[Federal Register Volume 68, Number 169 (Tuesday, September 2, 2003)]
[Rules and Regulations]
[Pages 52276-52306]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-22193]



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Part II





Federal Communications Commission





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47 CFR Part 51



Review of the Section 251 Unbundling Obligations of Incumbent Local 
Exchange Carriers; Implementation of the Local Competition Provisions 
of the Telecommunications Act of 1996; Deployment of Wireline Services 
Offering Advanced Telecommunications Capability; Final Rule and 
Proposed Rule

  Federal Register / Vol. 68, No. 169 / Tuesday, September 2, 2003 / 
Rules and Regulations  

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 51

[CC Docket Nos. 01-338; CC Docket No. 96-98; CC Docket No. 98-147; FCC 
03-36]


Review of the Section 251 Unbundling Obligations of Incumbent 
Local Exchange Carriers; Implementation of the Local Competition 
Provisions of the Telecommunications Act of 1996; Deployment of 
Wireline Services Offering Advanced Telecommunications Capability

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) adopts rules which establish a new standard for 
determining the existence of impairment under section 251(d)(2) of the 
Act, sets forth a new list of unbundled network elements (UNEs), and 
creates a specifically defined role for the states in the unbundling 
inquiry. The new interpretation of the ``impair'' standard in section 
251(d)(2) finds a requesting carrier to be impaired when lack of access 
to a facility in the incumbent LEC's network poses a barrier or 
barriers to entry, including operational and economic barriers, that 
are likely to make entry into a market uneconomic. The Commission 
reaffirms that the ``at a minimum'' language of section 251(d)(2) 
permits the Commission to take into account factors other than the 
``impair'' and ``necessary'' standards, particularly important goals of 
the 1996 Act, when making unbundling determinations. The Commission 
applies its unbundling analysis to individual elements in a more 
granular manner than before. Under this more granular approach, the 
Commission determines whether impairment varies by geographic location, 
customer class, and service, including a consideration of the type and 
capacity of the facilities to be used.

DATES: Effective October 2, 2003.

FOR FURTHER INFORMATION CONTACT: Jeremy Miller, Attorney-Advisor, 
Wireline Competition Bureau, at (202) 418-1580 or via the Internet at 
[email protected]. The complete text of this Report and Order and Order 
on Remand is available for inspection and copying during normal 
business hours in the FCC Reference Information Center, Portals II, 445 
12th Street, SW., Room CY-A257, Washington, DC 20554. Further 
information may also be obtained by calling the Wireline Competition 
Bureau's TTY number: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order and Order on Remand in CC Docket No. 01-338, CC Docket No. 
96-98, and CC Docket No. 98-147; FCC 03-36, adopted February 20, 2003, 
and released August 21, 2003. The full text of this document may be 
purchased from the Commission's duplicating contractor, Qualex 
International, Portals II, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554, telephone (202) 863-2893, facsimile (202) 863-
2898, or via e-mail [email protected]. It is also available on the 
Commission's Web site at http://www.fcc.gov/Bureaus/ Wireline--
Competition/in-region--applications.

Synopsis of the Report and Order and Order on Remand

    1. Background. In the Notice of Proposed Rulemaking (NPRM) (67 FR 
1947, Jan. 15, 2002), the Commission sought comment on many issues 
concerning the unbundling obligations of incumbent local exchange 
carriers (LECs) under section 251(c)(3) of the Communications Act of 
1934, as amended by the Telecommunications Act of 1996 (the Act). After 
the Commission issued the NPRM, the United States Court of Appeals for 
the District of Columbia Circuit issued its opinion in United States 
Telecom Association v. FCC (USTA), in which it vacated and remanded the 
Commission's prior unbundling rules. The Commission issues this Report 
and Order and Order on Remand (Order) to complete the rulemaking it 
began with the NPRM and respond to the D.C. Circuit's concerns 
regarding the prior rules.
    2. Section 251(c)(3) of the Act requires that incumbent LECs 
provide UNEs to other telecommunications carriers. Section 153(29) of 
the Act defines ``network element'' as ``a facility or equipment used 
in the provision of a telecommunications service,'' specifying that 
``[s]uch term also includes features, functions, and capabilities that 
are provided by means of such facility or equipment, including 
subscriber numbers, databases, signaling systems, and information 
sufficient for billing and collection or used in the transmission, 
routing, or other provisions of a telecommunications service.'' Section 
251(d)(2) of the Act establishes a general federal standard for use in 
determining the UNEs that must be made available by the incumbent LECs 
pursuant to section 251. Section 251(d)(2) provides that ``[i]n 
determining what network elements should be made available for purposes 
of section (c)(3), the Commission shall consider, at a minimum, whether 
`` (A) access to such network elements as are proprietary in nature is 
necessary; and (B) the failure to provide access to such network 
elements would impair the ability of the telecommunications carrier 
seeking access to provide the services that it seeks to offer.''
    3. In addition, the Act preserves a state role in addressing 
unbundling issues. First, section 252 authorizes states to review and 
to arbitrate interconnection agreements for compliance with the 
requirements of sections 251 and 252 and this Commission's implementing 
rules. Second, section 251(d)(3) also preserves states' independent 
state law authority to address unbundling issues to the extent that the 
exercise of that authority does not conflict with federal law.
    4. Definition of Network Element. The Commission interprets the 
definition of ``network element'' in section 153(29) to refer to an 
element of the incumbent's network that is capable of being used to 
provide a telecommunications service.
    5. Impair Standard. The Commission finds a requesting carrier to be 
``impaired'' under section 251(d)(2) when lack of access to an 
incumbent LEC network element poses a barrier or barriers to entry, 
including operational and economic barriers, that are likely to make 
entry into a market uneconomic. This granular analysis is informed by 
consideration of the relevant barriers to entry, as well as a careful 
examination of the evidence, especially marketplace evidence showing 
whether entry has already occurred in particular markets without 
reliance on the incumbent LEC's networks but instead through self-
provisioning or reliance on third-party sources.
    6. Several types of barriers to entry inform the ``impair'' 
analysis. Scale economies, particularly when combined with sunk costs 
and first mover advantages, can pose a powerful barrier to entry. The 
Commission will consider the pervasiveness of scale economies to 
determine whether, in combination with other factors, they are likely 
to make entry uneconomic. For similar reasons, the Commission also 
examines scope economies to determine whether they, too, could 
contribute to a barrier to entry. Sunk costs, particularly when 
combined with scale economies, can pose a formidable barrier to entry. 
First mover advantages can contribute to the factors described above. 
First mover advantages can include preferential access to buildings, 
access to rights of way, the higher risk of a new entrants'

[[Page 52277]]

failure (often exacerbated by high sunk costs), the fact that the 
incumbent LEC has substantial sunk capacity, operational difficulties 
faced by an entrant that have already been worked out by the incumbent 
LEC when it built out its network as a monopolist, consumers' 
reluctance to switch carriers, and advertising and brand name 
preference. The Commission also examines those barriers to entry that 
are solely or primarily within the control of the incumbent LEC. The 
Commission looks to these barriers because it is within the control of 
the incumbent LEC to eliminate them or mitigate their effects, which 
could eliminate the need to unbundle network elements to overcome them.
    7. Evidence of Impairment. Actual marketplace evidence is the most 
persuasive and useful kind of evidence submitted to show that 
impairment does not exist, in particular granular evidence that new 
entrants are providing retail services in the relevant market using 
non-incumbent LEC facilities. The Commission gives substantial weight 
to evidence of alternative deployment, but will not find it conclusive 
or presumptive of no impairment without additional information. On the 
other hand, if the marketplace evidence shows that new entrants have 
not widely deployed a particular kind of facility, the Commission will 
consider the facts as some evidence that barriers to entry in that 
market for that element are preventing the deployment, but will not 
presume from lack of entry or lack of deployment, however, that there 
are barriers to entry in the relevant market, or that any barriers 
cannot be overcome through means other than unbundling without further 
analysis. The Commission also gives weight to evidence that intermodal 
alternatives can be used to provide telecommunications service.
    8. The application of the ``impair'' standard does not change 
depending on whether a new entrant is providing retail or wholesale 
services. The Commission also reaffirms its prior conclusion in the UNE 
Remand Order, 65 FR 2367 (Jan. 14, 2000) to afford little weight to 
evidence that requesting carriers are using incumbent LEC tariffed 
services.
    9. Granularity of the Impairment Analysis. In the NPRM, the 
Commission asked many questions about whether and how to make the 
unbundling analysis more granular by considering such factors as 
specific services, specific geographic locations, the different types 
and capacities of facilities, and customer and business considerations. 
Subsequently, the USTA decision directed the Commission to approach the 
section 251(d)(2) impairment analysis by considering market-specific 
variations in impairment. The Commission applies several types of 
granularity in the unbundling analysis, including considerations of 
customer class, geography, and service. In addition, within discussions 
of specific network elements, the Commission injects granularity into 
the analysis by considering types and capacities of facilities.
    10. In particular, with regard to customer class, the Commission 
finds that the economic characteristics of the mass market and 
enterprise market can be sufficiently different that they constitute 
major market segments. With regard to geographic granularity, the 
Commission considers whether impairment varies geographically 
throughout the country. In those instances where the record permits the 
Commission to create unbundling rules that apply nationally, it does 
so. In other instances, the Commission may delegate authority to state 
commissions to ensure that the unbundling rules are implemented on the 
most accurate level possible while still preserving administrative 
practicality.
    11. Finally, with regard to the different services that competitors 
may wish to offer using UNEs, the Commission adopts an approach that 
obligates incumbent LECs to provide access to UNEs only when requesting 
carriers seek to use those elements to compete against those services 
that traditionally have been the exclusive domain of incumbent LECs, or 
``qualifying services.'' ``Qualifying services'' include, for example, 
local exchange service, such as POTS, and access services, such as 
special access using high-capacity circuits. Once a requesting carrier 
has obtained access to a UNE to provide a ``qualifying service,'' the 
carrier may use that UNE to provide any additional services, including 
non-qualifying telecommunications and information services. In order to 
gain access to a UNE under section 251(c)(3), a requesting carrier must 
provide a ``telecommunications service,'' and specifically a qualifying 
telecommunications service, over that UNE. The Commission has 
interpreted ``telecommunications services'' to mean services offered on 
a common carrier basis.
    12. Implicit Support Flows. In the USTA decision, the D.C. Circuit 
addressed the question of implicit support flows and their relationship 
to the Commission's decision making under section 251. The court 
concluded, among other things, that the Commission had not adequately 
explained its decision to adopt nationwide unbundling requirements in 
light of the implicit support flows found in telecommunications rates. 
In reaching this conclusion, the court expressed concerns about the 
Commission's approach to unbundling both in areas where the incumbent 
LEC's retail rates may exceed its costs (presumably referring to 
historic costs) and in areas where incumbent LEC retail rates may be 
below cost. By focusing on the economic and operational viability of 
entry in different market segments, the revised impairment standard 
addresses the issue of implicit support flows in a manner that is 
responsive to the concerns raised by the D.C. Circuit. At the same 
time, the Commission concludes that the statute is best interpreted as 
giving it considerable discretion to address the relationship between 
implicit support flows and its impairment analysis. In general terms, 
the new impairment standard provides that a requesting carrier is 
deemed to be impaired when lack of access to an incumbent LEC network 
element poses a barrier or barriers to entry, including operational and 
economic barriers, that are likely to make entry into a market 
uneconomic. The impairment standard is unlikely to result in 
unwarranted unbundling in the case of areas and services for which 
local exchange rates generally exceed the incumbent LEC's costs. In 
addition, were the impairment standard to require unbundling for 
services and areas with ``below cost'' rates where actual competitive 
entry does not take place, little harm would result. The statute 
contains an exemption from the unbundling requirements for rural 
carriers and provides for state modification or suspension of the 
unbundling requirements for incumbent carriers serving, in the 
aggregate, less than two percent of the nation's access lines. This 
allows the states to prevent any problems that they believe might 
result from unbundling requirements in these circumstances.
    13. The ``Necessary'' Standard. Section 251(d)(2) requires the 
Commission, in making its unbundling determination, to consider whether 
``access to such network elements as are proprietary in nature is 
necessary.'' The Commission determines to readopt the interpretation of 
``necessary'' that it gave in the UNE Remand Order: a proprietary 
network element is ``necessary'' if, taking into consideration the 
availability of alternative elements outside the

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incumbent's network, including self-provisioning by a requesting 
carrier or acquiring an alternative from a third-party supplier, lack 
of access to that element would, as a practical, economic, and 
operational matter, preclude a requesting carrier from providing the 
services it seeks to offer.
    14. ``At a Minimum''. Section 251(d)(2) provides that ``the 
Commission shall consider, at a minimum, whether * * * the failure to 
provide access to such network elements would impair the ability of the 
telecommunications carrier seeking access to provide the services that 
it seeks to offer.'' While this phrase permits the Commission to take 
factors other than ``necessary'' and ``impair'' into account in making 
the unbundling determination, the Commission applies ``at a minimum'' 
with restraint. In this Order, the Commission has not required the 
unbundling of any network element in the absence of impairment. But it 
has used this authority to inform its consideration of unbundling in 
contexts where some level of impairment may exist, but unbundling 
appeared likely to undermine important goals of the 1996 Act, such as 
in the analyses of fiber-to-the-home and hybrid loops.
    15. Role of the States. The 1996 Act--specifically sections 
251(d)(3) and 252(e)(3)--preserves the states' authority to establish 
unbundling regulations pursuant to state law as long as the exercise of 
state authority does not conflict with the Act and its purposes or 
substantially prevent the Commission's implementation. In addition, 
sections 261(b) and (c) generally preserve state authority to take 
action pursuant to state law, provided that such action is consistent 
with the Act and the federal framework. The Communications Act assigns 
the Commission the responsibility for establishing a framework to 
implement the unbundling requirements of section 251(d)(2). In this 
Order, the Commission creates rules for UNEs based on the impairment 
standard and marketplace developments over the past three years. The 
Commission recognizes that competition has evolved at a different pace 
in different geographic markets and for different market segments. 
Thus, to ensure that the proper degree of unbundling occurs, the 
Commission relies, in certain instances when such analysis is 
necessary, on market-by-market fact-finding determinations made by the 
states.
    16. While the Commission delegates to the states a role in the 
implementation of the federal unbundling requirements for certain 
network elements that require this more granular approach, the 
Commission makes clear that any action taken by the states pursuant to 
this delegated authority must be in conformance with the Act and the 
regulations set forth herein. The Commission also finds that the 1996 
Act preserved the states' authority to prescribe access obligations 
pursuant to state law in section 251(d)(3), but only to the extent that 
state laws or regulations do not conflict with or frustrate the Act and 
its purposes or substantially prevent the federal implementation 
regime.
    17. If a state commission fails to perform the granular inquiry 
this Commission delegates to it, any aggrieved party may petition this 
Commission to step into the state's role. Any carrier seeking 
Commission review of a state commission's failure to act shall file a 
petition with this Commission that explains with specificity the bases 
for the petition and information that supports the claim that the state 
has failed to act. The Commission will issue a public notice seeking 
comment on the petition and rule on the petition within ninety days 
from this public notice. If the Commission agrees that the state has 
failed to act, it will assume responsibility for the proceeding and 
make any findings in accordance with the rules set forth herein. These 
findings will be made nine months from the time the Commission has 
assumed responsibility for the proceeding.
    18. Parties that believe that a particular state unbundling 
obligation (imposed pursuant to state law) is inconsistent with the 
limits of section 251(d)(3)(B) and (C) may seek a declaratory ruling 
from this Commission. If a decision pursuant to state law were to 
require the unbundling of a network element for which the Commission 
has either found no impairment--and thus has found that unbundling that 
element would conflict with the limits in section 251(d)(2)--or 
otherwise declined to require unbundling on a national basis, it is 
unlikely that such decision would fail to conflict with, and thus would 
``substantially prevent'' implementation of the federal regime, in 
violation of section 251(d)(3)(C).
    19. Mass Market Loops. The Commission finds that requesting 
carriers are impaired on a national basis without unbundled access to 
an incumbent LEC's local loops used to provide narrowband services to 
the mass market. The Commission thus requires that incumbent LECs 
provide unbundled access to the complete transmission path comprised of 
a copper local loop between the central office and the customer's 
premises, including all intermediate devices (e.g., repeaters, load 
coils) used to establish the transmission path. This network element 
includes all local loops comprised of copper cable, whether in active 
service or deployed as spares. Incumbent LECs also must provide the 
requesting carriers with nondiscriminatory access to the same detailed 
loop information that is available to the incumbent LEC in the same 
time intervals it is provided to the incumbent LEC's retail operations.
    20. The Commission reaffirms the existing rules that require 
incumbent LECs to permit competing carriers to engage in line splitting 
where a competing carrier purchases the whole loop and provides its own 
splitter. For purposes of clarity and regulatory certainty, however, 
the Commission also adopts line splitting-specific rules, including the 
requirement that incumbent LECs modify their OSS to facilitate line 
splitting.
    21. The Commission requires incumbent LECs to provide unbundled 
access to their copper subloops, i.e., the distribution plant 
consisting of the copper transmission facility between a remote 
terminal and the customer's premises, including inside wire. To 
facilitate competitive LEC access to the copper subloop UNE, the 
Commission requires incumbent LECs to provide, upon a site-specific 
request, access to the copper subloop at a splice near their remote 
terminals. Unlike the Commission's previous subloop unbundling rules, 
the Commission does not require incumbent LECs to provide unbundled 
access to their feeder loop plant as stand-alone UNEs. The Commission 
expects, however, that incumbent LECs will develop wholesale service 
offerings for access to their fiber feeder, which would be subject to 
sections 201 and 202 of the Act.
    22. The Commission finds that unbundled access to conditioned, 
stand-alone copper loops is sufficient to overcome impairment for the 
provision of broadband services. Consequently, the Commission finds 
that, subject to the grandfather provision and transition period, 
incumbent LECs do not have to unbundle the high-frequency portion of 
the local loop (HFPL) for requesting telecommunications carriers.
    23. The Commission adopts an interim grandfathering rule to help 
alleviate the impact of the elimination of the HFPL UNE on competitive 
LECs and end user customers. Until the next biennial review, the 
Commission grandfathers all existing line sharing arrangements unless 
the respective competitive LEC discontinues providing

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xDSL service to the particular end user customer. During this interim 
period, the Commission directs incumbent LECs to charge the same price 
for access to the HFPL for those grandfathered customers as the 
incumbent LECs charged prior to the effective date of this Order.
    24. The Commission also adopts a three-year transition period for 
new line sharing arrangements of requesting carriers. During the first 
year, which begins on the effective date of this Order, competitive 
LECs may obtain new line sharing customers using the HFPL at recurring 
charge equal to 25 percent of the state-approved rates or the agreed-
upon rates in existing interconnection agreements for stand-alone 
copper loops for that location. During the second year, the recurring 
charge for access to the HFPL for customers acquired after the 
effective date of this Order will increase to 50 percent of the state-
approved rate or the agreed-upon rate in existing interconnection 
agreements for a stand-alone copper loop for that location. In the last 
year of the transition period, the recurring charge for access to the 
HFPL for those customers obtained after the effective date of this 
Order will increase to 75 percent of the state-approved rate or the 
agreed-upon rate for a stand-alone loop for that location. After the 
transition period, any new customer must be served through a line 
splitting arrangement, through use of a stand-alone copper loop, or 
through an arrangement that a competitive LEC has negotiated with the 
incumbent LEC to replace line sharing. If line sharing obligations are 
imposed by a state law decision after the effective date of this Order, 
any party that believes such decision is inconsistent with the limits 
of sections 251(d)(3)(B) and (C) may seek a declaratory ruling from 
this Commission.
    25. In addition, incumbent LECs are only required to provide access 
to the HFPL if the incumbent LEC is providing, and continues to 
provide, analog circuit-switched voiceband services on the loop over 
which the requesting carriers seeks access to provide ADSL service. In 
the event that the customer ceases purchasing voice service from the 
incumbent LEC, either the new voice provider or the xDSL provider, or 
both, must purchase the full stand-alone loop to continue providing 
xDSL service. Incumbent LECs may also maintain control over the loop 
and splitter equipment and functions.
    26. The Commission concludes that the level of impairment without 
access to fiber to the home (FTTH) loops varies depending on whether 
such loops are new loops or replacements of a pre-existing copper 
loops. The Commission does not require incumbent LECs to provide 
unbundled access to new FTTH loops for either narrowband or broadband 
services. Regarding ``overbuild'' deployment in which an incumbent LEC 
constructs fiber transmission facilities parallel to or in replacement 
of its existing copper plant, the Commission must ensure continued 
access to an unbundled transmission path suitable for providing 
narrowband services to customers served by FTTH loops. In this 
situation, incumbent LECs have the option to either (1) keep the 
existing copper loop connected to a particular customer location after 
deploying FTTH; or (2) provide unbundled access to a 64 kbps 
transmission path over its FTTH loop. Incumbent LECs do not have to 
offer unbundled access to overbuilt fiber loops for competing carriers 
to provide broadband services.
    27. The Commission finds that a blanket prohibition on the ability 
of incumbent LECs to retire any copper loops or subloops they have 
replaced with FTTH loops is unnecessary at this time because existing 
rules, with minor modifications, serve as adequate safeguards. Because 
the retirement of copper loop plant is a network modification that 
affects the ability of competitive LECs to provide service, the 
Commission clarifies that incumbent LECs must provide notice of such 
retirement in accordance with our rules. The Commission revises its 
network modification rules with respect to the retirement of copper 
loops to allow parties to file objections to the incumbent LEC's notice 
of such retirement on the basis that competitors will be denied access 
to the loop facilities required under our rules. This process does not 
preempt the ability of any state commission to evaluate an incumbent 
LEC's retirement of its copper loops to ensure that such retirement 
complies with any applicable state requirements.
    28. In making our unbundling determination for hybrid loops, the 
Commission considers both impairment and, through our section 251(d)(2) 
``at a minimum'' authority, additional factors. The Commission declines 
to require incumbent LECs to unbundle the next-generation network, 
packetized capabilities of their hybrid loops to enable requesting 
carriers to provide broadband services to the mass market. The 
Commission concludes that applying section 251(c) unbundling 
obligations to these next-generation network elements would blunt the 
deployment of advanced telecommunications infrastructure in direct 
opposition to the express statutory goals authorized in section 706 of 
the Telecommunications Act of 1996. Further, a primary benefit of 
unbundling hybrid loops--to spur competitive deployment of broadband 
services to the mass market--appears to be obviated to some degree by 
the existence of cable broadband service competitors, which have a 
leading position in the marketplace. The Commission thus does not 
require incumbent LECs to unbundle any transmission path over a fiber 
transmission facility between the central office and the customer's 
premises (including fiber feeder plant) that is used to transmit 
packetized information. Moreover, the Commission does not require 
incumbent LECs to provide unbundled access to any electronics or other 
equipment used to transmit packetized information over hybrid loops, 
such as the xDSL-capable line cards installed in DLC systems or 
equipment used to provide passive optical networking (PON) capabilities 
to the mass market.
    29. The Commission requires incumbent LECs to provide unbundled 
access to the entire non-packetized transmission path capable of voice-
grade service between the central office and customer's premises. This 
unbundling obligation for narrowband services is limited to the TDM-
based features, functions, and capabilities of these hybrid loops. 
Incumbent LECs may elect, instead, to provide homerun copper loops 
rather than a TDM-based narrowband pathway over their hybrid loop 
facilities if the incumbent LEC has not removed such loop facilities. 
The Commission further requires incumbent LECs to provide requesting 
carriers access to a transmission path over hybrid loops served by 
Integrated DLC systems.
    30. The Commission retains competitive LECs' existing right to 
obtain unbundled access to hybrid loops capable of providing DS1 and 
DS3 service. Incumbent LECs remain obligated to comply with the 
nondiscrimination requirements of section 251(c)(3) in their provision 
of loops to requesting carriers, including stand-alone spare copper 
loops, copper subloops, and the features, functions, and capabilities 
for TDM-based services over their hybrid loops. The Commission 
prohibits incumbent LECs from engineering the transmission capabilities 
of their loops in a way that would disrupt or degrade the local loop 
UNEs (either hybrid loops or stand-alone copper loops) provided to 
competitive LECs.

