[Federal Register Volume 59, Number 146 (Monday, August 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18589]
[[Page Unknown]]
[Federal Register: August 1, 1994]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 64 and 69
[CC Docket No. 91-141, FCC 94-190]
Expanded Interconnection With Local Telephone Company Facilities
agency: Federal Communications Commission.
action: Final rule.
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summary: The FCC reaffirmed its commitment to its expanded
interconnection policy, which creates new opportunities for competitive
provision of access services that the local telephone companies
traditionally have provided on a monopoly basis. The Commission acted
in response to the June 10, 1994 decision of the U.S. Court of Appeals
for the D.C. Circuit in Bell Atlantic Telephone Companies v. FCC. In
that case, the court said it would vacate in part, and otherwise
remand, the first two of the Commission's expanded interconnection
orders, on the grounds that the agency lacked authority to require the
telephone companies to provide expanded interconnection for special
access through physical collocation. The Commission directed the local
telephone companies to provide expanded interconnection through virtual
collocation. The Commission concluded that, although its earlier orders
found that physical collocation would be the optimal means to achieve
the public interest benefits of expanded interconnection, virtual
collocation also produces these benefits. The Commission found that it
had legal authority to require virtual collocation. The FCC exempted
telephone companies from the mandatory virtual collocation requirement
at central offices in which they choose to offer physical collocation
subject to non-streamline regulation by the Commission as a
communications common carrier service. By acting expeditiously before
the court issues its mandate, the FCC said that it sought to avoid the
disruption to competition that might result if its expanded
interconnection policy lapsed. This quick response to the court's
decision should give affected parties clear guidance on their rights
and obligations and preserve the public interest benefits of expanded
interconnection.
dates: Effective Date: December 15, 1994.
Compliance Date: September 1, 1994, the carriers subject to these
rules must file tariffs and notifications with respect to physical
collocation offerings under exemption from the virtual collocation
requirement.
for further information contact: David L. Sieradzki, (202) 418-1576, or
Suzanne M. Tetreault, (202) 418-1596, Policy and Program Planning
Division, Common Carrier Bureau.
supplementary information: This is a synopsis of the Commission's
Memorandum Opinion and Order in CC Docket No. 91-141, adopted July 14,
1994, and released July 25, 1994. The complete text of this Memorandum
Opinion and Order is available for inspection and copying during normal
business hours in the FCC Reference Center, 1919 M St., NW., Room 239,
Washington, DC 20554.
The Federal Communications Commission has submitted the following
information collection requirement to OMB for review and clearance
under the Paperwork Reduction Act of 1980, 44 U.S.C. 3507. Persons
wishing to comment on this information should contact Timothy Fain,
Office of Management and Budget, Room 10236, New Executive Office
Building, Washington, DC 20503, (202) 395-3561. For further information
contact Judy Boley, Federal Communications Commission, (202) 418-0214.
Please note: The Commission has requested expedited review of this
collection by August 1, 1994, under the provisions of 5 CFR 1320.18.
Title: Expanded Interconnection with Local Telephone Company
Facilities.
Respondents: Business or other for-profit.
Frequency of Response: One-time collection.
Estimated Annual Burden: 16 respondents; 1 response per respondent;
390 hours per response; 6240 hours total annual burden.
Needs and Uses: The information required is necessary to ensure the
provision of expanded interconnection services in a manner consistent
with the requirements of the Communications Act of 1934, as amended,
particularly 47 U.S.C. 201, 202, and 203, as well as other requirements
established herein. Public reporting burden for this one-time
collection of information is estimated as follows: for tariff filings,
including supporting information, average 390 hours per response. These
estimates include the time for reviewing instructions, searching
existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information. Send comments
regarding this burden estimate or any other aspect of this collection
of information, including suggestions for reducing the burden, to the
Federal Communications Commission, Office of Managing Director,
Paperwork Reduction Project, Washington, DC 20554 and to the Office of
Management and Budget, Paperwork Reduction Project, Washington, DC
20503.
Synopsis of Memorandum Opinion and Order
1. Expanded interconnection is a local exchange carrier (LEC)
offering that enables parties, by interconnecting their circuits with
those of the LEC at a LEC central office through either physical
collocation or virtual collocation, to compete on a facilities basis
with certain LEC access services. Physical collocation, as defined by
the Commission in this proceeding, is an offering that enables an
interconnector to locate its own transmission equipment in a segregated
portion of a LEC central office. The interconnector pays a tariffed
charge to the LEC for the use of that central office space, and may
enter the central office to install, maintain, and repair the
collocated equipment. Virtual collocation is defined as an offering in
which the LEC owns (or may lease) and exercises exclusive physical
control over the transmission equipment, located in the central office,
that terminates the interconnector's circuits. The LEC dedicates this
equipment to the exclusive use of the interconnector, and provides
installation, maintenance, and repair services on a non-discriminatory
basis. Under our virtual collocation policy, the interconnector has the
right to designate its choice of central office equipment, and to
monitor and control the equipment remotely. The LEC connects this
equipment to the interconnector's circuit outside the central office,
with an interconnection point between LEC-owned facilities and
interconnector-owned facilities as close as possible to the office. The
standards governing physical collocation and virtual collocation
arrangements are discussed in detail below.
