Telephone Number Portability

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 20 and 52

[CC Docket No. 95-116; FCC 96-286]

Telephone Number Portability

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: On June 13, 1995, The Commission adopted a notice of proposed

rulemaking (CC Docket No. 95-116) regarding telephone number

portability . The First Report and Order released July 2, 1996,

promulgates rules and regulations implementing the statutory

requirement that local exchange carriers (LECs) provide number

portability as set forth in section 251 of the Telecommunications Act

of 1996 (1996 Act). The Report and Order mandates the implementation of

number portability by LECs, consistent with the procompetitive goals of

the Telecommunications Act of 1996. Concurrently with the adoption of

the Report and Order, the Commission adopted a Further Notice of

Proposed Rulemaking which is published elsewhere in this issue.

EFFECTIVE DATE: August 26, 1996.

FOR FURTHER INFORMATION CONTACT: Jason Karp, Attorney, Common Carrier

Bureau, Policy and Program Planning Division, (202) 418-1517, or Mindy

Littell, Attorney, Common Carrier Bureau, Policy and Program Planning

Division, (202) 418-1394. For additional information concerning the

information collections contained in this Report and Order contact

Dorothy Conway at 202-418-0217, or via the Internet at [email protected].

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

Report and Order adopted June 27, 1996, and released July 2, 1996. The

full text of this First Report and Order is available for inspection

and copying during normal business hours in the FCC Reference Center

(Room 239), 1919 M St., NW., Washington, DC. The complete text also may

be obtained through the World Wide Web, at http://www.fcc.gov/Bureaus/

Common Carrier/Orders/fcc96286.wp, or may be purchased from the

Commission's copy contractor, International Transcription Service,

Inc., (202) 857-3800, 2100 M St., NW., Suite 140, Washington, DC 20037.

Pursuant to Section 251, the Report and Order establishes performance

criteria for acceptable long-term number portability methods and

requires all LECs to begin deploying number portability in the 100

largest Metropolitan Statistical Areas (MSAs) no later than October 1,

1997, and to complete deployment in those MSAs by December 31, 1998, in

accordance with a phased schedule. Number portability must be provided

in these areas by all LECs to all telecommunications carriers,

including commercial mobile radio services (CMRS) providers. In

addition, pursuant to the Commission's independent authority under

sections 1, 2, 4(i) and 332 of the Communications Act of 1934, as

amended, the Report and Order requires all cellular, broadband personal

communications services (PCS) and covered Specialized Mobile Radio

(SMR) service providers to be able to deliver calls from their networks

to ported numbers anywhere in the country by December 31, 1998, and

requires cellular, broadband PCS and covered SMR customers to be able

to move their own numbers to other carriers by June 30, 1999. In the

Report and Order, the Commission delegates responsibility to the North

American Numbering Council (NANC) to oversee the initial administration

of the system of regional databases which will be used by carriers to

provide number portability. Pursuant to the 1996 Act, the Commission

also requires LECs to provide currently available number portability

measures upon specific request from another carrier until long-term

number portability is available. However, the Report and Order

concludes that CMRS providers need not provide such measures due to

technical considerations specific to the CMRS industry. In addition,

consistent with section 251(e)(2) of the Telecommunications Act of

1996, the Report and Order sets forth principles that ensure that the

costs of currently available measures are borne by all

telecommunications carriers on a competitively neutral basis, and

permits states to utilize various cost recovery mechanisms, so long as

they are

[[Page 38606]]

consistent with these statutory requirements.

Regulatory Flexibility Analysis:

As required by the Regulatory Flexibility Act, the Report and Order

contains a Final Regulatory Flexibility Analysis which is set forth in

Appendix C to the Report and Order. A brief description of the analysis

follows.

The rules adopted in this Report and Order are necessary to

implement the provisions of the Telecommunications Act of 1996

requiring LECs to offer number portability, if technically feasible.

Although there were no comments submitted in response to the

Initial Regulatory Flexibility Analysis set forth in the Notice of

Proposed Rulemaking, the general comments of Chief Counsel for Advocacy

of the United States Small Business Administration (SBA) generally

supported the actions of the Commission in the Report and Order.