[[Page 52280]]

    31. Enterprise Market Loops. The Commission concludes that 
different economic characteristics affect alternative loop deployment 
according to whether the loop facility is dark fiber or ``lit'' fiber, 
as well as the loop capacity level. The Commission finds that incumbent 
LECs are no longer required to unbundle OCn loops, nationwide. 
Incumbent LECs must continue to offer, on a nationwide basis, unbundled 
access to dark fiber loops, DS3 loops (limited to two DS3 loops per 
requesting carrier per customer location) and DS1 loops, except at 
specified customer locations where state commissions have found no 
impairment based on federally-defined triggers within nine months of 
the effective date of this Order.
    32. Specifically, a state commission must determine that unbundling 
is no longer required at a specific customer location for dark fiber or 
DS3 loops when two or more unaffiliated competitive LECs have self-
provisioned their own transmission facilities at the same loop capacity 
level to that customer location. A state commission must determine that 
unbundling is no longer required at a specific customer location for 
DS3 loops or DS1 loops when two or more unaffiliated competitive 
providers offer wholesale loops at the same capacity level to 
competitive LECs at that customer location. State commissions have a 
continuing responsibility to conduct periodic granular reviews of 
impairment, which must be completed within six months of a petition to 
initiate each subsequent review.
    33. Subloops for Multiunit Premises Access. The Commission 
concludes that competitive carriers are impaired on a nationwide basis 
without access to unbundled subloops used to access customers in 
multiunit premises. Based on evidence in the record, the barriers faced 
by requesting carriers in accessing customers in multiunit premises are 
not unique to customers typically associated with the enterprise market 
residing in such premises but extend to all customers residing therein, 
including residential or other tenants typically associated with the 
mass market. Similarly, impairment is also not limited by the type or 
capacity of the loop the requesting carrier will provide. The 
Commission finds that incumbent LECs must offer unbundled access to 
subloops necessary to access wiring at or near multiunit customer 
premises, including the Inside Wire Subloop, i.e., all incumbent LEC 
loop plant between the minimum point of entry (MPOE) at a multiunit 
premise and the point of demarcation, regardless of the capacity level 
or type of loop the requesting carrier will provision to its customer. 
Unbundled access must be provided at any technically feasible 
accessible terminal at or near the multiunit premise, including but not 
limited to, a pole or pedestal, a network interface device (NID), the 
MPOE, the single point of interconnection (SPOI) or a feeder 
distribution interface. Upon notification by a requesting carrier that 
interconnection at a multiunit premise is required through a SPOI, an 
incumbent LEC is required to provide a SPOI at that multiunit premise 
if the incumbent LEC owns, controls or leases the wiring at such 
premise. A requesting carrier accessing a subloop on the incumbent 
LEC's network side of the NID obtains the NID functionality as part of 
that subloop.
    34. Network Interface Device (NID). The Commission concludes that 
the NID must remain available as a stand-alone unbundled network 
element as the means to enable a competitive LEC to connect its loop to 
customer premise inside wiring. The NID is the gateway to the consumer 
and thus a key element to local competition. The record shows that the 
NID may often be the only means through which a competitive LEC can 
provide facilities-based service to customers, particularly those 
located in multiunit premises. The NID is defined as any means of 
interconnecting the incumbent LEC's loop distribution plant to wiring 
at a customer premises location. Incumbent LECs must offer unbundled 
access to the NID on a stand alone basis to carriers requesting only 
stand-alone NID access. An incumbent LEC shall permit a requesting 
carrier to connect its loop facilities through the incumbent LEC's NID.
    35. Dedicated Transport. Pursuant to the approach of the NPRM, the 
Commission adopts in this Order a more granular unbundling analysis for 
transport facilities. See Review of the Section 251 Unbundling 
Obligations of Incumbent Local Exchange Carriers, 67 FR 1947 (2002) 
(proposed Jan. 15, 2002). As an initial matter, the Commission limits 
its definition of the dedicated transport network element to only those 
transmission facilities connecting incumbent LEC switches or wire 
centers as this provides a reasonable interpretation of an incumbent 
LEC's unbundling obligations. The Commission makes findings regarding 
impairment by evaluating the attributes of each capacity of transport 
and the effect of barriers to entry on each. It believes that its 
analysis of transport will create market certainty and provide 
incentives for competitive LECs to deploy and utilize alternate 
facilities. Specifically, based on the evidence in the record, the 
Commission makes the following determinations. First, due to the 
ability to self-deploy or utilize unbundled dark fiber or multiple 
unbundled DS3 circuits, the Commission finds on a national level that 
requesting carriers are not impaired without access to unbundled OCn 
transport facilities. Second, due to barriers to entry, including high 
sunk costs, and the general lack of alternatives in most areas, it 
finds on a national level that requesting carriers are impaired without 
access to unbundled dark fiber, DS3, and DS1 transport facilities. 
However, the record indicates that competitive dark fiber, DS3, and DS1 
transport facilities are available on a wholesale basis in some areas, 
and that competing carriers have deployed their own transport networks 
in some areas. Because the record is not sufficiently detailed 
concerning exactly where these facilities have been deployed, and 
because the nature of transport facilities requires a highly granular 
impairment analysis, the Commission establishes specific triggers for 
states to apply in conducting such an analysis. It establishes two ways 
for states to identify where requesting carriers are not impaired 
without unbundled transport: (1) By identifying specific point-to-point 
routes where carriers have the ability to use two or more alternatives 
to the incumbent's network, or (2) by identifying specific point-to-
point routes where three or more competing carriers have self-deployed 
transport facilities. The Commission delegates to state regulators the 
authority to make findings of fact within the scope of these triggers 
to identify on a more granular scale where carriers are not impaired 
without access to incumbent LEC unbundled transport. In addition to 
allowing a more precise finding of impairment, the Commission's 
analysis provides a roadmap for deregulation where regulation does not 
serve the goals of the Act.
    36. Local Circuit Switching. The Commission finds that, on the 
national level, competitive LECs are not impaired without access to 
unbundled local circuit switching when serving DS1 enterprise 
customers. DS1 enterprise customers are served using DS1 and above 
capacity facilities, or served by a sufficient number of DS0 lines that 
state commissions have determined they could be served using DS1 and 
above capacity facilities. The record reveals widespread switch 
deployment by competing carriers to serve the DS1 enterprise market and

[[Page 52281]]

establishes that, in most areas, competitive LECs can overcome barriers 
to serving enterprise customers in an economic manner using their own 
switching facilities in combination with unbundled loops. The 
Commission recognizes, however, that in particular markets special 
circumstances might give rise to impairment without access to unbundled 
local circuit switching for carriers serving DS1 enterprise customers. 
The Commission thus allows states 90 days from the effective date of 
this Order to petition the Commission to waive the finding of no 
impairment in individual markets based on specific operational and 
economic factors. State commissions have a continuing responsibility to 
conduct periodic reviews of impairment for carriers serving the DS1 
enterprise market.
    37. The Commission further concludes that, on the national level, 
competitive LECs are impaired without access to unbundled local circuit 
switching when serving mass market customers. The record indicates that 
there has been only minimal deployment of competitive LEC-owned 
switches to serve mass market customers, and that the characteristics 
of the mass market give rise to significant barriers to competitive 
LECs' use of self-provisioned switching to serve mass market customers. 
In particular, inherent difficulties arise from the incumbent LEC hot 
cut process for transferring DS0 loops, typically used to serve mass 
market customers, to competing carriers' switches. This national 
finding of impairment is subject to a more granular review by state 
commissions within nine months of the effective date of this Order. The 
state commission must find that competing LECs are not impaired in a 
particular market if either of two triggers are met: (1) Three or more 
competing carriers, unaffiliated with the incumbent carrier, each are 
using their own switches to serve mass market customers in the market 
or (2) two or more competing carriers, unaffiliated with the incumbent 
carrier, offer wholesale local circuit switching to carriers serving 
mass market customers in the market. If the triggers are not satisfied, 
the state commissions shall examine evidence of the potential for 
switch self-provisioning in the particular market, taking into account 
current switch deployment, revenues, costs, processes, network 
architecture, and the other factors that the Commission identified as 
potentially giving rise to impairment. If a state commission makes a 
finding of impairment in a particular market as a result of such a 
review, it must consider whether this impairment could be addressed by 
a narrower rule making unbundled switching temporarily available for a 
minimum of 90 days for customer acquisition purposes, rather than 
making unbundled switching available for an indefinite period of time. 
State commissions have a continuing responsibility to conduct periodic 
reviews of impairment for carriers serving the mass market.
    38. The Commission also requires state commissions to take steps to 
help mitigate the causes of impairment with respect to the mass market. 
Specifically, within nine months of the effective date of this Order, 
state commissions must approve and implement a seamless, low-cost 
process for transferring large volumes of mass market customers or 
issue detailed findings that such a ``batch cut'' process is 
unnecessary in a particular market.
    39. On an interim basis, pending state commission determinations 
pursuant to the framework described above, the Commission retains the 
rule that incumbent LECs are not obligated to provide unbundled local 
circuit switching to requesting carriers for serving customers with 
four or more DS0 loops in density zone one of the top fifty MSAs. 
Retaining this rule on a temporary basis minimizes the potential 
service disruptions that could occur from the changes adopted regarding 
local circuit switching if carriers were free to accumulate more DS0 
customers while states pursued their inquiries, only to risk losing 
those customers after the states had made their determinations.
    40. The Commission also establishes a transition plan to migrate 
the embedded customer base served using unbundled switching to an 
alternative service arrangement when unbundled local circuit switching 
is no longer made available. Competitive carriers must transfer their 
embedded base of enterprise customers to an alternative service 
arrangement within 90 days from the end of the 90-day state commission 
consideration period, unless a longer period is necessary to comply 
with a ``change of law'' provision in an applicable interconnection 
agreement.
    41. To the extent a state commission finds that competing LECs are 
not impaired without unbundled local circuit switching in serving mass 
market customers in a particular market, the Commission requires mass 
market carriers to commit to an implementation plan with the incumbent 
LEC within 2 months from the finding of no impairment. Within 5 months 
after a finding of no impairment, competitive LECs may no longer 
request access to unbundled local circuit switching. Competitive LECs 
are required to submit the necessary orders to transition their 
embedded base of unbundled local circuit switching customers, except 
rolling use customers, in accordance with the following schedule: (1) 
13 months after a finding of no impairment: Each competitive LEC must 
submit orders for one-third of all its unbundled local circuit 
switching end users; (2) 20 months after a finding of no impairment: 
Each competitive LEC must submit orders for half of its remaining 
unbundled local circuit switching end users; and (3) 27 months after a 
finding of no impairment: Each competitive LEC must submit orders for 
its remaining unbundled local circuit switching end users.
    42. Shared Transport. The Commission finds that shared transport 
and switching are inextricably linked. Therefore, the Commission finds 
that requesting carriers are impaired without access to unbundled 
shared transport to the extent that they are impaired without access to 
unbundled local circuit switching. Thus, state commissions in 
identifying impairment for unbundled circuit switching should also 
incorporate into their analyses the economic characteristics of shared 
transport.
    43. Packet Switching. Incumbent LECs are not required to unbundle 
packet switching, including routers and DSLAMs, as a stand-alone 
network element. The Order eliminates the current limited requirement 
for unbundling of packet switching.
    44. Signaling Networks. The Commission finds that, in the instances 
in which incumbent LECs will be required to provide access to switching 
as a UNE, carriers purchasing the switching UNE must also gain access 
to incumbent LEC signaling. In all other cases, however, the Commission 
determines that there are sufficient alternatives in the market 
available and competitive LECs are no longer impaired without access to 
signaling networks as UNEs for all markets. The Commission concludes 
that, in the last several years, the market for signaling networks has 
matured. The Commission explains that multiple alternative providers 
are available to provide rival signaling services to competitive LECs, 
and that several competitive carriers are building their own signaling 
network capabilities. Accordingly, the Commission finds that, for 
competitive carriers deploying their own switches, there are no 
barriers to obtaining signaling or self-provisioning signaling

[[Page 52282]]

capabilities. The Commission further finds that the appropriate level 
of granularity for its analysis to be at the national level and its 
conclusions apply equally to the mass market and the enterprise market.
    45. Call-Related Databases. The Commission finds that, competitive 
carriers deploying their own switches are not impaired in any market 
without access to incumbent LEC call-related databases, with the 
exception of the 911 and E911 databases. The Commission concludes that, 
for carriers deploying their own switches, there is evidence in the 
record of substantial numbers of competitive suppliers that competitive 
LECs can reliably utilize as an alternative to the incumbent LECs' 
services. In such instances where switching remains a UNE, however, the 
Commission finds that competitive carriers purchasing the switching UNE 
must be able to have access to signaling and the call-related databases 
that the signaling networks permit carriers to access, and if the 
incumbent LEC does not provide customized routing, to operator service 
and directory assistance. As with signaling, the Commission finds that 
the appropriate level of granularity for its analysis to be at the 
national level. The alternative call-related database networks are 
national and regional networks that competitive LECs will be able to 
use throughout the country. In addition, the Commission states that its 
conclusions apply equally to the mass market and the enterprise market.
    46. With regard to the specific call-related databases, the 
Commission finds that carriers deploying their own switches are not 
impaired without access to the incumbent LECs' CNAM and LIDB databases. 
The Commission concludes that carriers can either self provision or use 
alternative providers to obtain CNAM and LIDB database services. The 
Commission similarly concludes that carriers deploying their own 
switches are not impaired without access to the Toll-Free and LNP 
databases. Like CNAM and LIDB, the Commission determines that there are 
third-party vendors available to provide competitive carriers access to 
Toll-Free and LNP databases. With regard to AIN databases, the 
Commission also concludes that competitive carriers are no longer 
impaired without unbundled access to those databases if the carrier 
deploys its own switches. However, the Commission determines that all 
competitive carriers continue to be impaired on a national basis 
without access to the 911 and E911 databases and, therefore, the 
Commission requires that access to those databases continue to be 
unbundled.
    47. OSS Functions. The Commission finds that competitive LECs 
providing qualifying services continue to be impaired on a national 
basis without access to OSS functions, including: pre-ordering, 
ordering, provisioning, maintenance and repair, and billing functions 
supported by an incumbent LEC's databases and information. Accordingly, 
the Commission requires incumbent LECs to continue to provide unbundled 
access to OSS. The Commission states that this requirement includes an 
ongoing obligation on the incumbent LECs to make modifications to 
existing OSS as necessary to offer competitive carriers 
nondiscriminatory access and to ensure that the incumbent LEC complies 
with all of its network element, resale and interconnection obligations 
in a nondiscriminatory manner. In reaching this conclusion, the 
Commission finds that the systems, databases, and personnel that the 
incumbent LEC uses to provide OSS functions represent an extensive 
infrastructure that would be difficult, if not impossible, for 
competitors to duplicate. Accordingly, the Commission finds that 
competitive LECs are impaired without access to incumbent LECs' OSS. 
The Commission adopts an unbundling requirement for OSS functions on a 
national basis that applies equally to the mass market and the 
enterprise market.
    48. Combinations of Network Elements. The Commission reaffirms its 
existing rules requiring incumbent LECs to provide UNE combinations 
upon request where such combinations are technically feasible and do 
not undermine the ability of other carriers to access UNEs or 
interconnect with the incumbent LEC's network, and prohibiting 
incumbent LECs from separating UNE combinations that are ordinarily 
combined except upon request. The Commission concludes that incumbent 
LECs shall make UNE combinations, including unbundled loop-transport 
combinations, available in all areas where the underlying UNEs are 
available and in all instances where the requesting carrier meets the 
applicable eligibility requirements. Apart from the applicable service 
eligibility criteria for high-capacity circuits, incumbent LECs may not 
impose additional conditions or limitations, such as pre-audits or a 
requirement to purchase special access services which are subsequently 
converted to UNE combinations, to obtaining access to EELs and other 
UNE combinations.
    49. The Commission concludes that requesting carriers are permitted 
to commingle UNEs and combinations of UNEs with other wholesale 
facilities and services obtained from an incumbent LEC. Incumbent LECs, 
however, are not required to implement any changes to their systems to 
bill a single circuit at multiple rates in order to charge competitive 
LECs a single, blended rate.
    50. The Commission concludes that competitive LECs may both convert 
UNEs and UNE combinations to wholesale services and convert wholesale 
services to UNEs and UNE combinations, so long as the competitive LEC 
meets the applicable eligibility criteria. To the extent a competitive 
LEC fails to meet the eligibility criteria for serving a particular 
customer, the incumbent LEC may convert the UNE or UNE combination to 
the equivalent wholesale service in accordance with the procedures 
established between the parties.
    51. The Commission declines to require incumbent LECs to provide 
requesting carriers an opportunity to supersede or dissolve existing 
contractual arrangements governing loop-transport combinations. The 
Commission concludes, however, that incumbent LECs may not assess 
termination charges, re-connect and disconnect fees, or non-recurring 
charges associated with establishing a service for the first time 
because such charges deter legitimate conversions from wholesale 
services to UNEs or UNE combinations and unjustly enrich an incumbent 
LEC. Further, because incumbent LECs are never required to perform a 
conversion in order to continue serving their own customers, the 
Commission concludes that such charges are inconsistent with an 
incumbent LEC's duty to provide nondiscriminatory access to UNEs and 
UNE combinations on just, reasonable, and nondiscriminatory rates, 
terms, and conditions, and that such charges unlawfully subject 
competitive LECs purchasing UNEs or UNE combinations to undue or 
unreasonable prejudice or disadvantage.
    52. Service Eligibility Criteria to Access UNEs. The Order 
concludes that a carrier seeking access to an unbundled element of the 
incumbent LEC's network must provide qualifying service to a customer 
in order to obtain access to that facility pursuant to the Commission's 
section 251 unbundling rules. With respect to combinations of high-
capacity (DS1 and DS3) loops and interoffice transport only, the 
Commission adopts additional

[[Page 52283]]

eligibility criteria due to the potential for a provider of exclusively 
non-qualifying service to obtain access to these combinations at UNE 
prices.
    53. The Commission does not, however, impose these additional 
requirements on access to UNEs other than high-capacity EELs. To ensure 
that the Commission's rules on service eligibility are not gamed in 
whole or in part, the Commission makes clear that the service 
eligibility criteria must be satisfied (1) to convert a special access 
circuit to a high-capacity EEL; (2) to obtain a new high-capacity EEL; 
or (3) to obtain at UNE pricing part of a high-capacity loop-transport 
combination (commingled EEL).
    54. Service Eligibility Criteria for High-Capacity EELs. The Order 
concludes that where a requesting carrier satisfies the following three 
categories of criteria, it is a bona fide provider of qualifying 
services and thus is entitled to order high-capacity EELs. Requesting 
carriers must certify to meeting all three criteria (authorization, 
local number and E911 assignment, and architectural safeguards) to 
qualify for the high-capacity circuit, subject to the separate 
certification and auditing requirements.
    55. First, the Commission finds that each requesting carrier must 
have a state certification of authority to provide local voice service. 
Second, to demonstrate that it actually provides a local voice service 
to the customer over every DS1 circuit, the Commission finds that the 
requesting carrier must have at least one local number assigned to each 
circuit and must provide 911 or E911 capability to each circuit. To 
ensure the legitimacy of these assignments, the origination and 
termination of local voice traffic should not include a toll charge, 
and should not require dialing special digits beyond those normally 
required for a local voice call. Further, the Commission also clarifies 
that each DS1-equivalent circuit of a DS3 EEL must have its own local 
number assignment, so that each DS3 must have at least 28 local voice 
numbers assigned to it.
    56. Third, the Commission finds additional circuit-specific 
architectural safeguards to prevent gaming are necessary. Each circuit 
must terminate into a collocation governed by section 251(c)(6) at an 
incumbent LEC central office within the same LATA as the customer 
premises. In particular, for this collocation safeguard, the Order 
finds that termination of a circuit into a section 251(c)(6) 
collocation arrangement in an incumbent LEC central office is an 
effective tool to prevent arbitrage, because collocation is a necessary 
building block for providing local voice services and is traditionally 
not used by interexchange carriers. More specifically, because 
traditional interexchange configurations route long-distance traffic 
from a customer premises over tariffed channel termination and 
transport facilities directly to an interexchange point-of-presence, a 
section 251(c)(6) collocation requirement ensures that a carrier has 
set up an architecture that ensures that traffic can leave the 
incumbent network prior to hitting the POP. As further evidence that a 
carrier provides qualifying voice service, the collocation arrangement 
must be within the same LATA as the customer premises. The Commission 
determines that a requesting carrier can satisfy this prong through 
reverse collocation, and that any non-incumbent LEC collocation 
arrangement pursuant to section 251(c)(6) meets this test.
    57. As an additional indicator of providing local voice service, 
the Commission concludes that each EEL circuit must be served by an 
interconnection trunk in the same LATA as the customer premises served 
by the EEL, and that for every 24 DS1 EELs or the equivalent, the 
requesting carrier must maintain at least one active DS1 
interconnection trunk for the exchange of local voice traffic. As a 
further safeguard against gaming, where a requesting carrier strips off 
the calling party number on calls exchanged over the interconnection 
trunk, that trunk shall not be counted towards meeting the trunk/EEL 
ratio. The costs and difficulties of network configuration necessary to 
satisfy the interconnection and collocation requirements minimize the 
potential for these safeguards to be gamed; only a bona fide provider 
of qualifying local services would undertake these measures, all of 
which are a necessary precondition to compete directly against the 
incumbent LEC's voice service. The 24-to-1 EEL to interconnection trunk 
ratio provides a reliable gauge that the competitive LEC exchanges 
local traffic with the incumbent LEC in a manner that indicates that it 
is a bona fide provider of local voice service. The Commission finds 
that this ratio therefore provides a reasonable proxy for the capacity 
of interconnection that a bona fide provider of local voice service 
competing against the incumbent LEC would require.
    58. In addition, the Commission finds that each EEL circuit must be 
served by a Class 5 switch or other switch capable of providing local 
voice traffic. To ensure that the traffic carried over each EEL is not 
exclusively non-local, a requesting carrier must certify that the 
switching equipment is either registered as Class 5 or that it can 
switch local voice traffic.
    59. The Commission applies the service eligibility requirements on 
a circuit-by-circuit basis, so each DS1 EEL (or combination of DS1 loop 
with DS3 transport) must satisfy the service eligibility criteria. For 
a requesting carrier to obtain a DS3 EEL as a UNE, the requesting 
carrier must satisfy the criteria for service eligibility for the DS1-
equivalent circuit capacity of that DS3 EEL. The Commission is 
persuaded that while no single requirement can prevent gaming, the 
criteria the Commission adopts are collectively sufficient to restrict 
the availability of these UNE combinations to legitimate providers of 
local voice service.
    60. Certification and Auditing. The Commission concludes that 
requesting carriers may self-certify to satisfying the qualifying 
service eligibility criteria for high-capacity EELs. The Order does not 
specify the form for such a self-certification, but re-adopts the 
Commission's prior findings that a letter sent to the incumbent LEC by 
a requesting carrier is a practical method. The Order concludes that 
incumbent LECs may obtain and pay for an independent auditor to audit, 
on an annual basis, compliance with the qualifying service eligibility 
criteria. The independent auditor must perform its evaluation in 
accordance with the standards established by the American Institute for 
Certified Public Accountants (AICPA), which will require the auditor to 
perform an ``examination engagement'' and issue an opinion regarding 
the requesting carrier's compliance with the qualifying service 
eligibility criteria. To the extent the independent auditor's report 
concludes that the competitive LEC failed to comply with the service 
eligibility criteria, that carrier must true-up any difference in 
payments, convert all noncompliant circuits to the appropriate service, 
and make the correct payments on a going-forward basis.
    61. In addition, to the extent the independent auditor's report 
concludes that the competitive LEC failed to comply in all material 
respects with the service eligibility criteria, the competitive LEC 
must reimburse the incumbent LEC for the cost of the independent 
auditor. Similarly, to the extent the independent auditor's report 
concludes that the requesting carrier complied in all material respects 
with the eligibility criteria, the incumbent LEC must reimburse the 
audited carrier for its costs associated with the audit.

