[Federal Register Volume 62, Number 209 (Wednesday, October 29, 1997)]
[Rules and Regulations]
[Pages 56111-56118]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-28613]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Chapter I

[CC Docket No. 96-61; FCC 97-366]


Petition for Rulemaking to Reclassify AT&T Corp. as Having 
Dominant Carrier Status

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Order on Reconsideration, Order Denying Petition for 
Rulemaking, and Second Order on Reconsideration in CC Docket No. 96-61 
(Order) released October 9, 1997 finds no new evidence or arguments 
that demonstrate that a new examination of AT&T's regulatory status is 
warranted. The Order also finds no basis to impose on AT&T a service 
requirement not imposed on other carriers subject to the rate averaging 
and rate integration rules, and that the Commission properly included 
AT&T/Alascom within the scope of the reclassification of AT&T as non-
dominant in the provision of interstate, domestic, interexchange 
services. Finally, the Order clarifies that, to the extent AT&T/Alascom 
has been found to be dominant in the provision of certain interstate 
common carrier services (which the Commission has previously defined as 
``all interstate interexchange transport and switching services that 
are necessary for other interexchange carriers to provide services in 
Alaska up to the point of interconnection with each Alaska local 
exchange carrier.''), AT&T/Alascom's regulatory obligations with 
respect to those services remain unchanged.

EFFECTIVE DATE: November 28, 1997.

FOR FURTHER INFORMATION CONTACT: Christopher Heimann, 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 October 8, 1997, and released October 9, 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/
fcc97-366.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.

SYNOPSIS OF ORDER ON RECONSIDERATION

I. Introduction

    1. On October 23, 1995, the Commission issued an order granting 
AT&T Corporation's (AT&T's) motion to be reclassified as a non-dominant 
carrier under Part 61 of the Commission's rules and regulations. On 
November 22, 1995, the State of Hawaii (Hawaii) and General 
Communications, Inc. (GCI) timely filed Petitions for Reconsideration 
of the Commission's AT&T Reclassification Order. For the reasons stated 
below, we deny the petitions of both Hawaii and GCI.
    2. On January 23, 1996, more than two months past the statutory 
deadline, Total Telecommunications Services, Inc. (TTS) also filed a 
Petition For Reconsideration, and a Motion For Acceptance of Petition 
For Reconsideration. As discussed below, we deny TTS's motion and 
dismiss its petition as untimely, and therefore do not address the 
merits of its petition.
    3. On December 23, 1996, GCI filed a Petition for Reconsideration 
or Clarification of the Commission's Tariff Forbearance Order (61 FR 
59340 (November 22, 1996)). For the reasons discussed below, we grant 
GCI's petition for clarification of the Tariff Forbearance Order.
    4. Finally, on December 31, 1996, the United Homeowners Association 
and the United Seniors Health Cooperative (UHA), filed a Petition for 
Rulemaking to Reclassify AT&T as Having Dominant Carrier Status. For 
the reasons discussed below, we deny UHA's petition.

II. Petitions for Reconsideration

A. Background

    5. In the AT&T Reclassification Order, the Commission reclassified 
AT&T as a non-dominant carrier, based on the Commission's finding that 
AT&T no longer possessed individual market power in the interstate, 
domestic, interexchange market taken as a whole. The Commission 
acknowledged that there was evidence in the record that AT&T, MCI and 
Sprint had increased basic schedule rates in lock-step, but found that 
that evidence did not support a finding that AT&T retained the power 
unilaterally to raise residential prices above competitive levels. In 
addition, the Commission found that, to the extent that tacit price 
coordination with respect to basic schedule or residential rates in 
general was occurring, the problem was generic to the

[[Page 56112]]

interexchange industry and not specific to AT&T. The Commission 
concluded that concerns regarding such pricing would be better 
addressed by removing regulatory requirements that may have facilitated 
such conduct, such as the longer advance notice period for tariff 
changes then applicable only to AT&T, and by addressing the issues 
raised by these concerns in the context of a proceeding to examine the 
interstate, domestic, interexchange market as a whole. We recently 
reiterated our concern that ``not all segments of [the interstate, 
interexchange services] market appear to be subject to vigorous 
competition,'' and expressed concern about the ``relative lack of 
competition among carriers to serve low volume long distance 
customers.''
    6. In assessing whether AT&T possessed individual market power, the 
Commission followed the relevant product and geographic market 
definitions adopted by the Commission in the Competitive Carrier 
proceeding. In that proceeding, the Commission found, for purposes of 
assessing the market power of interexchange carriers covered by that 
proceeding, that: ``(1) Interstate, domestic, interexchange 
telecommunications services comprise the relevant product market, and 
(2) the United States (including Alaska, Hawaii, Puerto Rico, U.S. 
Virgin Islands, and other U.S. off-shore points) comprises the relevant 
geographic market for this product, with no relevant submarkets.'' The 
Commission concluded that it should apply the foregoing market 
definitions in assessing AT&T's market power, because those definitions 
were applied in classifying all of AT&T's competitors as non-dominant 
carriers. The Commission further stated that examination of the 
substitutability of supply for interstate, domestic, interexchange 
services also indicated that use of those definitions to evaluate 
AT&T's market power was appropriate.
    7. As a non-dominant interexchange carrier, AT&T is generally 
subject to the same regulations as its long-distance competitors. In 
the AT&T Reclassification proceeding, however, AT&T made certain 
voluntary commitments that it described as transitional provisions 
intended to address concerns expressed by various parties about 
possible adverse effects of reclassifying AT&T. These commitments 
concerned, among other things, service to and from the States of Alaska 
and Hawaii, and other regions subject to the Commission's rate 
integration policy, and geographic rate averaging. In the AT&T 
Reclassification Order, the Commission accepted AT&T's commitments and 
ordered AT&T to comply with those commitments.
    8. On February 8, 1996, the Telecommunications Act of 1996 (1996 
Act) was enacted. The 1996 Act seeks ``to provide for a pro-
competitive, de-regulatory national policy framework'' designed to make 
available to ``all Americans'' advanced telecommunications and 
information technologies and services ``by opening all 
telecommunications markets to competition.'' Consistent with the 1996 
Act's objective of ensuring that all Americans benefit from the 
liberalization of telecommunications markets, the 1996 Act required the 
Commission, within six months after the date of enactment, to:

