[Federal Register Volume 65, Number 32 (Wednesday, February 16, 2000)]
[Rules and Regulations]
[Pages 7744-7747]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3644]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 51

[CC Docket Nos. 98-147, 98-11, 98-26, 98-32, 98-78, 98-91, FCC 99-413]


Deployment of Wireline Services Offering Advanced 
Telecommunications Capability

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, we determine that US West may not avoid the 
obligations placed on incumbent LECs under section 251(c) of the Act in 
connection with the provision of advanced services. We find that when 
xDSL-based advanced services both originate and terminate ``within a 
telephone exchange,'' and provide subscribers with the capability of 
communicating with other subscribers in that same exchange, they are 
properly classified as ``telephone exchange service.'' We also find 
that xDSL-based advanced services constitute ``exchange access'' when 
they provide subscribers with the ability to communicate across 
exchange boundaries for the purposes of originating or terminating 
telephone toll services.

DATES: Effective December 23, 1999.

FOR FURTHER INFORMATION CONTACT: Christopher Libertelli, Attorney 
Advisor, Common Carrier Bureau, Policy and Program Planning Division, 
202-418-1580.

SUPPLEMENTARY INFORMATION: This is a summary of the Order on Remand in 
CC Docket 98-147, 98-11, 98-26, 98-78, 98-91, FCC 99-413, adopted on 
December 23, 1999 and released on December 23, 1999. The complete text 
of the Order on Remand is available for inspection and copying during 
normal business hours in the FCC Reference Information Center, 
Courtyard Level, 445 12th Street, S.W., Washington, D.C. and also may 
be purchased from the Commission's copy contractor, International 
Transcription Services (ITS Inc.), CY-B400, 445 12th Street, S.W., 
Washington, D.C.

Synopsis of the Order on Remand

I. Introduction

    1. 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. We

[[Page 7745]]

