[Federal Register Volume 66, Number 228 (Tuesday, November 27, 2001)]
[Notices]
[Pages 59249-59252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-29501]


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FEDERAL COMMUNICATONS COMMISSION

[CC Docket No. 01-194; FCC 01-338]


Joint Application by SBC Communications Inc., Southwestern Bell 
Telephone Company, and Southwestern Bell Communications Services, Inc. 
d/b/a Southwestern Bell Long Distance To Provide In-Region, InterLATA 
Service in the States of Arkansas and Missouri

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 Arkansas and Missouri. The 
Commission grants SWBT's application based on our conclusion that 
Southwestern Bell satisfies all of the statutory requirements 
established by Congress in section 271 of the Communications Act.

DATES: Effective November 26, 2001.

FOR FURTHER INFORMATION CONTACT: Scott Bergmann, Legal Counsel, Common 
Carrier Bureau, at (202) 418-1580, or via the 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, SW., 
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 November 16, 2001, 
and released November 16, 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, Qualex International 
Transcription Service Inc. (ITS), CY B-402, 445 12th Street, SW., 
Washington, DC.

[[Page 59250]]

Synopsis of the Memorandum Opinion and Order

    1. History of the Application. On August 20, 2001, 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 Arkansas and Missouri.
    2. The State Commissions' Evaluations. The Arkansas Public Service 
Commission and Missouri Public Service 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 September 24, 
2001. In its evaluation, the Department of Justice raised concerns 
about pricing of interconnection and unbundled network elements (UNEs) 
in Missouri. Second, the Department of Justice raised concerns about 
SWBT's ability to provide non-discriminatory access to its maintenance 
and repair functions and finally suggests that performance problems may 
occur in after section 271 approval in Arkansas because of the limited 
enforcement authority of the Arkansas Commission. The Department of 
Justice recognized that the Commission may gather additional 
information on these issues during the pendency of the application, and 
``may therefore be able to assure itself that the remaining questions 
have been answered and may be in a position to approve SBC's [SWBT's] 
joint application.''
    4. Compliance with Section 271(c)(1)(A). In order for the 
Commission to approve a BOC's application to provide in-region 
InterLATA services a BOC must first demonstrate that it satisfies the 
requirements of either section 271(c)(1)(A) (Track A) or section 
271(c)(1)(B) (Track B). To qualify for Track A, a BOC must have 
interconnection agreements with one or more competing providers of 
``telephone exchange service * * * to residential and business 
subscribers.'' We conclude that SWBT demonstrates that it satisfies 
Track A in Arkansas based on the interconnection agreements it has 
implemented with ALLTEL. Although commenters dispute the exact number 
of residential and business subscribers in Arkansas, the Commission 
concludes that a sufficient number of customers are being served by 
ALLTEL through the use of their own facilities. No commenter has 
challenged SWBT's claim regarding the number of customers served by 
ALLTEL. With respect to Missouri, the Commission concludes that SWBT 
demonstrates that it satisfies the requirements of Track A based upon 
interconnection agreements it has implemented with AT&T and WorldCom. 
No commenter has challenged SWBT's assertion that it qualifies for 
Track A in Missouri.
    5. Checklist Item 2--Access to Unbundled Network Elements. We 
conclude that SWBT satisfies the requirements of checklist item 2 in 
both Arkansas and Missouri. For 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, and 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 find that SWBT provides non-discriminatory access to its 
OSS in Arkansas and Missouri.
    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, the Commission finds that SWBT provides carriers in 
Arkansas and Missouri nondiscriminatory access to all pre-ordering 
functions and enables carriers to integrate pre-order and pre-ordering 
functions through DataGate and VeriGate. Navigator, nevertheless 
suggests that it experiences a variety of problems when attempting to 
reserve a telephone number using VeriGate. We find that Navigator's 
claims do not overcome the detailed affidavit and performance data 
evidence submitted by SWBT that indicates that VeriGate and other SWBT 
systems operate properly.
    7. In addition, with respect to maintenance and repair, the 
Commission finds that SWBT demonstrates that it provides 
nondiscriminatory access to the maintenance and repair OSS functions. 
While commenters raise questions about the functioning of the SWBT's 
maintenance and repair databases, we find that those potential 
deficiencies have not had a significant effect on competitive entry in 
Arkansas and Missouri and as such do not warrant a finding of 
noncompliance with checklist item 2.
    8. 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 access to its OSS by showing that it has an adequate 
change management process in its five-state region, which includes 
Arkansas and Missouri. The Commission finds that SWBT provides carriers 
with nondiscriminatory access to functionality of it billing systems.
    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 Arkansas and Missouri, 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, the Commission finds that SWBT satisfies the pricing 
requirements of checklist item 2 in both Arkansas and Missouri. 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

