[Federal Register Volume 62, Number 65 (Friday, April 4, 1997)]
[Rules and Regulations]
[Pages 16093-16099]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8605]
[[Page 16093]]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Chapter I
[CC Docket No. 96-152; FCC 97-101]
Implementation of the Telecommunications Act of 1996:
Telemessaging, Electronic Publishing, and Alarm Monitoring Services
AGENCY: Federal Communications Commission.
ACTION: Final rule; interpretation.
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SUMMARY: The Second Report and Order (Order) released March 25, 1997
clarifies the definition of ``alarm monitoring service'' and the manner
in which the Commission will apply the nondiscrimination provisions of
section 275(b) of the Telecommunications Act of 1996 (the 1996 Act).
This Order implements the alarm monitoring provisions of section 275 of
the 1996 Act.
EFFECTIVE DATE: May 5, 1997.
FOR FURTHER INFORMATION CONTACT: Michelle Carey, Attorney, Common
Carrier Bureau, Policy and Program Planning Division, (202) 418-1580.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order
adopted March 21, 1997, and released March 25, 1997. The full text of
this Order is available for inspection and copying during normal
business hours in the FCC Reference Center, 1919 M St., NW., Room 239,
Washington, DC. The complete text also may be obtained through the
World Wide Web, at http://www.fcc.gov/Bureaus/Common Carrier/Orders/
fcc97-101.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.
Regulatory Flexibility Certification
As required by the Regulatory Flexibility Act, the Order contains a
Final Regulatory Flexibility Certification which is set forth in the
Order. A brief description of the certification follows.
The Commission certifies, pursuant to 5 U.S.C. 605(b), that the
regulations adopted in this Order will not have a significant economic
impact on a substantial number of ``small entities,'' as this term is
defined in 5 U.S.C. 601(6). The Commission therefore is not required to
prepare a final regulatory flexibility analysis of the regulations
adopted in this Order. This certification and a statement of its
factual basis are set forth in the Order, as required by 5 U.S.C.
605(b).
Synopsis of Second Report and Order
I. Introduction
1. In February 1996, the ``Telecommunications Act of 1996'' became
law. The intent of the 1996 Act is ``to provide for a pro-competitive,
de-regulatory national policy framework designed to accelerate rapidly
private sector deployment of advanced telecommunications and
information technologies and services to all Americans by opening all
telecommunications markets to competition.''
2. On July 18, 1996, the Commission released a Notice of Proposed
Rulemaking (61 FR 39385 (July 29, 1996)) (NPRM) regarding
implementation of sections 260, 274, and 275 of the Communications Act
addressing telemessaging, electronic publishing, and alarm monitoring
services, respectively. This Order implements the alarm monitoring
provisions of section 275.
3. Section 275 prohibits Bell Operating Companies (BOCs) from
providing alarm monitoring service until February 8, 2001, although it
exempts from this prohibition those BOCs that were providing alarm
monitoring service as of November 30, 1995. This Order clarifies the
definition of ``alarm monitoring service'' and the manner in which we
will apply the nondiscrimination provisions of section 275(b). We
address the enforcement issues related to sections 260, 274, and 275 in
a separate proceeding.
II. Scope of the Commission's Authority
A. Scope of Authority Over Alarm Monitoring Services
i. Background
4. Pursuant to Computer III, the Commission has traditionally
regulated alarm monitoring services provided by BOCs as enhanced (or
information) services. The Commission has determined that ``all of the
services that the Commission has previously considered to be `enhanced
services' are `information services.' '' See Implementation of the Non-
Accounting Safeguards of Sections 271 and 272 of the Communications Act
of 1934, as amended, CC Docket No. 96-149, First Report and Order and
Further Notice of Proposed Rulemaking, (62 FR 2927 (January 21, 1997))
at para. 102 (Non-Accounting Safeguards Order). Accordingly, we use the
term ``information services'' to apply to both. These rules applied to
all BOC-provided alarm monitoring services--intrastate as well as
interstate. Because the Modified Final Judgment (MFJ) prohibition on
BOC provision of interLATA telecommunications services also applied to
interLATA information services, however, the BOCs were limited to
providing alarm monitoring services on an intraLATA basis.
5. Section 275 of the Act refers generally to BOC and incumbent
local exchange carrier (LEC) provision of alarm monitoring services and
does not differentiate between interLATA and intraLATA or between
interstate and intrastate alarm monitoring services. In the NPRM, we
sought comment on the extent of the Commission's authority over
intrastate alarm monitoring services. We also asked whether, if the
Commission lacks express authority over intrastate alarm monitoring
services, the Commission has authority to preempt state regulation with
respect to these matters pursuant to Louisiana PSC.
ii. Discussion
6. For the reasons stated below, we find that section 275, and the
Commission's authority thereunder, applies to intrastate as well as
interstate alarm monitoring services provided by incumbent LECs and
their affiliates. We also find that section 2(b) does not limit the
Commission's authority to establish rules governing intrastate alarm
monitoring service pursuant to section 275. We hold, therefore, that
the states may regulate incumbent LEC provision of alarm monitoring
services, but may not do so in a manner that is inconsistent with
section 275 and the interpretations established in this Order.
