[Federal Register Volume 62, Number 167 (Thursday, August 28, 1997)]
[Rules and Regulations]
[Pages 45579-45587]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22734]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 51

[CC Docket No. 96-98; FCC 97-295]


Implementation of the Local Competition Provisions in the 
Telecommunications Act of 1996

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Third Order on Reconsideration (Order) released August 18, 
1997 addresses the obligation of incumbent local exchange carriers 
(LECs) to provide unbundled access to interoffice transport facilities 
on a shared basis. The Order clarifies the definition of shared 
transport as a network element which includes the same transport links 
and routing table as used by the incumbent local exchange carrier. The 
effect of this rule will be to allow competitive carriers to share in 
the scale and scope benefits of the incumbent LEC's network, thus 
increasing competition opportunities in the local exchange and exchange 
access market.

EFFECTIVE DATE: The stay of 47 CFR 51.501 through 51.515, 51.601 
through 51.611, 51.705 through 51.715, and 51.809 effective October 15, 
1996 (62 FR 662, Jan. 6, 1997) was lifted by the United States Court of 
Appeals for the Eighth Circuit effective July 18, 1997.
    The amendments to 47 CFR part 51 made in this final rule are 
effective September 29, 1997.

FOR FURTHER INFORMATION CONTACT: Kalpak Gude, Attorney, Common Carrier 
Bureau, Policy and Program Planning Division, (202) 418-1580. For 
additional information concerning the information collections contained 
in this Order contact Judy Boley at (202) 418-0214, or via the Internet 
at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
adopted and released August 18, 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., N.W., Room 239, Washington, D.C. 
The complete text also may be obtained through the World Wide Web, at 
http://www.fcc.gov/Bureaus/Common Carrier/Orders/fcc97-295.wp, or may 
be purchased from the Commission's copy contractor, International 
Transcription Service, Inc., (202) 857-3800, 1231 20th St., N.W., 
Washington, D.C. 20036.

Regulatory Flexibility Analysis

    The changes adopted in this Order do not affect our analysis in the 
First Report and Order (61 FR 45476 (August 29, 1996)).

Synopsis of Third Order on Reconsideration

I. Introduction

    1. In this Order, we address two petitions for reconsideration or 
clarification of the Local Competition and Order regarding the 
obligation of incumbent local exchange carriers (LECs) to provide 
unbundled access to interoffice transport facilities on a shared basis. 
Implementation of the Local Competition Provisions in the 
Telecommunications Act of 1996, Report and Order, (61 FR 45476 (August 
29, 1996)) (Local Competition Order), Order on Reconsideration, (61 FR 
52706 (October 8, 1996)), Second Order on Reconsideration, 61 FR 66931 
(December 19, 1996)), further recon. pending, aff'd in part and vacated 
in part sub. nom. CompTel. v. FCC, 11 F.3d 1068 (8th Cir. 1997) 
(CompTel), aff'd in part and vacated in part sub nom. Iowa Utilities 
Bd. v. FCC and consolidated cases, No. 96-3321 et al., 1997 WL 403401 
(8th. Cir., Jul. 18, 1997) (Iowa Utilities Bd.). We intend to address 
petitions for reconsideration of other aspects of the Local Competition 
Order in the future.
    2. In the Local Competition Order, which established rules to 
implement sections 251 and 252 of the Communications Act of 1934 (the 
Act), as amended by the Telecommunications Act of 1996, the Commission 
required incumbent LECs ``to provide unbundled access to shared 
transmission facilities between end offices and the tandem switch.'' In 
this reconsideration order, we first explain that the Local Competition 
Order required incumbent LECs to provide requesting carriers with 
access to the same transport facilities, between the end office switch 
and the tandem switch, that incumbent LECs use to carry their own 
traffic. We further explain that, when a requesting carrier takes 
unbundled local switching, it gains access to the incumbent LEC's 
routing table, resident in the switch. Second, we reconsider the 
requirement that incumbent LECs only provide ``shared transport'' 
between the end office and tandem. Section 51.319(d) of the 
Commission's rules requires that incumbent LECs provide access on an 
unbundled basis to interoffice transmission facilities shared by more 
than one customer or carrier. 47 CFR Sec. 51.319(d). In this 
reconsideration order, we refer to such shared interoffice transmission 
facilities as ``shared transport.'' For the reasons discussed below, we 
conclude that incumbent LECs should be required to provide requesting 
carriers with access to shared transport for all transmission 
facilities connecting incumbent LECs' switches--that is, between end 
office switches, between an end office switch and a tandem switch, and 
between tandem switches. Third, we conclude that incumbent LECs must 
permit requesting carriers that purchase unbundled shared transport and 
unbundled switching to use the same routing table and transport links 
that the incumbent LEC uses to route and carry its own traffic. By 
requiring incumbent LECs to provide requesting carriers with access to 
the incumbent LEC's routing table and to all its interoffice 
transmission facilities on an unbundled basis, requesting carriers can 
route calls in the same manner that an incumbent routes its own calls 
and thus take advantage of the incumbent LEC's economies of scale, 
scope, and

[[Page 45580]]

density. Finally, incumbent LECs must permit requesting carriers to use 
shared transport as an unbundled element to carry originating access 
traffic from, and terminating access traffic to, customers to whom the 
requesting carrier is also providing local exchange service.
    3. We also issue a further notice of proposed rulemaking seeking 
comment on whether requesting carriers may use shared transport 
facilities in conjunction with unbundled switching, to originate or 
terminate interexchange traffic to customers to whom the requesting 
carrier does not provide local exchange service. Moreover, we seek 
comment on whether requesting carriers may use dedicated transport 
facilities to originate or terminate interexchange traffic to customers 
to whom the requesting carrier does not provide local exchange service.

II. Background

Local Competition Order

    4. Sections 251(c)(3) and 251(d)(2) of the Act set forth standards 
for identifying unbundled network elements that incumbent LECs must 
make available to requesting telecommunications carriers. Section 
251(c)(3) requires incumbent LECs to provide requesting carriers with 
``nondiscriminatory access to network elements on an unbundled basis at 
any technically feasible point.'' Section 251(d)(2) provides that, in 
identifying unbundled elements, the ``Commission shall consider, at a 
minimum, whether--

    (A) Access to such network elements as are proprietary in nature 
is necessary; and
    (B) The failure to provide access to such network elements would 
impair the ability of the telecommunications carrier seeking access 
to provide the services that it seeks to offer.''

