[Federal Register Volume 66, Number 22 (Thursday, February 1, 2001)]
[Notices]
[Pages 8596-8599]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-2748]


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FEDERAL COMMUNICATIONS COMMISSION

[CC Docket No. 00-217; FCC 01-29]


Joint Application by SBC Communications Inc., Southwestern Bell 
Telephone Company, and Southwestern Bell Communications Services, Inc. 
d/b/a Southwestern Bell Long Distance, Pursuant to Section 271 of the 
Telecommunications Act of 1996 To Provide In-Region, InterLATA Service 
in the States of Kansas and Oklahoma

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) grants the section 271 application of Southwestern Bell 
Telephone Company (SWBT) for authority to enter the interLATA 
telecommunications market in the States of Kansas and Oklahoma. The 
Commission grants SWBT's application based on our conclusion that SWBT 
has satisfied all of the statutory requirements for entry, and opened 
its local exchange markets to full competition. This document 
represents the first time that the Commission has approved a section 
271 application for a more rural state, and the first time we have 
ruled on a section 271 application for a second state within a Bell 
Operating Company (BOC) region.

DATES: Date of approval of section 271 application is: March 7, 2001.

FOR FURTHER INFORMATION CONTACT: John Stanley, Attorney, Policy and 
Program Planning Division, Common Carrier Bureau, at (202) 418-1580, or 
via the

[[Page 8597]]

