[Federal Register Volume 63, Number 38 (Thursday, February 26, 1998)]
[Proposed Rules]
[Pages 9749-9770]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4650]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 51, 53, and 64

[CC Docket No. 95-20, FCC 98-8]


Computer III Further Remand Proceedings: Bell Operating Company 
Provision of Enhanced Services; 1998 Biennial Regulatory Review--Review 
of Computer III and ONA Safeguards and Requirements

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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[[Page 9750]]

SUMMARY: The Commission is issuing this Notice of Proposed Rulemaking 
seeking comment on the remand from the United States Court of Appeals 
for the Ninth Circuit relating to the replacement of structural 
separation requirements for Bell Operating (BOC) provision of enhanced 
services with nonstructural safeguards, as well as the effectiveness of 
the Commission's Computer III and ONA nonstructural rules in general. 
The Commission believes it is necessary not only to respond to the 
issues remanded by the Ninth Circuit, but also to reexamine the 
Commission's nonstructural safeguards regime governing the provision of 
information services by the BOCs in light of the Telecommunications Act 
of 1996 and ensuing changes in telecommunications technologies and 
markets.

DATES: Comments are due on or before March 27, 1998 and Reply Comments 
are due on or before April 23, 1998. Written comments by the public on 
the proposed information collections are due March 27, 1998. Written 
comments must be submitted by the Office of Management and Budget (OMB) 
on the proposed information collections on or before April 27, 1998.

ADDRESSES: Comments and reply comments should be sent to Office of the 
Secretary, Federal Communications Commission, 1919 M Street, N.W., Room 
222, Washington, D.C. 20554, with a copy to Janice Myles of the Common 
Carrier Bureau, 1919 M Street, N.W., Room 544, Washington, D.C. 20554. 
Parties should also file one copy of any documents filed in this docket 
with the Commission's copy contractor, International Transcription 
Services, Inc., 1231 20th St., N.W., Washington, D.C. 20036. In 
addition to filing comments with the Secretary, a copy of any comments 
on the information collections contained herein should be submitted to 
Judy Boley, Federal Communications Commission, Room 234, 1919 M Street, 
N.W., Washington, D.C. 20554, or via the Internet to [email protected], 
and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725--17th Street, 
N.W., Washington, D.C. 20503 or via the Internet to [email protected].

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

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking adopted January 29, 1998 and released January 
30, 1998 (FCC 98-8). This NPRM contains proposed or modified 
information collections subject to the Paperwork Reduction Act of 1995 
(PRA). It has been submitted to the OMB for review under the PRA. The 
OMB, the general public, and other Federal agencies are invited to 
comment on the proposed or modified information collections contained 
in this proceeding. The full text of this Notice of Proposed Rulemaking 
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/fcc988.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.

Paperwork Reduction Act

    This NPRM contains either a proposed or modified information 
collection. The Commission, as part of its continuing effort to reduce 
paperwork burdens, invites the general public and OMB to comment on the 
information collections contained in this NPRM, as required by the 
Paperwork Reduction Act of 1995, Pub. L. 104-13. Public and agency 
comments are due at the same time as other comments on this NPRM; OMB 
notification of action is due April 27, 1998. Comments should address: 
(a) whether the proposed collection of information is necessary for the 
proper performance of the functions of the Commission, including 
whether the information shall have practical utility; (b) the accuracy 
of the Commission's burden estimates; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden of the collection of information on the 
respondents, including the use of automated collection techniques or 
other forms of information technology.
    OMB Approval Number: None.
    Title: Computer III Further Remand Proceedings: Bell Operating 
Company Provision of Enhanced Services; 1998 Biennial Regulatory 
Review--Review of Computer III and ONA Safeguards and Requirements.
    Form No.: N/A.
    Type of Review: New collection.

----------------------------------------------------------------------------------------------------------------
                                   No. of                                                                       
    Information collection      respondents              Estimated time per response               Total annual 
                                 (approx.)                                                            burden    
----------------------------------------------------------------------------------------------------------------
Consolidation of generic                  5  4 hours (2 hours twice a year).....................  20 hours.     
 information in semi-annual                                                                                     
 reports.                                                                                                       
----------------------------------------------------------------------------------------------------------------

    Respondents: Bell Operating Companies.
    Estimated costs per respondent: $0.
    Needs and Uses: The NPRM seeks comment on a number of issues, the 
result of which could lead to the imposition of information 
collections.

Synopsis of Notice of Proposed Rulemaking

I. Introduction

    1. In the Commission's Computer III and Open Network Architecture 
(ONA) proceedings, the Commission sought to establish appropriate 
safeguards for the provision by the Bell Operating Companies (BOCs) of 
``enhanced'' services.\1\ Examples of enhanced services include, among 
other things, voice mail, electronic mail, electronic store-and-
forward, fax store-and-forward, data processing, and gateways to online 
databases. Underlying this effort, as well as our reexamination of the 
Computer III and ONA rules in this Further Notice of Proposed 
Rulemaking (Further Notice), are three complementary goals. First, we 
seek to enable consumers and communities across the country to take 
advantage of innovative ``enhanced'' or ``information'' services \2\ 
offered by both

[[Page 9751]]

the BOCs and other information service providers (ISPs). Second, we 
seek to ensure the continued competitiveness of the already robust 
information services market. Finally, we seek to establish safeguards 
for BOC provision of enhanced or information services that make common 
sense in light of current technological, market, and legal conditions.
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    \1\ Basic services, such as ``plain old telephone service'' 
(POTS), are regulated as tariffed services under Title II of the 
Communications Act. Enhanced services use the existing telephone 
network to deliver services that provide more than a basic 
transmission offering. Bell Operating Companies' Joint Petition for 
Waiver of Computer II Rules, Memorandum Opinion & Order, 10 FCC Rcd 
1724 n.3 (1995) (Interim Waiver Order); 47 CFR 64.702(a). The terms 
``enhanced service'' and ``basic service'' are defined and discussed 
more fully infra at para. 38.
    \2\ The terms ``enhanced services'' and ``information services'' 
are used interchangeably in this Further Notice.
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    2. Under Computer III and ONA, the BOCs are permitted to provide 
enhanced services on an ``integrated'' basis (i.e., through the 
regulated telephone company), subject to certain ``nonstructural 
safeguards,'' as described more fully below. These rules replaced those 
previously established in Computer II, which required AT&T (and 
subsequently the BOCs) to offer enhanced services through structurally 
separate subsidiaries. On February 21, 1995, the Commission released a 
Notice of Proposed Rulemaking (Computer III Further Remand Notice) 
following a remand from the United States Court of Appeals for the 
Ninth Circuit (California III). The Computer III Further Remand Notice 
sought comment on both the remand issue in California III relating to 
the replacement of structural separation requirements for BOC provision 
of enhanced services with nonstructural safeguards, as well as the 
effectiveness of the Commission's Computer III and ONA nonstructural 
rules in general.
    3. Since the adoption of the Computer III Further Remand Notice, 
significant changes have occurred in the telecommunications industry 
that affect our analysis of the issues raised in this proceeding. Most 
importantly, on February 8, 1996, Congress passed the 
Telecommunications Act of 1996 (1996 Act) to establish ``a pro-
competitive, de-regulatory national policy framework'' in order to make 
available to all Americans ``advanced telecommunications and 
information technologies and services by opening all telecommunications 
markets to competition.'' As the Supreme Court recently noted, the 1996 
Act ``was an unusually important legislative enactment'' that changed 
the landscape of telecommunications regulation.
    4. The 1996 Act significantly alters the legal and regulatory 
framework governing the local exchange marketplace. Among other things, 
the 1996 Act opens local exchange markets to competition by imposing 
new interconnection, unbundling, and resale obligations on all 
incumbent local exchange carriers (LECs), including the BOCs. In 
addition, the 1996 Act allows the BOCs, under certain conditions, to 
enter markets from which they previously were restricted, including the 
interLATA telecommunications and interLATA information services 
markets. In some cases, the 1996 Act requires a BOC to offer services 
in these markets through a separate affiliate.\3\ In addition, the 1996 
Act incorporates new terminology and definitions that differ from those 
the Commission had been using.
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    \3\ We note that on December 31, 1997, the United States 
District Court for the Northern District of Texas held that sections 
271-275 of the Act are a bill of attainder and thus are 
unconstitutional as to SBC Corporation and U S WEST. SBC 
Communications, Inc. v. Federal Communications Comm'n, No. 7:97-CV-
163-X, 1997 WL 800662 (N.D. Tex. Dec. 31, 1997) (SBC v. FCC) (ruling 
subsequently extended to Bell Atlantic), request for stay pending. 
In general, the analysis in this Further Notice assumes the 
continued applicability of these provisions to the Bell companies. 
At appropriate places in this Further Notice, however, we ask 
commenters to assess the impact of SBC v. FCC on our analysis.
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    5. In light of the 1996 Act and ensuing changes in 
telecommunications technologies and markets, we believe it is necessary 
not only to respond to the issues remanded by the Ninth Circuit, but 
also to reexamine the Commission's nonstructural safeguards regime 
governing the provision of information services by the BOCs. Congress 
recognized, in passing the 1996 Act, that competition will not 
immediately supplant monopolies and therefore imposed a series of 
safeguards to prevent the BOCs from using their existing market power 
to engage in improper cost allocation and discrimination in their 
provision of interLATA information services, among other things. These 
statutory safeguards seek to address many of the same anticompetitive 
concerns as, but do not explicitly displace, the safeguards established 
by the Commission in the Computer II, , and ONA proceedings. We 
therefore issue this Further Notice to address issues raised by the 
interplay between the safeguards and terminology established in the 
1996 Act and the regime. These 1996 Act-related issues were not raised 
in the Computer III Further Remand Notice. We therefore ask interested 
parties to respond to the issues raised in this Further Notice and, to 
the extent that parties want any arguments made in response to the 
Computer III Further Remand Notice to be made a part of the record for 
this Further Notice, we ask them to restate those arguments in their 
comments.
    6. We note, in addition, that Congress required the Commission to 
conduct a biennial review of regulations that apply to operations or 
activities of any provider of telecommunications service and to repeal 
or modify any regulation it determines to be ``no longer necessary in 
the public interest.'' Accordingly, the Commission has begun a 
comprehensive 1998 biennial review of telecommunications and other 
regulations to promote ``meaningful deregulation and streamlining where 
competition or other considerations warrant such action.'' In this 
Further Notice, therefore, we seek comment on whether certain of the 
Commission's current and ONA rules are ``no longer necessary in the 
public interest.'' To the extent parties identify additional Computer 
III and ONA rules they believe warrant review under the Act, we invite 
those comments as well.
    7. Consistent with the 1996 Act, in this Further Notice we seek to 
strike a reasonable balance between our goal of reducing and 
eliminating regulatory requirements when appropriate as competition 
supplants the need for such requirements to protect consumers and 
competition, and our recognition that, until full competition is 
realized, certain safeguards may still be necessary. We want to 
encourage the BOCs to provide new technologies and innovative 
information services that will benefit the public, as well as ensure 
that the BOCs will make their networks available for the use of 
competitive providers of such services. We therefore seek comment in 
this Further Notice on, among other things, the following tentative 
conclusions:

--Notwithstanding the 1996 Act's adoption of separate affiliate 
requirements for BOC provision of certain information services (most 
notably, interLATA information services), the Act's overall pro-
competitive, de-regulatory framework, as well as our public interest 
analysis, support the continued application of the Commission's 
nonstructural safeguards regime to BOC provision of intraLATA 
information services [paragraphs 43-59];
--Given the protections established by the 1996 Act and our ONA rules, 
we should eliminate the requirement that BOCs file Comparably Efficient 
Interconnection (CEI) plans and obtain Common Carrier Bureau (Bureau) 
approval for those plans prior to providing new intraLATA information 
services [paragraphs 60-65];
--At a minimum, we should eliminate the CEI-plan requirement for BOC 
intraLATA information services provided through an Act-mandated 
affiliate under section 272 or 274 [paragraphs 66-72]; and
--The Commission's network information disclosure rules established 
pursuant to section 251(c)(5) should supersede certain,

[[Page 9752]]

but not all, of the Commission's previous network information 
disclosure rules established in Computer II and Computer III [paragraph 
122].

    We also generally seek comment on, among other things, the 
following issues:

--Whether enactment and implementation of the 1996 Act, as well as 
other developments, should alleviate the Ninth Circuit's concern about 
the level of unbundling mandated by ONA [paragraphs 29-36];
--Whether the Commission's definition of the term ``basic service'' and 
the 1996 Act's definition of ``telecommunications service'' should be 
interpreted to extend to the same functions [paragraphs 38-42];
--Whether the Commission's current ONA requirements have been effective 
in providing ISPs with access to the basic services that ISPs need to 
provide their own information service offerings [paragraphs 85-90];
--Whether the Commission, under its general rulemaking authority, 
should extend to ISPs some or all section 251-type unbundling rights, 
which the Commission previously concluded was not required by section 
251 of the Act [paragraphs 94-96]; and
--How the Commission's current ONA reporting requirements should be 
streamlined and modified [paragraphs 99-116].
    8. As set forth in the 1998 appropriations legislation for the 
Departments of Commerce, Justice, and State, the Commission is required 
to undertake a review of its implementation of the provisions of the 
1996 Act relating to universal service, and to submit its review to 
Congress no later than April 10, 1998. The Commission must review, 
among other things, the Commission's interpretations of the definitions 
of ``information service'' and ``telecommunications service'' in the 
1996 Act, and the impact of those interpretations on the current and 
future provision of universal service to consumers, including consumers 
in high cost and rural areas. We recognize that there is a some overlap 
between the inquiry in this Further Notice about the relationship 
between the Commission's definition of the term ``basic service'' and 
the 1996 Act's definition of ``telecommunications service,'' and the 
issues to be addressed in the Commission's report to Congress. 
Furthermore, we recognize that other aspects of this Further Notice 
also may be affected by the analysis in the Universal Service Report. 
We note that the inquiry in this Further Notice is primarily focused on 
the rules and terminology the Commission should be using in the context 
of its Computer II and Computer III requirements. We also note that the 
order in this proceeding will be issued after the Universal Service 
Report is submitted to Congress, and will thus take into account any 
conclusions made in that report.