    5. In the Local Competition Order, the Commission, pursuant to 
sections 251(c)(3) and 251(d)(2), identified a minimum list of seven 
network elements to which incumbent LECs must provide access on an 
unbundled basis. These network elements included local switches, tandem 
switches, and interoffice transmission facilities. With respect to 
interoffice transmission facilities, the Commission required incumbent 
LECs to provide requesting telecommunications carriers access to both 
dedicated and ``shared'' interoffice transmission facilities. The 
Commission defined ``interoffice transmission facilities'' as:

    Incumbent LEC transmission facilities dedicated to a particular 
customer or carrier, or shared by more than one customer or carrier, 
that provide telecommunications between wire centers owned by 
incumbent LECs or requesting telecommunications carriers, or between 
switches owned by incumbent LECs or requesting telecommunications 
carriers.

The Commission stated that ``[f]or some elements, especially the loop, 
the requesting carrier will purchase exclusive access to the element 
for a specific period, [and for] other elements, especially shared 
facilities such as common transport, [carriers] are essentially 
purchasing access to a functionality of the incumbent's facilities on a 
minute-by-minute basis.'' In defining the network elements to which 
incumbent LECs must provide access on an unbundled basis, the 
Commission adopted the statutory definition of unbundled elements as 
physical facilities of the network, together with the features, 
functions, and capabilities associated with those facilities. The 
Commission concluded that ``the definition of the term network element 
includes physical facilities, such as a loop, switch, or other node, as 
well as logical features, functions, and capabilities that are provided 
by, for example, software located in a physical facility such as a 
switch.'' The Commission found that:

    The embedded features and functions within a network element are 
part of the characteristics of that element and may not be removed 
from it. Accordingly, incumbent LECs must provide network elements 
along with all of their features and functions, so that new entrants 
may offer services that compete with those offered by incumbents as 
well as new services.

The Commission also determined that ``we should not identify elements 
in rigid terms, but rather by function.''
    6. On July 18, 1997, the United States Court of Appeals for the 
Eighth Circuit issued a decision affirming certain of the Commission's 
rules adopted in the Local Competition Order, and vacating other rules. 
Iowa Utilities Bd. v. FCC, 1997 WL 403401 (8th Cir. July 18, 1997). 
With respect to issues relevant to this reconsideration decision, the 
court affirmed the Commission's authority to identify unbundled network 
elements pursuant to section 251(d)(2), and generally upheld the 
Commission's decision regarding incumbent LECs' obligations to provide 
access to network elements on an unbundled basis. The order we issue 
today is consistent with the court's decision.

III. Discussion

    7. On July 18, 1997, the United States Court of Appeals for the 
Eighth Circuit affirmed in part and vacated in part the Commission's 
Local Competition Order. We note, as a predicate to our discussion 
below, that the court affirmed the Commission's rulemaking authority to 
identify unbundled network elements. The court held that section 
251(d)(2) of the Act expressly gave the Commission jurisdiction in this 
area. We thus conclude that the Commission has authority to address, in 
this reconsideration order, the issues raised by petitioners concerning 
the extent to which ``shared transport'' should be provided as an 
unbundled element.
    8. WorldCom filed a petition for clarification, and LECC filed a 
petition for reconsideration of the Local Competition Order; both 
petitions concerned the definition of shared transport as an unbundled 
network element. WorldCom filed a petition for clarification pursuant 
to 47 U.S.C. Sec. 405 and 47 CFR Sec. 1.429, which set forth rules 
regarding petitions for reconsideration. In its petition WorldCom also 
stated that, ``[s]hould the Commission not regard this petition as a 
request for clarification of the Local Competition Order, WorldCom 
requests that it be regarded as a petition for reconsideration.'' We 
believe WorldCom's filing is more properly addressed as a petition for 
reconsideration, and treat it as such in this decision.
    9. Parties disagree about what we required in the Local Competition 
Order with respect to shared transport. In addition, parties ask us to 
clarify or reconsider our decision regarding the provision of shared 
transport under section 251(c)(3). We first restate what we required in 
the Local Competition Order, and then reconsider certain aspects that 
may have been unclear or that were not addressed in the Local 
Competition Order. We then respond to arguments raised by parties that 
advocate a different approach to the provision of shared transport than 
our rules require.
    10. We believe that the petitions for reconsideration have raised 
reasonable questions about the scope and nature of an incumbent LEC's 
obligation to offer shared transport as an unbundled network element, 
pursuant to section 251(c)(3) and our implementing regulations. We 
address these issues below. We also believe, however, some parties have 
argued that certain aspects of the rules adopted last August were 
ambiguous which, in our view, were clear. Specifically, in the Local 
Competition Order, we expressly required incumbent LECs to provide 
access to transport facilities ``shared by more than one customer or 
carrier.'' The term ``carrier'' includes both an incumbent LEC as well 
as a requesting telecommunications carrier. We,

[[Page 45581]]

