[Federal Register Volume 61, Number 227 (Friday, November 22, 1996)]
[Rules and Regulations]
[Pages 59340-59368]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29529]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 42, 61 and 64

[CC Docket No. 96-61; FCC 96-424]


Policy and Rules Concerning the Interstate, Interexchange 
Marketplace; Implementation of Section 254(g) of the Communications Act 
of 1934, as Amended

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Second Report and Order (Order) released October 31, 1996 
relieves nondominant interexchange carriers from filing with the 
Commission tariffs for interstate, domestic, interexchange services. 
The Order furthers the pro-competitive and deregulatory objectives of 
the Telecommunications Act of 1996 by ending a regulatory regime that 
is no longer necessary for nondominant interexchange carriers in the 
interstate, domestic, interexchange market and by fostering increased 
competition in this market.

EFFECTIVE DATE: December 23, 1996.


[[Page 59341]]


FOR FURTHER INFORMATION CONTACT: Melissa Waksman, Attorney, or 
Christopher Heimann, Attorney, Common Carrier Bureau, Policy and 
Program Planning Division, (202) 418-1580. For additional information 
concerning the information collections contained in this Report and 
Order contact Dorothy Conway at 202-418-0217, or via the Internet at 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second 
Report and Order adopted October 29, 1996, and released October 31, 
1996. The full text of this Second Report and Order is available for 
inspection and copying during normal business hours in the FCC 
Reference Center (Room 239), 1919 M St., NW., Washington, DC. The 
complete text also may be obtained through the World Wide Web, at 
http://www.fcc.gov/Bureaus/Common Carrier/Orders/fcc96325.wp, or may be 
purchased from the Commission's copy contractor, International 
Transcription Service, Inc., (202) 857-3800, 2100 M St., NW., Suite 
140, Washington, DC 20037. Pursuant to the Telecommunications Act of 
1996, the Commission released a Notice of Proposed Rulemaking, Policy 
and Rules Concerning the Interstate, Interexchange Marketplace; 
Implementation of Section 254(g) of the Communications Act of 1934, as 
amended, CC Docket No. 96-61 (61 FR 14717 (April 3, 1996)) to seek 
comment on rules to implement section 254(g) of the 1996 Act.

Regulatory Flexibility Analysis

    As required by the Regulatory Flexibility Act, the Report and Order 
contains a Final Regulatory Flexibility Analysis which is set forth in 
the Second Report and Order. A brief description of the analysis 
follows.
    Pursuant to Section 604 of the Regulatory Flexibility Act, the 
Commission performed a comprehensive analysis of the Second Report and 
Order with regard to small entities. This analysis includes: (1) A 
succinct statement of the need for, and objectives of, the Commission's 
decisions in the Second Report and Order; (2) a summary of the 
significant issues raised by the public comments in response to the 
initial regulatory flexibility analysis, a summary of the Commission's 
assessment of these issues, and a statement of any changes made in the 
Second Report and Order as a result of the comments; (3) a description 
of and an estimate of the number of small entities and small incumbent 
LECs to which the Second Report and Order will apply; (4) a description 
of the projected reporting, recordkeeping and other compliance 
requirements of the Second Report and Order, including an estimate of 
the classes of small entities which will be subject to the requirement 
and the type of professional skills necessary for compliance with the 
requirement; (5) a description of the steps the Commission has taken to 
minimize the significant economic impact on small entities consistent 
with the stated objectives of applicable statutes, including a 
statement of the factual, policy, and legal reasons for selecting the 
alternative adopted in the Second Report and Order and why each one of 
the other significant alternatives to each of the Commission's 
decisions which affect small entities was rejected.
    The rules adopted in this Second Report and Order are necessary to 
implement the provisions of the Telecommunications Act of 1996.

Paperwork Reduction Act

    OMB Approval Number: 3060-0704.
    Title: Policy and Rules Concerning the Interstate, Interexchange 
Marketplace; Implementation of Section 254(g) of the Communications Act 
of 1934, as amended, CC Docket No. 96-61.
    Respondents: Business or other for-profit.
    Public reporting burden for the collection of information is 
estimated as follows:

----------------------------------------------------------------------------------------------------------------
                                  Number of respondents    Annual hour burden per                               
     Information collection             (approx.)                 response              Total annual burden     
----------------------------------------------------------------------------------------------------------------
Detariffing *..................                        0  0......................  0                            
Certification requirement......                      519  0.5 hour...............  259.5                        
Tariff cancellation                                  519  2 hours per page (1,252  2,504 (one-time)             
 requirement: completely cancel                            pages) (one-time).                                   
 tariffs.                                                                                                       
Tariff cancellation                                  519  2 hours per page         72,094 (one-time)            
 requirement: revise mixed                                 (36,047 pages) (one-                                 
 tariffs to remove domestic                                time).                                               
 services.                                                                                                      
Information disclosure                               519  120 hours (one-time)...  62,280 (one-time)            
 requirement.                                                                                                   
Recordkeeping requirement......                      519  2 hours................  1,038                        
----------------------------------------------------------------------------------------------------------------
* The Commission has eliminated the tariffing requirement now imposed on nondominant interexchange carriers for 
  interstate, domestic, interexchange services.                                                                 

    Total Annual Burden: 138,175.5 hours, of which 136,878 will be one-
time.
    Frequency of Response: Annual, except for tariff cancellation 
requirement, which will be one-time.
    Estimates Costs Per Respondent: $435,000.
    Needs and Uses: The attached item eliminates the requirement that 
nondominant interexchange carriers file tariffs for interstate, 
domestic, interexchange telecommunications services. In order to 
facilitate enforcement of such carriers' statutory obligation to 
geographically average and integrate their rates, and to make it easier 
for customers to compare carriers' service offerings, the attached 
Order requires affected carriers to maintain, and to make available to 
the public in at least one location, information concerning their 
rates, terms and conditions for all of their interstate, domestic, 
interexchange services.

Synopsis of Second Report and Order

I. Introduction

    1. On February 8, 1996, the Telecommunications Act of 1996 (1996 
Act) was enacted. Telecommunications Act of 1996, Public Law 104-104, 
110 Stat. 56, codified at 47 U.S.C. 151 et seq. The goal of the 1996 
Act is to establish ``a pro-competitive, de-regulatory national policy 
framework'' in order to make available to all Americans advanced 
telecommunications and information technologies and services ``by 
opening all telecommunications markets to competition.'' Joint 
Explanatory Statement of the Committee of Conference, S. Conf. Rep. No. 
230, 104th Cong., 2d Sess. 113 (1996). An integral element of this 
framework is the requirement in Section 10 of the Communications Act of 
1934, as amended (Communications Act), that the Commission forbear from 
applying any provision of the Communications Act, or any of the 
Commission's regulations, to a telecommunications carrier or 
telecommunications service, or class thereof, if the Commission

[[Page 59342]]

makes certain specified findings with respect to such provisions or 
regulations. 47 U.S.C. 160(a).
    2. On March 25, 1996, the Commission released a Notice of Proposed 
Rulemaking initiating a review of its regulation of interstate, 
domestic, interexchange telecommunications services in light of the 
passage of the 1996 Act and the increasing competition in the 
interexchange market over the past decade. Policy and Rules Concerning 
the Interstate, Interexchange Marketplace; Implementation of Section 
254(g) of the Communications Act of 1934, as amended, CC Docket No. 96-
61, Notice of Proposed Rulemaking, 61 FR 14717 (April 3, 1996) (NPRM). 
In this Report and Order (Order), we consider issues raised in the NPRM 
relating to tariff forbearance. We also consider, but decline to act at 
this time on, the Commission's proposal in the NPRM to allow 
nondominant interexchange carriers to bundle customer premises 
equipment (CPE) with interstate, interexchange telecommunications 
services. In the NPRM, the Commission also raised issues relating to: 
market definition; separation requirements for nondominant treatment of 
local exchange carriers in their provision of certain interstate, 
interexchange services; and implementation of the rate averaging and 
rate integration requirements in new section 254(g) of the 
Communications Act. On August 7, 1996, the Commission issued a Report 
and Order implementing the rate averaging and rate integration 
requirements. See Policy and Rules Concerning the Interstate, 
Interexchange Marketplace; Implementation of Section 254(g) of the 
Communications Act of 1934, as amended, CC Docket No. 96-61, Report and 
Order, 61 FR 42558 (August 16, 1996) (Geographic Rate Averaging Order). 
We will address the market definition and separation requirements in an 
upcoming order.
    3. For the reasons set forth below, we conclude that the statutory 
forbearance criteria in Section 10 are met for the Commission to no 
longer require or allow nondominant interexchange carriers to file 
tariffs pursuant to Section 203 for their interstate, domestic, 
interexchange services. We conclude that a policy of complete 
detariffing (i.e., not permitting nondominant interexchange carriers to 
file tariffs) for such services would further advance the statutory 
objectives of the forbearance provision, Section 10. We therefore order 
all nondominant interexchange carriers to cancel their tariffs for 
interstate, domestic, interexchange services within nine months from 
the effective date of this Order. In addition, we conclude that our 
decision to order complete detariffing renders moot the contract tariff 
and reseller issues raised in the NPRM.
    4. The actions we take here will further the pro-competitive, 
deregulatory objectives of the 1996 Act by fostering increased 
competition in the market for interstate, domestic, interexchange 
telecommunications services. Since the early 1980's, the Commission has 
gradually adapted its regulatory regime for such services from one in 
which all interexchange carriers were subject to the full panoply of 
Title II regulatory requirements, including Section 203 tariff filing 
requirements, to one in which pricing and other regulatory requirements 
have been replaced by market forces. Our decision in this proceeding 
marks the end of the transformation of the regulatory regime governing 
interstate, domestic, interexchange services. After our policy of 
complete detariffing has been implemented, carriers in the interstate, 
domestic, interexchange marketplace will be subject to the same 
incentives and rewards that firms in other competitive markets 
confront. We seek ultimately to accomplish the same result in every 
telecommunications market, because we believe that effectively 
competitive markets produce maximum benefits for consumers, carriers 
and the nation's economy.
    5. Our decision to forbear from applying the statutory requirement 
that compels nondominant interexchange carriers to file tariffs for 
interstate, domestic, interexchange services and to implement a policy 
of complete detariffing does not signify in any way a departure from 
our historic commitment to protecting consumers of interstate 
telecommunications services against anticompetitive practices. We 
reaffirm our pledge to use our complaint process to enforce vigorously 
our statutory and regulatory safeguards against carriers that attempt 
to take unfair advantage of American consumers. Moreover, when 
interstate, domestic, interexchange services are completely detariffed, 
consumers will be able to take advantage of remedies provided by state 
consumer protection laws and contract law against abusive practices.
    6. We note that the California Public Utilities Commission recently 
adopted a complete detariffing regime for intrastate long-distance 
services offered in California. Public Utilities Commission of the 
State of California, Rulemaking on the Commission's Own Motion to 
Establish a Simplified Registration Process for Non-Dominant 
Telecommunications Firms, R. 94-02-003, Interim Opinion, at Appendix A, 
Rule 7 (released September 20, 1996). We encourage other state 
regulatory commissions to seek the legislative authority necessary to 
enable them to adopt a complete detariffing policy when they find, as 
the California Commission did, that competition is sufficient to 
obviate the need for tariffing of intrastate long-distance services.

II. Forbearance From Tariff Filing Requirements for Nondominant 
Interexchange Carriers

A. Background
i. The Telecommunications Act of 1996
    7. The 1996 Act provides for regulatory flexibility by requiring 
the Commission to forbear from applying any regulation or any provision 
of the Communications Act, to telecommunications carriers or 
telecommunications services, or classes thereof, if the Commission 
determines that certain conditions are satisfied. Specifically, the 
1996 Act amends the Communications Act to provide that:

    [T]he Commission shall forbear from applying any regulation or 
any provision of this Act to a telecommunications carrier or 
telecommunications service, or class of telecommunications carriers 
or telecommunications services, in any or some of its or their 
geographic markets, if the Commission determines that--
    (1) Enforcement of such regulation or provision is not necessary 
to ensure that the charges, practices, classifications or 
regulations by, for, or in connection with that telecommunications 
carrier or telecommunications service are just and reasonable, and 
are not unjustly or unreasonably discriminatory;
    (2) Enforcement of such regulation or provision is not necessary 
for the protection of consumers; and
    (3) Forbearance from applying such provision or regulation is 
consistent with the public interest.

    In making the public interest determination, the 1996 Act requires 
the Commission to consider whether forbearance will promote competitive 
market conditions, including the extent to which forbearance will 
enhance competition among providers of telecommunications services. New 
Section 10(b) also provides that, ``[i]f the Commission determines that 
such forbearance will promote competition among providers of 
telecommunications services, that determination may be the basis for a 
Commission finding that forbearance is in the public interest.''

[[Page 59343]]

ii. The Competitive Carrier Proceeding
    8. In the Competitive Carrier proceeding, the Commission pursued 
pro-competitive and deregulatory goals similar to those underlying the 
1996 Act. The Commission examined how its regulations should be adapted 
to reflect and promote increasing competition in interexchange 
telecommunications markets, and sought to reduce or eliminate its 
tariff filing and facilities authorization requirements for nondominant 
interexchange carriers. In Competitive Carrier, the Commission 
distinguished between two kinds of carriers--those with market power 
(dominant carriers) and those without market power (nondominant 
carriers).
    9. In a series of orders beginning in 1982, the Commission 
established a permissive detariffing policy for nondominant carriers, 
pursuant to which such carriers were permitted, although not required, 
to file tariffs with the Commission. See Second Report and Order, 47 FR 
37899 (August 27, 1982); Fourth Report and Order, 48 FR 52452 (November 
18, 1983); Fifth Report and Order, 50 FR 1215 (January 10, 1985). The 
Commission found that ``there was no evidence that it is in the public 
interest for us to continue receiving streamlined tariff and Section 
214 filings from certain specialized common carriers to prevent them 
from charging unjust and unreasonable rates or making service 
unavailable.'' The Commission concluded that market forces, together 
with the Section 208 complaint process and the Commission's ability to 
reimpose tariff-filing and facilities-authorization requirements, were 
sufficient to protect the public interest with respect to nondominant 
interexchange carriers subject to forbearance. The Commission also 
noted that firms lacking market power could not charge unlawful rates 
because customers could always turn to competitors. Sixth Report and 
Order, 50 FR 1215 (January 10, 1985).
    10. In 1985, in the Sixth Report and Order, the Commission 
established a mandatory detariffing policy for all carriers subject to 
the Commission's forbearance policy, because it concluded that policy 
would further its objectives of ensuring just and reasonable rates, and 
that it could rely instead on market forces, the complaint process, and 
its ability to reimpose tariff requirements, if necessary, to fulfill 
its mandate under the Communications Act. The Commission stated: 
``Throughout this rulemaking, we have determined that enforcement of 
Sections 201 and 202 objectives of just and reasonable rates could be 
effectuated for certain carriers without the filing of tariffs and 
through market forces and the administration of the complaint 
process.'' Carriers subject to forbearance were required to ``file 
supplements to cancel their tariffs on file with the Commission within 
six months of the effective date of [the Sixth Report and Order].'' In 
order to facilitate the complaint process and its enforcement of 
statutory requirements that carriers charge just and reasonable rates, 
the Commission also ordered carriers to maintain price and service 
information on file in their offices that could be produced readily 
upon inquiry from the Commission in order to substantiate the 
lawfulness of the carriers' rates, terms and conditions for service.
    11. The Sixth Report and Order subsequently was vacated and 
remanded by the U.S. Court of Appeals for the D.C. Circuit, on the 
ground that the Commission lacked the statutory authority to prohibit 
carriers from filing tariffs. MCI Telecommunications Corp. v. FCC, 765 
F.2d 1186, 1192 (D.C. Cir. 1985). The court, however, did not reach the 
issue of whether the Commission's earlier permissive detariffing orders 
were valid. Id. at 1196. The Commission, accordingly, continued to 
apply its permissive detariffing policy to nondominant interexchange 
carriers until 1992, when the U.S. Court of Appeals for the D.C. 
Circuit vacated the Commission's permissive detariffing regime in AT&T 
Co. v. FCC. AT&T Co. v. FCC, 978 F.2d 727 (D.C. Cir. 1992), cert. 
denied, MCI Telecommunications Corp. v. AT&T Co., 509 U.S. 913 (1993). 
The court, in reviewing an FCC decision disposing of a complaint filed 
by AT&T against MCI, vacated the Commission's Fourth Report and Order, 
thereby invalidating the Commission's permissive detariffing policy for 
nondominant carriers. Id. at 737. While stating that it did ``not 
quarrel with the Commission's policy objectives,'' the court found that 
the Communications Act as it existed at that time did not give the 
Commission authority to adopt such a policy. Id. at 736.
    12. Prior to the issuance of the U.S. Court of Appeals' decision 
invalidating the permissive detariffing policy, the Commission adopted 
a Report and Order in a rulemaking proceeding commenced in response to 
AT&T's complaint. See Tariff Filing Requirements for Interstate Common 
Carriers, CC Docket No. 92-13, Report and Order, 7 FCC Rcd 8072 (1992). 
(While adopted prior to the court's finding that the Commission's 
permissive detariffing policy exceeded the Commission's statutory 
authority, the order was released after the court vacated the Fourth 
Report and Order). The Commission again determined that permissive 
detariffing was within its authority under the Communications Act. Id. 
at 8074. The U.S. Court of Appeals for the D.C. Circuit granted summary 
reversal of the Commission's order based on the court's earlier AT&T v. 
FCC decision. AT&T Co. v. FCC, Nos. 92-1628, 92-1666, 1993 WL 260778 
(D.C. Cir. June 4, 1993) (per curiam), aff'd, MCI Telecommunications 
Corp. v. AT&T Co., 114 S. Ct. 2223 (1994). In affirming the U.S. Court 
of Appeal's ruling, the Supreme Court found that Section 203(b)(2) of 
the Communications Act gives the Commission authority to modify the 
Communications Act's tariff filing requirement, but not to eliminate it 
entirely. MCI Telecommunications Corp. v. AT&T Co., 114 S. Ct. 2223, 
2229-31 (1994). The Commission thereafter modified the tariff filing 
requirements and established a one-day tariff notice period for all 
nondominant interexchange carriers after again concluding that 
traditional tariff regulation of nondominant interexchange carriers is 
not necessary to ensure just and reasonable rates. Tariff Filing 
Requirements for Nondominant Common Carriers, 58 FR 44457 (August 23, 
1993) (Nondominant Filing Order), vacated on other grounds, 
Southwestern Bell Corp. v. FCC, 43 F.3d 1515 (D.C. Cir. 1995) (finding 
the range of rates provision in the Nondominant Filing Order violated 
Section 203(a) of the Communications Act). The Commission subsequently 
eliminated the range of rates provision and reinstated the other tariff 
filing requirements, including the one-day notice period, adopted in 
the Nondominant Filing Order. Tariff Filing Requirements for 
Nondominant Common Carriers, 60 FR 52865 (October 11, 1995) 
(Nondominant Filing Order II). In addition, under the streamlined 
regulatory procedures for nondominant carriers established in the 
Competitive Carrier proceeding, such carriers are not subject to price 
cap regulation, and their tariff filings are presumed to be lawful and 
do not require cost support data. See First Report and Order, 45 FR 
76148 (November 18, 1980). Nondominant carriers also are subject to 
streamlined Section 214 procedures for the construction, extension or 
operation of new transmission facilities, as well as for the proposed 
reduction or discontinuance of service.
    13. Against this background, Congress enacted Section 401 of the 
1996 Act, adding Section 10 to the

[[Page 59344]]

