Deployment of Wireline Services Offering Advanced Telecommunications Capability

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 51

[CC Dockets No. 98-147 and 96-98; FCC 99-355]

Deployment of Wireline Services Offering Advanced

Telecommunications Capability

AGENCY: Federal Communications Commission

ACTION: Final rule

-----------------------------------------------------------------------

SUMMARY: This document adopts measures to promote the availability of

competitive broadband xDSL-based services, especially to residential

and small business customers. This document amends the Commission's

unbundling rules to require incumbent LECs to provide unbundled access

to a new network element, the high frequency portion of the local loop.

This will enable competitive LECs to compete with incumbent LECs to

provide to consumers xDSL-based services through telephone lines that

the competitive LECs can share with incumbent LECs. In addition, the

document adopts spectrum management policies and rules to facilitate

the competitive deployment of advanced services. These rules will

significantly benefit the rapid and efficient deployment of xDSL-based

technologies.

DATES: Effective February 9, 2000.

FOR FURTHER INFORMATION CONTACT: Staci Pies, (202) 418-1580. For

further information concerning the information collection contained in

this document, contact Les Smith, Federal Communications Commission,

Room 1A-804, 445 12th Street, S.W., Washington, D.C. 20554, or via

Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Third

Report and Order in CC Docket No. 98-147 and Fourth Report and Order in

CC Docket 96-98, adopted on November 18, 1999, and released on December

9, 1999. The complete text of the order is available for inspection and

copying during normal business hours in the FCC Reference Information

Center, Courtyard Level, 445 12th Street S.W., Washington, D.C., and

also may be purchased from the Commission's copy contractor,

International Transcription Services (ITS, Inc.), CY-B4000, 445 12th

Street, S.W., Washington, D.C. it is also available via the Internet at

the Commission's home page, http:www.fcc.gov/Common__Carrier/Orders/

1999/fcc99355.doc.

Synopsis of the Third Report and Order and Fourth Report and Order

I. Introduction

1. The Commission adopts a Third Report and Order in CC Docket No.

98-147 and Fourth Report and Order in CC Docket No. 96-98,

(collectively ``Third R&O'') to promote the availability of competitive

broadband xDSL-based services, especially to residential and small

business customers. Specifically, the Commission amends the unbundling

rules to require incumbent LECs to provide unbundled access to a new

network element, the high frequency portion of the local loop. This

will enable competitive LECs to compete with incumbent LECs to provide

to consumers xDSL-based services through telephone lines that the

competitive LECs can share with incumbent LECs. The provision of xDSL-

based service by a competitive LEC and voiceband service by an

incumbent LEC on the same loop is frequently called ``line sharing.''

2. In addition, the Commission adopts rules in this Order that

apply to spectrum compatibility and management. These rules will

significantly benefit the rapid and efficient deployment of xDSL-based

technologies. Specifically, the Commission seeks to encourage the

voluntary development of industry standards while limiting the ability

of any one class of carriers to impose unilateral and potentially anti-

competitive spectrum management or compatibility rules on other xDSL

providers. The spectrum policies adopted in this Order will ensure the

compatibility of technologies and minimize the risk of harmful spectrum

interference among transmission services. As such, these policies will

ensure that American consumers will not face undue delay in receiving

the benefits of technological innovation.

[[Page 1332]]

II. Line Sharing

3. The Third R&O concludes that the Commission has authority to

require incumbent LECs to provide unbundled access to the high

frequency spectrum of a local loop pursuant to our authority to

identify a minimum list of network elements that must be unbundled on a

nationwide basis. Section 251(c)(3) imposes a duty on all incumbent

LECs to provide to competitors access to network elements on an

unbundled basis. The standard for unbundling is set out in section

251(d)(2). Section 251(d)(2) provides that, in determining which

network elements should be unbundled under section 251(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 element would impair the

ability of the telecommunications carrier seeking access to provide the

services that it seeks to offer.'' Based on this language the Third R&O

concludes that the high frequency portion of the loop is a network

element that must be unbundled pursuant to section 251(c)(3) and

section 251(d)(2).

4. Line sharing generally describes the ability of two different

service providers to offer two services over the same line, with each

provider employing different frequencies to transport voice or data

over that line. Section 3(29) of the Act defines a network element as

``a facility or equipment used in the provision of telecommunications

services'' including ``features, functions, and capabilities, that are

provided by means of such facility or equipment.'' The frequencies

above those used for analog voice services on any loop are a capability

of that loop. Therefore, those otherwise unused frequencies that can be

used for xDSL or other applications meet the definition of a ``network

element.''

5. Specifically, Secs. 51.307(d) and 51.309(c) of the Commission's

rules address the requesting carrier's right to loop access. These

rules provide, respectively, that an incumbent LEC must provide

competitors with ``access to the facility or functionality of a

requested network element separate from access to the facility or

functionality of other network elements.'' The rules also state that a

requesting carrier is ``entitled to exclusive use'' of an ``unbundled

network facility.'' Consequently, although the Third R&O concludes that

to the extent section 251(d) is satisfied requesting carriers may

access unbundled loop functionalities, such as non-voiceband

transmission frequencies, separate from other loop functions, they are

also ``entitled,'' at their option, to exclusive use of the entire

unbundled loop facility.

6. High Frequency Loop Spectrum. The Third R&O concludes that

access to the high frequency spectrum of a local loop meets the

statutory definition of a network element and satisfies the

requirements of sections 251(d)(2) and (c)(3). It is technically

feasible for an incumbent LEC to provide a competitive LEC with access

to the high frequency portion of the local loop as an unbundled network

element. An incumbent LEC's failure to provide access impairs the

ability of a competitive LEC to offer, on a competitive basis, certain

forms of xDSL-based service that are capable of line sharing with voice

services. The Third R&O finds that lack of access to the high frequency

portion of the local loop would materially raise competitive LECs' cost

of providing xDSL-based service to residential and small business

users, delaying broad facilities-based market entry, and materially

limiting the scope and quality of competitors' service offerings. It

finds that access to the high frequency portion of the loop encourages

the deployment of advanced telecommunications capability to all

Americans as mandated by section 706 of the 1996 Act. Because some

residential and small business markets may lack the economic

characteristics that would support competitive entry in the absence of

access to the high frequency spectrum of a local loop, it is clear that

spectrum unbundling is crucial for the deployment of broadband services

to the mass consumer market.

7. The Third R&O defines the high frequency spectrum network

element to be the frequency range above the voiceband on a copper loop

facility used to carry analog circuit-switched voiceband transmissions.

The Third R&O does not mandate a particular technological approach to

the use of a line for multiple services. Line sharing relies on rapidly

evolving technology and our requirement that incumbent LECs provide the

high frequency spectrum of a local loop as an unbundled network element

should stimulate technological innovation. The Third R&O does not set a

specific dividing line between the low frequency channel and a high

frequency channel on the loop.

8. The Third R&O supports the use of any transmission technology

that is presumed acceptable for shared-line deployment with analog

voice service according to the criteria already identified in the First

R&O 14 FR Rcd 4761 (1999), 63 FR 44220 August 18, 1998, and codified in

the Third R&O.

9. The Third R&O finds that there are no proprietary concerns

associated with unbundled access to the high frequency spectrum of the

local loop. It finds that there are no copyright, patent, or trade

secrecy implications to unbundled access to the high frequency spectrum

UNE. Carriers do not generally rely upon loop spectrum to differentiate

themselves from their competitors. Thus, the high frequency spectrum is

not proprietary

10. The Third R&O concludes that a lack of access to high frequency

spectrum of a local loop impairs a competitive carrier's ability to

offer certain forms of xDSL-based service. Just as the loop itself

remains a facility available only from an incumbent LEC, so too is a

competitor seeking to offer certain xDSL-based services impaired if it

does not have access to the high frequency spectrum of the local loop

available from an incumbent LEC.

11. Section 251 requires incumbent LECs to provide unbundled access

to a network element where lack of access impairs the ability of the

requesting carrier to provide the services that it seeks to offer. The

Third R&O finds that most xDSL lines have been deployed to residential

or small business consumers, and incumbent LECs provide service on the

vast majority of these lines where their xDSL-based service shares the

line with their voice service. Incumbent LECs generally deploy forms of

xDSL-based services that can coexist with voice service on a single

line. This enables incumbent LECs to utilize the full capacity of the

copper local loop to efficiently provide both voice and data service to

a customer. Competitive LECs seeking to deploy xDSL-based service to

customers subscribing to the incumbent LEC's voice telephone service

cannot deploy their xDSL with the same efficiency or at the same cost.

Incumbent LECs currently do not permit competitive LECs to access the

high frequency portion of the loop to provide xDSL-based services, even

though the incumbent LECs utilize the high frequency portion of the

loop to deploy their own services. This situation materially diminishes

the competitive LEC's ability to provide the particular type of xDSL-

based service that it seeks to offer.

12. In contrast, the Third R&O finds that competitors are not

impaired where they seek to deploy those versions of xDSL-based

services that require a dedicated local loop, such as SDSL or HDSL,

because they can procure unbundled loops to deploy such service. For

larger business users, competitive

[[Page 1333]]

and incumbent LECs have to date maintained a degree of competitive

parity, acquiring similar customer volumes. The larger business market

tends to favor robust, high-capacity, symmetrical forms of xDSL, such

as SDSL. These types of xDSL are not compatible with voice service

provided over the same line in a line sharing arrangement, because they

utilize the whole loop frequency spectrum. Thus, both incumbent and

competitive LECs must deploy these forms of xDSL over dedicated loops.

Comparable levels of market penetration between incumbent and

competitive LECs indicates that competitive LECs are not impaired where

they can procure unbundled loops to provide these services.

13. The Third R&O concludes that carriers seeking to deploy voice-

compatible xDSL-based services cannot self-provision loops. The Third

R&O also concludes purchasing or self-provisioning a second loop is not

possible as a practical, operational or economic matter. First, second

loops are not ubiquitously available. Refusing to unbundle the high

frequency portion of the loop in this situation forecloses competitive

access to the segment of consumers that lack additional copper pairs to

their homes or small businesses. Where a customer premises is only

addressed by one copper loop, or where end users have exhausted the

facilities that serve them by installing multiple phone, modem, and fax

lines, end users will have no additional facilities available at their

premises which a competitive xDSL service provider could use to provide

service. In those situations, competitive xDSL service providers are

precluded from providing the services they seek to offer, and consumers

are deprived of the benefits of competition. This is particularly a

problem in rural areas, where spare copper facilities are less common.