therefore, conclude that ``shared transport,'' as required by the Local 
Competition Order encompasses a facility that is shared by multiple 
carriers, including the incumbent LEC. We recognize that the Local 
Competition Order did not explicitly state that an incumbent LEC must 
provide shared transport in a way that enables the traffic of 
requesting carriers to be carried on the same facilities that an 
incumbent LEC uses for its traffic. We find, however, that a fair 
reading of our order and rules does not support the claim advanced by 
Ameritech that a shared network element necessarily is shared only 
among competitive carriers and is separate from the facility used by 
the incumbent LEC for its own traffic. Indeed, only Ameritech and US 
West suggest that the Local Competition Order could be interpreted to 
require sharing only between multiple competitive carriers. Moreover, 
the fact that we required incumbent LECs to provide access to other 
network elements, such as signalling, databases, and the local switch, 
which are shared among requesting carriers and incumbent LECs is 
consistent with our view that transport facilities ``shared by more 
than one customer or carrier'' must be shared between the incumbent 
LECs and requesting carriers. Furthermore, with respect to local 
switching, we expressly rejected, in the Local Competition Order, a 
proposal that incumbent LECs could, or were required to, partition 
local switches before providing requesting carriers access to incumbent 
LEC switches under section 251(c)(3). We stated that ``[t]he 
requirements we establish for local switch unbundling do not entail 
physical division of the switch, and consequently do not impose the 
inefficiency or technical difficulties identified by some 
commentators.'' We thus required that shared portions of incumbent LEC 
switches would be shared by all carriers, including the incumbent LEC. 
Although we do not believe that the Local Competition Order was unclear 
as to this aspect of an incumbent LEC's obligation to provide shared 
transport, we take this opportunity to state explicitly that the Local 
Competition Order requires incumbent LECs to offer requesting carriers 
access, on a shared basis, to the same interoffice transport facilities 
that the incumbent uses for its own traffic.
    11. We also conclude that the Local Competition Order was not 
ambiguous as to an incumbent LEC's obligation to offer access to the 
routing table resident in the local switch to requesting carriers that 
purchase access to the unbundled local switch. The Local Competition 
Order made clear that requesting carriers that purchase access to the 
unbundled local switch may obtain customized routing, unless it is not 
technically feasible to provide customized routing from that switch. In 
those instances, a requesting carrier is limited to using the routing 
instructions in the incumbent LEC's routing table. In so holding, we 
necessarily accepted the view that requesting carriers that take 
unbundled local switching have access to the incumbent LEC's routing 
table, resident in the switch. We find nothing in the Local Competition 
Order that supports the contention that requesting carriers that obtain 
access to unbundled local switching, pursuant to section 251(c)(3), do 
not obtain access to the routing table in the unbundled local switch.
    12. The Local Competition Order did not clearly define certain 
aspects of incumbent LECs' obligation to provide access to shared 
transport under section 251(c)(3). In particular, we did not clearly 
and unambiguously (1) identify all portions of the network to which 
incumbent LEC must provide interoffice transport facilities on a shared 
basis; and (2) address whether requesting carriers may use shared 
transport facilities to provide exchange access service to IXCs for 
access to customers to whom they also provide local exchange service. 
We do so here on reconsideration.
A. Incumbent LECs' Obligation Regarding Shared Transport
    13. We conclude that the obligation of incumbent LECs to provide 
requesting carriers with access to shared transport extends to all 
incumbent LEC interoffice transport facilities, and not just to 
interoffice facilities between an end office and tandem. Thus, 
incumbent LECs are required to provide shared transport (between end 
offices, between tandems, and between tandems and end offices).
    14. The Local Competition Order expressly required ``incumbent LECs 
to provide unbundled access to shared transmission facilities between 
end offices and the tandem switch.'' Parties disagree, however, about 
whether incumbent LECs are required to provide shared transport between 
end offices. As noted above, there is a discrepancy between the rule 
that establishes the general obligation to provide shared transport as 
a network element, and the rule vacated by the court that purports to 
establish the pricing standard for shared transport. 47 CFR 
Secs. 51.319(d) and 51.509(d). We note that the Eighth Circuit has held 
that the Commission lacked jurisdiction to adopt the pricing standard 
set forth in Sec. 51.509(d), and accordingly vacated that section of 
the Commission's rules. To the extent that incumbent LECs already have 
transport facilities between end offices, and between tandems, the 
routing table contained in the switch most likely would route calls 
between such switches. We therefore conclude that there is no basis for 
limiting the use of shared transport facilities to links between end 
office switches and tandem switches. Limiting the definition of shared 
transport in this manner would not permit requesting carriers to 
utilize the routing tables in the incumbent LECs' switches. To the 
contrary, such a limitation effectively would require a requesting 
carrier to design its own customized routing table, in order to avoid 
having its traffic transported over the same interoffice facilities, 
connecting end offices, that the incumbent LEC use to transport its own 
interoffice traffic. Moreover, in the Local Competition Order, we held 
that it is technically feasible to provide access to interoffice 
transport facilities between end offices and between end offices and 
tandem switches. No new evidence has been presented in this proceeding 
to convince us that our earlier conclusion regarding technical 
feasibility was incorrect.
    15. We further clarify in this order that incumbent LECs are only 
required to offer dedicated transport between their switches, or 
serving wire centers, and requesting carriers' switches. Our Local 
Competition Order was not absolutely clear as to whether incumbent LECs 
must provide dedicated or shared interoffice transport between 
incumbent LEC switches, or serving wire centers, and switches owned by 
requesting carriers. In the Local Competition Order, we required 
incumbent LECs to ``provide access to dedicated transmission facilities 
between LEC central offices or between end offices and those of 
competing carriers.'' This could be read to suggest that incumbent LECs 
are only required to provide dedicated (but not shared) interoffice 
transport facilities between their end offices, or serving wire 
centers, and points in the requesting carrier's network. The rule that 
defines interoffice transmission facilities, however, is less clear, 
and could be read to require incumbent LECs to provide shared transport 
between incumbent LECs' switches, or serving wire centers, and 
requesting carriers' switches.
    16. We therefore clarify here that incumbent LECs must offer only 
dedicated transport, and not shared transport, between their switches, 
or

[[Page 45582]]

serving wire centers, and requesting carriers' switches, as set forth 
in the Local Competition Order. We also note that the Local Competition 
Order expressly limited the requirement to provide unbundled 
interoffice transport facilities to existing incumbent LEC facilities.
    17. On reconsideration, we further clarify that incumbent LECs are 
not required to provide shared transport between incumbent LEC switches 
and serving wire centers. We stated above that shared transport must be 
provided between incumbent LEC switches. Serving wire centers are 
merely points of demarcation in the incumbent LEC's network, and are 
not points at which traffic is switched. Traffic routed to a serving 
wire center is traffic dedicated to a particular carrier. We thus 
conclude that unbundled access to the transport links between incumbent 
LEC switches and serving wire centers must only be provided by 
incumbent LECs on a dedicated basis.
    18. Finally, we note that, traditionally, shared facilities are 
priced on a usage-sensitive basis, and dedicated facilities are priced 
on a flat-rated basis. We believe that this usage-sensitive pricing 
mechanism provides a reasonable and fair allocation of cost between the 
users of shared transport facilities. For example, in the Access Charge 
Reform Order (62 FR 40460 (July 29, 1997)), specifically the sections 
dealing with rate structure issues for interstate access charges, we 
required that the cost of switching, a shared facility, be recovered on 
a per minute of use basis, while the cost of entrance facilities, which 
are dedicated to a single interexchange carrier, be recovered on a 
flat-rated basis. We note that several state commissions, in 
proceedings conducted pursuant to section 252 of the Act, have required 
incumbent LECs to offer shared transport priced on a usage-sensitive 
basis. We acknowledge that, under the Eighth Circuit's decision, we may 
not establish pricing rules for shared transport. However, in 
situations where the Commission is required to arbitrate 
interconnection agreements pursuant to subsection 252(e)(5), we intend 
to establish usage-sensitive rates for recovery of shared transport 
costs unless parties demonstrate otherwise.

