[Federal Register Volume 63, Number 163 (Monday, August 24, 1998)]
[Rules and Regulations]
[Pages 45134-45139]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22598]



[[Page 45133]]

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Part V





Federal Communications Commission





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47 CFR Parts 51, 64, and 68



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Deployment of Wireline Services Offering Advanced Telecommunications 
Services; Final Rule and Proposed Rule

  Federal Register / Vol. 63, No. 163 / Monday, August 24, 1998 / Rules 
and Regulations  

[[Page 45134]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 51, 64, and 68

[CC Docket Nos. 98-147, 98-11, 98-26, 98-32, 98-15, 98-78, 98-91; FCC 
98-188]


Deployment of Wireline Services Offering Advanced 
Telecommunications Services

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In the order we clarify that sections 251 and 252 apply to 
advanced telecommunications facilities and services offered by an 
incumbent local exchange carrier (LEC) and that the facilities and 
equipment used by incumbent LECs to provide advanced services are 
network elements and subject to section 251(c). We deny requests to 
forbear from application of sections 251(c) and/or 271, and we deny 
requests for large-scale changes in LATA boundaries. We have taken 
these steps to meet one of the fundamental goals to promote innovation 
and investment by all participants in the telecommunications 
marketplace.

EFFECTIVE DATE: September 23, 1998.

FOR FURTHER INFORMATION CONTACT: Linda Kinney, Assistant Division 
Chief, Policy and Program Planning Division, Common Carrier Bureau, at 
202-418-1580 or via the Internet at [email protected] or Jordan 
Goldstein, Attorney, Policy and Program Planning Division, Common 
Carrier Bureau, at 202-418-1580 or via the Internet at 
[email protected]. Further information may also be obtained by calling 
the Common Carrier Bureau's TTY number: 202-418-0484. For additional 
information concerning the information collections contained in this 
Order contact Judy Boley at (202) 418-0214, or via the Internet at 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
adopted August 6, 1998, and released August 7, 1998. The full text of 
this Order is available for inspection and copying during normal 
business hours in the FCC Reference Center, 1919 M St., N.W., Room 239, 
Washington, D.C. The complete text also may be obtained through the 
World Wide Web, at http://www.fcc.gov/Bureaus/Common Carrier/Orders/
98188, or may be purchased from the Commission's copy contractor, 
International Transcription Service, Inc., (202) 857-3800, 1231 20th 
St., N.W., Washington, D.C. 20036.

Synopsis of Order

A. Applicability of Section 251(c) to Incumbent Local Exchange Carriers

1. Introduction
    1. In this section, we address several issues that ALTS raises in 
its petition for a declaratory ruling. First, as described in greater 
detail below, we grant the ALTS petition to the extent it asks the 
Commission to clarify that the obligations of sections 251 and 252 of 
the Act apply to advanced services and the facilities used to provide 
those services. We hold that, pursuant to the Act and our implementing 
orders, incumbent LECs are required to (1) provide interconnection for 
advanced services; and (2) provide access to unbundled network 
elements, including conditioned loops capable of transmitting high-
speed digital signals, used by the incumbent LEC to provide advanced 
services. We also note that under the plain terms of the Act, incumbent 
LECs have an obligation to offer for resale, pursuant to section 
251(c)(4), all advanced services that they generally provide to 
