Court Opinion

ID: 185256
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:29:46+00
Date Added: 2024-06-11T17:26:14.344830
License: Public Domain

220 F.3d 607 (D.C. Cir. 2000)
AT&T Corporation,Appellantv.Federal Communications Commission, AppelleeBell Atlantic, U S West Communications, Inc.,Public Service Commission of the State of New York, et al.,Intervenors
No. 99-1538 Consolidated with 99-1540
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 24, 2000Decided August 1, 2000

[Copyrighted Material Omitted]
Appeals of An Order of the Federal Communications CommissionDavid W. Carpenter argued the cause for appellants.  With  him on the briefs were Mark E. Haddad, Peter D. Keisler, Daniel Meron, Mark C. Rosenblum, Roy E. Hoffinger, and  Jonathan Jacob Nadler.
Randall B. Lowe, Renee R. Crittendon, Russell M. Blau,  Mark J. Tauber, Michael D. Hays, J. G. Harrington, and  John D. Seiver were on the briefs for intervenors Prism  Communication Services, RCN Telecom Services, Competitive Telecommunications Commission, Close Call America,  Inc., and Global NAPs, Inc.
Jonathan E. Nuechterlein, Deputy General Counsel, Federal Communications Commission, argued the cause for appellee.  With him on the brief were Christopher J. Wright,  General Counsel, John E. Ingle, Deputy Associate General  Counsel, and James M. Carr, Counsel.  Joel Marcus, Counsel, entered an appearance.
Michael E. Glover argued the cause for intervenors Bell  Atlantic and U S West Communications, Inc.  With him on  the brief were Randal S. Milch, Edward Shakin, Mark L.  Evans, Henk Brands, William T. Lake, Lynn R. Charytan,  Dan L. Poole and Robert B. McKenna, Jr.  John H. Harwood, II entered an appearance.
Lawrence G. Malone and Jonathan D. Feinberg were on  the brief for intervenor Public Service Commission of the  State of New York.
Before:  Randolph, Tatel and Garland, Circuit Judges.
Opinion for the Court filed by Circuit Judge Tatel.
Tatel, Circuit Judge:

1
Appellants challenge the Federal  Communications Commission's approval of an application by  Bell Atlantic to provide long distance service in New York,  arguing that the company failed to implement two elements of  a fourteen-point competitive checklist prescribed by the Telecommunications Act of 1996.  The FCC's approval of Bell  Atlantic's application was the first time since the 1982 breakup of AT&T that a Bell operating company received regulatory permission to offer long distance service in a state where it  provides local telephone service.  Finding no defect in the  Commission's analysis, we affirm in all respects.

2
* Historically, local telephone companies operated as monopolies.  "States typically granted an exclusive franchise in each  local service area to a local exchange carrier (LEC), which  owned, among other things, the local loops (wires connecting  telephones to switches), the switches (equipment directing  calls to their destinations), and the transport trunks (wires  carrying calls between switches) that constitute a local exchange network."  AT&T Corp. v. Iowa Util. Bd., 119 S. Ct.  721, 726 (1999).  For the better part of the twentieth century,  appellant AT&T Corporation provided most local and long  distance phone service throughout the country.

3
In 1974, the United States filed an antitrust action against  AT&T alleging "monopolization by the defendants with respect to a broad variety of telecommunications services and  equipment in violation of section 2 of the Sherman Act."United States v. American Tel. and Tel. Co., 552 F. Supp 131,  139 (D.D.C. 1982), aff'd sub nom. Maryland v. United States,  460 U.S. 1001 (1983).  Following several years of discovery  and nearly a full year of trial, AT&T and the government  settled.  Known as the Modification of Final Judgment  ("MFJ"), the resulting consent decree required AT&T to  divest itself of the twenty-two Bell operating companies, or  "BOCs," that provided local telephone service.

4
Consolidated into seven regional holding companies (four  today as a result of mergers), the BOCs continued to have a  monopoly in local phone service in their respective service  areas.  Because "there are many ways in which the company  controlling the local exchange monopoly could discriminate  against competitors in the interexchange [long distance] market," the MFJ prohibited BOCs from offering so-called "interLATA" or long distance service.  AT&T, 552 F. Supp. at 188.The MFJ left open the possibility that BOCs could someday  provide long distance service, but only if they "los[t] the  ability to leverage their monopoly power into the competitive  [long distance] markets," either "as a result of technological  developments which eliminate the [BOCs'] local exchange  monopoly or from changes in the structures of the competitive markets."  Id. at 194.  No BOC ever obtained permission  to provide long distance telephone service under the MFJ.

5
This regulatory landscape remained largely unchanged until Congress enacted the Telecommunications Act of 1996,  Pub. L. No. 104-104, 110 Stat. 56.  That Act fundamentally  restructured local telephone markets by ending the BOCs'  local monopoly.  Designed to "open[ ] all telecommunications  markets to competition," the Act established "a procompetitive, de-regulatory national policy framework" that  sought to eliminate the barriers that competitive local exchange carriers, known as "CLECs," faced in offering local  telephone service.  S. Conf. Rep. No. 230, 104th Cong., 2d  Sess. 1 (1996).  To this end, the 1996 Act requires BOCs to  offer CLECs access to their local telephone networks in three  ways:  by selling local telephone services to competitors at  wholesale rates for resale to end users;  by leasing network  elements to competitors on an unbundled basis;  and by  interconnecting a requesting competitor's network with their  own.  See 47 U.S.C. § 251(c)(2)-(4).  The 1996 Act requires  BOCs to offer the latter two services on "rates, terms, and  conditions that are just, reasonable, and nondiscriminatory."Id. § 251(c)(2)(D), (c)(3).  Through any of these three routes,  CLECs may offer local phone service in competition with  BOCs.

6
Added by the 1996 Act, section 252 of the Communications  Act of 1934 established procedures for CLECs to request and  obtain access to network elements and other facilities.  The  requesting carrier and the BOC "may" first attempt to negotiate an agreement governing the rates, terms, and conditions  under which the CLEC accesses the BOC's facilities.  See id.  § 252(a)(1).  If the parties reach an agreement, they must  submit it to the appropriate state commission for approval. See id. § 252(a)(1), (e)(1).  If an agreement is not reached,  section 252 directs the state commission to arbitrate and  resolve the dispute.  Id. § 252(b)(1), (b)(4)(C).  The state  commission must "ensure that such resolution and conditions  meet the requirements of section 251" and "establish any  rates for interconnection, services, or network elements according to subsection (d) of this section."  Id. § 252(c)(1)-(2). Subsection (d) requires rates to be "based on the cost ... of  providing the interconnection or network element (whichever  is applicable), and [ ] nondiscriminatory."  Id. § 252(d)(1)(A).Subsection (f) permits a BOC to file with the appropriate  state commission "a statement of the terms and conditions  that such company generally offers within that State to  comply with the requirements of section 251."  Id. § 252(f)(1).It also requires states to review such statements for compliance with sections 251 and 252(d).  Id. § 252(f)(2).

7
Section 601(a)(1) of the 1996 Act frees BOCs from all  restrictions and obligations imposed by the MFJ, including  the prohibition against providing long distance service. Telecommunications Act of 1996 § 601(a)(1), Pub. L. No. 104-104,  110 Stat. at 143.  To encourage BOCs to open their markets  to competition as quickly as possible, the Act permits them to  provide "in-region" long distance service (long distance service originating in a state in which they offered local service  under the MFJ) if they demonstrate that they have opened  their local markets in that state to competition by fulfilling  the requirements of section 271.  See 47 U.S.C. § 271(b)(1).BOCs may immediately begin providing "out-of-region" long  distance service (long distance service originating outside the  states in which the particular BOC offered local service under  the MFJ).  See id. § 271(b)(2).

8
Under section 271, a BOC wishing to provide in-region long  distance service must apply to the FCC for approval.  Id.  § 271(b)(1).  In its application, the BOC must first demonstrate that it has satisfied either section 271(c)(1)(A), known  as "Track A," or section 271(c)(1)(B), known as "Track B."To satisfy Track A, the BOC must show that it has entered  into an agreement to provide access and interconnection to  "one or more unaffiliated competing providers of telephone  exchange service ... to residential and business subscribers."Id. § 271(c)(1)(A).  If no such request for access and interconnection has been made, Track B requires the BOC to show  that "a statement of the terms and conditions that the [BOC]  generally offers to provide such access and interconnection  has been approved or permitted to take effect by the State  commission."  Id. § 271(c)(1)(B).

9
Once the BOC has shown that it has satisfied either Track  A or Track B, it must establish that its offering of services to  CLECs meets the fourteen requirements of a "competitive  checklist" contained in section 271(c)(2)(B).  The checklist  incorporates by reference many of the substantive requirements of the Act's local competition provisions, sections 251  and 252, described supra at 611-12.  See id. § 271(c)(2)(B).  For  example, the BOC must demonstrate that it provides "[i]nterconnection in accordance with the requirements of sections  251(c)(2) and 252(d)(1)";  "[n]ondiscriminatory access to network elements in accordance with the requirements of sections 251(c)(3) and 252(d)(1)";  "[l]ocal loop transmission ...  unbundled from local switching";  "[l]ocal switching unbundled from transport, local loop transmission, or other services";  and "[n] on discriminatory access to [ ] 911 and E911  services [and] directory assistance services to allow the other  carrier's customers to obtain telephone numbers."  Id.  § 271(c)(2)(B)(i), (ii), (iv), (vi), (vii)(I)-(II).  In addition to  satisfying the competitive checklist's fourteen requirements,  the BOC must demonstrate that it will provide in-region long  distance service in accordance with the nondiscrimination and  separate affiliate requirements of section 272.  See id.  §§ 271(d)(3)(B), 272.  Finally, the BOC must persuade the  FCC that "the requested authorization is consistent with the  public interest, convenience, and necessity."  Id.  § 271(d)(3)(C).

