[Federal Register Volume 64, Number 250 (Thursday, December 30, 1999)]
[Notices]
[Pages 73555-73559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33901]


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FEDERAL COMMUNICATIONS COMMISSION

[CC Docket No. 99-295, FCC 99-404]


Application by Bell Atlantic New York for Authorization Under 
Section 271 of the Communications Act To Provide In-Region, Inter-LATA 
Service in the State of New York

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: In this document, the Commission grants Bell Atlantic's 
section 271 application for authority to enter the inter-LATA toll 
market in the state of New York. The Commission grants Bell Atlantic's 
application based on our conclusion that Bell Atlantic has satisfied 
all of the statutory requirements for entry, and opened its local 
exchange markets to full competition.

DATES: Effective December 22, 1999.

FOR FURTHER INFORMATION CONTACT: Claudia Pabo or Andrea Kearney, 
Attorneys, Policy and Program Planning Division, Common Carrier Bureau, 
at (202) 418-1580, or via the Internet at [email protected] or 
[email protected], respectively. The full text of this Order is 
available for inspection and copying during normal business hours in 
the FCC Reference Information Center, CY-A257, 445 12th Street, 
Washington, DC 204554. Further information may also be obtained by 
calling the Common Carrier Bureau's TTY number: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This document is a brief description of the 
Commission's Memorandum Opinion and Order adopted December 21, 1999, 
and released December 22, 1999. The full text also may be obtained 
through the World Wide Web, at http://www.fcc.gov/ccb/Orders/
index6.html; or may be purchased from the Commission's copy contractor, 
International Transcription Service Inc. (ITS), CY B-400, 445 12th 
Street, SW, Washington, DC.

Synopsis of the Memorandum Opinion and Order

    1. The New York Commission's Evaluation. The New York Commission 
advised the Commission that, following two and one-half years of 
review, testing, and process improvements, Bell Atlantic-NY had met the 
checklist requirements of section 271(c). Specifically, the New York 
Commission stated that Bell Atlantic had met its obligation under 
section 271(c)(1)(A) by entering into more than 75

[[Page 73556]]

