2007 / Rules and Regulations 

the same targeted safeguards as the rest 

of the company as a whole. 

15. AT&T, Verizon, and Qwest remain 

subject to a number of legal obligations 

that are an important component of the 

regulatory framework that the 

Commission finds appropriate for the 

BOCs and their independent incumbent 

LEC affiliates. In particular, these 

carriers are still subject to: dominant 

carrier regulation of their interstate 

exchange access services, including 

price cap regulation of most exchange 

access services; the Commission’s 

accounting and cost allocation rules and 

related reporting requirements; equal 

access obligations under longstanding 

Commission precedent and section 

251(g) of the Act (see 47 U.S.C. 251(g)); 

section 251 obligations (see 47 U.S.C. 

251); section 271 obligations (see 47 

U.S.C. 271), including the obligation to 

continue to comply with the marketopening requirements that the BOCs had 

to meet in order to receive authority to 

provide in-region, interLATA services; 

and the continuing general obligation to 

provide service on just, reasonable, and 

not unreasonably discriminatory rates, 

terms, and conditions pursuant to 

sections 201 and 202 of the Act (see 47 

U.S.C. 201, 202). In addition, the 

nondiscrimination requirement in 

section 272(e)(1) of the Act (47 U.S.C. 

272(e)(1)) and the imputation 

requirement in section 272(e)(3) of the 

Act (47 U.S.C. 272(e)(3)) continue to 

apply. The Commission also requires 

the continued treatment of the costs of, 

and revenues from, the direct provision 

of in-region, long distance services as 

nonregulated for accounting purposes. 

The Commission finds that this 

requirement will provide an important 

protection against improper cost shifting 

by the BOCs and their independent 

incumbent LEC affiliates; address 

concerns of continued compliance with 

section 254(k) of the Act; and lessen the 

chance that costs associated with such 

services are inadvertently assigned to a 

local exchange or exchange access 

category. 

16. In addition, in this Order the 

Commission adopts targeted safeguards 

that will apply to the BOCs to the extent 

they choose to provide in-region, 

interstate or international, long distance 

services either directly or through an 

affiliate that is not a section 272 

separate affiliate. As a further condition 

of this Order, the BOCs’ independent 

incumbent LEC affiliates also must 

comply with these safeguards to the 

extent they provide in-region, interstate, 

interexchange telecommunications 

services either directly or through an 

affiliate that does not comply with the 

requirements of either section 272 or 

§ 64.1903 of the Commission’s rules. 

The targeted safeguards include: (1) 

Special access performance metrics to 

prevent non-price discrimination in the 

provision of special access services; (2) 

imputation requirements to help 

monitor BOC provisioning of these 

services for possible price 

discrimination; (3) the offering of calling 

plans to protect residential customers 

who make few interstate, long distance 

calls; and (4) providing subscribers 

monthly usage information to enable 

them to make cost-effective decisions 

concerning alternative long distance 

plans. 

17. Special Access Performance 

Metrics. As part of the Commission’s 

implementation of the section 272 

structural safeguards, the BOCs have 

implemented special access 

performance metrics designed to help 

ensure that they refrain from non-price 

discrimination in their provision of 

special access services. Once a BOC 

chooses to provide in-region, interLATA 

telecommunications services either 

directly or through an affiliate that is 

not a section 272 separate affiliate, those 

metrics would cease to be available. 

AT&T, Verizon, and Qwest also are 

required to implement special access 

metrics in accordance with their 

voluntary commitments in connection 

with the SBC/AT&T Order, 20 FCC Rcd 

18290 (2005), the Verizon/MCI Order, 

20 FCC Rcd 18433 (2005), the AT&T/ 

BellSouth Order, 22 FCC Rcd 5662 

(2007), and the Qwest Section 272 

Sunset Forbearance Order. This latter 

group of special access metrics 

addresses order taking, provisioning, 

and maintenance and repair of the 

BOCs’ DS0, DS1, DS3, and OCn 

services. 