7. We find that section 275, by its terms, applies to interstate
and intrastate alarm monitoring services. The statute makes no
distinction between interstate and intrastate alarm monitoring
services, but rather enacts a broad prohibition on all BOC provision of
alarm monitoring services, except for ``grandfathered'' BOCs.
Significantly, section 275(b) provides that ``an incumbent local
exchange carrier * * * engaged in the provision of alarm monitoring
service shall not subsidize its alarm monitoring services either
directly or indirectly from telephone exchange service operations.''
Because telephone exchange service is a local, intrastate service,
section 275(b) plainly addresses intrastate service. Thus, the
safeguards provided in section 275(b) clearly and explicitly relate to
intrastate service. Given that section 275(b) applies explicitly to
intrastate service, we find that Congress intended that all of section
275 apply to intrastate alarm monitoring service.
8. This interpretation of section 275 also is consistent with
existing
[[Page 16094]]
Commission regulation of alarm monitoring and other enhanced services.
As discussed above, alarm monitoring services provided by BOCs are
currently regulated as enhanced services and are subject to Computer
III nondiscrimination safeguards. These safeguards apply to the
intrastate as well as interstate aspects of alarm monitoring services.
9. We also find that adopting the view that section 275, and our
authority thereunder, applies only to interstate services would lead to
implausible results. If section 275 were interpreted to apply only to
interstate alarm monitoring services, the five-year prohibition on BOC
entry into alarm monitoring service in section 275(a) would apply only
to the extent that a BOC provides alarm monitoring services on an
interstate basis. Because the jurisdictional nature of an alarm
monitoring service depends on whether the monitoring center is situated
in the same state as the monitored premises, a BOC could escape a
prohibition on providing interstate alarm monitoring service by
establishing a monitoring center in each state in which it sought to do
business. We agree with AICC and AT&T that such a reading would render
the section 275(a) prohibition against BOC entry into the alarm
monitoring business nearly meaningless, a result that in our view is
contrary to the plain intent of this section. We further find that
limiting the scope of the prohibition to interstate alarm monitoring
services would be contrary to the rule of statutory construction ``that
one provision should not be interpreted in a way * * * that renders
other provisions of the same statute inconsistent or meaningless.''
10. Nevertheless, several parties argue that sections 2(b) of the
1934 Act and 601(c) of the 1996 Act prevent the Commission from
exercising authority over intrastate alarm monitoring services. Section
2(b) provides that ``nothing in this Act shall be construed to apply to
or give the Commission jurisdiction with respect to * * * charges,
classifications, practices, services, facilities, or regulations for or
in connection with intrastate communications service * * *.'' In
Louisiana PSC, the Supreme Court held that, in order to overcome
section 2(b)'s limitation of Commission authority over intrastate
service, Congress must either modify section 2(b) or grant the
Commission additional authority over intrastate services.
11. As discussed above, we find that Congress, by the Act's use of
the term ``telephone exchange service,'' explicitly granted the
Commission authority over intrastate alarm monitoring services for the
purpose of section 275. Accordingly, consistent with the Court's
statement in Louisiana, we find that section 2(b) does not limit our
authority over intrastate alarm monitoring services. Consistent with
our finding in the Local Competition Order (61 FR 45476 (August 29,
1996)) and the Non-Accounting Safeguards Order, we find that in
enacting section 275 after section 2(b) and addressing services that
are intrastate in nature, Congress intended the express language of
section 275 to take precedence over any limiting language in section
2(b).
12. We similarly are not persuaded that section 601(c) of the 1996
Act evinces an intent by Congress to preserve states' authority over
intrastate alarm monitoring. Section 601(c) of the 1996 Act provides
that the Act and its amendments ``shall not be construed to modify,
impair, or supersede Federal, State, or local law unless expressly so
provided in such Act or amendments.'' As shown above, we conclude that
section 275 expressly modifies the Commission's existing statutory
authority and authorizes adoption of regulations implementing the
requirements of section 275 that apply to incumbent LECs' provision of
both intrastate and interstate alarm monitoring service.
13. We also find implausible the suggestion that we should
interpret section 275 to apply broadly to all alarm monitoring
services, but that the Commission's rulemaking authority under that
section is limited to interstate services. Rather, we conclude that the
Commission's rulemaking authority pursuant to section 275 is
coextensive with the reach of the statute. As discussed below, the
Commission possesses broad rulemaking authority to implement and
interpret provisions of the Communications Act. Nothing in section 275
or elsewhere in the Act deprives the Commission of this authority.