II. Background

A. Overview of Computer III/ONA and Related Court Decisions

    9. We discussed in detail the factual history of Computer III/ONA 
in the Computer III Further Remand Notice. One of the Commission's main 
objectives in the Computer III and ONA proceedings has been to permit 
the BOCs to compete in unregulated enhanced services markets while 
preventing the BOCs from using their local exchange market power to 
engage in improper cost allocation and unlawful discrimination against 
ESPs. The concern has been that BOCs may have an incentive to use their 
existing market power in local exchange services to obtain an 
anticompetitive advantage in these other markets by improperly 
allocating to their regulated core businesses costs that would be 
properly attributable to their competitive ventures, and by 
discriminating against rival, unaffiliated ESPs in the provision of 
basic network services in favor of their own enhanced services 
operations. In Computer II, the Commission addressed these concerns by 
requiring the then-integrated Bell System to establish fully 
structurally separate affiliates in order to provide enhanced services. 
Following the divestiture of AT&T in 1984, the Commission extended the 
structural separation requirements of Computer II to the BOCs.
    10. In Computer III, after reexamining the telecommunications 
marketplace and the effects of structural separation during the six 
years since Computer II, the Commission determined that the benefits of 
structural separation were outweighed by the costs, and that 
nonstructural safeguards could protect competing ESPs from improper 
cost allocation and discrimination by the BOCs while avoiding the 
inefficiencies associated with structural separation. The Commission 
concluded that the advent of more flexible, competition-oriented 
regulation would permit the BOCs to provide enhanced services 
integrated with their basic network facilities. Towards this end, the 
Commission adopted a two-phase system of nonstructural safeguards that 
permitted the BOCs to provide enhanced services on an integrated basis. 
The first phase required the BOCs to obtain Commission approval of a 
service-specific CEI plan in order to offer a new enhanced service. In 
these plans, the BOCs were required to explain how they would offer to 
ESPs all the underlying basic services the BOCs used to provide their 
own enhanced service offerings, subject to a series of ``equal access'' 
parameters. Thus, the CEI phase of nonstructural safeguards imposed 
obligations on the BOCs only to the extent they offered specific 
enhanced services. The Commission indicated that such a CEI requirement 
could promote the efficiencies of competition in enhanced services 
markets by permitting the BOCs to participate in such markets provided 
they open their networks to competitors.
    11. During the second phase of implementing Computer III, the 
Commission required the BOCs to develop and implement ONA plans. The 
ONA phase was intended to broaden a BOC's unbundling obligations beyond 
those required in the first phase. ONA plans explain how a BOC will 
unbundle and make available to unaffiliated ESPs network services in 
addition to those the BOC uses to provide its own enhanced services 
offerings. These ONA plans were required to comply with a defined set 
of criteria in order for the BOC to obtain structural relief on a 
going-forward basis. This means that a BOC would not need to obtain 
approval of CEI plans prior to offering specific enhanced services on 
an integrated basis. The Commission also required the BOCs to comply 
with various other nonstructural safeguards in the form of rules 
related to network disclosure, customer proprietary network information 
(CPNI), and quality, installation, and maintenance reporting. All of 
these nonstructural safeguards were designed to promote the efficiency 
of the telecommunications network, in part by permitting the technical 
integration of basic and enhanced services and in part by preserving 
competition in the enhanced services market through the control of 
potential anticompetitive behavior by the BOCs.
    12. In 1990, the Court of Appeals for the Ninth Circuit vacated 
three orders in the Computer III proceeding, finding that the 
Commission had not adequately justified the decision to rely on 
(nonstructural) cost accounting safeguards as protection against cross-
subsidization of enhanced services by the BOCs. In response to this 
remand, the Commission adopted the BOC Safeguards Order, which 
strengthened

[[Page 9753]]

the cost accounting safeguards, and reaffirmed the Commission's 
conclusion that nonstructural safeguards should govern BOC 
participation in the enhanced services industry, rather than structural 
separation requirements.
    13. During the period from 1988 to 1992, the Commission approved 
the BOCs' ONA plans, which described the basic services that the BOCs 
would provide to unaffiliated and affiliated ESPs and the terms on 
which these services would be provided. During the two-year period from 
1992 to 1993, the Bureau approved the lifting of structural separation 
for individual BOCs upon their showing that their initial ONA plans 
complied with the requirements of the BOC Safeguards Order, and these 
decisions were later affirmed by the Commission.
    14. After California I and the Commission's response in the BOC 
Safeguards Order, the Ninth Circuit in California II upheld the 
Commission's orders approving BOC ONA plans. In California II, the 
court concluded that the Commission had scaled back its vision of ONA 
since Computer III by approving BOC ONA plans before ``fundamental 
unbundling'' had been achieved. The court also concluded that the issue 
of whether implementation of ONA plans justified the lifting of 
structural separation, as the Commission had determined, was not 
properly before it.
    15. In California III, the Court of Appeals for the Ninth Circuit 
partially vacated the Commission's BOC Safeguards Order. The California 
III court found that, in granting full structural relief based on the 
BOC ONA plans, the Commission had not adequately explained its apparent 
``retreat'' from requiring ``fundamental unbundling'' of BOC networks 
as a component of ONA and a condition for lifting structural 
separation. The court was therefore concerned that ONA unbundling, as 
implemented, failed to prevent the BOCs from engaging in discrimination 
against competing ESPs in providing access to basic services. The court 
did find, however, that the Commission had adequately responded to its 
concerns regarding cost-misallocation by strengthening its cost 
accounting rules and introducing a system of ``price cap'' regulation; 
the court indicated its belief that these strengthened safeguards would 
significantly reduce the BOCs' incentive and ability to misallocate 
costs. The court also upheld the scope of federal preemption adopted in 
the BOC Safeguards Order.
    16. In response to California III, the Bureau issued the Interim 
Waiver Order, which reinstated the requirement that BOCs must file CEI 
plans, and obtain Commission approval of those plans, to continue to 
provide specific enhanced services on an integrated basis. Also in 
response, the Commission issued the Computer III Further Remand Notice, 
60 FR 12529, March 7, 1995, which sought comment on the California III 
court's remand question regarding the sufficiency of ONA unbundling as 
a condition of lifting structural separation, and on the general issue 
of whether relying on nonstructural safeguards serves the public 
interest.

B. Overview of the 1996 Act

    17. Since the California III remand and the Commission's release of 
the Computer III Further Remand Notice, the 1996 Act became law and the 
Commission has conducted a number of proceedings to implement its 
provisions. These developments give us a fresh perspective from which 
to evaluate the Commission's current regulatory framework for the 
provision of information services. In this section, we describe some of 
the major provisions of the 1996 Act, and in later sections we examine 
how those provisions may affect our current rules.
1. Opening the Local Exchange Market
    18. Various provisions of the 1996 Act are intended to open local 
exchange markets to competition. Section 251(c) of the Act requires, 
among other things, incumbent LECs, including the BOCs and GTE, to 
provide to requesting telecommunications carriers interconnection and 
access to unbundled network elements at rates, terms, and conditions 
that are just, reasonable, and nondiscriminatory, and to offer 
telecommunications services for resale. Section 253(a) bars state and 
local governments from imposing certain legal requirements that 
prohibit or have the effect of prohibiting the ability of any entity to 
provide any telecommunications service, and section 253(d) authorizes 
the Commission to preempt such legal requirements to the extent 
necessary to correct inconsistency with the Act. As a result, 
telecommunications carriers may now enter the local exchange market, 
and compete with the incumbent LEC, through access to unbundled network 
elements, resale, or through construction of network facilities.
    19. In implementing section 251 of the Act, the Commission 
prescribed certain minimum points of interconnection necessary to 
permit competing carriers to choose the most efficient points at which 
to interconnect with the incumbent LEC's network. The Commission also 
adopted a minimum list of unbundled network elements (UNEs) that 
incumbent LECs must make available to new entrants, upon request. In 
Parts III and IV below, we discuss and seek comment on the potential 
impact of these unbundling requirements in more detail, both with 
respect to the issue in California III regarding the Commission's 
justification of ONA unbundling as a condition of lifting structural 
separation, as well as our overall reexamination of the Commission's 
current nonstructural safeguards framework.
2. BOC Provision of Information Services
    20. The 1996 Act conditions the BOCs' entry into the market for 
many in-region interLATA services, among other things, on their 
compliance with the separate affiliate, accounting, and 
nondiscrimination requirements set forth in section 272. In the Non-
Accounting Safeguards Order, 62 FR 2927, January 21, 1997, we noted 
that these safeguards are designed to prohibit anticompetitive 
discrimination and improper cost allocation while still permitting the 
BOCs to enter markets for certain interLATA telecommunications and 
information services, in the absence of full competition in the local 
exchange marketplace. We also concluded in the Non-Accounting 
Safeguards Order that the Commission's Computer II, Computer III, and 
ONA requirements are consistent with section 272 of the Act, and 
continue to govern the BOCs' provision of intraLATA information 
services, since section 272 only addresses BOC provision of interLATA 
services.
    21. Sections 260, 274, and 275 of the Act set forth specific 
requirements governing the provision of telemessaging, electronic 
publishing, and alarm monitoring services, respectively, by the BOCs 
and, in certain cases, by incumbent LECs. Section 260 delineates the 
conditions under which incumbent LECs, including the BOCs, may offer 
telemessaging services. We affirmed our conclusion in the Non-
Accounting Safeguards Order that, since telemessaging service is an 
``information service,'' BOCs that offer interLATA telemessaging 
services are subject to the separation requirements of section 272. We 
further concluded that the Computer III/ONA requirements are consistent 
with the requirements of section 260(a)(2), and, therefore, BOCs may 
offer intraLATA telemessaging services on an integrated basis subject 
to both Computer III/ONA and the requirements in section 260.

[[Page 9754]]

    22. Section 274 permits the BOCs to provide electronic publishing 
services, whether interLATA or intraLATA, only through a ``separated 
affiliate'' or an ``electronic publishing joint venture'' that meets 
certain separation, nondiscrimination, and joint marketing requirements 
in that section. The Commission found that there was no inconsistency 
between the nondiscrimination requirements of Computer III/ONA and 
section 274(d). We therefore found that the Computer III/ONA 
requirements continue to govern the BOCs' provision of intraLATA 
electronic publishing. We also noted that the nondiscrimination 
requirements of section 274(d) apply to the BOCs' provision of both 
intraLATA and interLATA electronic publishing.
    23. Section 275 of the Act prohibits the BOCs from providing alarm 
monitoring services until February 8, 2001, although BOCs that were 
providing alarm monitoring services as of November 30, 1995 are 
grandfathered. Section 275 of the Act does not impose any separation 
requirements on the provision of alarm monitoring services. We 
concluded in the Alarm Monitoring Order, 62 FR 16093, April 4, 1997 
that the Computer III/ONA requirements are consistent with the 
requirements of section 275(b)(1), and therefore continue to govern the 
BOCs' provision of alarm monitoring service. We discuss the potential 
impact of the Act's new requirements for BOC provision of certain 
information services on our cost-benefit analysis of structural versus 
nonstructural safeguards in more detail in Part IV.B.

III. California III Remand

A. Background

    24. In California III, the Ninth Circuit reviewed the BOC 
Safeguards Order, in which the Commission reaffirmed its earlier 
determination to remove structural separation requirements imposed on a 
BOC's provision of enhanced services, based on a BOC's compliance with 
ONA requirements and other nonstructural safeguards. The court found 
that, in the BOC Safeguards Order, and in the orders implementing ONA, 
the Commission had ``changed its requirements for, or definition of, 
ONA so that ONA no longer contemplates fundamental unbundling.'' 
Because, in the Ninth Circuit's view, the Commission had not adequately 
explained why this perceived shift did not undermine its decision to 
rely on the ONA safeguards to grant full structural relief, the court 
remanded the proceeding to the Commission.
    25. In the Computer III Phase I Order, (51 FR 24350 (July 3, 1986)) 
the Commission declined to adopt any specific network architecture 
proposals or specific unbundling requirements, but instead set forth 
general standards for ONA. BOCs were required to file initial ONA plans 
presenting a set of ``unbundled basic service functions that could be 
commonly used in the provision of enhanced services to the extent 
technologically feasible.'' The Commission stated that, by adopting 
general requirements rather than mandating a particular architecture 
for implementing ONA, it wished to encourage development of efficient 
interconnection arrangements. The Commission also noted that 
inefficiencies might result from ``unnecessarily unbundled or 
splintered services.''
    26. The Computer III Phase I Order required the BOCs to meet a 
defined set of unbundling criteria in order for structural separation 
to be lifted. In the BOC ONA Order, (54 FR 3435 (January 24, 1989)) the 
Commission generally approved the ``common ONA model'' proposed by the 
BOCs. The common ONA model was based on the existing architecture of 
the BOC local exchange networks, and consisted of unbundled services 
categorized as basic service arrangements (BSAs), basic service 
elements (BSEs), complementary network services (CNSs), and ancillary 
network services (ANSs).
    27. In the BOC ONA proceeding, certain commenters criticized the 
common ONA model. The commenters argued that the BOCs had avoided the 
Computer III Phase I Order unbundling requirements by failing to 
``disaggregate communications facilities and services on an element-by-
element basis.'' They urged the Commission to adopt a more 
``fundamental'' concept of unbundling in the ONA context, by requiring 
the BOCs to unbundle facilities such as loops, as well as switching 
functions, inter-office transmission, and signalling. Specifically, 
they claimed that BSAs could be further unbundled; e.g., trunks could 
be unbundled from the circuit-switched, trunk-side BSA, so that ESPs 
could connect their own trunks to BOC switches.
    28. In the BOC ONA Order, the Commission rejected arguments that 
ONA, as set forth in the Computer III Phase I Order, required 
unbundling more ``fundamental'' than that set forth in the ``common ONA 
model'' proposed by the BOCs. The Commission indicated that the 
Computer III Phase I Order anticipated that the BOCs would unbundle 
network services, not facilities, and determined that the ONA services 
developed by the BOCs under the common ONA model were consistent with 
the examples of service unbundling set forth in the Computer III Phase 
I Order. The Ninth Circuit, however, agreed with the view that the 
Commission's approval of the BOC ONA plans, and subsequent lifting of 
structural separation, was a retreat from a ``requirement'' of 
``fundamental unbundling.''

B. Subsequent Events May Have Alleviated the Ninth Circuit's California 
III Concerns

    29. In this section, we seek comment on whether the enactment and 
implementation of the 1996 Act, as well as other developments, should 
alleviate the Ninth Circuit's underlying concern about the level of 
unbundling mandated by ONA. Section 251 of the Act requires incumbent 
LECs, including the BOCs and GTE, to provide to requesting 
telecommunications carriers interconnection and access to unbundled 
network elements at rates, terms, and conditions that are just, 
reasonable, and nondiscriminatory, and to offer telecommunications 
services for resale. Section 251 also requires incumbent LECs to 
provide for physical collocation at the LEC's premises of equipment 
necessary for interconnection or access to unbundled network elements, 
under certain conditions.
    30. In its regulations implementing these statutory provisions, the 
Commission identified a minimum list of network elements that incumbent 
LECs are required to unbundle, including local loops, network interface 
devices (NIDs), local and tandem switching capabilities, interoffice 
transmission facilities (often referred to as trunks), signalling 
networks and call-related databases, operations support systems (OSS) 
facilities, and operator services and directory assistance. Additional 
unbundling requirements may be specified during voluntary negotiations 
between carriers, by state commissions during arbitration proceedings, 
or by the Commission as long as such requirements are consistent with 
the 1996 Act and the Commission's regulations. We note that the 1996 
Act creates particular incentives for the BOCs to unbundle and make 
available the elements of their local exchange networks. For example, 
section 271 provides that a BOC may gain entry into the interLATA 
market in a particular state by demonstrating, inter alia, that it has 
entered into access and interconnection agreements with competing 
telephone exchange service providers that satisfy the ``competitive

[[Page 9755]]

checklist'' set forth in section 271(c)(2)(B).
    31. In our view, the unbundling requirements imposed by section 251 
and our implementing regulations (hereinafter referred to as ``section 
251 unbundling'') are essentially equivalent to the ``fundamental 
unbundling'' requirements proposed by certain commenters, and rejected 
by the Commission as premature, in the BOC ONA Order. These commenters 
asked the Commission to require the BOCs to unbundle network elements 
such as loops, switching functions, inter-office transmission, and 
signalling. Section 251(c)(3) and the Commission's implementing 
regulations require those elements, and others, to be unbundled by the 
BOCs, and by other incumbent LECs that are subject to the requirements 
of section 251(c). In addition, the type and level of unbundling under 
section 251 is different and more extensive than that required under 
ONA. This may be because one of Congress's primary goals in enacting 
section 251--to bring competition to the largely monopolistic local 
exchange market--is more far-reaching than the Commission's goal for 
ONA, which has been to preserve competition and promote network 
efficiency in the developing, but highly competitive, information 
services market.
    32. We recognize that, according to the terms of section 251, only 
``requesting telecommunications carriers'' are directly accorded rights 
to interconnect and to obtain access to unbundled network elements.\4\ 
In that regard, the section 251 unbundling requirements do not provide 
access and interconnection rights to the identical class of entities as 
does the ONA regime, since these rights do not extend to entities that 
provide solely information services (``pure ISPs''). We also recognize 
that the development of competition in the local exchange market has 
not occurred as rapidly as some expected since the enactment of the 
1996 Act.
---------------------------------------------------------------------------