subscribers who are not telecommunications carriers. Finally, for the 
reasons discussed below, we conclude that incumbent LECs have an 
obligation under the statute and our implementing rules to offer 
collocation arrangements that reduce unnecessary costs and delays for 
competitors and that optimize the amount of space available for 
collocation.
2. Statutory Classification of Advanced Services
    2. Before turning to the specific declaratory rulings requested by 
ALTS, we first must address the regulatory classification of ``advanced 
services.'' The specific obligations of the 1996 Act depend on 
application of the statutory categories established in the Act's 
definitions section. In particular, we consider whether advanced 
services constitute ``telecommunications services,'' and, if so, what 
type of telecommunications service.
    a. Telecommunications services. (1) Background. 3. The obligations 
imposed by sections 251 and 252 of the Act are triggered by the 
provision of a ``telecommunications service.'' Thus, for example, 
section 251(a) requirements apply to each ``telecommunications 
carrier,'' which is to say, each ``provider of telecommunications 
services.'' Section 251(c)(3) obligates incumbent LECs to provide 
unbundled access to ``network elements,'' which is to say, 
``facilit[ies] or equipment used in the provision of a 
telecommunications service.'' The Act defines ``telecommunications 
service'' to mean ``the offering of telecommunications for a fee 
directly to the public * * *.'' It defines ``telecommunications'' to 
mean ``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.''
    (2) Discussion. 4. We conclude that advanced services are 
telecommunications services. The Commission has repeatedly held that 
specific packet-switched services are ``basic services,'' that is to 
say, pure transmission services. xDSL and packet switching are simply 
transmission technologies. To the extent that an advanced service does 
no more than transport information of the user's choosing between or 
among user-specified points, without change in the form or content of 
the information as sent and received, it is ``telecommunications,'' as 
defined by the Act. Moreover, to the extent that such a service is 
offered for a fee directly to the public, it is a ``telecommunications 
service.''
    5. Incumbent LECs have proposed, and are currently offering, a 
variety of services in which they use xDSL technology and packet 
switching to provide members of the public with a transparent, 
unenhanced, transmission path. Neither the petitioners, nor any 
commenter, disagree with our conclusion that a carrier offering such a 
service is offering a ``telecommunications service.'' An end-user may 
utilize a telecommunications service together with an information 
service, as in the case of Internet access. In such a case, however, we 
treat the two services separately: the first service is a 
telecommunications service (e.g., the xDSL-enabled transmission path), 
and the second service is an information service, in this case Internet 
access.
    6. We note that, pursuant to the Commission's Computer Inquiry and 
Open Network Architecture (ONA) proceedings, BOCs are permitted to 
offer information services on either an integrated basis, i.e. through 
the regulated telephone company, or through a separate affiliate. The 
BOCs are obligated, however, to unbundle and make available to 
competing information service providers (ISPs): (1) the network 
services that underlie the BOCs' own information services (pursuant to 
the Computer Inquiry proceedings); and (2) additional network services 
that the BOCs do not use in their information service offerings 
(pursuant to ONA). We note

