[Federal Register Volume 69, Number 174 (Thursday, September 9, 2004)]
[Rules and Regulations]
[Pages 54589-54591]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-20356]


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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 
04-191]


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) modifies certain of the unbundling obligations associated 
with fiber networks serving multiple dwelling units (MDUs) pursuant to 
section 251 of the Telecommunications Act of 1996 (1996 Act). 
Specifically, the Commission concludes that fiber networks serving 
predominantly residential MDUs will be subject to the same, limited 
unbundling obligations governing fiber-to-the-home (FTTH) loops serving 
individual occupancy premises. The Commission further clarifies that 
the definition of FTTH loops includes fiber loops deployed to the 
minimum point of entry (MPOE) of MDUs, regardless of the ownership of 
the MDU's inside wiring.

DATES: Effective October 12, 2004.

FOR FURTHER INFORMATION CONTACT: Pamela Arluk, Attorney-Advisor, 
Wireline Competition Bureau, at (202) 418-1580, or via the Internet at 
[email protected]. The complete text of this Order on 
Reconsideration 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 Order 
on Reconsideration in CC Docket No. 01-338, CC Docket No. 96-98, and CC 
Docket No. 98-147; FCC 04-191, adopted August 4, 2004, and released 
August 9, 2004. The full text of this document may be purchased from 
the Commission's duplicating contractor, Best Copy and Printing, Inc., 
Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, 
telephone 1-800-378-3160, or at www.bcpiweb.com. It is also available 
on the Commission's Web site at http://www.fcc.gov.

Synopsis of the Order on Reconsideration

    1. In the Triennial Review Order (68 FR 52276, Sept. 2, 2003), the 
Commission adopted rules implementing section 251 of the 1996 Act, 
requiring incumbent local exchange carriers (LECs) to make elements of 
their local network available to competitors on a unbundled basis. The 
Triennial Review Order imposed only limited unbundling obligations with 
respect to incumbent LECs' broadband loops. In USTA v. FCC, 359 F.3d 
554 (D.C. Cir. 2004) (USTA II), the D.C. Circuit recently upheld these 
rules. In particular, for loops serving mass market customers, the 
Commission ruled that incumbent LECs need not unbundle either dark or 
lit fiber loops that extend to the customer's premises (known as fiber-
to-the-home or FTTH loops) deployed in new build, or ``greenfield,'' 
situations. Where a FTTH loop is deployed in overbuild, or 
``brownfield,'' situations, incumbent LECs must either provide 
unbundled access to a 64 kbps transmission path over the fiber loop or 
unbundled access to a spare copper loop. The FTTH rules expressly 
applied only to fiber loops serving individual occupancy premises, and 
not multiunit premises.
    2. In this Order, the Commission determines that it is possible to 
make an administrable distinction between predominantly residential 
MDUs and other multiunit premises for purposes of its unbundling rules. 
For example, a multi-level apartment building that houses retail stores 
such as a drycleaner and/or a mini-mart on the ground floor would be 
considered predominantly residential, while an office building that 
contains a floor of residential suites would not.
    3. The Commission concludes that it is appropriate to apply the 
FTTH rules to fiber deployed to predominantly residential MDUs. The 
Commission has the flexibility under section 251(d)(2) of the 1996 Act 
to consider the statutory goals of section 706, which require the 
Commission to encourage the deployment of advanced telecommunications 
capability to all Americans. In the Order, the Commission finds that 
the broadband deployment goals of section 706 justify reducing the 
unbundling obligations on fiber to predominantly residential MDUs, 
providing greater incentives for the deployment of such facilities. By 
tailoring the Order's unbundling relief to predominantly residential 
MDUs, the Commission draws an administrable line between those MDUs for 
which unbundling relief would significantly increase broadband 
investment incentives and those for which it would not.
    4. The Commission further concluded that a new definition of FTTH 
loops was necessary for purposes of the rules governing predominantly 
residential MDUs. The prior definition of FTTH loops required the 
deployment of fiber from the incumbent LEC central office all the way 
to the end-user customer's premises. However, many MDUs have copper 
wiring inside the building which is used to connect to each individual 
tenant. To ensure that the incentives to deploy broadband facilities 
extend to these buildings as well, the Commission determined that a 
FTTH loop in the context of predominantly residential MDUs only 
requires the deployment of fiber from the incumbent LEC's central 
office to the MPOE of the MDU, which is usually located in the basement 
of the building. With such a rule, the fact that the incumbent LEC may 
have copper inside wiring in the MDU will not result in different 
regulatory treatment.