adopt rules to require that the rates charged by providers of 
interexchange telecommunications services to subscribers in rural 
and high cost areas shall be no higher than the rates charged by 
each such provider to its subscribers in urban areas. Such rules 
shall also require that a provider of interstate interexchange 
telecommunications services shall provide such services to its 
subscribers in each State at rates no higher than the rates charged 
to subscribers in any other State.

On August 7, 1996, the Commission adopted a Report and Order 
implementing these statutory requirements.
    9. On October 31, 1996, the Commission released the Tariff 
Forbearance Order. In that order, the Commission determined that the 
statutory criteria in section 10 of the Communications Act, as amended, 
were met to detariff completely interstate, domestic, interexchange 
services offered by nondominant interexchange carriers, and, therefore, 
that the Commission would no longer allow such carriers to file tariffs 
for such services pursuant to section 203 of the Communications Act.

B. Analysis

    10. Petitioners raise three substantive arguments in seeking 
reconsideration or clarification of the Commission's Order granting 
AT&T's motion to be reclassified as a non-dominant carrier. First, 
Hawaii argues that the Commission should strengthen AT&T's voluntary 
commitments by requiring AT&T to serve on Hawaii and the State of 
Alaska (Alaska) copies of any submissions that address the Commission's 
geographic rate averaging and rate integration policies, in order to 
ensure that Hawaii and Alaska have a meaningful opportunity to 
participate in pre-effective review proceedings. Second, GCI maintains 
that the reclassification of AT&T does not apply to AT&T/Alascom, Inc. 
(AT&T/Alascom), because AT&T/Alascom is still dominant in the Alaska 
market. Third, GCI argues that it is not clear which of the obligations 
and conditions imposed on AT&T and Alascom by the Market Structure 
Order (59 FR 27496 (May 27, 1994)), the Final Recommended Decision (58 
FR 63345 (December 1, 1993)), and the Alascom Authorization Order 
continue to apply now that AT&T has been reclassified as nondominant.
1. Whether the Commission Should Strengthen AT&T's Commitments
    a. Positions of the Parties. 11. Hawaii requests that the 
Commission strengthen the commitments made by AT&T in the AT&T 
Reclassification proceeding by requiring AT&T to serve on Alaska and 
Hawaii copies of any pleadings, tariff revisions or other submissions 
to the Commission that purport to seek alteration or a specific 
interpretation of, or otherwise affect, the Commission's rate 
integration and geographic rate averaging policies, at the same time 
AT&T files such submissions with the Commission. Hawaii argues that the 
historical importance of the Commission's rate integration and 
geographic rate averaging policies to Hawaii and Alaska, as well as the 
alleged lack of reasonably priced telecommunications to Hawaii, warrant 
assurance that Hawaii and Alaska will have the opportunity to voice 
their concerns if AT&T proposes to depart from these policies. Hawaii 
acknowledges that AT&T informally committed to give Hawaii notice of 
tariff filings departing from geographic rate averaging, but maintains 
that in some situations more time would be needed to ensure that it has 
an opportunity to respond.
    12. Alaska, CNMI, GTA, and Guam support Hawaii's request. Alaska 
argues that requiring AT&T to serve Alaska and Hawaii with copies of 
submissions affecting the Commission's rate integration and geographic 
averaging policies would not impose a significant burden on AT&T, but 
would ensure that the interests of citizens of Alaska and Hawaii are 
heard before any action affecting these policies goes into effect. 
CNMI, GTA and Guam contend that the Commission should require AT&T to 
serve on all interested parties, not just Alaska and Hawaii, copies of 
submissions that would alter the Commission's rate integration or 
geographic rate averaging policies. Similarly, the LEC Associations 
argue that AT&T should be required to serve copies of submissions that 
depart from the Commission's established geographic averaging policies 
in other states and in U.S. territories, because

[[Page 56113]]