[[Page 52284]]

The Commission also expects that requesting carriers will maintain the 
appropriate documentation to support their certifications.
    62. Modification of Existing Network. The Commission concludes that 
incumbent LECs must make routine network modifications to unbundled 
transmission facilities used by requesting carriers where the requested 
transmission facility has already been constructed, meaning that 
incumbent LECs must perform those activities that incumbent LECs 
regularly undertake for their own customers. Routine modifications, 
however, do not include the construction of new wires for a requesting 
carrier. The Commission finds that loop modification functions that the 
incumbent LECs routinely perform for their own customers, and therefore 
must perform for competitors, include rearrangement or splicing of 
cable, and deploying a new multiplexer or reconfiguring an existing 
multiplexer. The Commission also concludes that incumbent LECs must 
provide access, on an unbundled basis, to xDSL-capable stand-alone 
copper loops because competitive LECs are impaired without such loops. 
Such access may require incumbent LECs to condition the local loop for 
the provision of xDSL-capable services by removing bridge taps and 
similar devices as part of this obligation. The Commission concludes 
that incumbent LECs are not obligated to construct transmission 
facilities so that requesting carriers can access them as UNEs at cost-
based rates. However, the Commission also clarifies that an incumbent 
LEC's unbundling obligation includes all deployed transmission 
facilities in its network, unless specifically exempted in the Order. 
To ensure that no incumbent LEC is obligated to build out facilities at 
TELRIC pricing, the Commission clarifies that the tariffed termination 
liabilities for special construction apply to the conversion of special 
access circuits built to customer specification.
    63. Section 271 Issues. The Commission concludes that BOCs have an 
independent obligation, under section 271(c)(2)(B), to provide access 
to each network element on section 271's ``competitive checklist'' even 
where that element is no longer required to be unbundled under section 
251(c)(3). This conclusion follows from the plain language and 
structure of section 271(c)(2)(B) and is a reasonable interpretation of 
the Act. Sections 251, 252 and 271 do not establish standards for the 
rates, terms and conditions of offerings pursuant to section 
271(c)(2)(B) alone. Rather, the offering of such network elements is 
governed by the just, reasonable and nondiscriminatory rate standards 
of sections 201 and 202. The Commission further concludes that 
following a grant of section 271 authorization, the BOC must continue 
to comply with any conditions required for approval, subject to changes 
in the law. It would be inconsistent with public policy to impose 
different--and potentially out-of-date or vacated--rules on BOCs based 
solely on the date of section 271 entry.
    64. Clarification of TELRIC Rules. The Order clarifies two key 
components of its TELRIC pricing rules to ensure that UNE prices send 
appropriate economic signals to incumbent LECs and competitive LECs. 
First, the Order clarifies that the risk-adjusted cost of capital used 
in calculating UNE prices should reflect the risks associated with a 
competitive market. The Order also reiterates the Commission's finding 
from the Local Competition Order that the cost of capital may be 
different for different UNEs. Second, the Order declines to mandate the 
use of any particular set of asset lives for depreciation, but 
clarifies that the use of an accelerated depreciation mechanism may 
present a more accurate method of calculating economic depreciation. In 
addition to these clarifications, the Order notes that the Commission 
plans to open a proceeding to consider issues related to its TELRIC 
pricing rules.
    65. Fresh Look. The Commission retains the determination made in 
the UNE Remand Order that it will not permit competitive LECs to avoid 
any liability under contractual early termination clauses in the event 
that it converts a special access circuit to a UNE. Although ``fresh 
look'' has occurred in the past, this rare exercise of Commission 
discretion is not appropriate here because it would be unfair to both 
incumbent LECs and other competitors, disruptive to the market place, 
and ultimately inconsistent with the public interest.
    66. Transition Period. The Commission will not intervene in the 
contract modification process to establish a specific transition period 
for each of the rules established in this Order. Instead, as 
contemplated in the Act, individual carriers will have the opportunity 
to negotiate specific terms and conditions necessary to translate our 
rules into the commercial environment, and to resolve disputes over any 
new contract language arising from differing interpretations of our 
rules.
    67. Periodic Review of National Unbundling Rules. The Commission 
will evaluate these rules consistent with the biennial review mechanism 
established in section 11 of the Act. These reviews, however, will not 
be performed de novo but according to the standards of the biennial 
review process.
    68. Duty to Negotiate in Good Faith. The Commission amends its 
duty-to-negotiate rule 51.301(c)(8)(ii) to make the rule conform to the 
text of the Local Competition Order.

Final Regulatory Flexibility Analysis

    69. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the Federal Register summary of the NPRM. The 
Commission sought written public comments on the proposals in the NPRM, 
including comments on the IRFA. Comments addressed the proposals 
contained in the NPRM, as well as the IRFA. This present Final 
Regulatory Flexibility Analysis (FRFA) addresses comments on the IRFA 
and conforms to the RFA.

Need for, and Objectives of, the Rules

    70. This Order fulfills the commitment the Commission undertook in 
its 1999 UNE Remand Order to reexamine, in three years, the list of 
network elements that incumbent LECs must offer to competitors on an 
unbundled basis, and responds to several significant judicial rulings 
that have been issued since the Commission last conducted a 
comprehensive review of its unbundling rules. More specifically, this 
Order refines the ``impair'' standard set forth in section 251(d)(2) of 
the Act, and applies the revised standard to an array of 
``transmission'' and ``intelligence'' network elements. The revised 
``impair'' standard is designed to reflect both the experience of the 
local service market during the seven years since the Act's market-
opening provisions took effect and the legal guidance mentioned above. 
Applying this standard, which pays special attention to the requesting 
carrier's ability to self-provision the element or to obtain it from a 
source other than the incumbent LEC, this Order adopts a list of 
network elements that must be unbundled and sets forth the particular 
circumstances in which unbundling will be required. The approach 
adopted is substantially more granular than our earlier formulations of 
the ``impair'' standard, accounting for considerations of customer 
class, geography, and service. This Order also reaffirms a state 
commission's authority to establish unbundling requirements, as long as 
the unbundling obligations are consistent with the requirements of 
section 251(d)(3) and do not

[[Page 52285]]

substantially prevent implementation of the requirements of that 
section and the purposes of the Act, and authorizes state commissions 
to make certain factual determinations necessary to implementation of 
the granular analysis we adopt here.

Summary of Significant Issues Raised by the Public Comments in Response 
to the IRFA

    71. In this section, the Commission responds to various arguments 
raised by TeleTruth, the National Federation of Independent Businesses 
(NFIB), and the Office of Advocacy of the Small Business Administration 
(SBA Advocacy) relating to the IRFA presented in the NPRM. It also 
addresses concerns raised by Senator (then-Representative) James Talent 
in a letter submitted in response to the UNE Remand Order, which was 
later incorporated into this proceeding. To the extent the Commission 
received comments raising general small business concerns during this 
proceeding, those comments are discussed throughout the Order and are 
summarized in Part X.A.5, below.
    72. As an initial matter, the Commission rejects the contention 
that it failed to consider the needs of small business customers of 
competitive LECs in fashioning the analysis set forth in this Order. It 
has grappled, throughout this proceeding and throughout this Order, 
with the consequences our determinations will have on all market 
participants, including small business providers and the small business 
end users about which TeleTruth, NFIB, SBA Advocacy, and Senator Talent 
express concern. The Commission has also considered various 
alternatives to the rules it adopts, and has stated the reasons for 
rejecting these alternative rules, as commenters have urged. A summary 
of our analysis regarding small business concerns, and of alternative 
rules that we considered in light of those concerns, is presented in 
subsection 5 of the FRFA, infra.
    73. Many of the complaints raised regarding the Commission's IRFA 
hinge on the argument that in performing the analysis mandated by the 
RFA, an agency must analyze the effects its proposed rules will have on 
``customers'' of the entities it regulates. But as the courts have made 
clear time and again, this is not the case. Indeed, the D.C. Circuit 
``has consistently held that the RFA imposes no obligation to conduct a 
small entity impact analysis of effects on entities which [the agency 
conducting the analysis] does not regulate.'' Thus, the RFA imposes no 
independent obligation to examine the effects an agency's action will 
have on the customers of the companies it regulates unless those 
customers are, themselves, subject to regulation by the agency. In any 
event, as noted above, we have considered the needs of small business 
customers of competitive (and incumbent) LECs throughout this Order. 
Our analysis of small business concerns is summarized in Part X.A.5, 
below.
    74. TeleTruth argues that the Commission has taken inadequate steps 
to notify small businesses of this and other proceedings, in violation 
of the RFA. The Commission disagrees. The RFA requires the Commission 
to ``assure that small entities have been given an opportunity to 
participate in the rulemaking,'' and proposes as example five 
``reasonable techniques'' that an agency might employ to do so. In this 
proceeding, the Commission has employed several of these techniques: it 
has published a ``notice of proposed rulemaking in publications likely 
to be obtained by small entities''; has ``inclu[ded] * * * a statement 
that the proposed rule may have a significant economic effect on a 
substantial number of small entities'' in the NPRM; has solicited 
comments over its computer network; and has acted ``to reduce the cost 
or complexity of participation in the rulemaking by small entities'' 
by, among other things, facilitating electronic submission of comments. 
The Commission thus concludes that it has satisfied its RFA obligation 
to assure that small companies were able to participate in this 
proceeding.
    75. TeleTruth further contends that the Commission's IRFA was 
flawed by its use of ``boilerplate'' language that differed little from 
the language used in the IRFAs prepared for other proceedings. However, 
the only language it cites does not even appear in the IRFA prepared 
for this proceeding. Moreover, TeleTruth has suggested no reason why 
the use of similar language in several proceedings is at all 
problematic. Indeed, the particular language about which it complains 
merely describes the ``number of telephone companies affected'' by a 
given proceeding-- a class that is likely to differ little, if at all, 
among industry-wide rulemakings such as this.
    76. TeleTruth next complains that the IRFA used outdated census 
data from 1992 in estimating the number of small businesses that might 
be affected by the Commission's decisions here. While certain 1997 
census data became available in late 2000 and were not incorporated 
into the previous NPRM, this updating would not, we believe, have 
affected a small entity's decisions concerning IRFA. This more recent 
data are reflected in subsection 3 of the FRFA, infra.
    77. TeleTruth also contends that ``[a] true IRFA analysis about 
small business telecom competitors would conclude that the current FCC 
is in violation of the Telecom Act and all of its provisions'' because 
the Commission purportedly has failed to enforce its local competition 
rules. Such an assertion falls outside the scope of this rulemaking 
proceeding and our analysis herein. Complaints regarding carriers' 
compliance with the Commission's Rules are properly addressed in other 
venues. For example, section 208 of the Communications Act specifically 
permits small businesses and other entities to lodge complaints 
regarding other carriers' activities, and to seek enforcement of 
Commission regulations. Also, to the extent an incumbent LEC's 
obligations under section 251 are implemented through interconnection 
agreements, those obligations are enforceable as a matter of contract 
law through the courts.
    78. TeleTruth next argues the RFA requires ``an impact study on how 
[an agency's regulations] will harm small businesses,'' and that ``the 
FCC has not done anything of the sort for this proceeding.'' The 
Commission disagrees: the RFA requires us to provide precisely the 
information contained in this FRFA, but does not mandate a separate 
``impact study.'' The Commission has therefore satisfied its RFA 
obligations.
    79. In a letter challenging the UNE Remand Order, Senator Talent 
argued that that Order violated section 3(a)(2)(C) of the Small 
Business Act. Specifically, Senator Talent noted that the UNE Remand 
Order differentiated between businesses that used fewer than four 
access lines and those that used four or more lines, in contravention 
of the Small Business Act's directive that ``unless specifically 
authorized by statute, no Federal department or agency may prescribe a 
size standard for categorizing a business concern as a small business 
concern,'' unless certain procedural requirements are satisfied. In the 
present Order, our action does not establish any special small business 
size standard.
    80. TeleTruth and Senator Talent suggest that section 257 of the 
Act dictates a particular substantive result in this matter. 
Specifically, TeleTruth claims that this ``Triennial Review is mandated 
in Section [257(c)],'' and requires an outcome favorable to 
entrepreneurs and small businesses. Senator Talent argued that in 
limiting the class of elements subject to section

[[Page 52286]]

251(c), the UNE Remand Order ``erected a new barrier to entry'' by 
small business carriers, and consequently violated section 257 of the 
Communications Act. Section 257, however, did not mandate this 
proceeding and in no way cabins this Commission's exercise of its 
authority to adopt rules implementing the Act. Section 257 required the 
Commission to conduct a proceeding designed to identify and eliminate 
``market entry barriers for entrepreneurs and other small businesses in 
the provision and ownership of telecommunications services and 
information services'' within 15 months of the enactment of the 1996 
Act, and periodically to review its regulations and report to Congress 
on any such barriers. The Commission concluded the requisite proceeding 
in 1997 and issued its first subsequent section 257 Report to Congress 
in 2000. Thus, this proceeding is not mandated (or in any way governed) 
by section 257. Rather, as described above, this Order fulfills the 
Commission's commitment--set forth in the UNE Remand Order--to 
reevaluate unbundling requirements, and responds to various judicial 
rulings regarding those requirements.
    81. TeleTruth, the NFIB, and SBA Advocacy caution that this Order 
may stand in violation of Executive Order 13272. Setting aside the 
question of whether a multi-member independent agency such as the FCC 
must comply with that Executive Order, it notes that affected agencies 
must: (1) Comply with the RFA, (2) give SBA Advocacy advanced notice of 
any proposed rules that might substantially impact small businesses, 
and (3) give ``appropriate consideration to'' and provide a written 
response to ``any comments provided by'' SBA Advocacy. Here, the 
Commission did send SBA Advocacy a copy of the published NPRM (which 
pre-dated the Executive Order). Moreover, in this FRFA, we fully 
satisfy our obligations under the RFA. Finally, we address SBA 
Advocacy's other comments below. Therefore, this proceeding stands in 
compliance with Executive Order 13272.
    82. SBA Advocacy argues that the Commission's IRFA ``did not 
consider the impact of delisting unbundled network elements * * * on 
small competitive local exchange carriers.'' While SBA Advocacy 
recommends that we issue a revised IRFA to account more fully for the 
impact our rules might have on competitive LECs, it recognizes that we 
might appropriately address any such impact in this FRFA instead. The 
Commission has adopted the latter course. It notes that we have 
considered the concerns of competitive LECs throughout this Order, and 
those considerations are summarized in Part X.A.5, below. Moreover, in 
Part X.A.3, we attempt to estimate the number of competitive LECs that 
will be affected by the rules we adopt herein.
    83. SBA Advocacy also claims that the proposals contained in the 
NPRM were not sufficiently specific to allow small businesses the 
opportunity to comment meaningfully. The Commission disagrees. This 
proceeding has elicited well over one thousand filings, submitted by 
scores of parties. These parties--which include numerous small 
businesses--found in the NPRM sufficient specificity to permit 
meaningful comment. SBA Advocacy notes its ``particular concern'' that 
the Commission ``is considering removing elements from the list'' of 
incumbent LECs' unbundling obligations, whereas the NPRM purportedly 
gave no indication of this eventuality. The NPRM clearly explained that 
the Commission was considering ``an unbundling analysis that is more 
targeted,'' including approaches ``that take into consideration 
specific services, facilities, and customer and business 
considerations.'' It expressly sought comment ``on applying the 
unbundling analysis to define the network elements'' subject to 
unbundling, and indicated our intention to ``probe whether and to what 
extent we should adopt a more sophisticated, refined unbundling 
analysis.'' The Commission officially stated its intention to reexamine 
unbundling obligations with respect to loops, switching, interoffice 
transport, OSS, call-related signaling and call-related databases. It 
is thus not persuaded that the NPRM somehow failed to signal our intent 
to examine rules that might result in modification of the list of 
elements (including possible removal of elements) subject to section 
251(c)(3)'s unbundling requirements.

Description and Estimate of the Number of Small Entities to Which the 
Actions Taken Will Apply

    84. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that will be 
affected by the rules. The RFA generally defines the term ``small 
entity'' as having the same meaning as the terms ``small business,'' 
``small organization,'' and ``small governmental jurisdiction.'' In 
addition, the term ``small business'' has the same meaning as the term 
``small business concern'' under the Small Business Act. A small 
business concern is one which: (1) Is independently owned and operated; 
(2) is not dominant in its field of operation; and (3) satisfies any 
additional criteria established by the Small Business Administration 
(SBA).
    85. In this section, we further describe and estimate the number of 
small entity licensees and regulatees that may be affected by rules 
adopted in this Order. The most reliable source of information 
regarding the total numbers of certain common carrier and related 
providers nationwide, as well as the number of commercial wireless 
entities, appears to be the data that the Commission publishes in its 
Trends in Telephone Service report. The SBA has developed small 
business size standards for wireline and wireless small businesses 
within the three commercial census categories of Wired 
Telecommunications Carriers, Paging, and Cellular and Other Wireless 
Telecommunications. Under these categories, a business is small if it 
has 1,500 or fewer employees. Below, using the above size standards and 
others, we discuss the total estimated numbers of small businesses that 
might be affected by our actions.
    86. The Commission has included small incumbent LECs in this 
present RFA analysis. As noted above, a ``small business'' under the 
RFA is one that, inter alia, meets the pertinent small business size 
standard (e.g., a wired telecommunications carrier having 1,500 or 
fewer employees), and ``is not dominant in its field of operation.'' 
SBA Advocacy contends that, for RFA purposes, small incumbent LECs are 
not dominant in their field of operation because any such dominance is 
not ``national'' in scope. The Commission has therefore included small 
incumbent LECs in this RFA analysis, although it emphasizes that this 
RFA action has no effect on Commission analyses and determinations in 
other, non-RFA contexts.
    87. Wired Telecommunications Carriers. The SBA has developed a 
small business size standard for Wired Telecommunications Carriers, 
which consists of all such companies having 1,500 or fewer employees. 
According to Census Bureau data for 1997, there were 2,225 firms in 
this category, total, that operated for the entire year. Of this total, 
2,201 firms had employment of 999 or fewer employees, and an additional 
24 firms had employment of 1,000 employees or more. Thus, under this 
size standard, the great majority of firms can be considered small.
    88. Incumbent LECs. Neither the Commission nor the SBA has 
developed a size standard for small businesses specifically applicable 
to incumbent local exchange services. The closest applicable size 
standard under SBA

[[Page 52287]]

rules is for Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 1,329 carriers reported that they were 
engaged in the provision of local exchange services. Of these 1,329 
carriers, an estimated 1,024 have 1,500 or fewer employees and 305 have 
more than 1,500 employees. Consequently, the Commission estimates that 
most providers of incumbent local exchange service are small businesses 
that may be affected by the rules and policies adopted herein.
    89. Competitive LECs. Neither the Commission nor the SBA has 
developed a size standard for small businesses specifically applicable 
to providers of competitive exchange services or to competitive access 
providers or to ``Other Local Exchange Carriers,'' all of which are 
discrete categories under which TRS data are collected. The closest 
applicable size standard under SBA rules is for Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. According to Commission 
data, 532 companies reported that they were engaged in the provision of 
either competitive access provider services or competitive LEC 
services. Of these 532 companies, an estimated 411 have 1,500 or fewer 
employees and 121 have more than 1,500 employees. In addition, 55 
carriers reported that they were ``Other Local Exchange Carriers.'' Of 
the 55 ``Other Local Exchange Carriers,'' an estimated 53 have 1,500 or 
fewer employees and two have more than 1,500 employees. Consequently, 
the Commission estimates that most providers of competitive local 
exchange service, competitive access providers, and ``Other Local 
Exchange Carriers'' are small entities that may be affected by the 
rules and policies adopted herein.
    90. Interexchange Carriers. Neither the Commission nor the SBA has 
developed a size standard for small businesses specifically applicable 
to interexchange services. The closest applicable size standard under 
SBA rules is for Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 229 companies reported that their primary 
telecommunications service activity was the provision of payphone 
services. Of these 229 companies, an estimated 181 have 1,500 or fewer 
employees and 48 have more than 1,500 employees. Consequently, the 
Commission estimates that the majority of payphone service providers 
are small entities that may be affected by the rules and policies 
adopted herein.
    91. Operator Service Providers (OSPs). Neither the Commission nor 
the SBA has developed a size standard for small businesses specifically 
applicable to OSPs. The closest applicable size standard under SBA 
rules is for Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 22 companies reported that they were 
engaged in the provision of operator services. Of these 22 companies, 
an estimated 20 have 1,500 or fewer employees and two have more than 
1,500 employees. Consequently, the Commission estimates that the great 
majority of OSPs are small entities that may be affected by the rules 
and policies adopted herein.
    92. Prepaid Calling Card Providers. The SBA has developed a size 
standard for a small business within the category of Telecommunications 
Resellers. Under that SBA size standard, such a business is small if it 
has 1,500 or fewer employees. According to Commission data, 32 
companies reported that they were engaged in the provision of prepaid 
calling cards. Of these 32 companies, an estimated 31 have 1,500 or 
fewer employees and one has more than 1,500 employees. Consequently, 
the Commission estimates that the great majority of prepaid calling 
card providers are small entities that may be affected by the rules and 
policies adopted herein.
    93. Other Toll Carriers. Neither the Commission nor the SBA has 
developed a size standard for small businesses specifically applicable 
to ``Other Toll Carriers.'' This category includes toll carriers that 
do not fall within the categories of interexchange carriers, OSPs, 
prepaid calling card providers, satellite service carriers, or toll 
resellers. The closest applicable size standard under SBA rules is for 
Wired Telecommunications Carriers. Under that size standard, such a 
business is small if it has 1,500 or fewer employees. According to 
Commission's data, 42 companies reported that their primary 
telecommunications service activity was the provision of payphone 
services. Of these 42 companies, an estimated 37 have 1,500 or fewer 
employees and five have more than 1,500 employees. Consequently, the 
Commission estimates that most ``Other Toll Carriers'' are small 
entities that may be affected by the rules and policies adopted herein.
    94. Wireless Service Providers. The SBA has developed a small 
business size standard for wireless firms within the two broad economic 
census categories of Paging and Cellular and Other Wireless 
Telecommunications. Under both SBA categories, a wireless business is 
small if it has 1,500 or fewer employees. For the census category of 
Paging, Census Bureau data for 1997 show that there were 1,320 firms in 
this category, total, that operated for the entire year. Of this total, 
1,303 firms had employment of 999 or fewer employees, and an additional 
17 firms had employment of 1,000 employees or more. Thus, under this 
category and associated small business size standard, the great 
majority of firms can be considered small. For the census category 
Cellular and Other Wireless Telecommunications firms, Census Bureau 
data for 1997 show that there were 977 firms in this category, total, 
that operated for the entire year. Of this total, 965 firms had 
employment of 999 or fewer employees, and an additional 12 firms had 
employment of 1,000 employees or more. Thus, under this second category 
and size standard, the great majority of firms can, again, be 
considered small.
    95. Broadband Personal Communications Service. The broadband 
Personal Communications Service (PCS) spectrum is divided into six 
frequency blocks designated A through F, and the Commission has held 
auctions for each block. The Commission defined ``small entity'' for 
Blocks C and F as an entity that has average gross revenues of $40 
million or less in the three previous calendar years. For Block F, an 
additional classification for ``very small business'' was added and is 
defined as an entity that, together with its affiliates, has average 
gross revenues of not more than $15 million for the preceding three 
calendar years.'' These standards defining ``small entity'' in the 
context of broadband PCS auctions have been approved by the SBA. No 
small businesses, within the SBA-approved small business size standards 
bid successfully for licenses in Blocks A and B. There were 90 winning 
bidders that qualified as small entities in the Block C auctions. A 
total of 93 small and very small business bidders won approximately 40 
percent of the 1,479 licenses for Blocks D, E, and F. On March 23, 
1999, the Commission re-auctioned 347 C, D, E, and F Block licenses. 
There were 48 small business winning bidders. On January 26, 2001, the 
Commission completed the auction of 422 C and F Broadband PCS licenses 
in Auction No. 35. Of the 35 winning bidders in this auction, 29 
qualified as