Without a requirement that the incumbent LEC must provide competitors

with access to the high frequency portion of these loops, only the

voice service provider that already controls the entire loop can

provide xDSL-based service to that customer. In virtually all cases,

this provider will be the incumbent LEC. Thus, lack of access to the

high frequency portion of the loop reduces the efficient use of

existing loop plant and diminishes the scope of potential customers to

whom competitive LECs can market xDSL-based service, thereby limiting

the competitive choices available to consumers for whom additional

copper loops are not available. In addition, such lack of access can

accelerate the depletion of copper loops in entire communities,

necessitating inefficient capital expenditures that will increase costs

imposed on consumers and competitors alike. Even if there are spare

pairs in the ``drop'' to a home or business, there are not

corresponding pairs in the feeder plant connecting the neighborhood to

the central office.

14. Second, the Third R&O concludes that if competitive LECs were

to purchase or self-provision a second unbundled loop to provide voice-

compatible xDSL-based services, their provisioning of service would be

materially more costly, and coincidentally less efficient, than

purchasing the unbundled high-frequency portion of the loop. The

inability of competing carriers to provide xDSL-based services over the

same loop facilities that the incumbents use to provide local exchange

service makes the provision of competitive xDSL-based services to

customers that want a single line for both voice and data

applications--typically small businesses and mass market residential

consumers--not just marginally more expensive, but so prohibitively

expensive that competitive LECs will not be able to provide such

services on a sustained economic basis. Accordingly, a requesting

carrier providing voice-compatible xDSL-based services is impaired

without access to the unbundled high frequency portion of the loop.

15. Specifically, incumbent LECs refuse to permit competitive LECs

to deploy xDSL-based service to their customers on the same customer

loops through which incumbents provide voice services, although

incumbents regularly deploy both services on the same loop. As a

result, a competitive LEC providing xDSL to a customer subscribing to

an incumbent LEC's voice service must provide a second customer loop

for the customer's xDSL service, effectively doubling the line access

charges for that customer's voice and xDSL services, and providing a

distinct cost advantage to incumbent LEC-provided xDSL products. The

Third R&O finds that the combined collocation and unbundled loop costs,

exclusive of incremental and fixed network, equipment, and overhead

costs, incurred by a competitive LEC seeking to deploy xDSL service can

exceed 100% of the retail price for the comparable shared-line xDSL

that the incumbent offers to the same customer that the competitor is

vying for. It also finds that incumbents charge requesting carriers

almost as much or more, on a monthly basis, for an unbundled,

conditioned loop, as the incumbent charges its retail customers for

xDSL service. This price discrepancy between what an incumbent can

charge its customer for its own shared-line xDSL and what a competitor

must pay to the incumbent just to gain access to that customer

materially diminishes the ability of the competitive carrier to offer

voice-compatible xDSL-based services in competition with incumbent LEC.

16. The Third R&O finds that it is not economical for competitive

LECs to self-provision or purchase the entire loop as a second line

just to obtain access to the high frequency portion of the loop.

Incumbent LECs generally allocate virtually all loop costs to their

voice services, then deploy a voice-compatible xDSL service such as

ADSL on the same loop, allocating little or no incremental loop costs

to the new resulting service. In contrast, when the competitive LEC

procures a second loop, it must pay the incumbent LEC the full price of

that unbundled loop as an unbundled network element. The cost of that

additional loop often accounts for 30 to 50% of the competitor's total

cost of providing service. Thus, the incumbent LEC's voice-compatible

xDSL service enjoys substantial cost advantages over a competitive

LEC's xDSL offerings.

17. Third, the Order finds that a competitive carrier faces a

competitive disadvantage in providing xDSL over a second line when

competing against the incumbent's single line offering. The incumbent

is able to market its own service to customers as a quick and

convenient add-on service, while the competitive carrier must persuade

the customer to purchase a second line. In comparison, consumers that

desire to obtain xDSL service from competitive LECs must encounter

complications and expenses, including the need to arrange for a

technician to install service, that do not arise if they procure the

exact same service from the incumbent LEC. Providing competitive LECs

with access to the high frequency portion of the loop would remove that

additional burden from consumers that prefer to obtain xDSL service

from competitors.

18. The Third R&O is not inconsistent with the Commission's

decision to decline to unbundle packet switching. Self-provisioning

switches is vastly easier, less expensive, less time consuming, less

complicated, and less risky than self-provisioning the outside plant

that constitutes the ubiquitous loop network. There can be little

dispute that requesting carriers have not duplicated the incumbent

LEC's ubiquitous loop plant and generally are not providing service

with competitive loop facilities.

[[Page 1334]]

19. The Third R&O concludes that if competitive LECs were to

provide voice service in addition to xDSL-based service, they would be

impaired in their ability to provide the data services they seek to

offer. First, concluding that competitive LECs should be able to

provide voice service on the customer's first line would impose on

requesting carriers all of the cost and operational issues associated

with providing circuit-switched voice services. To the extent the

competitive carrier invests in its own switching facilities, it would

face cost and operational impairments associated with collocation and

the coordinated cutover process. Competitive carriers providing voice

service would also incur the costs of providing E911 service and number

portability.

20. Furthermore, the Third R&O finds that requiring competitive

LECs to provide voice services could require large investments in

circuit switching network architectures that may have little to do with

a requesting carrier's intention to offer advanced data services.

Investments in circuit switched networks may only be justified by

carriers that have attained sufficient scale and scope economies to

justify deploying large-scale circuit switched networks. For other

entrants, requiring this investment diverts financial resources and

management focus away from competitive LECs' ability to offer advanced

services and frustrates a requesting carrier's plan to migrate

telecommunication services from circuit switched to packet switched

networks. Frustrating the development of packet switched networks

capable of bringing advanced telecommunications capability to all

Americans is wholly inconsistent with the goals of section 706 of the

1996 Act and the deployment of efficient networks.

21. The Third R&O finds that despite its ability to purchase

transmission facilities from the incumbent to provide voice service, a

competitor is still impaired if it must provide analog voice service in

order to enter the market for voice-compatible xDSL services. There are

additional costs associated with being a provider of voice service than

the cost of the circuit switches. In particular, a competitive carrier

would need to develop marketing, billing, and customer care

infrastructure designed to service the needs of its voice customers. In

addition, competitive LECs seeking to enter the traditional voice

services market must deploy sales and marketing forces, and invest in

creating a recognizable brand. To compete against incumbent LECs that

have a long history providing voice services, competitors must overcome

the substantial goodwill, experience and market power of the incumbent

LECs. These factors make it a considerable challenge for competitive

LECs to motivate a consumer to adopt a new local exchange provider that

offers much the same service that the consumer already receives from

the incumbent LEC.

22. The Third R&O finds that competitive LECs would be impaired

even if they attempted to provide multi-service offerings including

voice-compatible xDSL services. In addition, it is likely that

competitive market entry would take longer to accomplish because

competitors would need to develop all of these additional capabilities.

To be sure, competitive LECs may well decide to diversify their

offerings at some point in the future. But such action should occur in

response to marketplace forces, not regulatory fiat. To conclude

otherwise would be to ignore the statutory directive in section

251(d)(2) that requires the Commission to consider whether a requesting

carrier is impaired ``to provide the services that it seeks to offer.''

23. The Third R&O's unbundling analysis acknowledges that

requesting carriers may address the impairment they face in the absence

of line sharing by capturing their own efficiencies and offering

integrated or innovative product offerings to customers. For example,

in the absence of line sharing, requesting carriers could offer

multiple services, such as voice and data, over a single loop to

capture the additional revenues associated with local and long distance

voice services. Alternatively, requesting carriers could offer

innovative bundles of services to customers to counter an incumbent LEC

who provides voice and data services on a single loop. The unbundling

analysis, however, favors an analytical approach that considers the

totality of the circumstances a requesting carrier will face, rather

than a specific business case analysis, to determine whether lack of

access to particular network elements materially diminishes a

requesting carrier's ability to provide the services it seeks to offer.

The Third R&O does not rely upon the presence of a particular

innovative business plan as a response to whether a requesting carrier

is impaired because of the variety and difficulty of predicting the

success of such a plan. The Third R&O concludes that a requesting

carrier's ability to spread the costs of a loop between multiple

services fully addresses a requesting carrier's impairment without

access to line sharing.

24. The Third R&O concludes that requesting carriers are not

presently obtaining the high frequency portion of the loop from third-

party sources rather than from an incumbent LEC under the section

251(c) unbundling obligation.

25. The Third R&O states that the Commission will reexamine the

national list of network elements that are subject to the unbundling

obligations of the Act every three years.

26. The Third R&O concludes that there are no bona fide issues of

technical feasibility with regard to line sharing. The local loop can

support transmissions on a wide range of frequencies. Analog voice

service occurs on the lower ``voiceband'' frequency range, at least

between 300 Hertz and 3,000 Hertz, and possibly up to 3,400 Hertz

depending on equipment and facilities. Some forms of xDSL, such as ADSL

use a higher frequency range, generally above 20,000 Hertz, that does

not interfere with voiceband transmissions. xDSL services that do not

use the voiceband frequency range can ``share'' a copper loop with

voiceband services, such as POTS, without impairing the performance of

either service. Therefore, the customer purchasing the xDSL service may

continue to receive analog circuit-switched POTS from the incumbent

LEC.

27. xDSL service can be added to a local loop that is being used

for ``traditional'' voice service by deploying special equipment at

each end of the subscribing customer's local loop. Specifically,

passive signal filters, or ``splitters,'' are installed at each end of

the customer's loop to accomplish this operation. One splitter is

installed at the customer's premises, and another at the central office

or remote terminal. A splitter bifurcates the digital and voiceband

signals concurrently traversing the local loop, directing the voiceband

signals through a pair of copper wires to the Class 5 switch, and

directing the digital traffic though another pair of copper wires to a

DSLAM attached to the packet-switched network.

28. The Third R&O finds that incumbents that provide their own xDSL

services on the same line that they are providing analog voice service

are utilizing the single copper pair in the same manner as if the

incumbent's voice service shared the line with a competitive carrier's

data service. Accordingly, the Third R&O requires incumbent LECs to

provide access to the high frequency portion of the loop based on the

criteria for presumed acceptability for deployment on shared lines. By

requiring conformance with this criteria, the Third R&O ensures that

competitive LECs utilize technology that

[[Page 1335]]

does not interfere with analog voice frequencies.

29. Voice-Compatible Forms of xDSL. The Third R&O requires

incumbent LECs to provide unbundled access to the high frequency

portion of the loop to any carrier that seeks to deploy any version of

xDSL that is presumed to be acceptable for shared-line deployment in

accordance with Commission rules. xDSL technologies that meet this

presumption include ADSL, as well as Rate-Adaptive DSL and Multiple

Virtual Lines (MVL) transmission systems, all of which reserve the

voiceband frequency range for non-DSL traffic. Among these, ADSL is the

most widely deployed version of xDSL that is currently presumed

acceptable for deployment on a shared line. Because line sharing as

contemplated in the Third R&O can occur only on lines that carry

traditional analog voiceband service, lines that are not used for these

services could not be shared.