10
The statute gives the FCC ninety days to determine whether an applicant has met section 271's requirements, including  whether it has "fully implemented the competitive checklist."Id. § 271(d)(3).  The Commission must "consult with the  Attorney General," who shall "provide to the Commission an  evaluation of the application using any standard the Attorney  General considers appropriate."  Id. § 271(d)(2)(A).  Although "[t]he Commission shall give substantial weight to the  Attorney General's evaluation," that evaluation "shall not  have any preclusive effect on any Commission decision."  Id. The FCC must also "consult with the State commission of any  State that is the subject of the application in order to verify  the compliance of the [BOC] with the requirements [for providing in-region long distance service]."  Id.  § 271(d)(2)(B).

11
Since passage of the 1996 Act, the FCC has implemented  the statute's local competition provisions through a series of  regulations and orders.  Of particular relevance to this case,  the Local Competition First Report and Order adopted "initial rules designed to ... open[ ] the local exchange and  exchange access markets to competition."  In the Matter of  Implementation of the Local Competition Provisions in the  Telecommunications Act of 1996, 11 F.C.C.R. 15499, 15507  p 6 (1996) ("Local Competition First Report and Order").The Local Competition First Report and Order listed a  minimum set of network elements that BOCs must provide to  competing carriers, established interconnection rules, and  adopted a methodology for pricing network elements known  as "TELRIC" (total element long-run incremental cost).  Id.  at 15514-15 pp 27-29.

12
Prior to the filing of the application at issue in this case, the  FCC had received and rejected five section 271 applications.It rejected the first because the applicant, SBC Communications, failed to demonstrate that it satisfied Track A.  In the  Matter of Application by SBC Communications, Inc., Pursuant to Section 271 of the Communications Act of 1934, as  amended, to Provide In-Region, InterLATA Services in  Oklahoma, 12 F.C.C.R. 8685, 8686 p 1 (1997), aff'd, SBC  Communications v. FCC, 138 F.3d 410 (D.C. Cir. 1998).  It  rejected the others because the applicants failed to comply  with various requirements of the competitive checklist.  See  In the Matter of Application of Ameritech Michigan, Pursuant to Section 271 of the Communications Act of 1934, as  amended, to Provide In-Region, InterLATA Services in  Michigan, 12 F.C.C.R. 20543, 20546-47 p 5 (1997) (failure to  provide nondiscriminatory access to operations support system, interconnection, and 911 and E911 services);  In the  Matter of Application of BellSouth Corporation, et al., Pursuant to Section 271 of the Communications Act of 1934, as  amended, to Provide In-Region, InterLATA Services in  South Carolina, 13 F.C.C.R. 539, 547 p 14 (1997) (failure to  (1) provide nondiscriminatory access to operations support systems, (2) provide unbundled network elements in a manner that permits competing carriers to combine them through  collocation, and (3) offer certain retail services at discounted  rates), aff'd, BellSouth Corp. v. FCC, 162 F.3d 678 (D.C. Cir.  1998);  In the Matter of Application by BellSouth Corporation, et al., Pursuant to Section 271 of the Communications  Act of 1934, as amended, to Provide In-Region, InterLATA  Services in Louisiana, 13 F.C.C.R. 6245, 6246-47 p 1 (1998)  (failure to provide nondiscriminatory access to operations  support system and to make telecommunications services  available for resale);  In the Matter of Application of BellSouth Corporation, BellSouth Telecommunications, Inc., and  BellSouth Long Distance, Inc., for Provision of In-Region,  InterLATA Services in Louisiana, 13 F.C.C.R. 20599, 20605  p 10 (1998) (failure to provide nondiscriminatory access to  operations support system and unbundled network elements).After oral argument in this case, however, the Commission  approved SBC Communications's application to provide long  distance service in Texas.  In the Matter of Application by  SBC Communications, Inc., Southwestern Bell Tel. Co., And  Southwestern Bell Communications Services, Inc. d/b/a  Southwestern Bell Long Distance Pursuant to Section 271 of  the Telecommunications Act of 1996 To Provide In-Region,  InterLATA Services in Texas, FCC No. 00-238 (June 30,  2000).

13
Bell Atlantic filed its application to provide in-region long  distance service in New York on September 29, 1999.  By  then, the Supreme Court had invalidated that portion of the  Local Competition First Report and Order, specifically Rule  319, which listed the network elements that BOCs must  provide to competitors.  Iowa Util. Bd., 119 S. Ct. at 734-36.According to the Court, "the FCC did not adequately consider the 'necessary and impair' standards [of section 251(d)(2)  of the statute] when it gave blanket access to these network  elements."  Id. at 734.  Because Bell Atlantic filed its application while the Commission was still revising its network  element rule in response to the Supreme Court's vacatur, the  company agreed to demonstrate compliance with the vacated  rule.  See In the Matter of Application by Bell Atlantic New  York for Authorization Under Section 271 of the Communications Act to Provide In-Region, InterLATA Service in the  State of New York, 15 F.C.C.R. 3953, 3966-67 p 30 (1999)  ("Bell Atlantic").  When this opinion was in page proofs, the  Eighth Circuit, acting on remand from the Supreme Court's  decision in Iowa Util. Bd., invalidated the TELRIC pricing  methodology.  See Iowa Util. Bd. v. FCC, No. 96-3321 (8th  Cir. July 18, 2000).  By basing rates on hypothetical rather  than actual costs, the court held, the TELRIC methodology  forced BOCs to charge less for network elements than Congress intended.  Id. 612-14.  That decision has no  effect on this case, however, because Bell Atlantic has in fact  shown compliance with the TELRIC methodology, just as it  did with the vacated Rule 319.

14
The Bell Atlantic application represented the culmination of  more than two years of work by the company and the New  York Public Service Commission ("NYPSC").  After Bell  Atlantic submitted a draft application in February 1997, the  NYPSC commenced collaborative proceedings involving the  company and its competitors to open New York's local exchange market to competition.  The NYPSC also issued an  order establishing rates for access to certain Bell Atlantic  network elements.  Spanning over one hundred pages, that  order set rates for local loops, local switching, tandem switching, interoffice transport, signal control points, etc.  Opinion  and Order Setting Rates for First Group of Network Elements, Op. No. 97-2 (NYPSC Apr. 1, 1997) ("1997 NYPSC  Order").

15
At about the same time, the NYPSC began developing  performance measures and service quality standards to assess whether Bell Atlantic was providing the nondiscriminatory access to its network that the 1996 Act requires.  Bell  Atlantic, 15 F.C.C.R. at 3959 p 11.  The NYPSC also hired  the consulting firm KPMG to test Bell Atlantic's operations  support systems for processing orders from Bell Atlantic's  competitors.  After extensive testing, during which Bell Atlantic corrected many problems, KPMG concluded that the  company's operations support systems could adequately accommodate "reasonable, anticipated commercial volumes" of  competitors' requests for network access.  Id. at 3959 p 10.

16
On December 21, 1999, the FCC approved Bell Atlantic's  application to provide long distance service in New York. The Commission began by observing that "[t]he well established pro-competitive regulatory environment in New York  in conjunction with recent measures to achieve section 271  compliance has, in general, created a thriving market for the  provision of local exchange and exchange access service. Competitors in New York are able to enter the local market  using all three entry paths provided under the Act."  Id. at  3959 p 13.  The FCC cited Bell Atlantic's estimates that  competitors serve over one million phone lines in New York .Id. at 3960 p 14.  According to the Department of Justice,  moreover, CLECs in New York served approximately 8.9  percent of access lines as of June 1999, an amount "significantly larger than the national average of less than five  percent."  Evaluation of the United States Department of  Justice 9 (Nov. 1, 1999) ("DOJ Evaluation").

17
Relying on uncontested evidence that Bell Atlantic had  entered into interconnection agreements with several competing New York carriers, the Commission determined that the  company had satisfied Track A.  Bell Atlantic, 15 F.C.C.R. at  3977 p 62.  The Commission next examined Bell Atlantic's  compliance with the fourteen components of the competitive  checklist, concluding that the company had "fully implemented" each.  47 U.S.C. § 271(d)(3)(A)(i).  The Commission also found that Bell Atlantic had demonstrated that it would  comply with the separate affiliate and nondiscrimination requirements of section 272.  Bell Atlantic, 15 F.C.C.R. at 4153  p 403.  Finding approval of the company's application to be  "consistent with promoting competition in the local and long  distance telecommunications markets," the Commission concluded that Bell Atlantic's provision of long distance service in  New York would be in the public interest.  Id. at 4162 p 425.

18
On December 28, 1999, appellants AT&T and Covad Communications, a provider of high-speed, data-oriented telecommunications services, appealed the FCC's decision pursuant  to 47 U.S.C. § 402(b)(6), (9), which gives this court exclusive  jurisdiction to review FCC orders relating to applications to  provide long distance service under section 271.  After this  court denied appellants' request for stay pending appeal AT&T v. FCC, Nos. 99-1538, 99-1540 (D.C. Cir. Jan. 4, 2000)  (order denying motion for stay), Bell Atlantic began providing  long distance service to customers in New York.

19
AT&T mounts four challenges to the FCC's approval of  Bell Atlantic's application, the first two of which Covad joins:(1) Bell Atlantic's prices for certain network elements do not  conform to the TELRIC pricing methodology;  (2) contrary to  the Commission's conclusion, Bell Atlantic fails to provide  competitors nondiscriminatory access to two types of unbundled loops, DSL-capable loops and hot cut loops;  (3) the  company imposes use restrictions on combinations of network  elements that violate the 1996 Act; and  (4) the company's  proposed script for handling calls requesting new service or  changes to existing service conflicts with section 272's nondiscrimination safeguards.  Supported by intervenors  NYPSC,  Bell Atlantic, and U S West, the FCC argues that the  company has satisfied both the competitive checklist and  section 272's nondiscrimination safeguards.  We consider  each of appellants' arguments in turn.