geographic averaging is essential for maintaining universal service. 
They also urge the Commission to commence a proceeding to codify its 
geographic averaging polices.
    13. AT&T responds that Hawaii's petition relates solely to AT&T's 
voluntary commitments concerning rate integration and geographic rate 
averaging, and that, since the commitments were not offered, or used, 
to support the Commission's finding that AT&T lacks market power in the 
overall interstate, domestic, interexchange market, the 
reclassification of AT&T is appropriate. AT&T argues that the 
Commission cannot modify voluntary commitments that were not the basis 
for its ruling, and cannot create or impose new rules on AT&T in this 
non-rulemaking proceeding. AT&T also contends that the relief sought by 
the parties supporting Hawaii's petition would impose significantly 
greater burdens on AT&T than are required under the Commission's tariff 
filing rules for dominant carriers. AT&T concludes that the requested 
relief should be rejected as unnecessary and overly burdensome, in 
light of the fact that all such filings are made on the public record 
at the Commission. AT&T also argues that the relief sought would exceed 
the Commission's authority by requiring AT&T to make public tariff 
filings not only with the Commission, but with Hawaii, Alaska, the 
Northern Mariana Islands, and other state jurisdictions and U.S. 
territories.
    14. In reply, Hawaii argues that its petition is consistent with 
the Commission's stated commitment to rate integration and geographic 
averaging, and the Commission's decision to incorporate AT&T's 
commitments into the AT&T Reclassification Order. It adds that its 
request is also consistent with AT&T's pledge to ``work very closely on 
an informal basis with representatives of the State of Hawaii on 
matters affecting telecommunications there.'' Hawaii claims it is 
merely seeking assurance that AT&T will honor its pledge. Hawaii 
concludes that the relief it seeks would not burden AT&T or the 
Commission, but would ensure that citizens of Hawaii have a meaningful 
opportunity to participate in the pre-effective review of any filings 
that affect these policies.
    b. Discussion. 15. As noted above, on August 7, 1996, the 
Commission adopted the Geographic Averaging Order (61 FR 42558 (August 
16, 1996)), which implemented the geographic rate averaging and rate 
integration requirements of the 1996 Act. In that Order, we adopted a 
rule requiring that ``the rates charged by all providers of 
interexchange telecommunications services to subscribers in rural and 
high cost areas shall be no higher than the rates charged by each such 
provider to its subscribers in urban areas.'' The Commission stated 
that this rule ``codifies our existing geographic rate averaging 
policy.'' The LEC Associations'' request that the Commission initiate a 
proceeding to codify its geographic rate averaging policies is 
therefore moot. The Commission also adopted a rule ``requiring that `a 
provider of interstate interexchange telecommunications services shall 
provide such services to its subscribers in each State at rates no 
higher than the rates charged to its subscribers in any other State.''' 
As required by the 1996 Act, the Commission found that the geographic 
rate averaging rule applies ``to all providers of interexchange 
telecommunications services, and to all interexchange 
`telecommunications services,' as defined by the Act.'' Similarly, the 
Commission found that the rate integration rule applies ``to all 
domestic interstate interexchange telecommunications services as 
defined in the 1996 Act, and all providers of such services.''
    16. In the Geographic Averaging Order, the Commission also 
determined that the rules adopted in that proceeding superseded the 
rate averaging and rate integration commitments AT&T voluntarily made 
in the AT&T Reclassification proceeding. We based this determination on 
the grounds that the rules we adopted in Geographic Averaging Order 
would require AT&T to provide interexchange service at geographically 
averaged and integrated rates, and that these requirements incorporated 
the Commission's rate averaging and rate integration policies then in 
effect. We therefore released AT&T from the commitment to comply with 
the Commission's earlier orders regarding rate integration and the 
commitment to file any tariff containing a geographically deaveraged 
rate on five business days' notice.
    17. In light of Congress's codification of the Commission's rate 
averaging and rate integration policies in section 254(g) of the 
Communications Act, the Commission's rules implementing that section, 
and the other actions taken in the Geographic Averaging Order, we find 
that Hawaii's request that we impose a service requirement on AT&T has 
been superseded and is now moot because AT&T cannot deaverage its rates 
consistent with federal law. We also find no basis to impose on AT&T a 
service requirement not imposed on other carriers subject to the rate 
averaging and rate integration rules. Accordingly, for the foregoing 
reasons, we find that the relief sought by Hawaii is unnecessary in 
light of the Commission's implementation of the geographic rate 
averaging and rate integration requirements of the Communications Act, 
and of AT&T's specific voluntary commitments concerning service to 
Hawaii and Alaska. We therefore deny Hawaii's petition.
2. Whether Reclassification of AT&T Applies to AT&T/Alascom
    a. Position of the Parties. 18. GCI asks the Commission either to 
clarify that the reclassification of AT&T does not apply to AT&T/
Alascom, Inc., or to reconsider and reverse any finding that AT&T/
Alascom is no longer dominant. GCI justifies its request on the grounds 
that AT&T did not seek to reclassify Alascom as non-dominant, and that 
the Commission did not address the reclassification of Alascom in the 
AT&T Reclassification Order. GCI argues that the Commission found 
Alascom dominant in the Alaska market in the Competitive Carrier Fifth 
Report and Order (49 FR 34824 (September 4, 1984)), and has never 
reversed that finding. It also contends that this finding could not be 
reversed, in light of AT&T/Alascom's legally enforced monopoly in the 
Alaska Bush. GCI argues that AT&T/Alascom is able to leverage its 
market power beyond the Bush because of Commission policies requiring 
other carriers serving Alaska to purchase Bush distribution services 
from AT&T/Alascom. GCI also argues that it is unclear how long AT&T/
Alascom's market power in the Alaska Bush will persist. GCI adds that, 
even if the Alaska Bush were opened immediately, it would take 
significant time for the market to become workably competitive, because 
of the time necessary to construct a competing network.
    19. Alaska and MCI likewise claim that the Commission's 
reclassification of AT&T does not affect AT&T/Alascom's classification 
as a dominant carrier. Alaska argues that, in reclassifying AT&T, the 
Commission noted that Alascom continues to be ``governed by dominant 
carrier rules where it has a facilities monopoly, namely the Bush 
areas,'' and therefore that the AT&T Reclassification Order does not 
affect the classification of AT&T Alascom, Inc. MCI argues that the 
Commission's reclassification of AT&T as non-dominant in the domestic 
market was based on market characteristics in the