30. Incumbent Remains the Voice Carrier. The Third R&O does not

require incumbents to provide unbundled access to carriers seeking just

the data portion of an otherwise unoccupied loop (often referred to as

a ``dry loop.'') In the event that the customer terminates its

incumbent LEC provided voice service, for whatever reason, the

competitive data LEC is required to purchase the full stand-alone loop

network element if it wishes to continue providing xDSL service.

Similarly, incumbent carriers are not required to provide line sharing

to requesting carriers that are purchasing a combination of network

elements known as the platform. In that circumstance, the incumbent no

longer is the voice provider to the customer.

31. Single Requesting Carrier, One Customer Per Loop. The Third R&O

defines the unbundling obligations to permit only a single competitor

to share the line with the incumbent. Moreover, the Third R&O does not

establish multiple customer line sharing requirements.

32. Control of the Loop and Splitter Functionality. The Third R&O

concludes that, subject to certain obligations, incumbent LECs may

maintain control over the loop and splitter equipment and functions.

Incumbent LEC seeking to maintain control of the splitter must promptly

accommodate, in response to a competitive LEC request to do so, any

line sharing technology that meets the deployment criteria established

in this proceeding. It finds that incumbent LECs will not delay their

actions to procure the necessary equipment, and will inform the

requesting carrier of what action it takes, and when the equipment can

be installed. It should take no longer to obtain and install such

equipment in response to a competitive LEC's request than it would take

the incumbent to procure and install the same equipment for itself. Any

failure to make this accommodation in a reasonably prompt manner would

constitute a violation of the incumbent LEC's section 251 unbundling

obligations.

33. The Third R&O finds that if a state commission finds that an

incumbent has unreasonably refused to accommodate the competitive LEC's

preferred technology or requested equipment upgrades in a prompt

fashion, the state commission may authorize the competitive LEC to

purchase and collocate its own splitter, whether or not incorporated

into the DSLAM. The incumbent LEC would then receive the voiceband

signal by connecting to the competitive LEC's collocated splitter.

Alternatively, the state commission may authorize the competitive LEC

to purchase a splitter that complies with the deployment standards we

adopt in this Order, and transfer that splitter to the incumbent. Where

the competitive LEC obtains some degree of control over the splitter,

the state commission should ensure that the integrity of the incumbent

LEC's voice transmission's passing through the competitive LEC's

equipment and do not interfere with the performance of the incumbent

LEC's central office and network equipment.

34. Line Sharing Does Not Impede Incumbent LECs' Ability to Manage

the Loop Plant. The findings in the Third R&O do no restrain the

incumbent LEC, in the course of normal loop plant maintenance and

improvement activities, from migrating customers from copper to fiber

loop facilities. Where such activity takes place, however, the

competitor may be required to forego access to only the high frequency

portion of the loop serving that customer, and may have to obtain

access to the entire unbundled copper loop or find another alternative

to maintain service.

35. The Third R&O concludes that, except in specific circumstances,

incumbent LECs must condition loops to enable requesting carriers to

provide xDSL-based services on the same loops the incumbent is

providing analog voice service, regardless of loop length.

Specifically, the incumbent LEC is required to remove bridge taps,

filters, range extenders, and similar devices where a competitive

carrier requests unbundled access to the high frequency portion of the

local loop. Incumbent LECs are required to condition loops of any

length for which competing carriers have requested line sharing, unless

conditioning of that loop will significantly degrade the incumbent's

voice service as described below. It concludes, however, that if

conditioning a particular loop for shared-line xDSL will significantly

degrade that customer's analog voice service, incumbent LECs are not

required to condition that loop for shared-line xDSL.

36. The Third R&O requires that the incumbent refusing a

competitive carrier's request to condition a loop make an affirmative

showing to the relevant state commission that conditioning the specific

loop in question will significantly degrade voiceband services. The

incumbent LEC must also show that there is no adjacent or alternative

loop available that can be conditioned or to which the customer's

service can be moved to enable line sharing.

37. The Third R&O concludes that incumbent LECs should be able to

charge for conditioning loops when competitors request the high

frequency portion of the loop. The conditioning charges for shared

lines, however, should never exceed the charges incumbent LECs are

permitted to recover for similar conditioning on stand-alone loops for

xDSL services. Accordingly, the Third R&O concludes that if the

incumbent LEC seeks compensation from the requesting carrier for line

conditioning activities, or such activity will cause substantial loop

provisioning delays, the requesting carrier has the option of refusing,

in whole, or in part, to have the line conditioned. A requesting

carrier refusing some or all aspects of line conditioning will not,

however, lose its right of access to the high frequency portion of the

loop.

38. The Third R&O concludes that incumbents must provide unbundled

access to the high frequency portion of the loop at the remote terminal

as well as the central office. It applies a rebuttable presumption that

for carriers requesting unbundled access to the high frequency portion

of the loop, the subloop can be unbundled at any accessible terminal in

the outside loop plant. Where the parties are unable to forge an

agreement to facilitate line sharing where the customer is served by a

loop passing through a DLC, the incumbent carrier bears the burden of

demonstrating to the relevant state commission, in the course of a

section 252 proceeding, that it is not technically feasible to unbundle

the subloop to provide access to the high frequency portion of the

loop.

[[Page 1336]]

39. The Third R&O concludes that incumbent LECs have the capability

to accommodate the provisioning of the high frequency portion of the

loop as a network element. Where incumbent LECs provide shared-loop

xDSL services to their voice customers, either through their own

subsidiaries or in cooperation with an unaffiliated ISP, the incumbent

must resolve many of the same problems that they claim stand in the way

of providing competitors with access to the high frequency portion of

the loop.

40. Service Ordering. The Third R&O concludes that the type of

effort required for incumbent LECs to establish appropriate line

sharing ordering practices is incremental in nature, and does not

require a major development initiative. The OSS capabilities required

for incumbent LEC provision of shared-line xDSL services are

substantially similar to the OSS capabilities required for competitive

LEC provision of shared-line xDSL services, and could be easily adapted

to support unbundled access to the high frequency portion of the loop

network element.

41. The record shows that while changes to the existing fields on

the UNE order form/electronic order formats may appropriately involve

the OBF for coordination and standardization, incumbents already have

made interim modifications to accommodate their own ADSL products.

Thus, we conclude that the interim arrangements that the incumbents use

for themselves can be extended to competitive carriers as well.

42. A key ordering system function is establishing the records

necessary for customer service, trouble management, billing, and

inventory functions. The Third R&O observes that the incumbent LECs

already use two circuit or service numbers to track their own shared-

line xDSL services: (1) the existing telephone number to identify the

voice service; and (2) a circuit number to identify the xDSL service

sharing the line. It concludes that incumbent LECs can extend this

practice to accommodate two-carrier shared line access to the high

frequency portion of the loop network element. Specifically, incumbent

LECs can identify a line shared with a competitive LEC by cross-

referencing a circuit number with the POTS telephone number. Possible

methods for establishing this cross-reference include embedding the

telephone number in the incumbent-assigned circuit number or the

customer-assigned circuit number, adding it as a cross-reference to the

existing account number, making a notation in the remarks field, or by

establishing a new field and field identifier (FID). An incumbent LEC

could create two internal orders from a competitive LEC's order for

access to the high frequency portion of the local loop submitted using

the incumbent's UNE ordering process. In that case, one order would be

used to establish the requesting carrier's access to the high frequency

loop spectrum, and the other would be a record-type order to add line

sharing indicators to the customer's analog voice service account and

records. This system resembles those used for ``from'' and ``to''

orders to accommodate customers that change their address but want to

retain the same telephone number, as well as the system that incumbents

employ to respond to a customer's change to a competitive local service

provider.

43. Provisioning. The Third R&O does not require incumbents to

provide access to the high frequency portion of the loop for multiple

competitive carriers. It finds that incumbents will use much the same

inventory functionality to inventory unbundled access to the high

frequency portion of the loop whether for the purposes of providing

access to that network element to their competitors, or for themselves.

Otherwise, incumbents would have to undertake substantial rebuilds to

accommodate their own shared-line xDSL service offerings.

44. The Third R&O concludes that the capabilities already exist in

the Loop Facilities and Assignment Control System (LFACS) to inventory

and assign two services on one loop, and that with minor modifications,

incumbent LECs can easily use existing capabilities to inventory

services on a shared line. In light of the apparent availability of OSS

modifications that will satisfy incumbent LEC inventory needs, there is

no justification to withhold requesting carrier's access to the high

frequency portion of the loop while OSS modifications are implemented

to allow carriers to order line sharing through electronic interfaces.

The Third R&O urges the state commissions not to permit incumbent LECs

to delay the availability of access to the high frequency portion of

the loop while they implement automated OSS solutions, or to attribute

an unreasonable portion of incumbent LEC OSS development costs to our

spectrum unbundling requirements. The Third R&O expressly makes no

judgment, however, that such non-automated measures would constitute

nondiscriminatory access to OSS interfaces for the purposes of section

271 of the Act. It notes that a failure to implement OSS modifications

within the time frame we contemplate in this Order could be grounds for

finding that a BOC is not providing nondiscriminatory access to

unbundled network elements under section 271 of the Act.

45. Billing. The Third R&O finds that there is likely to be little,

if any, billing system impact resulting from the provision of unbundled

access to the high frequency portion of the loop.

46. Maintenance, Repair, and Testing. The Third R&O concludes that

current industry methods and procedures for customer service, line

maintenance, and service quality assurance can largely accommodate the

demands of line sharing between competitive LECs and incumbent LECs.

47. First, the Third R&O finds that the customer must be informed

that testing on one of their services will impact the other service

sharing the customer's line. The Third R&O finds that either the

incumbent or competitive LEC's customer service operations can provide

sufficient customer education on this issue.

48. The second loop testing issue, however, is more complex.

Specifically, both the incumbent and competitive LEC must have access

to the shared loop facility for testing, maintenance, and repair

activities. Assuming that the competitive LEC owns the DSLAM and

installs it in its collocation space in the incumbent LEC end office or

remote terminal, a splitter is required to isolate and direct the voice

service to the incumbent LEC voice switch and the xDSL service to the

competitive LEC's DSLAM. This splitter will likely be installed between

the MDF and the other central office equipment. In this configuration,

the incumbent LEC retains testing access to the outside part of the

loop through the voice switch. The competitive LEC, however, can only

access the high frequency portion of the loop at its DSLAM. This

precludes the competitive LEC from engaging in certain important types

of loop testing that require the competitive LEC to access the loop's

whole frequency range. The ability to perform this type of loop testing

is important for installation, maintenance, and repair activities in

both shared and non-shared line situations.