find that ``information access service'' is not a category separate and 
distinct from telephone service and exchange access. We also affirm our 
initial view in the Advanced Services Memorandum Opinion and Order, 63 
FR 45140, August 24, 1998, that xDSL-based advanced services are either 
telephone exchange service or exchange access. We clarify that whether 
xDSL-based advanced services constitute telephone exchange service or 
exchange access depends on how such technology is used.
    2. We first address whether a service that employs xDSL technology 
may be classified as telephone exchange service within the meaning of 
the Act. The 1996 Act provides two alternative definitions for the term 
``telephone exchange service.'' The first definition, which is codified 
in section 3(47)(A), provides that telephone exchange service includes 
``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.'' The second definition, which is codified in section 
3(47)(B), provides that the term also includes ``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.'' In the Advanced Services 
Memorandum Opinion and Order, we noted that section 3(47)(B) was added 
to ensure that the definition of telephone exchange service was not 
limited to traditional voice telephony, but included non-traditional 
``means of communicating information within a local area.''
    3. We conclude that xDSL-based advanced services, when used to 
permit communications among subscribers within an exchange, or within a 
connected system of exchanges, constitute telephone exchange services 
within the meaning of section 3(47)(A) of the Act. Consistent with 
this, the Commission has expressly made the rules governing basic 
telephone exchange service equally applicable to LEC provision of data 
and voice services. The parties have not persuaded us that we should 
depart from this long-standing practice. Indeed, in this era of 
converging technologies, limiting the telephone exchange service 
definition to voice-based communications would undermine a central goal 
of the 1996 Act--opening local markets to competition to all 
telecommunications services. We thus conclude, consistent with past 
practice, that the term ``telephone exchange service'' encompasses 
voice and data services.
    4. We recognize that, in the GTE ADSL Tariffing Order, CC Docket 
98-79, FCC 98-292, May 29, 1998, the Commission noted that a dedicated 
connection between an end-user and an Internet service provider's point 
of presence is similar to private line service. We do not find, 
however, that such an observation is relevant with respect to 
determining whether services that employ xDSL technology may constitute 
telephone exchange service within the meaning of the Act. Rather, the 
key criterion for determining whether a service falls within the scope 
of the telephone exchange service definition is whether it permits 
``intercommunication.'' As noted above, in this regard, xDSL-based 
advanced service and private line service are distinguishable in that 
xDSL-based services permit intercommunication and private line services 
do not.
    5. The final requirement in section 3(47)(A) is that telephone 
exchange services be covered by ``the exchange service charge.'' 
Although this term is not defined in the Act or the Commission's rules 
we glean its meaning from the context in which the phrase is used. We 
agree with those commenters who argue that the phrase implies that an 
end-user obtains the ability to communicate within the equivalent of an 
exchange area as a result of entering into a service and payment 
agreement with a provider of a telephone exchange service. We thus find 
that any charges that a LEC assesses for originating and terminating 
xDSL-based advanced services within the equivalent of an exchange area 
would be covered by the ``exchange service charge.''
    6. We thus reject the contention that, because the price of xDSL-
based services is not included within the price of basic local 
telephone service, such services are not covered by ``the exchange 
service charge.'' Indeed, we note that, in a competitive environment, 
where there are multiple local service providers and multiple services, 
there will be no single ``exchange service charge.'' We further note 
that, if a service otherwise satisfies the telephone exchange service 
definition, a LEC has the option of including the price of that service 
within the price it charges consumers for basic local telephone 
service.
    7. We conclude that a service falls within the scope of section 
3(47)(B) if it permits intercommunication within the equivalent of a 
local exchange area and is covered by the exchange service charge. In 
setting forth the types of services that may fall within the scope of 
section 3(47)(B), Congress determined, as an initial matter, that such 
services must be ``comparable'' to the services described in section 
3(47)(A). Although the term ``comparable'' is not defined in the Act, 
it is generally understood to mean ``having enough like characteristics 
and qualities to make comparison appropriate.''
    8. The xDSL-based advanced services at issue here, when they 
originate and terminate within an exchange area, satisfy the statutory 
definition of telephone exchange service under clause (B) of section 
3(47) as well, and that clause provides an alternative basis for our 
conclusion that these services may constitute telephone exchange 
services. We note that neither the statutory text nor the legislative 
history accompanying section 3(47)(B) provides guidance on which 
characteristics and qualities must be present in order for a service to 
fall within the scope of section 3(47)(B). In these circumstances, we 
presume that Congress sought to provide the Commission with discretion 
in determining whether a particular telecommunications service is 
sufficiently ``comparable'' to the services described in section 
3(47)(A) to constitute telephone exchange service within the meaning of 
the Act.
    9. Because we find that the term ``comparable'' means that the 
services retain the key characteristics and qualities of the telephone 
exchange service definition under subparagraph (A), we reject the 
argument that subparagraph (B) eliminates the requirement that 
telephone exchange service permit ``intercommunication'' among 
subscribers within a local exchange area. As prior Commission precedent 
indicates, a key component of telephone exchange service is 
``intercommunication'' among subscribers within a local exchange area.
    10. The next question we address is whether, and under what 
circumstances, xDSL-based advanced services may be classified as 
exchange access under the Act. As we have previously found, xDSL-based 
advanced services that are used to connect ISPs with their subscribers 
to facilitate Internet bound traffic typically constitute exchange 
access service because the call initiated by the subscriber terminates 
at Internet websites located in other exchanges, states, or foreign 
countries.
    11. The issue we address here is whether xDSL-based services may

[[Page 7746]]