Communications Act. As discussed below, we find that this section 
provides the Commission with the forbearance authority that the courts 
had previously concluded was lacking. The Commission now has express 
authority to eliminate unnecessary regulation and to carry out the pro-
competitive, deregulatory objectives that it pursued in the Competitive 
Carrier proceeding for more than a decade.
B. Analysis of Statutory Requirements
i. Introduction
    14. In the NPRM, the Commission tentatively concluded that it could 
make the determinations necessary to forbear from applying the 
provisions of Section 203 to nondominant carriers with respect to their 
interstate, domestic, interexchange services. Specifically, the 
Commission tentatively found that enforcement of the Section 203 tariff 
filing requirements with respect to nondominant interexchange carriers: 
(1) Is not necessary to ensure that such carriers' charges, practices, 
or classifications are just and reasonable, and are not unjustly or 
unreasonably discriminatory; and (2) is not necessary for the 
protection of consumers. The Commission also tentatively found that 
forbearing from applying Section 203 to nondominant interexchange 
carriers is consistent with the public interest. The Commission 
therefore tentatively concluded that it must forbear from applying 
Section 203 tariff filing requirements to nondominant interexchange 
carriers with respect to their interstate, domestic, interexchange 
services. The Commission also tentatively concluded that it should not 
permit nondominant interexchange carriers to file tariffs for such 
services (that is, that it should adopt a policy of complete 
detariffing), because it found that allowing nondominant interexchange 
carriers to file tariffs on a voluntary basis would not be in the 
public interest, and that complete detariffing would promote 
competition in the interstate, domestic, interexchange market, deter 
price coordination, and better protect consumers.
    15. In this section, we consider whether the complete detariffing 
policy proposed in the NPRM satisfies each of the statutory forbearance 
criteria. We note that our analysis under the first two criteria does 
not differentiate between our proposal in the NPRM to adopt a complete 
detariffing policy and other detariffing options, such as detariffing 
on a permissive basis (that is, allowing, but not requiring, 
nondominant interexchange carriers to file tariffs with respect to 
their interstate, domestic, interexchange services). Based on the 
language of the first two statutory criteria, the analysis of all 
detariffing proposals under the first two forbearance criteria would be 
the same, because in each case the relevant inquiries are whether 
tariff filings are necessary to ensure that nondominant interexchange 
carriers' charges, practices, or classifications are just and 
reasonable, and are not unjustly or unreasonably discriminatory, and 
whether tariff filings are necessary to protect consumers. However, the 
third statutory forbearance criterion, which requires an analysis of 
whether the proposed forbearance is consistent with the public 
interest, necessitates an analysis specific to the type of forbearance 
at issue. Accordingly, in addressing the third criterion, we consider 
whether adoption of a complete, or permissive, detariffing policy is 
consistent with the public interest.
ii. Statutory Criteria for Forbearance
    a. Are Tariff Filing Requirements Necessary To Ensure that the 
Charges, Practices, Classifications or Regulations for the Interstate, 
Domestic, Interexchange Services of Nondominant Interexchange Carriers 
Are Just and Reasonable, and Are Not Unjustly or Unreasonably 
Discriminatory?
(1) Background
    16. As noted above, the 1996 Act requires the Commission to forbear 
from applying Section 203 tariff filing requirements to interstate, 
domestic, interexchange services offered by nondominant interexchange 
carriers if the Commission determines that the three statutory 
forbearance criteria are satisfied. With respect to the first 
criterion, the Commission in the NPRM tentatively concluded that tariff 
filing requirements are not necessary to ensure that nondominant 
interexchange carriers' charges, practices, classifications or 
regulations for interstate, domestic, interexchange services are just 
and reasonable, and are not unjustly or unreasonably discriminatory. 
The Commission also tentatively concluded that the Communications Act's 
objectives of just, reasonable, and not unjustly or unreasonably 
discriminatory rates could be achieved effectively through other means, 
specifically through market forces and the administration of the 
complaint process. The Commission therefore tentatively concluded that 
elimination of tariff filing requirements for nondominant interexchange 
carriers for their interstate, domestic, interexchange offerings would 
satisfy the first statutory prerequisite for forbearance.
(2) Comments
    17. Many commenters concur with the Commission's tentative 
conclusion that requiring nondominant interexchange carriers to file 
tariffs for their interstate, domestic, interexchange service offerings 
is unnecessary to ensure that charges, practices, and classifications 
for such services are just and reasonable, and are not unjustly or 
unreasonably discriminatory. These parties claim that nondominant 
carriers cannot rationally impose prices or terms that are unjust, 
unreasonable, or unjustly or unreasonably discriminatory, because any 
attempt to do so would result in a loss of market share. Several of 
these parties add that the Section 208 complaint process is adequate to 
remedy any illegal carrier conduct that does occur. Thus, they conclude 
that market forces and the administration of the complaint process will 
prevent nondominant interexchange carriers from behaving 
anticompetitively in violation of Sections 201(b) and 202(a) of the 
Communications Act.
    18. Other commenters, however, argue that market forces are 
currently inadequate to ensure that the charges, practices, 
classifications or regulations of nondominant interexchange carriers 
are just and reasonable, and are not unjustly or unreasonably 
discriminatory, because the market for interstate, domestic, 
interexchange services is not yet fully competitive. In addition, the 
Tennessee Attorney General and ACTA argue that AT&T is able profitably 
to charge higher rates than its competitors, demonstrating that 
existing competition alone does not constrain AT&T's prices, and 
therefore is not sufficient to regulate the marketplace.
    19. Several commenters, including a number of state commissions, 
argue that in the absence of tariffs, the Section 208 complaint process 
would not be adequate to ensure that the charges, practices, and 
classifications of nondominant interexchange carriers are just and 
reasonable, and not unjustly or unreasonably discriminatory.
    These commenters insist that tariffs provide information necessary 
to enforce Sections 201 and 202 and to investigate fraudulent 
practices. In addition, they argue that tariffs ensure accurate 
information in the event of a dispute. They conclude that, without 
tariffs, consumers and other interested parties will lack adequate 
information to bring a complaint. TRA adds that the

[[Page 59345]]

complaint process is too limited because it focuses only on legal 
issues, while the tariff review process allows policy analysis as well.
    20. TRA argues that eliminating tariff filing requirements in a 
market that is less than perfectly competitive will enable carriers to 
discriminate against resellers, many of which are small and mid-sized 
businesses. TRA claims that the resale market will not survive 
detariffing, and that such a result is contrary to the objectives of 
the Communications Act and Commission policy, which recognizes that a 
vibrant resale market provides residential and small business customers 
with access to lower rates, puts downward pressure on prices, and helps 
prevent discriminatory pricing by increasing the number of parties 
offering similar services.
(3) Discussion
    21. We adopt the tentative conclusion in the NPRM that tariffs are 
not necessary to ensure that the rates, practices, and classifications 
of nondominant interexchange carriers for interstate, domestic, 
interexchange services are just and reasonable and not unjustly or 
unreasonably discriminatory. We conclude, consistent with the AT&T 
Reclassification Order, that the high churn rate among consumers of 
interstate, domestic, interexchange services indicates that consumers 
find the services provided by interexchange carriers to be close 
substitutes, and that consumers are likely to switch carriers in order 
to obtain lower prices or more favorable terms and conditions. In 
addition, as we found in the AT&T Reclassification Order, residential 
and small business customers are highly demand-elastic, and will switch 
carriers in order to obtain price reductions and desired features. 
Because of the high elasticity of demand for interstate, domestic, 
interexchange services, we find it is highly unlikely that 
interexchange carriers that lack market power could successfully charge 
rates, or impose terms and conditions, for interstate, domestic, 
interexchange services that violate Section 201 or 202 of the 
Communications Act, because any attempt to do so would cause their 
customers to switch to different carriers. Thus, we believe that market 
forces will generally ensure that the rates, practices, and 
classifications of nondominant interexchange carriers for interstate, 
domestic, interexchange services are just and reasonable and not 
unjustly or unreasonably discriminatory. Moreover, if nondominant 
interexchange carriers service offerings violate Section 201 or Section 
202 of the Communications Act, we have other, more effective means of 
remedying such conduct. Specifically, we can address any illegal 
carrier conduct through the exercise of our authority to investigate 
and adjudicate complaints under Section 208.
    22. We also reject the unsupported suggestion that current levels 
of competition are inadequate to constrain AT&T's prices. In the AT&T 
Reclassification Order, we found that AT&T cannot unilaterally exercise 
market power in the interstate, domestic, interexchange market. We 
based this finding on, inter alia, AT&T's declining market share, the 
supply elasticity in this market, the fact that both residential and 
business customers are highly demand-elastic, and an analysis of AT&T's 
cost, structure, size, and resources. The Tennessee Attorney General 
and ACTA offer no new evidence that would lead us to alter our 
conclusion that AT&T lacks market power in this market.
    23. We also are not persuaded that tariffs are necessary to 
constrain the prices and practices of nondominant interexchange 
carriers with respect to interstate, domestic, interexchange services. 
As discussed below, we find that evidence of tacit price coordination 
in the market for interstate, domestic, interexchange services is 
inconclusive. Moreover, we find that tariff filings by nondominant 
interexchange carriers for interstate, domestic, interexchange services 
may facilitate, rather than deter, price coordination, because under a 
tariffing regime, all rate and service information is collected in one, 
central location. Therefore, we believe that complete detariffing, 
along with additional, competitive, facilities-based entry into the 
interstate, domestic, interexchange market, will help deter attempts to 
increase rates for interstate, domestic, interexchange services through 
tacit price coordination. We therefore conclude that complete 
detariffing of interstate, domestic, interexchange services offered by 
nondominant interexchange carriers will further the Communications 
Act's objective that carriers' rates, practices, classifications, and 
regulations be just, reasonable and not unjustly or unreasonably 
discriminatory.
    24. In the NPRM, the Commission acknowledged that the Commission 
initially relaxed its regulation of nondominant carriers in the 
Competitive Carrier proceeding in part because it concluded that the 
availability of service from a nationwide dominant carrier subject to 
full Title II regulation would further constrain nondominant carriers. 
We therefore sought comment on whether the absence of a nationwide 
dominant carrier should affect our determination to forbear from 
requiring nondominant interexchange carriers to file tariffs for 
interstate, domestic, interexchange services. No commenter addressed 
this issue, and we conclude that the absence of a dominant 
interexchange carrier in today's competitive interstate, domestic, 
interexchange market should not alter our analysis, because nondominant 
interexchange carriers cannot successfully price their services 
anticompetitively in this market. In addition, the Commission has 
previously found that market forces effectively discipline nondominant 
carriers even in the absence of a dominant carrier. See Implementation 
of Sections 3(n) and 332 of the Communications Act, Regulatory 
Treatment of Mobile Services, 59 FR 18493 (April 19, 1994).
    25. We also reject the claim that, without tariffs, consumers and 
other parties will lack sufficient information to challenge the 
lawfulness of nondominant interexchange carriers' rates, terms and 
conditions for domestic service, in particular on the ground that such 
carriers' rates, practices, and classifications are unjustly or 
unreasonably discriminatory. In the absence of tariffs, customers will 
still receive rate information in the same manner they always have, 
through the billing process. In addition, carriers likely will be 
obligated to notify their customers of any changes in their rates, 
terms and conditions for service as part of their contractual 
relationship. Moreover, tariffs may not be the best vehicle for 
disclosure of rate and service information for nondominant 
interexchange carriers to residential and small business customers, 
because such end-users rarely, if ever, consult these tariff filings, 
and few of them are able to understand tariff filings even if they do 
examine them. We further believe that nondominant interexchange 
carriers will generally provide customers rate and service information 
that currently is contained in tariffs, in an accessible format in 
order to market their services and to retain customers. Nevertheless, 
we acknowledge that, even in a competitive market, nondominant 
interexchange carriers might not provide complete information 
concerning all of their interstate, domestic, interexchange service 
offerings to all consumers, and that some consumers may not be able to 
determine the particular rate plans that are most appropriate for them, 
based on their individual calling patterns. (For

[[Page 59346]]

example, nondominant interexchange carriers might engage in targeted 
advertising concerning particular discounts and rate plans that might 
be the least costly, and most appropriate, plan for some, but not all, 
consumers.) Accordingly, and in light of considerations regarding the 
enforcement of the 1996 Act's geographic rate averaging and rate 
integration requirements, we will require carriers to provide rate and 
service information to the public, as we discuss below. In addition, as 
the Commission did in the Sixth Report and Order, we will require 
nondominant interexchange carriers to maintain price and service 
information and to make such information available on a timely basis to 
the Commission upon request. We therefore conclude that, in the absence 
of tariffs for nondominant carriers' interstate, domestic, 
interexchange services, consumers and other parties will have access to 
sufficient information about such services for purposes of bringing 
complaints. On June 12, 1996, the Office of Management and Budget 
approved the Commission's proposal in the NPRM to require nondominant 
interexchange carriers to maintain at their premises price and service 
information regarding their interstate, interexchange offerings that 
they can submit to the Commission upon request. Notice of Office of 
Management and Budget Action, OMB No. 3060-0704 (June 12, 1996). In 
reviewing the proposed information collection requirements in the NPRM, 
including the proposal to eliminate tariff filing requirements by 
nondominant interexchange carriers for interstate, domestic, 
interexchange services, the Office of Management and Budget ``strongly 
recommend[ed] that the [Commission] investigate potential mechanisms to 
provide consumers, State regulators, and other interested parties with 
some standardized pricing information.''
    26. We reject TRA's claim that the complaint process is inadequate 
to protect consumers. TRA maintains that the Commission addresses only 
legal issues in a complaint proceeding, whereas in the tariff review 
process, the Commission can address policy issues as well. TRA is 
incorrect, however. Regardless of whether the inquiry is part of a 
complaint or a tariff review proceeding, the Commission can address all 
relevant legal and policy issues. In the particular context of Section 
208 complaint proceedings, we will continue to examine legal, and, 
where appropriate, policy matters to give full effect to the 
requirements that a carrier's rates, terms, and conditions are just, 
reasonable, and not unreasonably discriminatory, as well as the 
requirements of our rules and orders.
    27. Contrary to TRA's assertions that the resale market will not 
survive in the absence of tariffs, we conclude that our decision to 
forbear from requiring nondominant interexchange carriers to file 
tariffs for interstate, domestic, interexchange services will not 
affect such carriers' obligations under Sections 201 and 202 to charge 
rates, and to impose practices, classifications and regulations, that 
are just and reasonable and not unjustly or unreasonably 
discriminatory. In addition, as discussed below, we will require 
nondominant interexchange carriers to provide rate and service 
information on all of their interstate, domestic, interexchange 
services to consumers, including resellers. Thus, resellers will be 
able to determine whether nondominant interexchange carriers have 
imposed rates, practices, classifications or regulations that 
unreasonably discriminate against resellers, and to bring a complaint, 
if necessary.
    28. For the reasons discussed herein, we conclude that tariffs are 
not necessary to ensure that the rates, practices, classifications, and 
regulations of nondominant interexchange carriers for interstate, 
domestic, interexchange services are just and reasonable and not 
unjustly or unreasonably discriminatory. We therefore conclude that the 
proposal to adopt complete detariffing meets the first of the statutory 
forbearance criteria.
    b. Are Tariff Filing Requirements for the Interstate, Domestic, 
Interexchange Services of Nondominant Interexchange Carriers Necessary 
for the Protection of Consumers?
(1) Background
    29. In the NPRM, the Commission tentatively concluded that 
requiring nondominant interexchange carriers to file tariffs for 
interstate, domestic, interexchange services is not necessary to 
protect consumers, and that such tariff filing requirements could harm 
consumers by undermining the development of vigorous competition.
(2) Comments
    30. A number of parties support the Commission's tentative 
conclusion that requiring nondominant interexchange carriers to file 
tariffs for interstate, domestic, interexchange service offerings is 
not necessary to protect consumers. Several of these parties claim that 
nondominant interexchange carriers cannot rationally charge prices, or 
impose terms and conditions that harm consumers without losing 
customers. In addition, many parties assert that the complaint process 
is adequate to remedy any illegal carrier conduct that violates the 
Communications Act and harms consumers.
    31. Several commenters also support the Commission's tentative 
conclusion that tariff filing requirements actually harm consumers by 
impeding the development of vigorous competition and by leading to 
higher rates.
    32. A number of state commissions and other commenters assert, 
however, that, without tariffs, the complaint process would not be 
adequate to protect consumers. They claim that the complaint process is 
cumbersome, expensive and time-consuming, and that without tariffs, 
consumers will lack sufficient information on which to base a complaint 
that a carrier has violated Section 201 or 202, or failed to comply 
with the rate averaging and rate integration requirements of Section 
254(g). A number of state commissions and other parties also assert 
that detariffing will impede state regulatory or law enforcement 
functions, because state officials depend on information contained in 
tariffs filed with the Commission to protect consumers, to prevent 
fraudulent practices, and to promote state objectives and policies, 
such as ensuring that rates for intraLATA services are no higher than 
those for interLATA services. In addition, some state commissions are 
concerned that tariff forbearance by the Commission might preempt state 
tariff filing requirements because Section 10(e) of the Communications 
Act provides that ``a State commission may not continue to apply or to 
enforce any provision of this Act that the Commission has determined to 
forbear from applying.'' Several parties add that tariffs also ensure 
that the Commission has access to accurate information in the event of 
a dispute.
    33. The Ad Hoc Users and BellSouth maintain, however, that, even in 
the absence of tariffs, carriers will make price and service 
information available to the public through methods such as 
advertising, bill inserts and brochures; and that those methods are 
more effective at informing consumers than tariff filings, which are 
not readily available to consumers and which most consumers therefore 
never examine.
    34. Some commenters suggest that, if the Commission detariffs, the 
Commission should limit forbearance from tariff filing requirements to 
individually-negotiated service

[[Page 59347]]

arrangements. They urge the Commission to retain tariff filing 
requirements for mass market services offered to residential and small 
business customers because, they claim, tariffs are necessary to 
protect consumers of such services.
    35. In addition, American Telegram argues that tariffs are 
necessary to protect consumers with respect to terms and conditions, 
but not rates and charges, of nondominant interexchange carriers. 
American Telegram asserts that tariffs are necessary to protect 
consumers with respect to terms and conditions of service, because, 
without tariffs, each customer would have to challenge its individual 
contract with the carrier in order to establish the illegality of the 
carrier's terms or conditions for service. American Telegram claims 
that, by contrast, when a tariff is challenged, any changes to the 
tariffed terms and conditions apply automatically to all customers of 
that service.
(3) Discussion
    36. We adopt the tentative conclusion in the NPRM that tariff 
filings by nondominant interexchange carriers for interstate, domestic, 
interexchange services are not necessary to protect consumers. Rather, 
as discussed above, we find that it is highly unlikely that 
interexchange carriers that lack market power could successfully charge 
rates, or impose terms and conditions, for interstate, domestic, 
interexchange services that violate Sections 201 and 202 of the 
Communications Act. We therefore conclude that market forces, our 
administration of the Section 208 complaint process, and our ability to 
reimpose tariff filing requirements, if necessary, are sufficient to 
protect consumers.
    37. We also adopt the tentative conclusion that in the interstate, 
domestic, interexchange market, requiring nondominant interexchange 
carriers to file tariffs for interstate, domestic, interexchange 
services may harm consumers by impeding the development of vigorous 
competition, which could lead to higher rates. We agree with NYNEX that 
``forbearance will promote competition and deter price coordination, 
which can threaten competitive benefits.'' By promoting competition, 
detariffing will better protect consumers against the imposition of 
rates, terms, or conditions that violate the Communications Act.
    38. We reject the argument that, for interstate, domestic, 
interexchange services offered by nondominant interexchange carriers, 
the complaint process is inadequate to protect consumers. As an initial 
matter, we note that we are not simply relying on the complaint process 
to protect consumers. Rather, as set forth above, we believe that 
market forces, together with the complaint process, will adequately 
protect consumers. In addition, we find that our complaint process is 
adequate to redress any harm to consumers should a nondominant 
interexchange carrier establish prices, or impose terms and conditions, 
that violate Sections 201 or 202, or engage in other conduct that 
violates the Communications Act or our regulations. Moreover, we note 
that in the absence of tariffs, consumers will be able to pursue 
remedies under state consumer protection and contract laws in a manner 
currently precluded by the ``filed-rate'' doctrine.
    39. While we agree with those commenters that argue that the 
Commission and the public may need access to information concerning 
carriers' rates, terms and conditions to ensure carrier compliance with 
the requirements of Sections 201, 202, and 254(g) of the Communications 
Act, we are not persuaded that tariffs filed pursuant to Section 203 
are the only, or most effective, means of disseminating such 
information. As an initial matter, we note that the majority of 
complaints by consumers about the lawfulness of carriers' rates, terms, 
or conditions for interstate, domestic, interexchange services are 
based on information obtained through the billing process, rather than 
information obtained from carriers' tariffs. As set forth above, we 
believe that nondominant interexchange carriers likely will provide 
rate and service information currently contained in tariffs to their 
customers in order to establish a legal relationship with such 
customers or as part of the billing process. Moreover, nondominant 
carriers likely will publicize their rates, terms and conditions for 
service in order to maintain, or improve, their competitive positions 
in the market. We therefore conclude that the public will have access 
to sufficient information to bring to the Commission's attention 
possible violations of the Communications Act without the risk of 
anticompetitive effects inherent in tariff filing requirements.
    40. Additionally, we find no basis for the claim that the 
detariffing of the interstate, domestic, interexchange services of 
nondominant interexchange carriers will significantly impede state 
regulatory or law enforcement functions. The rules we adopt in this 
proceeding will not interfere with, and in fact may facilitate, a state 
agency's ability to obtain directly from carriers price and service 
information regarding interstate, domestic, interexchange services. Our 
action here also does not affect state tariff filing requirements for 
intrastate services. Section 10(e) of the Communications Act, which 
provides that ``a State commission may not continue to apply or to 
enforce any provision of this Act that the Commission has determined to 
forbear from applying,'' does not prohibit states from requiring 
nondominant interexchange carriers to file tariffs with respect to 
their intrastate, interexchange services based on our action here.
    41. We reject the suggestion that tariffs are necessary to protect 
consumers of mass market interstate, domestic, interexchange services 
provided by nondominant interexchange carriers, and therefore that the 
Commission should limit forbearance only to individually-negotiated 
service arrangements. We find that the reasons supporting our 
conclusion that tariff filings are not necessary to protect consumers 
of interstate, domestic, interexchange services provided by nondominant 
interexchange carriers apply to all such services, and not only to 
those provided pursuant to individually-negotiated arrangements. 
Specifically, any increase in competition resulting from the 
elimination of tariffs will redound to the benefit of consumers of all 
interstate, domestic, interexchange services. For example, we believe 
that eliminating tariffs for mass market services will increase 
carriers' incentive to reduce prices for such services, and reduce 
their ability to engage in tacit price coordination. In addition, 
detariffing of mass market services will likely provide greater 
protection to consumers, because, as discussed below, carriers will 
likely be required, as a matter of contract law, to give customers 
advance notice before instituting changes that adversely affect 
customers. Carriers will also continue to provide rate information to 
customers as part of the billing process, and in order to market their 
services and to retain customers.
    42. Similarly, we do not agree with American Telegram's claim that 
tariffs are necessary to protect consumers with respect to terms and 
conditions, but not rates and charges, of interstate, domestic, 
interexchange services provided by nondominant interexchange carriers. 
Just as we believe that competition is sufficient to ensure that 
nondominant interexchange carriers' charges for interstate, domestic, 
interexchange services are just and reasonable, and not unreasonably 
discriminatory, and to protect consumers, we believe that competitive 
forces will ensure that nondominant