49. The Third R&O requires that incumbent LECs must provide

requesting carriers with access to the loop facility for testing,

maintenance, and repair activities. We require that, at a minimum,

incumbents must provide requesting carriers with loop access either

through a cross-connection at the competitor's collocation space, or

through a standardized interface

[[Page 1337]]

designed for to provide physical access for testing purposes. Such

access must be provided in a reasonable and nondiscriminatory manner.

An incumbent 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,

nondiscriminatory, and will not disadvantage a requesting carrier's

ability to perform loop or service testing, maintenance, or repair. We

stress that incumbents may not use their control over loop testing

access points and mechanisms for anti-competitive or discriminatory

purposes, and that we will remain attentive and ready to respond to any

reported anti-competitive incidents relating to competitive LEC access

to loop testing mechanisms.

50. Customer Service, Troubleshooting, and Repair. The Third R&O

finds that maintenance, repair, and testing concerns can be handled by

utilizing similar methods and procedures to those that incumbent LECs

are implementing for the ordering and provisioning of other unbundled

network elements. Specifically, it finds that incumbent LECs already

have methods and procedures in place for the cooperative resolution of

trouble and testing problems that arise with competitive LECs, and that

these methods and procedures can easily be modified to include

provisions for escalating shared line trouble issues in a manner that

minimizes customer confusion.

51. Resolution of Operational Issues. The Third R&O finds that

incumbent LECs have already modified their OSS systems to accommodate

their own xDSL products, and that those modifications and those

required for line sharing are substantially similar. Incumbent LECs can

adapt expediently existing incumbent OSS systems to handle line sharing

with a single requesting carrier. The Third R&O also finds that

incumbent LECs can perform the incremental modifications to the

existing ordering processes required to provide competitive LECs with

access to the high frequency portion of the loop in an expedient manner

and at modest expense. It finds that in the absence of fully automated

OSS interfaces, incumbent LECs have a variety of means available with

which they can accommodate competitive LEC orders for the unbundled

high frequency portion of the local loop, including the use of manual

overrides of their current UNE ordering methods and procedures.

Accordingly, the Third R&O urges requesting carriers and incumbent LECs

to engage in a collaborative process at the regional level to develop

solutions to incumbent LEC provision of shared line access.

52. The Third R&O does not identify or require incumbent LECs to

make specific OSS methods and procedures, or facilities changes, and it

does not prejudge whether specific OSS functionalities are necessary to

fulfill an incumbent LEC's nondiscrimination duty. The Third R&O finds

that incumbent LECs should be able to develop and implement the

majority of systems modifications necessary to provide access to the

higher frequency portion of the loop 180 days from release of this

order. There are alternatives, to those system modifications that can

not be implemented in 180 days, and these alternatives can be deployed

in six months. Thus, the Third R&O concludes that incumbent LECs should

be able to implement system changes necessary to provide requesting

carriers with nondiscriminatory access to the high frequency portion of

the local loop within 180 days from release of the order.

53. The Third R&O finds that there are five types of direct costs

that an incumbent LEC potentially could incur to provide access to line

sharing: (1) loops; (2) OSS; (3) cross connects; (4) splitters; and (5)

line conditioning.

54. Local Loop. The Third R&O concludes that in arbitrations and in

setting interim prices, states may require that incumbent LECs charge

no more to competitive LECs for access to shared local loops than the

amount of loop costs the incumbent LEC allocated to ADSL services when

it established its interstate retail rates for those services.

55. OSS. The Third R&O finds that incumbent LECs should recover in

their line sharing charges those reasonable incremental costs of OSS

modification that are caused by the obligation to provide line sharing

as an unbundled network element. It also reaffirms that the states may

require incumbent LECs in an arbitrated agreement to recover such

nonrecurring costs such as these incremental OSS modification costs

through recurring charges over a reasonable period of time; and that

nonrecurring charges must be imposed in an equitable manner among

entrants.

56. Cross Connects. The Third R&O finds it reasonable for the

states to establish a presumption that, where the splitter is located

within the incumbent LECs' MDF, the cost for a cross connect for entire

loops and for the high frequency portions of loops should be the same.

It states that the states should examine carefully any assessment of

costs for cross connections for xDSL services that are in excess of the

costs of connecting loops to a competitive LECs' collocated facilities

where the splitter is located within the MDF. If the splitter is not

located within the incumbent LEC's MDF, however, then the states should

allow the incumbent LEC to adjust the charge for cross connecting the

competitive LEC's xDSL equipment to the incumbent LECs' facilities to

reflect any cost differences arising from the different location of the

splitter, compared to the MDF.

57. Splitters. The Third R&O concludes that if the incumbent LEC

purchases for a competitive LEC the same splitter that it uses itself

for providing xDSL services, then a state may require that it only

assess the competitive LEC the same amount that it itself pays for a

delivered splitter. The Third R&O further concludes that a competitive

LEC, at its option, should be allowed to purchase a splitter that

complies with industry standards, and transfer it to the incumbent LEC,

in the event that the competitive LEC can complete the transaction more

expeditiously or cost effectively than the incumbent LEC. A state may

also allow the incumbent LEC to include in its rate structure a charge

to recover the cost of installing the splitters.

58. Line Conditioning. In order to prevent incumbent LECs from

charging an excessive price for line conditioning, the Third R&O finds

that states may require that the conditioning charges for shared lines

not exceed the charges the incumbent LECs are permitted to recover for

similar conditioning of stand-alone loops for xDSL services.

Furthermore, if the incumbent LEC is providing, or has already

provided, xDSL service over a particular shared loop, a competitive LEC

should not be charged with any line conditioning costs if it wins that

customer and seeks access to that shared loop for providing xDSL

service. Thus, the Third R&O concludes that requiring line sharing and

pricing it on the basis of TELRIC should not affect the ability of the

incumbent LEC to recover costs associated with providing voice service.

59. Effective Date of New Rules. The rules established in the Third

R&O require that the unbundling of the high frequency portion of the

loop becomes effective February 9, 2000.

60. States' Role in Fostering Local Competition Under Sections 251

and 252. The Third R&O strongly encourages states to issue binding

interim arbitration awards that would require the incumbent to begin

provisioning this unbundled network element on interim arbitration

terms and conditions

[[Page 1338]]

within 180 days of release of the Third R&O. The state interim

arbitration award would remain in effect until such time as the state

issues a final award. The Third R&O states that in the event that a

state commission fails to take action in an arbitration proceeding

within the nine months prescribed by Congress, the Commission is

prepared to act promptly, pursuant to section 252(e)(5) and the

Commission's implementing rules, to issue an order ``preempting the

State commission's jurisdiction of that proceeding or matter'' and

thereafter to bring the arbitration to an orderly, expeditious

conclusion. Furthermore, noting that a few states already have taken

significant steps toward requiring incumbent LECs in their jurisdiction

to offer line sharing, the Third R&O emphasizes that the timetable it

outlines for implementing line sharing on a nationwide basis should be

viewed as a maximum period for states that have not yet taken any

actions to make line sharing available, and that the intention is not

to delay or constrain states that already have undertaken such

initiatives.

61. The Third R&O contemplates that such interim arbitration awards

would incorporate the rules adopted in the Third R&O and be

sufficiently detailed to permit the incumbent LECs to begin providing

this new unbundled network element immediately upon the effective date

of the interim order. The interim arbitration awards, like final

arbitration awards, should include the price of the high frequency

portion of the loop based on the pricing guidelines set out in the

Third R&O. The Third R&O encourages the states, when issuing their

interim arbitration awards, to set the price for the unbundled high

frequency portion of the loop at the amount that the incumbent assesses

in establishing interstate rates for its own competing services.

62. In addition to arrangements reached through section 252-

negotiation and arbitration procedures, Bell Operating Companies (BOCs)

may prepare and file with a state commission a statement of generally

available terms and conditions (SGAT) that they offer to comply with

the requirements of section 251. Pursuant to section 252(i),

competitive carriers will be able to obtain access to the high

frequency portion of the loop at the same rates, terms, and conditions

offered in any approved interconnection agreement, as well as the BOCs'

SGATs.

63. Duty to Negotiate in Good Faith. The Third R&O concludes that

as part of the incumbent LEC's duty to negotiate in good faith, upon

commencement of the negotiation process the incumbent LEC immediately

should make available a representative who has region-wide decision-

making authority to meet with the requesting carrier and any other

competitive carriers seeking shared line access in the incumbent LEC's

region at issue.

64. Guidelines for State Arbitration Awards. The Third R&O

encourages states to require, in arbitration proceedings, incumbent

LECs to fulfill requests for line sharing within the same interval the

incumbent provisions xDSL to its own retail or wholesale customers,

regardless of whether the incumbent uses an automated or manual

process. The Third R&O further urges states to adopt provisioning

intervals for this unbundled network element as part of any arbitration

award, whether interim or final. Because there are currently no state-

required provisioning intervals for the high frequency portion of the

loop network element, the Third R&O recommends that states consider a

standard based on the time required to provision xDSL capable loops.

Where the incumbent LEC is already providing shared line xDSL service

to a particular customer, however, the provisioning interval should be

significantly shorter.

65. The Third R&O strongly urges the states to adopt an

implementation schedule that requires an incumbent to begin

provisioning this network element to requesting carriers no later than

45 days after the issuance of an arbitration award. Finally, the Third

R&O encourages states to establish penalties for failure to meet

provisioning intervals as part of any arbitration award.

III. Spectrum Policy

66. Standards-Setting Entities. The Third R&O reiterates the

Commission's general belief that industry standards bodies can, and

should, create acceptable standards for deployment of xDSL-based and

other advanced services. Despite the neutrality and openness principles

embedded in the standards setting processes of standards body T1E1.4,

however, several parties continue to express concerns that T1E1.4 is

dominated by incumbent LECs and that, as a result, standards setting is

delayed and deployment of certain technologies particularly favored by

competitive LECs is precluded. Thus, the Third R&O concludes that the

Commission is compelled to play a role in standards development, and

that the standards setting process must include the involvement of a

third party to advise the Commission on spectrum compatibility

standards and spectrum management practices. Specifically, the charter

of an existing Federal Advisory Committee, the Network Reliability and

Interoperability Council (NRIC), will be amended to charge NRIC with

such an advisory function.

67. NRIC V is requested to provide initial recommendations for

resolution of spectrum compatibility and management issues to the

Commission within 150 days from the establishment date of NRIC V.