[[Page 56114]]

``lower 48'' states, which are not representative of the Alaska market. 
It adds that a separate finding that AT&T/Alascom does not possess 
market power in Alaska is therefore required, but that such a 
determination is impossible to make and support at this time.
    20. AT&T responds that there is no basis for excluding AT&T/Alascom 
from the ambit of the AT&T Reclassification Order, because the 
Commission expressly found that AT&T lacked market power in the 
domestic interexchange market as a whole, which AT&T claims is the only 
relevant market for this purpose. AT&T argues that the fact that AT&T 
(or AT&T/Alascom) may be the major supplier of specific services does 
not alter the analysis, and that the Commission has never definitively 
held that a carrier must lack the ability to control the price of every 
service in the relevant market before it can be classified as non-
dominant. AT&T maintains that its voluntary commitments to continue 
rate integration for Alaska and to comply with the Commission's orders 
relating to Alaska necessarily apply to AT&T/Alascom, and that the 
commitments assume that AT&T/Alascom is included within the scope of 
the AT&T Reclassification Order.
    21. AT&T further responds that the Commission found that, to the 
extent AT&T is able to control price at all, it is only with respect to 
specific service segments that are either de minimis in relation to the 
overall market, or exposed to increasing competition so as not to 
affect materially the overall market. AT&T argues that these conditions 
apply to the Alaska Bush, which generates less than five one-hundredths 
of one percent (0.0005) of total industry revenue, an amount that AT&T 
claims is de minimis and affords AT&T/Alascom no power in the overall 
relevant market. AT&T concludes there is therefore no basis to treat 
AT&T differently from its competitors, or to treat AT&T/Alascom 
differently from the rest of AT&T.
    22. GCI counters that AT&T does not rebut GCI's claim that AT&T 
retains an absolute monopoly, and thus market power, in the Alaska 
market. GCI maintains that AT&T's suggestion that Alascom's market 
power in Alaska can be ignored as ``de minimis'' is contrary to prior 
Commission rulings and AT&T's own statements. Specifically, GCI 
contends that, in classifying Alascom as a dominant interexchange 
carrier, the Commission focused solely on Alascom's position in the 
Alaska market, and did not require Alascom to be dominant throughout 
the U.S. market as a whole. GCI adds that, as recently as August 1995, 
the Commission identified Alaska as a separate relevant interexchange 
market. Specifically, GCI maintains that, while the Commission spoke of 
a single national market, the Commission identified that market as 
distinct from the Alaska market occupied by Alascom and in which 
Alascom retained market power. GCI also claims that AT&T's own 
pleadings in the Alaska Joint Board Proceeding contemplate that AT&T 
could be classified as dominant in the lower 48 states, but non-
dominant in Alaska, because of different market characteristics and 
circumstances. GCI concludes that the Commission classified Alascom as 
a dominant carrier based on its legally protected monopoly position in 
the Alaska market, which it alleges has never changed, and that AT&T's 
purchase of Alascom did nothing to reduce Alascom's market power in 
Alaska.
    23. In its petition for reconsideration or clarification of the 
Commission's Tariff Forbearance Order, GCI requests the Commission 
either to clarify that the Tariff Forbearance Order did not detariff 
AT&T/Alascom's provision of ``common carrier'' services, (The 
Commission has defined Alascom's ``common carrier'' services as ``all 
interstate interexchange transport and switching services that are 
necessary for other interexchange carriers to provide services in 
Alaska up to the point of interconnection with each Alaska local 
exchange carrier.'') or to reconsider and reverse any finding that 
AT&T/Alascom is not required to file a tariff for such services. In 
support of its petition, GCI argues that AT&T, in the AT&T 
Reclassification proceeding, made certain voluntary commitments, 
including a commitment that AT&T/Alascom would provide ``common 
carrier'' services under tariff. In response to GCI's petition, AT&T 
states that it ``does not interpret the [Tariff Forbearance Order] to 
require the detariffing of Alascom's Common Carrier Services.'' The 
American Petroleum Institute (API) disagrees with GCI and argues that, 
to the extent AT&T/Alascom's services are interstate, domestic, 
interexchange services offered by a nondominant interexchange carrier, 
the Tariff Forbearance Order completely detariffed those services.
    b. Discussion. 24. AT&T/Alascom offers certain interstate ``common 
carrier'' services. As noted above, in the Market Structure Order, the 
Commission defined Alascom's ``common carrier'' services as ``all 
interstate interexchange transport and switching services that are 
necessary for other interexchange carriers to provide services in 
Alaska up to the point of interconnection with each Alaska local 
exchange carrier.'' For purposes of our discussion here, we refer to 
AT&T/Alascom's ``common carrier'' services as those services were 
defined in the Market Structure Order. In the Market Structure Order, 
the Commission adopted the recommendation of the Federal-State Alaska 
Joint Board in the Final Recommended Decision that Alascom be required 
to provide such services to interexchange carriers under tariff on a 
nondiscriminatory basis at rates that reflect the cost of the services 
(i.e., on dominant carrier basis). AT&T concedes that, to the extent 
that AT&T/Alascom's ``common carrier'' services are not interstate, 
domestic, interexchange telecommunications services as addressed in the 
AT&T Reclassification Order, the classification of those services is 
not affected by that Order. AT&T further concedes that the Tariff 
Forbearance Order does not require the detariffing of AT&T/Alascom's 
``common carrier'' services. Indeed, the Commission noted in the AT&T 
Reclassification Order, and we clarify here, that, to the extent AT&T/
Alascom has been found to be dominant in the provision of ``common 
carrier'' services, as defined above, AT&T/Alascom's regulatory 
obligations with respect to those services remain unchanged, and 
therefore AT&T/Alascom is required to file tariffs for such services on 
a dominant carrier basis.
    25. In addition to the foregoing ``common carrier'' services 
offered to interexchange carriers, AT&T/Alascom provides interstate, 
domestic, interexchange services to end-user customers in Alaska. For 
the reasons set forth below, we reject GCI's petition for 
reconsideration and find no basis to exclude AT&T/Alascom's provision 
of these services from the scope of the AT&T Reclassification Order.
    26. We reject the suggestion by GCI, MCI and Alaska, that, in order 
to reclassify AT&T/Alascom as a non-dominant carrier with respect to 
its provision of interstate, domestic, interexchange services, the 
Commission must assess AT&T/Alascom's market power in the Alaska 
market, rather than in the overall interstate, domestic, interexchange 
services market. The Commission's decision in the Competitive Carrier 
Fifth Report and Order to regulate Alascom as a dominant carrier did 
not, as GCI implies, disavow or modify the ``all interstate, domestic, 
interexchange services'' market definition adopted in the Competitive 
Carrier Fourth Report and Order (48 FR 52452 (November 18,