2. In response to the court's decision in Bell Atlantic Telephone
Companies v. FCC, No. 92-1619 (D.C. Cir., June 10, 1994), we first
reaffirm our analysis and conclusion in the Special Access Expanded
Interconnection Order, 57 FR 54323 (November 18, 1992) and the Switched
Transport Expanded Interconnection Order, 58 FR 48756 (September 17,
1993) that expanded interconnection for special access and switched
transport is in the public interest. We reaffirm that the benefits of
expanded interconnection outweigh any disadvantages of the policy. We
next conclude that, although expanded interconnection through physical
collocation is the optimal means to realize these benefits, expanded
interconnection through virtual collocation also produces these
benefits and is in the public interest. We reaffirm that we have
authority, pursuant to Section 1, 4(i), 201, 202, 205, 214(d), and 218
of the Communications Act, to mandate expanded interconnection and
impose the related requirements specified in this order.
I. Interconnection Architecture
3. Remand and New Mandatory Virtual Collocation Policy. In light of
the D.C. Circuit's Bell Atlantic v. FCC decision and in anticipation of
remand, we are adopting a new expanded interconnection policy that will
facilitate the continued, uninterrupted provision of expanded
interconnection and will reduce the practical problems that could arise
in the wake of the court's decision. We will require, as of September
1, 1994, that Tier 1 LECs (other than NECA pool members) file generally
available tariffs offering expanded interconnection through virtual
collocation. LECs will be exempted from this requirement in central
offices where they opt to provide physical collocation subject to the
standard described in detail below.
4. Physical Collocation Exemption. A LEC will be exempted from our
mandatory virtual collocation requirement at any specific central
office or offices for which the LEC opts to offer under tariff expanded
interconnection through physical collocation, subject to full
regulation by the Commission as a communications common carrier
service, including the standards we adopt below for such offerings. A
LEC's physical collocation offering will exempt it from the general
requirement to offer virtual collocation under tariff only if the LEC
explicitly consents to offer physical collocation as a communications
common carrier offering under non-streamlined Title II regulation.
5. A LEC will qualify for an exemption from the mandatory virtual
collocation requirement only if it voluntarily provides physical
collocation subject to all the rules relating to physical collocation
that are set forth in this order. As part of that regulation, a LEC
that has chosen to provide physical collocation at particular central
offices will not be permitted to withdraw its physical collocation
offering for customers' existing physical collocation nodes at those
offices, for either current or new circuits, without Commission
certification pursuant to Section 214 of the Communications Act that
such a discontinuation of service will not adversely affect the present
or future public convenience and necessity. The exemption from the
virtual collocation requirement will apply as long as the LEC offers
physical collocation. If a LEC has offered physical collocation
pursuant to this exemption, and subsequently withdraws its physical
collocation offering for new customers at a given location, it will no
longer qualify for the exemption, and will be required to offer virtual
collocation on a generally available, tariffed basis at that location.
Similarly, if a LEC has offered virtual collocation on a generally
available, tariffed basis, and later wants to withdraw that offering in
a particular central office because it qualifies for the physical
collocation exemption in that office, it may withdraw the offering for
new interconnectors. In such a case, however, the LEC must continue to
make virtual collocation available for existing and new circuits of
interconnectors that are already using virtual collocation in that
office, unless it obtains Commission certification that such a
discontinuation of service will not adversely affect the present or
future public convenience and necessity.
6. Alternative Interconnection Offerings. We remain open to
alternative interconnection arrangements that telephone companies may
propose in waiver petitions, if those proposals satisfy the public
interest objectives achieved by our virtual collocation requirements.
Moreover, LECs are free to tariff alternative virtual collocation,
physical collocation, or other arrangements that interconnectors may
want to take in addition to the baseline arrangements satisfying the
LECs' basic obligations under the rules adopted herein. Such
alternatives may be negotiated between the parties, although such
negotiated arrangements must be filed as tariffs to enable other
interconnectors desiring the same arrangement in the same central
office to obtain them.
7. Implementation. The LECs subject to expanded interconnection
requirements shall file tariffs offering virtual collocation as defined
herein on September 1, 1994, to be effective on December 15, 1994. LECs
must amend their initial tariff filings by October 3, 1994 if they are
required to tariff rates for services using additional interconnector-
specified circuit terminating equipment. Petitions to reject or suspend
and investigate any of these tariffs should be filed by October 14,
1994; replies will be due on October 31, 1994. LECs that wish to be
exempted from the virtual collocation requirement must, on September 1,
1994, file any necessary tariff revisions to implement physical
collocation in accordance with the rules set forth in this order, or
notify the Chief, Tariff Division, Common Carrier Bureau, in writing
that no such revisions are necessary and explain the basis for that
conclusion. We are not requiring LECs to obtain our advance approval
before making use of the physical collocation exemption from the
virtual collocation requirement. LECs will, however, be held to the
rules set forth herein concerning physical collocation offerings made
in lieu of the mandatory virtual collocation requirement.
8. We also emphasize that the mandatory physical collocation
requirement adopted in our earlier orders, which the Bell Atlantic v.
FCC court has stated it would vacate with respect to special access
expanded interconnection, remains in effect until the court issues the
mandate in that case, and the LECs may not propose to withdraw,
suspend, or otherwise abrogate their current special access physical
collocation offerings until then. Assuming the mandate does not issue
before December 15, 1994, our rules requiring that LECs offer both
special access and switched transport expanded interconnection through
physical collocation will remain in effect until December 15, 1994.