14. We therefore find that section 275 and the Commission's
authority thereunder apply to all alarm monitoring services--interstate
or intrastate--and affirm our tentative conclusion that section 275
applies to interLATA and intraLATA alarm monitoring services. We
further hold that the rules we establish to implement section 275 are
binding upon the states and that states may not impose any requirements
that are inconsistent with section 275 or the Commission's rules.
Because we find that section 275 provides the Commission with direct
authority over intrastate alarm monitoring services, we reject the
argument of the New York Commission that the Commission lacks authority
to preempt inconsistent state rules regarding intrastate alarm
monitoring services.
B. Scope of Authority to Issue Rules to Implement Section 275
i. Background
15. Section 275 contains several terms that are subject to varying
interpretation. The NPRM sought comment on whether several provisions
of section 275 should be clarified.
ii. Discussion
16. In the NPRM, we identified areas of ambiguity in the
requirements of section 275 that may benefit from the adoption of rules
that clarify and implement those mandates. We find that Congress
enacted in section 275 principles that can best be implemented if we
give affected parties more specific guidelines concerning the
requirements of that section, which will enable the Commission to carry
out effectively and efficiently its enforcement obligations under the
Communications Act.
17. We reject the suggestion of the California Commission that we
issue nonbinding ``guidelines'' that would be applied by the states if
they so choose. Such an approach could result in inconsistent and
uncertain application of the requirements of section 275, which may
deter or hamper alarm monitoring service providers that wish to offer
service on a nationwide basis.
18. Based on the foregoing, we find, pursuant to the general
rulemaking authority vested in the Commission by sections 4(i), 201(b),
and 303(r) of the Communications Act, and consistent with fundamental
principles of administrative law, that the Commission has the requisite
authority to promulgate rules implementing section 275 of the
Communications Act.
19. It is well-established that the Commission possesses authority
to adopt rules to implement the requirements of the Communications Act.
Sections 4(i), 201(b), and 303(r) of the Act authorize the Commission
to adopt rules it deems necessary or appropriate in order to carry out
its responsibilities under the Communications Act, so long as those
rules are not otherwise inconsistent with the Communications Act.
Moreover, courts repeatedly have held that the Commission's general
rulemaking authority is ``expansive'' rather than limited. In addition,
it is well-established that an agency has the authority to adopt rules
to administer congressionally mandated requirements.
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C. Constitutional Issues
20. BellSouth and U S WEST raise constitutional concerns with
respect to our implementation of section 275. BellSouth contends that
the Commission must be ``circumspect'' in its construction of section
275 because the prohibition on alarm monitoring services ``impose[s an]
impermissible prior restraint[] on BOCs' speech activities,'' in
violation of the First Amendment. Further, it maintains that section
275, as well as other sections of the Act, are unconstitutional ``bills
of attainder'' to the extent they single out BOCs by name and impose
restrictions on them alone. Recognizing that we have no discretion to
ignore Congress' mandate to apply sections 275, BellSouth urges us to
construe these sections, and others, narrowly. U S WEST concurs with
BellSouth that section 275 is an unlawful bill of attainder and urges
the Commission not to adopt any structural rules beyond the express
terms of the statute.
21. Although decisions about the constitutionality of congressional
enactments are generally outside the jurisdiction of administrative
agencies, we have an obligation under Supreme Court precedent to
construe a statute ``where fairly possible to avoid substantial
constitutional questions'' and not to ``impute to Congress an intent to
pass legislation that is inconsistent with the Constitution as
construed by the [Supreme Court].'' As BellSouth concedes, we have no
discretion to ignore Congress' mandate respecting these sections or any
other sections of the Act. Nevertheless, we find BellSouth's argument
to be without merit. We find that the prohibition on the provision of
alarm monitoring services in section 275 is not a restriction on
BellSouth's speech under the First Amendment.
22. Similarly, we reject BellSouth and U S WEST's argument that
section 275 is an unconstitutional ``bill of attainder'' because the
statute singles out BOCs by name and imposes restrictions on them
alone. We conclude that section 275 is not an unconstitutional bill of
attainder simply because it applies only to the BOCs. Rather, judicial
precedent teaches that, in determining whether a statute amounts to an
unlawful bill of attainder, we must consider whether the statute
``further[s] nonpunitive legislative purposes,'' and whether Congress
evinced an intent to punish. We find no evidence, and BellSouth and U S
WEST have offered none, that would support a finding that Congress
enacted section 275 to punish the BOCs. Thus, we conclude that the
section 275 restrictions imposed on BOCs do not violate the Bill of
Attainder Clause.
