[Federal Register Volume 68, Number 201 (Friday, October 17, 2003)]
[Proposed Rules]
[Pages 59756-59757]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-26108]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Chapter I

[CC Docket No. 96-128; FCC 03-220]


Implementation of Section 273 of the Communications Act of 1934, 
as Amended by the Telecommunications Act of 1996

AGENCY: Federal Communications Commission.

ACTION: Proposed rule; withdrawal.

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SUMMARY: This document terminates the pending Notice of Proposed 
Rulemaking to implement provisions of section 273 of the 
Telecommunications Act of 1996 (the Act) that pertain to manufacturing 
by the Bell Operating Companies (BOCs). (In the Matter of 
Implementation of Section 273 of the Communications Act of 1934, as 
Amended in the Telecommunications Act of 1996, Notice of Proposed 
Rulemaking, CC Docket No. 96-254, 62 FR 3638, January 24, 1997 (BOC 
Manufacturing NPRM)). The statute, as written, is sufficiently detailed 
and clear as to cover most circumstances at this time. Adopting rules 
to implement the provisions of section 273 would not serve the public 
interest and would impose unnecessary regulatory burdens inconsistent 
with the pro-competitive, deregulatory goals of the Act. Accordingly, 
for the reasons indicated below, the Commission concludes that it is 
unnecessary to adopt rules to implement section 273 at this juncture 
and terminates this proceeding.

DATES: This proposed rule is withdrawn as of October 17, 2003.

FOR FURTHER INFORMATION CONTACT: Henry L. Thaggert, Attorney-Advisor, 
Competition Policy Division, Wireline Competition Bureau, at (202) 418-
7941, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Memorandum Opinion and Order in CC Docket No. 96-254, FCC 03-220, 
adopted September 15, 2003, and released September 16, 2003. The 
complete text of this Memorandum Opinion and Order 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. This document may also 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.

Synopsis of the Memorandum Opinion and Order

    1. Background. Section 273 permits a BOC to manufacture 
telecommunications equipment and customer premises equipment through a 
structurally separate corporate affiliate once the Commission 
authorizes the BOC to provide in-region, interLATA services pursuant to 
section 271(d) of the Act. Section 273 provides for two important 
exceptions to the requirement that a BOC refrain from all manufacturing 
activity until after it receives section 271 approval. First, section 
273(b)(1) permits a BOC at any time to engage in ``close 
collaboration'' with manufacturers on product design and development. 
Second, section 273 (b)(2) permits a BOC at any time to enter into 
``royalty agreements'' with manufacturers.
    2. The BOC Manufacturing NPRM invited comment and proposed numerous 
tentative conclusions to implement rules governing section 273. The BOC 
Manufacturing NPRM generated comment from BOCs, competitive LECs, 
manufacturers, and others. Since the issuance of the BOC Manufacturing 
NPRM, each BOC has obtained section 271 authority to provide in-region 
interLATA service in at least one of its states, and Verizon and 
BellSouth have received section 271 authority throughout their regions. 
Yet to our knowledge, no BOC has created a manufacturing affiliate, nor 
has the Commission received complaints that BOCs have violated section 
273.
    3. The Commission concludes that the provisions of section 273 are 
sufficiently detailed as to be self-executing and sufficiently clear as 
to cover most circumstances. Thus, section 273 requires no further 
elaboration at this time. More than seven years have passed since the 
passage of the Act, and the Commission has granted section 271 
authorization to provide in-region interLATA service in forty-two 
states and the District of Columbia. Our experience over this time 
frame persuades us, with the benefit of hindsight, that the concerns 
the Commission articulated in the BOC Manufacturing NPRM were 
unwarranted because the competitive harms the Commission envisioned 
simply have not materialized.
    4. Whenever the Commission adopts rules, it must consider whether 
the benefit of such rules outweighs the burden on regulated entities. 
As written, section 273 provides detailed requirements that should 
facilitate quick review and disposal of alleged violations on a case-
by-case basis. Moreover, if a party believes that section 273 does not 
clearly indicate the proper course of conduct, the Commission has in 
place adequate mechanisms for addressing the party's concerns. 
Accordingly, we believe a case-by-case approach would serve the public 
interest more efficiently than imposing a new rules regime.

Regulatory Flexibility Act

    5. The Commission concludes that, because it does not adopt rules 
in this Memorandum Opinion & Order to implement section 273, our 
resolution of this matter raises no Regulatory Flexibility Act issues. 
Although section 273 focuses primarily on BOC manufacturing activity, 
in the BOC Manufacturing NPRM the Commission questioned whether 
development of rules would ``have a significant economic impact on a 
substantial number of small businesses insofar as they apply to 
entities that develop standards, develop generic requirements and 
conduct certification activity.'' However, in this Memorandum Opinion & 
Order, the Commission neither promulgates new rules nor revises 
existing rules, thus the action does not require any change in the 
current practices of any standard setting entities, large or small. 
Accordingly, because the Commission implements no rules, it takes no 
action that would require entities to modify their practices. Thus, the 
Commission finds that the action will not have a ``significant economic 
impact on a substantial number of small entities.''

Paperwork Reduction Act of 1995

    6. The Commission finds that this Memorandum Opinion and Order does 
not contain information collection provisions and therefore does not 
implicate the Paperwork Reduction Act of 1995.

Ordering Clauses

    1. Accordingly, pursuant to sections 1, 3, 4(i)-(j), 7, 201-209, 
218-220, 251, 271-273 and 403 of the

[[Page 59757]]

Communications Act of 1934, as amended, 47 U.S.C. 151, 153, 154(i)-(j), 
157, 201-209, 218-220, 251, 271-273, and 403 that this Memorandum 
Opinion and Order is adopted.
    2. The Commission has thus completed its review of the record in 
the above-captioned rulemaking. Accordingly, the above-captioned 
proceeding is terminated.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 03-26108 Filed 10-16-03; 8:45 am]
BILLING CODE 6712-01-U