[Federal Register Volume 60, Number 49 (Tuesday, March 14, 1995)]
[Rules and Regulations]
[Pages 13637-13639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5786]



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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 61

[CC Docket No. 90-132; FCC 95-2]


Competition in the Interstate Interexchange Marketplace

agency: Federal Communications Commission.

action: Final rule.

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summary: In this Memorandum Opinion and Order, the Commission responded 
to petitions for reconsideration filed in response to the Interexchange 
Order addressing the remaining issues raised on reconsideration. The 
Interexchange Order examined the state of competition in the interstate 
interexchange marketplace. At that time, the Commission concluded that 
most business services were subject to substantial competition, and 
therefore lifted or streamlined certain regulatory restrictions on AT&T 
and other Interexchange Carriers (IXCs). In this Memorandum Opinion and 
Order, the Commission generally affirmed the various regulatory reforms 
adopted in the Interexchange Order, with certain minor clarifications 
and modifications.

effective date: April 13, 1995.

for further information contact: Kevin Werbach at (202) 418-1580, 
Policy and Program Planning Division, Common Carrier Bureau.

supplementary information: This is a summary of the Commission's 
Memorandum Opinion and Order on Reconsideration adopted January 3, 
1995, and release February 17, 1995. The full text of this decision is 
available for inspection and copying during normal business hours in 
the FCC Dockets Branch (Room 239), 1919 M Street NW., Washington, DC. 
The complete text of this decision may also be purchased from the 
Commission's copy contractor, International Transcription Services, 
Inc., 2100 M [[Page 13638]] Street NW., Suite 140, Washington, DC 
20037.

Summary of Order

    1. On August 1, 1991, the Commission adopted the Interexchange 
Order (56 FR 55235 (Oct. 25, 1991)), concluding an examination of the 
state of competition in the interstate interexchange marketplace and 
adapting its regulatory policies in light of this competition. The 
Commission in the Interexchange Order found that most business services 
are subject to substantial competition. Based on this conclusion, the 
Commission further streamlined its regulation of most of AT&T's 
business services, while retaining price cap regulation for two 
services that were found to be less competitive--800 services and 
analog private line services. The Commission also authorized all 
interexchange carriers (IXCs) to offer service pursuant to 
individually-negotiated contract rates that are generally available to 
similarly situated customers. In addition, the Commission eliminated 
nondiscrimination reporting requirements for AT&T services subject to 
further streamlining, and the requirement that AT&T submit annually an 
independent audit report on its installation and maintenance 
procedures. Finally, the Commission eliminated the comparably efficient 
interconnection (CEI) filing requirements and CEI parameters for AT&T's 
provision of enhanced services that rely exclusively on basic services 
subject to further streamlining.
    2. Eleven parties filed petitions seeking reconsideration of the 
Interexchange Order. The Commission addressed reconsideration requests 
relating to the bundling of 800 services and inbound services with 
other services in prior orders. This Memorandum Opinion and Order on 
Reconsideration responds to the remaining issues on reconsideration, 
and reaffirms the Interexchange Order with certain minor modifications.
    3. The Commission affirmed its decision to permit IXCs to offer 
services pursuant to individually-negotiated contracts. The Commission 
rejected arguments that such ``contract carriage'' violated the 
Communications Act of 1934, that contract carriage would lead to 
predatory behavior by AT&T, that the presumption of lawfulness accorded 
AT&T's contract-based tariffs was inconsistent with prior Commission 
statements, that contract-based tariff filings would provide 
insufficient information about rates, and that additional safeguards 
should be imposed upon AT&T for its contract-based service offerings.
    4. The Commission clarified its decision to apply the ``substantial 
cause'' test to tariff revisions that alter material terms and 
conditions of a long-term contract. In the Interexchange Order, the 
Commission noted that tariff revisions by dominant carriers altering 
material terms and conditions of a long-term service tariff are 
considered reasonable only if the carrier can make a showing of 
substantial cause for the revisions. The Commission cited earlier 
decisions as holding that the same test applies to tariff revisions 
that alter material terms and conditions of a long-term contract. In 
response to petitions for reconsideration, the Commission first noted 
that it was unlikely that AT&T would seek to unilaterally modify a 
contract-based tariff, as such action could damage its relationship 
with its customers. The Commission then explained that it would 
consider on a case-by-case basis in light of all relevant circumstances 
whether a substantial cause showing has been made. The Commission 
concluded that commercial contract law principles are highly relevant--
but not necessarily determinative--to such a decision.
    5. The Commission refused to impose additional safeguards to ensure 
that AT&T's provision of ``customized'' services, such as Tariff 12 and 
contract services, does not impede competition in the customer premises 
equipment (CPE) marketplace. The Commission concluded that no party had 
demonstrated that customers are unaware of the relevant CPE bundling 
rules, and that it has not been presented with any evidence that 
systems integrators have been denied access to customized service 
arrangements.
    6. The Commission modified its decision in the Interexchange Order 
to eliminate comparably efficient interconnection (CEI) requirements 
for AT&T's provision of enhanced services that rely exclusively on 
basic services subject to further streamlined regulation. The 
Commission concluded that the distinction made in the Interexchange 
Order between streamlined services that are coupled with nonstreamlined 
services, and those that are not, was without a valid basis and should 
be abandoned. Consequently, the Commission lifted CEI requirements for 
any streamlined service provided by AT&T. AT&T was required to file a 
CEI plan explaining how it will comply with CEI parameters for 
nonstreamlined services only, for any enhanced service that AT&T 
proposes to provide that relies on both streamlined and nonstreamlined 
services.
    7. The Commission denied requests that it prohibit AT&T from 
including nonstreamlined services in its Tariff 12 offerings, or that 
the Commission apply its bundling restrictions on 800 and inbound 
services to other nonstreamlined services. The Commission noted that 
its rationale for prohibiting AT&T from including 800 and inbound 
services in future contract-based tariffs or Tariff 12s pending 800 
number portability was based on specific findings about AT&T ability to 
leverage its competitive advantage in the 800 marketplace. There are 
sufficient distinctions, the Commission concluded, between 800 services 
and other nonstreamlined services, and between contract-based tariffs 
and Tariff 12 offerings, to justify the policies adopted in the 
Interexchange Order.
    8. Finally, the Commission addressed concerns related to its 
treatment of analog private line service. The Commission denied 
requests to reconsider what it meant by the term ``analog private line 
service.'' The Commission did, however, order AT&T to remove analog 
private line services provided to government entities through 
contractual arrangements from Basket 3. This modification was designed 
to limit AT&T's ability to subsidize rate decreases in some Basket 3 
services with rate increases in other analog private line rate 
elements. In light of this decision, the Commission recalibrated the 
price cap index (PCI) and the actual price index (API) for Basket 3 to 
reflect the removal of all analog private line services provided under 
contract to government entities from this basket.