III. Alarm Monitoring Service Defined
A. Scope of Section 275(e)
i. Background
23. Section 275(e) defines ``alarm monitoring service'' as: A
service that uses a device located at a residence, place of business,
or other fixed premises--(1) to receive signals from other devices
located at or about such premises regarding a possible threat at such
premises to life, safety, or property, from burglary, fire, vandalism,
bodily injury, or other emergency, and (2) to transmit a signal
regarding such threat by means of transmission facilities of a [LEC] or
one of its affiliates to a remote monitoring center to alert a person
at such center of the need to inform the customer or another person or
police, fire, rescue, security, or public safety personnel of such
threat * * *.
The NPRM tentatively concluded that the provision of underlying
basic tariffed telecommunications services does not fall within the
definition of alarm monitoring service under section 275(e). The NPRM
further tentatively concluded that Ameritech's alarm monitoring service
falls within the definition in section 275(e) and is therefore
grandfathered under section 275(a)(2). The NPRM sought comment on
whether any other services provided by incumbent LECs should be
considered alarm monitoring services under section 275(e) and
grandfathered under section 275(a)(2).
ii. Discussion
24. We find that a service provided by incumbent LECs to transmit
information for use in connection with an alarm monitoring service,
such as U S WEST's ``ScanAlert'' or ``Versanet,'' does not constitute
an alarm monitoring service as defined by the Act. We further find, for
the reasons discussed below, that the service provided by Ameritech
constitutes an alarm monitoring service, as defined by section 275(e).
25. Incumbent LEC Services Used to Transmit Alarm Monitoring
Information. We conclude that an incumbent LEC that provides a service
used to transmit alarm monitoring information used by a third party to
furnish alarm monitoring service is not engaged in the provision of
alarm monitoring service under the Act. U S WEST argues that its basic
service ``Scan-Alert'' and enhanced ``Versanet'' service qualify as
alarm monitoring services under section 275(e) because these services
``use'' a device to receive signals from other devices at the
customer's premises and transmit a signal to a remote monitoring
center. U S WEST neither operates the monitoring center nor provides
the ``devices'' that transmit the alarm signal. Rather, U S WEST only
provides the transmission link between the two locations.
26. The definition of alarm monitoring service in section 275(e)
does not specify whether the ``device'' that transmits the information
or the service provided by the ``remote monitoring center'' that
receives the information must be offered by a BOC in order for its
service to qualify as an alarm monitoring service. Nor does the
legislative history address this issue. We find, however, that a
service that only transmits a signal from the monitored premises to the
monitoring center, and therefore does not ``use a device * * * to
receive signals from other devices located at or about such premises *
* *'' cannot qualify as alarm monitoring service regardless of whether
it is regulated as a telecommunications service or an information
service. Since alarm monitoring service is offered throughout the
country by alarm companies that use BOC-provided basic telephone
service to provide transmission between the monitored premises and the
alarm monitoring center, the statutory interpretation advocated by U S
WEST would grandfather all BOCs and, consequently, would make none
subject to the prohibition in section 275(a). We reject this
interpretation because it would render section 275(a) superfluous. For
the same reason, we also reject U S WEST's contention that an
information service used to transmit signals used for alarm monitoring,
such as its ``Versanet'' service, should be classified as an alarm
monitoring service merely because it includes an enhanced component.
Whether a particular service qualifies as an enhanced or information
service does not necessarily qualify it as an alarm monitoring service.
We therefore affirm our tentative conclusion that an incumbent LEC that
provides a basic telecommunications service that is used by third
parties to offer an alarm monitoring service is not engaged in the
provision of an alarm monitoring service. We further find that an
incumbent LEC that provides an enhanced service that transmits an alarm
signal to a third party is not engaged in the provision of alarm
monitoring service. We find that our conclusion will satisfy Congress's
intent to impose a five-year restriction on BOC entry into the alarm
monitoring services
[[Page 16096]]
market and the associated protections to nonaffiliated alarm monitoring
providers.
27. We clarify, however, that the prohibition on BOC provision of
alarm monitoring services in section 275(a) applies only to alarm
monitoring services as defined in section 275(e). Neither U S WEST nor
any other BOC is precluded from continuing to provide
telecommunications and information services used by unaffiliated firms
to provide alarm monitoring service. We also clarify, in accord with
BellSouth's request, that ``service offerings such as remote meter
reading * * *, remote monitoring of customer premises equipment (CPE)
for maintenance and other purposes, or other services in which the
purpose of the service offering is not to alert public safety personnel
of [a] threat'' do not constitute alarm monitoring services because
such services do not fall within the definition of alarm monitoring
service in section 275(e). Since section 275(e) defines alarm
monitoring service specifically to include transmission of signals
``regarding a possible threat at such premises to life, safety, or
property from burglary, fire, vandalism, bodily injury or other injury
* * *'' we find that service offerings that do not involve a possible
threat, such as those BellSouth mentions, do not fall within the
definition in section 275(e).
