[Federal Register Volume 61, Number 189 (Friday, September 27, 1996)]
[Rules and Regulations]
[Pages 50736-50737]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24818]



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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 22

[FCC 96-339]


Competitive Service Safeguards for Local Exchange Carrier 
Provision

AGENCY: Federal Communications Commission.

ACTION: Final rule; waiver.

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SUMMARY: In this Memorandum Opinion and Order, the Commission grants 
the Petition for Limited Waiver of Ameritech Communications 
Incorporated (``ACI''). In the petition, ACI sought a limited waiver of 
certain provisions of Section 22.903 of the Commission's rules, which 
set forth limitations on Bell Operating Companies that provide cellular 
service. As a result of the Commission's grant of the waiver, ACI is 
allowed to provide cellular service with access to ACI's landline 
facilities both inside and outside of Ameritech's region, on the 
conditions described further below.

EFFECTIVE DATE: August 22, 1996.

FOR FURTHER INFORMATION CONTACT: Jane Halprin, Commercial Wireless 
Division, Wireless Telecommunications Bureau, at (202) 418-0620.

SUPPLEMENTARY INFORMATION: This Memorandum Opinion and Order, in Docket 
No. 95-14, adopted on August 9, 1996, and released on August 22, 1996, 
is available for inspection and copying during normal business hours in 
the FCC Reference Center, Room 230, 1919 M Street, N.W., Washington, 
D.C. The complete text may also be purchased from the Commission's copy 
contractor, International Transcription Service, Inc., 2100 M Street, 
N.W., Suite 140, Washington, D.C. 20037, (202) 857-3800.