B. Application of the Requirements of Section 251(d)(2) To Shared 
Transport

    19. Shared transport, as defined in this order, satisfies the two-
prong test set forth in section 251(d)(2) of the Act. Section 251(d)(2) 
requires the Commission, in determining what network elements should be 
made available under section 251(c)(3), to consider ``at a minimum, 
whether (A) access to such network elements as are proprietary in 
nature is necessary; and (B) the failure to provide access to such 
network elements would impair the ability of the telecommunications 
carrier seeking access to provide the services that it seeks to 
offer.'' In the Local Competition Order, we held that an incumbent 
could refuse to provide access to a network element pursuant to section 
251(d)(2) only if the incumbent LEC demonstrated that ``the element is 
proprietary and that gaining access to that element is not necessary 
because the competing provider can use other, nonproprietary elements 
in the incumbent LEC's network to provide service.'' We further held 
that, under section 251(d)(2)(B), we must consider ``whether the 
failure of an incumbent to provide access to a network element would 
decrease the quality, or increase the financial or administrative cost 
of the service a requesting carrier seeks to offer, compared with 
providing that service over other unbundled elements in the incumbent 
LEC's network.'' The Eighth Circuit affirmed the Commission's 
interpretation of section 251(d)(2).
    20. In the Local Competition Order, we concluded that, with respect 
to transport facilities, ``the record provides no basis for withholding 
these facilities from competitors based on proprietary 
considerations.'' We also concluded that section 251(d)(2)(B) requires 
incumbent LECs to provide access to shared interoffice facilities and 
dedicated interoffice facilities. With respect to the unbundled local 
switch, we held that, even assuming that switching may be proprietary, 
at least in some respects, ``access to unbundled local switching is 
clearly `necessary' under our interpretation of section 251(d)(2)(A).'' 
We also concluded that a requesting carrier's ability to offer local 
exchange service would be ``impaired, if not thwarted,'' without access 
to the unbundled local switch, and therefore, that section 251(d)(2)(B) 
requires incumbent LECs to provide access to the unbundled local 
switch.
    21. Upon reconsideration, we herein affirm that incumbent LECs are 
obligated under section 251(d)(2) to provide access to shared 
transport, as we here define it, as an unbundled network element. 
Parties in the record have not contended that interoffice transport 
facilities are proprietary, and we have no basis for modifying our 
prior conclusion that interoffice transport facilities are not 
proprietary. Thus, there is no basis under section 251(d)(2)(A) for 
incumbent LECs to refuse to provide interoffice transport facilities on 
a shared as well as a dedicated basis.
    22. We also note that the failure of an incumbent LEC to provide 
access to all of its interoffice transport facilities on a shared basis 
would significantly increase the requesting carriers' costs of 
providing local exchange service and thus reduce competitive entry into 
the local exchange market. In the Local Competition Order, we observed 
that:

    By unbundling various dedicated and shared interoffice 
facilities, a new entrant can purchase all interoffice facilities on 
an unbundled basis as part of a competing local network, or it can 
combine its own interoffice facilities with those of the incumbent 
LEC. The opportunity to purchase unbundled interoffice facilities 
will decrease the cost of entry compared to the much higher cost 
that would be incurred by an entrant that had to construct all of 
its own facilities. An efficient new entrant might not be able to 
compete if it were required to build interoffice facilities where it 
would be more efficient to use the incumbent LEC's facilities.

We continue to find the foregoing statements to be true with respect to 
shared as well as dedicated transport facilities. Requesting carriers 
should have the opportunity to use all of the incumbent LEC's 
interoffice transport facilities. Moreover, the opportunity to purchase 
transport facilities on a shared basis, rather than exclusively on a 
dedicated basis, will decrease the costs of entry.
    23. We believe that access to transport facilities on a shared 
basis is particularly important for stimulating initial competitive 
entry into the local exchange market, because new entrants have not yet 
had an opportunity to determine traffic volumes and routing patterns. 
Moreover, requiring competitive carriers to use dedicated transport 
facilities during the initial stages of competition would create a 
significant barrier to entry because dedicated transport is not 
economically feasible at low penetration rates. In addition, new 
entrants would be hindered by significant transaction costs if they 
were required to continually reconfigure the unbundled transport 
elements as they acquired customers. We note that incumbent LECs have 
significant economies of scope, scale, and density in providing 
transport facilities. Requiring transport facilities to be made 
available on a shared basis will assure that such economies are passed 
on to competitive carriers. Further, if new entrants were forced to 
rely on dedicated transport facilities, even at the earliest stages of 
competitive entry, they would almost inevitably miscalculate the 
capacity or routing

[[Page 45583]]