    \4\ See 47 U.S.C. 251(c)(2), (c)(3). The Commission determined 
that entities that provide both telecommunications services and 
information services are classified as telecommunications carriers 
for the purposes of section 251, and are subject to the general 
interconnection obligations of section 251(a), to the extent that 
they are acting as telecommunications carriers. Local Competition 
Order, 61 FR 45476, August 29, 1996. The Commission further 
concluded that telecommunications carriers that have obtained 
interconnection or access to unbundled network elements under 
section 251 in order to provide telecommunications services, may 
offer information services through the same arrangement, so long as 
they are offering telecommunications services through the same 
arrangement as well. Id. See infra paragraphs 92-96 for a more 
complete discussion of section 251 unbundling vis-a-vis ONA. See 
also paragraph 8 for a discussion of the Universal Service Report.
---------------------------------------------------------------------------

    33. We believe, however, that section 251 is intended to bring 
about competition in the local exchange market that, ultimately, will 
result in increased variety in service offerings and lower service 
prices, to the benefit of all end-users, including ISPs. Moreover, 
because local telecommunications services are important inputs to the 
information services ISPs provide, ISPs are uniquely positioned to 
benefit from an increasingly competitive local exchange market. There 
is evidence, for example, that carriers that have direct rights under 
section 251 will compete with the incumbent LECs to provide pure ISPs 
with the basic network services that ISPs need to create their own 
information service offerings, either by obtaining unbundled network 
elements for the provision of telecommunications services or through 
the resale of such services. As a result, incumbent LECs have an 
incentive to provide an increased variety of telecommunications 
services to pure ISPs at lower prices in response to the market 
presence of such competitors. Pure ISPs also could enter into 
partnering or teaming arrangements with carriers that have direct 
rights under section 251. In addition, ISPs can obtain certification as 
telecommunications service providers in order to receive direct 
benefits under section 251. We also note that many ISPs that currently 
provide both telecommunications services and information services will 
have the benefit of both section 251 unbundling as well as ONA.
    34. For all these reasons, the fact that section 251's access and 
interconnection rights apply by their terms only to a ``requesting 
telecommunications carrier'' does not, in our view, change our 
conviction that the 1996 Act, as well as other factors, should 
alleviate the court's underlying concern in California III that the 
level of unbundling required under ONA does not provide sufficient 
protection against access discrimination. We seek comment on this 
analysis. In light of several recent court decisions bearing on these 
issues, we also ask commenters to address how the opinions of the 
Eighth Circuit Court of Appeals, including the decision regarding the 
recombination of unbundled network elements, as well as the decision of 
the United States District Court for the Northern District of Texas 
concerning the constitutionality of sections 271 through 275 of the 
Act, affect our analysis.
    35. In addition to the changes engendered by the 1996 Act, there 
have been other regulatory and market-based developments that, we 
believe, also should alleviate the court's underlying concern about 
whether the level of unbundling mandated by ONA provides sufficient 
protection against access discrimination. For example, the Commission's 
Expanded Interconnection proceeding requires Class A LECs, including 
the BOCs and GTE, to allow all interested parties to provide 
competitive interstate special access, transport, and tandem switched 
transport by interconnecting their transmission facilities with the 
LECs' networks. Competing ISPs that utilize transmission facilities 
thus may provide certain transport functions as part of their enhanced 
services independent of the Computer III framework. These additional 
interconnection requirements, together with section 251 unbundling and 
the Commission's current ONA requirements, further help to protect ISPs 
against access discrimination by the BOCs. We seek comment on this 
analysis.
    36. In addition, the level of competition within the information 
services market, which the Commission termed ``truly competitive'' as 
early as 1980, has continued to increase markedly as new competitive 
ISPs have entered the market. The phenomenal growth of the Internet 
over the past several years illustrates how robustly competitive one 
sector of the information services market has become. Recent surveys 
suggest that there are some 3,000 Internet access providers in the 
United States; these providers range from small start-up operations, to 
large providers such as IBM and AT&T, to consumer online services such 
as America Online. We believe that other sectors of the information 
services market have also continued to grow, as we observed in the 
Computer III Further Remand Notice. The presence of well-established 
participants in the information services market, such as EDS, MCI, 
AT&T, Viacom, Times-Mirror, General Electric, and IBM, may make it more 
difficult for BOCs to engage in access discrimination. For example, the 
California I court indicated that ``the emergence of powerful 
competitors such as IBM, which have the resources and expertise to 
monitor the quality of access to the network, reduces the BOCs' ability 
to discriminate in providing access to their competitors.'' We seek 
comment on whether the sustained growth of competition within the 
information services market,

[[Page 9756]]

including the continued participation of large information service 
competitors, serves to diminish further the threat of access 
discrimination and, consequently, the court's concern about whether the 
level of unbundling mandated by ONA is sufficient.

IV. Effect of the 1996 Act

    37. As detailed in the background section, the Commission issued 
the Computer III Phase I Order more than ten years ago, shortly after 
divestiture, and before the BOCs had obtained authorization from the 
MFJ court to begin to provide information services. Similarly, the 
implementation of ONA primarily took place between 1988 and 1992. Our 
objective is now, as it was then, to promote efficiency and increased 
service offerings while controlling anticompetitive behavior by the 
BOCs. We therefore reevaluate below the continuing need for these 
safeguards, in light of the 1996 Act and the significant technological 
and market changes that have taken place since the Computer III 
nonstructural safeguards were first proposed. This reevaluation is also 
part of the Commission's 1998 biennial review of regulations as 
required by the 1996 Act.

A. Basic/Enhanced Distinction

    38. In the Computer II proceeding, the Commission adopted a 
regulatory scheme that distinguished between the common carrier 
offering of basic transmission services and the offering of enhanced 
services. The Commission defined a ``basic transmission service'' as 
the common carrier offering of ``pure transmission capability'' for the 
movement of information ``over a communications path that is virtually 
transparent in terms of its interaction with customer-supplied 
information.'' The Commission further stated that a basic transmission 
service should be limited to the offering of transmission capacity 
between two or more points suitable for a user's transmission needs. 
The common carrier offering of basic services is regulated under Title 
II of the Communications Act. In contrast, the Commission defined 
enhanced services as:

services, offered over common carrier transmission facilities used 
in interstate communications, which employ computer processing 
applications that act on the format, content, code, protocol or 
similar aspects of the subscriber's transmitted information; provide 
the subscriber additional, different, or restructured information; 
or involve subscriber interaction with stored information.

Enhanced services are not regulated under Title II of the 
Communications Act.
    39. The 1996 Act does not utilize the Commission's basic/enhanced 
terminology, but instead refers to ``telecommunications services'' and 
``information services.'' The 1996 Act defines telecommunications as:

the transmission, between or among points specified by the user, of 
information of the user's choosing, without change in the form or 
content of the information as sent and received.

Telecommunications service is defined as:

the offering of telecommunications for a fee directly to the public, 
or to such classes of users as to be effectively available directly 
to the public, regardless of facilities used.

The 1996 Act defines information service as:

the offering of a capability for generating, acquiring, storing, 
transforming, processing, retrieving, utilizing, or making available 
information via telecommunications, and includes electronic 
publishing, but does not include any use of any such capability for 
the management, control, or operation of a telecommunications system 
or the management of a telecommunications service.

    40. We concluded in the Non-Accounting Safeguards Order that, 
although the text of the Commission's definition of ``enhanced 
services'' differs from the 1996 Act's definition of ``information 
services,'' the two terms should be interpreted to extend to the same 
functions. We found no basis to conclude that, by using the term 
``information services,'' Congress intended a significant departure 
from the Commission's usage of ``enhanced services.'' We further 
explained that interpreting ``information services'' to include all 
``enhanced services'' provides a measure of regulatory stability for 
telecommunications carriers and ISPs by preserving the definitional 
scheme under which the Commission exempted certain services from 
traditional common carriage regulation.
    41. Consistent with our conclusion in the Non-Accounting Safeguards 
Order that ``enhanced services'' fall within the statutory definition 
of ``information services,'' we seek comment in this Further Notice on 
whether the Commission's definition of ``basic service'' and the 1996 
Act's definition of ``telecommunications service'' should be 
interpreted to extend to the same functions, even though the two 
definitions differ. We ask parties to address whether there is any 
basis to conclude that, by using the term ``telecommunications 
services,'' Congress intended a significant departure from the 
Commission's usage of ``basic services.'' As noted in the Non-
Accounting Safeguards Order, we believe the public interest is served 
by maintaining the regulatory stability of the definitional scheme 
under which the Commission exempted certain services from traditional 
common carriage regulation. To the extent parties believe that 
``telecommunications services'' differ from ``basic services'' in any 
regard, they should identify the distinctions that should be drawn 
between the two categories, describe any overlap between the two 
categories, and delineate the particular services that would come 
within one category and not the other.
    42. In light of our conclusion in the Non-Accounting Safeguards 
Order that the statutory term ``information services'' includes all 
services the Commission has previously considered to be ``enhanced,'' 
and our decision in this proceeding to seek comment on whether the 
statutory term ``telecommunications services'' includes all services 
the Commission has previously considered to be ``basic services,'' we 
seek comment on whether the Commission hereafter should conform its 
terminology to that used in the 1996 Act. We ask commenters to discuss 
whether the Commission's rules, which previously distinguished between 
basic and enhanced services, should now distinguish between 
telecommunications and information services. For example, we ask 
whether the Commission's Computer II decision should now be interpreted 
to require facilities-based common carriers that provide information 
services to unbundle their telecommunications services and offer such 
services to other ISPs under the same tariffed terms and conditions 
under which they provide such services to their own information 
services operations.

B. Cost-Benefit Analysis of Structural Safeguards

1. Background
    43. The Commission's goals in addressing BOC provision of 
information services have been both to promote innovation in the 
provision of information services and to prevent access discrimination 
and improper cost allocation. Because the BOCs control the local 
exchange network and the provision of basic services, in the absence of 
regulatory safeguards they may have the incentive and ability to engage 
in anticompetitive behavior against ISPs that must obtain basic network 
services from the BOCs in order

[[Page 9757]]

to provide their information service offerings. For example, BOCs may 
discriminate against competing ISPs by denying them access to services 
and facilities or by providing ISPs with access to services and 
facilities that is inferior to that provided to the BOCs' own 
information services operations. BOCs also may allocate costs 
improperly by shifting costs they incur in providing information 
services, which are not regulated under Title II of the Act, to their 
basic services.
    44. Under rate-of-return regulation, which allows carriers to set 
rates based on the cost of providing a service, the BOCs may have had 
an incentive to shift costs incurred in providing information services 
to their basic service customers. In 1990, the Commission replaced 
rate-of-return regulation with price cap regulation of the BOCs and 
certain other LECs to discourage improper cost allocation, among other 
things. Recently, the Commission revised its price caps regime to 
eliminate the sharing mechanism, which required price cap carriers to 
``share'' with their access customers half or all their earnings above 
certain levels in the form of lower rates. This revision substantially 
reduces the BOCs' incentive to misallocate costs.
    45. Since the adoption of Computer I in 1971, the Commission has 
employed various regulatory tools, including structural separation, to 
prevent access discrimination and cost misallocation, first by AT&T and 
then, after divestiture, by the BOCs, in providing information 
services. In Computer I, we imposed a ``maximum separation policy'' on 
the provision of ``data processing'' services by common carriers other 
than AT&T and its Bell System subsidiaries. We continued to impose 
structural separation on the provision of enhanced services by AT&T and 
its Bell System subsidiaries in Computer II, until we replaced 
structural separation with a system of nonstructural safeguards in 
1986, in Computer III.
    46. The Commission has long recognized both the benefits as well as 
the costs of structural separation as a regulatory tool. The Commission 
noted in Computer II that a structural separation requirement reduces 
firms' ability to engage in anticompetitive activity without detection 
because the extent of joint and common costs between affiliated firms 
is reduced, transactions must take place across corporate boundaries, 
and the rates, terms, and conditions on which services will be 
available to all potential purchasers must be made publicly available. 
Structural separation thus is useful as an enforcement tool and as a 
deterrent, because firms are less likely to engage in anticompetitive 
activity the more easily it can be detected. As for costs, the 
Commission recognized that structural separation increases firms' 
transaction and production costs, but did not agree with arguments 
presented at the time that structural separation reduces innovation.
    47. The Commission similarly weighed the benefits and costs of 
structural separation in Computer III when, with the passage of time 
and the accumulation of experience, it replaced the Computer II 
structural separation requirements with a system of nonstructural 
safeguards. The Commission concluded in Computer III that the benefits 
of structural separation are not significantly greater than the 
benefits of nonstructural safeguards in preventing anticompetitive 
practices by the BOCs, and that structural separation imposes greater 
costs on the public and the BOCs than nonstructural safeguards. The 
Commission also found that the benefits of structural separation had 
decreased since the adoption of the BOC Separation Order, 49 FR 1190, 
January 10, 1984 due to technological and market developments that 
diminished the BOCs' ability to misallocate costs and engage in access 
discrimination. Further, the Commission found, based on its experience, 
that the introduction of new information services by the BOCs was 
slowed or prevented altogether by structural separation, thus denying 
the public the benefits of innovation. The Commission also found that 
structural separation imposed direct costs on the BOCs resulting from 
duplication of facilities and personnel, limitations on joint 
marketing, and deprivation of economies of scope. The Ninth Circuit 
upheld the Commission's analysis of the costs of structural separation 
in California I and California III.
2. Effect of the 1996 Act and Other Factors
    48. In the Computer III Further Remand Notice, the Commission 
sought comment on how various factors, including reports of 
anticompetitive behavior by the BOCs and the increase in the number of 
BOC information service offerings since the elimination of structural 
separation, affected the Commission's cost-benefit analysis of 
structural separation in Computer III. The 1996 Act was enacted after 
the Commission issued the Computer III Further Remand Notice, and 
raises additional issues that may affect this cost-benefit analysis. As 
discussed in more detail below, we tentatively conclude that the Act's 
overall pro-competitive, de-regulatory framework, as well as our public 
interest analysis, support the continued application of the 
Commission's nonstructural safeguards regime to the provision by the 
BOCs of intraLATA information services. We also tentatively conclude 
that allowing the BOCs to offer intraLATA information services subject 
to nonstructural safeguards serves as an appropriate balance of the 
need to provide incentives to the BOCs for the continued development of 
innovative new technologies and information services that will benefit 
the public with the need to protect competing ISPs against the 
potential for anticompetitive behavior by the BOCs. We thus propose to 
allow the BOCs to continue to provide intraLATA information services on 
an integrated basis, subject to the Commission's Computer III and ONA 
requirements as modified or amended by this proceeding, or on a 
structurally separate basis. If a BOC chooses to provide intraLATA 
information services on a structurally separate basis, we seek comment 
on whether we should permit the BOC to choose between a Computer II and 
an Act-mandated affiliate under section 272 or section 274, or whether 
we should mandate one of these types of affiliates.
a. Section 251 and Local Competition
    49. Competition in the local exchange and exchange access markets 
is the best safeguard against anticompetitive behavior. BOCs are unable 
to engage successfully in discrimination and cost misallocation to the 
extent that competing ISPs have alternate sources of access to basic 
services. Stated differently, when other telecommunications carriers, 
such as interexchange carriers (IXCs) or cable service providers, 
compete with the BOCs in providing basic services to ISPs, the BOCs are 
less able to engage successfully in discrimination and cost 
misallocation because they risk losing business from their ISP 
customers for basic services to these competing telecommunications 
carriers.
    50. As discussed above, the 1996 Act affirmatively promotes local 
competition. Sections 251 and 253, among other sections, are intended 
to eliminate entry barriers and foster competition in the local 
exchange and exchange access markets. Indeed, the market for local 
exchange and exchange access services has begun to respond to some 
degree to the pro-competitive mandates of the 1996 Act. Some ISPs, for 
example, currently are obtaining basic services that underlie their 
information services from competing