However, in their general comments filed prior to the passage of the

1996 Act, some LECs suggested that the Commission should neither adopt,

nor direct the adoption of, number portability without performing a

thorough cost/benefit analysis--a course of action which may result in

less of an impact on small entities. However, after passage of the 1996

Act, most parties agreed that the 1996 Act clearly directs the

Commission to implement long-term number portability.

The statutory meaning of the term ``small business'' is one which

(1) is independently owned and operated; (2) is not dominant in its

field of operation; and (3) satisfies any additional criteria

established by the Small Business Administration (SBA). According to

SBA's regulations, entities engaged in the provision of telephone

service may have a maximum of 1,500 employees in order to qualify as a

small business concern. 13 CFR 121.201. This standard also applies in

determining whether an entity is a small business for purposes of the

Regulatory Flexibility Act.

The rules adopted by the Commission governing long-term number

portability apply to all LECs, including incumbent LECs as well as new

LEC entrants, and also apply to cellular, broadband PCS, and covered

SMR providers. According to the SBA definition, incumbent LECs do not

qualify as small businesses because they are dominant in their field of

operation. However, the rules may have a significant economic impact on

a substantial number of small businesses insofar as they apply to

telecommunications carriers other than incumbent LECs, such as new

entrant LECs, as well as cellular, broadband PCS, and covered SMR

providers. Based upon data contained in the most recent census and a

report by the Commission's Common Carrier Bureau, the Commission

estimated that 2,100 carriers could be affected. This estimate was

derived based on an analysis using census data on the number of firms

with fewer than 1,000 employees and subtracting the number of incumbent

LECs (as established by an FCC report). For a detailed analysis, see

Appendix C of the Report and Order.

There are several reporting requirements imposed by the Report and

Order which will likely require the services of persons with technical

expertise to prepare the reports. First, carriers participating in a

field test in the Chicago, Illinois, area are required to file with the

Commission a report of their findings within 30 days after completion

of the test. Second, after December 31, 1998, long-term number

portability must be provided by LECs outside of the 100 largest MSAs

within six months after a specific request by another

telecommunications carrier in which the requesting carrier is operating

or plans to operate. The specific request must contain certain

information. Third, state regulatory commissions must file with the

Commission a notification if they opt to develop a state-specific

database in lieu of participating in a regional database system.

Carriers that object to a state decision to opt out of the regional

database system may file with the Commission a petition for relief.

Fourth, the item requires any administrator selected by a state prior

to the release of the Report and Order, that wishes to bid for

administration of one of the regional databases, must submit a new

proposal in accordance with the guidelines established by the NANC.

Fifth, the Report and Order requires carriers that are unable to meet

the deadlines for implementing a long-term number portability solution

to file with the Commission at least 60 days in advance of the deadline

a petition to extend the time by which implementation in its network

will be completed. Finally, we require an industry body known as the

Industry Numbering Committee (INC) to file a report with the Commission

on the portability of non-geographic numbers assigned to LECs within 12

months after the effective date of the Report and Order.

The Commission's actions in this Report and Order will benefit

small entities by facilitating their entry into the local exchange

market. The record in this proceeding indicates that the lack of number

portability would deter entry by competitive providers of local service

because of the value customers place on retaining their telephone

numbers. These competitive providers, many of which may be small

entities, may find it easier to enter the market as a result of number

portability which will eliminate this barrier to entry.

In general, the Commission has attempted to keep burdens on local

exchange carriers to a minimum. For example, the phased deployment

schedule requires long-term number portability to be implemented

initially in the 100 largest MSAs, and then elsewhere upon a carrier's

request. The provision of currently available measures is conditioned

upon request only. In addition, the Commission has attempted to

minimize the impact of our rules upon cellular, broadband PCS, and

covered SMR providers, which may be small businesses, by not requiring

such carriers to offer currently available number portability measures.