18. The Commission finds that the 

metrics the Commission approved in the 

SBC/AT&T Order, the Verizon/MCI 

Order, the AT&T/BellSouth Order, and 

the Qwest Section 272 Sunset 

Forbearance Order are necessary to 

monitor whether the BOCs and their 

independent incumbent LEC affiliates 

are engaging in non-price 

discrimination in the provision of 

special access services to unaffiliated 

entities in light of the regulatory relief 

the Commission grants those carriers in 

this Order. The information that AT&T, 

Qwest, and Verizon record and report to 

the Commission under these metrics 

will provide the Commission and other 

interested parties with reasonable tools 

to monitor each BOC’s performance in 

providing these special access services 

to itself and its competitors. This 

obligation shall apply beginning the first 

full quarter following provision of any 

in-region, interLATA 

telecommunications service through the 

BOC or through an affiliate that is not 

a section 272 separate affiliate. In 

addition, each of AT&T’s and Verizon’s 

independent incumbent LEC affiliates 

shall implement these metrics for the 

first full quarter following provision of 

any in-region, interstate, interexchange 

telecommunications service through the 

BOC or through an affiliate that is not 

a section 272 separate affiliate. The 

BOCs and their independent incumbent 

LEC affiliates must continue to abide by 

special access performance metrics until 

there is an affirmative Commission 

determination that such metrics no 

longer are necessary. 

19. Each BOC and each of AT&T’s and 

Verizon’s independent incumbent LEC 

affiliates shall implement these metrics 

to the extent the BOC or independent 

incumbent LEC provides one or more of 

the covered special access services to 

itself, to any affiliate, or to third parties. 

The BOCs and their independent 

incumbent LEC affiliates shall provide 

the Commission with their performance 

measurement results on a quarterly 

basis. 

20. Imputation. The Commission also 

provides guidance, pursuant to its 

authority under sections 201, 202(a), 

220(a), and 272(e)(3) of the Act (47 

U.S.C. 201, 202(a), 220(a), 272(e)(3)), to 

AT&T, Qwest, and Verizon regarding 

the treatment of charges for any access 

services that their incumbent LEC 

affiliates provide their in-region, long 

distance operations. In providing this 

guidance, the Commission addresses 

three situations: (1) The BOCs’

imputation in the event they provide inregion, long distance services on an 

integrated basis; (2) the obligations of 

AT&T’s and Verizon’s independent 

incumbent LEC affiliates in the event 

they provide in-region, long distance 

services on an integrated basis; and (3) 

AT&T’s, Qwest’s, and Verizon’s 

obligations in the event they provide inregion, long distance services through 

an affiliate that is neither a section 272 

nor a rule 64.1903 separate affiliate. 

21. In order to ensure the BOCs’

continued compliance with their 

imputation obligations under section 

272(e)(3), the Commission directs each 

BOC to continue to impute to itself its 

highest tariffed rate for access, including 

access provided over joint-use facilities. 

The Commission also requires AT&T’s 

and Verizon’s independent incumbent 

LEC affiliates, as a condition of the 

waiver granted to them in the Order, to 

comply with the same requirement with 

regard to their provision of access to any 

in-region, long distance services that 

they provide directly. In addition, the 

Commission requires the BOCs and 


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Federal Register / Vol. 72, No. 197 / Friday, October 12, 2007 / Rules and Regulations 58025 

their independent incumbent LEC 

affiliates to charge any non-section 272 

affiliate through which they provide inregion, long distance services the same 

amount for access that they would have 

charged a section 272 separate affiliate 

under section 272(e)(3). Although the 

statute does not address these latter two 

situations directly, applying protections 

paralleling those in section 272(e)(3) to 

these situations will assure that the 

degree of protection against improper 

cost shifting does not vary with AT&T’s, 

Qwest’s, and Verizon’s choice of 

corporate structure for the provision of 

in-region, long distance services. 

22. Section 69.727(a)(iii) of the 

Commission’s rules (47 CFR 

69.727(a)(iii)) requires that a price cap 

LEC cannot provide contract tariff 

services to either a section 272 separate 

affiliate or a Commission rule 64.1903 

affiliate until after it ‘‘certifies to the 

Commission that it provides service 

pursuant to that contract tariff to an 

unaffiliated customer.’’ To ensure that 

equivalent protection is in place in the 

event the BOCs provide in-region, long 

distance services directly, the 

Commission requires that each AT&T, 

Verizon, and Qwest incumbent LEC 

provide such a certification to the 

Commission prior to providing contract 

tariff services to itself or to any affiliate 

that is neither a section 272 nor a 

Commission rule 64.1903 separate 

affiliate for use in the provision of any 

in-region, long distance services. 