[[Page 9758]]

providers of telecommunications services that have entered into 
interconnection agreements with the BOCs pursuant to section 251.
    51. We recognize that the BOCs remain the dominant providers of 
local exchange and exchange access services in their in-region states, 
and thus continue to have the ability and incentive to engage in 
anticompetitive behavior against competing ISPs. On the other hand, the 
movement toward local exchange and exchange access competition should, 
over time, decrease and eventually eliminate the need for regulation of 
the BOCs to ensure that they do not engage in access discrimination or 
cost misallocation of their basic service offerings. The Commission has 
previously concluded that the nonstructural safeguards established in 
Computer III could combat such anticompetitive behavior as effectively 
as structural separation requirements, but in a less costly way. We 
thus tentatively conclude that the de-regulatory, pro-competitive 
provisions of the 1996 Act, and the framework the 1996 Act set up for 
promoting local competition, are consistent with, and provide 
additional support for, the continued application of the Commission's 
current nonstructural safeguards regime for BOC provision of intraLATA 
information services. We seek comment on this tentative conclusion.
b. Structural Separation and the 1996 Act
    52. In the Computer III Further Remand Notice, we sought comment on 
the issue of whether some form of structural separation should be 
reimposed for the provision of information services by the BOCs, and we 
discussed briefly the costs and benefits that the Commission previously 
identified in granting structural relief to the BOCs. In this section, 
we seek comment on the extent to which the Act-mandated separation 
requirements may affect this cost-benefit analysis.
    53. The 1996 Act permits the BOCs to enter markets from which they 
were previously restricted, allowing the BOCs to develop and market 
innovative new technologies and information services. In doing so, 
Congress in certain cases imposed structural separation requirements on 
the BOCs. Section 272, for example, allows the BOCs to provide certain 
interLATA information services as well as in-region, interLATA 
telecommunications services, and to engage in manufacturing activities, 
only through a structurally separate affiliate. Section 274 imposes 
structural separation requirements on BOC provision of intraLATA and 
interLATA electronic publishing services. Congress did not, however, 
mandate separation requirements for BOC provision of other information 
services.
    54. In the Non-Accounting Safeguards Order we recognized that 
section 272 on its face does not require the BOCs to offer intraLATA 
information services through a separate affiliate, and deferred to this 
proceeding the question of whether the Commission should exercise its 
general rulemaking authority to do so. We find it significant that 
Congress limited the separate affiliate requirement in section 272 to 
BOC provision of most interLATA information services, interLATA 
telecommunications services, and manufacturing, and in section 274 to 
BOC provision of electronic publishing services. We therefore 
tentatively conclude that Congress' decision to impose structural 
separation requirements in sections 272 and 274, while relevant to our 
cost-benefit analysis, does not in itself warrant a return to 
structural separation for BOC provision of intraLATA information 
services not subject to those sections. We seek comment on this 
tentative conclusion.
    55. Congress's decision to mandate structural separation only for 
certain information services does not necessarily foreclose the 
Commission from mandating or allowing structural separation for other 
information services. We recognize that, for example, the statutory 
separate affiliate requirements may reduce the cost of returning to a 
structural separation regime for BOC provision of intraLATA information 
services, given that the BOCs already are required to establish at 
least one structurally separate affiliate in order to provide the 
services covered by sections 272 and 274. Some BOCs may find it more 
efficient to provide all of their information services through a 
statutorily-mandated affiliate. In addition, it may be in the public 
interest for the Commission to prescribe a uniform set of regulations 
for BOC provision of both intraLATA and interLATA information services, 
by requiring, for example, that BOCs provide all information services 
through an affiliate that complies with the statute. This approach 
would eliminate the need to distinguish between intraLATA and interLATA 
information services for purposes of regulation and, consequently, 
lower compliance and enforcement costs.
    56. On the other hand, mandatory structural separation would entail 
increased transaction and production costs for the BOCs, as discussed 
above. In addition, in the Computer III Further Remand Notice we noted 
that all of the BOCs currently are offering some information services 
on an integrated basis pursuant to CEI plans approved by the 
Commission. Thus, our cost-benefit analysis should take into account 
the costs today of returning to structural separation. These would 
include the personnel, operational, and other changes the BOCs would 
have to undergo in order to reinstate a regime of structural 
separation, and the service disruptions, lower service quality, reduced 
innovation, and higher user rates that may result. We must also 
consider the effect on the public of the potential delay in the 
development of new technologies and information services by the BOCs 
that may result. In addition, once the separation requirements under 
sections 272 and 274 sunset, structural separation for intraLATA 
information services based on the existence of the statutorily-mandated 
affiliates would have to be reexamined.
    57. We also recognize the benefits of a flexible, regulatory 
framework that would allow the BOCs, consistent with the public 
interest, to structure their operations as they see fit in order to 
maximize efficiencies and thus provide greater benefits to consumers. 
We note that, under our current rules, a BOC may provide an intraLATA 
information service either on an integrated basis pursuant to an 
approved CEI plan or on a structurally separated basis pursuant to the 
Commission's Computer II rules. SBC has argued that the BOCs continue 
to need this type of flexibility to provide intraLATA information 
services either on an integrated basis, subject to appropriate 
safeguards, or through a separate affiliate, because the most 
appropriate form of regulation varies service-by-service, depending on 
the relative significance of cost considerations and other factors. 
Although the Commission may need to devote more resources to administer 
and enforce multiple regulatory regimes, this approach would allow the 
BOCs to structure their intraLATA information service offerings more in 
accordance with their business needs. In addition, such an approach may 
minimize the risk of service disruptions, since the BOCs would not have 
to change the manner in which they are providing their current 
intraLATA information service offerings.
    58. In addition to the factors cited by the Commission in the 
Computer III Phase I Order, more recent events may affect the analysis 
of the relative costs and benefits of structural and nonstructural 
safeguards. In particular,

[[Page 9759]]

we earlier discussed how our Price Caps Fourth Report and Order, 62 FR 
31939, June 11, 1997 eliminates the sharing mechanism from the price 
caps regime, thereby reducing the BOCs' incentive to misallocate costs. 
We also described previously how the local competition provisions of 
the 1996 Act provide for alternate sources of access to basic services, 
thereby diminishing the BOCs' ability to engage in anticompetitive 
behavior against competing ISPs.
    59. In light of this analysis, we continue to believe it is 
preferable, as a matter of public interest, to continue with the 
Commission's nonstructural safeguards regime rather than to reimpose 
structural separation, notwithstanding the affiliate requirements of 
sections 272 and 274 of the Act. We thus tentatively conclude that the 
BOCs should continue to be able to choose whether to provide intraLATA 
information services either on an integrated basis, subject to the 
Commission's Computer III and ONA requirements as modified or amended 
by this proceeding, or pursuant to a separate affiliate. We seek 
comment on this tentative conclusion. In addition, if a BOC chooses to 
provide intraLATA information services through a separate affiliate, we 
seek comment on whether we should permit the BOC to choose between a 
Computer II and an Act-mandated affiliate, or whether we should mandate 
one of these types of affiliates. Finally, we seek comment on how the 
recent SBC v. FCC decision in the United States District Court for the 
Northern District of Texas affects this analysis.

C. Comparably Efficient Interconnection (CEI) Plans

1. Proposed Elimination of Current Requirements
    60. In the Interim Waiver Order adopted in response to the 
California III decision, the Bureau allowed the BOCs to continue to 
provide existing enhanced services on an integrated basis, provided 
that they filed CEI plans for those services. In addition, the Bureau 
required the BOCs to file CEI plans for new enhanced services they 
propose to offer, and to obtain the Bureau's approval for these plans 
before beginning to provide service. We concluded that the partial 
vacation of the BOC Safeguards Order in California III reinstated the 
service-specific CEI plan regime, augmented by implementation of ONA, 
until the Commission concluded its remand proceedings. BOCs were also 
required to comply with the requirements established in their approved 
ONA plans, because we had previously determined that ONA requirements 
are independent of the removal of structural separation requirements.
    61. In this Further Notice, we tentatively conclude that we should 
eliminate the requirement that BOCs file CEI plans and obtain Bureau 
approval for those plans prior to providing new information services. 
We note that CEI plans were always intended to be an interim measure, 
designed to bridge the gap between the Commission's decision to lift 
structural separation in the Computer III Phase I Order and the 
implementation of ONA. While CEI plans have been effective as interim 
safeguards, we tentatively conclude that they are not necessary to 
protect against access discrimination once the BOCs are providing 
information services pursuant to approved ONA plans, which they have 
been for several years. ONA provides ISPs an even greater level of 
protection against access discrimination than CEI. Under ONA, not only 
must the BOCs offer network services to competing ISPs in compliance 
with the nine CEI ``equal access'' parameters, but the BOCs must also 
unbundle and tariff key network service elements beyond those they use 
to provide their own enhanced services offerings. BOCs are also subject 
to ONA amendment requirements that constitute an additional safeguard 
against access discrimination following the lifting of structural 
separation.
    62. Further, under the 1996 Act, the BOCs are now subject to 
additional statutory requirements that will help prevent access 
discrimination, including the section 251 unbundling requirements and 
the network information disclosure requirements of section 251(c)(5). 
These statutory requirements all serve as further protections against 
access discrimination, both by requiring the BOCs to open the local 
exchange market to competition, and by ensuring that the BOCs publicly 
disclose on a timely basis information about changes in their basic 
network services.
    63. Given the protections afforded by ONA and the 1996 Act, we 
believe that the substantial administrative costs associated with BOC 
preparation, and agency review, of CEI plans outweigh their utility as 
an additional safeguard against access discrimination. Moreover, the 
time and effort involved in the preparation and review of the CEI plans 
may delay the introduction of new information services by the BOCs, 
without commensurate regulatory benefits. Such a result is contrary to 
one of the Commission's original purposes in adopting a nonstructural 
safeguards regime, which was to promote and speed introduction of new 
information services, benefiting the public by giving them access to 
innovative new technologies.
    64. For the reasons outlined above, we tentatively conclude that we 
should eliminate the requirement that BOCs file CEI plans and obtain 
Bureau approval for those plans prior to providing new information 
services. We believe the significant burden imposed by these 
requirements on the BOCs and the Commission outweighs their possible 
incremental benefit as additional safeguards against access 
discrimination. In this light, we tentatively conclude that lifting the 
CEI plan requirement will further our statutory obligation to review 
and eliminate regulations that are ``no longer necessary in the public 
interest.'' We seek comment on this tentative conclusion and our 
supporting analysis.
    Parties who disagree with this tentative conclusion should address 
whether there are more streamlined procedures that could be adopted as 
an alternative to the current CEI filing requirements.
    65. We recognize that, as part of our effort to reexamine our 
nonstructural safeguards regime, we seek comment in this Further Notice 
on whether we should modify or amend certain ONA requirements. Because 
we base our tentative conclusion that we should eliminate the CEI-plan 
filing requirement in part on the adequacy of ONA, we ask that parties 
comment on how any of the modifications the Commission proposes in Part 
IV.D., or proposed by commenters in response to our questions, may 
affect this tentative conclusion. We also seek comment on whether the 
requirements that the 1996 Act imposes on the BOCs, such as those 
relating to section 251 unbundling and network information disclosure, 
are sufficient in themselves to provide a basis for eliminating CEI 
plans.
2. Treatment of Services Provided Through 272/274 Affiliates
a. Section 272
    66. In the Non-Accounting Safeguards Order, we noted that section 
272 of the Act imposes specific separate affiliate and 
nondiscrimination requirements on BOC provision of ``interLATA 
information services,'' but does not address BOC provision of intraLATA 
information services. We concluded that, pending the conclusion of the 
Computer III Further Remand proceeding, BOCs may continue to provide 
intraLATA information services on an integrated basis, in compliance

[[Page 9760]]