[[Page 59348]]

carriers' non-price terms and conditions are reasonable. Moreover, we 
concur with BellSouth that even non-price tariff filings can be used to 
facilitate tacit coordination by carriers. In addition, we reject 
American Telegram's argument that tariffs concerning nondominant 
carriers' terms and conditions for interstate, domestic, interexchange 
service are necessary to protect consumers, because, without such 
tariffs, each customer seeking to challenge a carrier's terms or 
conditions would have to show that its individual contract is unlawful. 
Nondominant interexchange carriers are likely to use standard contracts 
for most services rather than individually negotiate a different 
contract with each customer. As a result, following a successful 
challenge to a carrier's standard service agreement, that carrier is 
likely to modify the unlawful contract with all of its customers, 
rather than face additional complaints or litigation in which the 
previous determination that the contract is unlawful would likely be 
given preclusive effect. As in nearly every other business that is 
conducted without tariffs, we find that tariffs by nondominant 
interexchange carriers for interstate, domestic, interexchange services 
are not necessary to protect consumers. In the absence of such tariffs, 
consumers will not only have our complaint process, but will also be 
able to pursue remedies under state consumer protection and contract 
laws.
    43. For the reasons discussed herein, we conclude that tariffs for 
the interstate, domestic, interexchange services of nondominant 
interexchange carriers are not necessary to protect consumers. We 
therefore conclude that the proposal to adopt complete detariffing 
meets the second of the statutory forbearance criteria.
    c. Is Forbearance From Applying Section 203 Tariff Filing 
Requirements to the Interstate, Domestic, Interexchange Services 
Offered By Nondominant Interexchange Carriers Consistent With the 
Public Interest?
(1) Background
    44. The third statutory criterion requires us to determine whether 
forbearance from applying Section 203 tariff filing requirements to the 
interstate, domestic, interexchange services of nondominant 
interexchange carriers is consistent with the public interest. In 
making this determination, the statute specifically requires us to 
consider whether forbearance will promote competitive market 
conditions, including the extent to which forbearance will enhance 
competition among providers of telecommunications services. In 
addition, Section 10(b) provides that, ``[i]f the Commission determines 
that such forbearance will promote competition among providers of 
telecommunications services, that determination may be the basis for a 
Commission finding that forbearance is in the public interest.'' In the 
NPRM, the Commission tentatively concluded that it should not permit 
nondominant interexchange carriers to file tariffs for interstate, 
domestic, interexchange services of nondominant interexchange carriers, 
because complete detariffing of such services will promote competition 
and deter price coordination in the interstate, domestic, interexchange 
market, and will better protect consumers.
(2) Comments
    45. Several commenters, including large consumers of 
telecommunications services, agree with the Commission's tentative 
conclusion that complete detariffing of nondominant interexchange 
carriers' interstate, domestic, interexchange services is in the public 
interest. These commenters argue that allowing nondominant 
interexchange carriers to continue to file tariffs undermines the 
development of vigorous competition because: (1) Tariffs delay a 
carrier's ability to respond to market changes; (2) even under 
streamlined tariff filing procedures, the preparation, filing, and 
defense of tariffs imposes substantial uneconomic costs on carriers; 
(3) absent tariffs, a carrier could no longer refuse to accommodate a 
customer's request for services tailored to its specific needs on the 
ground that the request is beyond the scope of the carrier's tariff; 
(4) tariffs reduce incentives to engage in competitive price 
discounting, because competitors can respond to any price change before 
it has the desired effect of capturing market share. Several parties 
further argue that tariffs facilitate coordinated pricing by enabling 
carriers to ascertain their competitors' rates, terms, and conditions 
for service at one, central location. APCC argues that forbearance from 
tariff filing requirements would eliminate a regulatory requirement 
that is especially burdensome on small carriers. Some of these 
commenters additionally argue that complete detariffing would eliminate 
the possible invocation of the ``filed-rate'' doctrine. It is well 
established that, pursuant to the ``filed-rate'' doctrine, in a 
situation where a filed tariff rate, term or condition differs from a 
rate, term, or condition set in a non-tariffed carrier-customer 
contract, the carrier is required to assess the tariff rate, term, or 
condition. See Armour Packing Co. v. United States, 209 U.S. 56 (1908); 
American Broadcasting Cos., Inc. v. FCC, 643 F.2d 818 (D.C. Cir. 1980). 
Consequently, if a carrier unilaterally changes a rate by filing a 
tariff revision, the newly filed rate becomes the applicable rate 
unless the revised rate is found to be unjust, unreasonable, or 
unlawful under the Communications Act. See Maislin Industries, U.S., 
Inc. v. Primary Steel, Inc., 497 U.S. 116 (1990).
    46. Interexchange carriers and other commenters contend that 
complete detariffing is not in the public interest, because prohibiting 
nondominant interexchange carriers from filing tariffs with respect to 
interstate, domestic, interexchange services will impede competition 
and increase carriers' costs. Specifically, these parties argue that 
complete detariffing would: (1) Significantly increase transaction 
costs by forcing nondominant interexchange carriers to conclude 
literally millions of written agreements with customers in order to 
establish legally enforceable contractual relationships; (2) make 
casual calling options more difficult, if not impossible; and (3) 
prevent carriers from reacting quickly to market conditions because 
carriers would be forced to notify each individual customer of any 
changes to their rates, terms, and conditions before such changes could 
be effective. (Casual calling refers to services that do not require a 
consumer to open an account or otherwise presubscribe to a service, 
including use of a third-party credit card, collect calling, or dial-
around through the use of an access code. Several parties argue that 
tariffs are essential to casual calling services because callers use 
the services on a temporary basis without a preexisting contractual 
relationship, and that tariffs are the only cost-efficient way to 
establish a legal relationship with casual callers.) ACTA further 
argues that any increased transaction costs would be especially 
burdensome on small carriers that have fewer resources. LDDS contends 
that the increased transaction costs due to detariffing would 
discourage nondominant interexchange carriers from serving certain 
market segments (e.g., low-usage residential, small business, and 
casual callers), thereby decreasing competitive choices for these 
customers. In addition, several parties argue that tariffs actually 
promote competition by sending accurate economic signals and 
disseminating rate and service information to consumers and 
competitors. In particular, they argue that residential and small 
business

[[Page 59349]]

customers require access to such information to obtain the best rates 
available, and that small nondominant interexchange carriers need such 
information to compete with larger interexchange carriers. Several 
parties further argue that complete detariffing would not deter price 
coordination, to the extent it exists, both because rate and service 
information would continue to be available to competitors and because 
the existing streamlined tariff filing procedures prevent price 
signalling. A few parties suggest that, if the Commission is concerned 
about tacit price coordination, it could remedy the problem by 
requiring nondominant interexchange carriers to file tariffs on no more 
than one day's notice, rather than not permitting such carriers to file 
tariffs.
    47. Interexchange carriers and several other commenters that oppose 
complete detariffing contend that permissive detariffing would be 
consistent with the public interest. They maintain that: (1) Permissive 
detariffing would be the most deregulatory and pro-competitive option 
because carriers could determine the most efficient means to establish 
contractual relations with their customers (e.g., carriers could file 
tariffs for such mass market offerings as residential and small 
business services, reducing transactions costs to carriers and 
consumers); (2) the ``filed-rate'' doctrine would no longer apply if 
the Commission adopted a permissive detariffing regime, because the 
tariffed rate would no longer be the only legally permissible rate; (3) 
price coordination would be difficult, if not impossible, with 
permissive detariffing because carriers would at best have fragmentary 
information concerning their competitors' rates, terms, and conditions; 
and (4) casual calling options would still be feasible with permissive 
detariffing.
    48. Several commenters, however, argue that permissive detariffing, 
that is, allowing nondominant interexchange carriers to file tariffs if 
they wish to do so, is not in the public interest. Several of these 
parties argue that permissive detariffing is contrary to the public 
interest, because it would allow nondominant interexchange carriers to 
``game'' the system by filing tariffs when it serves their interest to 
do so, for example, to take advantage of the ``filed-rate'' doctrine or 
to engage in price signaling. Contrary to the interexchange carriers' 
assertions, these parties claim that the ``filed-rate'' doctrine would 
continue to exist if detariffing were implemented on a permissive 
basis. TRA, which opposes any detariffing at all, argues that 
permissive detariffing would enable carriers to discriminate against 
resellers.
    49. Some commenters suggest that the Commission limit forbearance 
from tariff filing requirements to individually-negotiated service 
arrangements and retain tariff filing requirements for mass market 
services offered to residential and small business customers, because 
tariffs allow carriers to establish a legal relationship with customers 
quickly and inexpensively. In addition, several parties urge the 
Commission to limit the scope of forbearance only to certain 
nondominant interexchange carriers, or to certain types of information. 
For example, TRA and ACTA suggest that the Commission should forbear 
from applying Section 203 tariff filing requirements to those carriers 
with less than a certain percentage of the market and that are not 
affiliated with certain incumbent local exchange carriers, such as the 
BOCs.
    50. In addition, several commenters contend that it is premature to 
detariff now, in light of the dynamic changes occurring in the market, 
such as the reclassification of AT&T in October 1995, and the opening 
of all telecommunications markets to increased competition following 
enactment of the 1996 Act. These commenters urge the Commission to 
defer any decision concerning forbearance from tariff filing 
requirements until it can evaluate the effect of these changes on the 
interstate, domestic, interexchange market.
    51. Finally, several parties commented on how the Commission should 
treat the BOCs upon their entry into the interstate, domestic, 
interexchange services market in order to promote competition in this 
market. A number of BOCs and other parties argue that detariffing will 
only provide competitive benefits if we also detariff the BOCs once 
they enter the interstate, domestic, interexchange market. They argue 
that failure to do so, would place the BOCs, which they claim lack 
market power in the interstate, domestic, interexchange market, at a 
competitive disadvantage vis-a-vis existing interexchange carriers, 
which currently control the market, and would inhibit competition, 
thereby undermining Congress' objective in passing the 1996 Act. Others 
argue that, because the BOCs exercise market power in the exchange 
access market, the Commission should require the BOCs to file tariffs 
for interstate, domestic, interexchange services until the Commission 
has experience with the type and level of safeguards necessary to 
prevent cross-subsidization and other unlawful practices.
(3) Discussion
    52. We adopt the tentative conclusion in the NPRM that not allowing 
nondominant interexchange carriers to file tariffs for the provision of 
interstate, domestic, interexchange services is consistent with the 
public interest, with the limited exception, as discussed below, of 
AT&T's provision of 800 directory assistance and analog private line 
services. Section 10(b) specifically requires the Commission, in 
determining whether forbearance from enforcing a provision of the 
Communications Act or a regulation is in the public interest, to 
consider whether forbearance will promote competitive market 
conditions, including the extent to which forbearance will enhance 
competition among providers of telecommunications services. We find 
that a regime without nondominant interexchange carrier tariffs for 
interstate, domestic, interexchange services is the most pro-
competitive, deregulatory system. Specifically, we find that not 
permitting nondominant interexchange carriers to file tariffs with 
respect to interstate, domestic, interexchange services will enhance 
competition among providers of such services, promote competitive 
market conditions, and achieve other objectives that are in the public 
interest, including eliminating the possible invocation of the filed 
rate doctrine by nondominant interexchange carriers, and establishing 
market conditions that more closely resemble an unregulated 
environment. Moreover, we find that permitting nondominant 
interexchange carriers to file tariffs on a voluntary basis would 
undermine several of these benefits, and therefore is not in the public 
interest.
    53. The record in this proceeding supports our tentative conclusion 
that not permitting nondominant interexchange carriers to file tariffs 
for interstate, domestic, interexchange services will promote 
competition in the market for such services. Even under existing 
streamlined tariff filing procedures, requiring nondominant 
interexchange carriers to file tariffs for interstate, domestic, 
interexchange services impedes vigorous competition in the market for 
such services by: (1) Removing incentives for competitive price 
discounting; (2) reducing or taking away carriers' ability to make 
rapid, efficient responses to changes in demand and cost; (3) imposing 
costs on carriers that attempt to make new offerings; and (4) 
preventing consumers from seeking out or obtaining service

[[Page 59350]]

arrangements specifically tailored to their needs. (These findings are 
consistent with the Commission's findings in the Competitive Carrier 
proceeding. Sixth Report and Order. The Commission recently reiterated 
these findings in the Regulatory Treatment of Mobile Services Order, 59 
FR 18493 (April 19, 1994).) Moreover, we believe that tacit 
coordination of prices for interstate, domestic, interexchange 
services, to the extent it exists, will be more difficult if we 
eliminate tariffs, because price and service information about such 
services provided by nondominant interexchange carriers would no longer 
be collected and available in one central location.
    54. In addition, requiring tariffs for interstate, domestic, 
interexchange services offered by nondominant interexchange carriers 
impedes competition by preventing customers from seeking out or 
obtaining price and service arrangements tailored to their needs. As Ad 
Hoc Users and others note, carriers, in some cases, have refused to 
accommodate customers' requests for particular service terms on the 
ground that the requested terms are not contained in the carriers' 
tariffs, and that the Commission would reject any term or condition for 
service that differed from the carriers' general tariffs. Eliminating 
tariff filings by nondominant interexchange carriers will prevent such 
carriers from refusing to negotiate with customers based on the 
Commission's tariff filing and review processes. As a result, carriers 
may become more responsive to customer demands, and offer a greater 
variety of price and service packages that meet their customers' needs.
    55. Complete detariffing would also further the public interest by 
eliminating the ability of carriers to invoke the ``filed-rate'' 
doctrine. As noted above, courts have long held that, in a situation 
where a filed tariff rate, or other term or condition, differs from a 
rate, term, or condition set in a non-tariffed carrier-customer 
contract, the carrier is required to impose the tariffed rate, term or 
condition. While the Commission has held that unilateral changes that 
alter material terms and conditions of long-term service arrangements 
are reasonable only if justified by substantial cause, the filed rate 
doctrine provides carriers with the ability to alter or abrogate their 
contractual obligations in a manner that is not available in most 
commercial relationships. In addition, complete detariffing would 
further the public interest by preventing carriers from unilaterally 
limiting their liability for damages. Accordingly, by permitting 
carriers unilaterally to change the terms of negotiated agreements, the 
filed rate doctrine may undermine consumers' legitimate business 
expectations. Absent filed tariffs, the legal relationship between 
carriers and customers will much more closely resemble the legal 
relationship between service providers and customers in an unregulated 
environment. Thus, eliminating the filed rate doctrine in this context 
would serve the public interest by preserving reasonable commercial 
expectations and protecting consumers.
    56. Eliminating tariffs for the interstate, domestic, interexchange 
services of nondominant interexchange carriers will not, as some 
suggest, reduce such carriers' incentive or ability to offer discounts 
or respond quickly to market changes by forcing them to give customers 
advance notice of all changes to their rates, terms, and conditions for 
service. Our experience over the past several years indicates that 
interexchange carriers' competitive offerings to residential and small 
business customers are typically optional calling plans in which 
consumers must affirmatively elect to participate. In order to induce 
customers to participate in such plans, carriers have widely advertised 
the terms and availability of these calling plans. Thus, detariffing of 
interstate, domestic, interexchange services is likely to have little, 
if any, impact on nondominant interexchange carriers' incentives or 
ability to engage in competitive price discounting. In addition, as a 
matter of contract law, nondominant interexchange carriers would not 
necessarily be required to provide notice before instituting changes 
that benefit, or do not adversely affect in a material way, customers 
(e.g., reducing rates). For example, carriers could expressly reserve 
the right to make rate reductions or new discounts immediately 
available to existing customers. Carriers could also include in their 
service contracts provisions giving them flexibility to alter specific, 
incidental contract terms in a manner not adverse to the customer. See 
Restatement (Second) of Contracts Sec. 34 (1981) (discussing the 
analogous practice of allowing one or both parties to a contract to 
select certain terms during the performance of the contract). Such 
carriers would, however, likely be required, as a matter of contract 
law, to give advance notice of those changes that adversely affect 
customers (e.g., rate increases). We conclude that it would not be 
unduly burdensome for nondominant interexchange carriers to provide 
customers advance notice of the latter changes through billing inserts 
or other measures. Such notice would provide greater protection to 
consumers and is more pro-competitive than allowing carriers to 
increase their rates by filing tariff changes with the Commission on 
one day's notice.
    57. We recognize that detariffing may change significant aspects of 
the way in which nondominant interexchange carriers conduct their 
business. Contrary to the suggestion of some parties, however, tariffs 
are not the only feasible way for carriers to establish legal 
relationships with their customers, nor will nondominant interexchange 
carriers necessarily need to negotiate contracts for service with each, 
individual customer. As some parties note, such carriers could, for 
example, issue short, standard contracts that contain their basic 
rates, terms and conditions for service. Moreover, parties that oppose 
complete detariffing have not shown that the business of providing 
interstate, domestic, interexchange services offered by nondominant 
interexchange carriers should be subject to a regulatory regime that is 
not available to firms that compete in any other market in this 
country. We conclude that requiring nondominant interexchange carriers 
to withdraw their tariffs and conduct their business as other 
enterprises do will not impose undue burdens on such carriers, 
substantially increase their costs, or, as LDDS suggests, force such 
carriers to abandon segments of the market to the detriment of 
residential and small business customers. Moreover, we reject ACTA's 
argument that detariffing will disproportionately burden small, 
nondominant interexchange carriers. While some of the increased 
administrative costs that carriers may incur initially as a result of 
the shift to a detariffed environment are likely to be fixed (such as 
the cost of developing short, standard contracts), many such costs will 
vary based on the area or number of customers served by such carriers 
(e.g., advertising expenditures, the cost of promotional mailings or 
billing inserts). Nonetheless, we find that, on balance, the pro-
competitive effects of not allowing nondominant interexchange carriers 
to file tariffs for their interstate, domestic, interexchange services 
outweigh any potential increase in transactional or administrative 
costs resulting from the shift to a detariffed environment.
    58. We are also not persuaded that complete detariffing will make 
casual calling impossible. We believe nondominant interexchange 
carriers have options other than tariffs by which