constitute exchange access under the Act. This question arises 
primarily in the context of services provided to ISPs to facilitate 
their provision of Internet access services. Applying the definitions 
contained in section 3 of the Act, we conclude that the service 
provided by the local exchange carrier to the ISP is ordinarily 
exchange access service because it enables the ISP to transport the 
communication initiated by the end-user subscriber located in one 
exchange to its ultimate destination in another exchange, using both 
the services of the local exchange carrier and in the typical case the 
telephone toll service of the telecommunications carrier responsible 
for the interexchange transport.
    12. We evaluate two relevant definitions contained in the Act. 
Section 3(16), a new provision of the Act, defines ``exchange access'' 
as the offering of access to telephone exchange services or facilities 
for the purpose of the origination or termination of telephone toll 
service.'' (emphasis added) Section 3(48), which was in the original 
Act, in turn defines ``telephone toll service'' as ``telephone service 
between stations in different exchanges for which there is made a 
separate charge.'' We conclude that because the local exchange carrier 
provides access permitting the ISP to complete the transmission from 
its subscriber's location to a destination in another exchange using 
the toll service it typically has purchased from the interexchange 
carrier, the access service provided by the local exchange carrier is 
for the ``origination or termination of telephone toll service'' within 
the meaning of the statutory definition. In reaching this conclusion, 
we further find that the interexchange carrier that provides the 
interexchange telecommunications to the ISP charges the ISP for those 
telecommunications and that charge is separate from the exchange 
service charge that the ISP or end user pays to the LEC. As a result, 
the ``separate charge'' requirement of section 3(48) is satisfied with 
respect to the underlying interexchange telecommunications.
    13. We recognize that this analysis with respect to ``exchange 
access'' does not by its terms cover traffic jointly carried by an 
incumbent LEC and a competitive LEC to an ISP where the ISP self-
provides the transport component of its internet service. We leave for 
another day the question of whether the LEC-provided portion of such 
traffic (which we believe to be rare) falls within the definition of 
``exchange access'' in section 3(16) and whether, as a result, the 
incumbent LEC would be subject to the interconnection obligations of 
section 251(c)(2) with respect to such traffic. We find, however, that 
even if such traffic traveling over the facilities of an incumbent LEC 
and a competitive LEC to an ISP falls outside the scope of section 
3(16) and is not covered by section 251(c)(2), the ILEC would 
nevertheless be subject to interconnection obligations imposed by 
section 251(a) and (to the extent that the service is interstate) 
section 201(a). Moreover, we note that, to the extent that the LEC-
provided portion of such traffic may not fall within the definition of 
``exchange access,'' the predominantly inter-exchange end-to-end nature 
of such traffic nevertheless renders it largely non-local for purposes 
of reciprocal compensation obligations of section 251(b)(5). In light 
of our authority to require interconnection under sections 201(a) and 
251(a) even in the ISP self-provisioning context, we expect incumbent 
LECs to continue providing interconnection to competitive LECs without 
imposing tariff, certification or other requirements on competitive 
LECs requesting interconnection. We encourage parties alleging the 
imposition of such requirements to file complaints pursuant to section 
208 of the Act.
    14 We recognize that we did hold, in the Non-Accounting Safeguards 
Order, 62 FR 02991, January 21, 1997, that ISPs do not receive 
``exchange access services in connection with their provision of 
unregulated information services because of their status as non-
carriers.'' However, that Order constitutes a departure from other 
Commission precedent on this matter. In a contemporaneous Commission 
decision, the Local Competition Order, 61 FR 22008, May 13, 1996, we 
specifically stated that, although ``[t]he vast majority'' of exchange 
access service purchasers are telecommunications carriers, non-carriers 
``do occasionally purchase'' such services. In fact, when the Non-
Accounting Safeguard Order was issued, the question of whether an xDSL-
based service offering directed at ISPs could be ``exchange access'' or 
``telephone exchange service'' was not before the Commission. Indeed, 
such service was first offered more than a year after release of that 
Order.
    15. On a more complete record in this proceeding, we correct the 
inconsistency in our prior orders and overrule the determination made 
in the Non-Accounting Safeguards Order that non-carriers may not use 
exchange access and affirm our determination in the Local Competition 
Order that non-carriers may be purchasers of those services. We find 
that this conclusion is consistent with the Commission's longstanding 
characterization of the service that LECs offer to enhanced services 
providers (which include ISPs) as exchange access. In MTS and WATS 
Markets Structure Order, 48 FR 33667, August 22, 1983, the Commission 
held that ``[a]mong the variety of users of access service are * * * 
enhanced service providers.'' As recognized in that case, the 
Commission has always required LECs to offer access services to parties 
that may not be common carriers. Similarly, we note that enhanced 
service providers use ``exchange access service.'' More recently, in 
the GTE ADSL Tariffing Order, we noted that ``[t]he Commission 
traditionally has characterized the link from an end user to an ESP as 
an interstate access service.''
    16. These holdings comport with the conclusion in the Local 
Competition Order that non-carriers may purchase exchange access 
services. This historical treatment properly serves as a lens through 
which to view Congress' intent in codifying a definition of ``exchange 
access'' in the 1996 Act. Nothing in the new definition of the Act or 
in its history suggests that Congress intended to narrow, for the first 
time, the availability of exchange access service to certain 
telecommunications service providers. For these reasons, we overrule 
our statements in the Non-Accounting Safeguards Order that non-carriers 
may not use exchange access, which we find to be inconsistent with our 
own precedent, and with the structure of the Act.
    17. We find that, with respect to access to the local network for 
the purpose of originating or terminating an interexchange 
communication, any service that otherwise constitutes ``special 
access'' also falls within the definition of ``exchange access.'' We 
note that ``special access'' refers to a dedicated path between an end-
user and a service provider's point of presence. We agree that special 
access, which provides access to the exchange through dedicated 
facilities, is different than switched access, which provides access to 
the exchange using switches. Both forms of access, however, provide 
access to exchange facilities, which is the pertinent point under the 
statutory definition of ``exchange access.''
    18. We also reject the contention that an incumbent LEC 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

[[Page 7747]]

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 will 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.

List of Subjects in 47 CFR Part 51

    Communications, Common carrier, Telecommunications.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 00-3644 Filed 2-15-00; 8:45 am]
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