28. Ameritech's Service. Ameritech's ``SecurityLink'' service was
described in its 1995 CEI plan as ``the sale, installation, monitoring
and maintenance of intrusion and motion detection systems, fire
detection systems, and other types of monitoring and control systems, *
* * the transmission of a non-voice message from the residential,
commercial or governmental alarm system to a central monitoring station
* * * [and] a voice call placed by personnel at the monitoring station
to the police or fire department and to persons designated to be
contacted in the event of an alarm * * *.'' This service fits squarely
within the definition of alarm monitoring service in section 275(e). We
therefore find that Ameritech's ``SecurityLink'' service falls within
the definition of an alarm monitoring service under section 275(e).
Since Ameritech is the only BOC that was authorized to provide alarm
monitoring service as of November 30, 1995, we find that Ameritech is
the only BOC that qualifies for ``grandfathered'' treatment under
section 275(a)(2).
B. Meaning of ``Provision'' in Section 275(a)
i. Background
29. Section 275(a)(1) prevents BOCs from ``engag[ing] in the
provision'' of alarm monitoring service until February 8, 2001. Section
275(b) places certain nondiscrimination obligations on all incumbent
LECs ``engaged in the provision'' of alarm monitoring services. In the
NPRM, we sought comment on the types of activities that constitute the
``provision'' of alarm monitoring services subject to this section. We
asked parties to address, with specificity, the levels and types of
involvement in alarm monitoring that would constitute ``engag[ing] in
the provision'' of alarm monitoring service. We tentatively concluded
that resale of alarm monitoring service constitutes the provision of
such service and sought comment on whether, among other things, billing
and collection, sales agency, marketing and/or various compensation
arrangements, either individually or collectively, would constitute the
provision of alarm monitoring. We also asked parties to address any
other factors that may be relevant in determining whether an incumbent
LEC, including a BOC, is providing alarm monitoring service under
section 275.
ii. Discussion
30. We conclude, consistent with our reading of the statutory
definition of alarm monitoring service, that an incumbent LEC,
including a BOC, is engaged in the ``provision'' of alarm monitoring
service if it operates the ``remote monitoring center'' in connection
with the provision of alarm monitoring service to end users. As noted
above, if an incumbent LEC is merely providing the CPE and/or the
underlying transmission service, it is not engaged in the provision of
alarm monitoring service under section 275. We further find, consistent
with Commission precedent, that the resale of a service constitutes the
provision of that service. We therefore affirm our tentative conclusion
that the resale of alarm monitoring service constitutes the provision
of such service under section 275. We also conclude that BOC
performance of the billing and collection for a particular alarm
monitoring company does not, in itself, constitute the provision of
alarm monitoring service under section 275(a). Indeed, BOCs perform
billing and collection for many services that they themselves do not
offer and, in some cases, are barred from offering.
31. We find that BOC participation in sales agency, marketing, and/
or various compensation arrangements in connection with alarm
monitoring services does not necessarily constitute the provision of
alarm monitoring under section 275(a). Whereas other provisions of the
Act explicitly bar BOCs from engaging in such activities in connection
with other services, section 275 does not, by its terms, prohibit a BOC
from acting as a sales agent or marketing alarm monitoring service. We
therefore reject AICC's suggestion that we should flatly prohibit BOCs
from entering into arrangements to act as sales agents on behalf of
alarm monitoring service providers or to market on behalf of, or in
conjunction with, alarm monitoring service providers.
32. We recognize, however, that there may be certain situations
where a BOC is not directly providing alarm monitoring service, but its
interests are so intertwined with the interests of an alarm monitoring
service provider that the BOC itself may be considered to be
``engag[ed] in the provision'' of alarm monitoring in contravention of
section 275(a). We conclude therefore that we will examine sales agency
and marketing arrangements between a BOC and an alarm monitoring
company on a case-by-case basis to determine whether they constitute
the ``provision'' of alarm monitoring service. In evaluating such
arrangements, we will take into account a variety of factors including
whether the terms and conditions of the sales agency and marketing
arrangement are made available to other alarm monitoring companies on a
nondiscriminatory basis.
33. In addition, we will also consider how the BOC is being
compensated for its services. For example, if a BOC, acting as a sales
agent or otherwise marketing the services of a particular alarm
monitoring service provider, has a financial stake in the commercial
success of that provider, such involvement with the alarm monitoring
company may constitute the ``provision'' of alarm monitoring service.
Such a BOC may be unlawfully providing alarm monitoring services if its
compensation for marketing such services is based on the net revenues
of an alarm monitoring service provider to which the BOC furnishes such
marketing services. In that circumstance, a BOC's compensation would
not be tied to its performance in marketing the unaffiliated firm's
service, but rather would depend on the unaffiliated firm's performance
in offering alarm monitoring service. We find that this approach to
evaluating
[[Page 16097]]
sales agency and marketing arrangements will preserve the strength of
the five-year restriction on BOC entry into the alarm monitoring
services market and the associated protections to nonaffiliated alarm
monitoring providers.