II

20
Section 271's competitive checklist directs the FCC to  determine whether Bell Atlantic's rates (which have been  approved by the NYPSC) comply with section 252's requirement that the rates be "just and reasonable" and "based on  the cost ... of providing the ... network element."  47  U.S.C. § 252(d)(1), (d)(1)(A)(i).  The FCC considers section  252 satisfied only if the rates conform to TELRIC.  See Bell  Atlantic, 15 F.C.C.R. at 4081 p 237;  see also Local Competition First Report and Order, 11 F.C.C.R. at 15844 p 672.  A  forward-looking methodology, TELRIC bases rates on "the  cost of operating a hypothetical network built with the most  efficient technology available."  Iowa Util. Bd., 119 S. Ct. at  728 n.3.  TELRIC is not a specific formula, but a framework  of principles that govern pricing determinations.  "[W]hile  TELRIC consists of 'methodological principles' for setting  prices, states retain flexibility to consider 'local technological,  environmental, regulatory, and economic conditions.' "  Bell Atlantic, 15 F.C.C.R. at 4084 p 244 (quoting Local Competition First Report and Order, 11 F.C.C.R. at 15812).  In other  words, while state commissions use TELRIC to establish  rates, application of TELRIC principles may result in different rates in different states.

21
The FCC does not conduct de novo review of state pricing  determinations in section 271 proceedings, nor does it adjust  rates to conform with TELRIC.  See Bell Atlantic, 15  F.C.C.R. at 4084 p 244.  It assesses only whether those rates  comply with basic TELRIC principles.  In language critical  to this case, the FCC described its role this way:

22
In reviewing state pricing decisions in the context of section 271 applications, we will not reject an applicationbecause isolated factual findings by a commission might be different from what we might have found if we were arbitrating the matter under section 252(e)(5).  Rather, we will reject the application only if basic TELRIC principles are violated or the state commission makes clear errors in factual findings on matters so substantial that the end result falls outside the range that the reasonable application of TELRIC principles would pro-duce .

23
Id.

24
Neither AT&T nor Covad challenges the TELRIC standard.  They claim instead that rates established by the  NYPSC for leasing three network elements--switches, voice  grade loops, and DSL-compatible loops--violate TELRIC.

25
We review the FCC's TELRIC compliance determinations  pursuant to the arbitrary and capricious standard.  See 5  U.S.C. § 706(2)(A);  Achernar Broad. Co. v. FCC, 62 F.3d  1441, 1445 (D.C. Cir. 1995) (applying arbitrary and capricious  standard to FCC action).  Highly deferential, that standard  presumes the validity of agency action, requiring us to determine whether the agency has considered the relevant factors  and "articulate [d] a rational connection between the facts  found and the choice made."  Motor Vehicle Mfrs. Ass'n of  the United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463  U.S. 29, 43 (1983) (internal quotation marks omitted).  We  "may reverse only if the agency's decision is not supported by  substantial evidence, or the agency has made a clear error in judgment."  Kisser v. Cisneros, 14 F.3d 615, 619 (D.C. Cir.  1994).

26
Three characteristics of section 271 proceedings call for  special deference to the FCC.  For one thing, not only do  section 271 issues "require[ ] a high level of technical expertise," Marsh v. Oregon Natural Resources Council, 490 U.S.  360, 377 (1989), but the Commission must consider those  issues in the context of rapid technological and competitive  change.  As the agency points out, "at any given point at  which a section 271 application might be filed, the rapidly  changing telecommunications industry will have recently unleashed a handful of new technological challenges and unsettled legal disputes."  Appellee's Br. at 12.  To deal with these  constantly-unfolding changes, the section 271 process "must  have some play in the joints."  Id.  Second, unlike most  agency decisions that we review, much of the FCC's order is  itself a review of a state agency decision.  Also possessing a  considerable degree of expertise, the NYPSC did a significant  amount of background work, such as establishing prices,  instituting collaborative proceedings to design provisioning  methods, and developing performance measures.  Finally,  and perhaps most important with respect to appellants' challenges to the NYPSC pricing determinations, enormous flexibility is built into TELRIC.  In other words, we decide only  whether the FCC's determination that Bell Atlantic's rates do  not fall "outside the range that the reasonable application of  TELRIC principles would produce" is itself arbitrary or  capricious.  Bell Atlantic, 15 F.C.C.R. at 4084 p 244.  Cf.  Patrick Thomas v. NLRB, 213 F.3d 651, 213 F.3d 651, 657 (D.C. Cir. 2000) ("[A] court reviews with deference a  Board decision that was itself made with deference to the  Union.").  Although we thus give substantial deference to the  Commission's decision, we emphasize that "[t]his does not  mean that our review is toothless but merely that we must be  very cautious in entertaining an invitation to reverse."  Patrick Thomas, 213 F.3d 651, 657.

Switching costs

27
AT&T and Covad claim that the rates the NYPSC set for  switches--the equipment used to direct calls to their destination--violate TELRIC in two respects:  first, the rates ignore  substantial discounts Bell Atlantic will likely receive on the  purchase of new switches, and second, they erroneously include the costs not just of new switches, but of more costly  "growth additions" to existing switches. With respect to the  latter argument, appellants claim that because TELRIC contemplates construction of a new network using the most  efficient technology, it requires the NYPSC to have used the  less costly new switches as the basis for the rates.  According  to appellants, these two errors caused Bell Atlantic's switch  rates to exceed substantially those that proper application of  TELRIC would have yielded.

28
Addressing switching costs in its April 1997 pricing order,  the NYPSC began by noting the wide disparity between the  estimates provided by Bell Atlantic ($586 per line) and AT&T  ($125 per line).  Based on that disparity, other evidence in  the record, and its own analysis, the agency found "neither  figure ... reliable."  1997 NYPSC Order at 84.  "In these  circumstances," the NYPSC explained, "[its] staff examined  the data on switching costs closely."  Id. at 85.  Starting with  the historic cost of switches installed in 1993 and 1994, the  agency adjusted that cost downward to reflect the declining  price of switches, yielding a per-line price of $192.67.  The  NYPSC acknowledged that its analysis did not take into  account "atypically large discounts" received by Bell Atlantic  "from its vendors after 1994 in connection with a major switch  replacement program."  Id. at 85 n.1.  The reason, the  agency explained in a subsequent order, was that it understood that Bell Atlantic would not receive such large discounts in the future.  Order Denying Motion to Reopen  Phase 1 and Instituting New Proceeding 3-4 (NYPSC Sept.  30, 1998) ("1998 NYPSC Order Denying Motion to Reopen").

29
More than a year after the NYPSC issued its 1997 order,  AT&T and other long distance carriers petitioned the agency  to lower switching rates.  They relied on evidence, only  recently revealed by Bell Atlantic, that it would in fact  continue to receive large discounts on purchases of all new  switches.  Seeking to avoid piecemeal changes to the rates,  and explaining that the new information would affect its prior  analysis in several ways, the NYPSC concluded that "[t] he  web of interconnected effects argues strongly against making the selective modification urged by the motion without a  comprehensive review of switching costs."  Id. at 11.  The  NYPSC went on to note that "[w]hile the effect of the  adjustment on switching prices cannot be presumed to be  trivial--though it might turn out to be so--switching costs in  general represent a much smaller component of CLEC expense than do the much more significant link costs."  Id. at  12.  Accordingly, the agency declined to revise the rates, but  scheduled a comprehensive review of switching costs to begin  in January 1999.  See id.

30
The FCC found no problem with the NYPSC's resolution of  this issue.  "AT&T has presented no evidence to persuade us  that New York did not conform to TELRIC principles simply  because it failed to modify one input into its cost model."Bell Atlantic, 15 F.C.C.R. at 4085 p 245.  Sympathetic to the  NYPSC's position that "its determination of allowable switch  costs was the result of a complex analysis that does not lend  itself to simple arithmetic correction through the adjustment  of a single input," the FCC concluded that the prospect of  future modification makes the rates no less TELRICcompliant.  Id.

31
The FCC's decision seems reasonable to us.  Not only are  state-agency-approved rates always subject to refinement, but  we suspect that rates may often need adjustment to reflect  newly discovered information, like that about Bell Atlantic's  future discounts.  If new information automatically required  rejection of section 271 applications, we cannot imagine how  such applications could ever be approved in this context of  rapid regulatory and technological change.  Moreover, both  the NYPSC and the FCC agree that adjusting switching  rates to reflect discounts is not so simple as subtracting the  amount of the discount;  it requires other adjustments to the  cost model.  Under these circumstances, we are comfortable  deferring to the Commission's conclusion that basic TELRIC  principles have not been violated and that the NYPSC has not  made such "clear errors in factual findings" that switching  costs fall "outside the range that the reasonable application of  TELRIC principles would produce."  Id. at 4084 p 244.  After all, not only is the $193 per-line switching cost considerably closer to AT&T's proposed $125 than to Bell Atlantic's  much higher estimate, and not only do "switching costs in  general represent a much smaller component of CLEC expense than do the much more significant link costs" (which  appellants have not challenged), 1998 NYPSC Order Denying  Motion to Reopen at 12, but the NYPSC has said it will  reexamine switching discounts, ordering refunds if appropriate.

32
Appellants' challenge to the inclusion of so-called "growth  additions" is largely a corollary of their discount argument. At oral argument, FCC counsel explained that growth additions to existing switches cost more than new switches only  because vendors offer substantial new switch discounts in  order to make telephone companies dependent on the vendors' technology to update the switches.  In fact, as far as we  can tell from the record, the growth addition issue did not  even surface in the NYPSC proceedings until after AT&T,  relying on the new evidence about discounts, requested reconsideration of switch costs.  Accordingly, we think the Commission reasonably concluded that because failure to reflect  discounts did not violate TELRIC, inclusion of growth additions did not either.

Voice Grade Loops

33
A loop is " 'a transmission facility between a distribution  frame, or its equivalent, in an incumbent LEC central office,  and the network interface device at the customer premises.' "Bell Atlantic, 15 F.C.C.R. at 4095 p 268 (quoting Local Competition First Report and Order, 11 F.C.C.R. at 15691).  In  plain English, loops are the wires that connect telephones to  the switches that direct calls to their destination.  There are  many different types of loops:  "two-wire and four-wire analog  voice-grade loops, and two-wire and four-wire loops that are  conditioned to transmit the digital signals needed to provide  services such as ISDN, ADSL, HDSL, and DS1-level signals."  Bell Atlantic, 15 F.C.C.R. at 4095 p 268.  The 1997  NYPSC pricing order set rates for Bell Atlantic loops.  1997  NYPSC Order at Attachment D.