[[Page 56115]]

1983)) by ``focus[ing] solely on Alascom's position within the Alaska 
market.'' Rather, the Commission concluded that Alascom should be 
regulated as dominant, without reaching the issue of relevant market 
definitions, because it was concerned that the Commission's rate-
integration policy for interstate MTS and WATS services to 
noncontiguous domestic points, which limited rate-integration payments 
only to Alascom, might limit the ability of other carriers to compete 
in serving Alaska.
    27. In addition, we find that GCI mischaracterizes the Alascom 
Authorization Order, in arguing that the Commission there identified 
Alaska as a separate relevant interexchange market and therefore that 
we are required to analyze separately AT&T/Alascom's market power in 
Alaska, for purposes of classifying AT&T/Alascom as non-dominant in the 
interstate, domestic, interexchange market. While, in the Alascom 
Authorization Order, the Commission did identify two relevant product 
markets for purposes of evaluating the proposed merger of AT&T and 
Alascom, the markets it identified were: (1) ``interexchange 
telecommunications services within Alaska (the `Alaska market'),'' 
which was the principal business of Alascom; and (2) ``interstate 
interexchange telecommunications (`the All Interexchange Market'),'' 
which AT&T provided, and which included Alascom's and Alaska Telecom's 
proposed undersea fiber cable services. In that Order, the Commission 
did not identify the provision of interstate, domestic, interexchange 
services to Alaska as a separate relevant product or geographic market. 
Indeed, the Commission specifically noted that its identification of 
interstate interexchange telecommunications (including Alascom's and 
Alaska Telecom's proposed undersea fiber cable services) as a relevant 
product market was ``consistent with the Commission's earlier findings 
of a single market for all interstate interexchange services.'' We note 
that GCI, in quoting the foregoing sentence, failed to include the word 
``interstate,'' which qualified the term ``interexchange services.'' We 
believe that the Commission's reference to ``interstate interexchange 
services,'' and not to ``interexchange services'' generally, is central 
to the meaning of the Commission's statement and hence to a complete 
understanding of this statement's relevance in the present context. 
Thus, the Commission did not, in the Alascom Authorization Order, 
disavow or modify in any way, the ``all interstate, domestic, 
interexchange services'' market definition adopted in the Competitive 
Carrier Fourth Report and Order.
    28. Accordingly, we reject GCI's argument that, based on the 
Alascom Authorization Order and the Competitive Carrier Fifth Report 
and Order, the Commission must analyze separately AT&T/Alascom's market 
power in Alaska for purposes of classifying AT&T/Alascom as non-
dominant in the interstate, domestic, interexchange market. Rather, we 
affirm our determination in the AT&T Reclassification Order that, 
consistent with the conclusions reached in Competitive Carrier Fifth 
Report and Order, the appropriate relevant geographic market for 
purposes of assessing AT&T's market power was a ``'single national 
relevant geographic market (including Alaska, Hawaii, Puerto Rico, U.S. 
Virgin Islands, and other U.S. offshore points).''' We conclude that, 
pursuant to Commission policy in effect at the time of the AT&T 
Reclassification Order, the Commission properly included AT&T/Alascom 
within the scope of the classification of AT&T as non-dominant in the 
provision of interstate, domestic, interexchange services.
    29. Subsequent to GCI's filing of its Petition for Reconsideration, 
the Commission adopted the LEC Interexchange Order (62 FR 35974 (July 
3, 1997)), which revises the Commission's approach to defining relevant 
geographic and product markets for purposes of determining whether a 
carrier should be regulated as dominant or non-dominant in the 
provision of interstate, domestic, interexchange services. 
Specifically, in the LEC Interexchange Order, we defined the relevant 
geographic market for interstate, domestic, interexchange services as 
``all possible routes that allow for a connection from one particular 
location to another particular location (i.e., a point-to-point 
market).'' We clarified, however, that we would

treat, in general, interstate, long distance calling as a single 
national market unless there is credible evidence suggesting that 
there is or could be a lack of competition in a particular point-to-
point market or group of point-to-point markets, and there is a 
showing that geographic rate averaging will not sufficiently 
mitigate the exercise of market power, we will refrain from 
employing the more burdensome approach of analyzing separately data 
from each point-to-point market.