9. Locations Where Expanded Interconnection Must Be Made Available.
For purposes of implementing our mandatory virtual collocation regime,
we require, as we did in the First Reconsideration Order, 57 FR 62481
(December 31, 1992), that LECs provide expanded interconnection in a
subset of their central offices in their initial tariffs. In this
instance, LECs should initially tariff expanded interconnection in all
offices in which it is currently tariffed. If a LEC receives a bona
fide request to make expanded interconnection available in additional
central offices, the LEC must file tariff revisions offering virtual
collocation (or, if it qualifies for an exemption, physical
collocation) in such offices within 45 days of receipt of such a
request. Such tariff revisions shall be effective on 45 days notice or
less. We also reaffirm that, under the policies adopted in this order,
LECs must provide: (1) Both special access and switched transport
expanded interconnection at central offices that are classified as end
offices and service wire centers, (2) special access expanded
interconnection at remote nodes that are rating points for special
access; and (3) switched transport expanded interconnection on a bona
fide request at ``stand-alone tandems'' and at remote nodes that serve
as rating points for switched transport and have the necessary space
and technical capabilities to originate and terminate switched traffic.
II. Standards
10. Overview. Except for the policy changes described below, we
conclude on the basis of the record previously compiled that the
virtual collocation standards adopted in earlier orders in this
proceeding should continue to apply under the new mandatory virtual
collocation requirement. We also find that the standards we adopted as
part of our mandatory physical collocation requirement remain
appropriate in the context of physical collocation provided voluntarily
under the new rules.
A. Standards Governing Virtual Collocation
1. In General
11. We here adopt rules governing mandatory virtual collocation
that are similar to the rules we adopted in earlier orders in this
proceeding to govern virtual collocation. Under these rules, LECs will
be required to dedicate to interconnectors' use in terminating the
interconnectors' circuits any kind of central office basic transmission
equipment reasonably specified by the interconnector. LECs will be
required to install, maintain, and repair this equipment, at a minimum,
under the same time intervals and with the same failure rates that
apply to comparable LEC equipment not dedicated to interconnectors.
Interconnectors will be entitled to monitor and control this equipment
remotely. LECs will be exempt from the virtual collocation requirement
if they provide physical collocation offerings that satisfy our
requirements. Tariffing, rate structure, and pricing requirements will
ensure that virtual collocation is generally available on a
nondiscriminatory basis and fulfills our public interest objectives.
12. In the unlikely event a court were to hold that we lack
authority to require that interconnectors be able to specify the
virtually collocated equipment dedicated to their use, we intend that,
instead, LECs and interconnectors would negotiate the range of
equipment available for virtual collocation. If a court were to hold
that we lack authority to impose even that approach, we intend that an
approach under which the LEC specifies the equipment that the
interconnector could select be used as a replacement. Moreover, if a
court were to hold that we lack authority to impose any of the other
specific requirements included in the standards described in the
preceding paragraph, we intend that the offending provision be removed.
We find that these approaches would be acceptable, although
substantially less desirable, options.
2. Equipment Designation
13. We reaffirm that under our virtual collocation policy,
interconnectors have the right to select the type of central office
equipment dedicated to their use. In addition to our requirement that
LECs offer virtual collocation of any type of transmission equipment
reasonably requested by interconnectors, we also require that LECs
offer virtual collocation through generally available tariffs. We are
specifying tariffing procedures for the LECs' service offerings
involving collocation equipment to ensure that both these requirements
are satisfied.
14. Prospective users of virtual collocation may request that LECs
include specific types of equipment that they are likely to use
initially, and would like to have included in the tariffs. If they
submit such requests to the LECs by August 1, 1994, the LECs are
required to include specific rates for the requested equipment in their
virtual collocation tariffs filed on September 1, 1994. Prospective
users of virtual collection may continue to give the LECs requests for
tariffing specific equipment through September 1, 1994. By October 3,
1994, LECs must amend their initial tariff filings to include specific
prices for all of the equipment identified by interconnectors by
September 1. During the period from September 1 to December 15,
interconnectors may continue to submit equipment requests, although in
order to facilitate an orderly tariffing process, we will permit LECs
to treat those requests as if they were received on the day after the
tariffs become effective, subject to the procedure outlined in the next
paragraph.
15. After the initial tariffs become effective, interconnectors
will continue to have the right to specify additional types of virtual
collocation equipment. An interconnector may request that a LEC modify
its virtual collocation tariffs to offer additional types of
transmission equipment. The LEC will be required to modify its tariff
accordingly within 30 days of receiving such a request. Such tariff
changes should be scheduled to become effective on 30 days notice. We
reaffirm that, under our new expanded interconnection policy, LECs may
proscribe the use of interconnector-designated equipment of practices
that represent a significant and demonstrable technical threat to the
LEC network.
3. Installation, Maintenance, and Repair
16. In our vital collocation regime, the LECs are responsible for
installing, maintaining, and repairing the central office equipment
that they own and dedicate to the use of interconnectors. In general,
we reaffirm our conclusion in earlier orders that LECs must provide
these services, at a minimum, under the same time intervals, and with
the same failure rates, that apply to the performance of similar
functions for comparable LEC equipment. Failure to provide these
functions on equipment dedicated to interconnectors in a manner that is
at least as timely and efficient as the service the LECs provide
themselves for services that compete with interconnectors' offerings
constitutes an unreasonable practice under Section 201(b) of the
Communications Act.
17. If an interconnector designates equipment that a LEC currently
uses in a given central office, the LEC will not need to provide
training to its employees and therefore will not be permitted to charge
the interconnector for training LEC personnel to service that
equipment. Evidence in the record shows that many LECs have procedures
for certifying or approving equipment manufacturers and independent
contractor personnel to install electronic equipment, and in some
cases, to maintain and repair such equipment. LECs that permit outside
service representatives to enter their central offices to install,
maintain, or repair LEC equipment must permit outside representatives
to provide these services for the equipment dedicated to
interconnectors' use under virtual collocation. If LECs can choose from
a range of levels of service quality offered by outside service
representatives (e.g., repair times), the LECs must offer the same
range of service options to virtual collocation customers in their
tariffs. LECs may impose conditions, including certification and
bonding requirements, on the contractors that provide service for
equipment dedicated to interconnectors, but these requirements must be
the same as the requirements that apply to contractors that provide
service for other LEC equipment. If LECs use outside contractors to
install, maintain, or repair equipment, they must reasonably consider
both price and service quality in selecting contractors to provide
these services.