[[Page 52288]]

``small'' or ``very small'' businesses. Subsequent events, concerning 
Auction 35, including judicial and agency determinations, resulted in a 
total of 163 C and F Block licenses being available for grant. In 
addition, we note that, as a general matter, the number of winning 
bidders that qualify as small businesses at the close of an auction 
does not necessarily represent the number of small businesses currently 
in service. Also, the Commission does not generally track subsequent 
business size unless, in the context of assignments or transfers, 
unjust enrichment issues are implicated.
    96. Narrowband PCS. To date, two auctions of narrowband PCS 
licenses have been conducted. For purposes of the two auctions that 
have already been held, ``small businesses'' were entities with average 
gross revenues for the prior three calendar years of $40 million or 
less. Through these auctions, the Commission has awarded a total of 41 
licenses, out of which 11 were obtained by small businesses. To ensure 
meaningful participation of small business entities in future auctions, 
the Commission has adopted a two-tiered small business size standard in 
the Narrowband PCS Second Report and Order. A ``small business'' is an 
entity that, together with affiliates and controlling interests, has 
average gross revenues for the three preceding years of not more than 
$40 million. A ``very small business'' is an entity that, together with 
affiliates and controlling interests, has average gross revenues for 
the three preceding years of not more than $15 million. The SBA has 
approved these small business size standards. In the future, the 
Commission will auction 459 licenses to serve Metropolitan Trading 
Areas (MTAs) and 408 response channel licenses. There is also one 
megahertz of narrowband PCS spectrum that has been held in reserve and 
that the Commission has not yet decided to release for licensing. The 
Commission cannot predict accurately the number of licenses that will 
be awarded to small entities in future actions. However, four of the 16 
winning bidders in the two previous narrowband PCS auctions were small 
businesses, as that term was defined under the Commission's Rules. The 
Commission assumes, for purposes of this analysis that a large portion 
of the remaining narrowband PCS licenses will be awarded to small 
entities. The Commission also assumes that at least some small 
businesses will acquire narrowband PCS licenses by means of the 
Commission's partitioning and disaggregation rules.
    97. 220 MHz Radio Service--Phase I Licensees. The 220 MHz service 
has both Phase I and Phase II licenses. Phase I licensing was conducted 
by lotteries in 1992 and 1993. There are approximately 1,515 such non-
nationwide licensees and four nationwide licensees currently authorized 
to operate in the 220 MHz band. The Commission has not developed a 
small business size standard for small entities specifically applicable 
to such incumbent 220 MHz Phase I licensees. To estimate the number of 
such licensees that are small businesses, we apply the small business 
size standard under the SBA rules applicable to ``Cellular and Other 
Wireless Telecommunications'' companies. This standard provides that 
such a company is small if it employs no more than 1,500 persons. 
According to Census Bureau data for 1997, there were 977 firms in this 
category, total, that operated for the entire year. Of this total, 965 
firms had employment of 999 or fewer employees, and an additional 12 
firms had employment of 1,000 employees or more. If this general ratio 
continues in the context of Phase I 220 MHz licensees, the Commission 
estimates that nearly all such licensees are small businesses under the 
SBA's small business size standard.
    98. 220 MHz Radio Service--Phase II Licensees. The 220 MHz service 
has both Phase I and Phase II licenses. The Phase II 220 MHz service is 
a new service, and is subject to spectrum auctions. In the 220 MHz 
Third Report and Order, we adopted a small business size standard for 
``small'' and ``very small'' businesses for purposes of determining 
their eligibility for special provisions such as bidding credits and 
installment payments. This small business size standard indicates that 
a ``small business'' is an entity that, together with its affiliates 
and controlling principals, has average gross revenues not exceeding 
$15 million for the preceding three years. A ``very small business'' is 
an entity that, together with its affiliates and controlling 
principals, has average gross revenues that do not exceed $3 million 
for the preceding three years. The SBA has approved these small 
business size standards. Auctions of Phase II licenses commenced on 
September 15, 1998, and closed on October 22, 1998. In the first 
auction, 908 licenses were auctioned in three different-sized 
geographic areas: three nationwide licenses, 30 Regional Economic Area 
Group (EAG) Licenses, and 875 Economic Area (EA) Licenses. Of the 908 
licenses auctioned, 693 were sold. Thirty-nine small businesses won 
licenses in the first 220 MHz auction. The second auction included 225 
licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies 
claiming small business status won 158 licenses.
    99. 800 MHz and 900 MHz Specialized Mobile Radio Licenses. The 
Commission awards ``small entity'' and ``very small entity'' bidding 
credits in auctions for Specialized Mobile Radio (SMR) geographic area 
licenses in the 800 MHz and 900 MHz bands to firms that had revenues of 
no more than $15 million in each of the three previous calendar years, 
or that had revenues of no more than $3 million in each of the previous 
calendar years, respectively. These bidding credits apply to SMR 
providers in the 800 MHz and 900 MHz bands that either hold geographic 
area licenses or have obtained extended implementation authorizations. 
The Commission does not know how many firms provide 800 MHz or 900 MHz 
geographic area SMR service pursuant to extended implementation 
authorizations, nor how many of these providers have annual revenues of 
no more than $15 million. One firm has over $15 million in revenues. 
The Commission assumes, for purposes here, that all of the remaining 
existing extended implementation authorizations are held by small 
entities, as that term is defined by the Small Business Act. The 
Commission has held auctions for geographic area licenses in the 800 
MHz and 900 MHz SMR bands. There were 60 winning bidders that qualified 
as small or very small entities in the 900 MHz SMR auctions. Of the 
1,020 licenses won in the 900 MHz auction, bidders qualifying as small 
or very small entities won 263 licenses. In the 800 MHz auction, 38 of 
the 524 licenses won were won by small and very small entities. 
Consequently, the Commission estimates that there are 301 or fewer 
small entity SMR licensees in the 800 MHz and 900 MHz bands that may be 
affected by the rules and policies adopted herein.
    100. Common Carrier Paging. In the Paging Third Report and Order, 
the Commission developed a small business size standard for ``small 
businesses'' and ``very small businesses'' for purposes of determining 
their eligibility for special provisions such as bidding credits and 
installment payments. A ``small business'' is an entity that, together 
with its affiliates and controlling principals, has average gross 
revenues not exceeding $15 million for the preceding three years. 
Additionally, a ``very small business'' is an entity that, together 
with its affiliates and controlling principals, has average gross 
revenues that are not more than $3 million for the preceding three 
years. An auction of Metropolitan

[[Page 52289]]

Economic Area licenses commenced on February 24, 2000, and closed on 
March 2, 2000. Of the 985 licenses auctioned, 440 were sold. Fifty-
seven companies claiming small business status won. At present, there 
are approximately 24,000 Private-Paging site-specific licenses and 
74,000 Common Carrier Paging licenses. According to the most recent 
Trends in Telephone Service, 471 carriers reported that they were 
engaged in the provision of either paging and messaging services or 
other mobile services. Of those, the Commission estimates that 450 are 
small, under the SBA business size standard specifying that firms are 
small if they have 1,500 or fewer employees.
    101. 700 MHz Guard Band Licensees. In the 700 MHz Guard Band Order, 
the Commission adopted a small business size standard for ``small 
businesses'' and ``very small businesses'' for purposes of determining 
their eligibility for special provisions such as bidding credits and 
installment payments. A ``small business'' as an entity that, together 
with its affiliates and controlling principals, has average gross 
revenues not exceeding $15 million for the preceding three years. 
Additionally, a ``very small business'' is an entity that, together 
with its affiliates and controlling principals, has average gross 
revenues that are not more than $3 million for the preceding three 
years. An auction of 52 Major Economic Area (MEA) licenses commenced on 
September 6, 2000, and closed on September 21, 2000. Of the 104 
licenses auctioned, 96 licenses were sold to nine bidders. Five of 
these bidders were small businesses that won a total of 26 licenses. A 
second auction of 700 MHz Guard Band licenses commenced on February 13, 
2001 and closed on February 21, 2001. All eight of the licenses 
auctioned were sold to three bidders. One of these bidders was a small 
business that won a total of two licenses.
    102. Rural Radiotelephone Service. The Commission has not adopted a 
size standard for small businesses specific to the Rural Radiotelephone 
Service. A significant subset of the Rural Radiotelephone Service is 
the Basic Exchange Telephone Radio System (BETRS). The Commission uses 
the SBA's small business size standard applicable to ``Cellular and 
Other Wireless Telecommunications,'' i.e., an entity employing no more 
than 1,500 persons. There are approximately 1,000 licensees in the 
Rural Radiotelephone Service, and the Commission estimates that there 
are 1,000 or fewer small entity licensees in the Rural Radiotelephone 
Service that may be affected by the rules and policies adopted herein.
    103. Air-Ground Radiotelephone Service. The Commission has not 
adopted a small business size standard specific to the Air-Ground 
Radiotelephone Service. The Commission will use SBA's small business 
size standard applicable to ``Cellular and Other Wireless 
Telecommunications,'' i.e., an entity employing no more than 1,500 
persons. There are approximately 100 licensees in the Air-Ground 
Radiotelephone Service, and we estimate that almost all of them qualify 
as small under the SBA small business size standard.
    104. Aviation and Marine Radio Services. Small businesses in the 
aviation and marine radio services use a very high frequency (VHF) 
marine or aircraft radio and, as appropriate, an emergency position-
indicating radio beacon (and/or radar) or an emergency locator 
transmitter. The Commission has not developed a small business size 
standard specifically applicable to these small businesses. For 
purposes of this analysis, the Commission uses the SBA small business 
size standard for the category ``Cellular and Other 
Telecommunications,'' which is 1,500 or fewer employees. Most 
applicants for recreational licenses are individuals. Approximately 
581,000 ship station licensees and 131,000 aircraft station licensees 
operate domestically and are not subject to the radio carriage 
requirements of any statute or treaty. For purposes of our evaluations 
in this analysis, we estimate that there are up to approximately 
712,000 licensees that are small businesses (or individuals) under the 
SBA standard. In addition, between December 3, 1998 and December 14, 
1998, the Commission held an auction of 42 VHF Public Coast licenses in 
the 157.1875-157.4500 MHz (ship transmit) and 161.775-162.0125 MHz 
(coast transmit) bands. For purposes of the auction, the Commission 
defined a ``small'' business as an entity that, together with 
controlling interests and affiliates, has average gross revenues for 
the preceding three years not to exceed $15 million dollars. In 
addition, a ``very small'' business is one that, together with 
controlling interests and affiliates, has average gross revenues for 
the preceding three years not to exceed $3 million dollars. There are 
approximately 10,672 licensees in the Marine Coast Service, and the 
Commission estimates that almost all of them qualify as ``small'' 
businesses under the above special small business size standards.
    105. Fixed Microwave Services. Fixed microwave services include 
common carrier, private operational-fixed, and broadcast auxiliary 
radio services. At present, there are approximately 22,015 common 
carrier fixed licensees and 61,670 private operational-fixed licensees 
and broadcast auxiliary radio licensees in the microwave services. The 
Commission has not created a size standard for a small business 
specifically with respect to fixed microwave services. For purposes of 
this analysis, the Commission uses the SBA small business size standard 
for the category ``Cellular and Other Telecommunications,'' which is 
1,500 or fewer employees. The Commission does not have data specifying 
the number of these licensees that have more than 1,500 employees, and 
thus are unable at this time to estimate with greater precision the 
number of fixed microwave service licensees that would qualify as small 
business concerns under the SBA's small business size standard. 
Consequently, the Commission estimates that there are up to 22,015 
common carrier fixed licensees and up to 61,670 private operational-
fixed licensees and broadcast auxiliary radio licensees in the 
microwave services that may be small and may be affected by the rules 
and policies adopted herein. We noted, however, that the common carrier 
microwave fixed licensee category includes some large entities.
    106. Offshore Radiotelephone Service. This service operates on 
several UHF television broadcast channels that are not used for 
television broadcasting in the coastal areas of states bordering the 
Gulf of Mexico. There are presently approximately 55 licensees in this 
service. We are unable to estimate at this time the number of licensees 
that would qualify as small under the SBA's small business size 
standard for ``Cellular and Other Wireless Telecommunications'' 
services. Under that SBA small business size standard, a business is 
small if it has 1,500 or fewer employees.
    107. Wireless Communications Services (WCS). This service can be 
used for fixed, mobile, radiolocation, and digital audio broadcasting 
satellite uses. The Commission established small business size 
standards for the WCS auction. A ``small business'' is an entity with 
average gross revenues of $40 million for each of the three preceding 
years, and a ``very small business'' is an entity with average gross 
revenues of $15 million for each of the three preceding years. The SBA 
has approved these small business size standards. The Commission 
auctioned geographic area licenses in the WCS service. In the auction, 
there were seven winning bidders that qualified as ``very small 
business'' entities, and one that

[[Page 52290]]

qualified as a ``small business'' entity. We conclude that the number 
of geographic area WCS licensees affected by this analysis includes 
these eight entities.
    108. 39 GHz Service. The Commission created a special small 
business size standard for 39 GHz licenses--an entity that has average 
gross revenues of $40 million or less in the three previous calendar 
years. An additional size standard for ``very small business'' is: an 
entity that, together with affiliates, has average gross revenues of 
not more than $15 million for the preceding three calendar years. The 
SBA has approved these small business size standards. The auction of 
the 2,173 39 GHz licenses began on April 12, 2000 and closed on May 8, 
2000. The 18 bidders who claimed small business status won 849 
licenses. Consequently, the Commission estimates that 18 or fewer 39 
GHz licensees are small entities that may be affected by the rules and 
polices adopted herein.
    109. Multipoint Distribution Service (MDS), Multichannel Multipoint 
Distribution Service (MMDS), and Instructional Television Fixed Service 
(ITFS). MMDS systems, often referred to as ``wireless cable,'' transmit 
video programming to subscribers using the microwave frequencies of the 
MDS and ITFS. In connection with the 1996 MDS auction, the Commission 
established a small business size standard as an entity that had annual 
average gross revenues of less than $40 million in the previous three 
calendar years. The MDS auctions resulted in 67 successful bidders 
obtaining licensing opportunities for 493 Basic Trading Areas (BTAs). 
Of the 67 auction winners, 61 met the definition of a small business. 
MDS also includes licensees of stations authorized prior to the 
auction. In addition, the SBA has developed a small business size 
standard for Cable and Other Program Distribution, which includes all 
such companies generating $12.5 million or less in annual receipts. 
According to Census Bureau data for 1997, there were a total of 1,311 
firms in this category, total, that had operated for the entire year. 
Of this total, 1,180 firms had annual receipts of under $10 million and 
an additional 52 firms had receipts of $10 million or more but less 
than $25 million. Consequently, we estimate that the majority of 
providers in this service category are small businesses that may be 
affected by the rules and policies adopted herein. This SBA small 
business size standard also appears applicable to ITFS. There are 
presently 2,032 ITFS licensees. All but 100 of these licenses are held 
by educational institutions. Educational institutions are included in 
this analysis as small entities. Thus, we tentatively conclude that at 
least 1,932 licensees are small businesses.
    110. Local Multipoint Distribution Service. Local Multipoint 
Distribution Service (LMDS) is a fixed broadband point-to-multipoint 
microwave service that provides for two-way video telecommunications. 
The auction of the 1,030 LMDS licenses began on February 18, 1998, and 
closed on March 25, 1998. The Commission established a small business 
size standard for LMDS licenses as an entity that has average gross 
revenues of less than $40 million in the three previous calendar years. 
An additional small business size standard for ``very small business'' 
was added as an entity that, together with its affiliates, has average 
gross revenues of not more than $15 million for the preceding three 
calendar years. The SBA has approved these small business size 
standards in the context of LMDS auctions. There were 93 winning 
bidders that qualified as small entities in the LMDS auctions. A total 
of 93 small and very small business bidders won approximately 277 A 
Block licenses and 387 B Block licenses. On March 27, 1999, the 
Commission re-auctioned 161 licenses; there were 40 winning bidders. 
Based on this information, we conclude that the number of small LMDS 
licenses consists of the 93 winning bidders in the first auction and 
the 40 winning bidders in the re-auction, for a total of 133 small 
entity LMDS providers.
    111. 218-219 MHz Service. The first auction of 218-219 MHz spectrum 
resulted in 170 entities winning licenses for 594 Metropolitan 
Statistical Area (MSA) licenses. Of the 594 licenses, 557 were won by 
entities qualifying as a small business. For that auction, the small 
business size standard was an entity that, together with its 
affiliates, has no more than a $6 million net worth and, after federal 
income taxes (excluding any carry-over losses), has no more than $2 
million in annual profits each year for the previous two years. In the 
218-219 MHz Report and Order and Memorandum Opinion and Order, we 
established a small business size standard for a ``small business'' as 
an entity that, together with its affiliates and persons or entities 
that hold interests in such an entity and their affiliates, has average 
annual gross revenues not to exceed $15 million for the preceding three 
years. A ``very small business'' is defined as an entity that, together 
with its affiliates and persons or entities that hold interests in such 
an entity and its affiliates, has average annual gross revenues not to 
exceed $3 million for the preceding three years. We cannot estimate, 
however, the number of licenses that will be won by entities qualifying 
as small or very small businesses under our rules in future auctions of 
218-219 MHz spectrum.
    112. 24 GHz--Incumbent Licensees. This analysis may affect 
incumbent licensees who were relocated to the 24 GHz band from the 18 
GHz band, and applicants who wish to provide services in the 24 GHz 
band. The applicable SBA small business size standard is that of 
``Cellular and Other Wireless Telecommunications'' companies. This 
category provides that such a company is small if it employs no more 
than 1,500 persons. According to Census Bureau data for 1997, there 
were 977 firms in this category, total, that operated for the entire 
year. Of this total, 965 firms had employment of 999 or fewer 
employees, and an additional 12 firms had employment of 1,000 employees 
or more. Thus, under this size standard, the great majority of firms 
can be considered small. These broader census data notwithstanding, we 
believe that there are only two licensees in the 24 GHz band that were 
relocated from the 18 GHz band, Teligent and TRW, Inc. It is our 
understanding that Teligent and its related companies have less than 
1,500 employees, though this may change in the future. TRW is not a 
small entity. Thus, only one incumbent licensee in the 24 GHz band is a 
small business entity.
    113. 24 GHz--Future Licensees. With respect to new applicants in 
the 24 GHz band, the small business size standard for ``small 
business'' is an entity that, together with controlling interests and 
affiliates, has average annual gross revenues for the three preceding 
years not in excess of $15 million. ``Very small business'' in the 24 
GHz band is an entity that, together with controlling interests and 
affiliates, has average gross revenues not exceeding $3 million for the 
preceding three years. The SBA has approved these small business size 
standards. These size standards will apply to the future auction, if 
held.
    114. Internet Service Providers. While internet service providers 
(ISPs) are only indirectly affected by our present actions, and ISPs 
are therefore not formally included within this present FRFA, we have 
addressed them informally to create a fuller record and to recognize 
their participation in this proceeding. The SBA has developed a small 
business size standard for Online Information Services, which consists 
of all such companies having $21 million or less in annual receipts. 
According to Census Bureau data for 1997, there were 2,751 firms in 
this category, total, that operated for the entire year. Of this

[[Page 52291]]

total, 2,659 firms had annual receipts of $9,999,999 or less, and an 
additional 67 had receipts of $10 million to $24,999,999. Thus, under 
this size standard, the great majority of firms can be considered 
small.

Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    115. Pursuant to sections 251(c) and (d) of the Act, incumbent 
LECs, including those that qualify as small entities, are required to 
provide nondiscriminatory access to UNEs. The only exception to this 
rule applies to qualifying rural carriers that have gone through the 
process of obtaining an exemption, suspension, or modification pursuant 
to section 251(f) of the Act. This Order represents, in large part, a 
fresh examination of the issues presented in implementing the 
unbundling requirements of section 251, based on comments from 
interested parties responding to the NPRM. This Order also interprets 
the necessary and impair standards of section 251(d)(2) in a manner 
that satisfies the D.C. Circuit's directives that (1) the Commission 
eschew broad national standards in favor of more granular analysis, and 
that, (2) in determining whether a carrier is ``impaired'' by 
diminished access to a given element, the Commission distinguish 
between ``cost disparities that are universal as between new entrants 
and incumbents in any industry'' and disparities resulting specifically 
from the conditions of natural monopoly that the Act is designed to 
redress.
    116. In this Order, we determine that requesting carriers (1) are 
impaired without access to local circuit switching in providing service 
to mass market customers using DS0 capacity loops; (2) are not impaired 
without access to unbundled local circuit switching for the provision 
of service to enterprise customers using DS1 and higher capacity loops; 
(3) are not impaired without access to packet switching, including 
routers and DSLAMs; (4) are not impaired without access to incumbent 
LECs' signaling systems except where they are also impaired without 
access to the incumbent LEC's unbundled circuit switching; (5) are 
impaired without unbundled access to the incumbent LEC's 911 and e911 
databases; (6) are not impaired without access to the incumbent LEC's 
other call-related databases if they deploy their own switches, but 
otherwise are impaired; (7) are impaired without access to incumbent 
LECs' OSS; (8) are impaired without access to copper loop or subloop 
facilities (and must condition copper loops for provision of advanced 
services), but are not impaired without access to line-sharing (subject 
to a three-year transition) or hybrid loops; (9) are not impaired 
without access to new build/greenfield fiber-to-the-home (FTTH) loops 
for broadband or narrowband services or overbuild/brownfield FTTH loops 
for broadband services; (10) are not impaired without unbundled access 
to OCn capacity loop facilities, but are impaired, subject to certain 
triggers, without access to dark fiber loops, DS1 loops, and DS3 loops; 
(11) are impaired without access to unbundled subloops associated with 
accessing customer premises wiring at multiunit premises and are also 
impaired without unbundled access to the incumbent LEC Inside Wire 
Subloops and NIDs, regardless of loop type; (12) are not impaired 
without unbundled access to OCn transport facilities, but are impaired, 
subject to certain triggers, without access to dark fiber transport 
facilities, DS1 transport facilities, and DS3 transport facilities; and 
(13) are impaired without access to unbundled shared transport only to 
the extent they are impaired without access to local circuit switching. 
The Order also affirms that incumbent LECs are obligated to provide 
access to UNE combinations.
    117. In this Order, the Commission adopts rules to implement a 
congressionally-mandated scheme, embodied in section 251 of the Act, 
that imposes upon incumbent LECs an obligation to provide unbundled 
access to certain network elements. This Order articulates a new 
impairment standard to govern which network elements incumbent LECs 
must unbundle for competitors in accordance with the Act. While this 
Order imposes no general obligations on competitive LECs, the Order 
does require competitive LECs to satisfy certain reporting requirements 
in order to obtain as UNEs certain high-capacity network elements from 
incumbent LECs. We have attempted to keep the obligations imposed by 
this Order to the minimum necessary to implement the requirements of 
the Act.
    118. In addition, this Order outlines procedures whereby states may 
conduct proceedings to determine whether certain network elements 
satisfy our impairment standard according to specific guidelines and 
triggers, as outlined in the Order. While this Order does not 
specifically impose any obligations on carriers in this regard, records 
regarding facility use may be necessary for these state proceedings.
    119. The various compliance requirements contained in this Order 
will require the use of engineering, technical, operational, 
accounting, billing, and legal skills. The carriers that are affected 
by these requirements already possess these skills. This Order contains 
new or modified information collections, which are subject to Office of 
Management and Budget review pursuant to the Paperwork Reduction Act of 
1995, Pub. L. 104-13.

Steps Taken To Minimize Significant Economic Impact on Small Entities, 
and Significant Alternatives Considered

    120. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others): (1) 
The establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.
    121. In this Order, the Commission adopts rules regarding the 
unbundling of network elements. It has modified our impairment analysis 
to find that a requesting carrier is impaired when lack of access to a 
facility in the incumbent LEC's network poses barriers that are likely 
to make entry into the market uneconomic. These can include both 
operational and economic barriers, such as scale economies, sunk costs, 
first mover advantages, absolute cost advantages, and barriers within 
the control of the incumbent LEC. In adopting this interpretation, the 
Commission considered a variety of factors relating to the size of 
regulated entities and the customers they serve. It considered a number 
of barriers to competitive entry, including those faced by small 
competitors, as well as the importance of scale economies as they 
relate to small entities. Finally, the Commission considered and 
rejected a number of suggested approaches to impairment.
    122. In applying its impairment analysis to specific network 
elements, the Commisson adopts a more granular approach, including the 
considerations of customer class, geography, and service. The 
Commission found that conducting a more granular analysis permits it to 
distinguish, with more particularity, those situations for which there 
is impairment from those for which there is none. It also found that an 
even more granular analysis--loop by loop, for example--is neither

[[Page 52292]]

administratively feasible nor required by the courts. The Commission 
considered the differing needs of three classes of telecommunications 
customers: mass market customers (i.e., residential customers and 
sometimes very small business customers), small and medium enterprise 
customers, and large enterprise customers. Mass market customers 
typically generate lower revenue and tighter profit margins than the 
other classes and therefore require service providers to minimize 
costs. Small and medium business customers typically are willing to pay 
higher prices but are more sensitive to reliability and quality of 
service. Large enterprise customers tend to demand extensive and 
sophisticated service packages, and reliability and quality of service 
are essential to these customers.
    123. In addition, because requiring unbundling in the absence of 
impairment imposes unnecessary costs--including for small or rural 
incumbent LECs--we considered whether impairment varies geographically 
throughout the country. The Commission makes unbundling decisions on a 
national scale where the record permits us to, but delegate some 
determining role to the states where it appears that impairment might 
exist in some regions of the country but not others. In this regard, we 
note that Congress provided a mechanism--in section 251(f) of the Act--
to exempt small and rural incumbent LECs from several of the Act's 
obligations. For example, unbundling rules shall not apply to a rural 
telephone company until it receives a bona fide request for 
interconnection and until the state commission determines that the 
request is technically feasible, not unduly economically burdensome, 
and consistent with section 254. Or, a LEC with fewer than two percent 
of the nation's subscriber lines may obtain relief from unbundling if 
the state commission decides, among other things, that relief is 
necessary to avoid imposing a economically burdensome requirement or 
other significant adverse economic impact.
    124. Through our granular impairment analysis, the Commission has 
considered the resources and needs of various carriers, including small 
businesses, and have examined the state of the marketplace to determine 
whether it was economically feasible for competitors to self-provision 
network elements or obtain them from competitive sources other than 
incumbent LECs. This approach strikes the appropriate balance between 
the needs of competitors--including small competitors--to access 
certain network elements, against the burdens unbundling imposes upon 
incumbent LECs--including small incumbents--and yields a more accurate 
picture of the state of competition for each of the varied network 
elements composing the local telephone network. For those network 
elements for which carriers may be impaired only in certain geographic 
markets, such as certain high capacity loops and transport, we adopt an 
approach that permits localized determination--with a role for the 
states--as to where and whether impairment exists. In this way, the 
Commission has sought to take a more specific view of the needs of 
differently situated competitors.
    125. The Commission also has established service eligibility 
requirements for UNEs which are designed to ensure that carriers use 
UNEs primarily to provide local services in competition with incumbent 
LECs, ``while avoiding burdensome administrative rules that serve as a 
drag on competitive entry.'' While we recognize that regulatory 
requirements may disproportionately impact smaller entities, we have 
adopted the least burdensome of several available alternatives in 
requiring competitors to satisfy certain service eligibility criteria. 
For example, rather than requiring carriers to certify to be the sole 
provider of local service in order to access certain elements (e.g., 
high capacity loops and transport)--an approach that might require 
frequent and costly assurance from a carrier's customers--the 
Commission permits carriers to certify that they are the primary 
providers of local service. In this regard, being certified as a 
competitive LEC is probative of providing qualifying service. The 
Commission also adopts collocation and local interconnection 
requirements as less burdensome ways of assuring service eligibility. 
By contrast, we have rejected a number of suggested approaches as 
unnecessarily burdensome, such as measuring minutes or traffic 
percentages, separately measuring voice and data use, or permitting 
UNEs only where a competitive carrier uses certain types of switches. 
It finds that our adopted indicia of service eligibility serve as 
adequate and less burdensome assurance that a carrier is using UNEs in 
a manner consistent with the local competition goals of the Act.

Ordering Clauses

    126. Accordingly, pursuant to sections 1, 3, 4, 201-205, 251, 256, 
271, 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 153, 154, 201-205, 251, 252, 256, 271, 303(r), and section 706 of 
the Telecommunications Act of 1996, 47 U.S.C. 157 nt, the Report and 
Order on Remand and Further Notice of Proposed Rulemaking in CC Docket 
No. 01-338 is adopted, and that part 51 of the Commission's Rules, 47 
CFR part 51, is amended as set forth in the rule changes.
    127. The rules contained herein are effective October 2, 2003.
    128. Pursuant to sections 1, 3, 4, 201-205, 251, 256, 271, and 
303(r) of the Communications Act, as amended, 47 U.S.C. 151, 153, 154, 
201-205, 251, 252, 256, 271, and 303(r), and Section 706 of the 
Telecommunications Act of 1996, 47 U.S.C. 157 nt. that the petitions 
for reconsideration of the UNE Remand Order filed in CC Docket No. 96-
98 by Low Tech Designs, Inc. on February 15, 2000, and by the 
Telecommunications Resellers Association on February 18, 2000; the 
petition for partial reconsideration of the UNE Remand Order filed in 
CC Docket No. 96-98 by Birch Telecom, Inc. on February 17, 2000; the 
petition for reconsideration and clarification of the UNE Remand Order 
filed in CC Docket No. 96-98 by Sprint Corporation on February 17, 
2000; the petition for clarification on reconsideration of the UNE 
Remand Order filed in CC Docket No. 96-98, 95-185 by MGC 
Communications, Inc.; d/b/a Mpower Communications, Corp. on February 
17, 2000; the joint petition filed in CC Docket No. 96-98 by BellSouth 
Corporation and BellSouth Telecommunications, Inc., SBC Communications, 
Inc., and Verizon Telephone Companies on April 5, 2001; the petitions 
for waiver of the supplemental order clarification filed in CC Docket 
No. 96-98 by WorldCom, Inc. on September 12, 2000, and 
ITC[caret]DeltaCom Communications, Inc. on August 16, 2001; 
the petition filed in CC Docket Nos. 01-338, 96-98, 98-147 by Promoting 
Active Competition Everywhere (PACE) Coalition on February 6, 2002; and 
the petition for declaratory ruling filed in CC Docket No. 01-338 by 
WorldCom, Inc. on August 8, 2002 are dismissed as moot.
    129. Pursuant to sections 1, 3, 4, 201-205, 251, 256, 271, and 
303(r) of the Communications Act, as amended, 47 U.S.C. 151, 153, 154, 
201-205, 251, 252, 256, 271, and 303(r), and Section 706 of the 
Telecommunications Act of 1996, 47 U.S.C. 157 nt. that the joint 
petition for declaratory ruling filed in CC Docket No. 96-98 by AT&T 
Wireless Services, Inc. and VoiceStream Wireless, Corp. on November 19, 
2001 is granted to the extent indicated herein and otherwise is moot.

[[Page 52293]]

    130. Pursuant to sections 1, 3, 4, 201-205, 251, 256, 271, and 
303(r) of the Communications Act, as amended, 47 U.S.C. 151, 153, 154, 
201-205, 251, 252, 256, 271, and 303(r), and Section 706 of the 
Telecommunications Act of 1996, 47 U.S.C. 157 nt. that the petition for 
reconsideration/clarification of the UNE Remand Order filed in CC 
Docket No. 96-98 by BellSouth Corporation and BellSouth 
Telecommunications, Inc. on February 17, 2000 is granted to the extent 
indicated herein and otherwise are denied.
    131. Pursuant to sections 1, 3, 4, 201-205, 251, 256, 271, and 
303(r) of the Communications Act, as amended, 47 U.S.C. 151, 153, 154, 
201-205, 251, 252, 256, 271, and 303(r), and Section 706 of the 
Telecommunications Act of 1996, 47 U.S.C. 157 nt. that the petitions 
for reconsideration of the UNE Remand Order filed in CC Docket Nos. 96-
98, 95-185 by Rhythms Netconnections Inc. and Covad Communications Co. 
on January 21, 2000, @Link Networks, Inc., DSL.net, Inc. and MGC 
Communications, Inc., d/b/a Mpower Communications Corp. on February 17, 
2000, McLeodUSA Telecommunications Services, Inc. and the petition for 
reconsideration of the UNE Remand Order filed in CC Docket No. 96-98 by 
RCN Telecom Services, Inc. on February 17, 2000 are denied.
    132. Pursuant to sections 1, 3, 4, 201-205, 251, 256, 271, and 
303(r) of the Communications Act, as amended, 47 U.S.C. 151, 153, 154, 
201-205, 251, 252, 256, 271, and 303(r), and section 706 of the 
Telecommunications Act of 1996, 47 U.S.C. 157 nt. that the petition of 
the UNE Remand Order filed in CC Docket No. 96-98 by Competitive 
Telecommunications Association on November 26, 2001; and the petitions 
for reconsideration of the UNE Remand Order filed in CC Docket No. 96-
98 by Intermedia Communications, Inc. and by MCI WorldCom, Inc. on 
February 17, 2000 are denied to the extent indicated herein and 
otherwise are dismissed as moot.
    133. Pursuant to sections 1, 3, 4, 201-205, 251, 256, 271, and 
303(r) of the Communications Act, as amended, 47 U.S.C. 151, 153, 154, 
201-205, 251, 252, 256, 271, and 303(r), and Section 706 of the 
Telecommunications Act of 1996, 47 U.S.C. 157 nt. that the petition for 
clarification of the UNE Remand Order filed in CC Docket No. 96-98 by 
MCI WorldCom, Inc. on February 17, 2000; the petition for 
reconsideration of the UNE Remand Order filed in CC Docket No. 96-98 by 
the Competitive Telecommunications Association on February 17, 2000; 
the petition for reconsideration and clarification of the UNE Remand 
Order filed in CC Docket No. 96-98 by Bell Atlantic on February 17, 
2000; and the petition for reconsideration and clarification of the UNE 
Remand Order filed in CC Docket No. 96-98 by AT&T Corp. on February 17, 
2000 are granted to the extent indicated herein and otherwise are 
denied or dismissed as moot.
    134. The Public Notice, Comments Sought on the Use of Unbundled 
Network Elements to Provide Exchange Access Service, CC Docket No. 96-
98, DA 01-169 (rel. Jan. 24, 2001); Deployment of Wireline Services 
Offering Advanced Telecommunications Capability and Implementation of 
the Local Competition Provisions of the Telecommunications Act of 1996, 
Third Report and Order on Reconsideration in CC Docket No. 98-147, 
Fourth Report and Order on Reconsideration in CC Docket No. 96-98, 
Third Further Notice of Proposed Rulemaking in CC Docket No. 98-147, 
and Sixth Further Notice of Proposed Rulemaking in CC Docket No. 96-98, 
16 FCC Rcd 2101 (2001); Implementation of Local Competition Provisions 
of the Telecommunications Act of 1996, Third Order on Reconsideration 
and Further Notice of Proposed Rulemaking, CC Docket Nos. 96-98 and 95-
185, 12 FCC Rcd 12460 (1997); and Implementation of the Local 
Competition Provisions of the Telecommunications Act of 1996, Third 
Report and Order and Fourth Further Notice of Proposed Rulemaking, CC 
Docket No. 96-98, 15 FCC Rcd 3696 (1999) are terminated.
    135. The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of this Report and 
Order and Order on Remand, including the Final Regulatory Flexibility 
Analysis, to the Chief Counsel for Advocacy of the Small Business 
Administration.

Report to Congress

    125. The Commission will send a copy of the Order, including this 
FRFA, in a report to be sent to Congress pursuant to the Congressional 
Review Act. In addition, the Commission will send a copy of the Order, 
including the FRFA, to the Chief Counsel for SBA Advocacy. The Order 
and FRFA, or summaries thereof, will also be published in the Federal 
Register.

List of Subjects in 47 CFR Part 51

    Interconnection, Telecommunications carriers.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.

Final Rules

0
Part 51 of title 47 of the Code of Federal Regulations is amended as 
follows:

PART 51--INTERCONNECTION

0
1. The authority citation for part 51 is revised to read as follows:

    Authority: Sections 1-5, 7, 201-05, 207-09, 218, 225-27, 251-54, 
256, 271, 303(r), 332, 48 Stat. 1070, as amended, 1077; 47 U.S.C. 
151-55, 157, 201-05, 207-09, 218, 225-27, 251-54, 256, 271, 303(r), 
332, 47 U.S.C. 157 note, unless otherwise noted.


0
2. Section 51.5 is amended by adding six new definitions in 
alphabetical order and by revising the definition of ``state 
commission'' to read as follows:


Sec.  51.5  Terms and definitions.

* * * * *
    Commingling. Commingling means the connecting, attaching, or 
otherwise linking of an unbundled network element, or a combination of 
unbundled network elements, to one or more facilities or services that 
a requesting telecommunications carrier has obtained at wholesale from 
an incumbent LEC, or the combining of an unbundled network element, or 
a combination of unbundled network elements, with one or more such 
facilities or services. Commingle means the act of commingling.
* * * * *
    Enhanced extended link. An enhanced extended link or EEL consists 
of a combination of an unbundled loop and unbundled dedicated 
transport, together with any facilities, equipment, or functions 
necessary to combine those network elements.
* * * * *
    Intermodal. The term intermodal refers to facilities or 
technologies other than those found in traditional telephone networks, 
but that are utilized to provide competing services. Intermodal 
facilities or technologies include, but are not limited to, traditional 
or new cable plant, wireless technologies, and power line technologies.
* * * * *
    Non-qualifying service. A non-qualifying service is a service that 
is not a qualifying service.
* * * * *
    Qualifying service. A qualifying service is a telecommunications 
service that competes with a telecommunications service that has been 
traditionally the exclusive or

[[Page 52294]]

primary domain of incumbent LECs, including, but not limited to, local 
exchange service, such as plain old telephone service, and access 
services, such as digital subscriber line services and high-capacity 
circuits.
* * * * *
    State commission. A state commission means the commission, board, 
or official (by whatever name designated) which under the laws of any 
state has regulatory jurisdiction with respect to intrastate operations 
of carriers. As referenced in this part, this term may include the 
Commission if it assumes responsibility for a proceeding or matter, 
pursuant to section 252(e)(5) of the Act or Sec.  51.320. This term 
shall also include any person or persons to whom the state commission 
has delegated its authority under sections 251 and 252 of the Act and 
this part.
* * * * *
    Triennial Review Order. The Triennial Review Order means the 
Commission's Report and Order and Order on Remand and Further Notice of 
Proposed Rulemaking in CC Docket Nos. 01-338, 96-98, and 98-147.
* * * * *

0
3. Section 51.301 is amended by revising paragraph (c)(8)(ii) to read 
as follows:


Sec.  51.301  Duty to negotiate.

* * * * *
    (c) * * *
    (8) * * *
    (ii) Refusal by an incumbent LEC to furnish cost data that would be 
relevant to setting rates if the parties were in arbitration.


0
4. Section 51.305 is amended by removing paragraph (a)(4), 
redesignating paragraph (a)(5) as paragraph (a)(4), and revising 
paragraph (a)(3) to read as follows:


Sec.  51.305  Interconnection.

    (a) * * *
    (3) That is at a level of quality that is equal to that which the 
incumbent LEC provides itself, a subsidiary, an affiliate, or any other 
party. At a minimum, this requires an incumbent LEC to design 
interconnection facilities to meet the same technical criteria and 
service standards that are used within the incumbent LEC's network. 
This obligation is not limited to a consideration of service quality as 
perceived by end users, and includes, but is not limited to, service 
quality as perceived by the requesting telecommunications carrier; and
* * * * *

0
5. Section 51.309 is amended by revising paragraphs (a) and (b), and by 
adding paragraphs (d) through (g) to read as follows:


Sec.  51.309  Use of unbundled network elements.

    (a) Except as provided in Sec.  51.318, an incumbent LEC shall not 
impose limitations, restrictions, or requirements on requests for, or 
the use of, unbundled network elements for the service a requesting 
telecommunications carrier seeks to offer.
    (b) A requesting telecommunications carrier may not access an 
unbundled network element for the sole purpose of providing non-
qualifying services.
* * * * *
    (d) A requesting telecommunications carrier that accesses and uses 
an unbundled network element pursuant to section 251(c)(3) of the Act 
and this part to provide a qualifying service may use the same 
unbundled network element to provide non-qualifying services.
    (e) Except as provided in Sec.  51.318, an incumbent LEC shall 
permit a requesting telecommunications carrier to commingle an 
unbundled network element or a combination of unbundled network 
elements with wholesale services obtained from an incumbent LEC.
    (f) Upon request, an incumbent LEC shall perform the functions 
necessary to commingle an unbundled network element or a combination of 
unbundled network elements with one or more facilities or services that 
a requesting telecommunications carrier has obtained at wholesale from 
an incumbent LEC.
    (g) An incumbent LEC shall not deny access to an unbundled network 
element or a combination of unbundled network elements on the grounds 
that one or more of the elements:
    (1) Is connected to, attached to, linked to, or combined with, a 
facility or service obtained from an incumbent LEC; or
    (2) Shares part of the incumbent LEC's network with access services 
or inputs for non-qualifying services.

0
6. Section 51.311 is amended by revising paragraphs (a) and (b), 
removing paragraph (c), redesignating paragraphs (d) and (e) as 
paragraphs (c) and (d) to read as follows:


Sec.  51.311  Nondiscriminatory access to unbundled network elements.

    (a) The quality of an unbundled network element, as well as the 
quality of the access to the unbundled network element, that an 
incumbent LEC provides to a requesting telecommunications carrier shall 
be the same for all telecommunications carriers requesting access to 
that network element.
    (b) To the extent technically feasible, the quality of an unbundled 
network element, as well as the quality of the access to such unbundled 
network element, that an incumbent LEC provides to a requesting 
telecommunications carrier shall be at least equal in quality to that 
which the incumbent LEC provides to itself. If an incumbent LEC fails 
to meet this requirement, the incumbent LEC must prove to the state 
commission that it is not technically feasible to provide the requested 
unbundled network element, or to provide access to the requested 
unbundled network element, at a level of quality that is equal to that 
which the incumbent LEC provides to itself.
* * * * *

0
7. Section 51.315 is amended by revising paragraphs (c) and (f) to read 
as follows:


Sec.  51.315  Combination of unbundled network elements.

* * * * *
    (c) Upon request, an incumbent LEC shall perform the functions 
necessary to combine unbundled network elements in any manner, even if 
those elements are not ordinarily combined in the incumbent LEC's 
network, provided that such combination:
    (1) Is technically feasible; and
    (2) Would not undermine the ability of other carriers to obtain 
access to unbundled network elements or to interconnect with the 
incumbent LEC's network.
* * * * *
    (f) An incumbent LEC that denies a request to combine unbundled 
network elements pursuant to paragraph (c)(2) of this section must 
demonstrate to the state commission that the requested combination 
would undermine the ability of other carriers to obtain access to 
unbundled network elements or to interconnect with the incumbent LEC's 
network.

0
8. Section 51.316 is added to read as follows:


Sec.  51.316  Conversion of unbundled network elements and services.