Ordering Clauses

    1. Accordingly, pursuant to authority contained in sections 1, 4, 
201-205, and 405 of the Communications Act of 1934, as amended, 47 
U.S.C. 151, 154, 201-205, 405, It Is Ordered that the policies, rules 
and requirements set forth herein Are Adopted, and Part 61 of the 
Commission's Rules, 47 CFR Part 61, Is Amended as set forth in below, 
effective April 13, 1995.
    2. It is further ordered That the petitions for reconsideration of 
AT&T, Ad Hoc, ARINC, Alascom, Broadcast Coalition, Citicorp, CompTel, 
IDCMA, MCI, Sprint and WilTel are Granted in Part and Denied in Part.

List of Subjects in 47 CFR Part 61

    Communications common carriers, Reporting and recordkeeping 
requirements, Telephone. [[Page 13639]] 

Amendatory Text

    Title 47 of the Code of Federal Regulations, Part 61 is amended as 
follows:

PART 61--TARIFFS

    1. The authority citation for part 61 continues to read as follows:

    Authority: Secs. 1, 4(i), 4(j), 201-205, and 403 of the 
Communications Act of 1934, as amended; 47 U.S.C. 151, 154(i), 
154(j), 201-205, and 403, unless otherwise noted.

    2. Section 61.42(b)(3) is revised to read as follows:


Sec. 61.42  Price cap baskets and service categories.

* * * * *
    (b) * * *
    (3) The business services basket shall contain analog private 
lines, including analog voice grade private line, unless provided under 
contract to a government entity, and terrestrial television 
transmission service.
* * * * *
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 95-5786 Filed 3-13-95; 8:45 am]
BILLING CODE 6712-01-M