[[Page 59351]]

they can establish legal relationships with casual callers pursuant to 
which such callers would be obligated to pay for the telecommunications 
services they use. For example, a carrier could seek recovery under an 
implied-in-fact contract theory if a customer has used the carrier's 
services, with knowledge of the carrier's charges, but has not executed 
a written contract. Under this theory, the customer's acceptance of the 
services rendered would evidence his agreement to the contract terms 
proposed by the carrier. By providing billing or payment information 
(e.g., credit card information or a billing number) and completing use 
of the telecommunications service, casual callers may be deemed to have 
accepted a legal obligation to pay for any such services rendered. 
(Similarly, a casual caller who uses a carrier's access code to obtain 
service from the carrier may be deemed to have accepted an outstanding 
offer from the carrier to provide casual calling service, and therefore 
be obligated to pay for any services rendered.) We do not believe that 
these options will prove unduly burdensome for carriers. In any event, 
we conclude that, on balance, the competitive benefits of complete 
detariffing of nondominant interexchange carriers' interstate, 
domestic, interexchange services outweigh any potential increased costs 
resulting from the shift to detariffing. We further believe that the 
nine-month transition period established by this Order, will afford 
carriers sufficient time to develop efficient mechanisms to provide 
casual calling services in the absence of tariffs.
    59. We reject the suggestion that eliminating tariff filing 
requirements for nondominant interexchange carriers' interstate, 
domestic, interexchange services would impede competition for such 
services by reducing information available to consumers and small 
nondominant interexchange carriers. As discussed above, nondominant 
interexchange carriers are likely to make rate and service information, 
currently contained in tariffs, available to the public in a more user-
friendly form in order to preserve their competitive position in the 
market, and as part of their contractual relationship with customers. 
In addition, as we discuss below, we will require nondominant 
interexchange carriers to provide rate schedules for all of their 
interstate, domestic, interexchange services to consumers.
    60. As noted, several parties, asserting that complete detariffing 
is not in the public interest, instead argue that permissive 
detariffing would be in the public interest. We reject their arguments 
for several reasons. Contrary to the assertions of AT&T and others, we 
believe that a permissive detariffing regime would not necessarily 
eliminate possible invocation of the ``filed-rate'' doctrine by 
nondominant interexchange carriers. Section 203(c) provides that a 
carrier may not ``charge, demand, collect, or receive a greater or less 
or different compensation * * * than the charges specified in the 
schedule then in effect.'' Thus, it is possible that, once a carrier 
files a tariff with the Commission, even if it is on a permissive 
basis, Section 203(c) may require the carrier to provide service at the 
rates, and on the terms and conditions, set forth in the tariff until 
or unless the carrier files a superseding tariff cancelling, or 
changing the rates and terms of, the tariff. Because the filed rate 
doctrine is a legal doctrine developed by judicial precedent, it is not 
entirely clear how courts would apply the filed rate doctrine if 
nondominant interexchange carriers were permitted to file tariffs and 
the filed tariff rate differed from the rate set in a non-tariffed 
contract. We believe that only with a complete detariffing regime, 
under which the carrier-customer relationship would more closely 
resemble the legal relationship between service providers and customers 
in an unregulated environment, can we definitively eliminate these 
possible anticompetitive practices and protect consumers.
    61. Another consideration that precludes us from finding that 
permissive detariffing of the interstate, domestic, interexchange 
services of nondominant interexchange carriers is in the public 
interest is that, unlike complete detariffing, permissive detariffing 
would not eliminate the collection and availability of rate information 
in one centralized location. Although we recognize that nondominant 
interexchange carriers under a complete detariffing regime would still 
be able to obtain information concerning their competitors' rates and 
service offerings, we believe that tacit price coordination, to the 
extent it exists, will be more difficult. In contrast, allowing 
nondominant interexchange carriers to file tariffs on a voluntary basis 
would create the risk that carriers would file tariffs merely to send 
price signals and thus manipulate prices. In this respect, we are not 
persuaded by Frontier and CSE who argue that permissive detariffing 
would eliminate any risk of coordinated pricing because carriers could 
not be certain of their competitors' rates, terms, and conditions for 
service. Carriers could use tariffs to engage in price signalling, 
because any nondominant carrier that opted to file a tariff would be 
bound by its terms until or unless the carrier cancelled or modified 
the tariff through a new tariff filing, and thus competing carriers 
would be certain of such carrier's rates, terms and conditions for 
service while its tariff is in effect.
    62. In addition, we note that permitting nondominant interexchange 
carriers to file tariffs for interstate, domestic, interexchange 
services imposes administrative costs on the Commission, which must 
maintain and organize tariff filings for public inspection. In light of 
our conclusion that market forces, the complaint process, and our 
ability to reimpose tariff filing requirements are adequate to protect 
consumers and ensure that nondominant interexchange carriers' rates, 
terms and conditions for interstate, domestic, interexchange services 
are just, reasonable and not unreasonably discriminatory, we believe 
that the public interest would be better served by the Commission 
devoting these resources to its enforcement duties.
    63. With two limited exceptions described below, we also do not 
believe that there is a sound basis for concluding that forbearance is 
in the public interest only with respect to certain interstate, 
domestic, interexchange services, such as individually negotiated 
service arrangements offered by nondominant interexchange carriers. We 
find that the competitive benefits of not permitting nondominant 
interexchange carriers to file tariffs for interstate, domestic, 
interexchange services, discussed above, apply equally to all segments 
of the interstate, domestic, interexchange services market. Moreover, 
as discussed above, we reject the argument that detariffing mass market 
services offered to residential and small business customers will lead 
to substantially higher transactions costs. Similarly, we are not 
persuaded that the public interest benefits differ depending on the 
type of tariffed information that is at issue. The public interest 
benefit of removing carriers' ability to invoke the ``filed-rate'' 
doctrine applies equally with respect to terms and conditions as to 
rates. Moreover, permitting or requiring large nondominant 
interexchange carriers to file tariffs for interstate, domestic, 
interexchange services would not eliminate the risk of tacit price 
coordination among such carriers, and would raise the possibility that 
such carriers' tariffed rates would become a price umbrella. Finally, 
we agree with AT&T that there is no basis

[[Page 59352]]

to differentiate among nondominant interexchange carriers, because all 
such carriers are unable to exercise market power in the interstate, 
domestic, interexchange market.
    64. Nor do we believe that we should delay our decision to detariff 
the interstate, domestic, interexchange services of nondominant 
interexchange carriers. Because we find the statutory criteria for 
forbearance are met at this time for all interstate, domestic, 
interexchange services offered by nondominant interexchange carriers, 
we are required by the 1996 Act to forbear from applying Section 203 
tariff filing requirements to these services. Should circumstances 
change such that the statutory forbearance criteria are no longer met, 
we have the authority to revisit our determination here, and to 
reimpose Section 203 tariff filing requirements.
    65. Finally, with respect to the regulatory treatment of BOC 
interexchange affiliates upon their entry into the interstate, 
domestic, interexchange market, we find no basis to exclude such 
carriers from the purview of this Order if they are classified as 
nondominant in their provision of interstate, domestic, interexchange 
services. We note that we are addressing the issue of whether incumbent 
local exchange carriers, including the BOCs, should be classified as 
dominant or nondominant in their provision of interstate, domestic, 
interexchange services in a separate ongoing proceeding. See 
Implementation of the Non-Accounting Safeguards of Sections 271 and 272 
of the Communications Act of 1934, as amended; Regulatory Treatment of 
LEC Provision of Interexchange Services Originating in the LEC's Local 
Exchange Area, CC Docket No. 96-149, Notice of Proposed Rulemaking, 61 
FR 39397 (July 29, 1996).
    66. For the reasons explained herein, we find that complete 
detariffing of interstate, domestic, interexchange services offered by 
nondominant interexchange carriers is in the public interest, and that 
permissive detariffing of such services is not in the public interest.
iii. Authority To Eliminate Tariff Filings
a. Background
    67. In the NPRM, the Commission sought comment on whether it has 
the authority under Section 10 of the Communications Act not to permit 
carriers to file tariffs.
b. Comments
    68. Several interexchange carriers and others argue that the plain 
language of Section 10 authorizes the Commission only to refrain from 
requiring tariffs, but not to prohibit carriers from voluntarily 
complying with Section 203. AT&T contends that the Commission has used 
the term ``forbearance'' to apply only to permissive detariffing, and 
used the terms ``cancellation'' of all filed tariffs and 
``elimination'' of future filings in adopting complete detariffing in 
the Competitive Carrier proceeding. AT&T adds that Congress used 
different terms in other provisions of the Communications Act to 
authorize the Commission to adopt complete detariffing. Specifically, 
AT&T argues that Congress gave the Commission authority to specify 
certain provisions of Title II of the Communications Act as 
``inapplicable'' to CMRS providers. AT&T claims that by failing to use 
this term in Section 10, and instead using such permissive terms as 
``forbear from applying'' or ``enforcing,'' Congress did not intend to 
give the Commission authority to adopt complete detariffing.
    69. Other parties, however, argue that the 1996 Act gives the 
Commission legal authority to prohibit carriers from filing tariffs. Ad 
Hoc Users argues that the Commission has used the term ``forbearance'' 
to refer to both mandatory and permissive detariffing. Ad Hoc Users 
further argues that federal agencies and the courts have construed 
similar statutory provisions as authorizing federal agencies to adopt 
mandatory deregulation. Specifically, Ad Hoc Users contends that: (1) 
The Commission adopted mandatory detariffing for CMRS based on Section 
332(c)(1)(A) of the Communications Act, which gave the Commission 
authority to specify certain provisions of Title II of the 
Communications Act as ``inapplicable'' to CMRS providers; and (2) the 
Civil Aeronautics Board (CAB) mandatorily deregulated the airline 
industry based on an amendment to the Federal Aviation Act that gave 
the CAB authority to ``exempt'' certain domestic air carriers from the 
requirements of the Federal Aviation Act if it found that such 
exemption was ``consistent with the public interest.'' Ad Hoc Users 
argues that these statutory grants of authority are substantially 
similar to Section 10, and that AT&T's argument (i.e., that Section 10 
only allows permissive deregulation) could be made about each of those 
statutes.
c. Discussion
    70. We conclude that the Commission has authority under Section 10 
to refuse to permit nondominant interexchange carriers to file tariffs 
for interstate, domestic, interexchange services. We reject the 
argument advanced by AT&T and others that by using the term 
``forbear,'' Congress intended to authorize the Commission merely to 
``refrain from enforcing'' its regulations or provisions of the 
Communications Act where the statutory forbearance criteria are met, 
and not to authorize the Commission to refuse to permit nondominant 
carriers to comply with such regulations or provisions voluntarily. We 
conclude that the plain meaning of the statute does not support their 
argument, and that federal agencies and the courts have construed 
similar statutory provisions as authorizing agencies to bar regulated 
entities from filing rate schedules and other tariff equivalents.
    71. As noted, AT&T and others argue that the dictionary definition 
of the term ``forbear'' authorizes the Commission to detariff only on a 
permissive basis. We agree with Ad Hoc Users that, in this context, 
such reliance solely on dictionary definitions is inappropriate, and 
can be misleading, where the historical usage of a term endows that 
term with a distinct meaning. The Commission has consistently used the 
term ``forbear,'' or a variation thereof, to refer to mandatory, as 
well as to permissive, detariffing. For example, in the Sixth Report 
and Order, the Commission stated that its mandatory detariffing 
proposal, if adopted, ``would result in the cancellation of all 
forborne carrier tariffs currently on file with the Commission and 
would eliminate future federal tariff filings by carriers treated by 
forbearance.'' Similarly, in Regulatory Treatment of Mobile Services, 
the Commission stated that it would ``forbear from requiring or 
permitting tariffs of interstate service offered directly by CMRS 
providers to their customers,'' based on the Commission's authority to 
specify any provision of Title II as ``inapplicable'' to any CMRS 
provider.
    72. The courts and Congress have also used the term ``forbear'' to 
apply to circumstances involving this agency's authority to refuse to 
permit carriers to file tariffs. In MCI Telecommunications Corp. v. 
FCC, the U.S. Court of Appeals for the D.C. Circuit used the term 
``forbearance'' to refer to our previous mandatory detariffing policy, 
noting that ``[t]he Sixth Report * * * changed the permissive 
forbearance arrangement to a mandatory one.'' MCI Telecommunications 
Corp. v. FCC, 765 F.2d 1186, 1189 (D.C. Cir. 1985). In addition, in 
describing the Commission's previous tariff forbearance policy, the 
Senate Commerce, Science, and Transportation Committee applied the term 
``forbearance'' to the entire Competitive

[[Page 59353]]

Carrier proceeding, encompassing both mandatory and permissive 
detariffing. See Telephone Operator Consumer Services Improvement Act 
of 1990, S. Rep. No. 439, 101st Cong., 2d Sess. 3 n.10 (1990) reprinted 
in 1990 U.S.C.C.A.N. 1577, 1579 (stating that ``[t]he FCC has chosen to 
`forbear' from regulating the rates of `non-dominant' carriers because 
they do not possess market power and thus have little ability to charge 
unjust or unreasonable rates in violation of the Communications Act of 
1934,'' and citing, inter alia, the Sixth Report and Order).
    73. It was against this background that Congress adopted Section 
10(a). Accordingly, we concur with Ad Hoc Users that the term 
``forbear'' must be construed within its historical and regulatory 
context, and not in a vacuum.
    74. We further note that in construing a similar statutory 
provision, the U.S. Court of Appeals for the D.C. Circuit rejected a 
virtually identical argument that Congress had only provided the CAB 
authority to deregulate the airline industry on a permissive basis. In 
an amendment to the Federal Aviation Act, Congress granted the CAB 
authority to ``exempt'' domestic air carriers from statutory 
requirements of the Federal Aviation Act. National Small Shipments 
Traffic Conference, Inc. v. CAB, 618 F.2d 819, 822 n.2, 823, 827 (D.C. 
Cir. 1980). The CAB used this authority to prohibit certain air 
carriers from filing tariffs and certain intercarrier agreements. In 
National Small Shipments Traffic Conference, Inc., petitioners argued 
that the CAB's ``authority to exempt airlines from certain requirements 
cannot be used to prohibit airlines from filing [intercarrier] 
agreements * * * if they choose to do so.'' Id. at 835. The court 
rejected this argument, noting that the CAB's exemption authority was 
``broad'' and that its refusal to permit airlines to file intercarrier 
agreements was consistent with Congress' deregulatory purpose. Id.
    75. Moreover, the action we take here is consistent with the 
Commission's order adopting complete detariffing for domestic CMRS 
providers. In Section 6002(b) of the Omnibus Budget Reconciliation Act 
of 1993 (OBRA), Congress granted the Commission authority to declare 
``inapplicable to [any commercial mobile] service or person'' any 
provision of Title II, subject to certain limitations. This grant of 
authority, while not identical, is similar to the Commission's 
authority under Section 10. In response to this grant of authority 
under Section 6002(b), the Commission determined that it would 
``forbear from requiring or permitting tariffs for interstate service 
offered directly by CMRS providers to their customers.''
    76. In addition, we conclude that Section 203, which was ``enacted 
to control monopoly abuse'' by the carriers, does not grant to carriers 
a statutory right to file tariffs. As noted in the 1996 Act's 
legislative history, ``given that the purpose of this legislation is to 
shift monopoly markets to competition as quickly as possible, the 
Committee anticipates this forbearance authority will be a useful tool 
in ending unnecessary regulation.'' Thus, it seems inconceivable that 
Congress intended Section 10 to be interpreted in a manner that allows 
continued compliance with provisions or regulations that the Commission 
has determined were no longer necessary in certain contexts.
iv. Summary of Findings and Conclusions
    77. We therefore conclude that tariffs are not necessary to ensure 
that the rates, practices, classifications, and regulations of 
nondominant interexchange carriers for interstate, domestic, 
interexchange services are just and reasonable and not unjustly or 
unreasonably discriminatory. In addition, we conclude that tariffs for 
the interstate, domestic, interexchange services of nondominant 
interexchange carriers are not necessary to protect consumers. 
Moreover, we find that complete detariffing of interstate, domestic, 
interexchange services provided by nondominant interexchange carriers 
is in the public interest, and that permissive detariffing of such 
services is not in the public interest. Accordingly, pursuant to the 
requirements of Section 10, we conclude that we must forbear from 
applying Section 203 tariff filing requirements to the interstate, 
domestic, interexchange services offered by nondominant interexchange 
carriers and not permit nondominant interexchange carriers to file 
tariffs for their interstate, domestic, interexchange services. We also 
conclude that the Commission has authority under Section 10 to refuse 
to permit nondominant interexchange carriers to file tariffs for 
interstate, domestic, interexchange services. We therefore order that 
nondominant interexchange carriers cancel all tariffs for such services 
currently on file with the Commission, subject to the procedural 
details specified below, and prohibit nondominant interexchange 
carriers from filing tariffs for such services in the future.
C. Maintenance and Disclosure of Price and Service Information; 
Certifications
i. Background
    78. In the NPRM, the Commission tentatively concluded that, if it 
were to adopt a complete detariffing policy, nondominant interexchange 
carriers would be required to maintain at their premises price and 
service information regarding all of their interstate, domestic, 
interexchange service offerings, which they could submit to the 
Commission upon request. In addition, the Commission tentatively 
concluded that it would require nondominant providers of interexchange 
telecommunications services to file certifications stating that they 
are in compliance with the geographic rate averaging and rate 
integration requirements of Section 254(g) in order to ensure 
compliance with those requirements. The Commission further tentatively 
concluded that it would rely on the complaint process under Section 208 
to bring violations of Section 254(g) to its attention.
ii. Comments
    79. Several commenters recommend that, if the Commission adopts 
detariffing, it should require nondominant interexchange carriers to 
make their rates available to the public in some other fashion, such as 
by posting pricing information on-line, submitting current rate 
information to the Commission, or making such information available to 
any member of the public upon request. These commenters argue that the 
public needs such information to determine whether a carrier is 
complying with the geographic rate averaging and rate integration 
requirements of Section 254(g) as well as with the nondiscrimination 
requirements of Section 202. Several of these commenters further argue 
that consumers, especially residential and small business customers, 
need information on rates, terms and conditions to compare carriers' 
service offerings. Several small businesses that analyze tariff 
information for business and residential customers argue that they need 
such information to conduct their businesses.
    80. Other commenters, however, oppose any record-keeping 
requirement. They argue that imposing such a requirement would 
eliminate any cost savings resulting from detariffing. Several parties 
further insist that carriers will make rate and service information 
available to consumers through other means.