    (a) Upon request, an incumbent LEC shall convert a wholesale 
service, or group of wholesale services, to the equivalent unbundled 
network element, or combination of unbundled network elements, that is 
available to the requesting telecommunications carrier under section 
251(c)(3) of the Act and this part.
    (b) An incumbent LEC shall perform any conversion from a wholesale 
service

[[Page 52295]]

or group of wholesale services to an unbundled network element or 
combination of unbundled network elements without adversely affecting 
the service quality perceived by the requesting telecommunications 
carrier's end-user customer.
    (c) Except as agreed to by the parties, an incumbent LEC shall not 
impose any untariffed termination charges, or any disconnect fees, re-
connect fees, or charges associated with establishing a service for the 
first time, in connection with any conversion between a wholesale 
service or group of wholesale services and an unbundled network element 
or combination of unbundled network elements.

0
9. Section 51.317 is revised to read as follows:


Sec.  51.317  Standards for requiring the unbundling of network 
elements.

    Proprietary network elements. A network element shall be considered 
to be proprietary if an incumbent LEC can demonstrate that it has 
invested resources to develop proprietary information or 
functionalities that are protected by patent, copyright or trade secret 
law. The Commission shall undertake the following analysis to determine 
whether a proprietary network element should be made available for 
purposes of section 251(c)(3) of the Act:
    (a) Determine whether access to the proprietary network element is 
``necessary.'' A network element is ``necessary'' if, taking into 
consideration the availability of alternative elements outside the 
incumbent LEC's network, including self-provisioning by a requesting 
telecommunications carrier or acquiring an alternative from a third-
party supplier, lack of access to the network element precludes a 
requesting telecommunications carrier from providing the services that 
it seeks to offer. If access is ``necessary,'' the Commission may 
require the unbundling of such proprietary network element.
    (b) In the event that such access is not ``necessary,'' the 
Commission may require unbundling if it is determined that:
    (1) The incumbent LEC has implemented only a minor modification to 
the network element in order to qualify for proprietary treatment;
    (2) The information or functionality that is proprietary in nature 
does not differentiate the incumbent LEC's services from the requesting 
telecommunications carrier's services; or
    (3) Lack of access to such element would jeopardize the goals of 
the Act.

0
10. Section 51.318 is added to read as follows:


Sec.  51.318  Eligibility criteria for access to certain unbundled 
network elements.

    (a) Except as provided in paragraph (b) of this section, an 
incumbent LEC shall provide access to unbundled network elements and 
combinations of unbundled network elements without regard to whether 
the requesting telecommunications carrier seeks access to the elements 
to establish a new circuit or to convert an existing circuit from a 
service to unbundled network elements.
    (b) An incumbent LEC need not provide access to an unbundled DS1 
loop in combination, or commingled, with a dedicated DS1 transport or 
dedicated DS3 transport facility or service, or to an unbundled DS3 
loop in combination, or commingled, with a dedicated DS3 transport 
facility or service, unless the requesting telecommunications carrier 
certifies that all of the following conditions are met:
    (1) The requesting telecommunications carrier has received state 
certification to provide local voice service in the area being served 
or, in the absence of a state certification requirement, has complied 
with registration, tariffing, filing fee, or other regulatory 
requirements applicable to the provision of local voice service in that 
area.
    (2) The following criteria are satisfied for each combined circuit, 
including each DS1 circuit, each DS1 enhanced extended link, and each 
DS1-equivalent circuit on a DS3 enhanced extended link:
    (i) Each circuit to be provided to each customer will be assigned a 
local number prior to the provision of service over that circuit;
    (ii) Each DS1-equivalent circuit on a DS3 enhanced extended link 
must have its own local number assignment, so that each DS3 must have 
at least 28 local voice numbers assigned to it;
    (iii) Each circuit to be provided to each customer will have 911 or 
E911 capability prior to the provision of service over that circuit;
    (iv) Each circuit to be provided to each customer will terminate in 
a collocation arrangement that meets the requirements of paragraph (c) 
of this section;
    (v) Each circuit to be provided to each customer will be served by 
an interconnection trunk that meets the requirements of paragraph (d) 
of this section;
    (vi) For each 24 DS1 enhanced extended links or other facilities 
having equivalent capacity, the requesting telecommunications carrier 
will have at least one active DS1 local service interconnection trunk 
that meets the requirements of paragraph (d) of this section; and
    (vii) Each circuit to be provided to each customer will be served 
by a switch capable of switching local voice traffic.
    (c) A collocation arrangement meets the requirements of this 
paragraph if it is:
    (1) Established pursuant to section 251(c)(6) of the Act and 
located at an incumbent LEC premises within the same LATA as the 
customer's premises, when the incumbent LEC is not the collocator; and
    (2) Located at a third party's premises within the same LATA as the 
customer's premises, when the incumbent LEC is the collocator.
    (d) An interconnection trunk meets the requirements of this 
paragraph if the requesting telecommunications carrier will transmit 
the calling party's number in connection with calls exchanged over the 
trunk.

0
11. Section 51.319 is revised to read as follows:


Sec.  51.319  Specific unbundling requirements.

    (a) Local loops. An incumbent LEC shall provide a requesting 
telecommunications carrier with nondiscriminatory access to the local 
loop on an unbundled basis, in accordance with section 251(c)(3) of the 
Act and this part and as set forth in paragraphs (a)(1) through (a)(9) 
of this section. The local loop network element is defined as a 
transmission facility between a distribution frame (or its equivalent) 
in an incumbent LEC central office and the loop demarcation point at an 
end-user customer premises. This element includes all features, 
functions, and capabilities of such transmission facility, including 
the network interface device. It also includes all electronics, 
optronics, and intermediate devices (including repeaters and load 
coils) used to establish the transmission path to the end-user customer 
premises as well as any inside wire owned or controlled by the 
incumbent LEC that is part of that transmission path.
    (1) Copper loops. An incumbent LEC shall provide a requesting 
telecommunications carrier with nondiscriminatory access to the copper 
loop on an unbundled basis. A copper loop is a stand-alone local loop 
comprised entirely of copper wire or cable. Copper loops include two-
wire and four-wire analog voice-grade copper loops, digital copper 
loops (e.g., DS0s and integrated services digital network

[[Page 52296]]

lines), as well as two-wire and four-wire copper loops conditioned to 
transmit the digital signals needed to provide digital subscriber line 
services, regardless of whether the copper loops are in service or held 
as spares. The copper loop includes attached electronics using time 
division multiplexing technology, but does not include packet switching 
capabilities as defined in paragraph (a)(2)(i) of this section. The 
availability of DS1 and DS3 copper loops is subject to the requirements 
of paragraphs (a)(4) and (a)(5) of this section.
    (i) Line sharing. Beginning on the effective date of the 
Commission's Triennial Review Order, the high frequency portion of a 
copper loop shall no longer be required to be provided as an unbundled 
network element, subject to the transitional line sharing conditions in 
paragraphs (a)(1)(i)(A) and (a)(1)(i)(B) of this section. Line sharing 
is the process by which a requesting telecommunications carrier 
provides digital subscriber line service over the same copper loop that 
the incumbent LEC uses to provide voice service, with the incumbent LEC 
using the low frequency portion of the loop and the requesting 
telecommunications carrier using the high frequency portion of the 
loop. The high frequency portion of the loop consists of the frequency 
range on the copper loop above the range that carries analog circuit-
switched voice transmissions. This portion of the loop includes the 
features, functions, and capabilities of the loop that are used to 
establish a complete transmission path on the high frequency range 
between the incumbent LEC's distribution frame (or its equivalent) in 
its central office and the demarcation point at the end-user customer 
premises, and includes the high frequency portion of any inside wire 
owned or controlled by the incumbent LEC.
    (A) Line sharing customers before the effective date of the 
Commission's Triennial Review Order. An incumbent LEC shall provide a 
requesting telecommunications carrier with the ability to engage in 
line sharing over a copper loop where, prior to the effective date of 
the Commission's Triennial Review Order, the requesting 
telecommunications carrier began providing digital subscriber line 
service to a particular end-user customer and has not ceased providing 
digital subscriber line service to that customer. Until such end-user 
customer cancels or otherwise discontinues its subscription to the 
digital subscriber line service of the requesting telecommunications 
carrier, or its successor or assign, an incumbent LEC shall continue to 
provide access to the high frequency portion of the loop at the same 
rate that the incumbent LEC charged for such access prior to the 
effective date of the Commission's Triennial Review Order.
    (B) Line sharing customers on or after the effective date of the 
Commission's Triennial Review Order. An incumbent LEC shall provide a 
requesting telecommunications carrier with the ability to engage in 
line sharing over a copper loop, between the effective date of the 
Commission's Triennial Review Order and three years after that 
effective date, where the requesting telecommunications carrier began 
providing digital subscriber line service to a particular end-user 
customer on or before the date one year after that effective date. 
Beginning three years after the effective date of the Commission's 
Triennial Review Order, the incumbent LEC is no longer required to 
provide a requesting telecommunications carrier with the ability to 
engage in line sharing for this end-user customer or any new end-user 
customer. Between the effective date of the Commission's Triennial 
Review Order and three years after that effective date, an incumbent 
LEC shall provide a requesting telecommunications carrier with access 
to the high frequency portion of a copper loop in order to serve line 
sharing customers obtained between the effective date of the 
Commission's Triennial Review Order and one year after that effective 
date in the following manner:
    (1) During the first year following the effective date of the 
Commission's Triennial Review Order, the incumbent LEC shall provide 
access to the high frequency portion of a copper loop at 25 percent of 
the state-approved monthly recurring rate, or 25 percent of the monthly 
recurring rate set forth in the incumbent LEC's and requesting 
telecommunications carrier's interconnection agreement, for access to a 
copper loop in effect on that date.
    (2) Beginning one year plus one day after the effective date of the 
Commission's Triennial Review Order until two years after that 
effective date, the incumbent LEC shall provide access to the high 
frequency portion of a copper loop at 50 percent of the state-approved 
monthly recurring rate, or 50 percent of the monthly recurring rate set 
forth in the incumbent LEC's and requesting telecommunications 
carrier's interconnection agreement, for access to a copper loop in 
effect on the effective date of the Commission's Triennial Review 
Order.
    (3) Beginning two years plus one day after effective date of the 
Commission's Triennial Review Order until three years after that 
effective date, the incumbent LEC shall provide access to the high 
frequency portion of a copper loop at 75 percent of the state-approved 
monthly recurring rate, or 75 percent of the monthly recurring rate set 
forth in the incumbent LEC's and requesting telecommunications 
carrier's interconnection agreement, for access to a copper loop in 
effect on the effective date of the Commission's Triennial Review 
Order.
    (ii) Line splitting. An incumbent LEC shall provide a requesting 
telecommunications carrier that obtains an unbundled copper loop from 
the incumbent LEC with the ability to engage in line splitting 
arrangements with another competitive LEC using a splitter collocated 
at the central office where the loop terminates into a distribution 
frame or its equivalent. Line splitting is the process in which one 
competitive LEC provides narrowband voice service over the low 
frequency portion of a copper loop and a second competitive LEC 
provides digital subscriber line service over the high frequency 
portion of that same loop.
    (A) An incumbent LEC's obligation, under paragraph (a)(1)(ii) of 
this section, to provide a requesting telecommunications carrier with 
the ability to engage in line splitting applies regardless of whether 
the carrier providing voice service provides its own switching or 
obtains local circuit switching as an unbundled network element 
pursuant to paragraph (d) of this section.
    (B) An incumbent LEC must make all necessary network modifications, 
including providing nondiscriminatory access to operations support 
systems necessary for pre-ordering, ordering, provisioning, maintenance 
and repair, and billing for loops used in line splitting arrangements.
    (iii) Line conditioning. The incumbent LEC shall condition a copper 
loop at the request of the carrier seeking access to a copper loop 
under paragraph (a)(1) of this section, the high frequency portion of a 
copper loop under paragraph (a)(1)(i) of this section, or a copper 
subloop under paragraph (b) of this section to ensure that the copper 
loop or copper subloop is suitable for providing digital subscriber 
line services, including those provided over the high frequency portion 
of the copper loop or copper subloop, whether or not the incumbent LEC 
offers advanced services to the end-user customer on that copper loop 
or copper subloop. If the incumbent LEC seeks compensation from the 
requesting telecommunications carrier for line conditioning, the 
requesting telecommunications carrier

[[Page 52297]]

has the option of refusing, in whole or in part, to have the line 
conditioned; and a requesting telecommunications carrier's refusal of 
some or all aspects of line conditioning will not diminish any right it 
may have, under paragraphs (a) and (b) of this section, to access the 
copper loop, the high frequency portion of the copper loop, or the 
copper subloop.
    (A) Line conditioning is defined as the removal from a copper loop 
or copper subloop of any device that could diminish the capability of 
the loop or subloop to deliver high-speed switched wireline 
telecommunications capability, including digital subscriber line 
service. Such devices include, but are not limited to, bridge taps, 
load coils, low pass filters, and range extenders.
    (B) Incumbent LECs shall recover the costs of line conditioning 
from the requesting telecommunications carrier in accordance with the 
Commission's forward-looking pricing principles promulgated pursuant to 
section 252(d)(1) of the Act and in compliance with rules governing 
nonrecurring costs in Sec.  51.507(e).
    (C) Insofar as it is technically feasible, the incumbent LEC shall 
test and report troubles for all the features, functions, and 
capabilities of conditioned copper lines, and may not restrict its 
testing to voice transmission only.
    (D) Where the requesting telecommunications carrier is seeking 
access to the high frequency portion of a copper loop or copper subloop 
pursuant to paragraphs (a) or (b) of this section and the incumbent LEC 
claims that conditioning that loop or subloop will significantly 
degrade, as defined in Sec.  51.233, the voiceband services that the 
incumbent LEC is currently providing over that loop or subloop, the 
incumbent LEC must either:
    (1) Locate another copper loop or copper subloop that has been or 
can be conditioned, migrate the incumbent LEC's voiceband service to 
that loop or subloop, and provide the requesting telecommunications 
carrier with access to the high frequency portion of that alternative 
loop or subloop; or
    (2) Make a showing to the state commission that the original copper 
loop or copper subloop cannot be conditioned without significantly 
degrading voiceband services on that loop or subloop, as defined in 
Sec.  51.233, and that there is no adjacent or alternative copper loop 
or copper subloop available that can be conditioned or to which the 
end-user customer's voiceband service can be moved to enable line 
sharing.
    (E) If, after evaluating the incumbent LEC's showing under 
paragraph (a)(1)(iii)(D)(2) of this section, the state commission 
concludes that a copper loop or copper subloop cannot be conditioned 
without significantly degrading the voiceband service, the incumbent 
LEC cannot then or subsequently condition that loop or subloop to 
provide advanced services to its own customers without first making 
available to any requesting telecommunications carrier the high 
frequency portion of the newly conditioned loop or subloop.
    (iv) Maintenance, repair, and testing. (A) An incumbent LEC shall 
provide, on a nondiscriminatory basis, physical loop test access points 
to a requesting telecommunications carrier at the splitter, through a 
cross-connection to the requesting telecommunications carrier's 
collocation space, or through a standardized interface, such as an 
intermediate distribution frame or a test access server, for the 
purpose of testing, maintaining, and repairing copper loops and copper 
subloops.
    (B) An incumbent LEC seeking to utilize an alternative physical 
access methodology may request approval to do so from the state 
commission, but must show that the proposed alternative method is 
reasonable and nondiscriminatory, and will not disadvantage a 
requesting telecommunications carrier's ability to perform loop or 
service testing, maintenance, or repair.
    (v) Control of the loop and splitter functionality. In situations 
where a requesting telecommunications carrier is obtaining access to 
the high frequency portion of a copper loop either through a line 
sharing or line splitting arrangement, the incumbent LEC may maintain 
control over the loop and splitter equipment and functions, and shall 
provide to the requesting telecommunications carrier loop and splitter 
functionality that is compatible with any transmission technology that 
the requesting telecommunications carrier seeks to deploy using the 
high frequency portion of the loop, as defined in paragraph (a)(1)(i) 
of this section, provided that such transmission technology is presumed 
to be deployable pursuant to Sec.  51.230.
    (2) Hybrid loops. A hybrid loop is a local loop composed of both 
fiber optic cable, usually in the feeder plant, and copper wire or 
cable, usually in the distribution plant.
    (i) Packet switching facilities, features, functions, and 
capabilities. An incumbent LEC is not required to provide unbundled 
access to the packet switched features, functions and capabilities of 
its hybrid loops. Packet switching capability is the routing or 
forwarding of packets, frames, cells, or other data units based on 
address or other routing information contained in the packets, frames, 
cells or other data units, and the functions that are performed by the 
digital subscriber line access multiplexers, including but not limited 
to the ability to terminate an end-user customer's copper loop (which 
includes both a low-band voice channel and a high-band data channel, or 
solely a data channel); the ability to forward the voice channels, if 
present, to a circuit switch or multiple circuit switches; the ability 
to extract data units from the data channels on the loops; and the 
ability to combine data units from multiple loops onto one or more 
trunks connecting to a packet switch or packet switches.
    (ii) Broadband services. When a requesting telecommunications 
carrier seeks access to a hybrid loop for the provision of broadband 
services, an incumbent LEC shall provide the requesting 
telecommunications carrier with nondiscriminatory access to the time 
division multiplexing features, functions, and capabilities of that 
hybrid loop, including DS1 or DS3 capacity (where impairment has been 
found to exist), on an unbundled basis to establish a complete 
transmission path between the incumbent LEC's central office and an end 
user's customer premises. This access shall include access to all 
features, functions, and capabilities of the hybrid loop that are not 
used to transmit packetized information.
    (iii) Narrowband services. When a requesting telecommunications 
carrier seeks access to a hybrid loop for the provision of narrowband 
services, the incumbent LEC may either:
    (A) Provide nondiscriminatory access, on an unbundled basis, to an 
entire hybrid loop capable of voice-grade service (i.e., equivalent to 
DS0 capacity), using time division multiplexing technology; or
    (B) Provide nondiscriminatory access to a spare home-run copper 
loop serving that customer on an unbundled basis.
    (3) Fiber-to-the-home loops. A fiber-to-the-home loop is a local 
loop consisting entirely of fiber optic cable, whether dark or lit, and 
serving a residential end user's customer premises.
    (i) New builds. An incumbent LEC is not required to provide 
nondiscriminatory access to a fiber-to-the-home loop on an unbundled 
basis when the incumbent LEC deploys such a loop to a residential unit 
that previously has not been served by any loop facility.

[[Page 52298]]

    (ii) Overbuilds. An incumbent LEC is not required to provide 
nondiscriminatory access to a fiber-to-the-home loop on an unbundled 
basis when the incumbent LEC has deployed such a loop parallel to, or 
in replacement of, an existing copper loop facility, except that:
    (A) The incumbent LEC must maintain the existing copper loop 
connected to the particular customer premises after deploying the 
fiber-to-the-home loop and provide nondiscriminatory access to that 
copper loop on an unbundled basis unless the incumbent LEC retires the 
copper loop pursuant to paragraph (a)(3)(iii) of this section.
    (B) An incumbent LEC that maintains the existing copper loop 
pursuant to paragraph (a)(3)(ii)(A) of this section need not incur any 
expenses to ensure that the existing copper loop remains capable of 
transmitting signals prior to receiving a request for access pursuant 
to that paragraph, in which case the incumbent LEC shall restore the 
copper loop to serviceable condition upon request.
    (C) An incumbent LEC that retires the copper loop pursuant to 
paragraph (a)(3)(iii) of this section shall provide nondiscriminatory 
access to a 64 kilobits per second transmission path capable of voice 
grade service over the fiber-to-the-home loop on an unbundled basis.
    (iii) Retirement of copper loops or copper subloops. Prior to 
retiring any copper loop or copper subloop that has been replaced with 
a fiber-to-the-home loop, an incumbent LEC must comply with:
    (A) The network disclosure requirements set forth in section 
251(c)(5) of the Act and in Sec.  51.325 through Sec.  51.335; and
    (B) Any applicable state requirements.
    (4) DS1 loops. (i) An incumbent LEC shall provide a requesting 
telecommunications carrier with nondiscriminatory access to a DS1 loop 
on an unbundled basis except where the state commission has found, 
through application of the competitive wholesale facilities trigger in 
paragraph (a)(4)(ii) of this section, that requesting 
telecommunications carriers are not impaired without access to a DS1 
loop at a specific customer location. A DS1 loop is a digital local 
loop having a total digital signal speed of 1.544 megabytes per second. 
DS1 loops include, but are not limited to, two-wire and four-wire 
copper loops capable of providing high-bit rate digital subscriber line 
services, including T1 services.
    (ii) Competitive wholesale facilities trigger for DS1 loops. A 
state commission shall find that a requesting telecommunications 
carrier is not impaired without access to a DS1 loop at a specific 
customer location where two or more competing providers not affiliated 
with each other or with the incumbent LEC, including intermodal 
providers of service comparable in quality to that of the incumbent 
LEC, each satisfy the conditions in paragraphs (a)(4)(ii)(A) and 
(a)(4)(ii)(B) of this section:
    (A) The competing provider has deployed its own DS1 facilities, and 
offers a DS1 loop over its own facilities on a widely available 
wholesale basis to other carriers desiring to serve customers at that 
location. For purposes of this paragraph, the competing provider's DS1 
facilities may use dark fiber facilities that the competing provider 
has obtained on an unbundled, leased, or purchased basis if it has 
attached its own optronics to activate the fiber.
    (B) The competing provider has access to the entire customer 
location, including each individual unit within that location.
    (5) DS3 loops. Subject to the cap in paragraph (a)(5)(iii), an 
incumbent LEC shall provide a requesting telecommunications carrier 
with nondiscriminatory access to a DS3 loop on an unbundled basis 
except where the state commission has found, through application of 
either paragraph (a)(5)(i) of this section or the potential deployment 
analysis in paragraph (a)(5)(ii) of this section, that requesting 
telecommunications carriers are not impaired without access to a DS3 
loop at a specific customer location. A DS3 loop is a digital local 
loop having a total digital signal speed of 44.736 megabytes per 
second.
    (i) Triggers for DS3 loops. A state commission shall find that a 
requesting telecommunications carrier is not impaired without access to 
unbundled DS3 loops at a specific customer location where two or more 
competing providers not affiliated with each other or with the 
incumbent LEC, including intermodal providers of service comparable in 
quality to that of the incumbent LEC, satisfy either paragraph 
(a)(5)(i)(A) or paragraph (a)(5)(i)(B) of this section:
    (A) Self-provisioning trigger for DS3 loops. To satisfy this 
trigger, a state commission must find that each competing provider has 
either deployed its own DS3 facilities at that specific customer 
location and is serving customers via those facilities at that 
location, or has deployed DS3 facilities by attaching its own optronics 
to activate dark fiber transmission facilities obtained under a long-
term indefeasible right of use and is serving customers via those 
facilities at that location.
    (B) Competitive wholesale facilities trigger for DS3 loops. To 
satisfy this trigger, a state commission must find that each competing 
provider satisfies the conditions in paragraphs (a)(5)(i)(B)(1) and 
(a)(5)(i)(B)(2) of this section.
    (1) The competing provider has deployed its own DS3 facilities, and 
offers a DS3 loop over its own facilities on a widely available 
wholesale basis to other competing providers seeking to serve customers 
at the specific customer location. For purposes of this paragraph, the 
competing provider's DS3 facilities may use dark fiber facilities that 
the competing provider has obtained on an unbundled, leased, or 
purchased basis if it has attached its own optronics to activate the 
fiber.
    (2) The competing provider has access to the entire customer 
location, including each individual unit within that location.
    (ii) Potential deployment of DS3 loops. Where neither trigger in 
paragraph (a)(5)(i) of this section is satisfied, a state commission 
shall consider whether other evidence shows that a requesting 
telecommunications carrier is not impaired without access to an 
unbundled DS3 loop at a specific customer location. To make this 
determination, a state must consider the following factors: evidence of 
alternative loop deployment at that location; local engineering costs 
of building and utilizing transmission facilities; the cost of 
underground or aerial laying of fiber or copper; the cost of equipment 
needed for transmission; installation and other necessary costs 
involved in setting up service; local topography such as hills and 
rivers; availability of reasonable access to rights-of-way; building 
access restrictions/costs; and availability/feasibility of similar 
quality/reliability alternative transmission technologies at that 
particular location.
    (iii) Cap on unbundled DS3 circuits. A requesting 
telecommunications carrier may obtain a maximum of two unbundled DS3 
loops for any single customer location where DS3 loops are available as 
unbundled loops.
    (6) Dark fiber loops. An incumbent LEC shall provide a requesting 
telecommunications carrier with nondiscriminatory access to a dark 
fiber loop on an unbundled basis except where a state commission has 
found, through application of the self-provisioning trigger in 
paragraph (a)(6)(i) of this section or the potential deployment 
analysis in paragraph