[[Page 45135]]

that BOCs offering information services to end users of their advanced 
service offerings, such as xDSL, are under a continuing obligation to 
offer competing ISPs nondiscriminatory access to the telecommunications 
services utilized by the BOC information services. In the NPRM, we seek 
comment on whether we should apply any similar safeguards if a BOC 
affiliate offers advanced services in conjunction with a BOC 
information service.
    b. Telephone exchange service or exchange access. (1) Background. 
7. Certain obligations under section 251 turn on whether the carrier is 
providing ``telephone exchange service'' or ``exchange access.'' 
Pursuant to section 251(c)(2), an incumbent LEC must provide 
interconnection only ``for the transmission and routing of telephone 
exchange service and exchange access.'' Section 251(b) applies to each 
``local exchange carrier''; section 153(26), in turn, defines ``local 
exchange carrier'' to include any person ``engaged in the provision of 
telephone exchange service or exchange access.''
    8. Prior to 1996, the Communications Act defined ``telephone 
exchange service'' to include ``service within a telephone exchange, or 
within a connected system of telephone exchanges within the same 
exchange area operated to furnish to subscribers intercommunicating 
service of the character ordinarily furnished by a single exchange and 
which is covered by the exchange service charge.'' In the 1996 Act, 
Congress expanded that definition to include ``comparable service 
provided through a system of switches, transmission equipment, or other 
facilities (or combination thereof) by which a subscriber can originate 
and terminate a telecommunications service.'' The Act defines 
``exchange access'' to mean ``the offering of access to telephone 
exchange services or facilities for the purpose of the origination or 
termination of telephone toll services.''
    (2) Discussion. 9. We conclude that advanced services offered by 
incumbent LECs are either ``telephone exchange service'' or ``exchange 
access.'' At this time, we do not decide whether, or to what extent, 
specific xDSL-based services offered by incumbent LECs are ``telephone 
exchange service'' as opposed to ``exchange access.'' We note, however, 
that this question has been raised in other pending proceedings, and we 
will continue to address it on a case-by-case basis.
    10. Nothing in the statutory language or legislative history limits 
these terms to the provision of voice, or conventional circuit-switched 
service. Indeed, Congress in the 1996 Act expanded the scope of the 
``telephone exchange service'' definition to include, for the first 
time, ``comparable service'' provided by a telecommunications carrier. 
The plain language of the statute thus refutes any attempt to tie these 
statutory definitions to a particular technology. Consequently, we 
reject US WEST's contention that those terms refer only to local 
circuit-switched voice telephone service or close substitutes, and the 
provision of access to such services.
    11. We note that in a typical xDSL service architecture, the 
incumbent LEC uses a DSLAM to direct the end-user's data traffic into a 
packet-switched network, and across that packet-switched network to a 
terminating point selected by the end-user. Every end-user's traffic is 
routed onto the same packet-switched network, and there is no technical 
barrier to any end-user establishing a connection with any customer 
located on that network (or, indeed, on any network connected to that 
network). We see nothing in this service architecture mandating a 
conclusion that advanced services offered by incumbent LECs fall 
outside of the ``telephone exchange service'' or ``exchange access'' 
definitions set forth in the Act.
    12. US WEST's reliance on the fact that the Commission in the Local 
Competition Order, 61 FR 45476, August 29, 1996, noted that CMRS 
carriers ``provide local, two-way switched voice service,'' as part of 
the analysis leading to its conclusion that such carriers provide 
telephone exchange service, is misplaced. The Commission nowhere 
suggested that two-way voice service is a necessary component of 
telephone exchange service. It certainly did not suggest that two-way 
voice service is a necessary component of exchange access.
    13. We also reject U S WEST's contention that it is not subject to 
section 251(c) for its provision of advanced services because such 
services are neither ``telephone exchange services'' nor ``exchange 
access services.'' To the extent that it offers advanced services, U S 
WEST contends, it is not acting as a ``local exchange carrier'' or 
``incumbent local exchange carrier,'' and the obligations imposed by 
section 251(c) on incumbent local exchange carriers do not apply. 
Because we have determined that advanced services offered by incumbent 
LECs are telephone exchange service or exchange access, we need not and 
do not address the section 251(c) obligations of an incumbent local 
exchange carrier offering services other than telephone exchange 
service or exchange access.
3. Interconnection
    a. Background. 14. Section 251(a) of the Act requires all 
``telecommunications carriers'' to ``interconnect directly or 
indirectly with the facilities and equipment of other 
telecommunications carriers.'' Section 251(c)(2) imposes 
interconnection obligations on incumbent LECs for purposes of 
transmitting and routing telephone exchange or exchange access traffic.
    b. Discussion. 15. We agree with ALTS that the interconnection 
obligations of section 251 of the Act apply equally to facilities and 
equipment used to provide data transport functionality and voice 
functionality. Because advanced services that provide members of the 
public with a transparent, unenhanced transmission path are 
telecommunications services, all carriers offering such services are 
subject to the requirements of section 251(a), including the 
interconnection obligation set out in section 251(a)(1). In addition, 
because such services offered by an incumbent LEC are either 
``telephone exchange services'' or ``exchange access,'' the incumbent 
LEC is subject to the interconnection obligations of section 251(c). 
Thus, any telecommunications carrier in need of interconnection with an 
incumbent LEC network ``for purposes of transmitting and routing 
telephone exchange traffic or exchange access traffic or both'' is 
entitled to interconnection pursuant to section 251(c)(2) of the Act.
    16. For purposes of determining the interconnection obligation of 
carriers, the Act does not draw a regulatory distinction between voice 
and data services. In particular, the Commission drew no such 
distinction in the Local Competition Order, when it required incumbent 
LECs to offer interconnection with competitors for the transmission and 
routing of telephone exchange and exchange access traffic. Thus, the 
interconnection obligations of incumbent LECs apply to packet-switched 
as well as circuit-switched services.
    17. The ability of competitive LECs to interconnect with incumbent 
LEC data networks ``will permit all carriers, including small entities 
and small incumbent LECs, to plan regional or national networks using 
the same interconnection points in similar networks nationwide.'' Our 
rules make it possible for competing telecommunications providers to 
offer seamless service to end-users by

[[Page 45136]]