interconnection agreements approved by the New York Commission, and 
that competitive LECs are providing facilities-based local exchange 
service. The New York Commission also stated that the record developed 
in the New York proceeding establishes that Bell Atlantic has a legal 
obligation to provide the 14 checklist items, and it is meeting that 
obligation.
    2. The Department of Justice's Evaluation. The Department of 
Justice concluded that it did not have substantial concerns about the 
ability of facilities-based carriers and firms that wish to resell Bell 
Atlantic's retail services to enter the local telecommunications 
markets in New York. It also concluded that Bell Atlantic had made 
great progress in opening the market to competition through the use of 
unbundled network elements, but two major areas of deficiency, 
operations support systems (OSS) and access to unbundled local loops, 
remain as important obstacles to local competition. As a result, the 
Department stated that this Commission could properly deny this 
application or, as an alternative, approve the application subject to 
carefully drafted conditions under which Bell Atlantic would be 
permitted to offer interLATA services only after taking specified steps 
and demonstrating that its performance has met appropriate 
requirements.
    3. Compliance with Section 271(c)(1)(A). We conclude that Bell 
Atlantic demonstrates that it satisfies the requirements of section 
271(c)(1)(A) based on the interconnection agreements it has implemented 
with competing carriers in New York. Specifically, we find that AT&T, 
MCI World Com, and Cablevision Lightpath provide telephone exchange 
service either exclusively or predominantly over their own facilities 
to residential subscribers and to business subscribers. The New York 
Commission also concludes that Bell Atlantic has met the requirements 
of section 271(c)(1)(A). None of the commenting parties, including the 
competitors cited by Bell Atlantic in support of its showing, 
challenges Bell Atlantic's assertion in this regard.
    4. Checklist Item 1--Interconnection. We conclude that Bell 
Atlantic satisfies the requirements of checklist item 1. Pursuant to 
this checklist item, Bell Atlantic must allow other carriers to 
interconnect their networks to its network for the mutual exchange of 
traffic. To do so, BellSouth must permit carriers to use any available 
method of interconnection at any available point in BellSouth's 
network. We find that Bell Atlantic demonstrates that it provides 
interconnection at all technically feasible points on its network. We 
likewise find that Bell Atlantic adequately demonstrates that it 
provides collocation in New York in accordance with the Commission's 
rules. Furthermore, interconnection between networks must be equal in 
quality whether the interconnection is between Bell Atlantic and an 
affiliate, or between Bell Atlantic and another carrier. Bell Atlantic 
demonstrates that it provides interconnection that meets this standard.
    5. Bell Atlantic satisfies the pricing requirements of checklist 
item 1. Pursuant to this checklist item, Bell Atlantic must make 
physical and virtual collocation arrangements available at rates that 
are just, reasonable, and nondiscriminatory. We find that Bell 
Atlantic's collocation arrangements meet this test because Bell 
Atlantic offers cageless physical collocation to those competitive LECs 
that request it at just, reasonable, and nondiscriminatory prices. With 
respect to security measures, Bell Atlantic's collocation rates are not 
discriminatory because Bell Atlantic does not impose this cost. In 
addition, Bell Atlantic complies with the Commission's requirements 
that it allocate its space preparation and related up-front costs among 
competing carriers on a pro-rata basis. The New York Commission has set 
prices for a competing carrier's up-front site preparation costs at 
TELRIC-based costs, and ensured that the initial competitor to 
collocate will not bear the complete up-front collocation costs.
    6. Checklist Item 2--Access to Unbundled Network Elements. We 
conclude that Bell Atlantic satisfies the requirements of checklist 
item 2. For purposes of the checklist, Bell Atlantic's obligation to 
provide ``access to unbundled network elements,'' or the individual 
components of the telephone network, is comprised of three aspects. 
First, to fulfill its nondiscrimination checklist obligation, Bell 
Atlantic must provide access to its operations support systems (OSS), 
meaning the systems, databases and personnel necessary to support the 
elements or services. Nondiscriminatory access ensures that new 
entrants have the ability to order service for their customers and 
communicate effectively with Bell Atlantic regarding basic activities 
such as placing orders and providing maintenance and repair for 
customers. For each of the primary OSS functions, including pre-
ordering, ordering, provisioning, maintenance and repair, and billing, 
as well as change management and technical assistance, Bell Atlantic 
must provide access that enables competing carriers to perform the 
function in substantially the same time and manner as Bell Atlantic or, 
if there is not an appropriate retail analogue in Bell Atlantic's 
systems, in a manner that permits an efficient competitor a meaningful 
opportunity to compete.
    7. As an initial matter, Bell Atlantic demonstrates that it 
provides documentation and technical assistance necessary for new 
entrants to connect with its OSS, and a change management process that 
provides information necessary for competing carriers to modify their 
systems and procedures when Bell Atlantic changes its OSS. With respect 
to pre-ordering, or the activities that a competing carrier undertakes 
to gather and verify the information necessary to place an order, Bell 
Atlantic demonstrates through evidence of actual commercial usage and 
results of independent third-party testing that it has deployed 
operationally ready interfaces and systems that offer nondiscriminatory 
access to pre-ordering OSS functions. Specifically, Bell Atlantic's 
pre-ordering interfaces and systems enable competing carriers to 
retrieve customer service records, validate addresses, select and 
reserve telephone numbers, assess the services and features available 
to customers, retrieve due date information, determine whether a loop 
is capable of supporting advanced technologies, and view a customers' 
directory listing.
    8. In terms of the interfaces and systems that enables competing 
carriers to place an order for service, Bell Atlantic demonstrates 
through performance data and third-party testing that it return timely 
order confirmation and rejection notices, processes manually handled 
orders accurately, provides jeopardy information and order completion 
notification, and is capable of handling reasonably foreseeable demand 
volumes. In terms of provisioning, performance data and third-party 
test results demonstrate that Bell Atlantic provisions competing 
carriers' customers orders in substantially the same time and manner 
that it provisions orders for its own retail customers.
    9. In addition, with respect to maintenance and repair, Bell 
Atlantic demonstrates through commercial usage and third-party test 
results that its interfaces and systems enable competing carriers to 
create, modify, and cancel trouble tickets, and to request that Bell 
Atlantic test a customer's circuit, in substantially the same time and 
manner as Bell Atlantic's retail operations. Similarly, Bell