Similarly, paging and messaging service providers, which may be small

entities, are required to provide neither currently available measures

nor long-term number portability under our rules. The regulatory

burdens imposed are necessary to ensure that the public receives the

benefit of the expeditious provision of service provider number

portability in accordance with the statutory requirements.

Paperwork Reduction Act

Public reporting burden for the collections of information is

estimated as follows:

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Estimated

number of

respondents

Information collections Estimated avg. hours per response (all are one-

time only

responses)

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Field test report........................... 20 hours per respondent (joint response).......... 11

[[Page 38607]]

Requests for long-term number portability in 3 hours........................................... 80

areas outside the 100 largest MSAs.

State notification of intention to ``opt 3 hours........................................... 5

out'' of regional database system.

Carrier petitions challenging state decision 10 hours.......................................... 2

to ``opt out'' of regional database system.

Proposal to administer database(s).......... 160 hours......................................... 1

Petitions to extend implementation deadline. 10 hours.......................................... 8

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Total Annual Burden: 735 hours.

Frequency of Response: All collections of information require one-

time only responses.

These estimates include the time for reviewing instructions,

searching existing data sources, gathering and maintaining the data

needed, and completing and reviewing the collections of information.

Send comments regarding these burden estimates or any other aspects of

the collections of information, including suggestions for reducing the

burden, to the Federal Communications Commission, Records Management

Branch, Room 234, Paperwork Reduction Project, Washington, DC 20554 and

to the Office of Management and Budget, Paperwork Reduction Project,

Washington, DC 20503.

Synopsis of First Report and Order

I. Introduction

1. We initiated this proceeding on July 13, 1995, when we adopted a

Notice of Proposed Rulemaking seeking comment on a wide variety of

policy and technical issues related to telephone number portability (60

FR 39136 (August 1, 1995)). Since our adoption of the NPRM, the

Telecommunications Act of 1996 became law. Section 251, added by the

1996 Act, requires all local exchange carriers (LECs), both incumbents

and new entrants, to offer number portability in accordance with

requirements prescribed by the Commission. On March 14, 1996, the

Common Carrier Bureau released a Public Notice seeking comment on how

the passage of the 1996 Act may have affected the issues raised in the

NPRM (61 FR 11174 (March 19, 1996)). Comments in response to the Public

Notice were received on March 29, 1996, and reply comments were filed

on April 5, 1996. In addition, efforts to implement number portability

at the state level have progressed since adoption of the NPRM.

2. The Telecommunications Act of 1996 establishes ``a pro-

competitive, de-regulatory national policy framework'' that is intended

to ``promote competition and reduce regulation * * * to secure lower

prices and higher quality services for American telecommunications

consumers and encourage the rapid deployment of new telecommunications

technologies.'' The statute imposes obligations and responsibilities on

telecommunications carriers, particularly incumbent local exchange

carriers, that are designed to open monopoly telecommunications markets

to competitive entry and to promote competition in markets that already

are open to new competitors. In particular, section 251(b) imposes

specific obligations on all local exchange carriers to open their

networks to competitors. The Act envisions that removing legal and

regulatory barriers to entry and reducing economic impediments to entry

will enable competitors to enter markets freely, encourage

technological development, and ensure that a firm's prowess in

satisfying consumer demand will determine its success or failure in the

marketplace. In implementing the statute, the Commission has the

responsibility to adopt the rules that will implement most quickly and

effectively the national telecommunications policy embodied in the 1996

Act. Number portability is one of the obligations that Congress imposed

on all local exchange carriers, both incumbents and new entrants, in

order to promote the pro-competitive, deregulatory markets it

envisioned. Congress has recognized that number portability will lower

barriers to entry and promote competition in the local exchange

marketplace. In its report, the Senate Committee on Commerce, Science,

and Transportation concluded that the ``minimum requirements [for

interconnection set forth in new section 251(b), including number

portability,] are necessary for opening the local exchange market to

competition.'' Likewise, the House of Representatives Committee on

Commerce determined that ``the ability to change service providers is

only meaningful if a customer can retain his or her local telephone

number.''