Moreover, NRIC is expected to submit reports to the Commission on

standards and practices development issues as further deemed necessary

by NRIC or the Commission and, in any event, promptly after NRIC has

received appropriate input from industry standards bodies.

68. The Third R&O anticipates that NRIC will receive the majority

of input from, and monitor most closely, the work of T1E1.4 with

respect to developing spectrum compatibility standards, and with

respect to fair and open practices for the deployment of advanced

services technologies. The Third R&O emphasizes, however, that NRIC

will be open to, and will consider submissions from, any appropriate

industry standards body. Through the recommendations and reports that

the Commission receives from NRIC, the Commission will evaluate whether

T1E1.4 and other industry standards bodies are acting in a manner

consistent with the policies that the Commission has determined should

underlie spectrum compatibility standards-setting and formation of

spectrum management rules and practices. Should the Commission find

that certain industry standards bodies are adopting spectrum

compatibility standards or spectrum management practices that continue

to fail, in their underlying processes, in safeguarding principles of

competitive neutrality and promoting innovation, the Commission will

look to other industry standards bodies that uphold these principles,

or the Commission will exercise its authority to assume the standards-

setting function itself.

69. Mechanisms for Demonstrating Spectrum Compatibility. In the

first order in this proceeding (Advanced Services First Report and

Order, 14 FCC Rcd 4761 (1999)), the Commission sought comment on the

best means to address spectrum compatibility. The Third R&O declines to

adopt a federal rule mandating the use of either generic PSD masks or a

calculation-based approach. Instead, it defers to the conclusions to be

reached by industry standards-setting bodies on this issue.

70. Notwithstanding the Commission's abstention from adopting a

federal rule governing methods for defining spectrum compatibility, the

Third R&O observes that the use both of

[[Page 1339]]

generic PSD masks and a calculation-based approach appear to be the

best means to address spectrum compatibility for purposes of spurring

competition.

71. Conditions for Acceptability of a Loop Technology for

Deployment. The Advanced Services First Report and Order concluded

that, ``until long-term standards and practices can be established,'' a

loop technology should be presumed acceptable for deployment under any

one of several circumstances. These circumstances include that the

technology: (1) Complies with existing industry standards; (2) is

approved by an industry standards body, the Commission, or any state

commission; or (3) has been successfully deployed by any carrier

without ``significantly degrading'' the performance of other services.

The Third R&O codifies these presumptions and clarifies certain aspects

of them.

72. The Third R&O reaffirms the conclusion from the Advanced

Services First Report and Order that ADSL, HDSL, and ISDN services are

presumed acceptable for deployment on fully unbundled loops where they

comply with any one of certain enumerated standards. Similarly, in

accordance with the second and third criteria outlined above, the Third

R&O declares SDSL to be presumed acceptable for deployment. This

finding, however, is limited to presuming SDSL acceptable for

deployment on a fully unbundled loop. The Third R&O does not establish

a presumption that SDSL is acceptable for deployment on a shared loop.

73. The Third R&O concludes that a competing carrier's use of the

calculation-based method for demonstrating spectrum compatibility, as a

prelude in most cases to initial deployment of a technology, should go

far towards allaying the concerns of some commenters over risks of

interference to the network from the deployment of a technology that

was successfully deployed elsewhere. The LEC also will be able to rebut

the presumption of acceptability before a state commission if the

technology proposed for deployment poses a real interference threat in

a certain area.

74. Consistent with the information disclosure requirements that

were applied to incumbent LECs in the Advanced Services First Report

and Order, the Third R&O finds that competitive LECs must provide to

incumbent LECs information on the type of technology that they seek to

deploy. The Third R&O concludes further that competitive LECs must

provide this information in notifying the incumbent LEC of any proposed

change in advanced services technology that the carrier uses on the

loop.

75. The Third R&O reaffirms the subjective definition of

``significantly degrade'' that was adopted in the Advanced Services

First Report and Order, namely, ``an action that noticeably impairs a

service from a user's perspective.'' The Third R&O reiterates that

where a carrier claims that a deployed service is significantly

degrading the performance of other advanced services or traditional

voice band services, that carrier must notify the deploying carrier and

allow the deploying carrier a reasonable opportunity to correct the

problem. Any claims of network harm presented to the deploying entity

or, if subsequently necessary, the relevant state commission, must be

supported with specific and verifiable corroborating information.

76. The Third R&O confirms that an incumbent LEC need not act as

the initial point of contact in all service degradation disputes.

Instead, the carrier that believes its services are being significantly

degraded should notify the causing carrier when the carrier

experiencing degradation knows with certainty the identity of the

causing carrier. The Third R&O recognizes that a carrier whose services

are being degraded may not know the precise cause of the degradation

and thus may not know which carrier to contact for corrective action.

In this circumstance, the carrier experiencing service degradation must

notify each carrier that may have caused or contributed to the

degradation, including, where applicable, the incumbent LEC. Where the

carrier experiencing service degradation does not know which carriers

share the binder group or have deployed services in an adjacent binder

group, it should request that the incumbent LEC provide it with the

relevant contact information for those other carriers.

77. The Third R&O reaffirms and codifies the policy enunciated in

the Advanced Services First Report and Order 63 FR 4420 August 18,

1998, to guide states in the resolution of interference disputes.

Specifically, where a LEC demonstrates that a deployed technology is

significantly degrading the performance of other advanced services or

traditional voice band services, ``the carrier deploying the technology

shall discontinue deployment of that technology and migrate its

customers to technologies that will not significantly degrade the

performance of other such services.'' The Third R&O adds an exception

to this rule that the Commission believes will further safeguard

competitive neutrality and deployment of new technologies.

Specifically, where the only interfered-with service itself is a known

disturber, that service shall not prevail against the newly deployed

technology.

78. Binder Group Management. The Third R&O concludes that the only

permissible forms of binder group management are the segregation of

known disturbers and the use of the interference protection techniques

described above. Currently, the only technology that the Third R&O

finds causes interference with sufficient persistence to rise to the

level of a known disturber is analog T1. Because the designation of a

technology as a known disturber impacts various national-level rules

and policies, such as those governing interference dispute resolution

and binder group management, and also triggers the determination by

states of how the known interfering technology will be disposed, the

Commission will decide which technologies should be considered as known

disturbers.

79. The Third R&O limits segregation practices to known disturbers

because only the interference risks of mixing known disturbers with

other technologies outweigh the risks of anticompetitive segregation

practices. Because the Commission currently does not determine ADSL to

be a known disturber, the Third R&O finds that SBC may not implement

SFS, a form of binder group management that segregates ADSL. SBC and

any other carrier currently implementing any prohibited binder group

management techniques, including SFS, must discontinue and dismantle

such implementations within 60 days after the release of the Third R&O.

80. The Third R&O concludes that the states should determine

disposition of known interfering technologies. The Third R&O further

finds that leaving disposition of known interfering technologies to the

states is preferable to establishing a national sunset period for known

disturbers in this proceeding.

IV. Other Issues

81. State Authority to Enact Additional Line Sharing Requirements.

In conformance with the rule established in the Third Report and Order

in CC Docket No. 96-98 (Local Competition Third Report and Order), the

Third R&O does not permit the states to reduce the unbundling

obligations established in the Third R&O. States may enact additional

or modified unbundling requirements only to the same extent that they

are

[[Page 1340]]

permitted to do so in the Local Competition Third Report and Order. Any

state that imposes unbundling requirements in contravention of section

253(a) of the Act will be subject to possible preemption by the

Commission under section 253(d) of the Act. Moreover, the Third R&O

declines to exempt rural incumbent LECs from the line sharing

unbundling obligation, but notes that states retain the authority

pursuant to section 251(f) of the Act to exempt certain rural LECs from

all section 251 obligations.

82. Takings. The Third R&O disagrees with US WEST's

characterization that declaring the high frequency portion of the local

loop to be an unbundled network element results in a physical taking.

As the Commission previously has stated in the Local Competition Third

Report and Order, dedicating a particular element to the new entrant's

exclusive use does not effect a physical occupation of any incumbent

LEC's property because the incumbent LEC retains physical dominion over

their network elements. Requesting carriers are simply permitted to

send their communications over these elements. Moreover, to the extent

requiring incumbent LECs to provide access to network elements could be

characterized as a regulatory or physical taking, incumbent LECs have

an adequate means available to secure just compensation. Thus, the

Third R&O concludes that even if requiring incumbent LECs to provide

competitive LECs with access to the unbundled high frequency spectrum

of the local loop constitutes a taking under the Fifth Amendment, this

taking is not unconstitutional.

V. Final Regulatory Flexibility Analysis

83. As required by the Regulatory Flexibility Act (RFA), an Initial

Regulatory Flexibility Analysis (IRFA) was incorporated in the Advanced

Services First Report and Order and FNPRM. The Commission sought

written public comment on the proposals in the Advanced Services First

Report and Order and FNPRM, including comment on the IRFA. This present

Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

Need for and Objectives of This Third Report and Order and the Rules

Adopted Herein

84. In this Third Report and Order (Order), the Commission takes

additional, important steps toward implementing Congress' goals for

deployment of advanced services by requiring incumbent LECs to unbundle

the high frequency portion of the loop, and establishing spectrum

compatibility and management policies.

85. First, the Commission amends our unbundling rules to require

incumbent LECs to provide unbundled access to a network element, the

high frequency portion of the loop. This will enable competitive LECs

to provide xDSL service through telephone lines that they share with

incumbent LECs, which is frequently called ``line sharing.'' In order

to ensure that line sharing does not significantly degrade analog voice

service, incumbents must provide unbundled access to the high frequency

portion of the loop only to carriers seeking to provide xDSL services

that meet one of the Commission's criteria regarding the presumption of

acceptability for deployment on the same loop as analog voice service.

86. The Commission also set specific parameters for line sharing

deployment in order to ensure that the analog voiceband is preserved

from significant degradation. Incumbents are not required to provide

unbundled access to the high frequency portion of the loop if they are

not currently providing analog voice service to the customer. Moreover,

incumbent carriers must provide unbundled access to the high frequency

portion of the loop to only a single requesting carrier, for use at the

same customer address as the analog voice service provided by the

incumbent. In addition, subject to certain obligations, incumbent LECs

may maintain control over the loop and splitter equipment and

functions.

87. The Commission also set forth pricing methodologies for the

states to use as guidelines when setting the price of this new

unbundled network element. Based on the record, we find that there are

five types of direct costs that an incumbent LEC potentially could

incur to provide access to line sharing : (1) loops; (2) OSS; (3) cross

connects; (4) splitters; and (5) line conditioning.