patterns. We recognize, however, that the need for access to all of the 
incumbent LEC's interoffice facilities on a shared basis may decrease 
as competitive carriers expand their customer base and have an 
opportunity to identify traffic volumes and call routing patterns. We 
therefore may revisit at a later date whether incumbent LECs continue 
to have an obligation, under section 251(d)(2), to provide access to 
all of their interoffice transmission facilities on a shared, usage 
sensitive basis. We note that, if, in the future, competitive carriers 
gain sufficient market penetration to justify obtaining dedicated 
transport facilities, either through the use of unbundled elements or 
through building their facilities, shared transport may no longer meet 
the section 251(d)(2) requirements. In that event, the Commission can 
evaluate at that time whether incumbent LECs must continue to provide 
access to shared transport as a network element.
    24. As noted above, although interoffice transport, as we define 
the element pursuant to section 251(c)(3), refers to the transport 
links in the incumbent LEC's network, access to those links on a shared 
basis effectively requires a requesting carrier to utilize the routing 
table contained in the incumbent LEC's switch. Ameritech contends that 
the routing table contained in the switch, which is used in conjunction 
with shared transport, is proprietary. Ameritech and other incumbent 
LECs further allege that requesting carriers may obtain the functional 
equivalent of shared transport either by purchasing transport as an 
access service, or by purchasing dedicated transport facilities. These 
parties thus contend that, under section 251(d)(2)(A), incumbent LECs 
are not required to provide shared transport (including use of the 
routing table contained in the switch) as a network element.
    25. Issues regarding intellectual property rights associated with 
network elements are before us in a separate proceeding. For purposes 
of this Order only, we therefore assume without deciding that the 
routing table is proprietary. We nevertheless conclude that section 
251(d)(2) requires an incumbent LEC to provide access to both its 
interoffice transmission facilities and to the routing tables contained 
in the incumbent LEC's switches. We affirm our finding in the Local 
Competition Order that transport provided as part of access service, or 
as a wholesale usage service, is not a viable substitute for shared 
transport as a network element. All incumbent LECs are not required to 
offer transport as an access service on a stand alone basis.
Only Class A carriers are required, under our Expanded Interconnection 
rules, to unbundle interstate transport service. Moreover, transport 
service that incumbents offer under the Expanded Interconnection 
tariffs may include only interstate transport facilities (transport 
provided either via a tandem switch or direct trunked between a local 
switch and the serving wire center), not interoffice transport 
facilities directly connecting two local switches. In the Local 
Competition Order, moreover, we expressly rejected the suggestion that 
requesting carriers ``are not impaired in their ability to provide a 
service * * * if they can provide the proposed service by purchasing 
the service at wholesale rates from a LEC.''
C. Use of Shared Transport Facilities To Provide Exchange Access 
Service
    26. In this order on reconsideration, we clarify that requesting 
carriers that take shared or dedicated transport as an unbundled 
network element may use such transport to provide interstate exchange 
access services to customers to whom it provides local exchange 
service. We further clarify that, where a requesting carrier provides 
interstate exchange access services to customers, to whom it also 
provides local exchange service, the requesting carrier is entitled to 
assess originating and terminating access charges to interexchange 
carriers, and it is not obligated to pay access charges to the 
incumbent LEC.
    27. In the Local Competition Order, we held that, if a requesting 
carrier purchases access to a network element in order to provide local 
exchange service, the carrier may also use that element to provide 
exchange access and interexchange services. We did not impose any 
restrictions on the types of telecommunications services that could be 
provided over network elements. We did not specifically consider in the 
Local Competition Order, however, whether a requesting carrier may use 
interoffice transport to provide exchange access service. We conclude 
here that a requesting carrier may use the shared transport unbundled 
element to provide exchange access service to customers for whom the 
carrier provides local exchange service. We find that this is 
consistent with our initial decision.
D. Response to Specific Arguments Raised by Parties
    28. As discussed above, we define the unbundled network element of 
shared transport under section 251(c)(3) as interoffice transmission 
facilities, shared between the incumbent LEC and one or more requesting 
carriers or customers, that connect end office switches, end office 
switches and tandem switches, or tandem switches, in the incumbent 
LEC's network. We exclude from this definition interoffice transmission 
facilities that connect an incumbent LEC's switch and a requesting 
carrier's switch, and those connecting an incumbent LEC's end office 
switch, or tandem switch, and a serving wire center. This definition of 
shared transport assumes the interconnection point between the two 
carriers' networks, pursuant to section 251(c)(2), is at the incumbent 
LEC's switch. This definition is consistent with the statutory 
definition of network elements, which defines a network element as a 
facility or equipment used in the provision of a telecommunications 
service, including the features, functions, and capabilities provided 
by means of such facility or equipment.
    29. As an initial matter, we reject Ameritech's contention that, by 
definition, network elements must be partly or wholly dedicated to a 
customer. To the contrary, we held in the Local Competition Order that 
some network elements, such as loops, are provided exclusively to one 
requesting carrier, and some network elements, such as interoffice 
transport provided on a shared basis, are provided on a minute-of-use 
basis and are shared with other carriers. In the Local Competition 
Order, we also identified signalling, call-related databases, and the 
switch, as network elements that necessarily must be shared among the 
incumbent and multiple competing carriers.
    30. We also reject Ameritech's and BellSouth's contention that, 
because WorldCom and other requesting carriers seek access to an 
element--shared transport--that cannot be effectively disassociated 
from another element--local switching, the requesting carriers are in 
fact seeking access to a bundled service rather than to transport as a 
network element unbundled from switching. As previously discussed, 
several of the network elements we identified in the Local Competition 
Order depend, at least in part, on other network elements. In 
particular, although we identified the signalling network as a network 
element, the information necessary to utilize signalling networks 
resides in the switch, which we identified as a separate network 
element. In addition, we required incumbent LECs, upon request, to 
provide access to unbundled loops conditioned to provide, among other 
things, digital services such as ISDN, even though the equipment used

[[Page 45584]]