3. In this Order, we promulgate rules and regulations implementing

this congressional directive. Although we decline to choose a

particular technology for providing number portability, we establish in

this Report and Order performance criteria that any long-term number

portability method selected by a LEC must meet. Pursuant to the

statutory requirement in section 251 to provide number portability, we

require all LECs to begin to implement a long-term service provider

portability solution that meets our performance criteria in the 100

largest Metropolitan Statistical Areas (MSAs) no later than October 1,

1997, and to complete deployment in those MSAs by December 31, 1998, in

accordance with a phased schedule set forth below. Number portability

must be provided in these areas by all LECs to all telecommunications

carriers, including commercial mobile radio services (CMRS) providers.

4. The statute explicitly excludes CMRS providers from the

definition of local exchange carriers, and therefore from the section

251(b) obligations to provide number portability, unless the Commission

concludes that they should be included in the definition of local

exchange carrier. Our recent Notice of Proposed Rulemaking on

interconnection issues raised by the 1996 Act sought comment generally

on whether, and to what extent, CMRS providers should be classified as

LECs. Because we conclude that we have independent authority under

sections 1, 2, 4(i), and 332 of the Communications Act of 1934, as

amended, to require cellular providers, broadband personal

communications services (PCS), and covered Specialized Mobile Radio

(SMR) providers to provide long-term service provider portability, we

need not decide here whether CMRS providers must provide number

portability as local exchange carriers under section 251(b). We require

all cellular, broadband PCS, and covered SMR providers to have the

capability of delivering calls from their networks to

[[Page 38608]]

ported numbers anywhere in the country by December 31, 1998, and to

offer service provider portability, including the ability to support

roaming, throughout their networks by June 30, 1999.

5. We conclude that a system of regional databases that are managed

by an independent administrator will serve the public interest. We

direct the North American Numbering Council (NANC) to provide initial

oversight of this regional database system. We direct the NANC to

determine the number and location of the regional databases and to

select one or more administrators responsible for deploying the

database system. Any state that prefers to develop its own statewide

database rather than participate in a regionally-deployed database,

however, may opt out of its designated regional database and implement

a state-specific database. We will retain authority to override a

state's decision to develop a statewide database if an affected carrier

can demonstrate that the state's proposal would significantly delay

deployment of a long-term method or impose unreasonable costs on

affected carriers.

6. Until long-term service provider portability is available, we

require LECs to provide currently available number portability

measures, such as Remote Call Forwarding (RCF) and Direct Inward

Dialing (DID), upon specific request from another carrier. We conclude,

however, that commercial mobile radio service providers need not

provide such measures due to technical considerations specific to the

CMRS industry. We enunciate principles that ensure that the costs of

currently available measures are borne by all telecommunications

carriers on a competitively neutral basis, and we conclude that states

may utilize various cost recovery mechanisms, so long as they are

consistent with these statutory requirements. We decline at this time

to require the provision of either service or location portability. We

conclude that, while the statute requires LECs to implement 500 and 900

number portability, there is insufficient record evidence to determine

whether LEC provision of portability for 500 and 900 numbers is

technically feasible. As a result, we refer the issue to the Industry

Numbering Committee (INC), which must report its findings to the

Commission within 12 months of the effective date of this Order.

Finally, we adopt a Further Notice of Proposed Rulemaking regarding

cost recovery for long-term number portability.

II. Background

A. Telecommunications Act of 1996

7. New section 251(b)(2) of the Communications Act of 1934, as

added by the 1996 Act, directs each local exchange carrier ``to

provide, to the extent technically feasible, number portability in

accordance with requirements prescribed by the Commission.'' The 1996

Act defines the term ``local exchange carrier'' as:

any person that is engaged in the provision of telephone exchange

service or exchange access. Such term does not include a [commercial

mobile service provider,] as defined under section 332(c), except to

the extent that the Commission finds that such provider should be

included in the definition of such term.

The 1996 Act defines ``number portability'' as ``the ability of

users of telecommunications services to retain, at the same location,

existing telecommunications numbers without impairment of quality,

reliability, or convenience when switching from one telecommunications

carrier to another.''