88. In addition to line sharing requirements, we adopt rules in

this Order that apply to spectrum compatibility and management. These

rules will significantly benefit the rapid and efficient deployment of

xDSL technologies. Specifically, the Commission seeks to encourage the

voluntary development of industry standards while limiting the ability

of any one class of carriers to impose unilateral and potentially anti-

competitive spectrum management or compatibility rules on other xDSL

providers. We believe that spectrum policies we adopt in this Order

will ensure the compatibility of technologies and minimize the risk of

harmful spectrum interference among transmission services. As such,

these policies will ensure that American consumers will not face undue

delay in receiving the benefits of technological innovation.

89. The Commission also adopts rules that will govern when a loop

technology is presumed acceptable for deployment. The circumstances

include when the technology: (1) complies with existing industry

standards; (2) has been approved by an industry standards body, the

Commission, or any state commission; or (3) has been successfully

deployed by any carrier without significantly degrading the performance

of other services.

90. The Commission affirms our conclusions from the Advanced

Services First Report and Order regarding resolution of interference

disputes. In the event that a LEC demonstrates to the relevant state

commission that a deployed technology is significantly degrading the

performance of other advanced services or traditional voice band

services, the carrier deploying the technology shall discontinue

deployment of that technology and migrate its customers to technologies

that will not significantly degrade the performance of other services.

We now adopt an exception to this rule: where the only service

experiencing interference is itself a known disturber, that service

shall not prevail against the newly developed technology. We conclude

that analog T1 service is a known disturber.

91. The only permissible forms of binder management are the

segregation of known disturbers and the use of the spectrum

compatibility (interference protection) techniques described above. The

states may select one or more of several approaches towards disposition

of known disturbers, including segregation or sunsetting of known

disturbers.

Summary of Significant Issues Raised by Public Comments in Response to

the IRFA

92. In the IRFA, the Commission stated that any rule changes would

impose minimum burdens on small entities, and solicited comment on

alternatives to our proposed rules that would minimize the impact they

might have on small entities. The Office of Advocacy, United States

Small Business Administration (SBA), commented on the issues raised in

the First Report and Order and Further Notice of Proposed Rulemaking.

SBA argued that the Commission should consider all comments received in

response to the FNPRM, but also issue a second Further

[[Page 1341]]

Notice along with a revised IRFA that more accurately identifies all

small businesses impacted and details the compliance burdens. Moreover,

SBA is concerned that the Commission did not provide adequate notice

regarding cost allocation and operational issues.

93. First, SBA argues that the Advanced Services FNPRM does not

adequately identify all small entities affected by the line sharing and

spectrum management proposals because the Commission did not identify

small incumbent LECs as small entities. In fact, the Commission does

include small incumbents in its RFA. While in the IRFA, the Commission

stated that ``[a]lthough some affected incumbent LECs may have 1,500 or

fewer employees, we do not believe that such entities should be

considered small entities within the meaning of the RFA because they

are either dominant in their field of operations or are not

independently owned and operated, and therefore by definition not

`small entities' or `small business concerns' under the RFA,'' the

Commission goes on to state that ``[o]ut of an abundance of caution,

however, for regulatory flexibility analysis purposes, we will

separately consider small incumbent LECs within this analysis and use

the term `small incumbent LECs' to refer to any incumbent LECs that

arguably might be defined by the SBA as `small business concerns.' ''

Moreover, as SBA is aware, the Commission continues formally to include

small incumbent LECs in the RFA analysis of recent Commission items.

94. SBA also argues that the IRFA does not describe the possible

reporting, recordkeeping, and other compliance requirements stemming

from the proposals in the Advanced Services FNPRM. The Commission

determined in the Advanced Services FNPRM that line sharing is

technically feasible and requested comments on the operation issues

relating to sharing a single line between two service providers. In

addition, the Commission sought comment on additional measures the

Commission could take to ensure that spectrum compatibility and

management concerns are resolved in a fair and expeditious manner. The

Commission sought comment on these two issues, and specifically

identified issues such as the economic, pricing, and cost allocation

implications of the line sharing proposals, as well as the burdens on

the industry created by our spectrum policy proposals. As stated in the

IRFA, we sought ``comments on whether the Commission should establish

rules for deployment of central office equipment similar to those set

forth in part 68 of our rules. We also ask[ed] commenters to address

whether the Commission should be involved with the actual testing and

compliance procedures or whether the industry is better suited to serve

this function through the use of independent and accredited labs.'' The

commenters in this proceeding addressed these specific issues in a

detailed manner, including any reporting, recordkeeping, and other

compliance requirements associated with the proposals, suggesting that

the Commission proposals were neither vague not insufficient as alleged

by SBA.

95. Third, SBA contends that the Commission's IRFA did not discuss

any alternatives to the proposals made in the Advanced Services FNPRM,

and that the Commission's claim that the proposals placed a minimum

burden on small entities is unsupported by any analysis of the burdens.

In the IRFA, the Commission sought ``to develop a record sufficient

enough to adequately address issues related to developing long-term

standards and practices for spectrum compatibility and management, and

to the sharing of loops by multiple providers.'' In addressing these

issues, the Commission sought to ensure that competing carriers,

including small entity carriers, obtain access to inputs necessary to

the provision of advanced services. We also tentatively concluded that

our proposals in the FNPRM would impose minimal burdens on small

entities. Moreover, we sought comment on these proposals and the impact

they may have on small entities.''

96. Although the Commission did not describe explicitly each of the

alternatives that we considered and rejected, as the proposals in the

Advanced Services FNRPM make clear, the Commission is not considering

proposals that would require small entities to engage in activities in

which they are not already required to engage. These activities might

require operational, accounting, billing, and legal skills that the

small carriers already have. Moreover, certain proposals in the

Advanced Services FNPRM clearly would benefit all carriers, including

small carriers, by ensuring that all carriers have economic incentives

to innovate and invest in new technologies. This document notes that in

the text of the Advanced Services FNPRM, the Commission, in many

instances, raised questions regarding alternatives to our proposals.

These alternatives have the potential to benefit small entities. While

the Commission did not reiterate each of these questions in the IRFA,

we did describe our actions in the IRFA, which was attached as an

Appendix to the Advanced Services FNPRM, and as such, we provided

sufficient notice for small entities.

VI. Description and Estimate of the Number of Small Entities Affected

by the Third Report and Order

97. In the RFA to the Commission's Advanced Services Order and

FNPRM, we adopted the analysis and definitions set forth in determining

the small entities affected by this order for purposes of this FRFA.

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 rules. The RFA generally defines ``small entity'' as having

the same meaning as the term ``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, unless the Commission

has developed one or more definitions that are appropriate to its

activities. Under the Small Business Act, a ``small business concern''

is one that: (1) is independently owned and operated; (2) is not

dominant in its field of operation; and (3) meets any additional

criteria established by the Small Business Administration (SBA). The

SBA has defined a small business for Standard Industrial Classification

(SIC) categories 4812 (Radiotelephone Communications) and 4813

(Telephone Communications, Except Radiotelephone) to be small entities

when they have no more than 1,500 employees. We first discuss the

number of small telephone companies falling within these SIC

categories, then attempt to refine further those estimates to

correspond with the categories of telephone companies that are commonly

used under our rules.

98. The most reliable source of information regarding the total

numbers of common carrier and related providers nationwide, as well as

the numbers of commercial wireless entities, appears to be data the

Commission publishes annually in its Carrier Locator report, derived

from filings made in connection with the Telecommunications Relay

Service (TRS). According to data in the most recent report, there are

3,604 interstate carriers. These carriers include, inter alia, local

exchange carriers, wireline carriers and service providers,

interexchange carriers, competitive access providers, operator service

providers, pay telephone operators, providers of telephone toll

service, providers of telephone exchange service, and resellers.

[[Page 1342]]

99. The Commission has included small incumbent LECs in the 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 LECs are not dominant in their field of operation because any

such dominance is not ``national'' in scope. We have therefore included

small incumbent LECs in this RFA analysis, although we emphasize that

this RFA action has no effect on FCC analyses and determinations in

other, non-RFA contexts.

100. Total Number of Telephone Companies Affected. The United

States Bureau of the Census (``the Census Bureau'') reports that, at

the end of 1992, there were 3,497 firms engaged in providing telephone

services, as defined therein, for at least one year. This number

contains a variety of different categories of carriers, including local

exchange carriers, interexchange carriers, competitive access

providers, cellular carriers, mobile service carriers, operator service

providers, pay telephone operators, PCS providers, covered SMR

providers, and resellers. It seems certain that some of those 3,497

telephone service firms may not qualify as small entities or small

incumbent LECs because they are not ``independently owned and

operated.'' For example, a PCS provider that is affiliated with an

interexchange carrier having more than 1,500 employees would not meet

the definition of a small business. It seems reasonable to conclude,

therefore, that fewer than 3,497 telephone service firms are small

entity telephone service firms or small incumbent LECs that may be

affected by the decisions and rules proposed in the Notice.

101. Wireline Carriers and Service Providers. SBA has developed a

definition of small entities for telephone communications companies

other than radiotelephone companies. The Census Bureau reports that,

there were 2,321 such telephone companies in operation for at least one

year at the end of 1992. According to SBA's definition, a small

business telephone company other than a radiotelephone company is one

employing no more than 1,500 persons. All but 26 of the 2,321 non-

radiotelephone companies listed by the Census Bureau were reported to

have fewer than 1,000 employees. Thus, even if all 26 of those

companies had more than 1,500 employees, there would still be 2,295

non-radiotelephone companies that might qualify as small entities or

small incumbent LECs. Although it seems certain that some of these

carriers are not independently owned and operated, we are unable at

this time to estimate with greater precision the number of wireline

carriers and service providers that would qualify as small business

concerns under SBA's definition. Consequently, the Commission estimates

that there are fewer than 2,295 small entity telephone communications

companies other than radiotelephone companies that may be affected by

the decisions and rules proposed in the Notice.

102. Local Exchange Carriers. Neither the Commission nor SBA has

developed a definition of small local exchange carriers (LECs) or

competitive local exchange carriers (CLECs). The closest applicable

definition for these carrier-types under SBA rules is for telephone

communications companies other than radiotelephone (wireless)

companies. The most reliable source of information regarding the number

of these carriers nationwide of which the Commission is aware appears

to be the data that we collect annually in connection with the

Telecommunications Relay Service (TRS). According to our most recent

data, there are 1,410 LECs, 129 CLECs, and 351 resellers.