34. Some parties have noted that the question of what constitutes
``engag[ing] in the provision'' of alarm monitoring service under
section 275(a) is at issue in the context of Southwestern Bell
Telephone Company's (SWBT) comparably efficient interconnection (CEI)
plan to provide ``security services.'' The lawfulness of SWBT's
security services is a fact-specific determination that is outside the
scope of this rulemaking. We will not address, therefore, any comments
filed in this proceeding that address the merits of SWBT's CEI plan.
The SWBT CEI plan proceeding, however, will be resolved consistent with
the policies adopted in this Order.
35. Finally, we reject BellSouth's contention that section
275(a)(2) permits non-grandfathered BOCs to engage in the provision of
alarm monitoring to the extent that they do not obtain an ``equity
interest in'' or ``financial control of'' an alarm monitoring service
provider. We find that section 275(a)(2) pertains exclusively to alarm
monitoring activities by a grandfathered BOC and, therefore, has no
applicability to non-grandfathered BOCs.
IV. Existing Alarm Monitoring Service Providers
A. Background
36. Section 275(a)(1) generally prohibits the BOCs from engaging in
the provision of alarm monitoring services until February 8, 2001.
Section 275(a)(2) allows BOCs that were providing alarm monitoring
services as of November 30, 1995, to continue to do so, but provides
that ``[s]uch Bell operating company or affiliate may not acquire any
equity interest in, or obtain financial control of, any unaffiliated
alarm monitoring service entity after November 30, 1995, and until 5
years after the date of enactment of the Telecommunications Act of
1996, except that this sentence shall not prohibit an exchange of
customers for the customers of an unaffiliated alarm monitoring service
entity.'' The NPRM sought comment on whether regulations are needed to
define further the terms of section 275(a)(2) and, in particular, on
what is meant by the terms ``equity interest'' and ``financial
control.'' It also sought comment on the conditions under which an
``exchange of customers'' is permitted by the Act.
B. Discussion
37. We conclude that regulations further interpreting the terms of
section 275(a)(2) are not needed at this time. Both Ameritech and AICC
offer differing interpretations of these terms and disagree on the
applicability of section 275 in the context of a specific factual
situation. These circumstances have led us to conclude that the scope
of section 275(a)(2) is better addressed on a case-by-case basis where
the Commission is able to consider all of the facts that may apply to a
particular transaction.
V. Nondiscrimination Safeguards
A. Background
38. Section 275(b)(1) requires an incumbent LEC engaged in the
provision of alarm monitoring services to ``provide nonaffiliated
entities, upon reasonable request, with the network services it
provides to its own alarm monitoring operations, on nondiscriminatory
terms and conditions.'' Prior to the Act, alarm monitoring services
were regulated as enhanced services and were subject to the
nondiscrimination requirements established under the Commission's
Computer II and Computer III regimes. Under Computer III and Open
Network Architecture, BOCs have been permitted to provide enhanced
services on an integrated basis. Moreover, BOCs have been required to
provide at tariffed rates nondiscriminatory interconnection to
unbundled network elements used to provide enhanced services.
39. We noted in the NPRM that sections 201 and 202 of the
Communications Act already place significant nondiscrimination
obligations on common carriers. We concluded that the Computer III
nondiscrimination provisions continue to apply to the extent they are
not inconsistent with the nondiscrimination requirements of section
275(b)(1). We sought comment on whether the existing nondiscrimination
and network unbundling rules in Computer III, as they apply to BOC
provision of alarm monitoring service, are consistent with the
requirements of section 275 and whether they should be applied to all
incumbent LECs for the provision of alarm monitoring. We also sought
comment on whether and what types of specific regulations are necessary
to implement section 275(b)(1), to the extent that parties argue that
the nondiscrimination provisions of Computer III and ONA are
inconsistent or should not be applied.
B. Discussion
40. Meaning of Section 275(b)(1). We conclude that no rules are
necessary to implement section 275(b)(1), based on the record before
us; we will reconsider this decision if circumstances warrant.
41. As noted above, section 275(b)(1) obligates an incumbent LEC to
provide nonaffiliated entities the same network services it provides to
its own alarm monitoring operations on nondiscriminatory terms and
conditions. We find that this nondiscrimination requirement does not
require an incumbent LEC to provide network services that the LEC does
not use in its own alarm monitoring operations. In addition, we agree
with U S WEST that, if an incumbent LEC is not providing alarm
monitoring services, it is not subject to the nondiscrimination
requirement of section 275(b)(1).
42. We also conclude that the nondiscrimination requirement of
section 275(b)(1) is independent of the nondiscrimination requirement
of section 202(a). Section 275(b)(1) requires incumbent LECs to provide
nonaffiliated entities, upon reasonable request, ``network services * *
* on nondiscriminatory terms and conditions.'' Section 202(a) prohibits
``any unjust and unreasonable discrimination * * *, or * * * any undue
or unreasonable preference or advantage'' by common carriers. Because
the section 275(b)(1) nondiscrimination bar, unlike that of section
202(a), is not qualified by the terms ``unjust and unreasonable,'' we
conclude that Congress intended a more stringent standard in section
275(b)(1).