34
AT&T and Covad challenge the rates for one type of loop-voice grade local loops.  They argue that the NYPSC violated  basic TELRIC principles by assuming that the "feeder"  portion of the loop would always use optical fiber, rather than  copper.  This assumption, according to appellants, produced  rates for leasing loops fifteen percent higher than proper  application of TELRIC would have yielded.

35
AT&T originally advanced this argument in the NYPSC  rate proceeding, claiming that copper feeder should always be  used for loops less than 9,000 feet long.  Rejecting this  argument in its 1997 order, the NYPSC based local loop rates  on the assumption that fiber feeder would be used for all  loops.  The agency relied on a 1991 Bell Atlantic study  establishing that "the investment costs associated with fiber  exceeded those of copper, but the difference was found to be  more than offset by the lower provisioning and maintenance  costs of fiber."  1997 NYPSC Order at 83.  In its rehearing  order, the NYPSC devoted twenty-nine more pages to this  issue, reaffirming its conclusion and elaborating on its reasoning.  Opinion and Order Concerning Petitions for Rehearing  of Opinion No. 97-2, Op. No. 97-14 (NYPSC Sept. 22, 1997)  ("1997 NYPSC Rehearing Order").  Emphasizing TELRIC's  forward-looking character, and relying on its own independent analysis, the NYPSC pointed out that while Bell Atlantic's plant includes substantial amounts of copper feeder,  "virtually none is being installed on a going-forward basis."Id. at 23-24.  The reason, the agency explained, is "fiber's  superiority with respect to its initial cost, its ongoing operation and maintenance expense, and its flexibility and reliability."  Id. at 24.  Not only are fiber's material costs lower than  copper's for the same capacity, but copper's heavier weight  and greater volume make it both more difficult and more  expensive to install.  See id.  The smaller space taken up by  fiber, moreover, reduces costs substantially, an especially  critical consideration in dense cities like New York.  See id.Finally, fiber offers numerous operational advantages over  copper.  See id. at 25.  The NYPSC tied all these factors  back to TELRIC:  "What TELRIC contemplates is the network that would actually be built, using the most cost efficient, forward-looking technology available, which would  certainly lead us to posit all-fiber feeder."  Id. at 26.

36
Largely reiterating the NYPSC's conclusion, the FCC rejected appellants' challenge to the use of fiber feeder.  "We  have no reason to disagree with the [NYPSC's] conclusion  that Bell Atlantic's use of fiber ... does not make its rates  inconsistent with a TELRIC methodology."  Bell Atlantic, 15  F.C.C.R. at 4087 p 249.

37
Appellants fault the FCC's decision on a host of largely  procedural grounds:  the Commission failed to address a  detailed AT&T study that proves copper is more costeffective for shorter loops;  it failed to consider AT&T's  evidence purportedly showing that other BOCs had conceded  that copper is more cost-effective;  and it could not have  reasonably deferred to the NYPSC's findings because the  only evidence the NYPSC relied on (the 1991 Bell Atlantic  study) was never placed in the record and the only rationale  offered by that agency (that fiber feeder is more economical  in dense Manhattan) is "plainly inadequate."  Appellants' Br.  at 30.

38
These arguments miss the mark.  The question whether  the FCC adequately considered AT&T's comments is "subsumed within [appellants'] substantive challenge" to the  FCC's conclusion that the assumption of fiber feeder was  appropriate, Chemical Mfrs. Ass'n v. EPA, 28 F.3d 1259, 1263  (D.C. Cir. 1994), and we find no basis for faulting the Commission's decisionmaking on that point.  The FCC analyzed  the NYPSC's original and rehearing orders, which exhaustively evaluated AT&T's arguments, thoroughly explained  fiber's superiority, and relied on far more than the unique  characteristics of Manhattan and the 1991 Bell Atlantic study.Based on this analysis, the Commission determined that  AT&T did not "present[ ] sufficient evidence to prove that the  [NYPSC] erred in its determination."  Bell Atlantic, 15  F.C.C.R. at 4087 p 249.

39
Appellants make one additional argument.  They claim that  in the Universal Service Tenth Report and Order the Commission found copper to be more cost-effective than fiber for  short distances.  In the Matter of Federal-State Joint Board on Universal Service;  Forward-Looking Mechanism for  High Cost Support for Non-Rural LECs, 14 F.C.C.R. 20156  (1999) ("Universal Service Tenth Report and Order").  That  order, however, expressly stated that "it may not be appropriate to use [the nationwide values developed in the universal  service proceedings] ... for other purposes, such as determining prices for unbundled network elements."  Id. at 20172  p 32.  Explaining that the universal service model employed  nationwide, not state-specific, pricing inputs, the Commission  "caution[ed] parties from making claims in other proceedings  based upon the input values [adopted in the Tenth Report  and Order]."  Id.  In any event, the Tenth Report and Order  did not say that copper is more cost-effective.  It said only  that "[w]hen fiber is more cost effective, the model will use it  to replace copper for loops that are shorter than 18,000 feet."Id. at 20196 p 85 (emphasis added).

40
Relying on the NYPSC's comprehensive analysis, as the  1996 Act directs, the FCC concluded that Bell Atlantic's use  of fiber for voice grade loops conforms with TELRIC. Not  only have appellants offered no persuasive reason to disturb  that judgment, but we cannot imagine a question more suited  for administrative rather than judicial resolution than whether copper or fiber loops are more cost-effective.  See Association of Oil Pipe Lines v. FERC, 83 F.3d 1424, 1445 (D.C. Cir.  1996) ("Because the Commission's analysis required a high  level of technical expertise, the court owes deference to the  Commission's informed and rationally exercised discretion.").

DSL Loop Conditioning

41
"Digital Subscriber Line" or "DSL" technology "describes  a 'family of transmission technologies that use specialized  electronics at the customer's premises and at a telephone  company's central office ... to transmit high-speed data  signals over copper cables.' "  Bell Atlantic, 15 F.C.C.R. at  4087 p 250 (quoting Bell Atlantic Affidavit in Support of DSL  Links).  Only recently developed, DSL technology "allows  transmission of data ... at vastly higher speeds than can be achieved with analog data transmission."  Bell Atlantic, 15  F.C.C.R. at 4117 p 316 n.1000.  When competitors seek to  provide DSL service over Bell Atlantic loops that exceed a  certain length, the company must sometimes "condition"  those loops to make them DSL-compatible by removing load  coils and bridge taps that interfere with transmission of  digital signals.  See id. at 4088-89 p 252.

42
Although BOCs have been obligated to provide access to  unbundled loops capable of supporting DSL technologies  since the Local Competition First Report and Order was  issued in 1996, demand for DSL-compatible loops in New  York emerged only in the past year.  See id. at 4117 pp 31617.  In fact, a Covad witness testifying in late July 1999  explained that Covad had just begun ordering DSL loops.For this reason, the 1997 NYPSC Order did not address rates  for DSL conditioning, so when Bell Atlantic filed its section  271 application in September 1999, the company had in place  only the interim conditioning rates that it had filed with the  NYPSC just one month earlier.

43
Responding to increased demand for DSL loops and to  complaints from competitors that Bell Atlantic's interim conditioning charges were excessive, the NYPSC initiated fasttrack proceedings to set permanent conditioning rates.  As a  result of those proceedings, the agency significantly reduced  Bell Atlantic's interim conditioning charges.  It also created a  "placeholder" rate subject to future adjustment as the  NYPSC conducts further inquiry.  See Order and Opinion  Concerning DSL Charges, Op. No. 99-12 (NYPSC Dec. 17,  1999).  Because the NYPSC issued this order only one week  before the end of the FCC's ninety-day review period, the  Commission's order focuses only on Bell Atlantic's interim  rates.

44
Although concerned that interim rates "create uncertainty,"  the FCC concluded that "a BOC's application for in-region  [long distance service] should not be rejected solely because  permanent rates may not yet have been established for each  and every element or nonrecurring cost of provisioning an  element."  Bell Atlantic, 15 F.C.C.R. at 4090-91 p 258.  "[T]his question," the Commission explained, "should be addressed on a case-by-case basis."  Id. at 4091 p 258.  The  Commission listed several factors that led it to conclude that  Bell Atlantic's use of interim rates did not preclude a finding  of checklist compliance:  "[t]he conditioning of DSL loops is a  relatively new issue";  the NYPSC "has a substantial track  record of setting other applicable prices at TELRIC rates";"Bell Atlantic's interim rates are subject to refund or true-up  if the [NYPSC] determines that they exceed applicable  TELRIC-based costs";  and the interim rates applied only to  "a few ancillary items" affecting a small percentage of unbundled loops.  Id. at 4090-91 pp 258-59.  Noting that "[a]t some  point, states will have had sufficient time to complete [permanent rate proceedings]," the FCC warned that it will "become  more reluctant to continue approving section 271 applications  containing interim rates.  It would not be sound policy for  interim rates to become a substitute for completing these  significant proceedings."  Id. at 4091 p 260.

45
AT&T and Covad argue that Bell Atlantic's interim conditioning rates violate TELRIC.  "When there is a substantial  challenge to a particular rate that has not been previously  reviewed by a state commission, the FCC's duty is to determine its lawfulness and grant the application only if it is  found lawful."  Appellants' Reply Br. at 17.

46
Because AT&T and Covad's argument rests on their interpretation of section 271, we employ the familiar two-step  Chevron process.  Chevron U.S.A., Inc. v. Natural Resources  Defense Council, Inc., 467 U.S. 837, 842-43 (1984).  If "Congress has directly spoken to the precise question at issue,"  the court "must give effect to the unambiguously expressed  intent of Congress."  Id.  In determining whether Congress  has spoken to the precise question at issue, we "exhaust the  traditional tools of statutory construction."  Natural Resources Defense Council, Inc. v. Browner, 57 F.3d 1122, 1125  (D.C. Cir. 1995) (internal quotation marks omitted).  "[I]f the  statute is silent or ambiguous with respect to the specific  issue," the court must determine whether the agency's interpretation "is based on a permissible construction of the  statute."  Chevron, 467 U.S. at 843.  In making this determination, we afford substantial deference to the agency's interpretation of the statute because "the responsibilities for assessing the wisdom of ... policy choices and resolving the  struggle between competing views of the public interest are  not judicial ones, and because of the agency's greater familiarity with the ever-changing facts and circumstances surrounding the subjects regulated."  FDA v. Brown & Williamson Tobacco Corp., 120 S. Ct. 1291, 1300 (2000) (internal  quotation marks and citation omitted).  As long as the agency's interpretation is reasonable, we uphold it "regardless  whether there may be other reasonable, or even more reasonable, views."  Serono Lab., Inc. v. Shalala, 158 F.3d 1313,  1321 (D.C. Cir. 1998).