8. The 1996 Act defines the term ``telecommunications carrier'' as

``any provider of telecommunications services, except that such term

does not include aggregators of telecommunications services (as defined

in section 226).'' The term ``telecommunications service'' is defined

by the 1996 Act as ``the offering of telecommunications for a fee

directly to the public, or to such classes of users as to be

effectively available directly to the public, regardless of the

facilities used.'' Because the 1996 Act's definition of number

portability requires LECs to provide number portability when customers

switch from any telecommunications carrier to any other, the statutory

obligation of LECs to provide number portability runs to other

telecommunications carriers. Because CMRS falls within the statutory

definition of telecommunications service, CMRS carriers are

telecommunications carriers under the 1996 Act. As a result, LECs are

obligated under the statute to provide number portability to customers

seeking to switch to CMRS carriers.

9. In addition to the duties imposed by section 251(b) on all LECs,

section 251(c)(1) imposes upon incumbent LECs, inter alia, the ``duty

to negotiate in good faith * * * the terms and conditions of agreements

to fulfill'' the section 251(b) obligations, including the duty to

provide number portability. An incumbent LEC is defined as a carrier

that was providing exchange access service in a particular area on

February 8, 1996, and was a member of the National Exchange Carrier

Association (NECA) pursuant to Sec. 69.601(b) of the Commission's

regulations. The 1996 Act creates an exemption from the obligations of

section 251(c) for rural telephone companies, and allows LECs with

fewer than two percent of the nation's subscriber lines to petition a

state commission for suspension or modification of the application of

sections 251(b) and (c).

10. Section 251(e)(1) reinforces the Commission's authority over

matters relating to the administration of numbering resources by giving

the Commission exclusive jurisdiction over those portions of the North

American Numbering Plan (NANP) that pertain to the United States. This

subsection also requires the Commission to ``create or designate one or

more impartial entities to administer telecommunications numbering and

to make such numbers available on an equitable basis.'' Moreover,

section 251(e)(2) provides that the cost of ``number portability shall

be borne by all telecommunications carriers on a competitively neutral

basis as determined by the Commission.''

11. Finally, new section 271(c)(2)(B) establishes a ``competitive

checklist'' of requirements that the Bell Operating Companies (BOCs)

must meet to provide in-region interLATA services. One of the

requirements that the BOCs must satisfy is the provision of ``interim

number portability through remote call forwarding, direct inward

dialing trunks, or other comparable arrangements, with as little

impairment of functioning, quality, reliability, and convenience as

possible'' until the Commission issues regulations pursuant to section

251 to implement the statute's number portability requirements. Section

271(c)(2)(B)(xi) directs the BOCs to comply fully with the regulations

implemented by the Commission.

B. Proposed Number Portability Methods

12. Because most telephone numbers within the NANP are associated

with a particular switch operated by a particular service provider,

they currently cannot be transferred outside the service area of a

particular switch or between switches operated by different service

providers without technical changes to the switch or network. Several

methods exist, or are being developed, to provide telephone number

portability. These methods generally consist of two types: database and

non-database methods.

[[Page 38609]]

1. Database Methods

13. Several industry participants have proposed methods for

providing service provider portability that use databases containing

the customer routing information necessary to route telephone calls to

the proper terminating locations. All these methods depend on

Intelligent Network (IN) or Advanced Intelligent Network (AIN)

capabilities. Before the release of our NPRM, AT&T proposed a Location

Routing Number (LRN) method to the Industry Numbering Committee (INC),

an industry body that provides an open forum to address and resolve

industry-wide issues associated with the non-policy-related planning,

administration, allocation, assignment, and use of numbering resources

within the NANP area. Since it proposed LRN to the INC, AT&T has

continued to develop and refine this method. Essentially, LRN assigns a

unique 10-digit telephone number to each switch in a defined geographic

area. The location routing number serves as a network address. Carriers

routing telephone calls to customers that have transferred their

telephone numbers from one carrier to another perform a database query

to obtain the location routing number that corresponds to the dialed

telephone number. The database query is performed for all calls to

switches from which at least one number has been ported. The carrier

then would route the call to the new carrier based on the location

routing number.