interconnecting with incumbents' networks. We therefore grant the ALTS 
request that we declare that the interconnection obligations of 
sections 251(a) and 251(c)(2) apply to incumbents' packet-switched 
telecommunications networks and the telecommunications services offered 
over them.
    18. We reject BellSouth's argument that Congress intended that 
section 251(c) not apply to new technology not yet deployed in 1996. 
Nothing in the statute or legislative history indicates that it was 
intended to apply only to existing technology. Moreover, Congress was 
well aware of the Internet and packet-switched services in 1996, and 
the statutory terms do not include any exemption for those services.
4. Unbundled Network Elements
    a. Background. 19. We next consider the unbundling obligations of 
section 251(c)(3). Section 251(c)(3) requires incumbent LECs to 
``provide, to any requesting telecommunications carrier for the 
provision of a telecommunications service, nondiscriminatory access to 
network elements on an unbundled basis at any technically feasible 
point on rates, terms, and conditions that are just, reasonable, and 
nondiscriminatory * * *.'' Section 153(29) defines ``network element'' 
to include any ``facility or equipment used in the provision of a 
telecommunications service'' along with the ``features, functions, and 
capabilities that are provided by means of such facility or 
equipment.'' The Commission noted in the Local Competition Order, 
however, that section 251(d)(2) gave it authority ``to refrain from 
requiring incumbent LECs to provide all network elements for which it 
is technically feasible to provide access.'' In considering whether to 
refrain from requiring the unbundling of a particular network element, 
the Commission is to weigh the standards set out in section 251(d)(2), 
as well as any other standards the Commission considers consistent with 
the objectives of the 1996 Act.
    20. So as to ``promote efficient, rapid, and widespread new 
entry,'' the Commission identified a minimum list of seven network 
elements that incumbent LECs must make available to new entrants. The 
Commission did not identify DSLAMs or packet switches as network 
elements that incumbent LECs must unbundle. It emphasized, however, 
that its list was a minimum one, because an exhaustive list would not 
accommodate changes in technology or differing local conditions. 
Further, the Commission noted that it might identify ``additional, or 
perhaps different'' unbundling requirements in the future.
    b. Discussion. (1) Loops. 21. We grant the ALTS request for a 
declaratory ruling that incumbent LECs are required, pursuant to 
section 251(c)(3) of the Act, to provide unbundled loops capable of 
transporting high speed digital signals. ALTS asserts that competitive 
LECs are having extreme difficulty obtaining the digital loops needed 
to provide advanced services. We agree with ALTS that, if we are to 
promote the deployment of advanced telecommunications capability to all 
Americans, competitive LECs must be able to obtain access to incumbent 
LEC xDSL-capable loops on an unbundled and nondiscriminatory basis.
    22. In the Local Competition Order, the Commission identified the 
local loop as a network element that incumbent LECs must unbundle ``at 
any technically feasible point.'' It defined the local loop to include 
``two-wire and four-wire loops that are conditioned to transmit the 
digital signals needed to provide services such as ISDN, ADSL, HDSL, 
and DS1-level signals.'' To the extent technically feasible, incumbent 
LECs must ``take affirmative steps to condition existing loop 
facilities to enable requesting carriers to provide services not 
currently provided over such facilities.'' For example, if a carrier 
requests an unbundled loop for the provision of ADSL service, and 
specifies that it requires a loop free of loading coils, bridged taps, 
and other electronic impediments, the incumbent must condition the loop 
to those specifications, subject only to considerations of technical 
feasibility. The incumbent may not deny such a request on the ground 
that it does not itself offer advanced services over the loop, or that 
other advanced services that the competitive LEC does not intend to 
offer could be provided over the loop. As the Commission stated in the 
Local Competition Order, ``section 251(c)(3) does not limit the types 
of telecommunications services that competitors may provide over 
unbundled elements to those offered by the incumbent LEC.''
    23. The incumbent LECs' obligation to provide requesting carriers 
with fully functional conditioned loops extends to loops provisioned 
through remote concentration devices such as digital loop carriers 
(DLC). The Commission concluded in the Local Competition Order that it 
was ``technically feasible'' to unbundle loops that pass through an 
integrated DLC or similar remote concentration devices, and required 
incumbent LECs to unbundle such loops for competitive LECs.
    24. To the extent that a competitive LEC cannot obtain 
nondiscriminatory access to an xDSL-capable loop, or any other loop 
capabilities to which it is entitled by virtue of section 251(c)(3) and 
the Local Competition Order, the competitive LEC can pursue remedies 
before the Commission and the appropriate state commissions. We note 
that the Commission has recently adopted an expedited complaint process 
to resolve these types of competitive issues in an accelerated fashion.
    25. Under our existing rules, incumbent LECs are also required to 
provide competing carriers with nondiscriminatory access to the 
operations support systems (OSS) functions for pre-ordering, ordering, 
and provisioning loops. If new entrants are to have a meaningful 
opportunity to compete, they must be able to determine during the pre-
ordering process as quickly and efficiently as can the incumbent, 
whether or not a loop is capable of supporting xDSL-based services. An 
incumbent LEC does not meet the nondiscrimination requirement if it has 
the capability electronically to identify xDSL-capable loops, either on 
an individual basis or for an entire central office, while competing 
providers are relegated to a slower and more cumbersome process to 
obtain that information. In the NPRM below, we seek comment on whether 
we should adopt any additional rules to ensure that competing providers 
have nondiscriminatory access to the loop information they need to 
provide advanced services.
    (2) Other Network Elements. 26. We further grant ALTS' petition to 
the extent that ALTS requests a declaratory ruling that advanced 
services are telecommunications services, and that the facilities and 
equipment used to provide advanced services are network elements 
subject to the obligations in section 251(c). Given our conclusion 
above that advanced services offered by incumbent LECs are 
telecommunications services, all equipment and facilities used in the 
provision of advanced services are ``network elements'' as defined by 
section 153(29).
    27. We seek comment in the NPRM below on the specific unbundling 
obligations that would apply to the network elements used to provide 
advanced services. We note, for example, that the section 251(c)(3) 
unbundling requirement is subject to the question of technical 
feasibility. We seek comment in the NPRM on whether the Commission 
should weigh any