[[Page 73557]]

Atlantic resolves problems associated with customers of competing 
carriers in substantially the same time and manner and at the same 
level of quality that it performs repair work for its own customers. 
Finally, with respect to billing, Bell Atlantic demonstrates that it 
provides complete and accurate reports on the service usage of 
competing carriers' customers in the same manner that Bell Atlantic 
provides such information to itself.
    10. Second, pursuant to the checklist, Bell Atlantic must provide 
nondiscriminatory access to network elements in a manner that allows 
other carriers to combine such elements. Using evidence of actual 
commercial usage and the results of independent third-party testing. 
Bell Atlantic demonstrates that it provides to competitors combinations 
of already-combined network elements as well as nondiscriminatory 
access to unbundled network elements in a manner that allows competing 
carriers to combine those elements themselves.
    11. Bell Atlantic satisfies the pricing requirements of checklist 
item 2. In order to fulfill its obligations under this checklist item, 
Bell Atlantic must provide 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. 
This checklist item ensures that new entrants are not placed at a 
competitive disadvantage due to discriminatory prices for network 
elements. The Commission has determined that prices for unbundled 
network elements must be based on Bell Atlantic's forward-looking, 
long-run incremental costs, or TELRIC (Total Element Long Run 
Incremental Cost) for each network element.
    12. We find that Bell Atlantic demonstrates that the pricing of its 
unbundled network elements complies with TELRIC. Specifically, Bell 
Atlantic's prices for switches and loops offered as unbundled network 
elements are priced pursuant to a forward-looking, long-run incremental 
cost methodology.
    13. In addition, we do not find that the contract termination 
liability provisions contained in Bell Atlantic's customer-specific 
arrangements (CSAs) constitute an unreasonable or discriminatory 
condition or limitation on the resale of its telecommunications 
services. We also find that Bell Atlantic is not required to provide an 
avoided-cost discount on its wholesale DSL offering because it is not a 
retail service subject to discount obligations.
    13. Checklist Item 3--Access to Poles, Ducts, Conduits, and Rights-
of-Way. Based on the evidence in the record, we find that Bell Atlantic 
demonstrates that it is providing nondiscriminatory access to its 
poles, ducts, conduits, and rights-of-way at just and reasonable rates, 
terms, and conditions in accordance with the requirements of section 
224, and thus, satisfies the requirements of checklist item 3. The New 
York Commission concluded that Bell Atlantic provides nondiscriminatory 
access to poles, ducts, conduits, and rights-of-way in compliance with 
this checklist item.
    14. Checklist Item 4--Unbundled Local Loops. Bell Atlantic 
satisfies the requirements of checklist item 4. Local loops are the 
wires, poles, and conduits that connect the telephone company end 
office to the customer's home or business. To satisfy the 
nondiscrimination requirement under checklist item 4, Bell Atlantic 
must demonstrate that it can efficiently furnish unbundled local loops 
to other carriers within a reasonable time frame, with a minimum level 
of service disruption, and at the same level of service quality it 
provides to its own customers. Nondiscriminatory access to unbundled 
local loops ensures that new entrants can provide quality telephone 
service promptly to new customers without constructing new loops to 
each customer's home or business.
    15. Bell Atlantic provides evidence and performance data 
establishing that it can efficiently furnish unbundled loops, for the 
provision of both traditional voice services and various advanced 
services, to other carriers in a nondiscriminatory manner. More 
specifically, Bell Atlantic establishes that it misses fewer new loop 
installation appointments for competing carriers than it does for its 
retail customers. In addition, Bell Atlantic demonstrates that the new 
loops it installs are of substantially the same quality as the loops it 
provides to its retail customers. Bell Atlantic also demonstrates that 
it provides coordinated cutovers of loops, i.e., hot cuts, to competing 
carriers within the prescribed time interval at least 90 percent of the 
time; that in no more than five percent of cases has the hot cut 
resulted in a service disruption; and that less than two percent of 
lines provisioned through hot cuts have been the subject of 
installation trouble reports. Additionally, Bell Atlantic establishes 
that it provides loop maintenance and repair functions to competitors 
in substantially the same time and manner as it provides them to its 
retail customers. Although due to unique circumstances present in this 
application we do not examine Bell Atlantic's provision of xDSL-capable 
loops separately, we provide guidance as to the evidentiary showing we 
would find most persuasive in evaluating future applicants' checklist 
compliance with respect to xDSL-capable loops.
    16. Checklist Item 5--Unbundled Local Transport. Based on the 
evidence in the record, the Commission concludes that Bell Atlantic 
provides both shared and dedicated transport in compliance with the 
requirements of this checklist item. The New York Commission also finds 
that Bell Atlantic is in compliance with this checklist item. We are 
not persuaded by the assertions of some commenters that Bell Atlantic 
fails to provide dedicated local transport in a timely manner. We 
cannot accept the assertion by a number of these parties that the 
provision of special access should be considered for purposes of 
determining checklist compliance in this proceeding. Nevertheless, to 
the extent that parties are experiencing delays in the provisions of 
special access services ordered from Bell Atlantic's federal tariffs, 
we note that these issues are appropriately addressed in the 
Commission's section 208 compliant process.
    17. Checklist Item 6--Unbundled Local Switching. Bell Atlantic 
satisfies the requirements of checklist item 6. A switch connects end 
user lines to other end user lines, and connects end user lines to 
trunks used for transporting a call to another central office or to a 
long-distance carrier. Switches can also provide end users with 
``vertical features'' such as call waiting, call forwarding, and caller 
ID, and can direct a call to a specific trunk, such as to a competing 
carrier's operator services. We find that Bell Atlantic satisfies the 
requirements of checklist item 6, because Bell Atlantic demonstrates 
that it provides all of the features, functions, and capabilities of 
the switch.
    18. Checklist Item 7--911/E911/Directory Assistance/Operator 
Services. Based on the evidence submitted in the record, the Commission 
concludes that Bell Atlantic demonstrates that it is providing 
nondiscriminatory access to 911/E911 services, and thus satisfies the 
requirements of checklist item 7. We note that no commenter disputes 
Bell Atlantic's compliance with this portion of checklist item 7, and 
the New York Commission concludes that Bell Atlantic is providing 
nondiscriminatory access to 911/E911. We further conclude that Bell 
Atlantic demonstrates that it provides directory assistance services in 
accordance with the requirements of