103. Although it seems certain that some of these carriers are not

independently owned and operated, or have more than 1,500 employees, we

are unable at this time to estimate with greater precision the number

of these carriers that would qualify as small business concerns under

SBA's definition. Consequently, we estimate that there are fewer than

1,410 small entity LECs, 129 CLECs, and 351 resellers that may be

affected by the decisions and rules adopted in the Order.

Summary of Projected Reporting, Recordkeeping, and Other Compliance

Requirements

A. Line Sharing

104. The Commission set forth guidelines that states may use in

pricing the higher frequencies of their local loops, which will be made

available as an unbundled network element. The Commission determined

that complying with these guidelines may require use of operational,

accounting, billing, and legal skills. These are skills that the

carriers already have. The Commission believes, however, that incumbent

LECs will already have these skills. The burden of compliance is

minimal because they use the higher frequencies of their local loops

already to provide the service that will be offered to others pursuant

to the unbundled network element.

105. In this Order, we identify the high frequency portion of the

loop as an additional network element that incumbent LECs are obligated

to offer to requesting carriers on an unbundled basis nationwide. The

Commission believes that incumbent LECs already have the skills

necessary to accomplish this with little or no additional resources

because incumbents will not have to hire new staff, or provide

additional training to current staff. The Commission notes that,

pursuant to section 251(c) and (d) of the 1996 Act, incumbent LECs,

including those that qualify as small entities, are required to provide

nondiscriminatory access to unbundled network elements. The only

exception to this rule apply to those carriers that qualify for and

have obtained an exemption, suspension, or modification pursuant to

section 251(f) of the Act.

B. Spectrum Policy

106. The Commission requires competitive LECs to provide to

incumbent LECs information on the type of technology they seek to

deploy, including Spectrum Class information where a competitive LEC

asserts that the technology it seeks to deploy fits within a generic

power spectral density (PSD) mask. Where a competitive LEC relies on a

calculation-based approach to support deployment of a particular

technology, it must furnish the incumbent LEC with information on the

speed and power at which the technology will be transmitted.

Competitive LECs must provide this information in notifying the

incumbent LEC of any proposed change in advanced services technology

that the carrier uses on the loop, so that the incumbent LEC can

correct its records and anticipate the effect that the change may have

on other services in the same or adjacent binder groups. The provision

of such information is integral to a competitive LEC's claim that the

technology it seeks to deploy is presumed acceptable for deployment.

The Commission determined that complying with these rules may require

use of engineering, technical, operational, and legal skills.

[[Page 1343]]

Steps Taken To Minimize Significant Economic Impact on Small Entities

and Small Incumbent LECs, and Alternatives Considered

A. Line Sharing

107. The high frequency portion of the loop meets the statutory

definition of a network element and must be unbundled pursuant to

sections 251(d) and (c)(3). Our unbundling analysis benefits

competitive carriers, including small entities, by enabling the

carriers to have access to shared loops in order to serve customers

who, heretofore, it has been uneconomical to serve. In order to ensure

that line sharing does not significantly degrade analog voice service,

incumbents must provide unbundled access to the high frequency portion

of the loop only to carriers seeking to provide xDSL-based service that

meets one of the Commission's criteria regarding the presumption of

acceptability for deployment on the same loop as analog voice service.

Incumbent carriers must provide unbundled access to the high frequency

portion of the loop only to a single requesting carrier, for use at the

same customer address as the analog voice service provided by the

incumbent. Incumbents are not required to provide unbundled access to

the high frequency portion of the loop if they are not currently

providing analog voice service to the customer. Subject to certain

obligations, incumbent LECs may maintain control over the loop and

splitter equipment and functions. The specific parameters pursuant to

which incumbent LECs have to provide access to shared lines benefit

small entities, both incumbent and competitive carriers, by ensuring

that carriers do not have to devote scarce resources to address line

sharing arrangements, such as multiple carriers and multiple customers

on the same loop, in which it is unlikely carriers seek to engage.

108. Moreover, the record shows that incumbents should be able to

resolve operational issues associated with implementation of line

sharing, including modifications to operations support systems, within

six months. The record shows that incumbents have a number of process

alternatives available and we will allow them the flexibility to choose

the best and most economically feasible of them. The 180-day

implementation period will benefit small incumbents who might not have

the resources to make immediate changes to their OSSs.

Spectrum Policy

109. Although we reiterate our general belief that industry

standards bodies should create acceptable standards for deployment of

advanced services, we remain convinced, however, that the Commission is

compelled to play a role in fostering timely, fair, and open

development of standards for current and future technologies. We

conclude that the standards setting process must include the

involvement of a third party to advise the Commission on spectrum

compatibility standards and spectrum management practices.

Specifically, the charter of an existing Federal Advisory Committee

(FAC), the Network Reliability Interoperability Council (NRIC), will be

amended to charge NRIC with such advisory function.

2. Because NRIC will make recommendations to the Commission based

on input and submissions from T1E1.4 and other industry standards

bodies, that balanced representation within the NRIC should be able to

recommend against any issues that are unduly weighted towards any one

particular industry segment, we expect that NRICs involvement in these

issues will help in several ways to alleviate small business concerns

about incumbent LEC domination of T1E1.4, and will help safeguard

competitive neutrality in, and the timeliness of xDSL standards setting

for network interoperability generally.

110. Should the Commission find that certain industry standards

bodies are adopting spectrum compatibility standards or spectrum

management practices that continue to fail, in their underlying

processes, in safeguarding principles of competitive neutrality and

promoting innovation, we will look to other industry standards bodies

that uphold these principles or we will exercise our authority to

assume that standards-setting function ourselves.

111. The Commission finds the criterion for acceptability for

deployment outlined above--successful deployment of a technology

elsewhere without significantly degrading the performance of other

services--to be particularly useful for assisting the deployment of new

technologies without subjecting them to delays often encountered with

industry standards-setting fora. As a method to achieve a presumption

of acceptability for deployment that does not rely upon industry

standards bodies, the successful deployment criterion provides a

further antidote against concerns regarding the competitive neutrality

of the industry standards-setting process. This criterion should

benefit small LECs because it relieves the LEC from having to meet the

potentially burdensome requirements of the industry standards setting

process.

112. The LEC also will be able to rebut the presumption of

acceptability before a state commission if the technology proposed for

deployment poses a real interference threat in a certain area. We are

confident that this represents a sufficient safeguard for network

reliability. Indeed, because the power to rebut the presumption of

acceptability for deployment of a technology before a state commission

is an important safeguard for LECs, we decline to make the presumptions

that are based on technology's standardization or other approval by an

industry standards body or this Commission irrebuttable. This

rebuttable presumption benefits small LECs because it gives them a

vehicle to protect the network and their deployed services. Small LECs

particularly benefit by the fact that we allow carriers to rebut the

presumption of acceptability for deployment before the relevant state

commission.

113. The Commission confirms that an incumbent LEC need not act as

the initial point of contact in all service degradation disputes. This

relieves small incumbent LECs from the potential responsibility for

fielding all complaints; a task which could create an administrative

burden and a resource drain on small incumbents.

114. The Commission reaffirms and codify the policy that we

enunciated in the Advanced Services First Report and Order to guide

states in the resolution of interference disputes. Specifically, where

a LEC demonstrates that a deployed technology is significantly

degrading the performance of other advanced services or traditional

voice band services, ``the carrier deployning the technology shall

discontinue deployment of that technology and migrate its customers to

technologies that will not significantly degrade the performance of

other such services. We now add an exception to this rule that we

believe will further safeguard competitive neutrality and deployment of

new technologies. Specifically, where the only interfered-with service

itself is a known disturber, as designated by this Commission, that

service shall not prevail against the newly developed technology. This

exception prevents the undue protection of noisier technologies that

are at or near the end of their useful life cycle, at the same time

preventing the undue preclusion of new, more efficient and spectrally

compatible technologies. This rule benefits incumbents, including small

incumbents, by protecting the deployment of innovative services. The

deployment of known disturbers is not at risk of being displaced by new

[[Page 1344]]

technologies that do not meet the presumption of acceptability for

deployment.

115. Such an approach would designate automatic winners in the

event of interference disputes. Chief among these concerns is that the

guarded services approach is blatantly discriminatory, protecting

technologies favored by competitive LECs. We emphasize that any

criteria that favor incumbent LEC services in a manner that

automatically trumps, without further consideration, innovative

services offered by new entrants is neither consistent with section 706

of the 1996 Act nor with the Commission's goals as set out in the

Advanced Services First Report and Order. The policies that we

reiterate and adopt here as rules with respect to interference dispute

resolution protect new technologies often deployed by small carriers

against otherwise guarded technologies that tend to be deployed by

incumbents who are generally larger than competitive carriers that do

not favor the guarded services approach having carte blanche to be

deployed after-the-fact and cause interference. These policies also

provide guidance at the national level, in accordance with our finding

in the Advanced Services First Report and Order that ``uniform spectrum

management procedures are essential to the success of advanced services

deployment'' where they are possible, precisely to avoid requiring

competitive LECs to conform to different specifications in each state.

These policies, therefore, benefit small carriers by making it

administratively more efficient to deploy advanced services nationwide.

116. The Commission concludes that only permissible forms of binder

group management are the segregation of known disturbers and the use of

interference protection techniques. The Commission believes that the

interference that known disturbers in particular are likely to cause in

a multi-service environment renders it worthwhile for us to allow

incumbent LECs to decide whether to segregate such disturbers as a

further measure to protect against interference. This conclusion helps

small incumbent LECs to the extent that they are likely to have some

deployment of known disturbers (analog T1), because segregation is much

less burdensome on small incumbents than forced replacement. This rule

also helps small competitive carriers by prohibiting segregation of

services in a discriminatory manner.

117. Numerous competitive LECs, which are often small businesses,

continue to express concern that if we vest in incumbent LECs right to

manage binder groups unfettered, we will provide ample opportunity for

incumbent LECs to discriminate against introduction of new technologies

and/or to institute binder configurations which significantly favor

their own deployed technologies. The Commission is persuaded that we

must limit segregation practices to known disturbers, because only the

interference risks of mixing known disturbers with other technologies

outweigh the risks of anticompetitive segregation practices. Because we

currently do not determine ADSL to be a known disturber, we find that

SBC may not implement SFS, and we do order that SBC dismantle any

currently existing SFS implementation. We further stress that carriers

cannot use binder group management to preclude the deployment of new

technologies that are otherwise presumed to be acceptable for

deployment.

118. The Commission finds leaving disposition of known interfering

technologies to the states preferable to establishing a national sunset

period for known disturbers in this proceeding. The Commission is

concerned that a blanket sunset period may lead to unnecessary

replacement of analog T1 or other otherwise known disturbers, which

could lead further to unnecessary network disruption and could force

carriers to undertake exorbitant replacement expenditures. In addition,

as we acknowledged in the Advanced Services First Report and Order and

FNRPM, carriers that have a substantial base of analog T1 in

deployment, and in some areas it provides the only feasible high-speed

transmission capability. We also recognize that transitioning customers

to less interfering technologies may disrupt service for subscribers.