18. If an interconnector meets the LEC's standards for outside
service representatives, then the interconnector should be certified as
a possible outside contractor. Although LECs are generally required to
consider cost in selecting a contractor, a LEC will not be required to
choose an interconnector to perform installation, maintenance, and
repair on this basis alone. LECs that do not permit outside contractors
to enter their central offices are not required to permit such
contractors to provide service for equipment dedicated to
interconnectors' use, although they are permitted to do so, and may
find it the most advantageous way of implementing virtual collocation.
19. We require the LECs to report on the timing and failure rates
for providing such services for comparable LEC and interconnector-
dedicated equipment and circuits. We increase the frequency of these
required reports from annually, as currently required, to quarterly. We
delegate authority to the Chief, Common Carrier Bureau, to specify the
format and timing of these reports. LECs are not subject to this
reporting requirement if they are exempt from the virtual collocation
requirement because they provide physical collocation in all central
offices in which they provide expanded interconnection. We decline to
require the LECs to install, maintain, and repair interconnectors'
virtual collocation equipment to meet the interconnectors' time
intervals.
4. Other Requirements for Virtual Collocation
20. Except as stated elsewhere in this order, we reaffirm our
existing rules on the tariffing of virtual collocation offerings, for
the reasons stated in our original orders. We reaffirm that the cross-
connect element must be tariffed at a study-area-wide averaged rate
that is the same for both virtual collocation and physical collocation
for LECs that choose to offer physical collocation. In addition, we
require that LECs' rates for particular types of equipment offered to
interconnectors may not vary within a study area. We also reaffirm, in
the context of our mandatory virtual collocation policy, that rates for
elements of virtual collocation other than the cross-connect element
and elements recovering the cost of central office equipment may
reasonably vary in different locations corresponding to cost
differences.
21. In unusual circumstances, space may be so limited in particular
central offices that even virtual collocation is infeasible in those
locations. As noted in our earlier orders, we will entertain requests
for waiver of the requirement that virtual collocation be made
available in such offices.
22. We clarify that LECs need not set aside segregated space, which
they could not then use for their own purposes, in anticipation of
virtual collocation requests. Virtual collocation arrangements do not
involve the reservation of segregated central office space for the use
of interconnectors. LECs must consider the needs of virtual collocation
customers, just as they consider the demand for other services in
planning space usage. We will not tolerate any discrimination against
interconnectors vis-a-vis other customers, however.
B. Standards Governing Physical Collocation
23. LECs that are providing physical collocation on a voluntary
basis and have been exempted from the virtual collocation requirements
may exhaust the space available for interconnection in a central
office. In that case, just as under the original rules, upon Commission
approval of a showing that space is unavailable, the LEC will be
required to provide generally available, tariffed virtual collocation
to subsequent interconnectors. The same standards and procedures will
apply to such requests based on space limitations that apply to such
requests under our existing rules.
24. For LECs that choose to offer physical collocation pursuant to
the terms of this order, a first-come, first-served process appears to
be the most equitable manner to allocate space. LECs that qualify for
exemptions to provide physical collocation in lieu of virtual
collocation need not expand their facilities or relinquish space
reasonably reserved for their future use, for the same reasons stated
in the Special Access Expanded Interconnection Order, 57 FR 54323
(November 11, 1992). LEC tariffs may reasonably include provisions
prohibiting interconnectors from warehousing central office space.
25. In earlier orders in this proceeding, we held that the cross-
connect element should be tariffed at a study-area-wide averaged rate
under both virtual collocation and physical collocation. We concluded
that cost differences among central offices may justify different
charges for central office space, power, environmental conditioning,
and labor and materials charges for installing physical collocation
arrangements, but charges should be uniform for all interconnectors in
each individual central office. The same tariffing requirements should
apply to physical collocation provided pursuant to exemption from the
virtual collocation requirement.
C. Standards that Apply to Both Virtual Collocation and Physical
Collocation
1. State Expanded Interconnection Policies
26. The state policy exemption from the mandatory physical
collocation requirement does not apply under our mandatory virtual
collocation policy. If a LEC offers both interstate and intrastate
expanded interconnection, it should do so in a manner that satisfies
both federal and state requirements to the extent possible, and should
provide mechanisms to avoid double payment for facilities used for both
interstate and intrastate collocation.
2. Reporting Requirements
27. We conclude that a broader information collection program is
necessary to gather empirical data that will better enable us to
monitor the development of competition in interstate access markets. We
delegate authority to the Chief, Common Carrier Bureau, to formulate
the detailed elements of this reporting program, decide which carriers
must provide information, and specify the format and timing of these
reports.
3. Dispute Resolution
28. We delegate to the Chief, Common Carrier Bureau, authority to
develop special dispute resolution mechanisms, possibly including the
designation of a Commission representative to work personally with the
parties to mediate disputes and ensure that they are settled
expeditiously, fairly, and consistently.