Final Regulatory Flexibility Analysis

    5. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the NPRM. The Commission sought written public comment 
on the proposals in the NPRM, including comment on the IRFA. In the 
Triennial Review Order, the Commission issued a Final Regulatory 
Flexibility Analysis (FRFA) addressing comments submitted with regard 
to the IRFA. This present Order addresses an issue raised by two 
petitions for reconsideration of the Triennial Review Order. This 
present Supplemental FRFA (Supplemental FRFA) conforms to the RFA.
    6. Need for, and Objectives of, the Rules. This Order concludes 
that the FTTH rules, which relieve the incumbent LECs from certain 
unbundling obligations, will apply to MDUs that are predominantly 
residential. In the Triennial Review Order released last year, the 
Commission concluded that the broadband capabilities of FTTH loops 
would be relieved from unbundling under section 251 of the Act. Today's 
action builds on the broadband

[[Page 54590]]

principles of the Triennial Review Order by further extending the 
unbundling relief to fiber loops deployed to predominantly residential 
MDUs. In this Order, the Commission performs the section 706 balancing 
for customers located in predominantly residential MDUs, and concludes 
that fiber loops provided to such dwellings should have the same 
unbundling relief as FTTH loops. The Order concludes that determining 
what constitutes a predominantly residential MDU will be based on the 
dwelling's predominant use. For example, a multi-level apartment 
building that houses retail stores such as a drycleaner or a mini-mart 
would be predominantly residential, while an office building that 
contains a floor of residential suites would not. The Order further 
clarifies that a loop will be considered a FTTH loop if it is deployed 
to the minimum point of entry of a predominantly residential MDU, 
regardless of the ownership of the inside wiring.
    7. Summary of Significant Issues Raised by the Public. The subject 
petitions for reconsideration were not submitted in response to the 
previous FRFA, and did not address the FRFA.
    8. Description and Estimate of the Number of Small Entities to 
Which the Proposed Rules Would Apply. The RFA directs agencies to 
provide a description of, and, where feasible, an estimate of, the 
number of small entities that may be affected by the rules adopted 
herein. 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).
    9. In this section, we further describe and estimate the number of 
small entity licensees and regulatees that may be affected by the 
revised rule 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 small businesses within the 
commercial census category of Wired Telecommunications Carriers. Under 
this category, 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.
    10. We have included small incumbent local exchange carriers 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 telephone communications business having 1,500 
or fewer employees), and ``is not dominant in its field of operation.'' 
The SBA's Office of Advocacy contends that, for RFA purposes, small 
incumbent local exchange carriers are not dominant in their field of 
operation because any such dominance is not ``national'' in scope. We 
have therefore included small incumbent local exchange carriers in this 
RFA analysis, although we emphasize that this RFA action has no effect 
on Commission analyses and determinations in other, non-RFA contexts.
    11. 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 majority of firms can be considered small.
    12. Incumbent Local Exchange Carriers. Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
incumbent local exchange services. The appropriate size standard under 
SBA rules is for the category Wired Telecommunications Carriers. Under 
that size standard, such a business is small if it has 1,500 or fewer 
employees. According to Commission data, 1,337 carriers have reported 
that they are engaged in the provision of incumbent local exchange 
services. Of these 1,337 carriers, an estimated 1,032 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 our 
proposed action.
    13. 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 proposed rules and policies.
    14. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities: In this Order, we conclude 
that fiber networks serving predominantly residential MDUs will be 
subject to the same unbundling obligations as FTTH loops serving 
individual occupancy premises. This rule modification will relieve the 
providers of such broadband fiber loops from unbundling obligations 
under section 251 of the Act. This relieved a compliance requirement 
currently placed on such providers.
    15. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered: The RFA requires an 
agency to describe any significant alternatives that it has considered 
in developing its 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 and 
reporting requirements under the rule for such 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 such small 
entities.''
    16. In this Order, we conclude that fiber loops serving 
predominantly residential MDUs should be governed by the FTTH rules. 
The Order applies principles established in the Triennial Review Order 
to more precisely calibrate the Commission's broadband policy for fiber 
loops for customers that reside in MDUs. In response to petitions for 
reconsideration requesting that the Commission look more closely at the 
unbundling requirements for MDUs, the Order considers section 706 in 
its unbundling analysis for customers located in predominantly 
residential MDUs, and concludes that the record demonstrates that fiber 
loops provided to such dwellings should have the same unbundling relief 
as FTTH loops. Although this rule will deny unbundling to competitive 
carriers seeking to serve customers in predominantly residential MDUs, 
the