23. The Commission requires that 

AT&T, Qwest, and Verizon revise the 

cost allocation manuals they filed 

pursuant to § 64.903 of the 

Commission’s rules (47 CFR 64.903) to 

include their imputation methodologies, 

which will be subject to public 

comment. The Commission also 

requires AT&T, Qwest, and Verizon to 

revise their cost allocation manuals to 

include a description of how their 

provision of access services will comply 

with the affiliate transaction rules, to 

the extent they will offer in-region, 

interstate, long distance service through 

an affiliate that is not a section 272 

separate affiliate or a Commission rule 

64.1903 affiliate. Consistent with the 

Commission’s findings in the 

Accounting Safeguards Order (61 FR 

41208, Aug. 7, 1996), the Commission 

requires that the BOCs and their 

independent incumbent LEC affiliates 

continue to treat in-region, long distance 

services as nonregulated for accounting 

purposes. These carriers also must 

continue to apply the Commission’s 

affiliate transaction rules to any 

transactions they have with affiliates 

that provide long distance services. The 

Commission also directs AT&T, Qwest, 

and Verizon to modify their cost 

allocation manuals as necessary to 

ensure that their imputation and access 

charge methodologies remain consistent 

with section 272(e)(3) and this Order as 

each of these carriers changes the degree 

to which it integrates its local telephone 

and long distance operations. 

24. Finally, under the Commission’s 

rules, amounts imputed to each BOC’s, 

or BOC independent incumbent LEC 

affiliate’s, in-region, long distance 

operations pursuant to section 272(e)(3) 

and the Order must be debited to 

account 32.5280 (47 CFR 32.5280), 

which includes nonregulated operating 

revenue. To facilitate transparency of 

each carrier’s imputation of in-region, 

long distance costs, the Commission 

requires AT&T, Qwest, and Verizon, as 

a condition of the Order, to include the 

imputation charges it debits to account 

32.5280 in its ARMIS filings, 

accompanied by an explanatory footnote 

for each line item identifying the 

amount imputed. This requirement 

should pose at most a minimal 

additional burden to the carriers 

because they already record imputation 

charges in a subsidiary record account 

for revenues derived from regulated 

services treated as nonregulated for 

federal accounting purposes, and 

already must file ARMIS reports. 

25. Low Volume Usage Plans. 

Although it finds that the BOCs 

generally lack classical market power in 

the provision of in-region, interstate, 

long distance services, the Commission 

remains concerned that BOC residential 

customers who make relatively few 

interstate long distance calls and who 

do not also subscribe to wireless or 

broadband Internet access service may 

have fewer competitive choices among 

in-region, interstate long distance 

providers and may not be able to avoid 

the impact of a price increase by 

engaging in usage substitution. To 

address this concern, AT&T and Verizon 

each have committed for three years to 

offer a rate plan tailored to these 

customers’ needs. Specifically, AT&T 

and Verizon each commit to offer a rate 

plan under which residential consumers 

with a local access line may obtain 1+ 

long distance telecommunications 

services at a rate of 12 cents per minute 

with no monthly minimum or monthly 

recurring charge. In connection with the 

Qwest Section 272 Sunset Forbearance 

Order, Qwest committed to freeze for 

two years the per-minute prices for two 

calling plans that it currently offers 

which are tailored to these customers’

needs, and to not increase the monthly 

fee that applies to one of these plans by 

more than one dollar as a condition of 

the Commission’s forbearance. The 

Commission requires that AT&T, Qwest, 

and Verizon adhere to these 

commitments as a condition of the relief 

granted in this Order, and finds that this 

condition will help protect against the 

exercise of any classical market power 

that Verizon, AT&T, or Qwest may have 

in relation to customers that make 

relatively few interstate long distance 

calls. 

26. Monthly Usage Information. The 

Commission is also concerned that 

interstate long distance consumers need 

adequate information regarding their 

monthly usage in order to make 

informed choices among alternative 

long distance calling plans. To address 

this concern, AT&T has committed to 

provide, for three years, each residential 

customer who subscribes to a calling 

plan that establishes a single rate for 

unlimited wireline local exchange and 

long distance telecommunications 

service with the total number of long 

distance telecommunications service 

minutes used by that customer each 

month. Similarly, Verizon has 

committed, for three years, to offer 

monthly long distance usage 

information to customers who subscribe 

to wireline interstate, interexchange 

telecommunications service plans that 

establish a single rate for unlimited 

wireline local exchange, intraLATA toll, 

and 1+ long distance 

telecommunications service. As a 

condition of the regulatory relief granted 

in this Order, the Commission requires 

AT&T, Verizon, and Qwest to provide 

such usage information without an 

additional charge. 

27. The Commission finds that the 

new regulatory framework adopted in 

this Order is preferable to the regulatory 

requirements previously in place for the 

BOCs and their independent incumbent 

LEC affiliates. In particular, the 

Commission finds that the new 

framework imposes significantly fewer 

costs than the prior regulations. Because 

the new framework does not involve 

retail price regulation or tariff filing 

with respect to in-region interLATA 

telecommunications services, it imposes 

fewer costs than would dominant carrier 

regulation. The new framework also 

does not impose the costs and 

inefficiencies associated with the full 

section 272 safeguards, including the 

costs and inefficiencies from 

maintaining structural separation 

between local telephone and long 

distance operations, operating these 

services independently, and 

maintaining duplicate sets of officers, 

directors, and employees. In addition, 

the new framework does not impose the 

same constraints on the ability of the 

BOCs and their independent incumbent 


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LEC affiliates to respond to 

technological and marketplace 

developments as do the section 272 and 

Commission rule 64.1903 safeguards. 