with the Commission's nonstructural safeguards established in Computer 
III and ONA.
    67. The Non-Accounting Safeguards Order also raised the related 
issue of whether a BOC that provides all information services (both 
intraLATA and interLATA) through a section 272 separate affiliate 
satisfies the Commission's Computer II separate subsidiary 
requirements, and therefore does not have to file a CEI plan for those 
services. We noted that the record in the Non-Accounting Safeguards 
Order was insufficient to make this determination, and that we would 
examine this issue in the Computer III Further Remand proceeding.
    68. If we do not adopt our tentative conclusion in this proceeding 
to eliminate the CEI plan filing requirement for the BOCs, we 
tentatively conclude that the BOCs should not have to file CEI plans 
for information services that are offered through section 272 separate 
affiliates, notwithstanding that section 272's requirements are not 
identical to the Commission's Computer II requirements (all other 
applicable Computer III and ONA safeguards, however, as amended or 
modified by this proceeding, would continue to apply). We note that, to 
the extent certain or all BOCs no longer have to provide interLATA 
services through a section 272 affiliate as a result of the SBC v. FCC 
decision by the United States District Court for the Northern District 
of Texas, then this tentative conclusion would not apply.
    69. We reach our tentative conclusion for several reasons. First, 
we believe that the concerns underlying the Commission's Computer II 
requirements regarding access discrimination and cost misallocation are 
sufficiently addressed by the accounting and non-accounting 
requirements set forth in section 272 and the Commission's orders 
implementing this section. Second, after a BOC receives authority under 
section 271 to provide interLATA services through a section 272 
affiliate, the BOC in many cases may want to provide a seamless 
information service to customers that would combine both the inter-and 
intraLATA components of such service. For the Commission to require 
that the BOC also receive approval under a CEI plan for the intraLATA 
component of such service is, in our view, unnecessary, and likely to 
delay the provision of integrated services that would be beneficial to 
consumers. We seek comment on this tentative conclusion and supporting 
analysis.
    70. We also noted in the Non-Accounting Safeguards Order that other 
issues raised regarding the interplay between the 1996 Act and the 
Commission's Computer III/ONA regime would be addressed in the Computer 
III Further Remand proceeding. These included whether: (1) the 
Commission should harmonize its regulatory treatment of intraLATA 
information services provided by the BOCs with the section 272 
requirements imposed by Congress on interLATA information services; (2) 
the 1996 Act's CPNI, network disclosure, nondiscrimination, and 
accounting provisions supersede various of the Commission's Computer 
III nonstructural safeguards; and (3) section 251's interconnection and 
unbundling requirements render the Commission's Computer III and ONA 
requirements unnecessary. These issues are either being addressed in 
this Further Notice or have been covered in other proceedings.
b. Section 274
    71. In the Telemessaging and Electronic Publishing Order, 62 FR 
7690, February 20, 1997 we concluded that the Commission's Computer II, 
Computer III, and ONA requirements continue to govern the BOCs' 
provision of intraLATA electronic publishing services. We found, 
however, that the record was insufficient to determine whether BOC 
provision of electronic publishing through a section 274 affiliate 
satisfied all the relevant requirements of Computer II, such that the 
BOC would not have to file a CEI plan for that service. We noted that 
we would consider that issue, as well as other issues raised regarding 
the revision or elimination of the Computer III/ONA requirements, in 
the Computer III Further Remand proceeding.
    72. If we do not adopt our tentative conclusion in this proceeding 
to eliminate the CEI plan filing requirement for the BOCs, we 
tentatively conclude, as we do above for information services that are 
provided through a section 272 affiliate, that BOCs should not have to 
file CEI plans for electronic publishing services or other information 
services provided through their section 274 affiliate (as noted above, 
however, all other applicable Computer III and ONA safeguards, as 
amended or modified by this proceeding, would continue to apply). As 
noted above, to the extent certain or all BOCs no longer are subject to 
section 274 for their provision of electronic publishing as a result of 
the SBC v. FCC decision by the United States District Court for the 
Northern District of Texas, then this tentative conclusion would not 
apply.
    73. Again, we reach our tentative conclusion for several reasons. 
First, we believe the section 274 separation and nondiscrimination 
requirements, and the Commission's rules implementing those 
requirements, are sufficient to address concerns regarding access 
discrimination and misallocation of costs in general. Second, given 
that Congress set forth detailed rules in section 274 for the specific 
provision of electronic publishing services, we do not believe the 
Commission should continue to require the BOCs to file, and the 
Commission to approve, CEI plans before the BOCs may provide such 
services. We seek comment on this tentative conclusion and supporting 
analysis.
3. Treatment of Telemessaging and Alarm Monitoring Services
    74. In the Telemessaging and Electronic Publishing Order and the 
Alarm Monitoring Order, respectively, we concluded that the 
Commission's Computer II, Computer III, and ONA requirements continue 
to govern the BOCs' provision of intraLATA telemessaging services and 
alarm monitoring services. Because neither section 260 nor section 275 
imposes separation requirements for the provision of intraLATA 
telemessaging services or alarm monitoring services, respectively, BOCs 
may provide those services, subject both to other restrictions in those 
sections, as applicable, as well as the Commission's current 
nonstructural safeguards regime, as modified by the proposals that we 
may adopt in this proceeding.
4. Related Issues
    75. If we adopt our tentative conclusion to eliminate the CEI plan 
filing requirement for the BOCs, we seek comment on whether we should 
dismiss all CEI matters pending at that time (including pending CEI 
plans, pending CEI plan amendments, and requests for CEI waivers), on 
the condition that the BOCs must comply with any new or modified rules 
that may be established as a result of this Further Notice. We also 
seek comment on whether we should require a BOC with CEI approval to 
continue to offer service under the CEI requirements. To the extent 
that parties involved in pending CEI matters raise issues other than 
those directly related to the CEI requirements (e.g., whether the 
service for which the BOC is seeking CEI-plan approval is a true 
information service, as opposed to a telecommunications service that 
should be offered under tariff), we seek comment on how and in what 
forum those issues should be addressed.

[[Page 9761]]

    76. We note that section 276 directs the Commission to prescribe a 
set of nonstructural safeguards for BOC provision of payphone service, 
which must include, at a minimum, the ``nonstructural safeguards equal 
to those adopted in'' the Computer III proceeding. In implementing 
section 276, the Commission required the BOCs, among other things, to 
file CEI plans describing how they would comply with various 
nonstructural safeguards. The Bureau approved the BOCs' CEI plans to 
provide payphone service on April 15, 1997.
    77. We seek comment on whether the changes that may be made to the 
Commission's Computer III and ONA rules as a result of this Further 
Notice should also apply to the nonstructural safeguards regime 
established in the Payphone Order proceeding for BOC provision of 
payphone service. For example, to the extent that we adopt our 
tentative conclusion to eliminate the CEI plan filing requirement, 
should we also relieve the BOCs from the requirement of filing 
amendments to their CEI plans for payphone service? How does this 
comport with the statutory requirement in section 276? We seek comment 
on these issues.

D. ONA and Other Nonstructural Safeguards

1. ONA Unbundling Requirements
a. Introduction
    78. The Commission's ONA unbundling requirements serve both to 
safeguard against access discrimination and to promote competition and 
market efficiency in the information services industry. As described 
above, the Commission conditioned the permanent elimination of the 
Computer II structural separation requirements imposed on the BOCs upon 
the evolutionary implementation of ONA and other nonstructural 
safeguards. The ONA requirements, however, have a significance 
independent of whether they provide the basis for lifting structural 
separation. In 1990, during the course of the remand proceedings in 
response to California I, the Commission required the BOCs to implement 
ONA regardless of whether ONA provided the basis for elimination of 
structural separation. As discussed below, the Commission stated that 
``[a] major goal of ONA is to increase opportunities for ESPs to use 
the BOCs'' regulated networks in highly efficient ways, enabling ESPs 
to expand their markets for their present services and develop new 
offerings as well, all to the benefit of consumers.'' It was for this 
reason that the Commission applied the ONA requirements to GTE in 1994.
    79. ONA is the overall design of a carrier's basic network services 
to permit all users of the basic network, including the information 
services operations of the carrier and its competitors, to interconnect 
to specific basic network functions and interfaces on an unbundled and 
``equal access'' basis. The BOCs and GTE through ONA must unbundle key 
components of their basic services and make them available under 
tariff, regardless of whether their information services operations 
utilize the unbundled components. Such unbundling ensures that 
competitors of the carrier's information services operations can 
develop information services that utilize the carrier's network on an 
economical and efficient basis.
b. ONA Unbundling Requirements
    80. In the Computer III Phase I Order we declined to adopt any 
specific network architecture proposals for ONA and instead specified 
certain standards that carriers' ONA plans must meet. The unbundling 
standard for the BOCs required that: (1) the BOCs' enhanced services 
operations obtain unbundled network services pursuant to tariffed 
terms, conditions, and rates available to all ISPs; (2) BOCs provide an 
initial set of basic service functions that could be commonly used in 
the provision of information services to the extent technologically 
feasible; (3) ISPs participate in developing the initial set of network 
services; (4) BOCs select the set of network services based on the 
expected market demand for such elements, their utility as perceived by 
information service competitors, and the technical and costing 
feasibility of such unbundling; and (5) BOCs comply with CEI 
requirements in providing basic network services to affiliated and 
unaffiliated ISPs. In the BOC ONA Order that reviewed the initial BOC 
ONA plans for compliance with the Commission's requirements, the 
Commission generally approved the use of the ``common ONA model'' that 
described unbundled services BOCs would provide to competing ISPs. 
Under the common ONA model, ISPs obtain access to various unbundled ONA 
services, termed Basic Service Elements (BSEs), through access links 
described as Basic Service Arrangements (BSAs). BSEs are used by ISPs 
to configure their information services. Other ONA elements include 
Complementary Network Services (CNSs), which are optional unbundled 
basic service features (such as stutter dial tone) that an end user may 
obtain from carriers in order to obtain access to or receive 
information services, and Ancillary Network Services (ANSs), which are 
non-Title II services, such as billing and collection, that may be 
useful to ISPs.
    81. The BOCs and GTE are also subject to the ONA amendment 
requirement. Under this requirement, if a subject carrier itself seeks 
to offer an information service that uses a new BSE or otherwise uses 
different configurations of underlying basic services than those 
included in its approved ONA plan, the carrier must amend its ONA plan 
at least ninety days before it proposes to offer that information 
service. The Commission must approve the amendment before the subject 
carrier can use the new basic service for its own information services.
    82. In addition to the ONA services that BOCs and GTE currently 
provide, there are mechanisms to help ISPs obtain the new ONA services 
they require to provide information services. When an ISP identifies a 
new network functionality that it wants to use to provide an 
information service, it can request the service directly from the BOC 
or GTE through a 120-day process specified in our rules, or it can 
request that the Network Interconnection Interoperability Forum (NIIF) 
sponsored by the Alliance for Telecommunications Industry Solutions 
(ATIS) consider the technical feasibility of the service.
    83. Under the Commission's 120-day request process, an ISP that 
requests a new ONA basic service from the BOC or GTE must receive a 
response within 120 days regarding whether the BOC or GTE will provide 
the service. The BOC or GTE must give specific reasons if it will not 
offer the service. The BOC or GTE's evaluation of the ISP request is to 
be based on the ONA selection criteria set forth in the original Phase 
I Order: (1) market area demand; (2) utility to ISPs as perceived by 
the ISPs themselves; (3) feasibility of offering the service based on 
its cost; and (4) technical feasibility of offering the service. If an 
ISP objects to the BOC or GTE's response, it may seek redress from the 
Commission by filing a petition for declaratory ruling.
    84. Additionally, ISPs can ask the NIIF for technical assistance in 
developing and requesting new network services. Upon request, the NIIF 
will establish a task force composed of representatives from different 
industry sectors to evaluate the technical feasibility of the service, 
and through a consensus process, make recommendations on how the 
service can be implemented. ISPs can then take the information to a 
specific BOC or GTE and request the service under the

[[Page 9762]]

120-day process using the NIIF result to show that the request is 
technically feasible.
    85. As part of the Commission's 1998 biennial review of 
regulations, we seek comment on whether ONA has been and continues to 
be an effective means of providing ISPs with access to the BOC/GTE 
unbundled network services they need to structure efficiently and 
innovatively their information service offerings. To the extent that 
commenters assert that ONA is effective or ineffective, we request that 
they cite to specific instances to support their claims.
    86. In addition, we seek comment on whether the ``common ONA 
model'' through which ISPs gain access to BSEs, BSAs, CNSs, and ANSs is 
adequate to provide ISPs with the network functionalities they need. If 
not, what specific changes to the ONA unbundling framework should be 
made? Some parties have argued that the common ONA model forces ISPs to 
purchase unnecessary services or functionalities that are embedded 
within the BSEs, BSAs, CNSs, and ANSs. We seek comment on this 
argument. In addressing these issues, commenters should take note of 
our separate inquiry below regarding the impact of section 251 and its 
separate unbundling regime.
    87. We further seek comment on whether ISPs make use of the ONA 
framework to acquire unbundled network services or whether they use 
other means to obtain such services in order to provide their 
information service offerings. Commenters that have used means other 
than ONA to acquire or provide unbundled network services should 
identify those means, state why ONA was not used, and discuss why the 
alternative approach was more effective and efficient.
    88. In addition, we seek comment on whether the ONA 120-day request 
process established to help ISPs obtain new ONA services has been 
effective. We seek comment, from ISPs in particular, regarding whether 
they have made use of the 120-day request process, and the results from 
using that process. If ISPs have not used the 120-day request process, 
we request that they explain why they have not done so. We further 
request that parties comment, with specificity, on what, if anything, 
we should do to streamline the 120-day request process to make it more 
useful. In the alternative, we seek comment on whether the 120-day 
request process should be eliminated, in light of the fact that the 
issues that must be resolved between the carrier and the requesting ISP 
are technical and operational in nature, and may be most appropriately 
addressed in an industry forum, such as the NIIF. We also seek comment 
on whether the ONA amendment process has been effective.
    89. We further seek comment regarding the role of the NIIF in 
helping ISPs obtain basic services from the BOCs and GTE. We seek 
comment, from ISPs in particular, regarding whether they have requested 
assistance from the NIIF in determining the technical feasibility of 
offering particular network functionalities as new basic services, and 
if so, the results obtained. If ISPs have not done so, we request that 
they tell us why not. We further seek comment on whether we should 
continue to request that the NIIF perform the function of facilitating 
ISP ONA requests or whether some other forum or industry group would be 
more appropriate.
    90. Finally, we seek comment on whether and how the development of 
new information services, including, for example, Internet services, 
should affect our analysis of the effectiveness of the Commission's 
current ONA rules for ISPs. As we noted in the Information Service and 
Internet Access NOI, 62 FR 4657, January 31, 1997, many of the 
Commission's existing rules have been designed for traditional circuit-
switched voice networks rather than the emerging packet-switched data 
networks. While the Information Service and Internet Access NOI sought 
comment, in general, on identifying ways in which the Commission could 
facilitate the development of high-bandwidth data networks while 
preserving efficient incentives for investment and innovation in the 
underlying voice network, we seek comment in this Further Notice 
specifically on whether and how the Commission should modify the 
Computer III and ONA rules in light of these technological 
developments.
    91. Specifically, we seek comment on how the Commission's Computer 
III or ONA rules may impact the BOCs' incentive to invest in and deploy 
data network switching technology. For example, the Commission's 
existing ONA rules require the BOCs to unbundle and separately tariff 
all basic services. We have interpreted this rule to require a BOC to 
unbundle and separately tariff a basic service used in the provision of 
an information service provided by the BOC affiliate, even where the 
basic service is solely located in, and owned by, the BOC affiliate, 
not the BOC. This situation may arise, for example, when a frame relay 
switch is located in, and owned by, the BOC affiliate rather than the 
BOC. We seek comment on the appropriate treatment of these types of 
services.
c. Effect of the 1996 Act
(1) Section 251 Unbundling
    92. Section 251 of the Act requires incumbent LECs, including the 
BOCs and GTE, to provide to requesting telecommunications carriers 
interconnection and access to unbundled network elements at rates, 
terms, and conditions that are just, reasonable, and nondiscriminatory, 
and to offer telecommunications services for resale. The Act defines 
``telecommunications carrier'' as ``any provider of telecommunications 
services, except that such term does not include aggregators of 
telecommunications services (as defined in section 226).'' As we 
concluded in the Local Competition Order, the term ``telecommunications 
carrier'' does not include ISPs that do not also provide domestic or 
international telecommunications. Thus, as discussed above, companies 
that provide both information and telecommunications services are able 
to request interconnection, access to unbundled network elements, and 
resale under section 251, but companies that only provide information 
services (``pure ISPs'') are not accorded such rights under section 
251.
    93. Despite this limitation, there are several ways that pure ISPs 
may be able to obtain benefits from section 251, as discussed in Part 
III.B. We recognize, however, that section 251 provides a level of 
unbundling that pure ISPs do not receive under the Commission's current 
ONA framework. Unbundling under section 251 includes the physical 
facilities of the network, together with the features, functions, and 
capabilities associated with those facilities. Section 251 also 
requires incumbent LECs to provide for the collocation at the LEC's 
premises of equipment necessary for interconnection or access to 
unbundled network elements, under certain conditions. Unbundling under 
ONA, in contrast, emphasizes the unbundling of basic services, not the 
substitution of underlying facilities in a carrier's network. ONA 
unbundling also does not mandate interconnection on carriers' premises 
of facilities owned by others. These differences may be due to the 
different policy goals that the two regimes were designed to serve.
    94. Section 251 unbundling raises a number of issues relating to 
the Commission's ONA framework. In the Non-Accounting Safeguards Order, 
for example, some parties stated that section 251's interconnection and