[[Page 54591]]

Commission concluded that such unbundling relief was necessary to 
remove disincentives for incumbent LECs to deploy fiber to these 
buildings. We believe that this approach is the least burdensome way to 
ensure that all Americans, not just those residing in single family 
homes, will be able to obtain the benefits of broadband services. 
Alternatives considered, including the use of a single, categorical 
rule, were not adopted because they do not accomplish the Commission's 
objectives in this proceeding.
    17. Report to Congress: The Commission will send a copy of the 
Order, including this Supplemental 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 this Supplemental 
FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the Order 
and Supplemental FRFA (or summaries thereof) will also be published in 
the Federal Register.

Final Paperwork Reduction Act Analysis

    18. This document does not contain new or modified information 
collection requirements subject to the Paperwork Reduction Act of 1995 
(PRA), Public Law 104-13. In addition, therefore, it does not contain 
any new or modified ``information collection burden for small business 
concerns with fewer than 25 employees,'' pursuant to the Small Business 
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 
3506(c)(4).

Ordering Clauses

    19. It is ordered that, pursuant to the authority contained in 
sections 2, 4(i)-4(j), 10(d), 201, 251, 303(r), and 706 of the 
Communications Act of 1934, as amended, 47 U.S.C. 152, 154(i)-4(j), 
160(d), 201, 251, 303(r), 706 this Order on Reconsideration is adopted.
    20. It is further ordered that, pursuant to the authority contained 
in sections 2, 4(i)-4(j), 10(d), 201, 251, 303(r), and 706 of the 
Communications Act of 1934, as amended, 47 U.S.C. 152, 154(i)-4(j), 
160(d), 201, 251, 303(r), and 706, the petitions for reconsideration 
filed by BellSouth and SureWest are granted in part.
    21. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Order, including the Supplemental Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects in 47 CFR part 51

    Interconnection, Unbundling requirements.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Rule Changes

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

PART 51--SPECIAL PROVISIONS CONCERNING BELL OPERATING COMPANIES

0
1. The authority citation for Part 51 continues to read:

    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 51.319 is amended by revising paragraph (a)(3) introductory 
text to read as follows:


Sec.  51.319  Specific unbundling requirements.

    (a) * * *
    (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, 
serving an end user's customer premises or, in the case of 
predominantly residential multiple dwelling units (MDUs), a fiber optic 
cable, whether dark or lit, that extends to the multiunit premises' 
minimum point of entry (MPOE).
* * * * *
[FR Doc. 04-20356 Filed 9-8-04; 8:45 am]
BILLING CODE 6712-01-P