Internet at [email protected]. The full text of the Order is available 
for inspection and copying during normal business hours in the FCC 
Reference Information Center, CY-A257, 445 12th Street, Washington, DC 
20554. 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 January 19, 2001, and 
released January 22, 2001. The full text also may be obtained through 
the World Wide Web, at http://www.fcc.gov/Bureaus/Common_Carrier/in-region_applications/sbcksok/welcome.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. History of the application. On October 26, 2000, SWBT filed a 
joint application, pursuant to section 271 of the Telecommunications 
Act of 1996 with the Commission to provide in-region, interLATA service 
in the States of Kansas and Oklahoma.
    2. The State Commissions' evaluations. The Kansas Corporation 
Commission and Oklahoma Corporation Commission both advised the 
Commission that, following more than two years of extensive review, 
SWBT met the checklist requirements of section 271(c) and had taken the 
statutorily required steps to open its local markets to competition. 
Specifically, both commissions stated that SWBT met its obligation 
under ``Track A'' or section 271(c)(1)(A) by entering into 
interconnection agreements with competing carriers that are serving 
residential and business customers either exclusively or predominantly 
over their own facilities. Both state commissions found that SWBT had 
fully complied with section 271, and each voted to support the 
application.
    3. The Department of Justice's evaluation. The Department of 
Justice submitted its evaluation of SWBT's application on December 4, 
2000. In its evaluation, the Department of Justice focused on the 
prices at which SWBT provides interconnection and unbundled network 
elements (UNEs) in Kansas and Oklahoma. The Department of Justice 
recommended that the Commission undertake an independent determination 
of recurring and nonrecurring UNE rates in Oklahoma, and nonrecurring 
UNE rates in Kansas. The Department of Justice also questioned the 
sufficiency of SWBT's evidence in support of its operations support 
systems (OSS) in Kansas and Oklahoma. The Department of Justice urged 
the Commission to establish the kind of evidentiary showing that will 
be expected of future applicants who seek to rely on findings from 
prior section 271 proceedings.
    4. Compliance with section 271(c)(1)(A). We conclude that SWBT 
demonstrates that it satisfies the requirements of section 271(c)(1)(A) 
based on the interconnection agreements it has implemented with 
competing carriers in Kansas and Oklahoma. Specifically, we find that a 
sufficient number of residential and business customers are being 
served by competing LECs through the use of their own facilities in 
both Kansas and Oklahoma. The Kansas and Oklahoma Commissions also 
conclude that SWBT has met the requirements of section 271(c)(1)(A).
    5. Checklist item 2--Access to unbundled network elements. We 
conclude that SWBT satisfies the requirements of checklist item 2 in 
both Kansas and Oklahoma. For the purposes of the checklist, SWBT's 
obligation to provide ``access to unbundled network elements,'' or the 
individual components of the telephone network, includes access to its 
OSS--the term used to describe the systems, databases and personnel 
necessary to support the network elements or services. 
Nondiscriminatory access to OSS ensures that new entrants have the 
ability to order service for their customers and communicate 
effectively with SWBT regarding basic activities such as placing 
orders, providing maintenance and repair service for customers. We find 
that, for each of the primary OSS functions (pre-ordering, ordering, 
provisioning, maintenance and repair, and billing, as well as change 
management and technical assistance), SWBT provides access that enables 
competing carriers to perform the function in substantially the same 
time and manner as SWBT or, if there is not an appropriate retail 
analogue in SWBT's systems, in a manner that permits an efficient 
competitor a meaningful opportunity to compete. In reaching this 
conclusion, we rely on detailed evidence provided by SWBT in this 
proceeding and, in certain circumstances, on our findings from the SWBT 
Texas section 271 Order. See Application of SWBT Texas for 
Authorization Under Section 271 of the Communications Act, 65 FR 42361 
(2000)
    6. With respect to pre-ordering, or the activities that a competing 
carrier undertakes to gather and verify the information necessary to 
place an order, SWBT demonstrates that it is provides nondiscriminatory 
access to its pre-ordering functions. Specifically, we find that SWBT 
demonstrates that: (i) SWBT offers nondiscriminatory access to OSS pre-
ordering functions associated with determining whether a loop is 
capable of supporting xDSL advanced technologies; (ii) competing 
carriers successfully have built and are using application-to-
application interfaces to perform pre-ordering functions and are able 
to integrate pre-ordering and ordering interfaces; and (iii) its pre-
ordering systems provide reasonably prompt response times and are 
consistently available in a manner that affords competitors a 
meaningful opportunity to compete.
    7. In terms of the interfaces and systems that enable competing 
carriers to place an order for service, SWBT demonstrates that its 
systems return timely order confirmation, rejection notices, jeopardy 
and order completion notifications, and are capable of achieving high 
overall levels of order flow-through. We also find that SWBT makes 
available sufficiently detailed interface design specifications for EDI 
that enable competing carriers to modify or design their own systems in 
a manner that will allow them to communicate with SWBT's systems and 
interfaces. In terms of provisioning, we find that SWBT provisions 
competing carriers' orders for resale and UNE-P services in 
substantially the same time and manner that it provisions orders for 
its own retail customers.
    8. In addition, with respect to maintenance and repair, we find 
that SWBT offers maintenance and repair interfaces and systems that 
enable a requesting carrier to access all the same functions that are 
available to SWBT's representatives. SWBT provides competing carriers 
with several options for requesting maintenance and reporting troubles. 
Similarly, SWBT 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. With respect to billing, SWBT demonstrates that it provides 
complete and accurate reports on the service usage of competing 
carriers' customers in the same manner that SWBT provides such 
information to itself. SWBT also demonstrates that it provides the 
documentation and support necessary to provide competitive carriers 
nondiscriminatory

[[Page 8598]]