[[Page 9763]]

unbundling requirements render the Commission's Computer III and ONA 
requirements unnecessary. A related issue is whether the Commission, 
pursuant to our general rulemaking authority, should extend section 
251-type unbundling to ``pure ISPs.''
    95. In this Further Notice, we seek comment on whether section 251, 
as currently applied, obviates the need for ONA. We ask commenters to 
analyze this issue with respect to both pure ISPs as well as ISPs that 
are also telecommunications carriers. For example, is ONA unbundling 
still necessary for ISPs that are also telecommunications carriers for 
whom section 251 unbundling is available? As for pure ISPs, does the 
fact that they can obtain the benefits of section 251 by becoming 
telecommunications carriers, or by partnering with or obtaining basic 
services from competitive telecommunications providers, render ONA 
unnecessary? Commenters should address whether ONA should still be 
available for pure ISPs or other ISPs in areas where there may not be 
sufficient competition in the local exchange market.
    96. We also seek comment on whether it is in the public interest 
for the Commission to extend section 251-type unbundling to pure ISPs. 
Put differently, we seek comment regarding whether, pursuant to our 
general rulemaking authority contained in section 201-205 of the Act, 
and as exercised in the Computer III, ONA, and Expanded Interconnection 
proceedings, we can and should extend some or all rights accorded by 
section 251 to requesting telecommunications carriers to pure ISPs. 
Commenters who contend that it is in the public interest to extend 
section 251-type unbundling should address why it is necessary to do 
so, given the alternative options pure ISPs have to obtain the benefits 
of section 251 unbundling, as well as the unbundling rights ISPs 
currently enjoy under the Commission's existing ONA regime. Commenters 
should also address whether the extension of section 251-type 
unbundling to pure ISPs would be inconsistent with section 251, which 
by its terms applies only to telecommunications carriers. Similarly, 
commenters should address whether section 251-type unbundling is 
appropriate for pure ISPs, given the different purposes section 251 and 
ONA serve, and the different approaches to unbundling they encompass. 
Furthermore, commenters that argue that we should extend the section 
251 unbundling framework to pure ISPs should explain what such a 
framework would include. For example, commenters should address, among 
other things, whether extending section 251-type unbundling rights to 
pure ISPs necessarily requires the extension to pure ISPs of any 
obligations under section 251 or other Title II provisions. Commenters 
should also address whether extending section 251-type unbundling to 
pure ISPs obviates the need for ONA.
(2) InterLATA Information Services
    97. As discussed, we tentatively conclude in this Further Notice 
that the Commission's nonstructural safeguard regime should continue to 
apply to BOC provision of intraLATA information services. Prior to the 
enactment of the 1996 Act, however, we did not distinguish between 
intraLATA and interLATA information services, and we did not explicitly 
apply our Computer III and ONA rules to BOC provision of interLATA 
information services since the BOCs were prevented under the MFJ from 
providing interLATA services. Section 272 of the 1996 Act, however, 
does distinguish between intraLATA and interLATA information services 
by imposing separation and nondiscrimination requirements on BOC 
provision of interLATA information services. We seek comment, 
therefore, on whether the Commission's ONA requirements, as modified or 
amended by this proceeding, should be interpreted as encompassing BOC 
provision of interLATA information services. We also seek comment on 
whether it would be inconsistent with section 272 for the Commission to 
apply ONA requirements to BOC provision of interLATA information 
services.
    98. In addressing this issue, we ask that commenters take note of 
the following policy considerations. As noted above, the Commission 
required the BOCs to implement ONA regardless of whether ONA provided 
the basis for elimination of structural separation. We stated that ONA 
serves the public interest, not only by serving as a critical 
nonstructural safeguard against anticompetitive behavior by the BOCs, 
but also by promoting the efficient use of the network by ISPs, to the 
benefit of consumers. On the other hand, section 272 already sets forth 
the statutory requirements for BOC provision of interLATA information 
services and, therefore, including such services within the 
Commission's ONA framework may be unnecessary to protect the public 
interest. Moreover, as discussed above, section 251 unbundling may 
obviate ONA in some or all respects, including its application to BOC 
provision of interLATA information services. We also seek comment, to 
the extent commenters believe that ONA should encompass BOC provision 
of interLATA information services, on how the Commission's current ONA 
requirements, including ONA reporting requirements, may need to be 
changed or supplemented, if at all, to take account of such services.
2. ONA and Nondiscrimination Reporting Requirements
a. Introduction
    99. In this section of the Notice, we examine the various reporting 
requirements imposed on the BOCs and GTE by the Computer III and ONA 
regimes. These reporting requirements were originally intended as a 
safeguard, in that the BOCs and GTE must disclose information that 
would allow detection of patterns of access discrimination. In 
addition, certain reporting requirements were intended to promote 
competition, by providing interested parties (including ISPs and 
equipment manufacturers) with information about service introduction 
and deployment by the subject carriers, which may assist such parties 
in structuring their own operations.
    100. We recognize, however, that a number of years have passed 
since certain of these reporting requirements were imposed, and that 
some of the information we require to be disclosed may no longer be 
useful, relevant, or related to either the safeguard or competition 
promotion functions identified above. Thus, as part of the Commission's 
1998 biennial review of regulations, we intend in this proceeding to 
reexamine each of the reporting obligations imposed on the BOCs and GTE 
by the Computer III and ONA regimes, to determine whether any of these 
requirements should be eliminated or modified, consistent with the 1996 
Act. We also seek comment on what, if any, different or additional 
reporting requirements should be imposed to safeguard against 
anticompetitive behavior by the BOCs and GTE and to promote competition 
in the provision of information services. In particular, we also seek 
comment on methods to facilitate access to and use of this information 
by unaffiliated entities, including small entities.
    101. We set forth the ONA reporting reporting requirements and make 
specific inquiries regarding each requirement. The following are 
general inquiries that apply to all ONA reporting requirements. We ask 
parties to respond to both the specific and general inquiries in their 
comments on each ONA reporting requirement.

[[Page 9764]]

    a. Is the information reported necessary to or helpful in 
monitoring the compliance of the subject carriers with their unbundling 
and nondiscrimination obligations? If not, why not? Would other types 
of information be more useful for compliance monitoring or enforcement 
purposes?
    b. Is this requirement duplicative? In other words, does the 
Commission currently require other reports that disclose the same or 
substantially similar information, or serve the same purposes? If so, 
how should the Commission streamline these requirements?
    c. Do industry groups, such as ATIS and/or NIIF, collect and 
compile information that is duplicative of that required by the 
Commission? If so, is that information readily available to interested 
parties?
    d. Should we continue to require the subject carriers to file this 
report with the Commission both on paper and on disk, or should we 
adopt streamlined filing proposals similar to those set forth in the 
Further Notice of Proposed Rulemaking in the Non-Accounting Safeguards 
proceeding? Specifically, should we require either:
    (i) a certification process whereby the subject carrier must 
maintain the required information in a standardized format, and file 
with the Commission an annual affidavit stating: (1) the information is 
so maintained; (2) the information will be updated in compliance with 
our rules; (3) the information will be maintained accurately; and (4) 
how the public will be able to access the information; or
    (ii) electronic posting whereby the subject carriers must make the 
required information available on the Internet (for example, by posting 
it on their website) or through another similar electronic mechanism?
    e. If we continue to maintain a paper filing requirement, is the 
information presented in a clear, comprehensible format? If not, what 
modifications to the format would improve clarity and accessibility?
    f. If we continue to maintain a paper filing requirement, should we 
alter the frequency with which we require this report to be filed? If 
so, what alteration should be made, and what is the basis for that 
alteration? In the alternative, if we impose a certification process or 
electronic posting requirement, how often should subject carriers be 
required to update the information they must maintain? How must the 
subject carriers maintain historical data, and for what length of time?
    102. In conjunction with our inquiries elsewhere in this item, we 
seek to examine, and, if possible, clarify the relationship between the 
ONA reporting requirements and the other obligations imposed on the 
subject carriers by ONA. For example we seek comment above on whether 
we should modify or eliminate the ONA unbundling requirements. To the 
extent that parties argue that we should do so, we request that they 
comment upon the effect that such action would have on the reporting 
obligations of the subject carriers. It seems that if the subject 
carriers were no longer required to unbundle and tariff ONA services, 
much of the information we currently require to be disclosed in the 
annual and semi-annual ONA reports would cease to exist. Does this mean 
that all such reporting requirements should be eliminated? Are there 
other meaningful reporting requirements that should be imposed instead?
b. Annual ONA Reports
    103. The BOCs and GTE are required to file annual ONA reports that 
include information on: (1) annual projected deployment schedules for 
ONA service, by type of service (BSA, BSE, CNS), in terms of percentage 
of access lines served system-wide and by market area; (2) disposition 
of new ONA service requests from ISPs; (3) disposition of ONA service 
requests that have previously been designated for further evaluation; 
(4) disposition of ONA service requests that were previously deemed 
technically infeasible; (5) information on Signaling System 7 (SS7), 
Integrated Services Digital Network (ISDN), and Intelligent Network 
(IN) projected development in terms of percentage of access lines 
served system-wide and on a market area basis; (6) new ONA services 
available through SS7, ISDN, and IN; (7) progress in the IILC (now 
NIIF) on continuing activities implementing service-specific and long-
term uniformity issues; (8) progress in providing billing information 
including Billing Name and Address (BNA), line-side Calling Number 
Identification (CNI), or possible CNI alternatives, and call detail 
services to ISPs; (9) progress in developing and implementing Operation 
Support Systems (OSS) services and ESP access to those services; (10) 
progress on the uniform provision of OSS services; and (11) a list of 
BSEs used in the provision of BOC/GTE's own enhanced services. In 
addition, the BOCs are required to report annually on the unbundling of 
new technologies arising from their own initiative, in response to 
requests by ISPs, or resulting from requirements imposed by the 
Commission.
    104. We believe that certain aspects of the annual reporting 
requirements may be outdated and should be streamlined. We seek 
comment, for example, on whether we should continue to require the 
subject carriers to continue to report on projected deployment of ONA 
services (item 1), particularly as this information does not appear to 
change appreciably from year to year. Should we instead require the 
subject carriers to make a one-time filing of a 5-year deployment 
schedule at the time a new ONA service is introduced? In addition, 
should we require the subject carriers to continue to report on the 
disposition of ONA service requests from ISPs (items 2, 3, and 4), 
despite evidence that the frequency of such requests has declined 
appreciably since the initial implementation of ONA?
    105. We seek comment on whether we should continue to require the 
subject carriers to report on deployment of SS7 (items 5 and 6), which 
has become available in most service areas. We further seek comment on 
whether we should continue to require the subject carriers to report on 
the availability and deployment of ISDN, IN, and AIN services (items 5 
and 6). In addition, we seek comment regarding whether the requirement 
that the BOCs report on ``new ONA services available through SS7, ISDN, 
and IN, and plans to provide these services'' (item 6) overlaps so 
significantly with the requirement that they report on the unbundling 
of new technologies that one of these requirements should be 
eliminated.
    106. In addition, we seek comment on whether, and to what extent, 
we should alter the requirement that carriers report on progress in 
industry forums regarding uniformity issues. Currently, subject 
carriers are required to report on progress in the IILC on continuing 
activities implementing service-specific and long-term uniformity 
issues (item 7). As a preliminary matter, we note that the functions 
that used to be performed by the IILC were transferred, as of January 
1, 1997, to the NIIF. We tentatively conclude that, at a minimum, the 
ONA reporting requirement should be updated to reflect this change. We 
believe that the BOCs have agreed to provide to the NIIF periodic 
updates regarding issues that have been resolved. We seek comment on 
the nature of such updates to the NIIF, including specifically what 
information the BOCs provide. We further seek comment regarding whether 
the information from such updates is comprehensive enough, and 
sufficiently accessible to interested parties, to allow

[[Page 9765]]

us to eliminate the ONA reporting requirement covering progress of 
matters in the NIIF. In the alternative, we seek comment regarding 
whether there are other sources of information produced by or for ATIS 
or the NIIF that may reasonably substitute for this ONA reporting 
requirement.
    107. We seek comment on whether we should continue to require the 
subject carriers to report on progress in providing billing information 
and call detail services to ISPs (item 8). We seek comment on whether 
we should continue to require the subject carriers to report on 
progress in developing, implementing, and providing access to Operation 
Support Systems (OSS) services (items 9 and 10). We believe it is 
important for such information to continue to be publicly available. We 
recognize, however, that such information may be more appropriately 
provided pursuant to other statutory provisions. For example, we issued 
a Public Notice on June 10, 1997, asking for comment on LCI's petition 
for expedited rulemaking to establish reporting requirements, 
performance, and technical standards for OSS in the context of section 
251 of the Act. We seek comment on the appropriate forum for collecting 
information about OSS and whether continued reporting under Computer 
III is necessary in light of other pending Commission proceedings. We 
further seek comment on what, if any, changes we should make to the ONA 
OSS reporting requirements, to better reflect the obligations with 
respect to OSS imposed on carriers in the Local Competition Order.
c. Semi-Annual ONA Reports
    108. In addition to the annual ONA reports discussed above, the 
BOCs and GTE are required to file semi-annual ONA reports. These semi-
annual reports include: (1) a consolidated nationwide matrix of ONA 
services and state and federal ONA tariffs; (2) computer disks and 
printouts of data regarding state and federal tariffs; (3) a printed 
copy and a diskette copy of the ONA Services User Guide; (4) updated 
information on 118 categories of network capabilities requested by ISPs 
and how such requests were addressed, with details and matrices; and 
(5) updated information on BOC responses to the requests and matrices.
    109. Considerable portions of the semi-annual reports filed by the 
BOCs appear to be redundant, as each of the BOCs files identical 
information. This generic information includes the ONA service matrix 
and the Services Description section of the ONA Services User Guide, as 
well as information on the 118 network capabilities originally 
requested by ISPs, and how the BOCs collectively have responded to 
these requests. Bell Communications Research, Inc. (Bellcore) 
originated and, until its spin-off earlier this year, prepared these 
portions of the BOCs' semi-annual reports; currently, an organization 
called the National Telecommunications Alliance (NTA) has assumed this 
responsibility. We see no benefit to continuing to require each of the 
BOCs separately to file the generic portions of the semi-annual report, 
particularly as there appear to be few changes in this information from 
year to year. Thus, we tentatively conclude that the BOCs should be 
permitted to make one consolidated filing (or posting) for all generic 
information they currently submit in their semi-annual reports. We seek 
comment on this tentative conclusion. We further seek comment on 
whether we should allow GTE to join in this consolidated filing or 
posting (to the extent that this arrangement would be mutually 
agreeable to the parties) with respect to the information it files that 
overlaps with that filed by the BOCs.
    110. In addition, we seek comment on the frequency with which we 
require the subject carriers to file the information contained in the 
semi-annual ONA reports. In particular, we inquire as to whether we 
should reduce the filing frequency, and restructure the semi-annual 
reports to become part of the annual ONA reports filed by the subject 
carriers. A reduction in filing frequency would decrease the burden 
imposed on the subject carriers, without, we believe, significantly 
affecting the quality or utility of the information supplied, much of 
which is either generic or rather static in nature, or is available 
through other means (for example, in the state and federal tariffs 
filed by the subject carriers).
    111. We also seek comment regarding whether certain information 
required in the semi-annual reports overlaps with the information 
required in the annual reports. For example, in the annual ONA reports, 
the Commission requires the BOCs and GTE to supply information on the 
disposition of several categories of ONA requests, whereas in the semi-
annual reports, the Commission requires the BOCs and GTE to supply 
information regarding how they have responded to ISP requests for the 
existing 118 categories of network capabilities. These separate 
requirements seem to elicit similar, if not identical, information. To 
the extent there is overlap, we seek comment regarding whether these 
requirements may be simplified and consolidated, or, in the 
alternative, whether either or both sets should be eliminated entirely. 
We also seek comment on other, similar, overlaps among the ONA 
reporting requirements, and what we should do to eliminate the burdens 
or inefficiencies associated with them.
d. Nondiscrimination Reports
    112. The BOCs and GTE are also required to establish procedures to 
ensure that they do not discriminate in their provision of ONA 
services, including the installation, maintenance, and quality of such 
services, to unaffiliated ISPs and their customers. For example, they 
must establish and publish standard intervals for routine installation 
orders based on type and quantity of services ordered, and follow these 
intervals in assigning due dates for installation, which are applicable 
to orders placed by competing service providers as well as orders 
placed by their own information services operations. In addition, they 
must standardize their maintenance procedures where possible, by 
assigning repair dates based on nondiscriminatory criteria (e.g., 
available work force and severity of problem), and handling trouble 
reports on a first-come, first-served basis.
    113. In order to demonstrate compliance with the nondiscrimination 
requirements outlined above, the BOCs and GTE must file quarterly 
nondiscrimination reports comparing the timeliness of their 
installation and maintenance of ONA services for their own information 
services operations versus the information services operations of their 
competitors. If a BOC or GTE demonstrates in its ONA plan that it lacks 
the ability to discriminate with respect to installation and 
maintenance services, and files an annual affidavit to that effect, it 
may modify its quarterly report to compare installation and maintenance 
services provided to its own information services operations with 
services provided to a sampling of all customers. In their quarterly 
reports, the BOCs and GTE must include information on total orders, due 
dates missed, and average intervals for a set of service categories 
specified by the Commission, following a format specified by the 
Commission.
    114. We tentatively conclude that the nondiscrimination obligations 
for provisioning and performing maintenance activities established by 
Computer III continue to apply to the BOCs and GTE. We seek comment, 
however, on whether the current quarterly installation and maintenance 
reports are an appropriate and effective mechanism for monitoring the 
BOCs'