43. We interpret the term ``network services'' to include all
telecommunications services used by an incumbent LEC in its provision
of alarm monitoring service. We do not find that this section requires
incumbent LECs to provide information services or other services that
use LEC facilities or features not part of the LECs' bottleneck network
because there is little danger of discrimination in the provision of
such services. We also decline to interpret the term ``network
services'' as we do the term ``network elements,'' to include
``features, functionalities and capabilities available through those
services,'' as AICC suggests. Our definition of ``network elements'' is
based on the statutory definition of that term, and we find no basis in
section 275 or elsewhere in the Act for the definition of ``network
services'' advocated by AICC.
44. Computer III/ONA Requirements and Section 275(b)(1). We also
conclude
[[Page 16098]]
that the Computer III/ONA requirements are consistent with the
requirements of section 275(b)(1). We affirm our conclusion, therefore,
that the Computer III/ONA requirements continue to govern the BOCs'
provision of alarm monitoring services. In addition, we find that the
nondiscrimination requirements of section 275(b)(1) apply to the BOCs'
provision of both intraLATA and interLATA alarm monitoring services, as
well as other incumbent LECs' provision of alarm monitoring services.
The parties have not indicated that there is any inconsistency between
the nondiscrimination requirements of Computer III/ONA and section
275(b)(1). Section 275(b)(1), moreover, does not repeal or otherwise
affect the Computer III/ONA requirements. We will consider in the
Commission's Computer III Further Remand proceeding whether the
Computer III/ONA requirements need to be revised or eliminated. For the
same reason, we also decline to extend the Computer III/ONA
requirements to all incumbent LECs, as recommended by AT&T.
VI. Procedural Matters
A. Final Regulatory Flexibility Certification
45. The Commission certified in the NPRM that the conclusions it
proposed to adopt would not have a significant economic impact on a
substantial number of small entities because the proposed conclusions
did not pertain to small entities. No comments were received in
response to the Commission's request for comment on its certification.
For the reasons stated below, we certify that the conclusions adopted
herein will not have a significant economic impact on a substantial
number of small entities. This certification conforms to the Regulatory
Flexibility Act (RFA), as amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA).
46. The RFA provides that the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act. The Small Business Act defines a ``small business concern'' as one
that is independently owned and operated; is not dominant in its field
of operation; and meets any additional criteria established by the
Small Business Administration (SBA). SBA has not developed a definition
of ``small incumbent LECs.'' The closest applicable definition under
SBA rules is for Standard Industrial Classification (SIC) code 4813
(Telephone Communications, Except Radiotelephone). The SBA has
prescribed the size standard for a ``small business concern'' under SIC
code 4813 as 1,500 or fewer employees.
47. Many of the conclusions adopted in this Order apply only to the
BOCs which, because they are large corporations that are dominant in
their field of operation and have more than 1,500 employees, do not
fall within the SBA's definition of a ``small business concern.'' Some
of the conclusions adopted in this Order apply, however, to all
incumbent LECs. Some of these incumbent LECs may have fewer than 1,500
employees and thus meet the SBA's size standard to be considered
``small.'' Because such incumbent LECs, however, are either dominant in
their field of operations or are not independently owned and operated,
consistent with our prior practice, they are excluded from the
definition of ``small entity'' and ``small business concern.''
Accordingly, our use of the terms ``small entities'' and ``small
businesses'' does not encompass small incumbent LECs. Out of an
abundance of caution, however, for regulatory flexibility purposes, we
will consider small incumbent LECs within this certification and use
the term ``small incumbent LECs'' to refer to any incumbent LECs that
arguably might be defined by SBA as ``small business concerns.''
48. The Commission adopts the conclusions in this Order to ensure
the prompt implementation of section 275 of the Act, which addresses
the provision of alarm monitoring services by BOCs and other incumbent
LECs. We certify that although there may be a substantial number of
small incumbent LECs affected by the decisions adopted herein, the
conclusions we adopt in this Order will not have a significant economic
impact on those affected small incumbent LECs. First, section 275(a)
applies only to Bell Operating Companies, prohibiting them, with
certain exceptions, from providing alarm monitoring service until
February 8, 2001. Thus, in clarifying the definition of ``alarm
monitoring service'' and the manner in which we will apply the
nondiscrimination provisions of section 275(b)(1), this Order has no
significant economic impact on small incumbent LECs. Second, we have
not adopted additional rules governing the nondiscrimination
requirements of section 275(b), which applies to all incumbent LECs;
therefore, there is no change in the status quo as to the regulation of
incumbent LECs in this regard.