[[Page 45137]]

criteria under section 251(d)(2) other than those expressly listed in 
that provision to determine the extent to which network elements used 
to provide advanced services should be unbundled.
5. Resale Obligations Under Section 251(c)(4)
    (a) Background. 28. Section 251(c)(4) requires incumbent LECs to 
offer for resale at wholesale rates ``any telecommunications service 
that the carrier provides at retail to subscribers who are not 
telecommunications carriers.'' The Commission held in the Local 
Competition Order that this obligation extends to all 
telecommunications services, not merely voice services, that an 
incumbent LEC provides to subscribers who are not telecommunications 
carriers. The Commission concluded that an incumbent LEC must establish 
a wholesale rate for every retail service that: (1) meets the statutory 
definition of a ``telecommunications service,'' and (2) is provided at 
retail to subscribers who are not telecommunications carriers. The 
Commission concluded, however, that exchange access services are 
generally offered to telecommunications carriers rather than retail 
subscribers, and thus were not subject to the provisions of section 
251(c)(4).
    (b) Discussion. 29. Given our determination above that advanced 
services offered by incumbent LECs are telecommunications services, by 
the plain terms of the Act, incumbent LECs have the obligation to offer 
for resale, pursuant to section 251(c)(4), all advanced services that 
they generally provide to subscribers who are not telecommunications 
carriers. The Commission in the Local Competition Order similarly 
emphasized that the resale obligation extends to all such 
telecommunications services, including advanced services.
    30. To the extent that advanced services are local exchange 
services, they are subject to the resale provisions of section 
251(c)(4). In the Local Competition Order, however, the Commission 
concluded that exchange access services are not subject to the 
provisions of section 251(c)(4) because ``[t]he vast majority of 
purchasers of interstate access services are telecommunications 
carriers, not end users.'' To the extent that advanced services are 
exchange access services, we believe that advanced services are 
fundamentally different from the exchange access services that the 
Commission referenced in the Local Competition Order and concluded were 
not subject to section 251(c)(4). We expect that advanced services will 
be offered predominantly to residential or business users or to 
Internet service providers. None of these purchasers are 
telecommunications carriers. We examine this issue further and propose 
specific requirements in the NPRM below.
6. Collocation
    a. Background. 31. In order to provide advanced services, new 
entrants may need to collocate equipment on the incumbent LEC's 
premises for interconnection and access to network elements. Congress 
recognized competing providers' need for collocation in section 
251(c)(6) of the Act, which requires incumbent LECs to provide ``for 
the physical collocation of equipment necessary for interconnection or 
access to unbundled network elements at the premises of the local 
exchange carrier, except that the carrier may provide for virtual 
collocation if the local exchange carrier demonstrates to the State 
commission that physical collocation is not practical for technical 
reasons or because of space limitations.'' In the Local Competition 
Order, the Commission implemented specific minimum requirements to 
implement the collocation requirements of section 251(c)(6). The 
Commission adopted rules for, among other things, space allocation and 
exhaustion, types of equipment that could be collocated, and LEC 
premises where parties could collocate equipment.
    32. ALTS asserts that excessive rates and unreasonably burdensome 
terms and conditions for collocation are blocking competitive entry 
into data service markets. As a result, ALTS requests that we initiate 
proceedings to help ensure implementation of section 251 and 252 of the 
Act with respect to deployment of advanced services. Among other 
requests, ALTS asks us to exercise our authority under section 
251(c)(6) of the Act and establish additional rules governing 
collocation arrangements.
    b. Discussion. 33. We conclude that the availability of cost 
efficient collocation arrangements is essential for the deployment of 
advanced services by facilities-based competing providers. Given 
incumbent LECs' statutory duty to provide physical collocation on just, 
reasonable, and nondiscriminatory rates, terms, and conditions, we 
believe that incumbent LECs have a statutory obligation to offer cost 
efficient and flexible collocation arrangements. In addition, we expect 
that incumbent LECs will fulfill their statutory collocation duty by 
taking steps to offer collocation arrangements that permit new entrants 
to provide advanced services using equipment that the new entrant 
provides. Such steps include offering collocation to competing 
providers in a manner that reduces unnecessary costs and delays for the 
competing providers and that optimizes the amount of space available 
for collocation. We conclude that measures that optimize the available 
collocation space and that reduce costs and delays for competing 
providers are consistent with an incumbent LEC's obligation under both 
the statute and our rules. In addition, we agree with ALTS that we 
should build upon our current physical and virtual collocation 
requirements adopted in the Expanded Interconnection and Local 
Competition  proceedings to ensure that our rules promote, to the 
greatest extent possible, the rapid deployment of advanced 
telecommunications capability to all Americans. We, therefore, propose 
specific additional physical and virtual collocation requirements in 
the NPRM below.