[[Page 59354]]

    81. AT&T argues that, to the extent the Commission seeks to justify 
its decision to detariff on the ground that complete detariffing would 
eliminate the ``filed-rate'' doctrine, a requirement that carriers make 
rate information available on-line or through a clearinghouse would 
undermine this objective. AT&T insists that the ``filed-rate'' doctrine 
would continue to apply if such a requirement is imposed, because the 
doctrine is based on the imposition of a filing requirement and not on 
the manner or place of filing.
    82. Several interexchange carriers and BOCs contend that the 
Commission's proposed certification requirement and the complaint 
process are appropriate mechanisms to enforce the requirements of 
Section 254(g). Others, however, argue that the Commission should not 
require certifications, but should rely instead on the complaint 
process and its ability to examine rates upon request. These parties 
argue that certifications do little to advance the Commission's 
enforcement objectives, and that the complaint process and the 
Commission's ability to examine rates upon request are the only 
effective means to ascertain whether carriers are in compliance with 
their statutory obligations.
iii. Discussion
    83. We adopt the tentative conclusion in the NPRM that nondominant 
providers of interstate, domestic, interexchange telecommunications 
services should be required to file annual certifications signed by an 
officer of the company under oath that they are in compliance with 
their statutory geographic rate averaging and rate integration 
obligations. We believe that annual certifications will emphasize the 
importance that we place on the rate averaging and rate integration 
requirements of the 1996 Act and put carriers on notice that they may 
be subject to civil and criminal penalties for violations of these 
requirements, especially willful violations.
    84. While we believe that carrier certifications will be an 
important mechanism for enforcing the 1996 Act's geographic rate 
averaging and rate integration requirements, we are persuaded by the 
arguments of many parties, including numerous state regulatory 
commissions and consumer groups, that publicly available information is 
necessary to ensure that consumers can bring complaints, if necessary, 
to enforce those requirements. As noted above, we find that it is 
highly unlikely that interexchange carriers that lack market power 
could successfully charge rates, or impose terms and conditions, for 
interstate, domestic, interexchange services in ways that violate 
Sections 201 and 202 of the Communications Act, and that such carriers 
will generally provide rate and service information to consumers to 
preserve or improve their competitive position in the market. We 
recognize, however, that in competitive markets carriers would not 
necessarily maintain geographically averaged and integrated rates for 
interstate, domestic, interexchange services as required by Section 
254(g). Because the public should have the ability to bring violations 
of the geographic rate averaging and rate integration requirements of 
the 1996 Act to our attention, we believe it is appropriate to require 
carriers to make available to the public the information that is 
necessary for the public to determine whether a carrier is adhering to 
the geographic rate averaging and rate integration requirements of 
Section 254(g). Accordingly, we will require nondominant interexchange 
carriers to make information on current rates, terms, and conditions 
for all of their interstate, domestic, interexchange services available 
to the public in an easy to understand format and in a timely manner. 
(A nondominant interexchange carrier must make available to any member 
of the public such information about all of that carrier's interstate, 
domestic, interexchange services.) We note that, by adopting this 
requirement, we do not intend to require carriers to disclose more 
information than is currently provided in tariffs, in particular in 
contract tariffs.
    85. The requirement that nondominant interexchange carriers make 
available to the public information concerning the current rates, terms 
and conditions for all of their interstate, domestic, interexchange 
services also will promote the public interest by making it easier for 
consumers, including resellers, to compare carriers' service offerings. 
While nondominant interexchange carriers will generally provide rate 
and service information to consumers in order to attract and retain 
customers, some consumers may find it difficult to determine the 
particular service plans that are most appropriate, and least costly, 
for them, based on their calling patterns, because of the wide array of 
calling plans offered by the scores of carriers. Businesses and 
consumer organizations that analyze and compare the rates and services 
of interexchange carriers perform a valuable function in assisting 
consumers to judge the specific carriers' rates and service plans that 
are best suited to their individual needs. The foregoing requirement 
will ensure that such businesses, many of which are small businesses, 
continue to have access to the information they need to provide their 
services.
    86. In order to minimize the burden on nondominant interexchange 
carriers of complying with this requirement, we will not require 
nondominant interexchange carriers to make rate and service information 
available to the public in any particular format, or at any particular 
location. We reject the suggestion that we should require nondominant 
interexchange carriers to provide information on their interstate, 
domestic, interexchange services at a central clearinghouse or on-line. 
We find that mandating such a requirement would be unduly burdensome at 
this time. Rather, we will require only that a carrier make such 
information available to the public in at least one location during 
regular business hours. We will also require carriers to inform the 
public that this information is available when responding to consumer 
inquiries or complaints, and to specify the manner in which the 
consumer may obtain the information. In addition, because we are simply 
requiring carriers to make information available to the public, we need 
not address AT&T's argument that requiring nondominant interexchange 
carriers to make price and service information available on-line or at 
a central clearinghouse is a filing requirement within the meaning of 
Section 203. (Although we do not require carriers to make such 
information available to the public at more than one location, we 
encourage carriers to consider ways to make such information more 
widely available, for example, posting such information on-line, 
mailing relevant information to consumers, or responding to inquiries 
over the telephone.)
    87. Finally, we adopt the tentative conclusion in the NPRM that we 
should require nondominant interexchange carriers to maintain price and 
service information regarding all of their interstate, domestic, 
interexchange service offerings, that they can submit to the Commission 
upon request. We believe it is appropriate that this information should 
include the information that carriers provide to the public as required 
above, as well as documents supporting the rates, terms, and conditions 
of the carriers' interstate, domestic, interexchange offerings. We note 
that we will not require carriers to make such supporting documentation 
available to the public. We also find that it is appropriate to require 
nondominant

[[Page 59355]]

interexchange carriers to retain the foregoing records for a period of 
at least two years and six months following the date the carrier ceases 
to provide services on such rates, terms and conditions, in order to 
afford the Commission sufficient time to notify a carrier of the filing 
of a complaint, which generally must be commenced within two years from 
the time the cause of action accrues. We note that, in the event a 
complaint is filed against a carrier, we will require the carrier to 
retain documents relating to the complaint until the complaint is 
resolved. We will also require nondominant interexchange carriers to 
file with the Commission, and update as necessary, the name, address, 
and telephone number of the individual, or individuals, designated by 
the carrier to respond to Commission inquiries and requests for 
documents. We will further require that nondominant interexchange 
carriers maintain the foregoing records in a manner that allows 
carriers to produce such records within ten business days of receipt of 
a Commission request. We conclude that the availability of such records 
will enable the Commission to meet its statutory duty of ensuring that 
such carriers' rates, terms, and conditions for service are just, 
reasonable, and not unreasonably discriminatory, and that these 
carriers comply with the geographic rate averaging and rate integration 
requirements of the 1996 Act. In addition, maintenance of such records 
will enable the Commission to investigate and resolve complaints.
D. Transition
i. Comments
    88. Several commenters suggest that if the Commission were to adopt 
the complete detariffing proposal, it should also implement an 
appropriate transition period to afford nondominant interexchange 
carriers time to adapt their operations to a detariffed regime. Ad Hoc 
Users and API suggest that we adopt a six-month transition period. 
Eastern Tel, AT&T, and LDDS recommend a period of at least one year, 
and LCI suggests a phase-in period of 18-24 months. In addition, AT&T 
urges the Commission to ``make clear that the terms of individual 
carrier/customer deals currently on file at the Commission stay on file 
and remain unchanged by a decision to prohibit the filing of tariffs.'' 
Ad Hoc Users and API, on the other hand, urge the Commission to prevent 
carriers from filing tariffs that supersede existing contracts during 
the transition period. API further recommends that during the 
transition period, carriers should not be permitted to require that the 
terms of existing pricing arrangements be extended as a condition for 
negotiating contracts to replace existing tariffs. Finally, Eastern Tel 
requests the Commission to work with industry to develop a standard 
contract for telecommunications services, similar to the form contracts 
used in the real estate industry, that address such issues as the 
collection procedures that can be utilized.
ii. Discussion
    89. We agree that we should allow nondominant interexchange 
carriers an appropriate transition period to adjust to detariffing. We 
conclude that a nine-month period is sufficient to provide for an 
orderly transition. We believe that this transition period will afford 
carriers sufficient time to adjust to detariffing. We do not believe 
that a more extended period is needed for nondominant interexchange 
carriers to adjust their operations. Nondominant interexchange carriers 
are not required to negotiate a new contract with each customer. 
Nondominant interexchange carriers may utilize various methods to 
establish legal relationships with customers in the absence of tariffs, 
including, for example, the use of short standard agreements. We 
therefore order all nondominant interexchange carriers to cancel their 
tariffs for interstate, domestic, interexchange services on file with 
the Commission within nine months of the effective date of this Order 
and not to file any such tariffs thereafter. We note that the effective 
date of this Order (i.e., the date the rules and requirements 
promulgated by this Order will become effective) will be 30 days from 
the date of publication of this Order in the Federal Register.
    90. Nondominant interexchange carriers may cancel their tariffs for 
interstate, domestic, interexchange services at any time during the 
nine-month period. Pending such cancellation, the Commission will 
accept new tariffs and revisions to the carrier's tariffs for mass 
market interstate, domestic, interexchange services. We believe that it 
is appropriate to allow nondominant interexchange carriers to revise 
their tariffs for mass market interstate, domestic, interexchange 
services on file with the Commission during the nine-month transition 
period in order to respond to changes in the market. However, in order 
to preserve the legitimate business expectations of customers taking 
service pursuant to long-term service arrangements, and to limit the 
ability of carriers to unilaterally alter or abrogate such arrangements 
by invoking the filed rate doctrine, the Commission will not accept new 
tariffs, or revisions to carriers' existing tariffs, for long-term 
service arrangements (such as contract tariffs, AT&T's Tariff 12 
options, MCI's special customer arrangements, and Sprint's custom 
network service arrangements) during the transition period. We 
recognize that many such long-term service arrangements incorporate by 
reference mass market tariffs. By precluding carriers during the 
transition period from filing tariffs or revisions to tariffs for long-
term service arrangements, we do not intend to limit carriers' ability 
to file tariffs and tariff revisions for mass market services.
    91. Carriers that have on file with the Commission ``mixed'' tariff 
offerings that contain services subject to detariffing pursuant to this 
Order, may comply with this Order either by: (1) Cancelling the entire 
tariff and refiling a new tariff for only those services subject to 
tariff filing requirements; or (2) issuing revised pages cancelling the 
material in the tariffs that pertain to those services subject to 
forbearance. A ``mixed'' tariff offering is a tariff that includes 
services for which the carrier is subject to different tariff filing 
requirements. One example of a ``mixed'' tariff offering would be a 
tariff that contains interstate, domestic, interexchange services for 
which the carrier is nondominant and therefore prior to the 
effectiveness of this Order was subject to a one-day tariff filing 
requirement, as well as international services for which the carrier is 
nondominant and therefore subject to a one-day tariff filing 
requirement. Another example would occur where a carrier is dominant 
for certain services and nondominant for others and includes both types 
of services in one tariff. As discussed below in section II.E., we 
determine that a carrier that has mixed tariff offerings that include 
interstate, domestic, interexchange services for which the carrier is 
nondominant, as well as international services for which the carrier is 
nondominant, must continue to tariff the international portions of such 
bundled or mixed tariff offerings. Accordingly, such a carrier must 
comply with this requirement. This requirement also applies to a 
carrier that has other types of mixed tariff offerings that are 
affected by this Order, such as where the carrier offers in one tariff 
interstate, domestic, interexchange services for which it is 
nondominant with other services for which the carrier is dominant.
    92. We note that, while complete detariffing will change the legal

[[Page 59356]]

framework for long-term service arrangements, we do not intend by our 
actions in this Order to disturb existing contractual or other long-
term arrangements. Accordingly, our detariffing policy should not be 
interpreted to allow parties to alter or abrogate the terms of long-
term arrangements currently on file with the Commission. Because we 
have determined that our action here does not entitle parties to a 
contract-based, or other long-term, service arrangement to take a 
``fresh look'' at such arrangements, we need not address API's 
suggestion that we prohibit nondominant interexchange carriers from 
demanding that the terms of existing pricing arrangements be extended 
beyond their currently applicable terms.
    93. Finally, we decline to follow Eastern Tel's suggestion that the 
Commission work with industry during the transition period to establish 
a standard contract for telecommunications services. As noted above, we 
believe that nondominant interexchange carriers may use various methods 
to provide service to their customers. We find that it would be more 
consistent with the pro-competitive and deregulatory objectives of the 
1996 Act to allow carriers and customers freely to determine the most 
efficient methods for providing interexchange services without tariffs.
E. Tariff Filing Requirements for the International Portion of Bundled 
Domestic and International Services
i. Background
    94. A number of nondominant interexchange carriers currently file 
bundled tariffs that include both interstate, domestic, interexchange 
services and international services. In the NPRM, the Commission sought 
comment on whether it should forbear from requiring nondominant 
interexchange carriers to file tariffs for the international portions 
of bundled domestic and international service offerings if the 
Commission forbears from requiring such carriers to file tariffs for 
their domestic services. The Commission noted that it was reserving for 
another day, in a separate proceeding, the broader question of whether 
it should consider generally forbearing from requiring tariffs for 
international services provided by nondominant carriers.
ii. Comments
    95. Several commenters support detariffing the international 
portions of bundled domestic and international services offered by 
nondominant interexchange carriers. Ad Hoc Users, API and AT&T argue 
that different tariff filing requirements for the domestic and 
international portions of bundled offerings would require the 
artificial partition of unified service arrangements, which would 
impose substantial costs on both customers and carriers. Ad Hoc Users 
also contends that different tariff rules would lead to separate 
minimum revenue requirements for domestic and international services. 
API and the Television Networks argue that international services 
offered by nondominant carriers should be detariffed whether or not the 
international services are bundled with domestic services.
    96. Other parties argue that the Commission should not detariff 
international portions of bundled offerings until nondominant 
international carriers are relieved generally of tariff filing 
requirements. MCI expressed concern that, if the Commission detariffed 
the international portion of bundled or ``mixed'' tariff offerings, 
AT&T, which was regulated as dominant in international markets when 
comments in this proceeding were due, would be freed of tariff 
regulation in connection with its `` `mixed' international offerings.''
    97. AMSC, which provides mobile telecommunications services using 
satellites that cover the continental United States, Hawaii, Alaska, 
Puerto Rico, and the U.S. Virgin Islands, as well as adjacent 
international waters and northern parts of South America, urges the 
Commission to detariff the international portions of the offerings of 
nondominant CMRS providers, including its own services. The Commission 
detariffed AMSC's domestic services two years ago when it adopted 
mandatory detariffing for CMRS providers. AMSC argues that there is no 
rationale for maintenance of a tariff filing requirement for the 
international services of AMSC or other CMRS providers. In addition, 
AMSC argues that because it offers a mobile service via satellite, it 
cannot determine whether a call originates in a domestic or 
international area and that most of its international service is 
provided to users in international waters.
iii. Discussion
    98. In the NPRM, the Commission indicated that it would consider in 
a separate proceeding the question of whether it should generally 
forbear from requiring tariffs for international services provided by 
nondominant carriers, but it sought comment on whether it should 
forbear from requiring nondominant interexchange carriers to file 
tariffs for the international portions of bundled domestic and 
international service offerings. There is not sufficient evidence in 
the record to make findings that each of the statutory criteria are met 
to forbear from requiring nondominant interexchange carriers to file 
tariffs for the international portions of bundled domestic and 
international service offerings. We therefore believe that detariffing 
the international portions of bundled domestic and international 
service offerings would be better addressed as part of a separate 
proceeding in which the Commission can further examine the state of 
competition in the international market. Accordingly, we will require 
nondominant interexchange carriers to continue to file tariffs for the 
international portions of bundled domestic and international service 
offerings until we find that the statutory criteria are met for 
international services provided by nondominant carriers. A nondominant 
carrier with bundled domestic and international services may comply 
with this Order either by cancelling its entire tariff and refiling a 
new tariff only for the international portions of its service offerings 
or by issuing revised pages that cancel the material in its tariffs 
which pertains to those services subject to forbearance. Because we 
will require nondominant interexchange carriers to continue to file 
tariffs for international services, we need not address MCI's concern 
that dominant international carriers might be freed from tariff 
requirements for the international portions of bundled domestic and 
international services.
    99. Our decision here will not impose substantial administrative 
expenses on carriers or customers. In addition, to respond to concerns 
about the cost of partitioning bundled offerings, we are modifying our 
rules to permit nondominant interexchange carriers to cross reference 
detariffed interstate, domestic, interexchange service offerings in 
their tariffs for international services for purposes of calculating 
discounts and minimum revenue requirements.
    100. We similarly find that there is insufficient record evidence 
in this proceeding to detariff the international portions of CMRS 
services, or to address AMSC's concerns with regard to its specific 
services at this time.

[[Page 59357]]

F. Effect of Forbearance on AT&T's Commitments
i. Background
    101. In the AT&T Reclassification proceeding, AT&T made certain 
voluntary commitments that AT&T stated were intended to serve as 
transitional arrangements to address concerns expressed by parties 
about possible adverse effects of reclassifying AT&T. These commitments 
concerned: service to low-income and other customers; analog private 
line and 800 directory assistance services; service to and from the 
State of Alaska and other regions subject to the Commission's rate 
integration policy; geographic rate averaging; changes to contract 
tariffs that adversely affect existing customers; and dispute 
resolution procedures for reseller customers. In the AT&T 
Reclassification Order, the Commission accepted AT&T's commitments and 
ordered AT&T to comply with those commitments.
    102. In the NPRM, the Commission sought comment on the effects of 
the Commission's complete detariffing proposal on certain of AT&T's 
commitments. Specifically, AT&T committed, for a period of three years, 
to limit any price increases for interstate analog private line and 800 
directory assistance services to a maximum increase in any year of no 
more than the increase in the consumer price index. AT&T also 
committed, for a period of three years, to file tariff changes 
increasing the prices of these services on not less than five business 
days' notice, and to identify clearly such tariff transmittals as 
affecting the provisions of this commitment. In the NPRM, the 
Commission tentatively concluded that AT&T should remain subject to 
these commitments for the specified term of the commitments. The 
Commission therefore tentatively concluded that if we were to adopt 
detariffing, AT&T should be required to continue to file tariffs for 
these services for the term of its commitments.
    103. In addition, AT&T voluntarily committed, for a period of three 
years, to offer two optional calling plans designed to mitigate the 
impact of future increases in basic schedule or residential rates. The 
first plan is targeted to low-income customers, and the second is 
targeted to low-volume consumers, but is generally available to all 
residential customers. Moreover, AT&T agreed to file on not less than 
five business days' notice tariffs changing the structure of these 
plans or significantly increasing the cost of its basic residential 
service.
ii. Comments
    104. The Pennsylvania PUC contends that AT&T should remain subject 
to all of its voluntary commitments as a safeguard, because AT&T has 
only been classified as a nondominant interexchange carrier for a short 
period of time. The Florida PSC suggests that AT&T should remain 
subject to its three-year commitment to offer calling plans intended 
for low-income and low-volume consumers in order to eliminate concerns 
about rate increases for basic long-distance rates. In contrast, 
several interexchange carriers contend that AT&T should not be bound by 
any commitments that do not apply equally to all nondominant 
interstate, interexchange carriers.
    105. AT&T states that it will abide by its commitments concerning 
unilateral changes to contract tariffs, but argues that it should not 
be subject to any additional burdens regarding contract tariffs that 
are not imposed on other nondominant carriers. AT&T did not address its 
other commitments in its comments in this proceeding.
iii. Discussion
    106. We conclude that we should adopt the tentative conclusion in 
the NPRM that AT&T should continue to comply with its commitments 
relating to 800 directory assistance and analog private line services. 
In the AT&T Reclassification Order, the Commission acknowledged that 
there was evidence in the record that AT&T may have the ability to 
control prices for 800 directory assistance service and analog private 
line services, but also noted that these services generate de minimis 
revenues when compared to total industry revenues. The Commission 
stated, therefore, that the evidence regarding AT&T's ability to 
control prices for these specific services did not mean that AT&T has 
market power in the interstate, domestic, interexchange market as a 
whole. The Commission further stated that it believed that ``AT&T's 
voluntary commitments will effectively restrain AT&T's exercise of any 
market power it may have with respect to these narrow service 
segments.'' In light of the Commission's conclusions in the AT&T 
Reclassification Order, and AT&T's statements that its commitments 
serve as a transitional mechanism, we find that detariffing of analog 
private line and 800 directory assistance services at this time is not 
in the public interest, and would not meet the statutory forbearance 
criteria. We, therefore, require AT&T to continue to file tariffs for 
these services in accordance with, and for the specified term of, its 
commitments. AT&T will be required to cancel its tariffs for these 
services within nine months of the end of its three-year commitment, 
consistent with the requirements we have adopted for other nondominant 
interexchange carriers.
    107. AT&T has not argued in this proceeding that it should be 
relieved of its commitment in the AT&T Reclassification Order to offer 
optional rate plans targeted at low-income and other residential 
customers. Accordingly, we require that AT&T continue to offer an 
optional calling plan targeted to low-income customers and a plan 
targeted to low-volume customers, but which is generally available to 
all residential customers, until the expiration of its original 
commitment in the fall of 1998. In addition, we will continue to 
monitor AT&T's compliance with its commitments to implement a consumer 
outreach program to notify its customers of the availability of such 
plans, and to offer for three years an interstate optional calling plan 
that will provide residential customers a postalized rate of no more 
than $0.35 per minute for peak calling and $0.21 per minute for off-
peak.
    108. We note that our decision to preclude nondominant 
interexchange carriers from filing tariffs for interstate, domestic, 
interexchange services would effectively eliminate AT&T's commitments 
to file changes to such optional plans and to file certain changes to 
its average residential interstate direct dial services on not less 
than five business days' notice. (AT&T committed to file changes to its 
average residential interstate direct dial services on not less than 
five business days' notice if those changes, (1) increase rates more 
than 20% for customers making more than $2.50 in calls per month, or 
(2) increase average monthly charges more than $.50 per month for 
customers making less than $2.50 in calls per month, and to clearly 
identify such tariff transmittals as affecting the provisions of this 
commitment. Additionally, AT&T committed to file tariff changes to its 
optional calling plans on not less than five business days' notice, and 
only in the event of a significant change in the structure of the 
interexchange industry (including a reprice or restructure of access 
rates). AT&T also committed to identify such tariff transmittals as 
affecting the provisions of this commitment.) Accordingly, consistent 
with AT&T's intent that its commitments serve as a transitional 
arrangement, we require AT&T, for the period of its