access to its OSS by showing that it has an adequate change management 
process in its five-state region, which includes Kansas and Oklahoma.
    9. Pursuant to this checklist item, SWBT must also provide 
nondiscriminatory access to network elements in a manner that allows 
other carriers to combine such elements. Based on the evidence in the 
record, and upon SWBT's legal obligations under interconnection 
agreements offered in Kansas and Oklahoma, SWBT 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.
    10. Finally, we find that SWBT satisfies the pricing requirements 
of checklist item 2 in both Kansas and Oklahoma. In fulfilling its 
obligation under this checklist item, SWBT demonstrates that it 
provides nondiscriminatory access to UNEs at any technically feasible 
point at rates, terms and conditions that are just, reasonable, and 
nondiscriminatory. We find that Kansas' recurring UNE rates fall within 
the reasonable range of total long run incremental cost (TELRIC) 
prices, and that Kansas' nonrecurring charges for UNE rates were guided 
by basic TELRIC principles. In Oklahoma, we find that both the 
recurring and nonrecurring charges for UNEs provide competitive 
carriers with rates that are within the range that a reasonable 
application of TELRIC principles would produce. We base our approval on 
SWBT's permanent UNE rates in Kansas and Oklahoma, as well as discounts 
SWBT made to some of those rates in December 2000. We waive our 
procedural requirements that an application be complete when filed in 
order to consider SWBT's voluntary rate reductions filed December 28, 
2000. We find that special circumstances warrant this waiver, notably 
the limited nature of the rate reductions and the Commission's and 
commenters' ability to fully evaluate the impact of the rate 
reductions.
    11. Checklist item 4--Unbundled local loops. SWBT satisfies the 
requirements of checklist item 4 in both Kansas and Oklahoma. Local 
loops are the wires that connect the telephone company end office to 
the customer's home or business. To satisfy the nondiscrimination 
requirement under checklist item 4, SWBT 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 
of a quality similar to that which it provides for its own retail 
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.
    12. SWBT 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, SWBT 
establishes that it provides coordinated cutovers of voice grade loops, 
i.e., hot cuts, in a manner that permits competing carriers a 
meaningful opportunity to compete. SWBT's performance in Kansas and 
Oklahoma on hot cut timeliness appears consistent with its current 
performance in Texas, where SWBT uses the same CHC process. Moreover, 
upon review of the evidence in the record regarding hot cut 
installation quality, and specifically the outage rate associated with 
failed SWBT CHCs, and the trouble rate following CHC installation, we 
find that SWBT demonstrates that it provisions CHCs in a manner that 
meets the requirements of this checklist.
    13. SWBT also establishes that it provides competing carriers with 
voice grade unbundled loops through new stand-alone loops in 
substantially the same time and manner as SWBT does for its own retail 
services. Moreover, SWBT demonstrates that it provides maintenance and 
repair functions for competing carriers in substantially the same time 
and manner as it provides for SWBT retail customers for both hot cut 
loops and new stand-alone loops. SWBT also demonstrates that it 
provides xDSL-capable loops to competing carriers in a 
nondiscriminatory manner, providing timely order processing and 
installation that provides an efficient competitor a meaningful 
opportunity to compete. Furthermore, SWBT demonstrates that it provides 
maintenance and repair functions for competing carriers in 
substantially the same time and manner that it provides such services 
for SWBT retail customers.
    14. Checklist item 1--Interconnection. Based on the evidence in the 
record, we conclude that SWBT satisfies the requirements of checklist 
item 1 in both Kansas and Oklahoma. Pursuant to this checklist item, 
SWBT must allow other carriers to interconnect their networks to its 
network for the mutual exchange of traffic, using any available method 
of interconnection at any available point in SWBT's network. We find 
that SWBT demonstrates that it provides interconnection at any 
technically feasible point, including the option to interconnect at 
only one technically feasible point within a LATA, within its network. 
We likewise find that SWBT adequately demonstrates that it provides 
collocation in Kansas and Oklahoma in accordance with the Commission's 
rules. Furthermore, interconnection between networks must be equal in 
quality whether the interconnection is between SWBT and an affiliate, 
or between SWBT and another carrier. SWBT demonstrates that it provides 
interconnection that meets this standard.
    15. SWBT also offers interconnection in Kansas and Oklahoma to 
other telecommunications carriers at just, reasonable, and 
nondiscriminatory rates, in compliance with checklist item 1. SWBT's 
collocation rates meet the standards for interim rates set forth in our 
order approving SWBT's Texas section 271 application and Bell 
Atlantic's New York section 271 application. See Application of SWBT 
Texas for Authorization Under Section 271 of the Communications Act, 65 
FR 42361 (2000); Application of Bell Atlantic New York for 
Authorization Under Section 271 of the Communications Act, 64 FR 73555 
(1999). The mere presence of interim rates will not generally threaten 
a section 271 application so long as an interim solution to a 
particular rate dispute is reasonable under the circumstances, the 
state commission has demonstrated its commitment to our pricing rules, 
and provision is made for refunds or true-ups once permanent rates are 
set. Here, we find that the interim solutions adopted by the Kansas and 
Oklahoma Commissions are reasonable under the circumstances. The 
Oklahoma Commission rates, which are the Texas collocation rates based 
on a TELRIC model, are reasonable starting points for interim rates for 
the same carrier in an adjoining state. The Kansas Commission also made 
a reasonable attempt to set an interim TELRIC-based rate pending its 
final determination. The Kansas and Oklahoma Commissions have pending 
cost proceedings to set permanent rates for collocation, and each has 
ordered that the interim rates be subject to a true-up.
    16. Checklist item 6--Unbundled local switching. Based on the 
evidence in the record, we find that SWBT satisfies the requirements of 
checklist item 6 in both Kansas and Oklahoma. We find that SWBT 
satisfies the requirements of checklist item 6, because SWBT 
demonstrates that it provides competing carriers all of the features, 
functions, and capabilities of