47
In support of their argument that section 271 requires the  Commission to have denied Bell Atlantic's application on the  basis of its interim conditioning rates, appellants rely on  section 271(d)(3)'s requirement that the FCC "not approve  [an application] unless it finds that ... [the applicant] has  fully implemented the competitive checklist."  47 U.S.C.  § 271(d)(3).  They also point out that the competitive checklist requires Bell Atlantic to offer "[n]ondiscriminatory access  to network elements in accordance with the requirements of  section[ ] ... 252(d)(1)," which the FCC has interpreted to  require TELRIC-compliant rates.  Id. § 271(c)(2)(B)(ii).Neither provision, however, speaks, as Chevron put it, unambiguously to "the precise question at issue":  Does the fact  that interim rates (reviewed by neither the NYPSC nor the  FCC) govern a small component of local loops that has only  recently become the subject of competitor demand preclude a  finding of checklist compliance?

48
Moving to Chevron step two, we think the FCC has reasonably answered this question in the negative.  Rapid advances  in technology continuously spark demand for new products  and services.  See Bell Atlantic, 15 F.C.C.R. at 4091 p 259.As a result, competitors may often demand access to new  technologies before state agencies are able to set TELRIC compliant rates--exactly what happened here.  Given this  fact of life in the telecommunication industry at this early  stage of the implementation of the 1996 Act, and given that  the FCC has only ninety days in which to act on section 271  applications, the agency's approach strikes a reasonable balance between ensuring that an applicant has opened local  markets to competition by charging just and reasonable rates  and not allowing technological developments to become obstacles to an applicant's entry into in-region long distance markets.

49
In deferring to the Commission's resolution of the interim  rate issue, we are influenced by an additional factor.  The  agency narrowly cabined its acceptance of interim rates to the  unique circumstances of this case:  emergence of a recently  developed technology produced demand for a new service  before the state commission had an opportunity to approve  permanent rates;  the state commission instituted fast-track  proceedings to set permanent rates;  and those proceedings  ended just days before the FCC approved the section 271  application.

III

50
Checklist item four requires BOCs to show that they  provide competitors with "[n]ondiscriminatory access to network elements," which include local loops, and "[l]ocal loop  transmission from the central office to the customer's premises, unbundled from local switching or other services."  47  U.S.C. § 271(c)(2)(B)(ii), (iv).  Appellants contend that Bell  Atlantic fails to provide nondiscriminatory access to two types  of unbundled loops:  DSL-capable loops and voice grade, hot  cut loops.

DSL-capable loops

51
Comments submitted to the FCC opposing Bell Atlantic's  application charge the company with failing to provide access  to loops capable of supporting DSL technology on a nondiscriminatory basis.  For example, Covad summarized its data  as follows:  "Covad's own, substantiated data shows that for  every 100 loop orders it places in New York, only 50% will receive a due date within 72 hours.  Of those 50 remaining  orders, only 74% (37) will be wired in the central office by the  time Bell Atlantic has committed to do so.  And of those 37  remaining orders, only 78% (29) of them will actually be  provisioned to the customer's premises on time."  The Justice  Department was also concerned about Bell Atlantic's provisioning of DSL loops:  "As to Bell Atlantic's historical performance in provisioning DSL loops, we are unable to conclude  on the current record that Bell Atlantic has demonstrated an  acceptable level of performance.  It is possible, however, that  the Commission may obtain information not currently available to the Department that would support such a conclusion....  [W]e cannot conclude that CLECs currently have  access to DSL loops necessary for them to compete effectively."  DOJ Evaluation at 27-28.

52
The FCC took a different approach.  Acknowledging the  concerns about Bell Atlantic's performance with respect to  DSL loops, the FCC based its finding of checklist compliance  on the company's provisioning of unbundled loops generally,  not of DSL-capable loops in particular.  In reaching this  conclusion, the Commission relied on several factors.  To  begin with, it observed that although BOCs have been obligated to provide access to DSL-capable loops since 1996, the  Commission had not "previously provided guidance to the  BOCs as to the type and level of proof necessary in this area  to establish compliance with section 271."  Bell Atlantic, 15  F.C.C.R. at 4117 p 316.  Moreover, the Commission explained, "no previous applicant has made a separate showing  on the provision of xDSL loops."  Id.  (The "small 'x' before  the letters 'DSL' signifies the use of the term as a generic  transmission technology."  Id. at 4087 p 250 n.818.)

53
Second, the FCC pointed out that because demand for DSL  loops did not surface until 1999, the NYPSC and other state  authorities had only recently begun developing and adopting  performance standards and measures for DSL loop ordering  and provisioning.  See id. at 4117 p 317.  Considering DSL  issues for the first time in August 1999, the NYPSC initiated  collaborative proceedings to address Bell Atlantic's DSL loop  provisioning by defining provisioning methods and developing DSL-specific performance standards.  See id.  The FCC  explained:  "Bell Atlantic and competing carriers have agreed  to joint testing and provisioning procedures for xDSL loops.Provisioning xDSL loops to competitors involves processes  that are more complex than those involved with the provision  of a voice-grade loop."  Id. at 4118 p 319.

54
Third, DSL loops represent only a "small fraction" of all  unbundled loops.  Id. at 4118-19 pp 320-21.  In support of  this finding, the Commission noted that Bell Atlantic provisioned just seven DSL-specific loops in June 1999, fifty-six in  July, 449 in August, and 653 in September.  Id. at 4118 p 320.Although the company also provisioned more than 3,300  premium loops since January 1999 that could "on occasion" be  used for DSL service, the FCC was unable to determine what  portion, if any, was so used.  Id. at 4119 p 320 n.1012.  In  contrast to the small number of DSL loops, Bell Atlantic  provisioned 50,000 unbundled voice grade loops through September 1999.  See id. at 4119 p 321.

55
Finally, Bell Atlantic and its competitors (including Covad)  submitted conflicting data about Bell Atlantic's provisioning  performance.  Noting that "[t]he absence of a New York  performance benchmark or [NYPSC] reconciliation of conflicting data claims makes it difficult for this Commission to  decide between the competing statistics," the FCC explained  that different methodologies in calculating the statistics likely  accounted for the divergence and "complicate[d] its efforts to  analyze the data."  Id. at 4120 p 326.

56
"In light of these unique circumstances," the Commission  concluded, "we should rely upon Bell Atlantic's overall showing of loop performance in evaluating whether Bell Atlantic  has met its burden of demonstrating that it provides unbundled local loops in accordance with checklist item 4."  Id. at  4121 p 327.  Acknowledging that this analysis diverged from  the Justice Department's, the FCC explained:  "We have  given substantial weight to the Department of Justice's views,  but nonetheless, based upon our review of the record on loops  as a whole, find that Bell Atlantic establishes that it provisions unbundled local loops at a level of performance sufficient for checklist compliance."  Id. at 4121 p 328.  The Commission cautioned, however, that "[i]f xDSL services  continue to grow rapidly ... the aggregate loop results will  be more heavily influenced by Bell Atlantic's performance in  provisioning xDSL-specific loops.  If the future aggregate  performance declines from current levels, we will take appropriate enforcement action."  Id. at 4122 p 329.

57
AT&T and Covad claim that the Commission's reasoning  suffers from several flaws.  The first is statutory.  Section  271, they point out, requires the FCC to determine whether  an applicant "has fully implemented the competitive checklist"  and denies the FCC the power to "limit or extend the terms  used in the competitive checklist."  47 U.S.C.  § 271(d)(3)(A)(i), (d)(4).  According to appellants, the evidence reveals systemic discrimination with respect to DSL  loops, thus precluding a finding that Bell Atlantic "fully  implemented" the competitive checklist.

58
Responding with a Chevron argument, the FCC contends  that Congress has not spoken to the "precise question" that  appellants raise:  Must the Commission make a finding of  nondiscriminatory access with respect to each type of loop, or  does the statute permit the agency to evaluate a BOC's  overall loop performance?  The Commission argues that the  statute speaks generally of nondiscriminatory access to "network elements" and "local loop transmission," and that the  statute nowhere unambiguously requires it to make pass-fail  evaluations of each category of loop.  According to the Commission, the fact that section 271 says "fully implemented,"  not "substantially complied," does not answer the question of  what must be fully implemented.

59
We agree with the FCC that the statute is ambiguous with  respect to the precise issue before us.  Section 271 does not  say that an applicant must show that it provides nondiscriminatory access to each category of loop or to every single loop.The statute requires only that the BOC provide "[n]ondiscriminatory access to network elements" (which include local  loops) and "[l]ocal loop transmission."  47 U.S.C.  § 271(c)(2)(B)(ii), (iv).  It thus leaves open precisely what section 271's nondiscriminatory access requirement means.That the FCC may not "limit or extend the terms used in the  competitive checklist," id. § 271(d)(4), changes nothing.  The  Commission neither "limit[ed]" nor "extend[ed]" the term  "local loop transmission," nor did it disregard any checklist  item.  Rather, it gave content to the statute by defining  nondiscriminatory access to unbundled local loops.