[[Page 59358]]

commitments, to notify consumers of changes to such plans, or of 
changes to its average residential interstate direct dial services, 
under the circumstances specified in the AT&T Reclassification Order, 
on not less than five business days' notice.
    109. Finally, we conclude that actions in this proceeding do not 
affect AT&T's other commitments. In our Geographic Rate Averaging 
Order, we found that the rules adopted in that proceeding would require 
AT&T to provide interexchange service at geographically averaged and 
integrated rates. We therefore released AT&T from its commitments 
relating to rate integration and geographic rate averaging. We 
expressly did not release AT&T from its more specific commitment to 
comply with the Commission's orders associated with AT&T's purchase of 
Alascom. We believe that detariffing would not affect these 
commitments. AT&T's commitment regarding dispute resolution procedures 
for resellers has no expiration date, and is also unaffected by 
detariffing. Finally, AT&T's commitments concerning changes to contract 
tariffs, quarterly performance reports on reseller order processing, 
and providing an ombudsman to resolve reseller complaints, expire by 
their own terms in the fall of 1996.
G. Additional Forbearance Issues
    110. The Secretary of Defense raises two concerns regarding the 
National Security and Emergency Preparedness (NSEP) system. 
Specifically, two services, Telecommunications Services Priority (TSP) 
and Government Emergency Telecommunications Service (GETS) are now 
provided by nondominant interexchange carriers pursuant to tariffs. 
Under tariffs filed to provide TSP service, circuits with NSEP 
designations receive priority restoral and provisioning. The Secretary 
of Defense argues that TSP tariffs not only establish a price for the 
service, but also serve as a clear sign that a carrier understands and 
accepts the responsibilities imposed by the Commission's TSP rules. The 
Secretary of Defense also expressly acknowledges, however, that TSP 
service could be provided on the basis of negotiated contracts. 
Consequently, we find no basis in the record for excluding TSP services 
from the requirements of this Order. The Secretary of Defense expresses 
concern, however, that carriers may not be aware of the TSP rules. 
While we concur with the Secretary of Defense that carriers must 
understand their responsibilities under our TSP rules, and that 
carriers should price such services, before an emergency occurs, we do 
not believe that tariffs are necessary to fulfill these functions. 
Rather, we conclude that carriers will be adequately informed of our 
TSP rules and regulations when contracts for TSP services are 
negotiated. In addition, we reaffirm our commitment to enforce the TSP 
rules and regulations, and expect that officials responsible for the 
NSEP TSP System will report any violations of these rules to us.
    111. The second issue raised by the Secretary of Defense concerns 
GETS, which provides NSEP-authorized personnel priority call completion 
over the public switched network. The Secretary of Defense seeks 
assurance that GETS would not be deemed to constitute unreasonable 
discrimination in violation of Section 202(a) of the Communications 
Act. The Secretary of Defense states that the Office of the Manager of 
the National Communications System wrote to the Commission on November 
29, 1993, asking for a declaratory ruling that GETS does not violate 
Section 202(a). The Commission later determined that the request for a 
declaratory ruling was moot, because ``[l]awful tariffs implementing 
[GETS] have gone into effect.'' The Secretary of Defense is concerned 
that the permissibility of GETS is dependent on filed tariffs. We 
conclude, however, that our decision to forbear does not affect the 
nondiscrimination provisions of Section 202(a). Thus, to the extent 
that GETS did not constitute unreasonable discrimination under tariffs, 
the service will not violate Section 202(a) following detariffing.
    112. APCC urges the Commission not to take any action in this 
proceeding that may be inconsistent with or jeopardize the Commission's 
ongoing inquiry into operator services. In the NPRM in this proceeding, 
the Commission indicated that it would consider operator services in 
another proceeding and therefore expressly stated that it was not 
addressing the issue of forbearance from applying Section 226 of the 
Communications Act, which requires operator service providers (OSP) to 
file informational tariffs. In the Nondominant Filing Order, the 
Commission, in order to minimize tariff filing burdens on carriers, 
permitted carriers that provide both operator services and other 
services to file one single tariff under Section 203, rather than 
separate tariffs under Sections 203 and 226, as long as the tariff 
meets the requirements of both sections. As a result, the largest 
nondominant interexchange carriers, or their affiliates, have filed 
tariffs for interstate and international operator services pursuant to 
Section 203 rather than Section 226. Our decision to forbear from 
applying Section 203 tariff filing requirements to nondominant 
interexchange carriers for interstate, domestic, interexchange services 
does not relieve such carriers of the obligation to file informational 
tariffs pursuant to Section 226. Accordingly, any carrier that has 
included tariff information concerning interstate and international 
operator services in a Section 203 tariff must refile an informational 
tariff for such services, consistent with Section 226, upon cancelling 
such Section 203 tariff. Thus, our actions in this proceeding will not 
dictate the outcome of the Commission's inquiry into operator services.

III. Bundling of Customer Premises Equipment

    113. In the Computer II proceeding, the Commission adopted a rule 
requiring all common carriers to sell or lease CPE separate and apart 
from such carriers' regulated communications services, and to offer CPE 
solely on a non-tariffed basis. (Section 64.702(e) of our rules 
provides: ``Except as otherwise ordered by the Commission, after March 
1, 1982, the carrier provision of customer-premises equipment used in 
conjunction with the interstate telecommunications network shall be 
separate and distinct from provision of common carrier communications 
services and not offered on a tariffed basis.'') Carriers previously 
had provided CPE to customers as part of a bundled package of services. 
The Commission required carriers to separate the provision of CPE from 
the provision of transmission services, because it found that carriers' 
continued bundling of telecommunications services with CPE could force 
customers to purchase unwanted CPE in order to obtain necessary 
transmission services, thus restricting customer choice and retarding 
the development of a competitive CPE market. The Commission 
acknowledged, however, that ``[i]f the markets for components of [a] 
commodity bundle are workably competitive, bundling may present no 
major societal problems so long as the consumer is not deceived 
concerning the content and quality of the bundle.''
    114. In the NPRM, the Commission tentatively concluded that, in 
light of the development of substantial competition in the markets for 
CPE and interstate long-distance services, it was unlikely that 
nondominant interexchange carriers could engage in the type of 
anticompetitive conduct that

[[Page 59359]]

led the Commission to prohibit the bundling of CPE with the provision, 
inter alia, of interstate, interexchange services. The Commission also 
tentatively concluded that allowing nondominant interexchange carriers 
to bundle CPE with interstate, interexchange services would promote 
competition by allowing such carriers to create attractive service/
equipment packages. The Commission therefore proposed to amend Section 
64.702(e) of the Commission's rules to allow nondominant interexchange 
carriers to bundle CPE with interstate, interexchange services. The 
Commission sought comment on this proposal, and on the effect that the 
proposed amendment of Section 64.702(e) would have on the Commission's 
other policies or rules. The Commission also sought comment on: (1) 
Whether interexchange carriers should be required to offer separately, 
unbundled interstate, interexchange services on a nondiscriminatory 
basis if they are permitted to bundle CPE with the provision of 
interstate, interexchange services and (2) whether and how the 
anticipated entry of local exchange carriers, in particular the BOCs, 
into the market for interstate, interexchange services should affect 
the Commission's analysis.
    115. A number of commenters addressing this issue support the 
Commission's proposal to amend Section 64.702(e) to allow nondominant 
interexchange carriers to bundle CPE with the provision of interstate, 
interexchange services, while other parties oppose such an amendment. 
Many commenters further argue that if the Commission permits bundling 
of CPE with interstate, interexchange services, it should require 
nondominant interexchange carriers to continue to offer unbundled 
interstate, interexchange services separately.
    116. In its comments, AT&T strongly supported the Commission's 
proposal, but suggested that it did not go far enough, and urged the 
Commission also to eliminate restrictions on single-priced, bundled 
packages of enhanced and interexchange services offered by nondominant 
interexchange carriers. These restrictions (which are not codified in 
the Commission's rules) were adopted by the Commission in the Computer 
II proceeding. AT&T maintains that such restrictions are no longer 
justified, in light of the Commission's findings regarding the 
competitiveness of the interexchange market, and because the enhanced 
services market is even more ``robust, competitive and diverse'' than 
the CPE market. AT&T concludes that ``the rationale underlying the 
Commission's proposal to eliminate the bundling restrictions for CPE 
and interexchange services applies equally to enhanced services,'' and 
it therefore urges the Commission to institute a supplemental notice of 
proposed rulemaking ``to eliminate the restrictions against the 
bundling of interexchange services and enhanced services by nondominant 
interexchange carriers.'' ( In its comments, MCI assumed that the 
proposed amendment of Section 64.702(e) would allow bundling of 
transmission with enhanced services as well as CPE or ``any other 
product or service that the carrier chooses to include in a bundle.'')
    117. ITAA opposes AT&T's request on the grounds that enhanced 
service providers (``ESPs'' ) require access to unbundled network 
services at competitive prices and on nondiscriminatory terms in order 
to succeed. ITAA claims that there are only three nationwide 
facilities-based carriers, which ITAA contends collectively control the 
bulk of the interexchange market, from which ESPs can purchase the 
ubiquitous transmission services they require. ITAA maintains that 
AT&T's proposal would chill the growth of the enhanced services market 
by making ESPs vulnerable to discrimination by carriers in favor of 
their own enhanced services.
    118. We conclude that, at this time, we should defer action on our 
earlier proposal to eliminate the CPE unbundling rule. We find that 
AT&T's request presents issues similar to those raised in the NPRM 
relating to the bundling of CPE with interstate, interexchange services 
by nondominant interexchange carriers. AT&T's request, however, also 
raises issues that have not been addressed in the record before us. 
Because we believe it is appropriate to consider the Commission's 
prohibitions against bundling CPE and enhanced services with 
interstate, interexchange services together, in a single, consolidated 
proceeding, we decline to act on the Commission's proposal in the NPRM 
to amend Section 64.702(e) of the Commission's rules to allow 
nondominant interexchange carriers to bundle CPE with interstate, 
interexchange services at this time. We intend to issue a further 
notice of proposed rulemaking that will address the continued 
applicability of the prohibitions against the bundling of both CPE and 
enhanced services with interstate, interexchange services by 
nondominant interexchange carriers.

IV. Other Issues

A. Pricing Issues
i. Background
    119. In the AT&T Reclassification Order, the Commission found the 
evidence in the record regarding the existence of alleged tacit price 
coordination among interexchange carriers for basic residential 
services, or residential services generally to be inconclusive and 
conflicting. The Commission concluded that, if there were tacit price 
coordination in the interexchange market, the problem was generic to 
the industry and would be better addressed by removing regulatory 
requirements that may have facilitated such conduct. In the NPRM, the 
Commission noted that its reclassification of AT&T removed one such 
regulatory requirement--the longer advance notice period applicable 
only to AT&T. The Commission also observed that the 1996 Act would 
provide the best solution to the problem of tacit price coordination, 
to the extent that it exists currently, by allowing for competitive 
entry in the interstate interexchange market by the facilities-based 
BOCs. Moreover, the Commission tentatively concluded that complete 
detariffing of the interstate, domestic, interexchange services of 
nondominant interexchange carriers would discourage price coordination 
by eliminating carriers' ability to ascertain their competitors' 
interstate rates and service offerings from publicly-available tariffs 
filed with the Commission. The Commission sought comment on these 
issues.
ii. Comments
    120. BOCs and other commenters argue that there is substantial 
evidence of tacit price coordination by the largest interexchange 
carriers, which the BOCs claim have engaged in price signaling and 
increased basic rates in lock-step, despite decreasing costs. Others, 
including a number of interexchange carriers, contend that there is no 
evidence of tacit price coordination, and that interexchange carriers 
have raised their rates for basic services because their rates were 
artificially kept below cost by price caps.
    121. Several commenters argue that the best remedy for price 
coordination, to the extent it exists, is competitive entry in the 
interstate, domestic, interexchange market. Other commenters argue that 
because the BOCs have bottleneck control over access facilities, 
premature BOC entry may impede competition, because the BOCs will have 
unfair advantages over

[[Page 59360]]

their competitors, forcing smaller carriers from the market.
    122. Some commenters suggest that the Commission's proposal to 
adopt complete detariffing will impede price coordination because 
tariffs enable carriers to ascertain their competitors' rates, terms 
and conditions for service at one, central location. Others argue that 
complete detariffing will have little effect on price coordination 
because carriers will be able to keep track of their competitors' rates 
through other methods, such as through competitors' advertising and 
because the current streamlined tariff filing requirements prevent 
price signaling.
iii. Discussion
    123. We find the evidence in the record regarding tacit price 
collusion to be inconclusive. While data presented by Bell South and 
Bell Atlantic could be consistent with the existence of tacit collusion 
among interexchange carriers, these data are also consistent with 
competition among interexchange carriers. For example, the fact that 
increases in AT&T's basic rates have been matched almost immediately by 
MCI and Sprint is consistent with a theory of evolving competition in 
this marketplace. Between 1991 and 1995, while interexchange carriers 
were increasing basic rates, they were also lowering prices to higher 
volume customers through increases in discounts offered via discount 
plans. A Commission staff study of best available rates from AT&T to 
callers with different calling patterns shows that between 1991 and 
1995, rates for customers with long-distance bills exceeding $10.00 per 
month have decreased by between 15 and 28 percent. By contrast, the 
best prices available to customers with less than $10.00 per month of 
calls have risen about 16 percent since 1991. (These prices are based 
on the basic rates, because no discount plans were generally available 
for those customers making less than $10.00 per month in calls.) This 
pattern is consistent with the view that, over time, interexchange 
carriers began to compete more vigorously for high volume users than 
for low volume users. Such a market strategy would tend to result in 
lower prices for higher volume, more price sensitive customers, and 
higher prices for lower volume, less price sensitive customers.
    124. Other data not discussed by BellSouth also are more suggestive 
of competition than collusion among interexchange carriers. For 
example, in 1994 nearly 30 million customers changed their 
presubscribed interexchange carriers, which is indicative of 
competition among interexchange carriers for customers. In addition, 
between 1989 and 1992, advertising expenditures by all interexchange 
carriers increased 85 percent, to 1.6 billion dollars, which is further 
evidence of increased competition among interexchange carriers and not 
tacit collusion.
    125. Based on the record in this proceeding, we find the evidence 
of tacit price coordination to be inconclusive and conflicting. In 
addition, we conclude that the detariffing rules we adopt today, 
together with additional competitive entry consistent with the 
provisions of the 1996 Act, provides the best solution to tacit price 
coordination to the extent it exists. Regarding the Alabama PSC's 
concern that the BOCs will have unfair advantages over their 
competitors and thereby will force small carriers from the market, we 
note that the 1996 Act provides safeguards to prevent the BOCs from 
engaging in anticompetitive conduct to the detriment of long-distance 
competitors, some of which are small nondominant interexchange 
carriers. We will address implementation of these safeguards in 
upcoming orders.
B. Contract Tariff Issues
    126. In the AT&T Reclassification proceeding, commenters raised 
certain issues regarding contract tariffs. The Commission deferred 
consideration of those issues to this proceeding because it found that 
those issues applied to all interexchange carriers and were unrelated 
to the determination of whether AT&T possessed market power. In the 
NPRM, the Commission noted that those issues would largely be mooted 
if, as proposed in the NPRM, the Commission were to adopt a complete 
detariffing policy. The Commission nevertheless sought comment on those 
and other issues, because such issues would remain relevant if we 
determined not to forbear from requiring nondominant interexchange 
carriers to file tariffs.
    127. MCI and GTE agree that the tariff-related issues raised in the 
NPRM would be largely moot if the Commission adopts complete 
detariffing. AT&T argues, however, that one of these issues, 
application of the ``substantial cause'' test would not be moot 
following adoption of a complete detariffing policy, because the 
substantial cause test is an integral part of the ``just and 
reasonable'' standard in section 201(b). AT&T argues that because the 
Commission is not proposing to forbear from applying Section 201(b), 
the ``substantial cause'' test would still apply even if the Commission 
adopts a complete detariffing policy. No other party commented on 
whether these issues would remain relevant if we were to adopt a 
complete detariffing policy.
    128. Because we are implementing complete detariffing, we conclude 
that the contract tariff-related issues raised in the NPRM are largely 
moot with respect to interstate, domestic, interexchange services 
offered by nondominant interexchange carriers. We reject AT&T's 
argument that the substantial cause test would continue to apply 
regardless of whether we order complete detariffing. In the RCA 
Americom Decisions, the Commission recognized that a dominant carrier's 
proposal ``to modify extensively a long term service tariff may present 
significant issues of reasonableness under Section 201(b) that are not 
ordinarily raised in other tariff filings.'' Accordingly, the 
Commission held that a carrier's unilateral tariff revisions that alter 
material terms and conditions of a long-term service tariff will be 
considered reasonable only if the carrier can show ``substantial 
cause'' for the revision. While we recognize that the Commission may be 
called upon to examine the reasonableness of a nondominant 
interexchange carrier's rates, terms and conditions for interstate, 
domestic, interexchange services, for example, in the context of a 
Section 208 complaint proceeding, we find that following complete 
detariffing, we will no longer have to assess the reasonableness of 
modifications by such carriers to their tariffs for interstate, 
domestic, interexchange services. Thus, although the substantial cause 
test may continue to apply in other contexts, the test will no longer 
apply to unilateral tariff modifications by nondominant interexchange 
carriers regarding their interstate, domestic, interexchange services.

V. Final Regulatory Flexibility Analysis

    129. As required by Section 603 of the Regulatory Flexibility Act 
(RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the NPRM. The Commission sought written public comments 
on the proposals in the NPRM, including on the IRFA. The Commission's 
Final Regulatory Flexibility Analysis (FRFA) in this Order conforms to 
the RFA, as amended by the Contract With America Advancement Act of 
1996 (CWAAA), Public Law 104-121, 110 Stat. 847 (1996).