to provide ISDN service typically resides in the local switch, rather 
than in the loop. We thus find no basis for concluding that each 
network element must be functionally independent of other network 
elements.
    31. We reject as well Ameritech's contention that a network element 
must be identifiable as a limited or pre-identified portion of the 
network. We find nothing in the statutory definition of network 
elements that prohibits requesting telecommunications carriers from 
seeking access to every transport facility within the incumbent's 
network. Our definition of signalling as a network element does not 
require requesting carriers to identify in advance a particular portion 
of the incumbent LEC's signalling facilities, but instead permits 
requesting carriers to obtain access to multiple signalling links and 
signalling transfer points in the incumbent LEC's network on an as-
needed basis. We also reject Ameritech's assertion that shared 
transport cannot be physically separated from switching. Both dedicated 
and shared transport facilities are transport links between switches. 
These links are physically distinct from the end office and tandem 
switches themselves.
    32. Although we conclude that shared transport is physically 
severable from switching, incumbent LECs may not unbundle switching and 
transport facilities that are already combined, except upon request by 
a requesting carrier. Although, the Eighth Circuit struck down the 
Commission's rule that required incumbent LECs to rebundle separate 
network elements, the court nevertheless stated that it: ``upheld the 
remaining unbundling rules as reasonable constructions of the Act, 
because, as we have shown, the Act itself calls for the rapid 
introduction of competition into the local phone markets by requiring 
incumbent LECs to make their networks available to * * * competing 
carriers.'' Among other things, the court left in effect Sec. 51.315(b) 
of the Commission's rules, which provides that, ``[e]xcept upon 
request, an incumbent LEC shall not separate requested network elements 
that the incumbent LEC currently combines.'' Therefore, although 
incumbent LECs are not required to combine transport and switching 
facilities to the extent that those elements are not already combined, 
incumbent LECs may not separate such facilities that are currently 
combined, absent an affirmative request. In addition to violating 
section 51.315(b) of our rules, such dismantling of network elements, 
absent an affirmative request, would increase the costs of requesting 
carriers and delay their entry into the local exchange market, without 
serving any apparent public benefit. We believe that such actions by an 
incumbent LEC would impose costs on competitive carriers that incumbent 
LECs would not incur, and thus would violate the requirement under 
section 251(c)(3) that incumbent LECs provide nondiscriminatory access 
to unbundled elements. Moreover, an incumbent LEC that separates shared 
transport facilities that are already connected to a switch would 
likely disrupt service to its own customers served by the switch 
because, by definition, the shared transport links are also used by the 
incumbent LEC to serve its customers. Thus, incumbent LECs would seem 
to have no network-related reason to separate network elements that it 
already combines absent a request.
    33. We likewise reject Ameritech's contention that purchasing 
access to the switch as a network element does not entitle a carrier to 
use the routing table located in that switch. According to Ameritech, 
vendors provide switches that are capable of acting on routing 
instructions, but the switch itself does not include routing 
instructions; those instructions are added by the carrier after it 
purchases the switch from the vendor and are contained in a routing 
table resident in the switch. Ameritech asserts that its routing tables 
are proprietary products, and ``are not a feature of the switch.'' In 
the Local Competition Order, we determined that ``we should not 
identify elements in rigid terms, but rather by function.'' Routing is 
a critical and inseverable function of the local switch. One of the 
most essential features a switch performs is to provide routing 
information that sends a call to the appropriate destination. We find 
no support in the statute, the Local Competition Order, or our rules 
for Ameritech's assertion that the switch, as a network element, does 
not include access to the functionality provided by an incumbent LEC's 
routing table. In fact, the only question addressed in the Local 
Competition Order was whether requesting carriers could obtain 
customized routing, that is, routing different from the incumbent LEC's 
existing routing arrangements.
    34. We further find that access to unbundled switching is not 
necessarily limited to the product the incumbent LEC originally 
purchased from a vendor. As we noted in the Local Competition Order, 
incumbent LECs may in some instances be required to modify or condition 
a network element to accommodate a request under section 251(c)(3). 
Moreover, we held that unbundled local switching includes access to the 
vertical features of the switch, regardless of whether the vertical 
features were included in the switch when it was purchased, or whether 
the vertical features were purchased separately from the vendor or 
developed by the incumbent. We held that network elements include 
physical facilities ``as well as logical features, functions, and 
capabilities that are provided by, for example, software located in a 
physical facility such as a switch.'' We also note that the Eighth 
Circuit affirmed the Commission's interpretation of the Act's 
definition of ``network elements.'' The court stated that ``the Act's 
definition of network elements is not limited to only the physical 
components of a network that are directly used to transmit a phone call 
from point A to point B'' and that the Act's definition explicitly made 
reference to ``databases, signaling systems, and information sufficient 
for billing and collection.'' Thus, just as databases and signaling 
systems may include software created by the incumbent LEC, which must 
be made available to competitive carriers purchasing those elements on 
an unbundled basis, we believe that the routing table created by the 
incumbent LEC that is resident in the switch must be made available to 
requesting carriers purchasing unbundled switching. Finally, we note 
that Ameritech is the only incumbent LEC that has argued in this record 
that the routing table is not included in the unbundled local switching 
element. Other incumbent LECs have stated that they offer shared 
transport in conjunction with unbundled local switching. This suggests 
that other incumbent LECs recognize that the routing table is a 
feature, function, or capability of the switch.
    35. We also disagree with Ameritech's and BellSouth's argument that 
defining the unbundled network element shared transport as all 
transport links between any two incumbent LEC switches would be 
inconsistent with Congress's intention to distinguish between resale 
services and unbundled network elements. Section 251(c)(3) requires 
incumbent LECs to make available unbundled network elements at cost-
based rates; sections 251(c)(4) and 252(d)(3) require incumbent LECs to 
make available for resale, at retail price less avoided costs, services 
the incumbent LEC offers to retail users. In the Local Competition 
Order, we held that a key distinction between section 251(c)(3) and 
section 251(c)(4) is that a requesting carrier that obtains access to

[[Page 45585]]