4. Interconnection to LEC Facilities
29. Microwave. Microwave interconnection must be so tailored to
specific interconnectors and to particular central offices that it does
not readily lend itself to uniform tariff arrangements. We therefore
modify our requirements to specify that the LECs must tariff microwave
interconnection on a central office-specific, individual case basis, in
response to bona fide requests. Such tariffed arrangements must be made
available to other similarly situated parties at the same central
office on non-discriminatory terms, and must be offered under general
tariff at a given central office if the LECs gain sufficient experience
to do so and if such arrangements can reasonably be standardized.
Microwave interconnection should be offered through virtual collocation
(using microwave transmission equipment that is owned by the LEC and
dedicated to the interconnector's exclusive use) or, if the LEC wishes
to qualify for an exemption, through physical collocation.
30. Copper or Coaxial Cable. Interconnection of copper or coaxial
cable facilities will be permitted in specific cases only upon approval
by the Common Carrier Bureau. The restriction on interconnecting copper
or coaxial cable refers to the interconnector's facilities, and does
not restrict the type of LEC services to which interconnectors are
entitled to connect.
31. DS0 and Other Special Access Services. The LECs must provide
interconnection to DS0 and all other special access services within 45
days of receiving a bona fide request for such a service. Our expanded
interconnection policies do not require a LEC to connect
interconnectors' facilities with any given LEC service (e.g., DS3
service) at a particular central office if the LEC does not offer that
service at that central office.
5. Other Standards Issues
32. Equipment in LEC Central Offices. In our earlier orders, we
required LECs to permit interconnectors to place, or designate for
placement, in LEC central offices only equipment needed to terminate
basic transmission facilities, including optical line terminating
equipment and multiplexers. We concluded that the placement or
dedication of other types of equipment, such as enhanced service
equipment, in LEC central offices was unnecessary to foster competition
in the provision of special access and switched transport services, and
consequently we did not require the LECs to permit the collocation of
such equipment in their central offices. We conclude that the same
principles should apply under the mandatory virtual collocation and
physical collocation exemption policies we adopt in this order, for the
reasons stated in our previous orders. Only central office equipment
needed to terminate basic transmission facilities must be collocated
pursuant to this order.
33. Points of Entry. The LECs must offer interconnectors at least
two separate points of entry to each central office if they have at
least two entry points for their own cable, but this requirement
applies only when there is space available for new facilities at each
of two points entering the central office. LECs are not required to
construct new entry points or reroute their own facilities to
accommodate interconnectors.
34. Network Reliability Council. We decline to delay expanded
interconnection pending action by the Network Reliability Council. We
reaffirm our conclusion that LECs are permitted to proscribe use of
interconnector equipment or operating practices that would constitute a
significant and demonstrable technical threat to LEC networks.
35. Insurance. We reaffirm our conclusion that resolution of
insurance issues is best addressed when we examine the reasonableness
of specific LEC physical collocation tariff provisions. We add,
however, that unless a LEC makes a compelling case to the contrary, in
generally no liability insurance requirements should be imposed in
connection with virtual collocation offerings.
36. Customer Proprietary Network Information (CPNI). We conclude
that no special CPNI protection rules are necessary in the context of
our new expanded interconnection regime.
37. Billing. The LECs should bill the transport interconnection
charge to the customer of record, whether that party is a CAP or an
IXC, even in cases where a CAP aggregates the traffic of several IXCs
and the CAP is the customer of record. The LEC, of course, must be able
to bill for the services it provides to its customers, and we will
consider granting waivers in circumstances meeting the normal waiver
standard.
38. Percentage of Interstate Use (PIU) Reporting. In cases in which
IXCs are able to report end users' PIU data, LECs may, in their
tariffs, require them to do so. LECs may use the same PIU verification
procedures for end user access customers that they now use for IXC
customers.
39. Collocation of Data-Over-Voice (DOV) Equipment. Because DOV
equipment is basic transmission equipment, expanded interconnection
customers have a right to virtual collocation of DOV equipment in LEC
central offices (or physical collocation for LECs that qualify for
exemptions from the virtual collocation requirement).
III. Availability of Expanded Interconnection
40. Section 201(a) of the Act already requires CAPs and other
common carriers to provide interconnections with other common carriers
upon request. We conclude that this general requirement is sufficient
with respect to parties other than LECs, and that our detailed
mandatory virtual collocation rules should apply only to the Tier 1
LECs other than NECA pool members.
41. We reaffirm that AT&T may use expanded interconnection, and
that if it does so, it must deploy the same facilities and pay the same
charges as any other interconnector. We also reaffirm that all parties,
including non-common carriers, may use expanded interconnection
offerings.
IV. Expanded Interconnection Rate Structure and Pricing
A. Connection Charge Rate Structure
42. We reaffirm and expand our requirements regarding the rate
structure of connection charges. We do not at this time impose a
detailed rate structure for connection charges under our mandatory
virtual collocation regime. We do, however, set forth additional
requirements to guide the LECs' choice of expanded interconnection rate
structures.
43. First, we reaffirm for our new regime the rate structure
principles adopted in the Second Reconsideration Order, 58 FR 48752
(September 17, 1993), and the Switched Transport Expanded
Interconnection Order, 58 FR 48756 (September 17, 1993) which require
the LECs to establish reasonable, disaggregated subelements for
connection charges pursuant to rate structures that (1) reflect cost-
causation principles, (2) are unbundled to ensure that interconnectors
are not forced to pay for services that they do not need, and (3)
establish a cross-connect element that applies uniformly to both
physical and virtual collocation.
44. In addition, the LECs' rate structures must be clear and easy
to understand. Regardless of a LEC's individual choice of rate
structure, the facilities and services provided under each rate element
should be clear on the face of the tariff, and the tariff support
information should identify the specific costs that are recovered by
each rate element. In addition, each rate element should logically
relate to the service function provided under that rate element.