60
Because Congress has not spoken to the precise question at  issue, we ask whether the FCC reasonably interpreted section 271 to allow assessment of an applicant's overall provisioning of loops, as opposed to mandating pass-fail analysis  with respect to DSL-capable loops.  See Chevron, 467 U.S. at  843.  We think it did.  To begin with, in reading the term  "nondiscriminatory access" not to require a separate showing  with respect to DSL-capable loops, the Commission relied on  the same characteristics of the DSL loop market that influenced its decision regarding interim rates:  "competitors have  been ordering xDSL-capable loops in New York for a relatively short period of time;  there has been a recent surge in  demand;  and xDSL-capable loops remain a small percentage  of loop orders."  Bell Atlantic, 15 F.C.C.R. at 4121 p 327.  In  addition, the agency explained, "[p]rovisioning xDSL loops to  competitors involves processes that are more complex than  those involved with the provision of a voice-grade loop."  Id.  at 4118 p 319.  Moreover, not only did the NYPSC institute  proceedings to improve Bell Atlantic's DSL performance, but  the FCC might have been unable to complete its work within  the ninety-day statutory review period had it been required  to make separate determinations with respect to each and  every type of loop.  As both the Commission and intervenors  point out, there are many different types of loops, including  two-wire loops, four-wire loops, analog loops, digital loops,  fiber loops, and copper loops.  See id. at 4095 p 268, 4097  p 275;  Bell Atlantic and U S West's Br. at 5.  There are also  "countless uses to which loops can be put, including residential service, business service, voice service, data service, alarm  service, and so on.  Under [appellants'] theory, each of these different kinds and uses of loops could become independent  checklist items requiring stand-alone satisfaction."  Id.

61
Our conclusion that the FCC's interpretation is reasonable  rests, as did the agency's decision, on the "unique factual  circumstances" presented by Bell Atlantic's application with  respect to DSL loops:  demand for DSL loops had only  recently surfaced, DSL loops constitute but a small fraction of  total loop orders, and provisioning DSL loops involves technical difficulties not encountered in provisioning voice grade  loops.  See Bell Atlantic, 15 F.C.C.R. at 4119 p 322.  Unlike  Bell Atlantic, moreover, "[f]uture applicants ... may have the  benefit of clearly-defined performance standards and verified  performance data....  [and] will have a clear picture of the  evidentiary showing [the FCC] would expect for a showing of  checklist compliance with respect to xDSL-capable loops."Id. at 4122 p 330 n.1032.  We therefore expect, as did the  FCC, that as DSL-capable loops become a larger proportion  of unbundled loops, and as performance standards are developed, checklist compliance will require "a separate and comprehensive evidentiary showing with respect to the provision  of xDSL-capable loops."  Id. at 4122 p 330.

62
That the Justice Department had a different view about  DSL-capable loops does not undermine the Commission's  order.  The FCC never disputed the Justice Department's  concerns about Bell Atlantic's provisioning of DSL loops.Acknowledging those concerns, the Commission disagreed  with the Department about what section 271 required.  Interpreting the Telecommunications Act is the FCC's job, not the  Justice Department's, a proposition recognized by both Congress and the Department.  See 47 U.S.C. § 271(d)(2)(A)  ("[T]he Attorney General's evaluation ... shall not have any  preclusive effect on any Commission decision");  DOJ Evaluation at 13 n.25 ("We have examined these facts to assess their  impact on the development of competition in New York and  have not, however, attempted to determine whether they  establish compliance with the legal requirements of the competitive checklist or the Commission's rules, matters which we  leave for the Commission's judgment.").

63
Appellants make one final argument about DSL loops.They claim the FCC improperly relied on Bell Atlantic's

64
promise--made in an ex parte submission shortly before the  Commission approved its application--to establish a separate  affiliate to provide retail advanced services, such as DSL  services.  See Bell Atlantic, 15 F.C.C.R. at 4123 p 331 n.1036.In support, they point to this sentence from the Commission's  order:  "In this case, we have further assurance that competing carriers in New York will have nondiscriminatory access  to xDSL-capable loops in the future as a result of Bell  Atlantic's commitment to establish a separate affiliate  through which it will offer retail advanced services."  Id. at  4122-23 p 331.  Notwithstanding this statement, the record  does not support appellants' argument.  The Commission  rejected Covad's motion to strike Bell Atlantic's ex parte  submission, expressly stating that it had not relied on it in  approving the application.  Id. at 3970 p 40.  The order itself,  moreover, indicates that the Commission did not rely on the  Bell Atlantic submission.  The order mentions the submission  only after concluding that the company provided nondiscriminatory access to loops, and then only in the context of  advising future applicants about what they would need to do  to obtain approval.  Id. at 4122-23 WW 331-33.

Hot Cut Loops

65
When a customer changes its local service provider from  Bell Atlantic to a competitor, Bell Atlantic must perform a  "hot cut," "manually disconnecting the customer's loop in the  Bell Atlantic central office and reconnecting the loop at the  competing carrier's collocation space."  Id. at 4122-23 p 291  n.925.  "The customer is taken out of service while the hot  cut is in progress, thereby making the cut 'hot,' although if  the cut is successful, the service disruption will last no more  than five minutes."  Id.

66
AT&T and Covad mount two challenges to the FCC's  conclusion that Bell Atlantic provisions hot cut loops in a  nondiscriminatory manner.  They challenge both the standard the Commission used and the factual basis for the  agency's conclusion.

67
The FCC has developed two standards for determining  whether BOCs provide nondiscriminatory access to certain products or services, both of which it has applied in prior  section 271 proceedings.  When considering "those functions  the BOC provides to competing carriers that are analogous to  the functions a BOC provides to itself in connection with its  own retail service offerings"--i.e., those with retail analogues--the Commission asks whether the BOC has "provide[d] access that is equal to ... the level of access that the  BOC provides itself, its customers, or its affiliates, in terms of  quality, accuracy, and timeliness."  Id. at 3971 p 44.  With  respect to functions lacking retail analogues, the Commission  looks "to whether the BOC's performance offers an efficient  competitor a meaningful opportunity to compete."  Id. at  4095 p 269.  Because provisioning hot cuts has no retail  analogue, the FCC applied the "meaningful opportunity to  compete" standard to Bell Atlantic's hot cut performance.Id.

68
Use of this standard was erroneous, appellants contend."The FCC should have required Bell Atlantic to prove that it  was providing hot cuts with the least amount of service  disruption and missed appointments that is technically and  commercially feasible."  Appellants' Br. at 45.  Appellants  derive this standard in the following way.  They begin with  Rule 311(b), which governs functions having retail analogues:"to the extent technically feasible," the rule says, BOCs must  provide access to network elements at the same level of  quality as they provide to their own customers.  47 C.F.R.  § 51.311(b).  Appellants argue that Rule 311(b) applies to hot  cuts because the FCC said in the order approving Bell  Atlantic's application that the standard for compliance absent  retail analogues (as in the case of hot cuts) is no weaker than  the standard where there are retail analogues.  Accordingly,  they argue, the meaningful opportunity to compete standard  employed in the former scenario must include a requirement  that the BOC take all technically feasible steps to provision  hot cut loops.  Appellants also contend that their standard is  compelled by the statute's requirement that BOCs provide  nondiscriminatory access to local loops.

69
We are unconvinced.  Applying to obligations that have  retail analogues, Rule 311(b) has nothing to do with obligations, like hot cut provisioning, that have no such analogue.As the FCC points out, the meaningful opportunity standard  "is neither stronger nor weaker than the standard for functions with retail analogues.  It is simply different, because it  requires an objective level of performance rather than a level  that varies with each carrier's individual retail performance."Appellee's Br. at 33.  Appellants thus may not import Rule  311(b)'s "technically feasible" requirement into the meaningful opportunity to compete standard.  Section 271's "nondiscriminatory" requirement, moreover, is not self-defining.While appellants' definition is plausible, the Commission interprets the word differently, and it is to the Commission that  we owe deference.

70
Applying the meaningful opportunity standard, the FCC  determined that Bell Atlantic made "a minimally acceptable  showing" of checklist compliance with respect to hot cuts.Bell Atlantic, 15 F.C.C.R. at 4115 p 309.  It found that the  company completed over ninety percent of hot cuts within a  specified period of time, that fewer than five percent resulted  in service outages, and that fewer than two percent of hot cut  lines reported installation troubles.  Id. at 4114-15 p 309.Appellants advance several challenges to this conclusion.Our review is pursuant to the arbitrary and capricious standard.  See 5 U.S.C. § 706(2)(A).

71
Appellants first argue that the FCC failed to give "substantial weight," 47 U.S.C. § 271(d)(2)(A), to the Justice Department's finding that "the number and magnitude of the deficiencies [in Bell Atlantic's hot cut provisioning] are imposing  a real constraint on competition through the use of unbundled  loops and that significant improvement is needed in this  area," DOJ Evaluation at 20.  We disagree with appellants.The Commission's analysis and the Justice Department's  evaluation rested on the same factual findings--those made  by the NYPSC--but differed over the standard a BOC must  meet to satisfy the statute.  As the Justice Department itself  explained:  "Our assessment of the facts regarding Bell Atlantic's wholesale performance is substantially consistent with  the NYPSC's assessment....  To the extent there is a  difference between the Department's judgment and that of the NYPSC, it arises largely from the Department's conclusion that needed improvements should be achieved before  Bell Atlantic is authorized to provide [long distance service] in  New York, rather than relying on post-271 approval regulatory mechanisms to attempt to ensure such improvements."Id. at 13-14 (footnote omitted). Moreover, the Department  explained:  "We have examined these facts to assess their  impact on the development of competition in New York and  have not, however, attempted to determine whether they  establish compliance with the legal requirements of the competitive checklist or the Commission's rules, matters which we  leave for the Commission's judgment."  Id. at 13 n.25.

72
The Commission and the Justice Department thus disagreed only about where to draw the line between acceptable  and unacceptable hot cut performance.  The Commission was  satisfied with Bell Atlantic's level of performance;  the Department was not.  As the Department recognized, linedrawing is the agency's responsibility.  Congress required  only that the FCC give the Department's evaluation "substantial weight," admonishing that the evaluation should not have  "preclusive effect."  47 U.S.C. § 271(d)(2)(A).  To accept  appellants' argument--particularly where the Justice Department and the FCC agreed on the facts but disagreed about  the law--would give the Department's evaluation precisely  such preclusive effect.