    30. Considering GCI's Petition for Reconsideration according to the 
market definition approach established in the recent LEC Interexchange 
Order, we conclude that, even assuming arguendo that GCI's petition 
presents credible evidence suggesting a lack of competition with 
respect to domestic, interstate, interexchange service in Alaska, GCI's 
petition fails to demonstrate that geographic rate averaging will not 
sufficiently mitigate the exercise of market power, if any, by AT&T/
Alascom in Alaska.
    31. In the Geographic Averaging Order, we found that the 1996 Act 
required the Commission to mandate rate integration among all states, 
territories and possessions, and held that ``this goal is best achieved 
by interpreting `provider' to include parent companies that, through 
affiliates, provide service in more than one state.'' We stated that 
``nothing in the record supports a finding that Congress intended to 
allow [interexchange carriers] to avoid rate integration by 
establishing subsidiaries that provide service in limited areas.'' 
Applying this general rule in a specific context, we held that GTE, for 
purposes of section 254(g), was required to integrate its rates for 
domestic, interstate, interexchange services across affiliates. We find 
that, pursuant to the rule established in the Geographic Averaging 
proceeding, AT&T, like GTE, is required to integrate and average its 
rates across affiliates, including AT&T/Alascom.
    32. Because AT&T is required to integrate and average its rates 
geographically for interstate, domestic, interexchange services across 
all of its affiliates, including AT&T/Alascom, we believe that AT&T/
Alascom could not raise and sustain prices for such services above the 
competitive level in Alaska, unless AT&T were able profitably to charge 
supracompetitive prices in the ``lower 48'' states. Nothing in the 
record of this reconsideration proceeding supports a reversal of our 
determination in the AT&T Reclassification Order, that ``AT&T neither 
possesses nor can unilaterally exercise market power within the 
interstate, domestic, interexchange market taken as a whole,'' which 
includes the ``lower 48'' states. Nor is there any evidence in the 
record on reconsideration to support a finding that geographic rate 
averaging, together with AT&T's lack of market power in the ``lower 
48,'' will not mitigate the exercise of market power, if any, by AT&T/
Alascom in Alaska. Therefore, we find no reason to analyze separately 
AT&T/Alascom's market power in Alaska. Accordingly, we find that AT&T/
Alascom is appropriately classified, as established in the AT&T 
Reclassification Order, as non-dominant

[[Page 56116]]