unbundled network elements faces greater risks than a requesting 
carrier that only offers services for resale. A requesting carrier that 
takes a network element dedicated to that carrier, and recovered on a 
flat-rated basis, must pay for the cost of the entire element, 
regardless of whether the carrier has sufficient demand for the 
services that the element is able to provide. The carrier thus is not 
guaranteed that it will recoup the costs of the element. By contrast, a 
carrier that uses the resale provision will not bear the risk of paying 
for services for which it does not have customers. In particular, a 
requesting carrier that takes an unbundled local switch must pay for 
all of the vertical features included in the switch, even if it is 
unable to sell those vertical features to end user customers. 
Requesting carriers that purchase shared transport as a network element 
to provide local exchange service must also take local switching, for 
the practical reasons set forth herein, and consequently will be forced 
to assume the risk associated with switching. A requesting carrier that 
uses its own self-provisioned local switches, rather than unbundled 
local switches obtained from an incumbent LEC, to provide local 
exchange and exchange access service would use dedicated transport 
facilities to carry traffic between its network and the incumbent LEC's 
network. Thus, the only carrier that would need shared transport 
facilities would be one that was using an unbundled local switch.
    36. BellSouth's argument, that assessing a usage-sensitive rate for 
shared transport would be inconsistent with the 1996 Act because it 
would not reflect the manner in which costs are incurred, is similarly 
unpersuasive. BellSouth's argument is premised on the assumption that 
incumbent LECs would be required to provide shared transport over 
facilities between the tandem switch and the serving wire center. In 
this order, however, we make clear that incumbent LECs are required to 
provide transport on a dedicated, but not on a shared basis, over 
transport facilities between the incumbent LEC's tandem and the serving 
wire center. Thus, BellSouth's concern is misplaced.
    37. We also find that there is no element in the incumbent LEC's 
network that is an equivalent substitute for the routing table. We 
agree with Ameritech that requesting carriers could duplicate the 
shared transport network by purchasing dedicated facilities. But in 
that instance, requesting carriers would be forced to develop their own 
routing instructions, and would not be utilizing a portion of the 
incumbent LEC's network to substitute for the routing table. In the 
Local Competition Order, we specifically rejected the suggestion that 
an incumbent LEC is not required to provide a network element if a 
requesting carrier could obtain the element from a source other than 
the incumbent LEC. The Eighth Circuit affirmed the Commission's 
conclusion.
    38. Furthermore, we find that, at this stage of competitive entry, 
limiting shared transport to dedicated transport facilities, as 
Ameritech suggests, would impose unnecessary costs on new entrants 
without any corresponding, direct benefits. AT&T and Ameritech have 
both presented evidence regarding the costs of dedicated transport 
facilities linking every end office and tandem in an incumbent LEC's 
network as significant relative to the cost of ``shared transport.''. 
For example, AT&T contends that the cost is $.041767 per minute for 
dedicated transport plus associated non-recurring charges (NRCs). AT&T 
claims that Ameritech would charge a total of $5008.58 per DS1 
(including administrative charges and connection charges) and 
$58,552.87 per switch (including customized routing and billing 
development). AT&T argues that this compares with $.000776 per minute 
for unbundled shared transport. Ameritech, on the other hand, contends 
the use of tandem routed dedicated facilities cost is $.0031148 per 
minute plus associated NRCs. Ameritech claims that the nonrecurring 
charges per DS1 are $2769.27 (including administrative charges per 
order). Ameritech states that other NRCs include two trunk port 
connection charges ($770.29 initial, $29.16 subsequent), service 
ordering charge per occasion ($398.72 initial, $17.37 subsequent), 
billing development charge per switch ($35,328.87), custom routing 
charge, per line class code per switch ($232.24), and a service order 
charge ($398.73). Nevertheless, under either AT&T's or Ameritech's cost 
calculations for dedicated transport, we conclude that the relative 
costs of dedicated transport, including the associated NRCs, is an 
unnecessary barrier to entry for competing carriers.
    39. We also find that limiting shared transport to dedicated 
facilities, as defined by Ameritech, would be unduly burdensome for new 
entrants. First, we agree with MCI, AT&T, et al., that a new entrant 
may not have sufficient traffic volumes to justify the cost of 
dedicated transport facilities. Second, a new entrant entering the 
local market with smaller traffic volumes would have to maintain 
greater excess capacity relative to the incumbent LEC in order to 
provide the same level of service quality (i.e., same level of 
successful call attempts) as the incumbent LEC. See William W. Sharkey, 
The Theory of Natural Monopoly 184-85, (1982) (``that for a given 
number of circuits the economies [of scale] are more pronounced at 
higher grades of service (lower blocking probability). The economics of 
scale, however, decline substantially as the number of circuits 
increases. Therefore for small demands a fragmentation of the network 
could result in a significant cost penalty, because more circuits would 
be required to maintain the same grade of service. At larger demands 
the costs of fragmentation are less pronounced.'') (emphasis added). As 
a new entrant gains market share and increased traffic volumes for 
local service, however, the relative amount of excess capacity 
necessary to prevent blocking should decrease. We do not rule out the 
possibility, therefore, that, once new entrants have had a fair 
opportunity to enter the market and compete, we might reconsider 
incumbent LECs' obligations to provide access to the routing table.
    40. As discussed above, requesting carriers may use shared 
transport to provide exchange access service to customers for whom they 
also provide local exchange service. Several competing carriers contend 
that an interexchange carrier (IXC) has the right to select a 
requesting carrier that has purchased unbundled shared transport to 
provide exchange access service. The carriers further contend that, if 
the IXC selects a requesting carrier, rather than the incumbent LEC, as 
the exchange access provider, the competing carrier is entitled to bill 
the IXC for the access services associated with shared transport. We 
find that a requesting carrier may use shared transport facilities to 
provide exchange access service to originate or terminate traffic to 
its local exchange customers, regardless of whether the requesting 
carrier or another carrier is the IXC for that traffic. We further 
conclude that a requesting carrier that provides exchange access 
service to another carrier is entitled to assess access charges 
associated with the shared transport facilities used to transport the 
traffic. We believe that this necessarily follows from our decision in 
the Local Competition Order where we stated that:

    [W]here new entrants purchase access to unbundled network 
elements to provide exchange access services, whether or not they 
are also offering toll services through such elements, the new 
entrants may assess exchange access charges to IXCs originating or 
terminating toll calls on those elements. In these circumstances, 
incumbent LECs may not assess exchange access charges to IXCs 
because the new entrants, rather than the

[[Page 45586]]