45. Finally, we will require the LECs to provide cost support data
for their September 1, 1994 virtual collocation tariff filings pursuant
to a uniform Tariff Review Plan (TRP) format established by the Common
Carrier Bureau. The TRP will disaggregate expanded interconnection
service into broad categories, or ``functions.'' We delegate authority
to the Chief, Common Carrier Bureau, to promulgate detailed
requirements regarding the TRP format in a separate order.
B. Connection Charge Pricing
46. We continue to believe that the LECs must cost-justify the rate
levels for connection charges, and that these rate levels must receive
careful scrutiny by Commission staff. The same scrutiny will be
required for both initial rate levels and subsequent rate changes in
connection charges assessed both by price cap LECs and by rate-of-
return LECs. We also reaffirm that expanded interconnection services
covered by connection charges will be excluded from the LECs' price cap
baskets indefinitely and are subject to non-streamlined tariff review.
47. Direct Costs. We reaffirm that price cap LECs must derive the
direct costs of expanded interconnection offerings as provided under
the price cap new services test. Rate of returns LECs that provide
expanded interconnection should provide the cost information required
for new services under the applicable sections of our rules. Thus,
under our new mandatory virtual collocation policy, the LECs must
justify the direct costs related to all services covered by connection
charges (including those related to physical collocation provided
pursuant to an exemption), for both the initial level of these charges
and subsequent changes. Specifically, we require the price cap LECs to
derive the direct cost of providing similar types of new offerings,
including expanded interconnection services covered by the connection
charge rate elements, based on consistent methodologies, unless they
can justify different methodologies. This requirement reflects our
policy for the pricing of new services adopted in the LEC Price Cap
proceeding. As noted in our earlier expanded interconnection orders,
however, certain aspects of the new services test, such as risk
premiums, are not applicable to expanded interconnection services.
48. We require the LECs to include in their September 1 tariff
filings a description of the methodology they use to compute their
rates for services that require the use of optical line terminating
multiplexers (OLTMs), and other equipment used to terminate, multiplex,
and demultiplex circuits, based on the purchase prices of the
equipment. The LECs' methodologies must be consistent with all the rate
structure and pricing rules set forth in this order. In addition, the
LECs must specify in their tariffs the actual charges for the
equipment, calculated using the general methodology.
49. LECs must base the direct costs of providing OLTMs and other
equipment with similar functions used in virtual collocation
arrangements on the lowest purchase price reasonably available to them
to serve an interconnector. In applying this standard, we would find
probative the price at which an interconnector may offer to sell the
desired equipment to the LEC. Any costs incurred above the lowest
reasonably available price are not prudently incurred, and thus should
not be reflected in the LECs' rates. The LECs, however, are not
required to purchase the equipment from interconnectors.
50. LECs may reasonably charge different rates to different
customers if they incur different costs to serve those customers. To be
sure, even virtual collocation offerings designed to meet the needs of
individual interconnectors must be made generally available to all
similarly situated interconnectors, and the actual rate levels (as well
as the general methodology) must be specified in the tariffs. The LEC
must use the same basic methodology specified in its tariff to compute
all customers' rates.
51. LECs may, if they wish, offer to purchase virtual collocation
equipment from interconnectors for a nominal amount (e.g., $1) and make
it available for resale to the interconnectors for the same amount. We
decline, however, to adopt the CAPs' recommendation that we require the
LECs to offer such an arrangement.
52. Overhead Costs. LECs incur overhead costs in providing expanded
interconnection services, and should be allowed to charge reasonable
amounts to recover these costs in their rates for these services. The
LECs may include no more than uniform overhead loadings in their rates
for expanded interconnection services, or must justify any deviations
from uniform loadings. In other words, LECs may not recover a greater
share of overheads in rates for expanded interconnection services than
they recover in rates for comparable services, absent justification.
The LECs have the burden of demonstrating that their connection charges
meet this overhead loading standard, and are otherwise just,
reasonable, and not unreasonably discriminatory. The price cap LECs may
be required to submit additional information to enable us to verify
that the overhead loadings on the expanded interconnection connection
charges do not unreasonably differ from the overhead loadings on other
services, for which price cap LECs generally do not provide cost
justification.
53. Other Pricing Issues. We decline to require the LECs to set
connection charges to ensure that interconnectors using virtual and
physical collocation arrangements pay the same total prices, or to
require that virtual collocation be priced using physical collocation
rates as a starting point and deducting the cost savings from using a
virtual arrangement. We reaffirm our decision to require the LECs to
provide cost justification for any connection charges that would vary
on a per circuit basis because of the number or type of interconnected
circuits ordered. We also reaffirm our conclusion that the LECs may not
charge different rates for special access and switched interconnection
rate elements, or for interconnection rate elements in different types
of central offices (i.e., end offices, serving wire centers, tandem
offices, etc.), unless costs differ.
C. Contribution Charge
54. We reaffirm the principle that interconnectors, as well as
LECs, should provide contributions to support any specifically
identified regulatory subsidy mechanisms that are embedded in LEC rates
for services subject to competition. Our rule on contribution charges
for special access and expanded interconnection, 47 CFR 69.122, will
advance this policy principle. Without evidence of other regulatory
support flows within interstate special access rates, we decline to
modify for our new regulatory regime the policy principle, the rule, or
our procedures regarding contribution charges. As to switched
transport, we find no reason to alter our conclusion that the transport
interconnection charge obviates the need for any separate contribution
charge.