[[Page 59361]]

A. Need for and Objectives of the Proposed Rules
    130. In the 1996 Act, Congress sought to establish ``a pro-
competitive, de-regulatory national policy framework'' for the United 
States telecommunications industry. One of the principal goals of the 
telephony provisions of the 1996 Act is promoting increased competition 
in all telecommunications markets, including those that are already 
open to competition, particularly long-distance services markets. 
Integral to this effort to foster competition is the requirement that 
the Commission forbear from applying any regulation or any provision of 
the Communications Act if the Commission makes certain specified 
findings.
    131. In this Order, the Commission proposes to exercise its 
forbearance authority under Section 10 of the Communications Act to 
detariff completely the interstate, domestic, interexchange services of 
nondominant interexchange carriers. In addition, the Commission 
promulgates rules in this Order that will require nondominant 
interexchange carriers to make available to the public information on 
the rates, terms, and conditions for all of their interstate, domestic, 
interexchange services in order to aid enforcement of Section 254(g) of 
the Communications Act. The objective of the rules adopted in this 
Order is to implement as quickly and effectively as possible the 
national telecommunications policies embodied in the 1996 Act and to 
promote the development of competitive, deregulated markets envisioned 
by Congress. In doing so, we are mindful of the balance that Congress 
struck between this goal of bringing the benefits of competition to all 
consumers and its concern for the impact of the 1996 Act on small 
business entities.
    132. In this Order, we also consider, but decline to act at this 
time on, the Commission's proposal in the NPRM to allow nondominant 
interexchange carriers to bundle CPE with interstate, interexchange 
telecommunications services. The Commission also raised issues in the 
NPRM relating to: market definition; separation requirements for 
nondominant treatment of local exchange carriers in their provision of 
certain interstate, interexchange services; and implementation of the 
rate averaging and rate integration requirements in new section 254(g) 
of the Communications Act. On August 7, 1996, the Commission issued a 
Report and Order implementing the rate averaging and rate integration 
requirements.
B. Summary of Significant Issues Raised by the Public Comments in 
Response to the IRFA
    133. In the NPRM, the Commission performed an IRFA. In the IRFA, 
the Commission found that the rules it proposed to adopt in this 
proceeding may have an impact on small business entities as defined by 
section 601(3) of the RFA. In addition, the IRFA solicited comment on 
alternatives to the proposed rules that would minimize the impact on 
small entities consistent with the objectives of this proceeding.
i. Comments on the IRFA
    134. No comments specifically address the Commission's initial 
regulatory flexibility analysis. Several parties, however, assert in 
their comments that the proposal to adopt complete detariffing would 
have an impact on small business entities. Several parties argue that 
tariffs send accurate economic signals and disseminate rate and service 
information so that nondominant interexchange carriers are able to 
price their services to compete with larger interexchange carriers. 
ACTA further argues that increased transaction costs in a detariffed 
environment--due to the need to establish a legal relationship with 
customers and notify them of any modifications--would be especially 
burdensome on small carriers that have fewer resources. In addition, 
Eastern Tel requests the Commission to work with industry, in 
particular small interexchange carriers, to develop a standard contract 
for telecommunications services, similar to the form contracts used in 
the real estate industry, that address such issues as the collection 
procedures that can be utilized. APCC, however, argues that forbearance 
from tariff filing requirements would eliminate a regulatory 
requirement that is especially burdensome on small carriers.
    135. Several parties contend that complete detariffing would harm 
small business entities that are consumers of interstate, interexchange 
telecommunications services, because: (1) Small business customers 
require access to information contained in tariffs to obtain the best 
rates available; and (2) increased transaction costs would discourage 
nondominant interexchange carriers from serving certain market 
segments, including certain small business markets, thereby decreasing 
competitive choices for these small business customers.
    136. TRA argues that detariffing would allow carriers to 
discriminate against resellers, many of which are small and mid-sized 
businesses. TRA claims that, as a result, the resale market will not 
survive. TRA claims that a vibrant resale market provides residential 
and small business customers with access to lower rates.
    137. In addition, several small businesses that analyze tariff 
information for business and residential customers argue that they need 
such information to conduct their businesses.
ii. Discussion
    138. We disagree with those commenters that argue that complete 
detariffing will harm small nondominant interexchange carriers. As 
discussed in section II, we find that not permitting nondominant 
interexchange carriers to file tariffs with respect to interstate, 
domestic, interexchange services will enhance competition among all 
providers of such services (regardless of size), promote competitive 
market conditions, and establish market conditions that more closely 
resemble an unregulated environment. We further find, as APCC notes, 
that filing tariffs imposes costs on carriers that attempt to make new 
service offerings. Our decision to adopt complete detariffing, 
therefore, should minimize regulatory burdens on all nondominant 
interexchange carriers, including small entities.
    139. We recognize that complete detariffing may change significant 
aspects of the way in which nondominant interexchange carriers conduct 
their business. As discussed above, however, tariffs are not the only 
feasible way for carriers to establish legal relationships with their 
customers, nor will carriers necessarily need to negotiate contracts 
for service with each, individual customer. See para. 57. Carriers 
could, for example, issue short, standard contracts that contain their 
basic rates, terms and conditions for service. As discussed above, 
nondominant interexchange carriers that provide casual calling services 
have options other than tariffs by which they can establish legal 
relationships with casual callers, and pursuant to which such callers 
would be obligated to pay for the telecommunications services they use. 
See para. 58. We believe that the nine-month transition period 
established by this Order, will afford nondominant interexchange 
carriers sufficient time to develop efficient mechanisms to provide 
interstate, domestic, interexchange services in a detariffed 
environment. Moreover, parties that oppose complete detariffing have 
not shown that the business of providing interstate, domestic, 
interexchange services should be subject

[[Page 59362]]

to a regulatory regime that is not available to firms that compete in 
any other market in this country. We thus conclude that requiring 
nondominant interexchange carriers to withdraw their tariffs and 
conduct their business as other enterprises do will not impose undue 
burdens on these carriers. Moreover, we disagree with ACTA's argument 
that detariffing will disproportionately burden small interexchange 
carriers. While some of the increased administrative costs that 
carriers may initially incur as a result of detariffing are likely to 
be fixed (such as the cost of developing short, standard contracts), 
many such costs will vary based on the area or number of customers 
served by such carriers (e.g., advertising expenditures, the cost of 
promotional mailings or billing inserts). Nonetheless, we find that, on 
balance, the pro-competitive effects of relieving nondominant 
interexchange carriers of the obligation to file tariffs for their 
interstate, domestic, interexchange services outweigh any potential 
increase in transactional or administrative costs resulting from the 
shift to a detariffed environment.
    140. We are also unpersuaded by the argument that complete 
detariffing will harm small business entities that utilize 
telecommunications services. Requiring nondominant interexchange 
carriers to file tariffs for interstate, domestic, interexchange 
services impedes competition by removing incentives for competitive 
price discounting, imposing costs on carriers that attempt to make new 
offerings, and preventing consumers from seeking out or obtaining 
service arrangements specifically tailored to their needs. As discussed 
above, complete detariffing will better protect consumers, many of 
which are small businesses, and will promote vigorous competition. See 
section II.B.2.b. As a result, we believe that complete detariffing 
will lead to lower prices for interstate, domestic, interexchange 
services, thereby benefitting all consumers, including small business 
ones. Moreover, because we do not agree that complete detariffing will 
substantially increase nondominant interexchange carriers' costs, we 
are unpersuaded that carriers will abandon segments of the market to 
the detriment of small business customers, as LDDS suggests.
    141. We reject the suggestion that eliminating tariff filing 
requirements would impede competition by reducing information available 
to consumers and small nondominant interexchange carriers. As discussed 
above, we believe that nondominant interexchange carriers will make 
rate and service information, currently contained in tariffs, available 
to the public in a more user-friendly form in order to preserve their 
competitive position in the market, and as part of their contractual 
relationship with customers. See para. 25. Nevertheless, we acknowledge 
that, even in a competitive market, nondominant interexchange carriers 
might not provide complete information concerning all of their service 
offerings to all consumers, and that some consumers may not be able to 
determine which rate plan is most appropriate for them, based on their 
individual calling patterns. Accordingly, and in light of 
considerations regarding the enforcement of the 1996 Act's geographic 
rate averaging and rate integration requirements, we will require 
carriers to provide rate and service information to the public. See 
paras. 84-86. This obligation will ensure that all customers, many of 
which are small businesses, have access to such information.
    142. Finally, as discussed above, we are not persuaded that the 
resale market will disappear in the absence of tariffs. See para. 27. 
Our decision to forbear from requiring nondominant interexchange 
carriers to file tariffs for interstate, domestic, interexchange 
services does not affect such carriers' obligations under Sections 201 
and 202 to charge rates, and to impose practices, classifications and 
regulations, that are just and reasonable and not unjustly or 
unreasonably discriminatory. In addition, as discussed above, we are 
requiring nondominant interexchange carriers to provide current rate 
and service information on their interstate, domestic, interexchange 
services to consumers, including resellers. See paras. 84-86. Thus, 
resellers will be able to determine whether nondominant interexchange 
carriers have imposed rates, practices, classifications or regulations 
that unreasonably discriminate against resellers, and to bring 
complaints, if necessary.
C. Description and Estimates of the Number of Small Entities to Which 
the Rule Will Apply
    143. For the purposes of this Order, the RFA defines a ``small 
business'' to be the same as a ``small business concern'' under the 
Small Business Act, 15 U.S.C. Sec. 632, unless the Commission has 
developed one or more definitions that are appropriate to its 
activities. Under the Small Business Act, a ``small business concern'' 
is one that: (1) Is independently owned and operated; (2) is not 
dominant in its field of operation; and (3) meets any additional 
criteria established by the Small Business Administration (SBA). SBA 
has defined a small business for Standard Industrial Classification 
(SIC) category 4813 (Telephone Communications, Except Radiotelephone) 
to be small entities when they have fewer than 1,500 employees. We 
first discuss generally the total number of telephone companies falling 
within this SIC category. Then, we refine further those estimates and 
discuss the number of carriers falling within subcategories.
    144. Total Number of Telephone Companies Affected. Many of the 
decisions and rules adopted herein may have a significant effect on a 
substantial number of the small telephone companies identified by SBA. 
The United States Bureau of the Census (``the Census Bureau'') reports 
that, at the end of 1992, there were 3,497 firms engaged in providing 
telephone services, as defined therein, for at least one year. United 
States Department of Commerce, Bureau of the Census, 1992 Census of 
Transportation, Communications, and Utilities: Establishment and Firm 
Size, at Firm Size 1-123 (1995) (1992 Census). This number contains a 
variety of different categories of carriers, including local exchange 
carriers, interexchange carriers, competitive access providers, 
cellular carriers, operator service providers, pay telephone operators, 
personal communications service providers, covered specialized mobile 
radio providers, and resellers. It seems certain that some of those 
3,497 telephone service firms may not qualify as small entities, small 
interexchange carriers, or resellers of interexchange services, because 
they are not ``independently owned and operated.'' For example, a PCS 
provider that is affiliated with an interexchange carrier having more 
than 1,500 employees would not meet the definition of a small business. 
It seems reasonable to conclude, therefore, that fewer than 3,497 
telephone service firms are small entity telephone service firms that 
may be affected by this Order.
    145. Wireline Carriers and Service Providers. SBA has developed a 
definition of small entities for telephone communications companies 
other than radiotelephone (wireless) companies. The Census Bureau 
reports that there were 2,321 such telephone companies in operation for 
at least one year at the end of 1992. 1992 Census at Firm Size 1-123. 
According to SBA's definition, a small business telephone company other 
than a radiotelephone company is one employing fewer than 1,500 
persons. 13 CFR Sec. 121.201, Standard Industrial Classification (SIC) 
Code 4812. All but 26 of the 2,321 non-

[[Page 59363]]

 radiotelephone companies listed by the Census Bureau were reported to 
have fewer than 1,000 employees. Thus, even if all 26 of those 
companies had more than 1,500 employees, there would still be 2,295 
non-radiotelephone companies that might qualify as small entities. 
Although it seems certain that some of these carriers are not 
independently owned and operated, we are unable at this time to 
estimate with greater precision the number of wireline carriers and 
service providers that would qualify as small business concerns under 
SBA's definition. Consequently, we estimate that there are fewer than 
2,295 small entity telephone communications companies other than 
radiotelephone companies that may be affected by the decisions and 
rules adopted in this Order.
    146. Interexchange Carriers. Neither the Commission nor SBA has 
developed a definition of small entities specifically applicable to 
providers of interexchange services. The closest applicable definition 
under SBA rules is for telephone communications companies other than 
radiotelephone (wireless) companies. The most reliable source of 
information regarding the number of interexchange carriers nationwide 
of which we are aware appears to be the data that the Commission 
collects annually in connection with Telecommunications Relay Services 
(TRS). According to our most recent data, 97 companies reported that 
they were engaged in the provision of interexchange services. Federal 
Communications Commission, CCB, Industry Analysis Division, 
Telecommunications Industry Revenue: TRS Fund Worksheet Data, Table 21 
(Average Total Telecommunications Revenue Reported by Class of Carrier) 
(February 1996). Although it seems certain that some of these carriers 
are not independently owned and operated, or have more than 1,500 
employees, we are unable at this time to estimate with greater 
precision the number of interexchange carriers that would qualify as 
small business concerns under SBA's definition. Consequently, we 
estimate that there are fewer than 97 small entity interexchange 
carriers that may be affected by the decisions and rules adopted in 
this Order.
    147. Resellers. Neither the Commission nor SBA has developed a 
definition of small entities specifically applicable to resellers. The 
closest applicable definition under SBA rules is for all telephone 
communications companies. The most reliable source of information 
regarding the number of resellers nationwide of which we are aware 
appears to be the data that we collect annually in connection with the 
TRS. According to our most recent data, 206 companies reported that 
they were engaged in the resale of telephone services. Federal 
Communications Commission, CCB, Industry Analysis Division, 
Telecommunications Industry Revenue: TRS Fund Worksheet Data, Table 21 
(Average Total Telecommunications Revenue Reported by Class of Carrier) 
(February 1996). Although it seems certain that some of these carriers 
are not independently owned and operated, or have more than 1,500 
employees, we are unable at this time to estimate with greater 
precision the number of resellers that would qualify as small business 
concerns under SBA's definition. Consequently, we estimate that there 
are fewer than 206 small entity resellers that may be affected by the 
decisions and rules adopted in this Order.
    148. In addition, the rules adopted in this Order may affect 
companies that analyze information contained in tariffs. The SBA has 
not developed a definition of small entities specifically applicable to 
companies that analyze tariff information. The closest applicable 
definition under SBA rules is for Information Retrieval Services (SIC 
Category 7375). The Census Bureau reports that, at the end of 1992, 
there were approximately 618 such firms classified as small entities. 
U.S. Small Business Administration 1992 Economic Census Industry and 
Enterprise Report, Table 2D, SIC Code 7375 (Bureau of the Census data 
adapted by the Office of Advocacy of the U.S. Small Business 
Administration). This number contains a variety of different types of 
companies, only some of which analyze tariff information. We are unable 
at this time to estimate with greater precision the number of such 
companies and those that would qualify as small business concerns under 
SBA's definition. Consequently, we estimate that there are fewer than 
618 such small entity companies that may be affected by the decisions 
and rules adopted in this Order.
    149. Finally, as discussed above, some commenters contend that the 
rules proposed in the NPRM would increase the cost of interstate, 
domestic, interexchange telecommunications services to small 
businesses. See para. 46. We assume that most, if not all, small 
businesses purchase interstate, domestic, interexchange 
telecommunications services. As a result, our rules in this Order would 
affect virtually all small business entities. SBA guidelines to the 
SBREFA state that about 99.7 percent of all firms are small and have 
fewer than 500 employees and less than $25 million in sales or assets. 
There are approximately 6.3 million establishments in the SBA database. 
A Guide to the Regulatory Flexibility Act, U.S. Small Business 
Administration, Washington D.C., at 14 (May 1996). The SBA data base 
does include nonprofit establishments, but it does not include 
governmental entities. SBREFA requires us to estimate the number of 
such entities with populations of less than 50,000 that would be 
affected by our new rules. There are 85,006 governmental entities in 
the nation. 1992 Census of Governments, Bureau of the Census, U.S. 
Department of Commerce. This number includes such entities as states, 
counties, cities, utility districts and school districts. There are no 
figures available on what portion of this number has populations of 
fewer than 50,000. However, this number includes 38,978 counties, 
cities and towns, and of those, 37,566, or 96 percent, have populations 
of fewer than 50,000. 1992 Census of Governments, Bureau of the Census, 
U.S. Department of Commerce. The Census Bureau estimates that this 
ratio is approximately accurate for all governmental entities. Thus, of 
the 85,006 governmental entities, we estimate that 96 percent, or 
81,600, are small entities that would be affected by our rules.
D. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements
    150. In this section of the FRFA, we analyze the projected 
reporting, recordkeeping, and other compliance requirements that may 
apply to small entities as a result of this Order. As a part of this 
discussion, we mention some of the types of skills that will be needed 
to meet the new requirements.
    151. Nondominant interexchange carriers, including small 
nondominant interexchange carriers, will be required to cancel all of 
their tariffs for interstate, domestic, interexchange services on file 
with the Commission within nine months. As a result, nondominant 
interexchange carriers will need to establish legal relationships with 
their customers in an alternative way, for example, by issuing short, 
standard contracts that contain their basic rates, terms and conditions 
for service. This change in the manner of conducting their business may 
require the use of technical, operational, accounting, billing, and 
legal skills.
    152. As discussed in section II.C, we are requiring nondominant 
interexchange carriers to make information on current rates, terms, and

[[Page 59364]]

conditions for all of their interstate, domestic, interexchange 
services available to the public in at least one location during 
regular business hours. We will also require carriers to inform the 
public that this information is available when responding to consumer 
inquiries or complaints and to specify the manner in which the consumer 
may obtain the information. We further require nondominant 
interexchange carriers to maintain, for a period of two years and six 
months, the information provided to the public, as well as documents 
supporting the rates, terms, and conditions for all of their 
interstate, domestic, interexchange offerings, that they can submit to 
the Commission upon request. Nondominant interexchange carriers will 
need to maintain the foregoing records in a manner that allows carriers 
to produce such records within ten business days of receipt of a 
Commission request. In addition, nondominant interexchange carriers 
will be required to file with the Commission, and update as necessary, 
the name, address, and telephone number of the individual, or 
individuals, designated by the carrier to respond to Commission 
inquiries and requests for documents. Compliance with these requests 
may require the use of accounting, billing, and legal skills.
    153. We further require nondominant providers of interstate, 
domestic, interexchange telecommunications services to file annual 
certifications signed by an officer of the company under oath that the 
company is in compliance with its statutory geographic rate averaging 
and rate integration obligations. Compliance with these requests may 
require the use of accounting and legal skills.
E. Significant Alternatives and Steps Taken To Minimize Significant 
Economic Impact on a Substantial Number of Small Entities Consistent 
With Stated Objectives
    154. In this section, we describe the steps taken to minimize the 
economic impact of our decisions on small entities and small incumbent 
LECs, including the significant alternatives considered and rejected. 
To the extent that any statement contained in this FRFA is perceived as 
creating ambiguity with respect to our rules or statements made in 
preceding sections of this Order, the rules and statements set forth in 
those preceding sections shall be controlling.
    155. We believe that our actions to adopt complete detariffing will 
facilitate the development of increased competition in the interstate, 
domestic, interexchange market, thereby benefitting all consumers, some 
of which are small business entities. Absent filed tariffs, the legal 
relationship between carriers and customers will much more closely 
resemble the legal relationship between service providers and customers 
in an unregulated environment. As set forth in section II.B above, we 
reject suggestions that we should permit carriers to voluntarily file 
tariffs. We believe that detariffing on a permissive basis would not 
definitively eliminate the possible invocation of the ``filed-rate'' 
doctrine and would create the risk of price signalling. We believe that 
only with complete detariffing can we definitively eliminate these 
possible anticompetitive practices and protect consumers, some of which 
are small business entities.
    156. As discussed above, we also reject suggestions that we should 
limit our decision to forbear by differentiating among interstate, 
domestic, interexchange services, among nondominant interexchange 
carriers, or among types of information contained in tariffs for such 
services. See paras. 41, 42, 63. We do not believe that there is a 
sound basis for limiting forbearance to certain interstate, domestic, 
interexchange services, such as individually negotiated service 
arrangements. We find that the competitive benefits of not permitting 
nondominant interexchange carriers to file tariffs for interstate, 
domestic, interexchange services, discussed above, apply equally to all 
segments of the interstate, domestic, interexchange services market. 
See paras. 53, 54. Moreover, as discussed above, we reject the argument 
that detariffing mass market services offered to residential and small 
business customers will lead to substantially higher transactions 
costs. See para. 57. Similarly, we are not persuaded that the public 
interest benefits differ depending on the type of tariffed information 
that is at issue. The public interest benefit of removing carriers' 
ability to invoke the ``filed-rate'' doctrine applies equally with 
respect to terms and conditions as to rates. See para. 55. In addition, 
permitting or requiring large nondominant interexchange carriers to 
file tariffs would not eliminate the risk of tacit price coordination 
among such carriers, and would raise the possibility that such 
carriers' tariffed rates would become a price umbrella. Finally, we 
agree with AT&T that there is no basis to differentiate among 
nondominant interexchange carriers, because all such carriers are 
unable to exercise market power in the interstate, domestic, 
interexchange market.
    157. In order to minimize the burden on nondominant interexchange 
carriers, and in particular small, nondominant interexchange carriers 
that may have fewer resources, we do not require nondominant 
interexchange carriers to make rate and service information available 
to the public in any particular format, or at any particular location. 
We reject the suggestion that we should require nondominant 
interexchange carriers to provide information on their interstate, 
domestic, interexchange services at a central clearinghouse or on-line, 
because we found that mandating such a requirement would be unduly 
burdensome at this time. Rather, we will require only that a carrier 
make such information available to the public in at least one location 
during regular business hours. Although we do not require carriers to 
make such information available to the public at more than one 
location, we encourage carriers to consider ways to make such 
information more widely available, for example, posting such 
information on-line, mailing relevant information to consumers, or 
responding to inquiries over the telephone.
    158. The decision to impose disclosure requirements will also allow 
businesses, including small business entities, that audit and analyze 
information contained in tariffs to continue. Our decision not to 
require nondominant interexchange carriers to provide information on 
their interstate, domestic, interexchange services at a central 
clearinghouse or on-line may impose an additional collection cost on 
these businesses. We find, however, that mandating such a requirement 
would be unduly burdensome on nondominant interexchange carriers, 
including small nondominant interexchange carriers.
F. Report to Congress
    159. The Commission shall send a copy of this FRFA, along with this 
Order, in a report to Congress pursuant to the Small Business 
Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 
Sec. 801(a)(1)(A). A copy of this FRFA will also be published in the 
Federal Register.