[[Page 8599]]

the switch. With regard to the provision of unbundled packed switching, 
SWBT demonstrates that it has a legal obligation in Kansas and Oklahoma 
to provide packet switching according to the rules set forth in the UNE 
Remand Order. See Revision of the Commission's Rules Specifying the 
Portions of the Nation's Local Telephone Networks That Incumbent Local 
Telephone Companies Must Make Available to Competitors, 65 FR 2542 
(2000).
    17. Checklist item 8--White pages directory listings. SWBT 
satisfies the requirements of checklist item 8 in both Kansas and 
Oklahoma. This checklist item ensures that white pages listings for 
customers of different carriers are comparable, in terms of accuracy 
and reliability, notwithstanding the identity of the customer's 
telephone service provider. SWBT 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.
    18. Checklist item 13--Reciprocal compensation. SWBT satisfies the 
requirements of checklist item 13 in both Kansas and Oklahoma. SWBT 
demonstrates that it has reciprocal compensation arrangements in 
accordance with section 252(d)(2), and that it is making all required 
payments in a timely manner. Given that the Commission had not yet 
determined the status of ISP-bound traffic, refusing to pay reciprocal 
compensation does not violate the requirements of checklist item 13 at 
the present time.
    19. Checklist item 14--Resale. SWBT demonstrates that it makes 
telecommunications services available for resale in accordance with 
sections 251(c)(4) and 252(d)(3), and thus satisfies the requirements 
of checklist item 14 in both Kansas and Oklahoma. SWBT also makes its 
retail telecommunications services available for resale without 
unreasonable or discriminatory conditions or limitations. We also find 
that SWBT satisfies the provisioning requirements of checklist item 14 
in both Kansas and Oklahoma because SWBT provisions competitive LECs' 
orders for resale in substantially the same time and manner as for its 
retail customers.
    20. Checklist items 3, 5, 7, 9, 10, 11 and 12. An applicant under 
section 271 must also demonstrate that it complies with checklist item 
3 (poles, ducts, conduits and rights of way), item 5 (unbundled local 
transport), item 7 (911/E911 access and directory assistance/operator 
services), item 9 (numbering administration), item 10 (databases and 
associated signaling), item 11 (number portability), and item 12 (local 
dialing parity). Based upon the evidence in the record, we conclude 
that SWBT demonstrates that it is in compliance with checklist items 3, 
5, 7, 9, 10, 11 and 12 in both Kansas and Oklahoma. The Kansas and 
Oklahoma Commissions also conclude that SWBT complies with the 
requirements of each of these checklist items.
    21. Section 272 compliance. SWBT demonstrates that it will comply 
with the requirements of section 272. Pursuant to section 271(d)(3), 
SWBT must demonstrate that it will comply with the structural, 
transitional, and nondiscriminatory requirements of section 272, as 
well as certain requirements governing its marketing arrangements. SWBT 
shows that it will provide interLATA telecommunications through 
structurally separate affiliates, and that it will operate in a 
nondiscriminatory manner with respect to these affiliates and 
unaffiliated third parties. In addition, SWBT demonstrates that it will 
comply with public disclosure requirements of section 272, which 
requires SWBT to post on the Internet certain information about 
transactions with its affiliates. Finally, SWBT demonstrates compliance 
with the joint marketing requirements of section 272.
    22. 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.
    23. 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 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 also find that the record 
confirms our view that a BOC's 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.
    24. We also find that the performance monitoring and enforcement 
mechanisms developed in Kansas and Oklahoma, in combination with other 
factors, provide meaningful assurance that SWBT 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 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.
    25. Section 271(d)(6) enforcement authority. Congress sought to 
create incentives for BOCs to cooperate with competitors 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 
last competition in local markets.

Federal Communications Commission.
Shirley Suggs,
Chief, Publications Group.
[FR Doc. 01-2748 Filed 1-31-01; 8:45 am]
BILLING CODE 6712-01-U