[[Page 9766]]

and GTE's compliance with these nondiscrimination obligations. Are 
there ways in which the quarterly reports, and the accompanying annual 
affidavits, may be simplified, clarified, or otherwise made more useful 
to the Commission and the interested public? Along these lines, we note 
that the Commission issued a Further Notice of Proposed Rulemaking in 
conjunction with its Non-Accounting Safeguards Order, seeking comment 
on what types of reporting requirements are necessary to implement the 
specific nondiscrimination requirement set forth in section 272(e)(1) 
of the Communications Act. While we acknowledge that the 
nondiscrimination obligations imposed on the BOCs by section 272(e)(1) 
differ from those imposed by Computer III, we seek comment regarding 
whether the information required to demonstrate compliance with both 
sets of nondiscrimination requirements is sufficiently similar that we 
should harmonize the ONA nondiscrimination reporting requirements with 
the reporting requirements adopted in response to the Further Notice of 
Proposed Rulemaking in the Non-Accounting Safeguards proceeding. We 
also seek comment on whether we should harmonize the ONA 
nondiscrimination reporting requirements with reporting requirements 
being considered in other proceedings, such as in the LCI OSS Petition.
    115. We note that, like the BOCs, AT&T was originally required to 
file quarterly nondiscrimination reports on the provision of 
installation and maintenance services to unaffiliated providers of 
enhanced services. The Commission modified and reduced these reporting 
requirements in 1991 and in 1993. In 1996, the Bureau eliminated the 
requirement that AT&T file quarterly installation and maintenance 
nondiscrimination reports, as well as the requirement that AT&T file an 
annual affidavit that its quarterly reports are true and that it has 
not discriminated in providing installation and maintenance services.
    116. The Bureau declined to eliminate the requirement that AT&T 
file a second affidavit, which affirms that AT&T has followed the 
installation procedures in its ONA plan and has not discriminated in 
the quality of network services provided to competing enhanced service 
providers, deferring that determination to the instant proceeding. We 
tentatively conclude that we should no longer require AT&T to file this 
second affidavit because the level of competition in the interexchange 
services market is an effective check on AT&T's ability to discriminate 
in the quality of network services provided to competing ISPs. This 
tentative conclusion is consistent with our previous finding that the 
competitive nature of the interexchange market provides an important 
assurance that access to those services will be open to ISPs, and that 
much of the information of greatest use to ISPs is controlled by LECs 
such as the BOCs, and not by interexchange carriers. We also find that 
this tentative conclusion comports with our statutory obligation to 
eliminate regulations that are no longer necessary due to ``meaningful 
economic competition'' between providers of such service. We seek 
comment on this tentative conclusion.
3. Other Nonstructural Safeguards
a. Network Information Disclosure Rules
    117. The Commission's network information disclosure rules seek to 
prevent anticompetitive behavior by ensuring that ISPs and other 
interested parties can obtain timely access to information affecting 
the interconnection of information services to the BOCs', AT&T's, and 
other carriers' networks. Prior to the 1996 Act, the rules set forth in 
the Commission's Computer II and Computer III proceedings governed the 
disclosure of network information. Section 251(c)(5) of the Act 
requires incumbent LECs to ``provide reasonable public notice of 
changes in the information necessary for the transmission and routing 
of services using that local exchange carrier's facilities or networks, 
as well as of any other changes that would affect the interoperability 
of those facilities or networks.'' The Commission recently adopted 
network information disclosure requirements to implement section 
251(c)(5) in the Local Competition Second Report and Order, 61 FR 
47284, September 6, 1996. Although we discussed our preexisting network 
information disclosure requirements in conjunction with the 
requirements of section 251(c)(5) in the Local Competition Second 
Report and Order, we did not address in that proceeding whether our 
Computer II and Computer III network information disclosure 
requirements should continue to apply independently of our section 
251(c)(5) network information disclosure requirements. We address that 
issue in this proceeding as part of our 1998 biennial review of 
regulations, in an effort to eliminate unnecessary and possibly 
conflicting requirements.
    118. The rules established pursuant to section 251(c)(5) in some 
respects appear to duplicate and even exceed the rules established 
under Computer II and Computer III, while in other respects they do 
not. For example, section 251(c)(5) of the Act, and the Commission's 
rules implementing that section, only apply to incumbent LECs, while 
some of the Computer II network information disclosure requirements 
apply more broadly to ``all carriers owning basic transmission 
facilities.'' We seek comment, therefore, on the extent to which the 
Commission should retain its network information disclosure rules 
established in the Commission's Computer II and Computer III 
proceedings in light of the disclosure requirements stemming from 
section 251(c)(5) of the 1996 Act. As a starting point, we set forth in 
the following paragraphs a general description of the current network 
disclosure requirements under Computer II, Computer III, and section 
251(c)(5), and then we ask parties to comment on whether, and why, 
specific requirements should be retained or eliminated. The following 
descriptions are not intended to be an exhaustive list of every feature 
of the Commission's current network disclosure requirements. These 
descriptions are intended, rather, to serve as a basis for comparison 
by parties commenting in this proceeding.
    119. Computer II Network Disclosure Obligations.
    a. Application of the Network Disclosure Obligations. The Computer 
II network information disclosure rules consist of two requirements: 
(1) a disclosure obligation which depends on the existence of a 
Computer II separate subsidiary; and (2) a disclosure obligation that 
applies independent of whether the carrier has a Computer II separate 
subsidiary. The Commission initially imposed both requirements on AT&T 
in the Computer II Final Decision. The Commission extended disclosure 
requirement (2) in the Computer II Reconsideration Order, 46 FR 5984, 
January 21, 1981, to ``all carriers owning basic transmission 
facilities'' (hereinafter the ``all-carrier'' rule). After divestiture, 
the Commission extended disclosure requirement (1) to the BOCs insofar 
as they are providing information services in accordance with the 
structural separation requirements of Computer II.
    b. Events Triggering the Public Notice Requirement. The Computer II 
``all-carrier'' rule is triggered by implementation of ``change[s] * * 
* to the telecommunications network that would affect either 
intercarrier interconnection or the manner in which interconnected CPE 
must operate

[[Page 9767]]

* * *.'' The Computer II separate affiliate disclosure obligation is 
triggered by any of three events: (1) the BOC communicates the relevant 
network information directly to its Computer II separate affiliate; (2) 
such information is used by the BOC or a third party to develop 
services or products which reasonably can be expected to be marketed by 
the Computer II separate affiliate; or (3) the BOC engages in joint 
research and development with its Computer II separate affiliate, 
leading to the design or manufacture of any product that either affects 
the network interface or relies on a not-yet implemented interface.
    c. Timing of Public Notice. Under Computer II, the disclosure 
obligation of the ``all-carrier'' rule must be met ``in a timely manner 
and on a reasonable basis.'' The Computer II separate affiliate network 
disclosure obligation requires that disclosure be made to information 
service competitors of the Computer II affiliate ``at the same time'' 
disclosure is made directly to the Computer II separate affiliate as 
described in item (1). If the disclosure requirement is triggered by 
the events described in items (2) and (3), then disclosure must be made 
at the ``make/buy'' point, i.e., when the BOC or an affiliated company 
decides, in reliance on previously undisclosed information, to produce 
itself or to procure from a non-affiliated company any product, whether 
it be hardware or software, the design of which either affects the 
network interface or relies on the network interface.
    d. Types of Information To Be Disclosed. The Computer II ``all-
carrier'' rule encompasses ``all information relating to network design 
* * *, insofar as such information affects * * * intercarrier 
interconnection * * *.'' For the separate affiliate network disclosure 
requirement, the information required to be disclosed consists of, ``at 
a minimum, * * * any network information which is necessary to enable 
all [information] service * * * vendors to gain access to and utilize 
and to interact effectively with [the BOCs'] network services or 
capabilities, to the same extent that [the BOCs' Computer II separate 
affiliate] is able to use and interact with those network services or 
capabilities.'' This requirement includes information concerning 
``network design, technical standards, interfaces, or generally, the 
manner in which interconnected * * * enhanced services will 
interoperate with [any of the BOCs'] network.'' In addition to 
technical information, the information required includes marketing 
information, such as ``commitments of the carrier with respect to the 
timing of introduction, pricing, and geographic availability of new 
network services or capabilities.''
    e. How Public Notice Should Be Provided. Under Computer II, 
carriers subject to the ``all-carrier'' rule must disclose in their 
tariffs or tariff support material either the relevant network 
information or a statement indicating where such information can be 
obtained, that will allow competitors to use network facilities in the 
same manner as the subject carrier. The separate affiliate network 
disclosure obligation requires that the BOCs ``file with the 
Commission, within seven calendar days of the date the disclosure 
obligation arises, a notice apprising the public that the disclosure 
has taken place and indicating in summary form the nature of the 
information which has been disclosed [to its Computer II separate 
affiliate], the identity of any source documents and where interested 
parties can obtain additional details.'' Moreover, when a BOC ``files a 
tariff for a new or changed network service where there has been a 
prior disclosure to or for the benefit of [the Computer II separate 
affiliate], the tariff support materials must list any disclosure 
notices previously filed with the Commission that are relevant to the 
tariffed offering.''
    120. Computer III Network Disclosure Obligations.
    a. Application of the Network Disclosure Obligations. The Computer 
III network information disclosure rules initially were imposed on AT&T 
and the BOCs in the Phase I Order and Phase II Order, 52 FR 20714, June 
3, 1987. The Commission later extended the Computer III network 
information disclosure rules and other nondiscrimination safeguards to 
GTE in the GTE ONA Order, 59 FR 26756, May 24, 1994.
    b. Events Triggering the Public Notice Requirement. The Computer 
III public notice requirement is triggered at the ``make/buy'' point; 
that is, when AT&T, any of the BOCs, or GTE ``makes a decision to 
manufacture itself or to procure from an unaffiliated entity, any 
product the design of which affects or relies on the network 
interface.''
    c. Timing of Public Notice. AT&T, the BOCs, and GTE must disclose 
the relevant information concerning planned network changes at two 
points in time. First, they must disclose the relevant technical 
information at the ``make/buy'' point. They are permitted, however, to 
condition this ``make/buy'' disclosure on the recipient's signing of a 
nondisclosure agreement, upon which the relevant technical information 
must be disclosed within 30 days. Second, they must make public 
disclosure of the relevant technical information a minimum of twelve 
months before implementation of the change; however, if the planned 
change can be implemented between six and twelve months following the 
``make/buy'' point, then public notice is permitted at the ``make/buy'' 
point, but at a minimum of six months before implementation.
    d. Types of Information To Be Disclosed. Under Computer III, the 
range of information encompassed by the network information disclosure 
requirements is adopted from, and identical to, the Computer II 
requirements. Specifically, at the ``make/buy'' point, AT&T, the BOCs, 
and GTE must disclose that a network change or network service is under 
development. The notice itself need not contain the full range of 
relevant network information, but it must describe the proposed network 
service with sufficient detail to convey what the new service is and 
what its capabilities are. The notice must also indicate that technical 
information required for the development of compatible information 
services will be provided to any entity involved in the provision of 
information services and may indicate that such information will be 
made available only to such entities willing to enter into a 
nondisclosure agreement. Once an entity has entered into a 
nondisclosure agreement, AT&T, the BOCs, or GTE must provide the full 
range of relevant information.
    e. How Public Notice Should Be Provided. Under the Computer III 
rules, public notice is made through direct mailings, trade 
associations, or other reasonable means.
    121. Section 251(c)(5) Network Disclosure Obligations.
    a. Application of the Network Disclosure Obligations. These rules 
apply to all incumbent LECs, as the term is defined in section 251(h) 
of the Act.
    b. Events Triggering the Public Notice Requirement. The incumbent 
LEC makes a decision to implement a network change that either: (1) 
affects ``competing service providers' performance or ability to 
provide service; or (2) otherwise affects the ability of the incumbent 
LEC's and a competing service provider's facilities or network to 
connect, to exchange information, or to use the information 
exchanged.'' Examples of network changes that would trigger the section 
251(c)(5) public disclosure obligations include, but are not limited 
to, changes that affect (1) transmission, (2) signalling standards, (3) 
call routing, (4)