Synopsis of the Memorandum Opinion and Order

I. Background
    1. On October 11, 1995, Ameritech Communications, Incorporated 
(``ACI'') filed a Petition for Limited Waiver (``Petition'') with the 
Commission. The Petition sought a waiver of certain provisions of 
Section 22.903 of the Commission's rules, 47 CFR Sec. 22.903, which set 
forth various limitations on Bell Operating Companies (``BOCs'') that 
provide cellular service. Specifically, ACI, as an affiliate of 
Ameritech Corporation (a BOC), sought a waiver of Section 22.903(a), 47 
CFR Sec. 22.903(a), which prohibits BOC affiliates that provide 
cellular service from owning any facilities for providing landline 
telephone service. ACI also sought a waiver of Section 22.903(e), 47 
CFR Sec. 22.903(e), which prohibits BOCs from promoting or selling 
cellular service for their affiliates; ACI sought such a waiver to the 
extent that the provision would prohibit it from promoting or selling 
cellular service for Ameritech's cellular subsidiary, Ameritech 
Cellular Services (``ACS''). According to its Petition, ACI contended 
that it sought these limited waivers so that it could resell cellular 
services, or sell cellular services as a sales agent for ACS, to ACI 
customers, and thereby offer those customers one-stop shopping 
opportunities.
    2. On October 19, 1995, the Wireless Telecommunications Bureau 
sought comment on ACI's Petition to determine whether the request was 
consistent with the waiver criteria set forth in the Commission's 
rules, and whether the request was consistent with the Commission's 
public interest goals. See Public Notice, DA 95-2198, ``Wireless 
Telecommunications Bureau Seeks Comment on Ameritech's Petition for 
Partial Waiver of Section 22.903 of the Commission's Rules'' (released 
October 19, 1995). The Bureau received several comments. In this 
Memorandum Opinion and Order, the Commission grants ACI a waiver of 
Section 22.903(a), and declaratory relief from Section 22.903(e).
II. Discussion
    3. In its Petition, ACI, as a separate affiliate of Ameritech, 
sought authority to provide wireless and wireline service, as a 
facilities-based carrier. ACI sought a waiver of Section 22.903(a), 
which prohibits BOC affiliates from owning facilities for providing 
landline telephone service, because it needs to purchase switching 
equipment for landline traffic. ACI also sought a waiver of Section 
22.903(e), which prohibits BOC affiliates from promoting or selling 
cellular service for another BOC affiliate, because ACI wishes to be a 
sales agent for ACS. In support of its Petition, ACI explained that it 
is a start-up carrier, and is structurally separate from Ameritech 
Operating Companies in all material respects, thereby diminishing 
opportunities for BOC cross-subsidization and interconnection 
discrimination. Thus, ACI explained, a waiver would further the public 
interest by promoting competition.
    4. Several commenters opposed the waiver, claiming that a waiver 
would be anticompetitive. However, based on the record in this 
proceeding, and uncontroverted information received in another 
proceeding, ``Ameritech Communication's Inc. Petition for Nondominant 
Status'' (filed July 21, 1995), the Commission disagreed, and granted 
the waiver.
    5. The Commission concluded that ACI's relationship with Ameritech 
and its other affiliates complies with the basic requirement of Section 
22.903, which requires that BOCs provide cellular service through 
structurally separate subsidiaries.
    6. In granting the requested waiver, the Commission noted two 
important events that transpired since ACI filed its Petition. First, 
the Telecommunications Act of 1996 was enacted. Public Law No. 104-104, 
110 Stat. 56 (1996), amending the Communications Act of 1934, as 
amended, 47 U.S.C. Secs. 151 et seq. Section 601(d) of the Act permits 
ACI to engage in joint marketing and resale of cellular services with 
landline services on the terms set forth in its Petition. However, the 
Commission stated that it would continue to apply the other 
requirements of Section 22.903 to ACI (except for 22.903(a), for which 
a waiver was granted, as explained below). Thus, the Commission noted 
that ``joint sales'' or resale by ACI of Ameritech's cellular services 
together with landline services must involve services acquired on an 
arm's length basis from ACI's affiliates, consistent with the affiliate 
transaction accounting rules and with the basic structural separation 
requirement of Section 22.903. The Commission observed that, because 
ACI is already established as a structurally separate affiliate, this 
requirement conforms not only with Section 601(d) but also with ACI's 
business plan. The Commission thus granted declaratory relief from 
Section 22.903(e), subject to certain conditions, discussed above.
    7. The second development since ACI filed its petition is that the 
Commission has commenced a comprehensive review of competitive 
safeguards as they apply to local exchange carriers that provide 
commercial radio services (``CMRS''), including BOCs that provide 
cellular service. In the CMRS Safeguards Notice of Proposed Rulemaking, 
61 FR 46420 (September 3, 1996), the Commission proposed to amend 
Section 22.903(a) to permit a BOC cellular affiliate to own landline 
facilities for the provision of competitive landline local exchange 
service. The Commission has already waived Section 22.903(a) for all 
BOC affiliates' out-of-region operations (i.e., regions where the BOC 
is not the local exchange carrier), including ACI. The Commission 
concluded that ACI's separation from Ameritech's other affiliates 
provided a substantial basis for extending a waiver for ACI's in-region

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operations as well. ACI's separation from both incumbent cellular 
operations and from incumbent local exchange operations lessens the 
Commission's concerns about improper cross-subsidization and 
discriminatory interconnection practices. Therefore, the Commission 
decided to permit ACI to provide cellular service with access to the 
landline facilities, both inside and outside Ameritech's region, as 
long as ACI remains structurally separate from Ameritech's telephone 
local exchange operating companies and its cellular affiliate.
III. Ordering Clauses
    It is ordered that, pursuant to Sections 4 and 303 of the 
Communications Act of 1934, as amended, 47 U.S.C. Secs. 154 and 303, 
and Sections 1.3 and 22.119 of the Commission's rules, 47 CFR Secs. 1.3 
and 22.119, a waiver of Section 22.903(a), 47 CFR Sec. 22.903(a), is 
GRANTED to Ameritech Communications, Incorporated.
    It is further ordered that, pursuant to Sections 4 and 303 of the 
Communications Act of 1934, as amended, 47 U.S.C. Secs. 154 and 303, 
and Section 1.2 of the Commission's rules, 47 CFR Sec. 1.2, Ameritech 
Communications, Incorporated, IS DECLARED not subject to Section 
22.903(e), subject to the conditions discussed herein.

List of Subjects in 47 CFR Part 22

    Radio.

Federal Communications Commission.
Shirley S. Suggs,
Chief, Publications Branch.
[FR Doc. 96-24818 Filed 9-26-96; 8:45 am]
BILLING CODE 6712-01-P