B. Forbearance and LATA Boundary Modifications

1. Background
    34. As discussed above, sections 251(c)(3) and (4) require 
incumbent LECs to provide nondiscriminatory access to unbundled network 
elements and to offer for resale, at wholesale rates, any 
telecommunications service the carrier provides at retail. Section 
271(b)(1) provides that a BOC or BOC affiliate ``may provide interLATA 
services originating in any of its in-region States'' only ``if the 
Commission approves the application of such company for such State 
under [section 271(d)(3)].'' Under section 271(d)(3), the Commission 
may grant a BOC authorization to originate in-region, interLATA 
services only if it finds that the BOC has met the competitive 
checklist set forth in section 271(c)(2)(B) and other statutory 
requirements.
    35. Section 706(a) of the 1996 Act instructs the Commission and 
each state commission to ``encourage the deployment on a reasonable and 
timely basis of advanced telecommunications capability to all Americans 
* * * by utilizing, in a manner consistent with the public interest, 
convenience, and necessity, price cap regulation, regulatory 
forbearance, measures that promote competition in the local 
telecommunications market, or other regulating methods that remove 
barriers to infrastructure investment.''
    36. Section 10 of the Communications Act requires the Commission to 
forbear from applying any regulation or any

[[Page 45138]]

provision of the Communications Act to telecommunications carriers or 
telecommunications services, or classes thereof, if the Commission 
determines that certain conditions are satisfied. Section 10(d) 
specifies, however, that ``[e]xcept as provided in section 251(f), the 
Commission may not forbear from applying the requirements of section 
251(c) or 271 under [section 10(a)] until it determines that those 
requirements have been fully implemented.''
    37. In their petitions, Ameritech, U S WEST, Bell Atlantic, and SBC 
seek regulatory relief from the application of section 251 and/or 
section 271 through Commission forbearance from applying those sections 
or through LATA boundary changes. Recognizing that the Commission may 
not forbear from application of sections 251(c) and 271 under section 
10(a) until the requirements in those sections have been fully 
implemented, petitioners seek forbearance pursuant to section 706(a). 
Petitioners contend that section 706(a) constitutes an independent 
grant of forbearance authority that encompasses the ability to forbear 
from sections 251(c) and 271. Ameritech, Bell Atlantic, and U S WEST 
seek regulatory relief not only to provide xDSL-based services to end 
users, but also to obtain freedom to become Internet backbone 
providers. Ameritech and U S WEST, notwithstanding their request here 
for LATA boundary changes, argue that this relief would not affect 
their compliance with section 271 for voice services.
2. Discussion
    a. Forbearance. 38. After reviewing the language of section 706(a), 
its legislative history, the broader statutory scheme, and Congress' 
policy objectives, we agree with numerous commenters that section 
706(a) does not constitute an independent grant of forbearance 
authority or of authority to employ other regulating methods. Rather, 
we conclude that section 706(a) directs the Commission to use the 
authority granted in other provisions, including the forbearance 
authority under section 10(a), to encourage the deployment of advanced 
services.
    39. To determine whether section 706(a) constitutes an independent 
grant of forbearance authority, we look first to the text of the 
statute. We recognize that the language of section 706 directs the 
Commission to encourage the deployment of advanced services ``by 
utilizing * * * regulatory forbearance * * * .'' It is not clear from 
the text of section 706(a), however, whether Congress intended that 
provision to constitute an independent grant of forbearance authority, 
or, alternatively, a directive that the Commission use forbearance 
authority granted elsewhere, in encouraging the deployment of advanced 
services.
    40. Because the language of section 706(a) does not make clear 
whether section 706(a) constitutes an independent grant of forbearance 
authority, we look to the broader statutory scheme, its legislative 
history, and the underlying policy objectives to resolve the ambiguity. 
We examine the structure of the 1996 Act as a whole. As the courts have 