[[Page 9768]]

network configuration, (5) logical elements, (6) electronic interfaces, 
(7) data elements, and (8) transactions that support ordering, 
provisioning, maintenance, and billing.
    c. Timing of Public Notice. Incumbent LECs must disclose planned 
network changes at the ``make/buy'' point, but at least twelve months 
before implementation of the change. If the planned change can be 
implemented within twelve months of the ``make/buy'' point, then public 
notice must be given at the ``make/buy'' point, but at least six months 
before implementation. If the planned changes can be implemented within 
six months of the make/buy point, then the public notice may be 
provided less than six months before implementation, if additional 
requirements set forth in section 51.333 of the Commission's rules are 
met.
    d. Types of Information To Be Disclosed. Under the Commission's 
regulations, incumbent LECs are required to disclose, at a minimum, 
``complete information about network design, technical standards and 
planned changes to the network.'' Public notice of planned network 
changes, at a minimum, shall consist of: (1) the carrier's name and 
address; (2) the name and telephone number of a contact person who can 
supply additional information regarding the planned changes; (3) the 
implementation date of the planned changes; (4) the location(s) at 
which the changes will occur; (5) a description of the type of changes 
planned (including, but not limited to, references to technical 
specifications, protocols, and standards regarding transmission, 
signalling, routing, and facility assignment as well as references to 
technical standards that would be applicable to any new technologies or 
equipment, or that may otherwise affect interconnection); and (6) a 
description of the reasonably foreseeable impact of the planned 
changes.
    e. How Public Notice Should Be Provided. Network disclosure may be 
made either: (1) by filing public notice with the Commission in 
accordance with section 51.329 of the Commission's rules; or (2) 
providing public notice through industry fora, industry publications, 
or on the incumbent LEC's own publicly accessible Internet sites, as 
well as a certification filed with the Commission in accordance with 
section 51.329 of the Commission's rules.
    122. We tentatively conclude that the Commission's rules 
established pursuant to section 251(c)(5) for incumbent LECs should 
supersede the Commission's previous network information disclosure 
rules established in Computer III. We also tentatively conclude that 
the Commission's network disclosure rules established in Computer II 
should continue to apply--specifically, the Computer II separate 
affiliate disclosure rule should continue to apply to any BOC that 
operates a Computer II subsidiary, and the all-carrier rule should 
continue to apply to all carriers owning basic transmission facilities. 
We reach our tentative conclusion regarding the Computer III network 
disclosure rules since, in our view, the 1996 Act disclosure rules for 
incumbent LECs are as comprehensive, if not more so, than the 
Commission's Computer III disclosure rules. Parties who disagree with 
this view should explain why all or some aspects of the Commission's 
Computer III disclosure rules are still needed for incumbent LECs in 
light of the rules established pursuant to section 251(c)(5) of the 
Act.
    123. We recognize, however, that some BOCs may still be providing 
certain intraLATA information services through a Computer II 
subsidiary, rather than on an integrated basis under the Commission's 
Computer III rules. We tentatively conclude, therefore, that the 
Computer II separate subsidiary disclosure rule should continue to 
apply in such cases because, for instance, it encompasses marketing 
information which is not included within the scope of information to be 
disclosed under section 251(c)(5) and it requires disclosure under a 
more stringent timetable than that required under section 251(c)(5). We 
also tentatively conclude that the all-carrier rule should continue to 
apply to all carriers owning basic transmission facilities, since it is 
broader in certain respects than section 251(c)(5). First, it applies 
to all carriers, whereas section 251(c)(5) just applies to incumbent 
LECs. In addition, the all-carrier rule requires, among other things, 
the disclosure of network changes that affect end users' CPE, whereas 
our rules interpreting section 251(c)(5) only require the disclosure of 
information that affects ``competing service providers.'' We seek 
comment on these tentative conclusions and analyses.
b. Customer Proprietary Network Information (CPNI)
    124. The Commission first established its CPNI rules in the 
Computer II Final Decision in 1980 to encourage AT&T, the BOCs, and GTE 
to develop and market efficient, integrated combinations of information 
and basic services without the marketing restrictions imposed by 
structural separation, while protecting the competitive interests of 
information service competitors. While the CPNI rules are an integral 
part of the Commission's current nonstructural regulatory framework for 
the provision of information services by AT&T, the BOCs, and GTE, we 
defer consideration of all CPNI issues relating to our Computer II and 
Computer III rules to our CPNI rulemaking proceeding.
    125. Section 702 of the 1996 Act, which added a new section 222 to 
the Communications Act of 1934, as amended, sets forth requirements for 
use of CPNI by telecommunications carriers, including the BOCs. 
Although the requirements of section 222 were effective upon enactment 
of the 1996 Act, we issued a CPNI Notice on May 17, 1996, 61 FR 26483, 
May 28, 1996, which sought comment on, among other things, what 
regulations we should adopt to implement section 222. We stated in the 
CPNI Notice that the CPNI requirements the Commission previously 
established in the Computer II and Computer III proceedings remain in 
effect pending the outcome of the rulemaking, to the extent they do not 
conflict with section 222. The CPNI proceeding will address whether 
these pre-existing requirements should be retained, eliminated, 
extended, or modified in light of the Act.
    126. Under the Computer II structural separation requirements, 
AT&T, the BOCs, and GTE were prohibited from jointly marketing their 
basic services with the enhanced services provided through their 
separate affiliate. Under the Computer III nonstructural safeguards 
regime, AT&T, the BOCs, and GTE were permitted to engage in joint 
marketing of basic and enhanced services subject to restrictions on 
their use of CPNI. In the BOC Safeguards Order, the Commission 
strengthened the CPNI rules by requiring that, for customers with more 
than twenty lines, BOC personnel involved in marketing enhanced 
services obtain written authorization from the customer before gaining 
access to its CPNI.
    127. On March 6, 1992, the Association of Telemessaging Services 
International, Inc. (ATSI) filed a petition for reconsideration of the 
BOC Safeguards Order in CC Docket No. 90-623, the Computer III Remand 
proceeding. ATSI asked the Commission to modify the BOC Safeguards 
Order by: (1) prohibiting joint marketing of basic and information 
services; (2) extending the prior authorization requirement for CPNI to 
all users, regardless of size; and (3) ensuring that users who restrict 
access to their CPNI continue to receive nondiscriminatory treatment 
and an adequate level of service. On May 17, 1996, the Commission 
issued an order dismissing issues (2) and (3) as moot

[[Page 9769]]

because of the passage of the Telecommunications Act of 1996 and our 
commencement of a new proceeding to address the obligations of 
telecommunications carriers with respect to CPNI in light of the new 
statute. The order also noted that issue (1) remained to be addressed 
by the Commission. ATSI filed a motion to withdraw its petition for 
reconsideration in CC Docket No. 90-623 and to incorporate its petition 
into the Commission's Computer III Further Remand proceeding in CC 
Docket No. 95-20, as well as other proceedings, on December 10, 1996. 
On May 14, 1997, the Common Carrier Bureau partially granted the ATSI 
Motion by agreeing to address in this proceeding whether joint 
marketing of basic services and information services by the BOCs should 
be prohibited.
    128. We therefore seek comment on the issue raised in the ATSI 
Petition: whether, to the extent the Commission continues to allow the 
BOCs to provide information services subject to a nonstructural 
safeguards regime, the BOCs should be prohibited from jointly marketing 
basic services and information services when these services are 
provided on an intraLATA basis. To the extent parties support the view 
that the term ``telecommunications service'' in the Act encompasses the 
same set of services as the term ``basic service'' did under the 
Commission's previous rules, parties should discuss the issue raised in 
the ATSI petition in terms of whether joint marketing should be allowed 
between telecommunications services and information services. As noted 
in the ATSI Order, we do not address this question with respect to 
interLATA information services, since under section 272 of the Act BOCs 
must provide interLATA information services pursuant to a section 272 
affiliate and subject to the joint marketing provisions in that 
section. Also, under section 274, BOCs providing electronic publishing, 
whether on an interLATA or intraLATA basis, must do so pursuant to a 
section 274 affiliate and subject to the joint marketing rules in that 
section.
    129. In its petition, ATSI argues that joint marketing of basic 
services and information services harms consumers and diminishes 
overall competition in the information services market. ATSI alleges 
that the BOCs have abused the Commission's joint marketing rules by: 
(1) routing calls to subscribers of competing voice messaging providers 
to the BOC's own voice messaging service instead; (2) soliciting 
customers of competing voice messaging providers who contact the BOCs 
to request other BOC services; (3) providing customers with misleading 
and disparaging information about the voice messaging services offered 
by competing providers; and (4) engaging in other unfair practices. 
ATSI therefore requests that the Commission prohibit the BOCs from 
using the same personnel and facilities to market basic services and 
information services. We seek comment on these issues. We also seek 
comment on the costs and operational efficiencies or inefficiencies of 
allowing the BOCs to provide intraLATA information services on an 
integrated basis, but requiring different personnel and facilities to 
market basic services and information services.

V. Jurisdictional Issues

    130. Our authority, pursuant to section 2(a) of the Communications 
Act, to establish, enforce, modify, or eliminate a regime of safeguards 
for the provision of information services by the BOCs and GTE is well 
settled. In addition, the scope of our authority to preempt 
inconsistent regulation on the part of the states has been established 
by the Commission in the previous Computer III orders and has been 
affirmed on appeal.
    131. In the Computer III Phase I Order, the Commission preempted: 
(1) all state structural separation requirements applicable to the 
provision of enhanced services by AT&T and the BOCs; and (2) all state 
nonstructural safeguards applicable to AT&T and the BOCs that were 
inconsistent with federal safeguards. The California I court vacated 
these preemption actions, on the ground that the Commission had not 
adequately justified imposing them. In response to the California I 
remand, the Commission narrowed the scope of federal preemption to 
cover only: (1) state requirements for structural separation of 
facilities and personnel used to provide the intrastate portion of 
jurisdictionally mixed enhanced services; (2) state CPNI rules 
requiring prior authorization that is not required by federal 
regulation; and (3) state network disclosure rules that require initial 
disclosure at a time different than the federal rules. The Commission 
reasoned that such state requirements would thwart or impede the 
nonstructural safeguards pursuant to which the BOCs may provide 
interstate enhanced services, and the federal goals such safeguards 
were intended to achieve. The California III court upheld the 
Commission's narrowly tailored preemption, stating that the Commission 
had met its burden of demonstrating that it was preempting only state 
regulations that would negate valid federal regulatory goals.
    132. Thus, we believe that the proposals we make in the current 
Further Notice, and the options upon which we seek comment, fall within 
the scope of our authority previously established in the context of 
this proceeding, as outlined above. To the extent that our proposals go 
beyond our recognized preemption authority, we ask that commenters 
identify those proposals and comment on our authority to adopt them.

VI. Procedural Matters

A. Ex Parte Presentations

    133. This matter shall be treated as a ``permit-but-disclose'' 
proceeding in accordance with the Commission's revised ex parte rules, 
which became effective June 2, 1997. See Amendment of 47 CFR 1.1200 et 
seq. Concerning Ex Parte Presentations in Commission Proceedings, GC 
Docket No. 95-21, Report and Order, 62 FR 15852, April 3, 1997, (citing 
47 CFR 1.1204(b)(1)) (1997). Persons making oral ex parte presentations 
are reminded that memoranda summarizing the presentations must contain 
summaries of the substance of the presentations and not merely a 
listing of the subjects discussed. More than a one or two sentence 
description of the views and arguments presented is generally required. 
See 47 CFR 1.1206(b)(2), as revised. Other rules pertaining to oral and 
written presentations are set forth in section 1.1206(b) as well.

B. Initial Paperwork Reduction Act Analysis

    134. This Further Notice contains either a proposed or modified 
information collection. As part of its continuing effort to reduce 
paperwork burdens, we invite the general public and the Office of 
Management and Budget (OMB) to take this opportunity to comment on the 
information collections contained in this Further Notice, as required 
by the Paperwork Reduction Act of 1995, Public Law 104-13. Public and 
agency comments are due at the same time as other comments on this 
Further Notice; OMB comments are due 60 days from the date of 
publication of this Further Notice in the Federal Register. Comments 
should address: (a) whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and

[[Page 9770]]

clarity of the information collected; and (d) ways to minimize the 
burden of the collection of information on the respondents, including 
the use of automated collection techniques or other forms of 
information technology.

C. Initial Regulatory Flexibility Certification

    135. The Regulatory Flexibility Act (RFA) requires that an initial 
regulatory flexibility analysis be prepared for notice-and-comment 
rulemaking proceedings, unless the agency certifies that ``the rule 
will not, if promulgated, have a significant economic impact on a 
substantial number of small entities.'' The RFA generally defines 
``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under 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).
    136. This Further Notice pertains to the Bell Operating Companies 
(BOCs), each of which is an affiliate of a Regional Holding Company 
(RHC), as well as to GTE and AT&T. Neither the Commission nor SBA has 
developed a definition of ``small entity'' specifically applicable to 
the BOCs, GTE, or AT&T. The closest definition under SBA rules is that 
for establishments providing ``Telephone Communications, Except 
Radiotelephone,'' which is Standard Industrial Classification (SIC) 
code 4813. Under this definition, a small entity is one employing no 
more than 1,500 persons. We note that each BOC is dominant in its field 
of operation and all of the BOCs as well as GTE and AT&T have more than 
1,500 employees. We therefore certify that this Further Notice will not 
have a significant economic impact on a substantial number of small 
entities. The Commission's Office of Public Affairs, Reference 
Operations Division, will send a copy of this Further Notice, including 
this certification, to the Chief Counsel for Advocacy of the Small 
Business Administration. A copy will also be published in the Federal 
Register.

D. Comment Filing Procedures

    137. Pursuant to applicable procedures set forth in sections 1.415 
and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested 
parties may file comments on or before March 27, 1998, and reply 
comments on or before April 23, 1998. To file formally in this 
proceeding, you must file an original and six copies of all comments, 
reply comments, and supporting comments. If you want each Commissioner 
to receive a personal copy of your comments, you must file an original 
and eleven copies. Comments and reply comments should be sent to Office 
of the Secretary, Federal Communications Commission, 1919 M Street, 
N.W., Room 222, Washington, D.C., 20554, with a copy to Janice Myles of 
the Common Carrier Bureau, 1919 M Street, N.W., Room 544, Washington, 
D.C., 20554. Parties should also file one copy of any documents filed 
in this docket with the Commission's copy contractor, International 
Transcription Services, Inc., 1231 20th Street, N.W., Washington, D.C., 
20036. Comments and reply comments will be available for public 
inspection during regular business hours in the FCC Reference Center, 
1919 M Street, N.W., Room 239, Washington, D.C., 20554.
    138. Comments and reply comments must include a short and concise 
summary of the substantive arguments raised in the pleading. Comments 
and reply comments must also comply with section 1.49 and all other 
applicable sections of the Commission's rules. We also direct all 
interested parties to include the name of the filing party and the date 
of the filing on each page of their comments and reply comments. All 
parties are encouraged to utilize a table of contents, regardless of 
the length of their submission.
    139. Parties are also asked to submit comments and reply comments 
on diskette. Such diskette submissions would be in addition to and not 
a substitute for the formal filing requirements addressed above. 
Parties submitting diskettes should submit them to Janice Myles of the 
Common Carrier Bureau, 1919 M Street, N.W., Room 544, Washington, D.C., 
20554. Such a submission should be on a 3.5 inch diskette formatted in 
an IBM compatible form using MS DOS 5.0 and WordPerfect 5.1 software. 
The diskette should be submitted in ``read only'' mode. The diskette 
should be clearly labeled with the party's name, proceeding, type of 
pleading (comment or reply comments) and date of submission. The 
diskette should be accompanied by a cover letter.
    140. You may also file informal comments or an exact copy of your 
formal comments electronically via the Internet at <http://www.fcc.gov/
e-file/> or via e-mail <[email protected]>. Only one copy of 
electronically-filed comments must be submitted. You must put the 
docket number of this proceeding in the subject line if you are using 
e-mail (CC Docket No. 95-20), or in the body of the text if by 
Internet. You must note whether an electronic submission is an exact 
copy of formal comments on the subject line. You also must include your 
full name and Postal Service mailing address in your submission.

VII. Ordering Clauses

    141. Accordingly, It is ordered that, pursuant to sections 1, 2, 4, 
10, 11, 201-205, 251, 271, 272, and 274-276, of the Communications Act 
of 1934, as amended, 47 U.S.C. 151, 152, 154, 160, 161, 201-205, 251, 
271, 272, and 274-276, a Further notice of proposed rulemaking is 
adopted.
    142. It is Further Ordered that the Commission's Office of Public 
Affairs, Reference Operations Division, shall send a copy of this 
Further notice of proposed rulemaking, including the Initial Regulatory 
Flexibility Certification, to the Chief Counsel for Advocacy of the 
Small Business Administration, in accordance with the Regulatory 
Flexibility Act, see 5 U.S.C. 605(b).

List of Subjects

47 CFR Part 51

    Communications common carriers, Interconnection.

47 CFR Part 53

    Bell Operating Companies, Communications common carriers, InterLATA 
services, Separate affiliate safeguards, Telephone.

47 CFR Part 64

    Communications common carriers, Reporting and recordkeeping 
requirements, Telephone.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 98-4650 Filed 2-25-98; 8:45 am]
BILLING CODE 6712-01-P