49. Third, our conclusion that section 275(b)(1) imposes a more
stringent standard for determining whether discrimination is unlawful
than that which already exists under sections 201 and 202 and applies
to all incumbent LECs, will not have a significant economic impact on
small incumbent LECs. Incumbent LECs, including small incumbent LECs,
are subject to pre-existing nondiscrimination requirements under the
Act and state law and therefore already are required to respond to
complaints of discriminatory behavior or more strictly limit their
participation in discriminatory activities. We therefore find that the
impact of the Order on incumbent LECs, including small incumbent LECs,
of the more stringent standard of section 275(b)(1) will be de minimis.
50. Finally, our decision not to extend the Computer III/ONA
nondiscrimination requirements to all incumbent LECs providing
intraLATA alarm monitoring services, as noted in Section V, will
prevent any significant economic impact on incumbent LECs, particularly
small incumbent LECs, by sparing them the regulatory burdens and
economic impact of complying with those additional rules.
51. For all of these reasons, we certify pursuant to section 605(b)
of the RFA that the conclusions adopted in this Order will not have a
significant economic impact on a substantial number of small entities.
The Commission shall provide a copy of this certification to the Chief
Counsel for Advocacy of the SBA, and include it in the report to
Congress pursuant to the SBREFA. A copy of this certification will also
be published in the Federal Register.
B. Final Paperwork Reduction Analysis
52. As required by the Paperwork Reduction Act of 1995, Public Law
104-13, the NPRM invited the general public and the OMB to comment on
the Commission's proposed changes to its information collection
requirements. Specifically, the Commission proposed to extend various
reporting requirements, which apply to the BOCs under Computer III, to
all incumbent LECs pursuant to section 275(b)(1). The OMB, in approving
the proposed changes in accordance with the Paperwork Reduction Act,
``encourage[d] the [Commission] to investigate the potential for
sunsetting these requirements as competition and other factors allow.''
In this Order, the Commission adopts none of the changes to our
information collection requirements proposed in the NPRM.
[[Page 16099]]
We therefore need not address the OMB's comment, although we note that
our decision is consistent with the OMB's recommendation.
VII. Ordering Clauses
53. Accordingly, It is ordered that pursuant to sections 1, 2, 4,
201-202, 275, and 303(r) of the Communications Act of 1934, as amended,
47 U.S.C. 151, 152, 154, 201-202, 275, and 303(r), the Report and Order
is Adopted, and the requirements contained herein will become effective
May 5, 1997.
54. It is further ordered that the Secretary shall send a copy of
this Report and Order, including the final regulatory flexibility
certification, to the Chief Counsel for Advocacy of the Small Business
Administration, in accordance with paragraph 605(b) of the Regulatory
Flexibility Act, 5 U.S.C. 601 et seq.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Note: This attachment will not appear in the Code of Federal
Regulations.
Attachment--List of Commenters in CC Docket No. 96-152
Alarm Detection Systems, Inc.
Alarm Industry Communications Committee (AICC)
Alert Holdings Group, Inc.
Ameritech
Association of Directory Publishers
Association of Telemessaging Services International
AT&T Corporation (AT&T)
Atlas Security Service, Inc.
Bell Atlantic Telephone Companies (Bell Atlantic)
BellSouth Corporation (BellSouth)
Checkpoint Ltd.
Cincinnati Bell Telephone (Cincinnati Bell)
Commercial Instruments & Alarm Systems, Inc.
Commonwealth Security Systems, Inc.
ElectroSecurity Corporation
Entergy Technology Holding Company
George Alarm Company, Inc.
Information Industry Association
Joint Parties
MCI Telecommunications Corporation (MCI)
Merchant's Alarm Systems
Midwest Alarm Company, Inc.
Morse Signal Devices
New York State Department of Public Service (New York Commission)
Newspaper Association of America
NSS National Security Service
NYNEX Corporation (NYNEX)
Pacific Telesis Group (PacTel)
Peak Alarm Company, Inc.
People of the State of California/California PUC (California
Commission)
Per Mar Security Services
Post Alarm Systems
Rodriguez, Francisco
Safe Systems
Safeguard Alarms, Inc.
SBC Communications, Inc. (SBC)
SDA Security Systems, Inc.
Security Systems by Hammond, Inc.
Sentry Alarm Systems of America, Inc.
Sentry Protective Systems
Smith Alarm Systems
Superior Monitoring Service, Inc.
SVI Systems, Inc.
Time Warner Cable
United States Telephone Association (USTA)
U S WEST, Inc. (U S WEST)
Valley Burglar & Fire Alarm Co., Inc.
Vector Security
Voice-Tel
Wayne Alarm Systems
Yellow Pages Publishers Association
[FR Doc. 97-8605 Filed 4-3-97; 8:45 am]
BILLING CODE 6712-01-P