recognized, ``[t]he literal language of a provision taken out of 
context cannot provide conclusive proof of congressional intent, any 
more than a word can have meaning without context to illuminate its 
use.'' Rather, when we are ``charged with understanding the 
relationship between two different provisions within the same statute, 
we must analyze the language of each to make sense of the whole.''
    41. As stated above, section 10(d) expressly forbids the Commission 
from forbearing from the requirements of sections 251(c) and 271 
``until it determines that those requirements have been fully 
implemented.'' There is no language in section 10 that carves out an 
exclusion from this prohibition for actions taken pursuant to section 
706.
    42. If section 706(a) were an independent grant of authority, as 
the BOCs argue, then it would allow us to forbear from applying 
sections 251(c) and 271 regardless of whether either section were fully 
implemented. Sections 251(c) and 271 are cornerstones of the framework 
Congress established in the 1996 Act to open local markets to 
competition. The central importance of these provisions is reflected in 
the fact that they are the only two provisions that Congress carved out 
in limiting the Commission's otherwise broad forbearance authority 
under section 10. We find it unreasonable to conclude that Congress 
would have intended that section 706 allow the Commission to eviscerate 
those forbearance exclusions after having expressly singled out 
sections 251(c) and 271 for different treatment in section 10.
    43. We are not persuaded by Bell Atlantic's argument that a 
conclusion that section 706(a) confers no independent authority would 
make that section redundant. On the contrary, we conclude that section 
706(a) gives this Commission an affirmative obligation to encourage the 
deployment of advanced services, relying on our authority established 
elsewhere in the Act. Our actions and proposals in this Order and NPRM 
make clear that this obligation has substance.
    44. Furthermore, we find nothing in the legislative history of 
section 706 to indicate that Congress gave us independent authority in 
section 706(a) to forbear from provisions of the Act. Section 706 was 
adopted contemporaneously with the forbearance authority in section 10, 
with section 706 contained in section 304 of the Senate version of the 
Communications Act of 1996, and the forbearance authority that was 
later included in section 10 contained in section 303 of that bill. 
Thus, when enacting section 706, Congress was well aware of the 
explicit exclusions of our forbearance authority in section 10(d). 
Congress presumably would have stated explicitly that those exclusions 
would not apply to forbearance under section 706 had it so intended. We 
are not persuaded by Ameritech's argument that the statement in the 
Senate Commerce Committee's Report that section 706 is intended as a 
``fail-safe'' indicates that Congress provided independent forbearance 
authority in section 706(a). The Senate Commerce Committee's Report 
makes clear that section 706 ``ensures that advanced telecommunications 
capability is promptly deployed by requiring the [Commission] to 
initiate and complete regular inquiries,'' and then take immediate 
action if it determines that such capability is not being deployed to 
all Americans. The Report does not clarify, however, whether section 
706 is an independent grant of regulatory authority or directs the 
Commission to use regulatory measures granted in other provisions of 
the Act.
    45. Moreover, as a matter of policy, we believe that interpreting 
section 706, not as an independent grant of authority, but rather, as a 
direction to the Commission to use the forbearance authority granted 
elsewhere in the Act, will further Congress' objective of opening all 
telecommunications markets to competition, including the market for 
advanced services. As discussed above, because of the central 
importance of the requirements in sections 251(c) and 271 to opening 
local markets to competition, we consider these sections to be 
cornerstones of the framework Congress established in the 1996 Act. We 
find that this conclusion that section 706 does not provide the 
statutory authority to forbear from sections 251(c) and 271 will better 
promote Congress' objectives in the Act.
    46. For the foregoing reasons, we conclude that, in light of the 
statutory language, the framework of the 1996 Act, its legislative 
history, and Congress'

[[Page 45139]]