incumbents, will be providing exchange access services. * * *

We therefore find that requesting carriers that provide exchange access 
using shared transport facilities to originate and terminate local 
exchange calls may also use those same facilities to provide exchange 
access service to the same customers to whom the requesting carrier is 
providing local exchange service. Requesting carriers are then entitled 
to assess access charges to interexchange carriers that use the shared 
transport facilities to originate and terminate traffic to the 
requesting carrier's customers.
E. Final Regulatory Flexibility Analysis
    41. As required by the Regulatory Flexibility Act (RFA), the 
Commission issued a Final Regulatory Flexibility Analysis (FRFA) in its 
Local Competition Order in this proceeding. None of the petitions for 
reconsideration filed in Docket No. 96-98 specifically address, or seek 
reconsideration of, that FRFA. This present Supplemental Final 
Regulatory Flexibility Analysis addresses the potential effect on small 
entities of the rules adopted pursuant to the Third Order on 
Reconsideration in this proceeding, supra. This Supplemental FRFA 
incorporates and adds to our FRFA.
    42. Need for and Objectives of this Third Order on Reconsideration 
and the Rules Adopted Herein. The need for and objectives of the rules 
adopted in this Third Order on Reconsideration are the same as those 
discussed in the Local Competition Order's FRFA ``Summary Analysis of 
Section V Access to Unbundled Network Elements.'' In general, our rules 
adopted in Section V were intended to facilitate the statutory 
requirement that incumbent local exchange carriers (LECs) are required 
to provide nondiscriminatory access to unbundled network elements. In 
this Third Order on Reconsideration, we grant in part and deny in part 
the petitions filed for reconsideration and/or clarification of the 
Local Competition Order, in order to further the same needs and 
objectives. We conclude that the duty of incumbent LECs to provide 
access to unbundled network elements also includes the provision of 
``shared transport'' as an unbundled network element between end 
offices, even if tandem switching is not used to route the traffic. We 
also hold that the term ``shared transport'' refers to all transmission 
facilities connecting an incumbent LEC's switches--that is, between end 
office switches, between an end office switch and a tandem switch, and 
between tandem switches. We conclude that incumbent LECs are obligated 
under Section 251(d)(2) of the Communications Act of 1934, as amended, 
47 U.S.C. Sec. 251(d)(2), to provide access to both their interoffice 
transmission facilities and their routing tables contained in the 
incumbent LEC's switches. Finally, we conclude that a requesting 
carrier may use the shared transport unbundled element to provide 
exchange access service to customers for whom the carrier provides 
local exchange service.
    43. Description and Estimate of the Number of Small Entities To 
Which the Rules Will Apply. In determining the small entities affected 
by our Third Order on Reconsideration for purposes of this Supplemental 
FRFA, we adopt the analysis and definitions set forth in the FRFA in 
our Local Competition Order. The RFA directs the Commission to provide 
a description of and, where feasible, an estimate of the number of 
small entities that might be affected by the rules we have adopted. The 
RFA defines the term ``small entity'' as having the same meaning as the 
terms ``small business,'' ``small organization,'' and ``small business 
concern'' under Section 3 of the Small Business Act. A small business 
concern is one which: (1) Is independently owned and operated; (2) is 
not dominant in its field of operation; and (3) satisfies any 
additional criteria established by the Small Business Administration 
(SBA). The SBA has defined a small business for Standard Industrial 
Classification (SIC) categories 4812 (Radiotelephone Communications) 
and 4813 (Telephone Communications, Except Radiotelephone) to be an 
entity with no more than 1,500 employees. Consistent with our FRFA and 
prior practice, we here exclude small incumbent local exchange carriers 
(LECs) from the definition of ``small entity'' and ``small business 
concern.'' While such a company may have 1500 or fewer employees and 
thus fall within the SBA's definition of a small telecommunications 
entity, such companies are either dominant in their field of operations 
or are not independently owned and operated. Out of an abundance of 
caution, however, for regulatory flexibility analysis purposes, we will 
consider small incumbent LECs within this present analysis and use the 
term ``small incumbent LECs'' to refer to any incumbent LEC that 
arguably might be defined by SBA as a small business concern.
    44. In addition, for purposes of this Supplemental FRFA, we adopt 
the FRFA estimates of the numbers of telephone companies, incumbent 
LECs, and competitive access providers (CAPs) that might be affected by 
the Local Competition Order. In the FRFA, we determined that it was 
reasonable to conclude that fewer than 3,497 telephone service firms 
are small entity telephone service firms or small incumbent LECs that 
might be affected. We further estimated that there are fewer than 1,347 
small incumbent LECs that might be affected. Finally, we estimated that 
there were fewer than 30 small entity CAPs that would qualify as small 
business concerns.
    45. Summary of Projected Reporting, Recordkeeping and Other 
Compliance Requirements. As a result of the rules adopted in the Third 
Order on Reconsideration, we require incumbent LECs to provide 
requesting carriers with access to the same shared transport for all 
transmission facilities connecting incumbent LECs' switches. No party 
to this proceeding has suggested that changes in the rules relating to 
access to unbundled network elements would affect small entities or 
small incumbent LECs. We determine that complying with this rule may 
require use of engineering, technical, operational, accounting, 
billing, and legal skills. For example, a new entrant may be required 
to combine its own interoffice facilities with those of the incumbent 
LEC, or be required to combine purchased unbundled network elements 
into a package unique to its own needs.
    46. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Alternatives Considered. As stated in our FRFA, we 
determined that our decision to establish minimum national requirements 
for unbundled elements should facilitate negotiations and reduce 
regulatory burdens and uncertainty for all parties, including small 
entities and small incumbent LECs. National requirements for unbundling 
may allow new entrants, including small entities, to take advantage of 
economies of scale in network design, which may minimize the economic 
impact of our decision in the Local Competition Order. As stated above, 
no petitioner has challenged this finding. We further find that our new 
rules, which clarify the definition of ``shared transport,'' will 
likely ensure that small entities obtain the unbundled elements that 
they request.
    47. Report to Congress: The Commission will send a copy of the 
Third Order on Reconsideration, including this Supplemental FRFA, in a 
report to be sent to Congress pursuant to the Small Business Regulatory 
Enforcement Fairness Act of 1996, see 5 U.S.C. 801(a)(1)(A). A copy of 
the Third Order on Reconsideration and this supplemental FRFA (or 
summary

[[Page 45587]]

thereof) will also be published in the Federal Register, see 5 U.S.C. 
604(b), and will be sent to the Chief Counsel for Advocacy of the Small 
Business Administration.

IV. Ordering Clauses

    48. Accordingly, it is ordered that, pursuant to sections 1-4, 201-
205, 214, 251, 252, and 303(r) of the Communications Act of 1934, as 
amended, 47 U.S.C. 151-154, 201-205, 214, 251, 252, and 303(r), the 
Third Order on Reconsideration is adopted.
    49. It is further ordered that changes adopted on reconsideration 
and the rule amendments will be effective September 29, 1997.
    50. It is further ordered, pursuant to section 405 of the 
Communications Act of 1934, as amended, 47 U.S.C. 405, and Sec. 1.106 
of the Commission's rules, 47 CFR 1.106 (1995), that the petitions for 
reconsideration filed by WorldCom, Inc. and the Local Exchange Carriers 
Coalition are denied in part and granted in part to the extent 
indicated above.
    51. It is further ordered, that the Commission shall send a copy of 
this Third Order on Reconsideration and Further Notice of Proposed 
Rulemaking, including the associated Supplemental Final Regulatory 
Flexibility Analysis and Initial Regulatory Flexibility Analysis, to 
the Chief Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 51

    Communications common carriers, Network elements, Transport and 
termination.

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

Rule Changes

    Part 51 of title 47 of the Code of Federal Regulations is amended 
as follows:

PART 51--INTERCONNECTION

    1. The authority citation for part 51 continues to read as follows:

    Authority: Sections 1-5, 7, 201-05, 207-09, 218, 225-27, 251-54, 
271, 48 Stat. 1070, as amended, 1077; 47 U.S.C. 151-55, 157, 201-05, 
218, 225-27, 251-54, 271, unless otherwise noted.

    2. Section 51.319 is amended by revising paragraph (d)(1) to read 
as follows:


Sec. 51.319  Specific unbundling requirements.

* * * * *
    (d) * * *
    (1) Interoffice transmission facilities include:
    (i) Dedicated transport, defined as incumbent LEC transmission 
facilities dedicated to a particular customer or carrier that provide 
telecommunications between wire centers owned by incumbent LECs or 
requesting telecommunications carriers, or between switches owned by 
incumbent LECs or requesting telecommunications carriers;
    (ii) Shared transport, defined as transmission facilities shared by 
more than one carrier, including the incumbent LEC, between end office 
switches, between end office switches and tandem switches, and between 
tandem switches, in the incumbent LEC's network;
* * * * *
    3. Section 51.515 is amended by adding paragraph (d) to read as 
follows:


Sec. 51.515  Application of access charges.

* * * * *
    (d) Interstate access charges described in part 69 shall not be 
assessed by incumbent LECs on each element purchased by requesting 
carriers providing both telephone exchange and exchange access services 
to such requesting carriers' end users.

[FR Doc. 97-22734 Filed 8-27-97; 8:45 am]
BILLING CODE 6712-01-P