[[Page 52299]]

(a)(6)(ii) of this section, that requesting telecommunications carriers 
are not impaired without access to a dark fiber loop at a specific 
customer location. Dark fiber is fiber within an existing fiber optic 
cable that has not yet been activated through optronics to render it 
capable of carrying communications services.
    (i) Self-provisioning trigger for dark fiber loops. A state 
commission shall find that a requesting telecommunications carrier is 
not impaired without access to a dark fiber loop at a specific customer 
location where two or more competing providers not affiliated with each 
other or with the incumbent LEC, have deployed their own dark fiber 
facilities at that specific customer location. For purposes of making 
this determination, a competing provider that has obtained those dark 
fiber facilities under a long-term indefeasible right of use shall be 
considered a competing provider with its own dark fiber facilities. 
Dark fiber purchased on an unbundled basis from the incumbent LEC shall 
not be considered under this paragraph.
    (ii) Potential deployment of dark fiber loops. Where the trigger in 
paragraph (a)(6)(i) of this section is not satisfied, a state 
commission shall consider whether other evidence shows that a 
requesting telecommunications carrier is not impaired without access to 
an unbundled dark fiber loop at a specific customer location. To make 
this determination, a state must consider the following factors: 
evidence of alternative loop deployment at that location; local 
engineering costs of building and utilizing transmission facilities; 
the cost of underground or aerial laying of fiber; the cost of 
equipment needed for transmission; installation and other necessary 
costs involved in setting up service; local topography such as hills 
and rivers; availability of reasonable access to rights-of-way; 
building access restrictions/costs; and availability/feasibility of 
similar quality/reliability alternative transmission technologies at 
that particular location.
    (7) State commission proceedings. A state commission shall complete 
the proceedings necessary to satisfy the requirements in paragraphs 
(a)(4), (a)(5), and (a)(6) of this section in accordance with 
paragraphs (a)(7)(i) and (a)(7)(ii) of this section.
    (i) Initial review. A state commission shall complete any initial 
review applying the triggers and criteria in paragraphs (a)(4), (a)(5), 
and (a)(6) of this section within nine months from the effective date 
of the Commission's Triennial Review Order.
    (ii) Continuing review. A state commission shall complete any 
subsequent review applying these triggers and criteria within six 
months of the filing of a petition or other pleading to conduct such a 
review.
    (8) Routine network modifications. (i) An incumbent LEC shall make 
all routine network modifications to unbundled loop facilities used by 
requesting telecommunications carriers where the requested loop 
facility has already been constructed. An incumbent LEC shall perform 
these routine network modifications to unbundled loop facilities in a 
nondiscriminatory fashion, without regard to whether the loop facility 
being accessed was constructed on behalf, or in accordance with the 
specifications, of any carrier.
    (ii) A routine network modification is an activity that the 
incumbent LEC regularly undertakes for its own customers. Routine 
network modifications include, but are not limited to, rearranging or 
splicing of cable; adding an equipment case; adding a doubler or 
repeater; adding a smart jack; installing a repeater shelf; adding a 
line card; deploying a new multiplexer or reconfiguring an existing 
multiplexer; and attaching electronic and other equipment that the 
incumbent LEC ordinarily attaches to a DS1 loop to activate such loop 
for its own customer. They also include activities needed to enable a 
requesting telecommunications carrier to obtain access to a dark fiber 
loop. Routine network modifications may entail activities such as 
accessing manholes, deploying bucket trucks to reach aerial cable, and 
installing equipment casings. Routine network modifications do not 
include the construction of a new loop, or the installation of new 
aerial or buried cable for a requesting telecommunications carrier.
    (9) Engineering policies, practices, and procedures. An incumbent 
LEC shall not engineer the transmission capabilities of its network in 
a manner, or engage in any policy, practice, or procedure, that 
disrupts or degrades access to a local loop or subloop, including the 
time division multiplexing-based features, functions, and capabilities 
of a hybrid loop, for which a requesting telecommunications carrier may 
obtain or has obtained access pursuant to paragraph (a) of this 
section.
    (b) Subloops. An incumbent LEC shall provide a requesting 
telecommunications carrier with nondiscriminatory access to subloops on 
an unbundled basis in accordance with section 251(c)(3) of the Act and 
this part and as set forth in paragraph (b) of this section.
    (1) Copper subloops. An incumbent LEC shall provide a requesting 
telecommunications carrier with nondiscriminatory access to a copper 
subloop on an unbundled basis. A copper subloop is a portion of a 
copper loop, or hybrid loop, comprised entirely of copper wire or 
copper cable that acts as a transmission facility between any point of 
technically feasible access in an incumbent LEC's outside plant, 
including inside wire owned or controlled by the incumbent LEC, and the 
end-user customer premises. A copper subloop includes all intermediate 
devices (including repeaters and load coils) used to establish a 
transmission path between a point of technically feasible access and 
the demarcation point at the end-user customer premises, and includes 
the features, functions, and capabilities of the copper loop. Copper 
subloops include two-wire and four-wire analog voice-grade subloops as 
well as two-wire and four-wire subloops conditioned to transmit the 
digital signals needed to provide digital subscriber line services, 
regardless of whether the subloops are in service or held as spares.
    (i) Point of technically feasible access. A point of technically 
feasible access is any point in the incumbent LEC's outside plant where 
a technician can access the copper wire within a cable without removing 
a splice case. Such points include, but are not limited to, a pole or 
pedestal, the serving area interface, the network interface device, the 
minimum point of entry, any remote terminal, and the feeder/
distribution interface. An incumbent LEC shall, upon a site-specific 
request, provide access to a copper subloop at a splice near a remote 
terminal. The incumbent LEC shall be compensated for providing this 
access in accordance with Sec. Sec.  51.501 through 51.515.
    (ii) Rules for collocation. Access to the copper subloop is subject 
to the Commission's collocation rules at Sec. Sec.  51.321 and 51.323.
    (2) Subloops for access to multiunit premises wiring. An incumbent 
LEC shall provide a requesting telecommunications carrier with 
nondiscriminatory access to the subloop for access to multiunit 
premises wiring on an unbundled basis regardless of the capacity level 
or type of loop that the requesting telecommunications carrier seeks to 
provision for its customer. The subloop for access to multiunit 
premises wiring is defined as any portion of the loop that it is 
technically feasible to access at a terminal in the incumbent

[[Page 52300]]

LEC's outside plant at or near a multiunit premises. One category of 
this subloop is inside wire, which is defined for purposes of this 
section as all loop plant owned or controlled by the incumbent LEC at a 
multiunit customer premises between the minimum point of entry as 
defined in Sec.  68.105 of this chapter and the point of demarcation of 
the incumbent LEC's network as defined in Sec.  68.3 of this chapter.
    (i) Point of technically feasible access. A point of technically 
feasible access is any point in the incumbent LEC's outside plant at or 
near a multiunit premises where a technician can access the wire or 
fiber within the cable without removing a splice case to reach the wire 
or fiber within to access the wiring in the multiunit premises. Such 
points include, but are not limited to, a pole or pedestal, the network 
interface device, the minimum point of entry, the single point of 
interconnection, and the feeder/distribution interface.
    (ii) Single point of interconnection. Upon notification by a 
requesting telecommunications carrier that it requests interconnection 
at a multiunit premises where the incumbent LEC owns, controls, or 
leases wiring, the incumbent LEC shall provide a single point of 
interconnection that is suitable for use by multiple carriers. This 
obligation is in addition to the incumbent LEC's obligations, under 
paragraph (b)(2) of this section, to provide nondiscriminatory access 
to a subloop for access to multiunit premises wiring, including any 
inside wire, at any technically feasible point. If the parties are 
unable to negotiate rates, terms, and conditions under which the 
incumbent LEC will provide this single point of interconnection, then 
any issues in dispute regarding this obligation shall be resolved in 
state proceedings under section 252 of the Act.
    (3) Other subloop provisions--(i) Technical feasibility. If parties 
are unable to reach agreement through voluntary negotiations as to 
whether it is technically feasible, or whether sufficient space is 
available, to unbundle a copper subloop or subloop for access to 
multiunit premises wiring at the point where a telecommunications 
carrier requests, the incumbent LEC shall have the burden of 
demonstrating to the state commission, in state proceedings under 
section 252 of the Act, that there is not sufficient space available, 
or that it is not technically feasible to unbundle the subloop at the 
point requested.
    (ii) Best practices. Once one state commission has determined that 
it is technically feasible to unbundle subloops at a designated point, 
an incumbent LEC in any state shall have the burden of demonstrating to 
the state commission, in state proceedings under section 252 of the 
Act, that it is not technically feasible, or that sufficient space is 
not available, to unbundle its own loops at such a point.
    (c) Network interface device. Apart from its obligation to provide 
the network interface device functionality as part of an unbundled loop 
or subloop, an incumbent LEC also shall provide nondiscriminatory 
access to the network interface device on an unbundled basis, in 
accordance with section 251(c)(3) of the Act and this part. The network 
interface device element is a stand-alone network element and is 
defined as any means of interconnection of customer premises wiring to 
the incumbent LEC's distribution plant, such as a cross-connect device 
used for that purpose. An incumbent LEC shall permit a requesting 
telecommunications carrier to connect its own loop facilities to on-
premises wiring through the incumbent LEC's network interface device, 
or at any other technically feasible point.
    (d) Local circuit switching. An incumbent LEC shall provide a 
requesting telecommunications carrier with nondiscriminatory access to 
local circuit switching, including tandem switching, on an unbundled 
basis, in accordance with section 251(c)(3) of the Act and this part 
and as set forth in paragraph (d) of this section.
    (1) Definition. Local circuit switching is defined as follows:
    (i) Local circuit switching encompasses all line-side and trunk-
side facilities, plus the features, functions, and capabilities of the 
switch. The features, functions, and capabilities of the switch shall 
include the basic switching function of connecting lines to lines, 
lines to trunks, trunks to lines, and trunks to trunks.
    (ii) Local circuit switching includes all vertical features that 
the switch is capable of providing, including custom calling, custom 
local area signaling services features, and Centrex, as well as any 
technically feasible customized routing functions.
    (2) DS0 capacity (i.e., mass market) determinations. An incumbent 
LEC shall provide access to local circuit switching on an unbundled 
basis to a requesting telecommunications carrier serving end users 
using DS0 capacity loops except where the state commission has found, 
in accordance with the conditions set forth in paragraph (d)(2) of this 
section, that requesting telecommunications carriers are not impaired 
in a particular market, or where the state commission has found that 
all such impairment would be cured by implementation of transitional 
unbundled local circuit switching in a given market and has implemented 
such transitional access as set forth in paragraph (d)(2)(iii)(C) of 
this section.
    (i) Market definition. A state commission shall define the markets 
in which it will evaluate impairment by determining the relevant 
geographic area to include in each market. In defining markets, a state 
commission shall take into consideration the locations of mass market 
customers actually being served (if any) by competitors, the variation 
in factors affecting competitors' ability to serve each group of 
customers, and competitors' ability to target and serve specific 
markets profitably and efficiently using currently available 
technologies. A state commission shall not define the relevant 
geographic area as the entire state.
    (ii) Batch cut process. In each of the markets that the state 
commission defines pursuant to paragraph (d)(2)(i) of this section, the 
state commission shall either establish an incumbent LEC batch cut 
process as set forth in paragraph (d)(2)(ii)(A) of this section or 
issue detailed findings explaining why such a batch process is 
unnecessary, as set forth in paragraph (d)(2)(ii)(B) of this section. A 
batch cut process is defined as a process by which the incumbent LEC 
simultaneously migrates two or more loops from one carrier's local 
circuit switch to another carrier's local circuit switch, giving rise 
to operational and economic efficiencies not available when migrating 
loops from one carrier's local circuit switch to another carrier's 
local circuit switch on a line-by-line basis.
    (A) A state commission shall establish an incumbent LEC batch cut 
process for use in migrating lines served by one carrier's local 
circuit switch to lines served by another carrier's local circuit 
switch in each of the markets the state commission has defined pursuant 
to paragraph (d)(2)(i) of this section. In establishing the incumbent 
LEC batch cut process:
    (1) A state commission shall first determine the appropriate volume 
of loops that should be included in the ``batch.''
    (2) A state commission shall adopt specific processes to be 
employed when performing a batch cut, taking into account the incumbent 
LEC's particular network design and cut over practices.
    (3) A state commission shall evaluate whether the incumbent LEC is 
capable of migrating multiple lines served using

[[Page 52301]]

unbundled local circuit switching to switches operated by a carrier 
other than the incumbent LEC for any requesting telecommunications 
carrier in a timely manner, and may require that incumbent LECs comply 
with an average completion interval metric for provision of high 
volumes of loops.
    (4) A state commission shall adopt rates for the batch cut 
activities it approves in accordance with the Commission's pricing 
rules for unbundled network elements. These rates shall reflect the 
efficiencies associated with batched migration of loops to a requesting 
telecommunications carrier's switch, either through a reduced per-line 
rate or through volume discounts as appropriate.
    (B) If a state commission concludes that the absence of a batch cut 
migration process is not impairing requesting telecommunications 
carriers' ability to serve end users using DS0 loops in the mass market 
without access to local circuit switching on an unbundled basis, that 
conclusion will render the creation of such a process unnecessary. In 
such cases, the state commission shall issue detailed findings 
regarding the volume of unbundled loop migrations that could be 
expected if requesting telecommunications carriers were no longer 
entitled to local circuit switching on an unbundled basis, the ability 
of the incumbent LEC to meet that demand in a timely and efficient 
manner using its existing hot cut process, and the non-recurring costs 
associated with that hot cut process. The state commission further 
shall explain why these findings indicate that the absence of a batch 
cut process does not give rise to impairment in the market at issue.
    (iii) State commission analysis. To determine whether requesting 
telecommunications carriers are impaired without access to local 
circuit switching on an unbundled basis, a state commission shall 
perform the inquiry set forth in paragraphs (d)(2)(iii)(A) through 
(d)(2)(iii)(C) of this section:
    (A) Local switching triggers. A state commission shall find that a 
requesting telecommunications carrier is not impaired without access to 
local circuit switching on an unbundled basis in a particular market 
where either the self-provisioning trigger set forth in paragraph 
(d)(2)(iii)(A)(1) of this section or the competitive wholesale 
facilities trigger set forth in paragraph (d)(2)(iii)(A)(2) of this 
section is satisfied.
    (1) Local switching self-provisioning trigger. To satisfy this 
trigger, a state commission must find that three or more competing 
providers not affiliated with each other or the incumbent LEC, 
including intermodal providers of service comparable in quality to that 
of the incumbent LEC, each are serving mass market customers in the 
particular market with the use of their own local circuit switches.
    (2) Local switching competitive wholesale facilities trigger. To 
satisfy this trigger, a state commission must find that two or more 
competing providers not affiliated with each other or the incumbent 
LEC, including intermodal providers of service comparable in quality to 
that of the incumbent LEC, each offer wholesale local circuit switching 
service to customers serving DS0 capacity loops in that market using 
their own switches.
    (B) Additional state authority. If neither of the triggers 
described in paragraph (d)(2)(iii)(A) of this section has been 
satisfied, the state commission shall find that requesting 
telecommunications carriers are not impaired without access to 
unbundled local circuit switching in a particular market where the 
state commission determines that self-provisioning of local switching 
is economic based on the following criteria:
    (1) Evidence of actual deployment. The state commission shall 
consider whether switches actually deployed in the market at issue 
permit competitive entry in the absence of unbundled local circuit 
switching. Specifically, the state commission shall examine whether, in 
the market at issue, there are either two wholesale providers or three 
self-provisioners of local switching not affiliated with each other or 
the incumbent LEC, serving end users using DS1 or higher capacity loops 
in the market at issue; or there is any carrier, including any 
intermodal provider of service comparable in quality to that of the 
incumbent LEC, using a self-provisioned switch to serve end users using 
DS0 capacity loops. If so, and if the state commission determines that 
the switch or switches identified can be used to serve end users using 
DS0 capacity loops in that market in an economic fashion, this evidence 
must be given substantial weight.
    (2) Operational barriers. The state commission also shall examine 
the role of potential operational barriers in determining whether to 
find ``no impairment'' in a given market. Specifically, the state 
commission shall examine whether the incumbent LEC's performance in 
provisioning loops, difficulties in obtaining collocation space due to 
lack of space or delays in provisioning by the incumbent LEC, or 
difficulties in obtaining cross-connects in an incumbent LEC's wire 
center render entry uneconomic for requesting telecommunications 
carriers in the absence of unbundled access to local circuit switching.
    (3) Economic barriers. The state commission shall also examine the 
role of potential economic barriers in determining whether to find ``no 
impairment'' in a given market. Specifically, the state commission 
shall examine whether the costs of migrating incumbent LEC loops to 
requesting telecommunications carriers' switches or the costs of 
backhauling voice circuits to requesting telecommunications carriers' 
switches from the end offices serving their end users render entry 
uneconomic for requesting telecommunications carriers.
    (4) Multi-line DS0 end users. As part of the economic analysis set 
forth in paragraph (d)(2)(iii)(B)(3) of this section, the state 
commission shall establish a maximum number of DS0 loops for each 
geographic market that requesting telecommunications carriers can serve 
through unbundled switching when serving multiline end users at a 
single location. Specifically, in establishing this ``cutoff,'' the 
state commission shall take into account the point at which the 
increased revenue opportunity at a single location is sufficient to 
overcome impairment and the point at which multiline end users could be 
served in an economic fashion by higher capacity loops and a carrier's 
own switching and thus be considered part of the DS1 enterprise market.
    (C) Transitional use of unbundled switching. If the triggers 
described in paragraph (d)(2)(iii)(A) of this section have not been 
satisfied with regard to a particular market and the analysis described 
in paragraph (d)(2)(iii)(B) of this section has resulted in a finding 
that requesting telecommunications carriers are impaired without access 
to local circuit switching on an unbundled basis in that market, the 
state commission shall consider whether any impairment would be cured 
by transitional (``rolling'') access to local circuit switching on an 
unbundled basis for a period of 90 days or more. ``Rolling'' access 
means the use of unbundled local circuit switching for a limited period 
of time for each end-user customer to whom a requesting 
telecommunications carrier seeks to provide service. If the state 
commission determines that transitional access to unbundled local 
circuit switching would cure any impairment, it shall require incumbent 
LECs to make unbundled local circuit switching available to requesting 
telecommunications carriers for 90 days

[[Page 52302]]

or more, as specified by the state commission. The time limit set by 
the commission shall apply to each request for access to unbundled 
local circuit switching by a requesting telecommunications carrier on a 
per customer basis.
    (iv) DS0 capacity end-user transition. If a state commission finds 
that no impairment exists in a market or that any impairment could be 
cured by transitional access to unbundled local circuit switching, all 
requesting telecommunications carriers in that market shall commit to 
an implementation plan with the incumbent LEC for the migration of the 
embedded unbundled switching mass market customer base within 2 months 
of the state commission determination. A requesting telecommunications 
carrier may no longer obtain access to unbundled local circuit 
switching 5 months after the state commission determination, except, 
where applicable, on a transitional basis as described in paragraph 
(d)(2)(iii)(C) of this section.
    (A) Transition timeline. Each requesting telecommunications carrier 
shall submit the orders necessary to migrate its embedded base of end-
user customers off of the unbundled local circuit switching element in 
accordance with the following timetable, measured from the day of the 
state commission determination. For purposes of calculating the number 
of customers who must be migrated, the embedded base of customers shall 
include all customers served using unbundled switching that are not 
customers being served with transitional unbundled switching pursuant 
to paragraph (d)(3)(iii)(C) of this section.
    (1) Month 13: Each requesting telecommunications carrier must 
submit orders for one-third of all its unbundled local circuit 
switching end-user customers;
    (2) Month 20: Each requesting telecommunications carrier must 
submit orders for half of its remaining unbundled local circuit 
switching end-user customers, as calculated pursuant to paragraph 
(d)(2)(iv)(A)(1) of this section; and
    (3) Month 27: Each requesting telecommunications carrier must 
submit orders for its remaining unbundled local circuit switching end-
user customers.
    (B) Operational aspects of the migration. Requesting 
telecommunications carriers and the incumbent LEC shall jointly submit 
the details of their implementation plans for each market to the state 
commission within two months of the state commission's determination 
that requesting telecommunications carriers are not impaired without 
access to local circuit switching on an unbundled basis. Each 
requesting telecommunications carrier shall also notify the state 
commission when it has submitted its orders for migration. Each 
incumbent LEC shall notify the state commission when it has completed 
the migration.
    (3) DS1 capacity and above (i.e., enterprise market) 
determinations. An incumbent LEC is not required to provide access to 
local circuit switching on an unbundled basis to requesting 
telecommunications carriers for the purpose of serving end-user 
customers using DS1 capacity and above loops except where the state 
commission petitions this Commission for waiver of this finding in 
accordance with the conditions set forth in paragraph (d)(3)(i) of this 
section and the Commission grants such waiver.
    (i) State commission inquiry. In its petition, a state commission 
wishing to rebut the Commission's finding should petition the 
Commission to show that requesting telecommunications carriers are 
impaired without access to local circuit switching to serve end users 
using DS1 capacity and above loops in a particular geographic market as 
defined in accordance with paragraph (d)(2)(i) of this section if it 
finds that operational or economic barriers exist in that market.
    (A) In making this showing, the state commission shall consider the 
following operational characteristics: incumbent LEC performance in 
provisioning loops; difficulties associated with obtaining collocation 
space due to lack of space or delays in provisioning by the incumbent 
LEC; and the difficulties associated with obtaining cross-connects in 
the incumbent LEC's wire center.
    (B) In making this showing, the state commission shall consider the 
following economic characteristics: the cost of entry into a particular 
market, including those caused by both operational and economic 
barriers to entry; requesting telecommunications carriers' potential 
revenues from serving enterprise customers in that market, including 
all likely revenues to be gained from entering that market; the prices 
requesting telecommunications carriers are likely to be able to charge 
in that market, based on a consideration of the prevailing retail rates 
the incumbent LEC charges to the different classes of customers in the 
different parts of the state.
    (ii) Transitional four-line carve-out. Until the state commission 
completes the review described in paragraph (b)(2)(iii)(B)(4) of this 
section, an incumbent LEC shall comply with the four-line ``carve-out'' 
for unbundled switching established in Implementation of the Local 
Competition Provisions of the Telecommunications Act of 1996, CC Docket 
No. 96-98, Third Report and Order and Fourth Further Notice of Proposed 
Rulemaking, 15 FCC Rcd 3822-31, paras. 276-98 (1999), reversed and 
remanded in part sub. nom. United States Telecom Ass'n v. FCC, 290 F.3d 
415 (D.C. Cir. 2002).
    (A) DS1 capacity and above end-user transition. Each requesting 
telecommunications carrier shall transfer its end-user customers served 
using DS1 and above capacity loops and unbundled local circuit 
switching to an alternative arrangement within 90 days from the end of 
the 90-day state commission consideration period set forth in paragraph 
(d)(5)(i), unless a longer period is necessary to comply with a 
``change of law'' provision in an applicable interconnection agreement.
    (4) Other elements to be unbundled. Elements relating to the local 
circuit switching element shall be made available on an unbundled basis 
as set forth in paragraphs (d)(4)(i) and (d)(4)(ii) of this section.
    (i) An incumbent LEC shall provide a requesting telecommunications 
carrier with nondiscriminatory access to signaling, call-related 
databases, and shared transport facilities on an unbundled basis, in 
accordance with section 251(c)(3) of the Act and this part, to the 
extent that local circuit switching is required to be unbundled by a 
state commission. These elements are defined as follows:
    (A) Signaling networks. Signaling networks include, but are not 
limited to, signaling links and signaling transfer points.
    (B) Call-related databases. Call-related databases are defined as 
databases, other than operations support systems, that are used in 
signaling networks for billing and collection, or the transmission, 
routing, or other provision of a telecommunications service. Where a 
requesting telecommunications carrier purchases unbundled local circuit 
switching from an incumbent LEC, an incumbent LEC shall allow a 
requesting telecommunications carrier to use the incumbent LEC's 
service control point element in the same manner, and via the same 
signaling links, as the incumbent LEC itself.
    (1) Call-related databases include, but are not limited to, the 
calling name database, 911 database, E911 database, line information 
database, toll free calling database, advanced intelligent