Further, the Commission finds that the 

improved ability of AT&T, Verizon, and 

Qwest to develop and deploy innovative 

interLATA services that meet their 

customers’ needs is a significant benefit 

associated with the new framework 

adopted in this Order. Given its 

expertise and experience with the 

regulation historically imposed on the 

BOCs and their independent incumbent 

LEC affiliates; the evidence of 

significant competition and evolution in 

the marketplace for interstate long 

distance services within the AT&T, 

Verizon, and Qwest incumbent LEC 

territories; and its conclusions regarding 

the adequacy of other safeguards, the 

Commission finds it appropriate to 

remove hindrances to the BOCs’ and 

their independent incumbent LEC 

affiliates’ becoming more effective 

competitors in a manner that is 

administrable and adequately protects 

customers and competition. 

Paperwork Reduction Act Analysis 

28. This document contains new or 

modified information collection 

requirements. The Commission, as part 

of its continuing effort to reduce 

paperwork burdens, invites the general 

public to comment on the information 

collection requirements contained in 

this Order as required by the Paperwork 

Reduction Act of 1995, Pub. L. 104–13. 

Public and agency comments are due 

December 11, 2007. In addition, the 

Commission notes that pursuant to the 

Small Business Paperwork Relief Act of 

2002, Pub. L. 107–198, see 44 U.S.C. 

3506(c)(4), the Commission previously 

sought specific comment on how it 

might ‘‘further reduce the information 

collection burden for small business 

concerns with fewer than 25 

employees.’’

29. In this document, the Commission 

has assessed the effects of the new or 

modified information collection 

requirements adopted in this Order, and 

finds that they do not affect businesses 

with few than 25 employees. 

In addition to filing comments with 

the Office of the Secretary, a copy of any 

comments on the Paperwork Reduction 

Act information collection requirements 

contained herein should be submitted to 

Jerry R. Cowden, Federal 

Communications Commission, 1–C804, 

445 12th Street, SW., Washington, DC 

20554, or via the Internet to 

PRA@fcc.gov. 

Congressional Review Act 

30. The Commission will send a copy 

of this Report and Order and 

Memorandum Opinion and Order in a 

report to be sent to Congress and the 

Government Accountability Office 

pursuant to the Congressional Review 

Act, see 5 U.S.C. 801(a)(1)(A). 

Final Regulatory Flexibility Act 

Analysis 

31. In this Order, the Commission 

establishes a new framework to govern 

the provision of in-region, long distance 

services by AT&T, Qwest, and Verizon. 

This new framework replaces 

burdensome regulation with less 

intrusive measures that protect 

important customer interests while 

allowing AT&T, Qwest, and Verizon to 

respond to marketplace demands 

efficiently and effectively. The issues 

addressed by the Commission in this 

Order directly affect only the BOCs and 

their affiliates, which do not qualify as 

small entities under the RFA. In 

particular, none of the BOCs is a small 

entity because each BOC is an affiliate 

of a Regional Holding Company (RHC), 

and all of the BOCs or their RHCs have 

more than 1,500 employees. Insofar as 

this Order applies to other BOC or RHC 

affiliates, those affiliates are controlled 

by the BOCs or by the RHC. 

Accordingly, they are not 

‘‘independently owned and operated’’

entities for purposes of the RFA. 

32. Therefore, the Commission finds 

that the requirements adopted in this 

Order will not have a significant 

economic impact on a substantial 

number of small entities. The 

Commission will send a copy of the 

Order including a copy of this final 

certification, in a report to Congress 

pursuant to the Small Business 

Regulatory Enforcement Fairness Act of 

1996. See 5 U.S.C. 801(a)(1)(A). In 

addition, a summary of the Order will 

be sent to the Chief Counsel for 

Advocacy of the Small Business 

Administration. 

Ordering Clauses 

33. Accordingly, it is ordered that, 

pursuant to sections 1, 2, 4(i), 4(j), 201 

through 204, 214, 220(a), 251, 252, 271, 

272, and 303(r) of the Communications 

Act of 1934, as amended, 47 U.S.C. 151, 

152, 154(i), 154(j), 201 through 204, 214, 

220(a), 251, 252, 271, 272, and 303(r), 

the Report and Order is adopted. 