This rule benefits incumbents, including small incumbents, by not

imposing an automatic sunset period for known disturbers. Such a sunset

could be expensive and have unnecessary detrimental effects on small

carriers. At the same time, states are better equipped than incumbent

LECs to take an objective view of the disposition of known disturbers,

because of the vested interest that incumbent LECs have in their own

substantial base of known disturbers such as analog T1.

Ordering Clauses

Accordingly, pursuant to the authority contained in Sections 1

through 4, 7, 10, 201 through 205, 251 through 254, 256, 271, and

303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 151

through 154, 157, 160, 201 through 205, 251 through 254, 256, 271, and

303(r), this Third Report and Order is adopted,

119. Part 51 of the Commission's Rules, 47 CFR 51, is amended.

120. SBC Communications Inc. and all of its affiliated companies

shall dismantle any currently existing Selective Feeder Separation

(SFS) implementations, unless such implementations solely designate,

segregate or reserve particular loops or binder groups for use solely

by analog T1 technology. Any carrier currently implementing any binder

group management technique, including SFS, which we prohibit above in

Section V.B.4. of this Order and that designates, segregates or

reserves particular loops or binder groups for use solely by any

particular advanced services loop technology other than analog T1,

shall discontinue and dismantle such implementations within 60 days

after the release of this Order.

121. The action contained herein has been analyzed with respect to

the Paperwork Reduction Act of 1995 and found to impose new or modified

reporting and recordkeeping requirements or burdens on the public.

List of Subjects in 47 CFR Part 51

Communications common carriers, telecommunications, telephone.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

Rule Changes

Part 51 of Title 47 of the Code of Federal Regulations is amended

as follows:

PART 51--INTERCONNECTION

1. The authority for part 51 continues to read as follows:

Authority: Sections 1-5, 7, 201-05, 207-09, 218, 225-27, 251-54,

271, 332, 48 Stat. 1070, as amended, 1077; 47 U.S.C. 151-55, 157,

201-05, 207-09, 218, 225-27, 251-54, 271, 332, unless otherwise

noted.

2. In Sec. 51.5, the following definitions are added in

alphabetical order to read as follows:

Sec. 51.5 Terms and definitions.

* * * * *

Binder or binder group. Copper pairs bundled together, generally in

groups of 25, 50 or 100.

* * * * *

Known disturber. An advanced services technology that is prone to

cause significant interference with other services deployed in the

network.

* * * * *

[[Page 1345]]

3. In Sec. 51.319, paragraph (h) is added to read as follows:

Sec. 51.319 Specific unbundling requirements.

* * * * *

(h) High frequency portion of the loop.

(1) The high frequency portion of the loop network element is

defined as the frequency range above the voiceband on a copper loop

facility that is being used to carry analog circuit-switched voiceband

transmissions.

(2) An incumbent LEC shall provide nondiscriminatory access in

accordance with Sec. 51.311 of these rules and section 251(c)(3) of the

Act to the high frequency portion of a loop to any requesting

telecommunications carrier for the provision of a telecommunications

service conforming with Sec. 51.230 of these rules.

(3) An incumbent LEC shall only provide a requesting carrier with

access to the high frequency portion of the loop if the incumbent LEC

is providing, and continues to provide, analog circuit-switched

voiceband services on the particular loop for which the requesting

carrier seeks access.

(4) Control of the loop and splitter functionality. In situations

where a requesting carrier is obtaining access to the high frequency

portion of the loop, the incumbent LEC may maintain control over the

loop and splitter equipment and functions, and shall provide to

requesting carriers loop and splitter functionality that is compatible

with any transmission technology that the requesting carrier seeks to

deploy using the high frequency portion of the loop, as defined in this

subsection, provided that such transmission technology is presumed to

be deployable pursuant to Sec. 51.230.

(5) Loop conditioning. (i) An incumbent LEC must condition loops to

enable requesting carriers to access the high frequency portion of the

loop spectrum, in accordance with Secs. 51.319(a)(3), and 51.319(h)(1).

If the incumbent LEC seeks compensation from the requesting carrier for

line conditioning, the requesting carrier has the option of refusing,

in whole, or in part, to have the line conditioned, and a requesting

carrier's refusal of some or all aspects of line conditioning will not

diminish its right of access to the high frequency portion of the loop.

(ii) Where conditioning the loop will significantly degrade, as

defined in Sec. 51.233, the voiceband services that the incumbent LEC

is currently providing over that loop, the incumbent LEC must either:

(A) Locate another loop that has been or can be conditioned,

migrate the incumbent LEC's voiceband service to that loop, and provide

the requesting carrier with access to the high frequency portion of the

alternative loop; or

(B) Make a showing to the relevant state commission that the

original loop cannot be conditioned without significantly degrading

voiceband services on that loop, as defined in Sec. 51.233, and that

there is no adjacent or alternative loop available that can be

conditioned or to which the customer's voiceband service can be moved

to enable line sharing.

(iii) If the relevant State commission concludes that a loop cannot

be conditioned without significantly degrading the voiceband service,

the incumbent LEC cannot then or subsequently condition that loop to

provide advanced services to its own customers without first making

available to any requesting carrier the high frequency portion of the

newly-conditioned loop.

(6) Digital loop carrier systems. Incumbent LECs must provide to

requesting carriers unbundled access to the high frequency portion of

the loop at the remote terminal as well as the central office, pursuant

to Sec. 51.319(a)(2) and Sec. 51.319(h)(1).

(7) Maintenance, repair, and testing. (i) Incumbent LECs must

provide, on a nondiscriminatory basis, physical loop test access points

to requesting carriers at the splitter, through a cross-connection to

the competitor's collocation space, or through a standardized

interface, such as an intermediate distribution frame or a test access

server, for the purposes of loop testing, maintenance, and repair

activities.

(ii) An incumbent seeking to utilize an alternative physical access

methodology may request approval to do so from the relevant state

commission, but must show that the proposed alternative method is

reasonable, nondiscriminatory, and will not disadvantage a requesting

carrier's ability to perform loop or service testing, maintenance or

repair.

4. Section 51.230 is added to read as follows:

Sec. 51.230 Presumption of acceptability for deployment of an advanced

services loop technology.

(a) An advanced services loop technology is presumed acceptable for

deployment under any one of the following circumstances, where the

technology:

(1) Complies with existing industry standards; or

(2) Is approved by an industry standards body, the Commission, or

any state commission; or

(3) Has been successfully deployed by any carrier without

significantly degrading the performance of other services.

(b) An incumbent LEC may not deny a carrier's request to deploy a

technology that is presumed acceptable for deployment unless the

incumbent LEC demonstrates to the relevant state commission that

deployment of the particular technology will significantly degrade the

performance of other advanced services or traditional voiceband

services.

(c) Where a carrier seeks to establish that deployment of a

technology falls within the presumption of acceptability under

paragraph (a)(3) of this section, the burden is on the requesting

carrier to demonstrate to the state commission that its proposed

deployment meets the threshold for a presumption of acceptability and

will not, in fact, significantly degrade the performance of other

advanced services or traditional voice band services. Upon a successful

demonstration by the requesting carrier before a particular state

commission, the deployed technology shall be presumed acceptable for

deployment in other areas.

5. Section 51.231 is added to read as follows:

Sec. 51.231 Provision of information on advanced services deployment.

(a) An incumbent LEC must provide to requesting carriers that seek

access to a loop or high frequency portion of the loop to provide

advanced services:

(1) Uses in determining which services can be deployed; and

information with respect to the spectrum management procedures and

policies that the incumbent LEC.

(2) Information with respect to the rejection of the requesting

carrier's provision of advanced services, together with the specific

reason for the rejection; and

(3) Information with respect to the number of loops using advanced

services technology within the binder and type of technology deployed

on those loops.

(b) A requesting carrier that seeks access to a loop or a high

frequency portion of a loop to provide advanced services must provide

to the incumbent LEC information on the type of technology that the

requesting carrier seeks to deploy.

(1) Where the requesting carrier asserts that the technology it

seeks to deploy fits within a generic power spectral density (PSD)

mask, it also

[[Page 1346]]

must provide Spectrum Class information for the technology.

(2) Where a requesting carrier relies on a calculation-based

approach to support deployment of a particular technology, it must

provide the incumbent LEC with information on the speed and power at

which the signal will be transmitted.

(c) The requesting carrier also must provide the information

required under paragraph (b) of this section when notifying the

incumbent LEC of any proposed change in advanced services technology

that the carrier uses on the loop.

6. Section 51.232 is added to read as follows:

Sec. 51.232 Binder group management.

(a) With the exception of loops on which a known disturber is

deployed, the incumbent LEC shall be prohibited from designating,

segregating or reserving particular loops or binder groups for use

solely by any particular advanced services loop technology.

(b) Any party seeking designation of a technology as a known

disturber should file a petition for declaratory ruling with the

Commission seeking such designation, pursuant to Sec. 1.2 of this

chapter.

7. Section 51.233 is added to read as follows:

Sec. 51.233 Significant degradation of services caused by deployment

of advanced services.

(a) Where a carrier claims that a deployed advanced service is

significantly degrading the performance of other advanced services or

traditional voiceband services, that carrier must notify the deploying

carrier and allow the deploying carrier a reasonable opportunity to

correct the problem. Where the carrier whose services are being

degraded does not know the precise cause of the degradation, it must

notify each carrier that may have caused or contributed to the

degradation.

(b) Where the degradation asserted under paragraph (a) of this

section remains unresolved by the deploying carrier(s) after a

reasonable opportunity to correct the problem, the carrier whose

services are being degraded must establish before the relevant state

commission that a particular technology deployment is causing the

significant degradation.

(c) Any claims of network harm presented to the deploying

carrier(s) or, if subsequently necessary, the relevant state

commission, must be supported with specific and verifiable information.

(d) Where a carrier demonstrates that a deployed technology is

significantly degrading the performance of other advanced services or

traditional voice band services, the carrier deploying the technology

shall discontinue deployment of that technology and migrate its

customers to technologies that will not significantly degrade the

performance of other such services.

(e) Where the only degraded service itself is a known disturber,

and the newly deployed technology satisfies at least one of the

criteria for a presumption that it is acceptable for deployment under

Sec. 51.230, the degraded service shall not prevail against the newly-

deployed technology.

[FR Doc. 00-458 Filed 1-7-00; 8:45 am]

BILLING CODE 6712-01-P