[[Page 52303]]

network databases, and downstream number portability databases by means 
of physical access at the signaling transfer point linked to the 
unbundled databases.
    (2) Service management systems are defined as computer databases or 
systems not part of the public switched network that interconnect to 
the service control point and send to the service control point 
information and call processing instructions needed for a network 
switch to process and complete a telephone call, and provide a 
telecommunications carrier with the capability of entering and storing 
data regarding the processing and completing of a telephone call. Where 
a requesting telecommunications carrier purchases unbundled local 
circuit switching from an incumbent LEC, the incumbent LEC shall allow 
a requesting telecommunications carrier to use the incumbent LEC's 
service management systems by providing a requesting telecommunications 
carrier with the information necessary to enter correctly, or format 
for entry, the information relevant for input into the incumbent LEC's 
service management system, including access to design, create, test, 
and deploy advanced intelligent network-based services at the service 
management system, through a service creation environment, that the 
incumbent LEC provides to itself.
    (3) An incumbent LEC shall not be required to unbundle the services 
created in the advanced intelligent network platform and architecture 
that qualify for proprietary treatment.
    (C) Shared transport. Shared transport is defined as the 
transmission facilities shared by more than one carrier, including the 
incumbent LEC, between end office switches, between end office switches 
and tandem switches, and between tandem switches, in the incumbent LEC 
network.
    (ii) An incumbent LEC shall provide a requesting telecommunications 
carrier nondiscriminatory access to operator services and directory 
assistance on an unbundled basis, in accordance with section 251(c)(3) 
of the Act and this part, to the extent that local circuit switching is 
required to be unbundled by a state commission, if the incumbent LEC 
does not provide that requesting telecommunications carrier with 
customized routing, or a compatible signaling protocol, necessary to 
use either a competing provider's operator services and directory 
assistance platform or the requesting telecommunications carrier's own 
platform. Operator services are any automatic or live assistance to a 
customer to arrange for billing or completion, or both, of a telephone 
call. Directory assistance is a service that allows subscribers to 
retrieve telephone numbers of other subscribers.
    (5) State commission proceedings. A state commission shall complete 
the proceedings necessary to satisfy the requirements in paragraphs 
(d)(2) and (d)(3) of this section in accordance with paragraphs 
(d)(5)(i) and (d)(5)(ii) of this section.
    (i) Timing. A state commission shall complete any initial review 
applying the triggers and criteria in paragraph (d)(2) of this section 
within nine months from the effective date of the Commission's 
Triennial Review Order. A state commission wishing to rebut the 
Commission's finding of non-impairment for DS1 and above enterprise 
switches must file a petition with the Commission in accordance with 
paragraph (d)(3) of this section within 90 days from that effective 
date.
    (ii) Continuing review. A state commission shall complete any 
subsequent review applying these triggers and criteria within six 
months of the filing of a petition or other pleading to conduct such a 
review.
    (e) Dedicated transport. An incumbent LEC shall provide a 
requesting telecommunications carrier with nondiscriminatory access to 
dedicated transport on an unbundled basis, in accordance with section 
251(c)(3) of the Act and this part and as set forth in paragraph (e)(1) 
through (e)(5) of this section. As used in those paragraphs, a 
``route'' is a transmission path between one of an incumbent LEC's wire 
centers or switches and another of the incumbent LEC's wire centers or 
switches. A route between two points (e.g., wire center or switch ``A'' 
and wire center or switch ``Z'') may pass through one or more 
intermediate wire centers or switches (e.g., wire center or switch 
``X''). Transmission paths between identical end points (e.g., wire 
center or switch ``A'' and wire center or switch ``Z'') are the same 
``route,'' irrespective of whether they pass through the same 
intermediate wire centers or switches, if any.
    (1) Dedicated DS1 transport. (i) An incumbent LEC shall provide a 
requesting telecommunications carrier with nondiscriminatory access to 
dedicated DS1 transport on an unbundled basis except where the state 
commission has found, through application of the competitive wholesale 
facilities trigger in paragraphs (e)(1)(ii) of this section, that 
requesting telecommunications carriers are not impaired without access 
to dedicated DS1 transport along a particular route. Dedicated DS1 
transport consists of incumbent LEC interoffice transmission facilities 
that have a total digital signal speed of 1.544 megabytes per second 
and are dedicated to a particular customer or carrier.
    (ii) Competitive wholesale facilities trigger for dedicated DS1 
transport. A state commission shall find that a requesting 
telecommunications carrier is not impaired without access to dedicated 
DS1 transport along a particular route where two or more competing 
providers not affiliated with each other or with the incumbent LEC, 
including intermodal providers of service comparable in quality to that 
of the incumbent LEC, each satisfy the conditions in paragraphs 
(e)(1)(ii)(A) through (e)(1)(ii)(D) of this section.
    (A) The competing provider has deployed its own transport 
facilities and is operationally ready to use those facilities to 
provide dedicated DS1 transport along the particular route. For 
purposes of this paragraph, the competing provider's DS1 facilities may 
use dark fiber facilities that the competing provider has obtained on 
an unbundled, leased, or purchased basis if it has attached its own 
optronics to activate the fiber.
    (B) The competing provider is willing immediately to provide, on a 
widely available basis, dedicated DS1 transport along the particular 
route.
    (C) The competing provider's facilities terminate in a collocation 
arrangement at each end of the transport route that is located at an 
incumbent LEC premises and in a similar arrangement at each end of the 
transport route that is not located at an incumbent LEC premises.
    (D) Requesting telecommunications carriers are able to obtain 
reasonable and nondiscriminatory access to the competing provider's 
facilities through a cross-connect to the competing provider's 
collocation arrangement at each end of the transport route that is 
located at an incumbent LEC premises and though a similar arrangement 
at each end of the transport route that is not located at an incumbent 
LEC premises.
    (2) Dedicated DS3 transport. Subject to the cap in paragraph 
(e)(2)(iii) of this section, an incumbent LEC shall provide a 
requesting telecommunications carrier with nondiscriminatory access to 
dedicated DS3 transport on an unbundled basis except where the state 
commission has found, through application of either paragraph (e)(2)(i) 
of this section or the potential deployment analysis in paragraph 
(e)(2)(ii) of this section, that requesting telecommunications carriers 
are not impaired without access to dedicated DS3 transport along a 
particular route.

[[Page 52304]]

Dedicated DS3 transport consists of incumbent LEC interoffice 
transmission facilities that have a total digital signal speed of 
44.736 megabytes per second and are dedicated to a particular customer 
or carrier.
    (i) Triggers for dedicated DS3 transport. A state commission shall 
find that a requesting telecommunications carrier is not impaired 
without access to unbundled dedicated DS3 transport along a particular 
route where either of the triggers in paragraphs (e)(2)(i)(A) or 
(e)(2)(i)(B) of this section is satisfied.
    (A) Self-provisioning trigger for dedicated DS3 transport. To 
satisfy this trigger, a state must find that three or more competing 
providers not affiliated with each other or with the incumbent LEC, 
including intermodal providers of service comparable in quality to that 
of the incumbent LEC, each satisfy the conditions in paragraphs 
(e)(2)(i)(A)(1) and (e)(2)(i)(A)(2) of this section.
    (1) The competing provider has deployed its own transport 
facilities and is operationally ready to use those transport facilities 
to provide dedicated DS3 transport along the particular route. For 
purposes of this paragraph, the competing provider's DS3 transport 
facilities may use dark fiber facilities that the competing provider 
has obtained on a long-term, indefeasible-right of use basis and that 
it has deployed by attaching its own optronics to activate the fiber.
    (2) The competing provider's facilities terminate at a collocation 
arrangement at each end of the transport route that is located at an 
incumbent LEC premises and in a similar arrangement at each end of the 
transport route that is not located at an incumbent LEC premises.
    (B) Competitive wholesale facilities trigger for dedicated DS3 
transport. To satisfy this trigger, a state must find that two or more 
competing providers not affiliated with each other or with the 
incumbent LEC, including intermodal providers of service comparable in 
quality to that of the incumbent LEC, each satisfy the conditions in 
paragraphs (e)(2)(i)(B)(1) through (e)(2)(i)(B)(4) of this section.
    (1) The competing provider has deployed its own transport 
facilities, including transport facilities that use dark fiber 
facilities that the competing provider has obtained on an unbundled, 
leased, or purchased basis if it has attached its own optronics to 
activate the fiber, and is operationally ready to use those facilities 
to provide dedicated DS3 transport along the particular route.
    (2) The competing provider is willing immediately to provide, on a 
widely available basis, dedicated DS3 transport along the particular 
route.
    (3) The competing provider's facilities terminate in a collocation 
arrangement at each end of the transport route that is located at an 
incumbent LEC premises and in a similar arrangement at each end of the 
transport route that is not located at an incumbent LEC premises.
    (4) Requesting telecommunications carriers are able to obtain 
reasonable and nondiscriminatory access to the competing provider's 
facilities through a cross-connect to the competing provider's 
collocation arrangement at each end of the transport route that is 
located at an incumbent LEC premises and though a similar arrangement 
at each end of the transport route that is not located at an incumbent 
LEC premises.
    (ii) Potential deployment of dedicated DS3 transport. Where neither 
trigger in paragraph (e)(2)(i) of this section is satisfied, a state 
commission shall consider whether other evidence shows that a 
requesting telecommunications carrier is not impaired without access to 
unbundled dedicated DS3 transport along a particular route. To make 
this determination, a state must consider the following factors: local 
engineering costs of building and utilizing transmission facilities; 
the cost of underground or aerial laying of fiber or copper; the cost 
of equipment needed for transmission; installation and other necessary 
costs involved in setting up service; local topography such as hills 
and rivers; availability of reasonable access to rights-of-way; 
availability/feasibility of similar quality/reliability alternative 
transmission technologies along the particular route; customer density 
or addressable market; and existing facilities-based competition.
    (iii) Cap on unbundled DS3 circuits. A requesting 
telecommunications carrier may obtain a maximum of 12 unbundled 
dedicated DS3 circuits for any single route for which dedicated DS3 
transport is available as unbundled transport.
    (3) Dark fiber transport. An incumbent LEC shall provide a 
requesting telecommunications carrier with nondiscriminatory access to 
dark fiber transport on an unbundled basis except where the state 
commission has found, through application of either paragraph (e)(3)(i) 
of this section or the potential deployment analysis in paragraph 
(e)(3)(ii) of this section, that requesting telecommunications carriers 
are not impaired without access to unbundled dark fiber transport along 
the particular route. Dark fiber transport consists of unactivated 
optical interoffice transmission facilities.
    (i) Triggers for dark fiber transport. A state commission shall 
find that a requesting telecommunications carrier is not impaired 
without access to dark fiber transport along a particular route where 
either of the triggers in paragraph (e)(3)(i)(A) or paragraph 
(e)(3)(i)(B) of this section is satisfied.
    (A) Self-provisioning trigger for dark fiber transport. To satisfy 
this trigger, a state commission must find three or more competing 
providers not affiliated with each other or with the incumbent LEC, 
each satisfy paragraphs (e)(3)(i)(A)(1) and (e)(3)(i)(A)(2) of this 
section.
    (1) The competing provider has deployed its own dark fiber 
facilities, which may include dark fiber facilities that it has 
obtained on a long-term, indefeasible-right of use basis.
    (2) The competing provider's facilities terminate in a collocation 
arrangement at each end of the transport route that is located at an 
incumbent LEC premises and in a similar arrangement at each end of the 
transport route that is not located at an incumbent LEC premises.
    (B) Competitive wholesale facilities trigger for dark fiber 
transport. To satisfy this trigger, a state commission must find that 
two or more competing providers not affiliated with each other or with 
the incumbent LEC, each satisfy paragraphs (e)(3)(i)(B)(1) through 
(e)(3)(i)(B)(4) of this section. In applying this trigger, the state 
commission may consider whether competing providers have sufficient 
quantities of dark fiber available to satisfy current demand along that 
route.
    (1) The competing provider has deployed its own dark fiber, 
including dark fiber that it has obtained from an entity other than the 
incumbent LEC, and is operationally ready to lease or sell those 
facilities for the provision of fiber-based transport along the 
particular route.
    (2) The competing provider is willing immediately to provide, on a 
widely available basis, dark fiber along the particular route.
    (3) The competing provider's dark fiber terminates in a collocation 
arrangement at each end of the transport route that is located at an 
incumbent LEC premises and in a similar arrangement at each end of the 
transport route that is not located at an incumbent LEC premises.
    (4) Requesting telecommunications carriers are able to obtain 
reasonable and nondiscriminatory access to the competing provider's 
dark fiber through a cross-connect to the competing provider's 
collocation arrangement at each end of the transport route that is 
located at an incumbent LEC premises and though a similar arrangement 
at each end of the transport route that is

[[Page 52305]]

not located at an incumbent LEC premises.
    (ii) Potential deployment of dark fiber transport. Where neither 
trigger in paragraph (e)(3)(i) of this section is satisfied, a state 
commission shall consider whether other evidence shows that a 
requesting telecommunications carrier is not impaired without access to 
unbundled dark fiber transport along a particular route. To make this 
determination, a state must consider the following factors: local 
engineering costs of building and utilizing transmission facilities; 
the cost of underground or aerial laying of fiber; the cost of 
equipment needed for transmission; installation and other necessary 
costs involved in setting up service; local topography such as hills 
and rivers; availability of reasonable access to rights-of-way; 
availability/feasibility of similar quality/reliability alternative 
transmission technologies along the particular route; customer density 
or addressable market; and existing facilities-based competition.
    (4) State commission proceedings. A state commission shall complete 
the proceedings necessary to satisfy the requirements in paragraphs 
(e)(1), (e)(2), and (e)(3) of this section in accordance with 
paragraphs (e)(4)(i) and (e)(4)(ii) of this section.
    (i) Initial review. A state commission shall complete any initial 
review applying the triggers and criteria in paragraphs (e)(1), (e)(2), 
and (e)(3) of this section within nine months from the effective date 
of the Commission's Triennial Review Order.
    (ii) Continuing review. A state commission shall complete any 
subsequent review applying these triggers and criteria within six 
months of the filing of a petition or other pleading to conduct such a 
review.
    (5) Routine network modifications. (i) An incumbent LEC shall make 
all routine network modifications to unbundled dedicated transport 
facilities used by requesting telecommunications carriers where the 
requested dedicated transport facilities have already been constructed. 
An incumbent LEC shall perform all routine network modifications to 
unbundled dedicated transport facilities in a nondiscriminatory 
fashion, without regard to whether the facility being accessed was 
constructed on behalf, or in accordance with the specifications, of any 
carrier.
    (ii) A routine network modification is an activity that the 
incumbent LEC regularly undertakes for its own customers. Routine 
network modifications include, but are not limited to, rearranging or 
splicing of cable; adding an equipment case; adding a doubler or 
repeater; installing a repeater shelf; and deploying a new multiplexer 
or reconfiguring an existing multiplexer. They also include activities 
needed to enable a requesting telecommunications carrier to light a 
dark fiber transport facility. Routine network modifications may entail 
activities such as accessing manholes, deploying bucket trucks to reach 
aerial cable, and installing equipment casings. Routine network 
modifications do not include the installation of new aerial or buried 
cable for a requesting telecommunications carrier.
    (f) 911 and E911 databases. An incumbent LEC shall provide a 
requesting telecommunications carrier with nondiscriminatory access to 
911 and E911 databases on an unbundled basis, in accordance with 
section 251(c)(3) of the Act and this part.
    (g) Operations support systems. An incumbent LEC shall provide a 
requesting telecommunications carrier with nondiscriminatory access to 
operations support systems on an unbundled basis, in accordance with 
section 251(c)(3) of the Act and this part. Operations support system 
functions consist of pre-ordering, ordering, provisioning, maintenance 
and repair, and billing functions supported by an incumbent LEC's 
databases and information. An incumbent LEC, as part of its duty to 
provide access to the pre-ordering function, shall provide the 
requesting telecommunications carrier with nondiscriminatory access to 
the same detailed information about the loop that is available to the 
incumbent LEC.

0
12. Section 51.320 is added to read as follows:


Sec.  51.320  Assumption of responsibility by the Commission.

    If a state commission fails to exercise its authority under Sec.  
51.319, any party seeking that the Commission step into the role of the 
state commission shall file with the Commission and serve on the state 
commission a petition that explains with specificity the bases for the 
petition and information that supports the claim that the state 
commission has failed to act. Subsequent to the Commission's issuing a 
public notice and soliciting comments on the petition from interested 
parties, the Commission will rule on the petition within 90 days of the 
date of the public notice. If it agrees that the state commission has 
failed to act, the Commission will assume responsibility for the 
proceeding, and within nine months from the date it assumed 
responsibility for the proceeding, make any findings in accordance with 
the Commission's rules.

0
13. Section 51.325 is amended by adding paragraph (a)(4) to read as 
follows:


Sec.  51.325  Notice of network changes: Public notice requirement.

    (a) * * *
    (4) Will result in the retirement of copper loops or copper 
subloops, and the replacement of such loops with fiber-to-the-home 
loops, as that term is defined in Sec.  51.319(a)(3).
* * * * *
0
14. Section 51.331 is amended by adding paragraph (c) to read as 
follows:


Sec.  51.331  Notice of network changes: Timing of notice.

* * * * *
    (c) Competing service providers may object to incumbent LEC notice 
of retirement of copper loops or copper subloops and replacement with 
fiber-to-the-home loops in the manner set forth in Sec.  51.333(c).

0
15. Section 51.333 is amended by revising the section heading, 
paragraph (b), paragraph (c) introductory text, and by adding paragraph 
(f) to read as follows:


Sec.  51.333  Notice of Network Changes: Short term notice, objections 
thereto and objections to retirement of copper loops or copper 
subloops.

* * * * *
    (b) Implementation date. The Commission will release a public 
notice of filings of such short term notices or notices of replacement 
of copper loops or copper subloops with fiber-to-the-home loops. The 
effective date of the network changes referenced in those filings shall 
be subject to the following requirements:
    (i) Short term notice. Short term notices shall be deemed final on 
the tenth business day after the release of the Commission's public 
notice, unless an objection is filed pursuant to paragraph (c) of this 
section.
    (ii) Replacement of copper loops or copper subloops with fiber-to-
the-home loops. Notices of replacement of copper loops or copper 
subloops with fiber-to-the-home loops shall be deemed approved on the 
90th day after the release of the Commission's public notice of the 
filing, unless an objection is filed pursuant to paragraph (c) of this 
section. Incumbent LEC notice of intent to retire any copper loops or 
copper subloops and replace such loops or subloops with fiber-to-the-
home loops shall be subject to the short term notice provisions of this 
section, but under no circumstances may an incumbent LEC

[[Page 52306]]

provide less than 90 days notice of such a change.
    (c) Objection procedures for short term notice and notices of 
replacement of copper loops or copper subloops with fiber-to-the-home 
loops. An objection to an incumbent LEC's short term notice or to its 
notice that it intends to retire copper loops or copper subloops and 
replace such loops or subloops with fiber-to-the-home loops may be 
filed by an information service provider or telecommunications service 
provider that directly interconnects with the incumbent LEC's network. 
Such objections must be filed with the Commission, and served on the 
incumbent LEC, no later than the ninth business day following the 
release of the Commission's public notice. All objections filed under 
this section must:
* * * * *
    (f) Resolution of objections to replacement of copper loops or 
copper subloops with fiber-to-the-home loops. An objection to a notice 
that an incumbent LEC intends to retire any copper loops or copper 
subloops and replace such loops or subloops with fiber-to-the-home 
loops shall be deemed denied 90 days after the date on which the 
Commission releases public notice of the incumbent LEC filing, unless 
the Commission rules otherwise within that time. Until the Commission 
has either ruled on an objection or the 90-day period for the 
Commission's consideration has expired, an incumbent LEC may not retire 
those copper loops or copper subloops at issue for replacement with 
fiber-to-the-home loops.

0
16. Section 51.509 is amended by revising paragraph (a) and adding 
paragraph (h) to read as follows:


Sec.  51.509  Rate structure standards for specific elements.

    (a) Local loop and subloop. Loop and subloop costs shall be 
recovered through flat-rated charges.
* * * * *
    (h) Network interface device. An incumbent LEC must establish a 
price for the network interface device when that unbundled network 
element is purchased on a stand-alone basis pursuant to Sec.  
51.319(c).

[FR Doc. 03-22193 Filed 8-29-03; 8:45 am]
BILLING CODE 6712-01-P