D. Separations
55. We reaffirm our earlier conclusions concerning the possible
need for separations changes in response to the adoption of expanded
interconnection requirements for special access and switched transport.
Thus, while we find no reason to delay implementation of the
requirements set forth in this order, we leave in place our current
referrals to the Joint Board concerning whether separations changes are
needed to ensure a reasonable jurisdictional allocation of expanded
interconnection costs and revenues. We decline to broaden the scope of
our referral to the Joint Board, or to modify our separations
procedures.
V. LEC Pricing Flexibility
A. In General
56. We deny Teleport's petition requesting that that Commission
eliminate the additional pricing flexibility granted to the LECs in the
Special Access Expanded Interconnection Order, 57 FR 54323 (November
18, 1992), unless those LECs voluntarily provide physical collocation
for special and switched access expanded interconnection, except that
we slightly modify the threshold standard by changing the definition of
when expanded interconnection is ``operational,'' as set forth below.
We generally reaffirm our decisions in the expanded interconnection
orders regarding LEC pricing flexibility.
B. Density Zone Pricing
1. Threshold Required for Implementation
57. We reaffirm the LECs with ``operational'' expanded
interconnection offerings for special access in a study area should be
allowed to implement density zone pricing of special access in that
study area, and similarly, that ``operational'' switched expanded
interconnection should enable LECs to implement density zone pricing of
switched transport. We modify our definition of when expanded
interconnection offerings are ``operational,'' and define expanded
interconnection offerings as ``operational'' when and if an
interconnector has taken a cross-connect element in connection with a
tariffed expanded interconnection offering after our new mandatory
virtual collocation policy becomes effective.
58. Thus, an offering will be considered ``operational'' under our
new regime in the following circumstances: (1) An interconnector has
taken a cross-connect pursuant to a generally tariffed virtual
collocation offering pursuant to our new rules; or (2) an
interconnector has taken a cross-connect pursuant to a physical
collocation offering subject to the terms of this order. In this second
case, the interconnector need not have started taking the cross-connect
after our new regime becomes effective, so long as it continues to take
the cross-connect under the new rules. In study areas where a LEC has
implemented density zone pricing, we will require the LEC to file,
sixty days after the effective date of the LEC's new expanded
interconnection offering, tariff revisions effective on 15 days notice
that reestablish averaged rates throughout the study area pursuant to
Sec. 69.3(e)(7) of our rules if no interconnector has taken a cross-
connect under our new regime.
59. We reject proposals to delay any competitive rate changes by
the LECs for an arbitrary time period (such as the 12 months proposed
by MFS) or until after they have lost a specified proportion of market
share. We also reject the CAPs' suggestion that LECs be permitted to
reduce rates in high-density areas but not to increase rates in low-
density areas, where they may be below cost due to past geographic rate
averaging. Finally, making density zone pricing for price cap LECs
conditional on cost-justification of special access volume discounts
would be inconsistent with price cap regulation.
2. Price Cap Structure
60. We find no need to amend the price cap rules for density zone
pricing under our mandatory virtual collocation regime. Moreover, we
reaffirm our decisions regarding the price cap structure for density
zone pricing under the pre-existing rules, including the +5%/-10%
pricing bands that apply to the zone subindexes, the retention of the
overall DS1 and DS3 pricing bands, and the existing tariff procedures
for above-band rate changes. We also decline to adopt MFS's
reconsideration proposal to require the LECs to demonstrate that the
ratio of revenues to average variable cost in the highest-density zone
is no less than that ratio in the lowest-density zone.
3. Definition of Zones
61. We reaffirm our decision to assign interoffice facilities
between different zones to the higher-price, lower-density zone, and
find no reason to apply a different rule under our mandatory virtual
collocation policy. We decline to create separate zone systems for
interoffice facilities and entrance facilities, or to impose
substantially higher burdens of proof than those we already imposed if
LECs propose zone plans with more than three zones.
C. Volume and Term Discounts
62. We reaffirm our decision to permit LECs to offer volume and
term discounts on switched transport services after the specified
threshold has been reached, and find no reason for a different rule
under our mandatory virtual collocation policy. We generally reaffirm
that LECs may begin offering switched transport with volume and term
discounts in any particular study area only after one of the following
conditions is met: (1) 100 DS1-equivalent switched cross-connects are
operational in the Zone 1 offices in the study area; or (2) an average
of 25 DS1-equivalent switched cross-connects per Zone 1 office are
operational. (Zone 1 refers to the LEC's density pricing zone with the
greatest traffic density.) In study areas with no Zone 1 offices, the
LECs may implement volume and term discounts once five DS1-equivalent
switched cross-connects have been taken in the study area. LECs that
have not implemented density zone pricing may implement volume and term
discounts in a study area after customers have subscribed to 100 DS1-
equivalent switched cross-connects in the study area. We adopt the
definition of ``operational'' cross-connects that we adopted in the
context of density zone pricing. We decline to set a threshold based on
the market penetration of LEC competitiors. We delegate authority to
the Chief, Common Carrier Bureau, to modify the threshold point for
zone density pricing in unusual circumstances where a change in the
strict requirements would advance the Commission's objectives.
63. We retain for our mandatory virtual collocation regime the rule
regarding cost showings for discounted switched transport offerings,
which qualify as new services under the price cap rules. We reject the
proposals of MFS and Sprint to require LECs to demonstrate that
discounted services recover the same proportion of overheads as non-
discounted services, or to require that the ratio of revenues to
average variable cost of discounted offerings be no less than that
ratio for non-discounted services. We are not persuaded that any change
is necessary to the 120-day notice period for these tariff filings.