[[Page 73558]]

checklist item 7. The New York Commission concludes that Bell Atlantic 
satisfies this portion of checklist item 7. We are not persuaded by 
commenters' arguments that Bell Atlantic fails to provide adequately 
directory assistance and operator services. To the extent that Bell 
Atlantic has not adequately addressed this problem, we note that the 
present record does not indicate that there is a widespread problem. 
Only two commenters raise this objection, suggesting the difficulty is 
of limited competitive consequence. In fact, several parties support 
Bell Atlantic's assertion of compliance with this checklist item. 
Accordingly, we conclude that these objections are not sufficient to 
conclude that Bell Atlantic has failed to comply with the requirements 
of checklist item 7.
    19. Checklist Item 8--White Pages Directory Listings. Bell Atlantic 
satisfies the requirements of checklist item 8. White pages are the 
directory listings of telephone numbers of residences and businesses in 
a particular area. This checklist item ensures that white pages 
listings for customers of different carriers are compatible, in terms 
of accuracy and reliability, notwithstanding the identity of the 
customer's telephone service provider. Bell Atlantic demonstrates that 
its provision of white pages listings to customers of competitive LECs 
is nondiscriminatory in terms of their appearance and integration, and 
that it provides white pages listings for competing carriers' customers 
with the same accuracy and reliability that it provides to its own 
customers.
    20. Checklist Item 9--Numbering Administration. Bell Atlantic 
satisfies the requirements of checklist item 9. Telephone numbers are 
currently assigned to telecommunications carriers based on the first 
three digits of the local number, known as ``NXX'' codes. To fulfill 
the nondiscrimination obligation in checklist item 9, Bell Atlantic 
must comply with the numbering administration guidelines, plan, or 
rules. This checklist item ensures that other carriers have the same 
access to new telephone numbers as Bell Atlantic. Bell Atlantic 
demonstrates that it has adhered to industry guidelines and the 
Commission's requirements.
    21. Checklist Item 10--Databases and Associated Signaling. Bell 
Atlantic satisfies the requirements of checklist item 10. Databases and 
associated signaling refer to the call-related databases and signaling 
systems that are used for billing and collection or the transmission, 
routing, or other provision of a telecommunications service. To fulfill 
the nondiscrimination obligation in checklist item 10, Bell Atlantic 
must demonstrate that it provides new entrants with the same access to 
these call-related databases and associated signaling that it provides 
itself. This checklist item ensures that other carriers have the same 
ability to transmit, route, complete, and bill for telephone calls as 
Bell Atlantic. Bell Atlantic demonstrates that it provides other 
carriers nondiscriminatory access to its: (1) signaling networks, 
including signaling links and signaling transfer points; (2) certain 
call-related databases necessary for call routing and completion or, in 
the alternative, a means of physical access to the signaling transfer 
point linked to the unbundled database; and (3) Service Management 
Systems; and to design, create, test, and deploy Advanced Intelligent 
Network (AIN) based services at the SMS through a Service Creation 
Environment.
    22. Checklist Item 11--Number Portability. Bell Atlantic satisfies 
the requirements of checklist item 11. Number portability enables 
consumers to take their phone number with them when they change local 
telephone companies. Bell Atlantic demonstrates that it provides number 
portability to consumers without impairment of quality, reliability, or 