34. It is further ordered, pursuant to 

sections 1, 2, 4(i), 4(j), 201 through 204, 

214, 220(a), 251, 252, 271, 272, and 

303(r) of the Communications Act of 

1934, as amended, 47 U.S.C. 151, 152, 

154(i), 154(j), 201 through 204, 214, 

220(a), 251, 252, 271, 272, and 303(r), 

the Petition for Extension of section 272 

Obligations of Southwestern Bell 

Telephone Co. in the States of Arkansas 

and Missouri that Legacy AT&T Corp. 

filed September 24, 2004 in WC Docket 

No. 02–112; the Petition for Extension of 

section 272 Obligations of Verizon in 

the State of Massachusetts that Legacy 

AT&T Corp. filed February 29, 2004 in 

WC Docket No. 02–112; the Petition for 

Extension of section 272 Obligations of 

Southwestern Bell Telephone Co. in the 

States of Kansas and Oklahoma that 

Legacy AT&T Corp. filed December 8, 

2003 in WC Docket No. 02–112; and the 

Petition for Extension of section 272 

Obligations of Southwestern Bell 

Telephone Co. in the State of Texas in 

WC Docket No. 02–112 that Legacy 

AT&T Corp. filed April 10, 2003 in WC 

Docket No. 02–112 are denied. 

35. It is further ordered, pursuant to 

sections 1, 2, 4(i), 4(j), 201 through 204, 

214, 220(a), 251, 252, 271, 272, and 

303(r) of the Communications Act of 

1934, as amended, 47 U.S.C. 151, 152, 

154(i)–154(j), 201–204, 214, 220(a), 251, 

252, 271, 272, and 303(r), that § 64.1903 

of the Commission’s rules is waived as 

applied to Southern New England 

Telephone Company and the General 

Telephone Operating Companies, 

subject to the conditions set forth in this 

Report and Order. 

36. It is further ordered, pursuant to 

§ 1.103(a) and 1.427(b) of the 

Commission’s rules, 47 CFR 1.103(a), 

1.427(b), that this Report and Order 

shall be effective 30 days after 

publication of notice of the Report and 

Order in the Federal Register, subject to 

Office of Management and Budget 

(OMB) approval for new or modified 

information collection requirements. 

37. It is further ordered, pursuant to 

sections 1, 2, 4(i), 4(j), 10, 201 through 

204, 214, 220(a), 251, 252, 271, 272, and 

303(r) of the Communications Act of 

1934, as amended, 47 U.S.C. 151, 152, 

154(i), 154(j), 160, 201 through 204, 214, 

220(a), 251, 252, 271, 272, and 303(r) 

that AT&T’s Petition for Forbearance, 

filed June 2, 2006, is granted in part, to 

the extent set forth herein. 

38. It is further ordered, pursuant to 

sections 1, 4(i), 4(j), 201 through 204, 

251(g), and 303(r) of the 

Communications Act of 1934, as 

amended, 47 U.S.C. 151, 154(i) through 

154(j), 201–204, 251(g), and 303(r), and 

§ 1.3 of the Commission’s rules, 47 CFR 

1.3, that the Equal Access Scripting 

Requirement is waived as applied to 

Southern New England Telephone 

Company and the General Telephone 

Operating Companies as described in 

the Memorandum Opinion and Order, 

effective on August 31, 2007. 


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Federal Register / Vol. 72, No. 197 / Friday, October 12, 2007 / Rules and Regulations 58027 

39. It is further ordered, pursuant to 

section 10 of the Communications Act 

of 1934, as amended, 47 U.S.C. 160, and 

§ 1.103(a) of the Commission’s rules, 47 

CFR 1.103(a), that the Memorandum 

Opinion and Order shall be effective on 

August 31, 2007. Pursuant to § 1.4 and 

1.13 of the Commission’s rules, 47 CFR 

1.4, 1.13, the time for appeal from that 

Memorandum Opinion and Order shall 

run from its release date. 

40. It is further ordered that the 

Commission’s Consumer and 

Governmental Affairs Bureau, Reference 

Information Center, shall send a copy of 

this Order, including the Final 

Regulatory Flexibility Certification, to 

the Chief Counsel for Advocacy of the 

Small Business Administration. 

List of Subjects in 47 CFR Parts 53 and 

64 

Accounting, Communications 

common carriers, Reporting and 

recordkeeping requirements, Telephone, 

Telecommunications. 

Federal Communications Commission. 

Marlene H. Dortch, 

Secretary. 

[FR Doc. 07–5037 Filed 10–11–07; 8:45 am] 

BILLING CODE 6712–01–P 


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