D. Other Forms of Pricing Flexibility
64. We do not grant the LECs authority for broader pricing
flexibility at present.
E. Fresh Look
65. We reaffirm our ``fresh look'' policy, limiting the charges a
LEC may impose on certain customers who want to terminate long-term LEC
special access arrangements to an amount that would place both the LEC
and the customer in the same position they would have been had the
customer chosen a shorter term arrangement from the beginning of the
term.
66. USTA's proposal to allow LECs to file monthly transmittals
including all new collocations that become operational within that
month appears to be reasonable. We modify our fresh look policy, which
currently requires LECs to file tariff transmittals giving public
notice of the fresh look opportunity for each central office no later
than five business days after the first special access expanded
interconnection arrangement becomes operational in the central office.
Instead, we will require the LECs to file tariff transmittals no later
than five business days after the end of each calendar month giving
public notice of the fresh look opportunity for each central office in
which the first expanded interconnection arrangement became operational
during that month. The fresh look period runs from the actual date that
the first expanded interconnection arrangement becomes operational
until 180 days following the filing date of the tariff providing notice
of the beginning of the fresh look period. The same procedures will
apply to fresh look periods triggered by switched transport expanded
interconnection. In addition, we clarify that LECs need not file any
tariff transmittals if their termination liabilities are less than or
equal to the maximum liabilities specified by our fresh look policy.
Accordingly, we dismiss GTE's petition for waiver as moot. Finally, we
conclude that no additional fresh look periods are necessary under our
mandatory virtual collocation rules.
F. Non-Recurring Reconfiguration Charges
67. We reaffirm that all non-recurring charges applicable to
customers shifting to an interconnector's services are to be set no
higher than cost-based levels. We also reaffirm that the presumption of
reasonableness in the price cap rules should not apply to these
charges. In addition, we reaffirm that any difference between the
charges applicable when a customer shifts to an interconnector's
services and those applicable when a customer reconfigures its service
with the LEC must be cost-based.
VI. Other Matters
68. We delegate authority to the Chief, Common Carrier Bureau, to
address certain transition issues raised by the CAPs. With respect to
any other issues addressed in our previous expanded interconnection
orders that are not specifically addressed in this order, we reaffirm
our earlier conclusions for our new virtual collocation regime, based
on the reasons stated in the earlier orders.
VII. Ordering Clauses
69. Accordingly, it is ordered, pursuant to authority contained in
Sections 1, 4, 201-205, 214, and 218 of the Communications Act of 1934,
as amended, 47 USC 151, 154, 201-205, 214, and 218, that Parts 64 and
69 of the Commission's Rules ARE AMENDED as set forth below.
70. It is further ordered That the policies, rules, and
requirements adopted in this Order shall be effective on December 15,
1994, except the requirements regarding the filing of tariffs and
regarding notifications with respect to exempt physical collocation
offerings, which shall be effective on September 1, 1994.
71. It is further ordered That Teleport's Petition for Declaratory
Ruling is denied except to the extent specified in this order.
72. It is further ordered That GTE's Petition for Limited Waiver of
the ``Fresh Look'' Policy is dismissed as moot.
73. It is further ordered That authority is delegated to the Chief,
Common Carrier Bureau, as set forth herein.
List of Subjects in 47 CFR Parts 64 and 69
Communications common carriers, Reporting and recordkeeping
requirements, Telephone.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Amendatory Text
Parts 64 and 69 of title 47 of the Code of Federal Regulations are
amended as follows:
PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
1. The authority citation for part 64 continues to read as follows:
Authority: Section 4, 48 Stat. 1066, as amended; 47 U.S.C. 154,
unless otherwise noted. Interpret or apply secs. 201, 218, 225, 48
Stat. 1070, as amended, 1077; 47 U.S.C. 201, 218, 225, unless
otherwise noted.
2. Section 64.1401 is amended by revising paragraph (c), removing
paragraphs (d) and (e), redesignating paragraphs (f) through (i) as
paragraphs (d) through (g), respectively, and revising newly
redesignated paragraph (f)(2), to read as follows:
Sec. 64.1401 Expanded interconnection.
* * * * *
(c) The local exchange carriers specified in paragraph (a) of this
section shall offer expanded interconnection for interstate special
access and switched transport services through virtual collocation,
except that they may offer physical collocation, instead of virtual
collocation, in specific central offices, as a service subject to non-
streamlined communications common carrier regulation under Title II of
the Communications Act (47 U.S.C. 201-228).
* * * * *
(f) * * *
(2) At least two such interconnection points at any local exchange
carrier location at which there are at least two entry points for the
local exchange carrier's cable facilities, and space is available for
new facilities in at least two of those entry points.
* * * * *
PART 69--ACCESS CHARGES
1. The authority citation for part 69 continues to read as follows:
Authority. Secs. 4, 201, 202, 203, 205, 218, 403, 48 Stat. 1066,
1070, 1072, 1077, 1094, as amended; 47 USC 154, 201, 202, 203, 205,
218, 403.
2. Section 69.121 is amended by revising paragraph (a)(2) to read
as follows:
Sec. 69.121 Connection charges for expanded interconnection.
(a) * * *
(2) Charges for subelements associated with physical collocation or
virtual collocation, other than the subelement described in paragraph
(a)(1) of this section and subelements recovering the cost of the
virtual collocation equipment described in Sec. 64.1401(e)(1) of this
chapter, may reasonably differ in different central offices,
notwithstanding Sec. 69.3(e)(7).
* * * * *
[FR Doc. 94-18589 Filed 7-29-94; 8:45 am]
BILLING CODE 6712-01-M