convenience.
    23. Checklist Item 12--Dialing Parity. Based on the evidence in the 
record, we find that Bell Atlantic demonstrates that it provides local 
dialing parity in accordance with the requirements of section 251(b)(3) 
and thus satisfies the requirements of this checklist item. No 
commenter challenges Bell Atlantic's assertion that it provides local 
dialing parity. Furthermore, the New York Commission concludes that 
Bell Atlantic meets the requirements of this checklist obligation.
    24. Checklist Item 13--Reciprocal Compensation. Bell Atlantic 
satisfies the requirements of checklist item 13. Pursuant to this 
checklist item, Bell Atlantic must compensate other carriers for the 
cost of transporting and terminating a local call from Bell Atlantic. 
Alternatively, Bell Atlantic and the other carrier may enter into an 
arrangement whereby neither of the two carriers charges the other for 
terminating local traffic that originates on the other carrier's 
network. This checklist item is important to ensuring that all carriers 
that originate calls bear the cost of terminating such calls. Bell 
Atlantic demonstrates that it has reciprocal compensation arrangements 
in accordance with section 252(d)(2) in place, and that it is making 
all required payments in a timely fashion.
    25. Checklist Item 14--Resale. Bell Atlantic satisfies the 
requirements of checklist item 14. This checklist item requires Bell 
Atlantic to offer other carriers all of its retail services at 
wholesale rates without unreasonable or discriminatory conditions or 
limitations so that other carriers may resell those services to an end 
user. This checklist item ensures a mode of entry into the local market 
for carriers that have not deployed their own facilities. Bell Atlantic 
demonstrates that it offers all of its retail services for resale at 
wholesale rates without unreasonable or discriminatory conditions or 
limitations. Bell Atlantic also shows that it provides 
nondiscriminatory access to operations support systems for the resale 
of its retail telecommunications services, and provisions resale 
services on a nondiscriminatory basis.
    26. Section 272 Compliance. Bell Atlantic demonstrates that it will 
comply with the requirements of section 272. Pursuant to section 
271(d)(3), Bell Atlantic must demonstrate that it will comply with the 
structural, transitional, and non-discriminatory requirements of 
section 272, as well as certain requirements governing its marketing 
arrangements. Bell Atlantic shows that it will provide interLATA 
telecommunications through structurally separate affiliates, and that 
its BOCs will operate in a non-discriminatory manner with respect to 
these affiliates and unaffiliated third parties. In addition, Bell 
Atlantic demonstrates that it will comply with public disclosure 
requirements of section 272, which requires Bell Atlantic to post on 
the Internet certain information about transactions between its 
affiliates and BOCs. Finally, Bell Atlantic demonstrates compliance 
with the joint marketing requirements of section 272.
    27. Public Interest Standard. We conclude that approval of this 
application is consistent with the public interest, convenience, and 
necessity. While no single factor is dispositive in our public interest 
analysis, our overriding goal is to ensure that nothing undermines our 
conclusion, based on our analysis of checklist compliance, that markets 
are open to competition. We note that a strong public interest showing 
cannot overcome failure to demonstrate compliance with one or more 
checklist items.
    28. Among other factors, we may review the local and long distance 
markets to ensure that there are not unusual circumstances that would 
make entry contrary to the public interest under the particular 
circumstances of