73
AT&T and Covad next argue that the FCC failed to give  "substantial weight" to the Justice Department's conclusion  that Bell Atlantic's hot cut deficiencies had reduced competition in the New York market.  But as the Commission noted  in the order approving the company's application, "the Department did not specify in what manner and to what extent  the New York local exchange market is affected adversely by  these problems.  Nor did the Department provide any indication as to what level of hot cut performance or what types of  improvements Bell Atlantic should be required to demonstrate in order to satisfy section 271."  Bell Atlantic, 15  F.C.C.R. at 4108 p 297.  To be sure, the FCC conducted no  detailed analysis of the effect on competition, relying instead on industry-approved metrics (such as on-time performance  and service outages) to conclude that Bell Atlantic provided  competitors with a meaningful opportunity to compete.  The  Commission certainly could have undertaken its own competition studies, but given that it is the agency's responsibility to  determine precisely how to measure whether an applicant  provides nondiscriminatory access to local loops, we find its  reliance on industry-approved metrics neither arbitrary nor  capricious.

74
Appellants also contend that the FCC failed to provide  reasoned support for its conclusion that Bell Atlantic met the  Commission's performance targets.  Noting that the NYPSC  advocated a ninety-five percent on-time performance rate,  they claim that the Commission failed to support its determination that a ninety percent rate represents a meaningful  opportunity to compete.  As the FCC points out, however,  the NYPSC also said that a ninety percent rate cannot be  considered discriminatory.  Appellee's Br. at 35.  Equally  important, the Commission has wide discretion to determine  where to draw administrative lines, and appellants point to  nothing suggesting that the agency abused its discretion in  drawing the line at ninety as opposed to ninety-five percent.See Department of Health and Human Svcs., Indian Health  Service, Oklahoma City v. FLRA, 885 F.2d 911, 917 (D.C.  Cir. 1989) ("Because of the need for expertise and judgment,  the drawing of the lines between [competing proposals] is  ultimately within the jurisdiction of the [agency], which has  been vested by Congress with administration of the statute,  whose decision must be sustained absent arbitrary action.").The same principle refutes appellants' challenge to the Commission's conclusion that Bell Atlantic satisfactorily performed hot cuts with minimal service outages (five percent)  and installation troubles (two percent).

75
AT&T and Covad next argue that the FCC's conclusion  that fewer than five percent of customers suffered service  outages caused by Bell Atlantic rests on a legal error, i.e.,  that the five percent figure did not include service outages  where fault could be attributed to neither Bell Atlantic nor  AT&T.  Because Bell Atlantic bears the burden of establishing that it has satisfied the competitive checklist, appellants  argue, the FCC must assume that the company caused the  outages of unattributed origin, raising its error rate to 6.5  percent.  But how does attributing outages of unknown origin  to Bell Atlantic follow automatically from the proposition that  the company has the burden of proof?  Appellants never  explain this connection.  Moreover, we find no reason to  disturb the Commission's judgment that Bell Atlantic satisfied its burden of proof.  The company offered evidence about  the number of service outages, which AT&T attempted to  rebut with its own data.  Relying on an NYPSC reconciliation  of this conflicting data, the FCC concluded that many of the  outages cited by AT&T could not fairly be attributed to Bell  Atlantic.  See Bell Atlantic, 15 F.C.C.R. at 4110-11 pp 30203.  The outages-of-unknown-origin problem thus represents  a failure of AT&T's rebuttal evidence, not of Bell Atlantic's  proof.

76
Equally unpersuasive is appellants' argument that "it was  absurd for the FCC to find that CLECs have nondiscriminatory access to unbundled loops when unrebutted evidence  showed that more than 10 percent of CLEC loop orders  result in dropped [directory] listings."  Appellants' Br. at 54.The Commission responded to this argument in the order  approving Bell Atlantic's application, stating:  "We find that  Bell Atlantic has taken adequate measures to detect any  dropped listings and restore them to the directory assistance  database promptly.  No other commenter raises this objection, suggesting the difficulty is of little competitive consequence.  In fact, several parties support Bell Atlantic's assertion of compliance with this checklist item."  Bell Atlantic, 15  F.C.C.R. at 4134 p 355 (footnote omitted).  Acknowledging  that the Justice Department, relying on an AT&T study, had  expressed concern about directory listings, the Commission  explained that the Department "did not have the benefit of  Bell Atlantic's reply [to AT&T's study], which we believe  sufficiently rebuts AT&T's claims."  Id. at 4134 p 356.  Although the Commission did not document all problems with  AT&T's study, its conclusion finds sufficient support in the  record and is neither arbitrary nor capricious.

IV

77
We turn to AT&T's challenge to the use restrictions Bell  Atlantic places on certain combinations of network elements.Bell Atlantic and its competitors use network elements to  provide two types of telecommunications services:  exchange  services, which subscribers use to make calls within local  exchange areas (local calls), and exchange access services,  which long distance carriers use to originate and terminate  long distance calls.  Adhering to an NYPSC policy, Bell  Atlantic prohibits competing carriers from using a certain  combination of unbundled network elements--a combination  of loop and transport known as the enhanced extended link or  "EEL"--to provide exchange access (long distance) services  unless those carriers use those elements primarily to provide  exchange (local) services.  In other words, Bell Atlantic denies EEL access to carriers seeking to use them either  exclusively or predominately for long distance service;  those  carriers must instead provide long distance service as they  had before the 1996 Act--by purchasing special access services from Bell Atlantic.  Special access charges for those  services exceed what competitive carriers like AT&T would  have to pay to lease EELs.  Thus this dispute.

78
The Commission originally considered these use restrictions in its Local Competition First Report and Order, finding  them to violate section 251(c)(3)'s requirement that BOCs  "provide such unbundled network elements in a manner that  allows requesting carriers to combine such elements in order  to provide such telecommunications service."  47 U.S.C.  § 251(c)(3). Because long distance service is a "telecommunications service," the FCC reasoned, BOCs must provide  access to network elements to carriers wishing to use them to  provide long distance as well as local service.  "Although we  conclude ... that we have discretion under the 1934 Act, as  amended by the 1996 Act, to adopt a limited, transitional plan  to address public policy concerns raised by the bypass of  access charges via unbundled elements," the FCC explained,  "we believe that our interpretation of section 251(c)(3) ... is  compelled by the plain language of the 1996 Act."  Local Competition First Report and Order, 11 F.C.C.R. at 15679  p 356.

79
In 1999, the Supreme Court vacated the rule listing the  network elements BOCs must provide to competitors, see  Iowa Util. Bd., 119 S. Ct. 721, leading the Commission to  reconsider its position with respect to EEL access.  As part  of the process of developing new unbundled network element  rules, the Commission issued a Supplemental Order expressly  authorizing--indeed, mandating--the use restrictions that appellants challenge here.  Issued approximately one month  before the FCC approved Bell Atlantic's application, the  Supplemental Order provides:

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[U]ntil resolution of our Fourth [Further Notice of Pro-posed Rulemaking], which will occur on or before June30, 2000, interexchange carriers (IXCs) may not convertspecial access services to combinations of unbundledloops and transport network elements....  This con-straint does not apply if an IXC uses combinations ofunbundled network elements to provide a significantamount of local exchange service, in addition to exchangeaccess service, to a particular customer.

81
In the Matter of Implementation of the Local Competition  Provisions of the Telecommunications Act of 1996, 15  F.C.C.R. 1760, 1760 p 2 (1999) ("Supplemental Order") (emphasis added), clarified, In the Matter of Implementation of  the Local Competition Provisions of the Telecommunications  Act of 1996, FCC No. 00-183 (June 2, 2000) ("Supplemental  Order Clarification").  In other words, the Commission mandated these use restrictions on an interim basis.  In a Supplemental Order Clarification, released June 2, 2000, the Commission extended the temporary constraint beyond June 30,  "while we compile an adequate record ... for addressing the  legal and policy issues that have been raised."  Supplemental  Order Clarification at p 8.

82
Acknowledging that it had changed its position, the FCC  explained that the interim rule "is consistent with the Commission's finding in the Local Competition First Report and  Order, that we may, where necessary, establish a temporary  transitional mechanism to help complete all of the steps  toward the pro-competitive goals of the 1996 Act, including the full implementation of a competitively-neutral system to  fund universal service and a completed transition to costbased access charges."  Supplemental Order, 15 F.C.C.R. at  1763 p 7.  Under the Commission's universal service program,  local telephone service in high-cost areas is subsidized by  incumbent LEC exchange access revenue.  The FCC was  concerned that if it allowed carriers to bypass special access  charges by using network elements to provide their own  exchange access, LEC exchange access revenue would decline, thus threatening universal service funding.

83
In comments opposing Bell Atlantic's application (submitted before promulgation of the Supplemental Order), AT&T,  relying on the same reasons the FCC gave in the Local  Competition First Report and Order, contended that these  use restrictions are unlawful, precluding the Commission's  finding that Bell Atlantic provided "nondiscriminatory access  to network elements in accordance with the requirements of  sections 251(c)(3) and 252(d)(1)." 47 U.S.C. § 271(c)(2)(B)(ii).The Commission responded in the order approving Bell Atlantic's application:

84
In the wake of the Supreme Court's January 25, 1999decision vacating the Commission's Rule 51.319 that iden-tified the network elements incumbent LECs are re-quired to provide on an unbundled basis, and prior toadoption of our order reinstating that rule, the incum-bents' obligations with regard to offering unbundled net-work elements or combinations thereof has been unclear.

85
Bell Atlantic, 15 F.C.C.R. at 4080 p 236 (citing Iowa Util. Bd.,  119 S. Ct. 721).  "Given this vacuum," the FCC reasoned, "it  would be inequitable to penalize Bell Atlantic for complying  with the rules established by the New York Commission,"  which permit these use restrictions.  Id.  The Commission  also relied on its determination in the Supplemental Order  that the imposition of use restrictions on an interim basis was  lawful.  See id.