in the provision of interstate, domestic, interexchange services.
3. Whether the Commission Should Clarify the Requirements of the Alaska 
Orders That Continue to Apply to AT&T and AT&T/Alascom
    a. Position of the Parties. 33. GCI requests that the Commission 
clarify which requirements of the Commission's Alaska Orders continue 
to apply to AT&T and AT&T/Alascom. GCI argues that, while AT&T made a 
generalized promise to comply with outstanding Commission orders 
relating to Alaska in the AT&T Reclassification proceeding, it is 
impossible to determine which requirements of the Alaska Orders AT&T 
has specifically agreed to follow, and which it will try to contest or 
ignore.
    34. GCI adds that, as a non-dominant carrier, AT&T may be able to 
discriminate and to deaverage its Alaska rates by providing Alaska 
services through two entities--AT&T and AT&T/Alascom. GCI argues that, 
although the Final Recommended Decision provided that AT&T would remain 
subject to Section 214 entry and exit certification requirements, non-
dominant status removes the requirement that AT&T obtain Section 214 
authority to serve the Alaska market. GCI further argues that, if AT&T 
provides separate service to Alaska pursuant to separate tariffs from 
those filed by AT&T/Alascom, AT&T will be able to discriminate between 
customers served by AT&T and customers served by AT&T/Alascom. GCI also 
claims that it will be impossible to determine whether AT&T is 
integrating Alaska rates into its domestic rate schedule, and that any 
difference in rates or offerings between AT&T and AT&T/Alascom would 
call into question which rate is appropriate for purposes of judging 
rate integration.
    35. Finally, GCI argues that separate service by AT&T would 
disadvantage captive monopoly customers that buy service under the 
AT&T/Alascom common carrier services tariff, because, to the extent 
AT&T provides separate service to Alaska and does not use the carrier 
services of AT&T/Alascom, AT&T will reduce traffic on the AT&T/Alascom 
network and drive up rates for AT&T/Alascom's captive monopoly 
customers. GCI states that all carriers, including AT&T, are required 
to buy Alaska distribution services under the AT&T/Alascom carrier 
services tariff.
    36. Alaska, supporting GCI's request for clarification, notes that 
AT&T committed to comply with the Commission's orders regarding rate 
integration and with all the obligations and conditions set forth in 
the Alaska Joint Board Proceeding and the Alascom Authorization Order. 
Alaska requests the Commission to clarify the AT&T Reclassification 
Order if there is any uncertainty on these points.
    37. AT&T responds that GCI's request for clarification is 
inappropriate, because it seeks to inject into this proceeding issues 
already litigated in other dockets. AT&T adds that its voluntary 
commitments assume that both AT&T and its AT&T/Alascom affiliate will 
continue to adhere to the Commission's orders regarding the 
restructuring of the Alaska market. In addition, AT&T notes that the 
Commission defined Alascom's ``common carrier'' services as interstate 
interexchange transport and switching services necessary for other 
interexchange carriers to provide service in Alaska up to the point of 
interconnection with LECs. As previously noted, AT&T concedes that, to 
the extent AT&T/Alascom's ``common carrier'' services are not domestic 
interstate interexchange services as addressed in the AT&T 
Reclassification Order, the classification of those ``common carrier'' 
services is not affected by that Order, and, therefore, that, to the 
extent Alascom's ``common carrier'' services have been found to be 
dominant, AT&T/Alascom's regulatory obligations relating to those 
services remain unchanged.
    b. Discussion. 38. We believe that there is no ambiguity concerning 
the requirements of the Alaska Orders that continue to apply to AT&T 
and AT&T/Alascom, but for the sake of clarity we note that the AT&T 
Reclassification Order contains a lengthy and detailed statement of 
both AT&T's and AT&T/Alascom's obligations with respect to Alaska. In 
addition, AT&T has committed to comply voluntarily with all the 
conditions and obligations set forth in the Alaska Orders, and has 
specifically acknowledged that AT&T's commitment applies to AT&T/
Alascom. Moreover, as the Commission noted in the AT&T Reclassification 
Order, any failure by AT&T or AT&T/Alascom to comply with any of the 
conditions and obligations in the Alaska Orders may result in the 
imposition of forfeitures on AT&T or AT&T/Alascom, or a revocation of 
their Commission licenses. In addition, if GCI believes that either 
AT&T or AT&T/Alascom has failed to honor the commitment to comply with 
all of the conditions and obligations in the Alaska Orders, GCI may 
seek relief under Section 208 of the Communications Act.
    39. We also reject GCI's claim that AT&T may be able to deaverage 
its Alaska rates by providing Alaska services through two entities. As 
an initial matter, we note that, contrary to GCI's suggestion, the 
reclassification of AT&T as a non-dominant carrier did not remove the 
requirement that AT&T obtain Section 214 authority to serve the Alaska 
market. As we stated in the AT&T Reclassification Order, AT&T may build 
or lease facilities to serve the Alaska market subject to dominant 
carrier authorization rules. Moreover, as discussed above, in the 
Geographic Averaging Order, we found that Congress did not intend to 
allow interexchange carriers to avoid the rate integration requirements 
of the 1996 Act by establishing subsidiaries that provide service in 
limited areas. As noted above, we find that, pursuant to the rule 
established in the Geographic Averaging Order, AT&T must integrate and 
average its rates across its affiliates. Accordingly, AT&T may not 
deaverage its Alaska rates by providing services to Alaska through two 
entities.
4. Other Matters
    40. On January 23, 1996, well after the statutory deadline for 
filing petitions for reconsideration of the AT&T Reclassification 
Order, TTS filed a Petition for Reconsideration requesting that the 
Commission reclassify AT&T as dominant on the grounds that AT&T retains 
a dominant position in the interstate, domestic, interexchange market, 
and has abused, and is likely to continue to abuse, its dominant 
position in the market. On the same date, TTS filed a motion for 
acceptance of its late-filed petition for reconsideration. TTS states 
that it was unable to file its petition before the statutory deadline 
because AT&T's ``bad acts,'' on which TTS's petition is based, did not 
occur until November 22, 1995, the due date for filing petitions. TTS 
alleges that its petition was delayed further by its attempt to 
negotiate with AT&T to resolve their dispute, and by the blizzard in 
Washington, D.C., in January, 1996. TTS maintains that these facts 
establish substantial justification and good cause for the Commission 
to accept TTS's late-filed petition.
    41. On April 15, 1997, TTS filed, in the record of the UHA Petition 
for Rulemaking proceeding, a Supplement to Petition for Reconsideration 
and a Motion to Accept Supplement to Petition for Reconsideration. TTS 
states that the information in its supplement was not available to TTS 
at the time it filed its petition for reconsideration and that the 
information is necessary in order for the Commission to have a complete 
record.
    42. Section 405 of the Communications Act, provides, in

[[Page 56117]]

relevant part, that: ``[a] petition for reconsideration must be filed 
within thirty days from the day upon which public notice is given of 
the order, decision, report, or action complained of.'' Section 1.4(b) 
of the Commission's rules defines the date of public notice of the 
final Commission action. Section 1.4(b)(2) provides that, for ``non-
rulemaking documents released by the Commission or staff, whether or 
not published in the Federal Register, the release date'' is date of 
public notice. Accordingly, public notice in this case was given on 
October 23, 1995, the date on which the AT&T Reclassification Order was 
released. Therefore, petitions to reconsider that decision were, as TTS 
concedes, due on or before November 22, 1995.
    43. Because the period for filing petitions for reconsideration is 
prescribed by statute, the Commission may not, with one narrow 
exception articulated by the courts, waive or extend the filing period. 
The narrow exception to this statutory filing period allows the 
Commission to extend or waive the 30-day filing period only in an 
``extraordinary case,'' such as where the late-filing is due to the 
Commission's failure to give a party timely notice of the action for 
which reconsideration is sought. In such circumstances, the petitioner 
must demonstrate that the delay in filing is attributable to Commission 
error in giving notice and that it acted promptly upon discovering the 
adoption of the Commission's decision.
    44. TTS has not demonstrated that its delay in filing is 
attributable to Commission error in giving notice. Indeed, TTS does not 
dispute that the Commission gave appropriate notice by the release of 
the AT&T Reconsideration Order on October 23, 1995. As noted above, TTS 
states only that its petition was delayed because the alleged actions 
on which TTS's petition is based, did not occur until the due date for 
filing petitions for reconsideration, and that its petition was further 
delayed by its attempt to negotiate with AT&T as well as by the 
blizzard in Washington, D.C., in January, 1996. Accordingly, we find 
that TTS does not meet the narrow exception of an ``extraordinary 
case'' in which the Commission may extend or waive the statutory 
deadline for filing petitions for reconsideration. We, therefore, deny 
TTS's Motion for Acceptance of Petition for Reconsideration, and 
dismiss its petition as untimely. Because we dismiss TTS's petition for 
reconsideration, we also deny TTS's Motion to Accept Supplement to 
Petition for Reconsideration and dismiss TTS's Supplement to Petition 
for Reconsideration.