policy objectives, the most logical statutory interpretation is that 
section 706 does not constitute an independent grant of authority. 
Rather, the better interpretation of section 706 is that it directs us 
to use, among other authority, our forbearance authority under section 
10(a) to encourage the deployment of advanced services. Under section 
10(d), we may not use that authority to forbear from applying the 
requirements of section 251(c) and 271 prior to their full 
implementation. Petitioners do not suggest that either section 251(c) 
or section 271 has been fully implemented, and we have no record on 
which to determine that either has been fully implemented. We, 
therefore, deny the BOC requests that we forbear from applying the 
requirements of sections 251(c) and 271. We seek comment in the NPRM 
below on whether there are avenues other than forbearance that might 
allow us to lessen the obligations of these sections in appropriate 
circumstances.
    47. Ameritech also requests forbearance pursuant to section 706 
from application of section 272's requirements if we grant its request 
to forbear from applying section 271's requirements. Because we deny 
that request for section 271 forbearance, we also deny Ameritech's 
request for section 272 forbearance.
    48. In addition, SBC requests forbearance, under section 10: (1) 
from the dominant treatment of ADSL service to the extent that 
treatment results in the imposition of tariff filing requirements and 
other obligations under the Act and under parts 61 and 69 of the 
Commission's rules; and (2) from the obligations of section 252(i). 
Section 10(a) requires us to forbear from the application of a 
statutory provision or regulation if we determine that specific 
criteria are met. We conclude, on the record before us, that SBC has 
not demonstrated that the relief it requests pursuant to section 10 
meets these criteria. In particular, to the extent that advanced 
services are offered by an incumbent LEC, we find, on the record before 
us, that it is consistent with the public interest to subject such 
incumbents to full incumbent LEC regulation. We therefore deny SBC's 
requests for forbearance under section 10. We note, however, that, in 
the NPRM below, we address the regulatory status of an advanced 
services affiliate that competes without any unfair advantages derived 
from its affiliation with the incumbent. In particular, we tentatively 
conclude below that such an affiliate, to the extent it provides 
interstate exchange access services, should, under existing Commission 
precedent, be presumed to be nondominant and should not be required to 
file tariffs for its provision of any interstate services that are 
exchange access.
    b. LATA Boundary Modifications. 49. As an alternative to 
forbearance from enforcing section 271, Ameritech, Bell Atlantic and U 
S WEST request that the Commission permit them to change LATA 
boundaries pursuant to section 3(25) of the Communications Act in order 
to create a large-scale ``LATA'' for packet-switched services. We 
decline to grant petitioners' requests for large-scale changes in LATA 
boundaries.
    50. Although section 3(25)(B) of the Act permits a BOC to modify 
LATA boundaries upon Commission approval, we conclude that petitioners' 
requests for large-scale changes in LATA boundaries amount to more than 
requests for ``modified'' LATAs as that term is used in section 
3(25)(B). In MCI v. AT&T, the Supreme Court held that the Commission's 
authority to ``modify'' portions of the Communications Act means 
``moderate change'' and not ``basic and fundamental changes in the 
scheme created by [the section at issue]'' We conclude that such large-
scale changes in LATA boundaries for packet-switched services as 
proposed by petitioners would effectively eliminate LATA boundaries for 
such services.
    51. Such far-reaching and unprecedented relief could effectively 
eviscerate section 271 and circumvent the procompetitive incentives for 
opening the local market to competition that Congress sought to achieve 
in enacting section 271 of the Act. We conclude, therefore, that the 
requests for large-scale changes in LATA boundaries, such as 
Ameritech's request for a global, ``data LATA,'' are functionally no 
different than petitioners'' requests that we forbear from applying 
section 271 to their provision of these services. It would exalt form 
over substance if we were to grant the requested large-scale changes in 
LATA boundaries. In the NPRM below, we seek comment on whether the 
Commission should, in certain circumstances, modify LATA boundaries to 
provide targeted relief.

C. Ordering Clauses

    52. Accordingly, it is ordered that, pursuant to sections 1-4, 10, 
201, 202, 251-254, 271, and 303(r) of the Communications Act of 1934, 
as amended, 47 U.S.C. 151-154, 160, 201, 202, 251-254, 271, and 303(r), 
the order is hereby adopted. The requirements adopted in this Order 
shall become effective September 23, 1998.
    53. It is further ordered that, pursuant to sections 1-4, 10, 201, 
202, 251-254, 271, and 303(r) of the Communications Act of 1934, as 
amended, 47 U.S.C. 151-154, 160, 201, 202, 251-254, 271, 272, and 
303(r), the Petitions filed by ALTS, Ameritech, SBC, U S WEST, and Bell 
Atlantic are granted to the extent described herein and otherwise 
denied.
    54. It is further ordered that, pursuant to sections 1-4, 10, 201, 
202, 251-254, 271, and 303(r) of the Communications Act of 1934, as 
amended, 47 U.S.C. 151-154, 160, 201, 202, 251-254, 271, and 303(r), 
the Petition filed by the Alliance for Public Technology is granted to 
the extent described herein.

List of Subjects in 47 CFR Parts 51, 64, and 68

    Communications common carriers, Communications equipment, Local 
exchange carrier, Telecommunications, Telephone.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 98-22598 Filed 8-21-98; 8:45 am]
BILLING CODE 6712-01-P