[[Page 73559]]

this Application. We find that, consistent with our extensive review of 
the competitive checklist, barriers to competitive entry in the local 
market have been removed and the local exchange market today is open to 
competition. We thus disagree with commenters' arguments that the 
public interest would be disserved by granting Bell Atlantic's 
application because the local market in New York has not yet truly been 
opened to competition. We also find that the record confirms our view 
that BOC entry into the long distance market will benefit consumers and 
competition if the relevant local exchange market is open to 
competition consistent with the competitive checklist.
    29. Another factor that could be relevant to our analysis is 
whether we lack sufficient assurance that markets will remain open 
after grant of application. We find that the performance monitoring and 
enforcement mechanisms developed in New York, in combination with other 
factors, provide strong assurance that Bell Atlantic will continue to 
satisfy the requirements of section 271 after entering the long 
distance market. Where, as here, a BOC relies on performance monitoring 
and enforcement mechanisms to provide such assurance, we will review 
the mechanisms involved to ensure that they are likely to perform as 
promised. We conclude that these mechanisms have a reasonable design 
and are likely to provide incentives sufficient to foster post-entry 
checklist compliance. We base this predictive judgment on the fact that 
the plan has the following important characteristics: (1) potential 
liability that provides a meaningful and significant incentive to 
comply with the designated performance standards; (2) clearly-
articulated, pre-determined measures and standards, which encompass a 
comprehensive range of carrier-to-carrier performance; (3) a reasonable 
structure that is designed to detect and sanction poor performance when 
it occurs; (4) a self-executing mechanism that does not leave the door 
open unreasonably to litigation and appeal; and (5) reasonable 
assurances that the reported data is accurate. Parties to this 
proceeding identify numerous criticisms relating to the structure of 
these mechanisms, but none are sufficient to cause us to conclude that 
the plan will fail to foster post-entry compliance with the checklist 
requirements.
    30. Consistent with our accounting rules with respect to antitrust 
damages and certain other penalties paid by carriers, we conclude that 
Bell Atlantic should not be permitted to reflect any portion of the 
bill credits associated with these enforcement mechanisms as expenses 
under the revenue requirement for interstate services of the Bell 
Atlantic incumbent LEC. We also conclude that other concerns identified 
by commenters do not convince us that grant of this application would 
be inconsistent with the public interest. Finally, we have determined 
in a separate order that Bell Atlantic's provisions of National 
Directory Assistance is permissible and consistent with section 
271(g)(6) of the Act, and conclude that any uncertainty about Bell 
Atlantic's past compliance with this provisions is not grounds for 
denying the application.
    31. Section 271(d)(6) Enforcement Authority. Congress sought to 
create incentives for BOCs to cooperate with competitions by 
withholding long distance authorization until they satisfy various 
conditions related to local competition. We note that these incentives 
may diminish with respect to a given state once a BOC receives 
authorization to provide interLATA service in that state. The statute 
nonetheless mandates that a BOC comply fully with section 271's 
requirements both before and after it receives approval from the 
Commission and competes in the interLATA market. Working in concert 
with state commissions, we intend to monitor closely post-entry 
compliance and to enforce vigorously the provisions of section 271 
using the various enforcement tools Congress provided us in the 
Communications Act. Swift and effective post-approval enforcement of 
section 271's requirements is essential to Congress' goal of achieving 
lasting competition in local markets.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. 99-33901 Filed 12-29-99; 8:45 am]
BILLING CODE 6712-01-M