[[Page 59251]]

find that SWBT's recurring charges for UNEs made available in both 
Arkansas and Missouri are just and reasonable and nondiscriminatory in 
compliance with checklist item 2. The Commission finds that SWBT's 
voluntarily-reduced rates in Missouri fall within a reasonable range of 
what TELRIC based ratemaking would produce, based upon comparisons 
between SWBT's rates in Missouri and SWBT's previously approved rates 
in Texas. We also find that SWBT passes this checklist item in Arkansas 
by adopting in whole the Kansas rates, which we previously reviewed and 
accepted in SWBT's Kansas 271 proceeding, and by showing that Arkansas 
costs are the same or higher than costs in Kansas. The Missouri and 
Arkansas Commissions concluded separately that SWBT satisfies this 
checklist item. The Department of Justice originally expressed concerns 
about SWBT's recurring rates in SWBT's first Missouri 271 application 
and urged the Commission to independently determine whether the prices 
were appropriately cost-based, but the Department of Justice did not 
specifically recommend denial based upon pricing. In its evaluation of 
SWBT's second Missouri application filed jointly with Arkansas, the 
Department of Justice stated that its original concerns would be moot 
if the Commission determines that the current rates are set within a 
reasonable total element long run incremental cost (TELRIC) range.
    11. Checklist Item 4 `` Unbundled Local Loops. SWBT satisfies the 
requirements of checklist item 4 in both Arkansas and Missouri. 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 
demonstrates that it provides unbundled local loops in accordance with 
the requirements of section 271 and our rules. The Commission's 
conclusion is based upon our review of SWBT's performance for all loop 
types, which include, as in past section 271 orders, voice grade loops, 
hot cuts, xDSL-capable loops, digital loops, high capacity loops and 
our review of SWBT's process for line sharing and line splitting. 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.
    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 Arkansas and Missouri. 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. The Commission has concluded that SWBT demonstrates that it is 
in compliance with the requirement of this checklist item. SWBT 
provides interconnection at any technically feasible point, including 
the option to interconnect at only one technically feasible point 
within a LATA, within its network. 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. We reject arguments raised in the initial Missouri proceeding 
that SWBT does not meet this checklist item due to interconnection 
installation performance. We find that these allegations are not 
substantiated in the current performance measures, which indicate that 
SWBT is providing installation of interconnection trunks to CLECs with 
far fewer missed due dates than it provides to itself.
    15. SWBT also offers interconnection in Arkansas and Missouri 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).
    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 Arkansas and Missouri. The Commission finds 
that SWBT satisfies the requirements of checklist item 6, and note that 
the Arkansas and Missouri Commissions found that SWBT satisfies this 
checklist item. SWBT demonstrates that it provides competing carriers 
all of the features, functions, and capabilities of the switch. We 
reject Sage's arguments that the Commission should deny SWBT's 271 
application for Missouri because SWBT refuses to allow access to the 
line class codes and/or other features of the SWBT switch that are used 
to provide extended calling area scopes, such as SWBT's Local Calling 
Plus service. Based on the record before us, it appears that there is a 
factual dispute between Sage and SWBT that would be better resolved in 
another proceeding.
    17. 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 Missouri and Arkansas. SWBT also makes its 
retail telecommunications services available for resale without 
unreasonable or discriminatory conditions or limitations.
    18. Checklist Items 3, 5, 7, 8, 9, 10, 11, 12 and 13. 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 8

[[Page 59252]]

(White Page Directory Listing), item 9 (numbering administration), item 
10 (databases and associated signaling), item 11 (number portability), 
item 12 (local dialing parity), and item 13 (reciprocal compensation). 
Based upon the evidence in the record, we conclude that SWBT 
demonstrates that it is in compliance with checklist items 3, 5, 7,8, 
9, 10, 11, 12 and 13 in both Arkansas and Missouri. The Arkansas and 
Missouri Commissions also conclude that SWBT complies with the 
requirements of each of these checklist items.
    19. 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.
    20. 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.
    21. 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.
    22. We also find that the performance monitoring and enforcement 
mechanisms developed in Arkansas and Missouri, 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.
    23. 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.
William F. Caton,
Deputy Secretary.
[FR Doc. 01-29501 Filed 11-26-01; 8:45 am]
BILLING CODE 6712-01-P