86
Renewing its argument here, AT&T claims that Bell Atlantic's use restrictions violate section 251(c)(3).  According to  AT&T, the Supplemental Order is unlawful and Bell Atlantic's imposition of use restrictions precludes a finding of  checklist compliance.  The FCC responds that compliance

87
with Commission orders cannot serve as a basis for rejecting  an application.  The reason, the FCC explains, is that the  statute does not permit appellants in section 271 proceedings  to collaterally attack orders or rules adopted by the Commission in other proceedings.  Calling its position "prudent," the  Commission further argues that "any such challenge could be  brought only through a petition for review of the Supplemental Order itself, see 47 U.S.C § 402 (a), not as a collateral  attack on this section 271 appeal, see 47 U.S.C. § 402 (b)(6),  (9)."  Appellee's Br. at 40.  "Because the Supplemental Order must be deemed lawful for purposes of this case," the  Commission concludes, "Bell Atlantic's use restrictions cannot  be a basis for challenging its section 271 authorization."  Id.

88
Since this issue presents a straightforward question of  statutory construction, we again invoke Chevron.  Under  Chevron step one, the "precise question" is this:  In a section  271 proceeding, may an applicant's compliance with a collateral order provide the basis for a finding that the applicant has  not "fully implemented the competitive checklist"?  47 U.S.C.  § 271(d)(3)(A)(i).  Put another way, does the statute require  the Commission in section 271 proceedings to entertain challenges to orders adopted in other proceedings?  We cannot  see how section 271(d)(3)(A)(i) speaks unambiguously to this  issue.  The section says nothing about what full implementation requires, nor whether the Commission can interpret it as  being satisfied by compliance with agency orders.

89
The question, then, is whether the FCC's interpretation of  section 271(d)(3)(A)(i) is reasonable.  See Chevron, 467 U.S.  at 843.  The Commission based its interpretation on the "very  unfortunate practical consequences" that would result from  adopting AT&T's interpretation of the statute.  Appellee's  Br. at 41.  Under that interpretation, during the ninety-day  statutory review period the FCC would have to resolve all  collateral challenges to rules and orders issued in other  proceedings, and then defend its decision in a section 271  appeal to this court.  According to the Commission, this  would risk converting "precisely focused, extremely expedited" section 271 "adjudications, as well as this Court's subsequent review proceedings, into forums for the mandatory  resolution of major industry-wide issues already pending in  traditional notice-and-comment rule making proceedings."  Id.

90
Given the deference we owe the Commission, particularly  where, as here, it has made a judgment about the most  efficient way to proceed in a complex administrative matter,  we find its interpretation of the statute reasonable.  The  Commission's concerns about encumbering the ninety-day  administrative process and prolonging litigation, thus delaying BOC entry into long distance markets, seem well-founded. Under AT&T's interpretation of the statute, parties to section  271 proceedings could challenge (before both the Commission  and this court) virtually every aspect of the agency's local  competition regulations--including TELRIC, as AT&T counsel conceded at oral argument.  Such a challenge would  further complicate these already enormously complex proceedings, requiring the Commission, in addition to resolving  the many other issues before it, to present a comprehensive  defense of TELRIC, all within the ninety days prescribed by  the statute.  We would then have to determine whether  TELRIC was the appropriate pricing methodology, and in  doing so we would create a holding that would supplant any  pending petitions for review of the underlying TELRIC orders, at least in this circuit.  We thus agree with the FCC  that allowing collateral challenges could change the nature of  section 271 proceedings from an expedited process focused on  an individual applicant's performance into a wide-ranging,  industry-wide examination of telecommunications law and policy.

91
Perhaps allowing substantive challenges to collateral orders  would result in speedier realization of competitive local and  long distance telephone markets.  But the FCC has a different view, and this being a policy judgment, it is for the  agency--not this court--to make.  "Congress quite clearly  gave the Commission the primary responsibility to make  delicate judgments under this statute...."  SBC Communications, 138 F.3d at 421.  We are particularly comfortable deferring to the Commission's judgment because the agency  adopted the Supplemental Order only as "a limited, transitional plan to address public policy concerns, relating to  universal service, raised by the bypass of access charges via  unbundled elements."  Cf. Competitive Telecommunications  Ass'n v. FCC, 117 F.3d 1068, 1073-75 (8th Cir. 1997) ("CompTel").

92
We do not agree with AT&T that AT&T v. FCC, 978 F.2d  727 (D.C. Cir. 1992) requires a different result.  There,  AT&T filed a section 208 complaint challenging a competitor's  failure to file a tariff in violation of the Communications Act. The Commission, acknowledging that this court had invalidated a previous order exempting non dominant carriers from  filing tariffs, deferred consideration of the "validity" of the  policy to a future rule making and dismissed AT&T's complaint.  Id. at 731.  Calling the Commission's action an "administrative law shell game," id. at 732, we found the dismissal of AT&T's complaint "with only a promise to address the  legal issue it raised in a future rule making" to be arbitrary  and capricious, id. at 733.

93
AT&T differs from this case in a fundamental respect. Unlike there, where the Commission dismissed AT&T's section 208 complaint, here the Commission fully considered  AT&T's challenges to the Commission's approval of Bell  Atlantic's section 271 application.  Although the Commission  declined to consider AT&T's challenge to the Supplemental  Order, there is no evidence that its reason for doing so was,  as in AT&T, a desire to "avoid judicial review" motivated by a  "fear[ ] ... [that the order] cannot withstand judicial scrutiny."  Id. at 731.  Instead, the Commission relied on its  view--reasonable, we have held--that section 271 does not  permit collateral challenges to Commission orders.  AT&T  could have challenged the Supplemental Order by filing a  petition for review pursuant to 47 U.S.C. § 402(a).  In fact,  this is exactly what Bell Atlantic and other BOCs did when  challenging the TELRIC methodology--they filed a petition  for review of the Local Competition First Report and Order,  which the Eighth Circuit resolved just days ago.  See Iowa  Util. Bd. v. FCC, No. 96-3321 (8th Cir. July 18, 2000).  AT&T  may still be able to challenge the Supplemental Order by  filing a section 208 complaint when Bell Atlantic actually refuses to permit it to use EELs to provide long distance  service.  Thus this case involves neither an "administrative  law shell game" nor a "promise to address the legal issue ...  in a future rule making."  Id. at 732-33.

94
A final note.  The parties debate the implications of CompTel, 117 F.3d at 1073-75.  The FCC argues that the decision  supports the interim restrictions authorized by the Supplemental Order.  AT&T thinks that CompTel was wrongly  decided.  We need not resolve that debate because the lawfulness of the Supplemental Order is not a proper subject of this  section 271 proceeding.

V

95
This brings us to AT&T's final challenge to the Commission's order.  In Bell Atlantic's section 271 application, the  company stated its intention to market its affiliate's long  distance service to customers who call Bell Atlantic to establish or change their existing local service.  Bell Atlantic  explained that when it receives calls relating to local service,  it will mention its affiliate's long distance service, then offer  to read the names of other long distance carriers in random  order.

96
AT&T claims that Bell Atlantic's practice violates section  272(c)(1), which prohibits BOCs from discriminating between  their long distance affiliate and other providers of long distance service.  See 47 U.S.C. § 272(c)(1).  Section 272(g)(2),  however, expressly permits BOCs to engage in joint marketing.  See id. § 272(g)(2).  Under section 272(g)(3), moreover,  "[t]he joint marketing and sale of services permitted under  this subsection shall not be considered to violate the nondiscrimination provisions of subsection (c) of this section."  Id.  § 272(g)(3).  We read this provision to exempt joint marketing activities from section 272(c)(1)'s nondiscrimination requirement.  It is true, as AT&T points out, that section  272(g)(3) is titled "Rule of construction," but we do not see  how this alters its clear implications.

97
AT&T also argues that prior to the 1996 Act the FCC  required BOCs to read the names of available long distance  carriers in alphabetical order, showing favoritism to none. According to AT&T, because section 251(g) requires BOCs to  adhere to all pre-Act nondiscrimination requirements until "explicitly superseded by regulations prescribed by the Commission," 47 U.S.C. § 251(g), BOCs may not deviate from the  prior practice of reading the list of all long distance carriers,  including themselves, in alphabetical order.  The Commission  persuasively responded to this issue in its 1997 Order denying  BellSouth's South Carolina application:

98
[T] he equal access obligations requiring BOCs to provide the names and telephone numbers of inter exchange carriers in random order were written at a time when BOC scould not provide (and therefore could not market) long distance services.  Now that BOCs ... are permitted under the Act to market their services jointly, we must harmonize the existing equal access requirements with the right under the Act to engage in joint marketing.

99
In the Matter of Application of BellSouth Corp., 13 F.C.C.R.  at 671 p 238 (footnote omitted).

VI

100
Approving a section 271 application requires a delicate  judgment about the current state of competition in local  markets, as well as how best to foster future competition. The FCC must ensure--as it has in five previous cases--that  BOCs failing to comply with the 1996 Act's local competition  provisions are not allowed to provide long distance service. The Commission must be equally careful to ensure--as it has  in this case--that BOCs that satisfy the statute's requirements are not barred from long distance markets.  "Setting  the bar for statutory compliance too high would inflict two  quite serious harms," as the FCC points out.  Appellee's Br.  at 11.  "First, it would dampen every BOC's incentive to  cooperate closely with state regulators to open its local markets to full competition.... Second, setting the bar too high  would simultaneously deprive the ultimate beneficiaries of the  1996 Act--American consumers--of a valuable source of  price-reducing competition in the long distance market."  Id.

101
We believe that the Commission set the bar at a reasonable  height.  It demanded real evidence that Bell Atlantic had  complied with all checklist requirements, but at the same  time, it did not allow " 'the infeasible perfect to oust the  feasible good.' "  Edison Elec. Inst. v. ICC, 969 F.2d 1221, 1227 (D.C. Cir. 1992) (quoting Commonwealth of Pennsylvania v. ICC, 535 F.2d 91, 96 (D.C. Cir. 1976)).  Given the  evidence of growing competition in the New York local telephone market, see supra at 9-10, the NYPSC's careful work  on a host of technical and complex issues, and the thorough  analysis conducted by the FCC in the limited time permitted  by section 271(c), we find no basis for faulting the Commission's conclusion that Bell Atlantic satisfied the statute's  requirements for entry into the long distance telephone market.

102
The Commission's order approving Bell Atlantic's application is affirmed.

103
So ordered.