III. Petition for Rulemaking

    45. On December 31, 1996, the United Homeowners Association and the 
United Seniors Health Cooperative (UHA) filed with the Commission a 
Petition for Rulemaking to Reclassify AT&T as Having Dominant Carrier 
Status. UHA requests that the Commission undertake a review and 
``reinstate AT&T's dominant carrier status.'' We note that UHA refers 
generally to AT&T's status as a carrier of ``long distance service,'' 
rather than more specifically to AT&T's status as a provider of 
domestic, interstate, interexchange service. Because UHA consistently 
refers in its petition only to the Commission's October 23, 1995, 
decision, we are treating the petition as applying only to AT&T's 
regulatory status with respect to domestic, interstate, interexchange 
service, and not international services. In support of its petition, 
UHA argues that consumers are adversely affected by the classification 
of AT&T as a non-dominant interexchange carrier, as demonstrated by a 
rate increase AT&T instituted in November 1996. UHA argues that, 
``without regulatory supervision, AT&T consumers will have no 
protection from unjust rates increases,'' and that classifying AT&T as 
dominant is necessary in order to monitor AT&T's rate increases until 
there is meaningful competition in the long-distance market. UHA also 
points to what it alleges is AT&T's 54.2 percent market share as 
evidence that AT&T has market power in the long distance market and 
therefore should be classified as dominant.
    46. TTS submitted comments in support of UHA's petition. TTS cites 
to alleged discriminatory conduct by AT&T against TTS as evidence of 
AT&T's abuse of its market power and the need therefore to reclassify 
AT&T as a dominant carrier.
    47. In opposition to UHA's petition, AT&T argues that the Petition 
for Rulemaking should be denied because UHA's arguments already were 
addressed and properly rejected in the orders classifying AT&T as non-
dominant for domestic and international services. AT&T also maintains 
that UHA's allegations, even if true, are immaterial under the 
Commission's rules defining dominant carriers. AT&T notes that the 
Commission examined and found in the AT&T Reclassification Order that 
AT&T does not retain market power in the domestic, interstate, 
interexchange market. In addition, AT&T maintains that UHA is mistaken 
in arguing that a change in AT&T's regulatory classification would 
affect AT&T's ability to make the price changes referenced by UHA. AT&T 
claims that, even as a dominant carrier subject to price cap 
regulation, AT&T did not need Commission approval to raise rates within 
price cap limits. AT&T further argues that UHA's ``unsupported claims 
of `tacit collusion' '' among various interexchange carriers does not 
support regulatory action aimed solely at AT&T, and that ``any attempt 
to paint the long distance industry as an oligopoly must fail.'' 
Finally, relying on the Commission's AT&T Reclassification Order, AT&T 
maintains that market share is not the sole determining factor of 
whether a firm possesses market power, and that the 54.2 percent market 
share figure referenced by UHA ``is even lower than the market share 
cited in the [AT&T Reclassification Order], and shows a further erosion 
of AT&T's market share since the Order was released.''
    48. In reply to AT&T's Opposition, Pacific takes no position on 
whether AT&T should be reclassified as a dominant carrier. Pacific only 
responds to AT&T's argument that there is no evidence of tacit 
collusion among the big interexchange carriers. Pacific argues that the 
evidence of tacit collusion ``is not `inconclusive' anymore,'' that 
AT&T has continued to raise prices after reclassification, and that new 
facilities-based entry by the Regional Bell Operating Companies is the 
best solution to rising prices.
    49. We find that the arguments raised by UHA's petition were 
addressed and decided in the AT&T Reclassification Order. Neither UHA, 
Pacific nor TTS has presented any new evidence or arguments that 
demonstrate that a new examination of AT&T's regulatory status is 
warranted. We thus decline to initiate a proceeding at this time to 
classify AT&T as a dominant carrier. ``Petitions [for rulemaking] * * * 
which plainly do not warrant consideration by the Commission may be 
denied or dismissed without prejudice to the petitioner.'' Accordingly, 
we deny without prejudice UHA's Petition for Rulemaking.

IV. Ordering Clauses

    50. Accordingly, it is ordered That Hawaii's Petition for 
Reconsideration is hereby denied. 
    51. It is further ordered That GCI's Petition for Reconsideration 
or Clarification of the AT&T Reclassification Order is hereby denied.

[[Page 56118]]

    52. It is further ordered That GCI's Petition for Clarification of 
the Tariff Forbearance Order is granted.
    53. It is further ordered That TTS's Motion for Acceptance of 
Petition for Reconsideration is hereby denied, and TTS's Petition for 
Reconsideration is hereby dismissed.
    54. It is further ordered That TTS's Motion to Accept Supplement to 
Petition for Reconsideration is hereby denied, and TTS's Supplement to 
Petition for Reconsideration is hereby dismissed.
    55. It is further ordered That the United Homeowners Association 
and United Seniors Health Cooperative's Petition for Rulemaking is 
hereby denied.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-28613 Filed 10-28-97; 8:45 am]
BILLING CODE 6712-01-P