VI. Final Paperwork Reduction Analysis

    160. As required by the Paperwork Reduction Act of 1995, Public Law 
No. 104-13, the NPRM invited the general public and the Office of 
Management and Budget (OMB) to comment on proposed changes to the 
Commission's information collection requirements contained in the NPRM. 
The changes to our information collection requirements proposed in the 
NPRM included: (1) The elimination of tariff filings by

[[Page 59365]]

nondominant interexchange carriers for interstate, domestic, 
interexchange telecommunications services; (2) the requirement that 
nondominant interexchange carriers maintain at their premises price and 
service information regarding their interstate, interexchange offerings 
that they can submit to the Commission upon request; (3) the 
requirement that providers of interexchange services file 
certifications with the Commission stating that they are in compliance 
with their statutory rate integration and geographic rate averaging 
obligations under Section 254(g) of the Communications Act; and (4) the 
requirement that interexchange carriers advertise the availability of 
discount rate plans throughout the entirety of their service areas.
    161. On June 12, 1996, OMB approved all of the proposed changes to 
our information collection requirements in accordance with the 
Paperwork Reduction Act. Notice of Office of Management and Budget 
Action, OMB No. 3060-0704 (June 12, 1996). In approving the proposed 
changes, OMB ``strongly recommend[ed] that the [Commission] investigate 
potential mechanisms to provide consumers, State regulators, and other 
interested parties with some standardized pricing information,'' which 
``could be provided as part of the certification process or could be 
made available to the public in other ways.''
    162. In this Order, we adopt several of the changes to our 
information collection requirements proposed in the NPRM. Specifically, 
we have decided to: (1) Eliminate tariff filings by nondominant 
interexchange carriers for interstate, domestic, interexchange 
telecommunications services; (2) require that nondominant interexchange 
carriers maintain at their premises price and service information 
regarding their interstate, interexchange offerings that they can 
submit to the Commission upon request; and (3) require that providers 
of interexchange services file certifications with the Commission 
stating that they are in compliance with their statutory rate 
integration and geographic rate averaging obligations under Section 
254(g) of the Communications Act. See paras. 77, 83, 87. In the 
Geographic Rate Averaging Order, we found it unnecessary to adopt a 
requirement that interexchange carriers advertise the availability of 
discount rate plans and promotions throughout the entirety of their 
service areas. We have also decided to require nondominant 
interexchange carriers to file with the Commission, and update as 
necessary, the name, address, and telephone number of the individual, 
or individuals, designated by the carrier to respond to Commission 
inquiries and requests for documents. See para. 83. In the Geographic 
Rate Averaging Order, we found it unnecessary to adopt a requirement 
that interexchange carriers advertise the availability of discount rate 
plans and promotions throughout the entirety of their service areas. In 
order to implement detariffing, we order all nondominant interexchange 
carriers to cancel their tariffs for interstate, domestic, 
interexchange services on file with the Commission within nine months 
of the effective date of this Order and not to file any such tariffs 
thereafter. See para. 89. We also order carriers that have on file with 
the Commission ``mixed'' tariff offerings that contain services subject 
to detariffing pursuant to this Order, to comply with this Order either 
by: (1) Cancelling the entire tariff and refiling a new tariff for only 
those services subject to the tariff filing requirements; or (2) 
issuing revised pages cancelling the material in the tariffs that 
pertain to those services subject to forbearance. See para. 91. In 
addition, we have decided to require nondominant interexchange carriers 
to file with the Commission, and update as necessary, the name, 
address, and telephone number of the individual, or individuals, 
designated by the carrier to respond to Commission inquiries and 
requests for documents. See para. 87. Finally, consistent with OMB's 
recommendation that we consider mechanisms to make pricing information 
available to interested parties, we have decided, for purposes of 
enforcing Section 254(g), to require nondominant interexchange carriers 
to disclose to the public rate and service information concerning all 
of their interstate, domestic, interexchange offerings. See paras. 84-
86. Implementation of these requirements will be subject to approval by 
OMB as prescribed by the Paperwork Reduction Act.

VII. Ordering Clauses

    163. Accordingly, it is ordered that, pursuant to Sections 1-4, 10, 
201, 202, 204, 205, 215, 218, 220, 226 and 254 of the Communications 
Act of 1934, as amended, 47 U.S.C. 151-154, 160, 201, 202, 204, 205, 
215, 218, 220, 226 and 254, the Second Report and Order is hereby 
adopted. The requirements adopted in this Second Report and Order shall 
be effective December 23, 1996. The collections of information 
contained within are contingent upon approval by the Office of 
Management and Budget.
    164. It is further ordered that Parts 42, 61 and 64 of the 
Commission's Rules, 47 CFR 42, 61, and 64 are amended as set forth 
below.
    165. It is further ordered that, AT&T shall detariff 800 Directory 
Assistance and Analog Private Line Services within nine months of the 
end of its three-year commitment period established in Motion of AT&T 
Corp. to be Reclassified as a Nondominant Carrier, Order, 11 FCC Rcd 
3271, 3305-07 (1995). During this commitment period, any tariff 
revisions that propose to increase the price of these services shall be 
filed on not less than five business days' notice, shall be within the 
limits established in the commitment and shall clearly identify such 
tariff transmittals as affecting the provisions of this commitment.
    166. It is further ordered that, for the period of its commitment, 
AT&T shall notify its customers of changes to its low volume and low 
income calling plans not less than five business days' prior to such a 
change. AT&T shall provide five business days' notice of changes to its 
average residential interstate direct dial services under the 
circumstances specified in Motion of AT&T Corp. to be Reclassified as a 
Nondominant Carrier, Order, 11 FCC Rcd 3271, 3305-07 (1995).

List of Subjects

47 CFR Part 42

    Communications common carriers, Reporting and recordkeeping 
requirements, Telephone.

47 CFR Part 61

    Communications common carriers, Reporting and recordkeeping 
requirements, Telephone.

47 CFR Part 64

    Communications common carriers, Reporting and recordkeeping 
requirements, Telephone.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Rule Changes

    Parts 42, 61 and 64 of Title 47 of the Code of Federal Regulations 
are amended as follows:

PART 42--PRESERVATION OF RECORDS OF COMMUNICATION COMMON CARRIERS

    1. The authority citation for part 42 continues to read as follows:

    Authority: Sec. 4(i), 48 Stat. 1066, as amended, 47 U.S.C. 
154(i). Interprets or applies secs. 219 and 220, 48 Stat. 1077-78, 
47 U.S.C. 219, 220.


[[Page 59366]]


    2. An undesignated centered heading and Secs. 42.10 and 42.11 are 
added to read as follows:

Specific Instructions for Carriers Offering Detariffed Interexchange 
Services


Sec. 42.10  Public availability of information concerning detariffed 
interexchange services.

    A nondominant interexchange carrier shall make available to any 
member of the public, in at least one location, during regular business 
hours, information concerning its current rates, terms and conditions 
for all of its detariffed interstate, domestic, interexchange services. 
Such information shall be made available in an easy to understand 
format and in a timely manner. When responding to an inquiry or 
complaint from the public concerning rates, terms and conditions for 
such services, a carrier shall specify that such information is 
available and the manner in which the public may obtain the 
information.


Sec. 42.11  Retention of information concerning detariffed 
interexchange services.

    (a) A nondominant interexchange carrier shall maintain, for 
submission to the Commission upon request, price and service 
information regarding all of the carrier's detariffed interstate, 
domestic, interexchange service offerings. The price and service 
information maintained for purposes of this paragraph (a) shall 
include, but not be limited to, the information that such carrier makes 
available to the public pursuant to Sec. 42.10, as well as documents 
supporting the rates, terms, and conditions of the carrier's detariffed 
interstate, domestic, interexchange offerings. The information 
maintained pursuant to this section shall be maintained in a manner 
that allows the carrier to produce such records within ten business 
days.
    (b) The price and service information maintained pursuant to this 
section shall be retained for a period of at least two years and six 
months following the date the carrier ceases to provide services 
pursuant to such rates, terms and conditions.
    (c) A nondominant interexchange carrier shall file with the 
Commission, and update as necessary, the name, address, and telephone 
number of the individual(s) designated by the carrier to respond to 
Commission inquiries and requests for documents about the carrier's 
detariffed interstate, domestic, interexchange services.

PART 61--TARIFFS

    3-4. The authority citation for part 61 continues to read as 
follows:

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

    5. Section 61.3 is amended by revising paragraph (jj) to read as 
follows:


Sec. 61.3  Definitions.

* * * * *
    (jj) Tariff publication, or publication. A tariff, supplement, 
revised page, additional page, concurrence, notice of revocation, 
adoption notice, or any other schedule of rates or regulations filed by 
common carriers.
* * * * *
    6. Sections 61.20 through 61.23 are redesignated as Secs. 61.21 
through 61.24, and new section 61.20 is added immediately preceding 
newly designated Sec. 61.21 to read as follows:


Sec. 61.20  Detariffing of interstate, domestic, interexchange 
services.

    Except as otherwise provided by Commission order, carriers that are 
nondominant in the provision of interstate, domestic, interexchange 
services shall not file tariffs for such services.
    7. Section 61.72 is amended by revising introductory text of 
paragraph (a) and paragraph (b) to read as follows:


Sec. 61.72  Posting.

    (a) Offering carriers must post (i.e., keep accessible to the 
public) during the carrier's regular business hours, a schedule of 
rates and regulations for those services subject to tariff filing 
requirements. This schedule must include all effective and proposed 
rates and regulations pertaining to the services offered to and from 
the community or communities served, and must be the same as that on 
file with the Commission. This posting requirement must be satisfied by 
the following methods:
* * * * *
    (b) The posting of rates and regulations for those services 
pursuant to paragraph (a) of this section shall be considered timely if 
they are available for public inspection at the posting locations 
within 15 days of their filing with the Commission.
    8. Section 61.74 is amended by adding new paragraph (d) to read as 
follows:


Sec. 61.74  References to other instruments.

* * * * *
    (d) A tariff for international services offered by a carrier that 
is subject to detariffing for domestic, interstate, interexchange 
services, may reference other documents or instruments concerning the 
carrier's detariffed domestic, interstate, interexchange service 
offerings. A tariff for international services may contain such a 
reference if, and only if, it is necessary to incorporate information 
regarding the carrier's detariffed domestic, interstate, interexchange 
services in order to calculate discounts and minimum revenue 
requirements for international services provided in combination with 
detariffed domestic, interstate, interexchange services. 
Notwithstanding any such reference to documents or instruments 
concerning the carrier's detariffed domestic, interstate, interexchange 
service offerings, a tariff for international services shall specify 
rates, terms and conditions for the international service.

PART 64 --MISCELLANEOUS RULES RELATING TO COMMON CARRIERS

    9. The authority citation for part 64 is revised to read as 
follows:

    Authority: Sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154, 
unless otherwise noted. Interpret or apply secs. 201, 218, 226, 228, 
254, 48 Stat. 1070, as amended, 1077; 47 U.S.C. 201, 218, 226, 228, 
254, unless otherwise noted.

    10. New subpart S consisting of Sec. 64.1900 is added to part 64 to 
read as follows:

Subpart S--Nondominant Interexchange Carrier Certifications 
Regarding Geographic Rate Averaging and Rate Integration 
Requirements

Sec.
64.1900  Nondominant interexchange carrier certifications regarding 
geographic rate averaging and rate integration requirements.

Subpart S--Nondominant Interexchange Carrier Certifications 
Regarding Geographic Rate Averaging and Rate Integration 
Requirements


Sec. 64.1900  Nondominant interexchange carrier certifications 
regarding geographic rate averaging and rate integration requirements.

    (a) A nondominant provider of interexchange telecommunications 
services, which provides detariffed interstate, domestic, interexchange 
services, shall file with the Commission, on an annual basis, a 
certification that it is providing such services in compliance with its 
geographic rate averaging and rate integration obligations pursuant to 
section 254(g) of the Communications Act of 1934, as amended.

[[Page 59367]]

    (b) The certification filed pursuant to paragraph (a) of this 
section shall be signed by an officer of the company, under oath.

    Note: This Attachment will not appear in the Code of Federal 
Regulations.

Attachment--List of Parties

[CC Docket No. 96-61]

List of Commenters in CC Docket No. 96-61, Sections III, VII, VIII, IX 
(Tariff Forbearance, CPE Bundling, Contract Tariff, Other Issues)

Ad Hoc Coalition of Corporate Telecommunications Managers (Corporate 
Managers)
Ad Hoc Telecommunications Users Committee, The California Bankers 
Clearing House Association, The New York Clearing House Association, 
ABB Business Services, Inc., and The Prudential Insurance Company of 
America (Ad Hoc Users)
America's Carriers Telecommunication Association (ACTA)
American Petroleum Institute (API)
American Public Communications Council (APCC)
American Telegram Corporation (American Telegram)
Ameritech
AMSC Subsidiary Corporation (AMSC)
AT&T Corp. (AT&T)
Association for The Study of Afro-American Life and History, Inc
Audits Unlimited, Inc. (Audits Unlimited)
BT North America Inc. (BT North America)
Bell Atlantic Telephone Companies (Bell Atlantic)
BellSouth Corp. (BellSouth)
Business Telecom, Inc. (Business Telecom)
Cable & Wireless, Inc. (Cable & Wireless)
Capital Cities/ABC, Inc., CBS Inc., National Broadcasting Company, 
Inc., and Turner Broadcasting System, Inc. (Television Networks)
Casual Calling Coalition
Cato Institute
Citizens for a Sound Economy Foundation (CSE)
Chrysler Minority Dealers Association
Compaq Computer Corporation (Compaq)
Competitive Telecommunications Association (CompTel)
Consumer Electronics Retailers Coalition
Consumer Federation of America and Consumers Union (CFA/CU)
Eastern Tel Long Distance Service, Inc. (Eastern Tel)
Excel Telecommunications, Inc. (Excel)
Frontier Corporation (Frontier)
Fone Saver, LLC (Fone Saver)
General Communication, Inc. (GCI)
General Services Administration (GSA)
GTE Service Corp. (GTE)
Gerald Hunter (Hunter)
Independent Data Communications Manufacturers Association (IDCMA)
Information Technology Association of America (ITAA)
LCI International Telecom Corp. (LCI)
LDDS World Com (LDDS)
Louisiana Public Service Commission (Louisiana PSC)
MCI
MFS
Dr. Robert Self dba Market Dynamics (Market Dynamics)
MOSCOM Corporation (MOSCOM)
National Association of Attorneys General, Consumer Protection 
Committee, Telecommunications Subcommittee (National Association of 
Attorneys General Telecommunications Subcommittee)
National Association of Development Organizations--Paraquad --United 
Homeowners Association--National Hispanic Council on the Aging--
Consumers First--National Association of Commissions for Women 
(National Association of Development Organizations)
National Black Data Processors Association
National Bar Association
Network Analysis Center, Inc.
NYNEX Telephone Companies (NYNEX)
Office of the Ohio Consumers' Counsel (Ohio Consumers' Counsel)
Pacific Telesis (PacTel)
Pennsylvania Public Utility Commission (Pennsylvania PUC)
SBC Communications Inc. (SBC)
Scheraga and Sheldon Associates (Scheraga and Sheldon)
Secretary of Defense
Sprint Corporation (Sprint)
State of Alaska (Alaska)
Telecommunications Information Services (TIS)
Telecommunications Management Information Systems Coalition
Telecommunications Research and Action Center (TRAC)
Telecommunications Resellers Association (TRA)
Tennessee Attorney General
URSUS Telecom Corp. (Ursus)
United States Telephone Association (USTA)
US West, Inc. (U.S. West)
UTC
WinStar Communications, Inc. (WinStar)
XIOX Corporation (XIOX)

List of Reply Commenters in CC Docket No. 96-61, Sections III, VII, 
VIII, IX (Tariff Forbearance, CPE Bundling, Contract Tariff, Other 
Issues)

Ad Hoc Telecommunications Users Committee, The California Bankers 
Clearing House Association, The New York Clearing House Association, 
ABB Business Services, Inc., and The Prudential Insurance Company of 
America (Ad Hoc Users)
American Petroleum Institute (API)
AT&T Corp. (AT&T)
Bell Atlantic Telephone Companies (Bell Atlantic)
BellSouth Corp. (BellSouth)
Casual Calling Coalition
Citizens Utilities Company (Citizens Utilities)
Consumer Electronics Retailers Coalition
Eastern Tel Long Distance Service, Inc. (Eastern Tel)
Frontier Corporation (Frontier)
General Services Administration (GSA)
GTE Service Corp. (GTE)
Independent Data Communications Manufacturers Association (IDCMA)
Information Technology Association of America (ITAA)
LCI International Telecom Corp. (LCI)
LDDS World Com (LDDS)
Louisiana Public Service Commission (Louisiana PSC)
MCI
MFS
New York State Department of Public Service
NYNEX Telephone Companies (NYNEX)
Office of the Ohio Consumers' Counsel (Ohio Consumers' Counsel)
Pacific Telesis (PacTel)
Pennsylvania Public Utility Commission (Pennsylvania PUC)
Sprint Corporation (Sprint)
Telecommunications Management Information Systems Coalition
Telecommunications Research and Action Center (TRAC)
Telecommunications Resellers Association (TRA)
US West, Inc. (U.S. West)
WinStar Communications, Inc. (WinStar)
XIOX Corporation (XIOX)

List of Commenters in CC Docket No. 96-61, Sections IV, V, VI (Market 
Definition, Separation Requirements, Rate Averaging and Rate 
Integration)

Alabama Public Service Commission (Alabama PSC)
America's Carriers Telecommunication Association (ACTA)
American Petroleum Institute (API)
American Public Communications Council (APCC)
Ameritech
AMSC Subsidiary Corporation (AMSC)
AT&T Corp. (AT&T)
Bell Atlantic Telephone Companies (Bell Atlantic)
BellSouth Corp. (BellSouth)
Cable & Wireless, Inc. (Cable & Wireless)
Columbia Long Distance Service, Inc. (CLDS)
Competitive Telecommunications Association (CompTel)
Commonwealth of the Northern Mariana Islands
Florida Public Service Commission (Florida PSC)
Frank Collins
Frontier Corporation (Frontier)
General Communication, Inc. (GCI)
General Services Administration (GSA)
GTE Service Corp. (GTE)
Governor of Guam & the Guam Telephone Authority
Guam Public Utility Commission (Guam PUC)
Harvey William Ward (Ward)
Iowa Utilities Board
IT&E Overseas, Inc.
JAMA Corporation
John Stauralakis, Inc.
Kevin Loflin (Loflin)
Kristine Stark (Stark)
LDDS WorldCom (LDDS)
Louisiana Public Service Commission (Louisiana PSC)
MCI
MFS
Michael Sussman (Sussman)
Missouri Public Service Commission (Missouri PSC)
National Association of Regulatory Utilities Commissioners (NARUC)
NYNEX Telephone Companies (NYNEX)

[[Page 59368]]

Office of the Ohio Consumers' Counsel (Ohio Consumers' Counsel)
Pacific Telesis Group (PacTel)
Paul Lee (Lee)
Peggy Orlic (Orlic)
Pennsylvania Office of Consumer Advocate
Pennsylvania Public Utility Commission (Pennsylvania PUC)
Public Utilities Commission of Ohio
Rural Telephone Coalition
Scherer Communications Group
SBC Communications, Inc. (SBC)
Southern New England Telephone Company (SNET)
Sprint Corporation (Sprint)
State of Alaska (Alaska)
State of Hawaii (Hawaii)
TCA, Inc.
TDS Telecommunications Corp.
Telecommunications Resellers Association (TRA)
United States Telephone Association (USTA)
U.S. West, Inc. (U.S. West)
Vanguard Cellular Systems, Inc.
Washington Utilities & Transportation Commission
Zankle Worldwide Telecom (ZWT)

List of Reply Commenters in CC Docket No. 96-61, Sections IV, V, VI 
(Market Definition, Separation Requirements, Rate Averaging and Rate 
Integration)

ALLTEL Corporate Services, Inc.
Ameritech
AT&T Corp. (AT&T)
Bell Atlantic Telephone Companies (Bell Atlantic)
BellSouth Corp. (BellSouth)
Citizens Utilities Company (Citizens Utilities)
Commonwealth of the Northern Mariana Islands
Competitive Telecommunications Association (CompTel)
General Communication, Inc. (GCI)
General Services Administration (GSA)
GTE Service Corp. (GTE)
Governor of Guam & the Guam Telephone Authority
Guam Public Utility Commission (Guam PUC)
LDDS WorldCom (LDDS)
MCI
MFS
Missouri Office of the Public Counsel
New York State Department of Public Service
NYNEX Telephone Companies (NYNEX)
Office of the Ohio Consumers Counsel (Ohio Consumers' Counsel)
PCI Communications, Inc.
Rural Telephone Coalition
SBC Communications Inc. (SBC)
Sprint Corporation (Sprint)
State of Alaska (Alaska)
State of Hawaii (Hawaii)
Telecommunications Resellers Association (TRA)
United States Telephone Association (USTA)
U.S. West, Inc. (U.S. West)
Vanguard Cellular Systems, Inc.

[FR Doc. 96-29529 Filed 11-21-96; 8:45 am]
BILLING CODE 6712-01-P