14. MCI, DSC Communications, Nortel, Tandem Computers, and Siemens

Stromberg-Carlson have developed a method referred to as the Carrier

Portability Code (CPC) method. This method operates in a similar manner

to LRN. Under CPC, however, the database associates the dialed

telephone number with a 3-digit carrier portability code identifying

the particular carrier to whom the dialed number has been transferred,

rather than a particular switch. As described below, many of the

parties in this proceeding and staff of some state commissions consider

the CPC method to be an interim database solution.

15. Stratus Computer and US Intelco have developed another database

method commonly referred to as Local Area Number Portability (LANP).

This method uses two ``domains'' of 10-digit numbers to route telephone

calls to customers that have transferred their numbers to new carriers

or new geographic locations. Specifically, LANP assigns a ten-digit

customer number address (CNA) to each end user; this is the number that

callers would dial to place telephone calls to the particular end user.

It also assigns each customer a 10-digit network node address (NNA)

that identifies where in the telephone network to reach the particular

end user. Both the CNA and the NNA are stored in routing databases so

that carriers can determine from the dialed telephone number where in

the network to reach the called party.

16. GTE has proposed both on the record in this proceeding and

before the INC what it refers to as the Non-Geographic Number (NGN)

method. While this method uses a database, it operates in a

fundamentally different manner from CPC, LRN, and LANP. The NGN method

would provide service provider and location portability to end users by

assigning them non-geographic telephone numbers, such as an INPA

(interchangeable numbering plan area) code that has been assigned for

non-geographic numbers. Telephone calls to such end users would be

routed in much the same way as toll free calls are today, by performing

a database query to determine the geographic telephone number

corresponding to the dialed non-geographic telephone number, and

routing the call to the appropriate geographic number.

17. Pacific Bell has proposed a triggering mechanism which operates

in conjunction with the same addressing scheme utilized in AT&T's LRN

method. This mechanism, called Query on Release (QOR) or Look Ahead,

determines under what circumstances a database query is performed.

Under QOR, the signalling used to set up a telephone call is routed to

the end office switch to which the dialed telephone number was

originally assigned (the release switch), i.e., according to the NPA-

NXX of the dialed number. If the dialed number has been transferred to

another carrier's switch, the previous switch in the call path queries

the database to obtain the routing information. The call is then

completed to the new carrier's switch.

18. Another number portability method triggering mechanism that is

similar to QOR is Release-to-Pivot (RTP). RTP differs from QOR in that

when a number has been ported from the release switch, the release

switch--rather than the previous switch in the call path--returns the

address information necessary for routing the call. The information

regarding where to route the telephone call, if the number has been

transferred, may be contained either in the release switch or an

external database.

2. Non-Database Methods

19. In our NPRM, we discussed two currently available methods of

providing service provider portability that do not use databases:

Remote Call Forwarding and Flexible Direct Inward Dialing. These

methods are commonly referred to as ``interim measures.'' While most

LECs currently are able to port numbers to other service providers

using these methods, they suffer from certain limitations that make

them unsuitable for long-term number portability. RCF redirects calls

to telephone numbers that have been transferred by essentially placing

a second telephone call to the new network location. DID routes the

second call over a dedicated facility to the new service provider's

switch, instead of translating the dialed number to a new number.

20. In the NPRM, we also discussed three derivative methods of RCF

and DID (enhanced remote call forwarding, route index/portability hub,

and hub routing with AIN), all of which require routing incoming calls

to the terminating switch identified by the NPA-NXX code of the dialed

phone number. Unlike RCF and DID, they use LEC tandem switches to

aggregate calls to a particular competing service provider before those

calls are routed to that provider. In addition, LECs in several states

reportedly are providing Directory Number Route Indexing (DNRI), which

first routes incoming calls to the switch to which the NPA-NXX code was

originally assigned, then routes ported calls to the new service

provider either through a direct trunk or by attaching a pseudo NPA to

the number and using a tandem, depending on availability.

C. Current State Efforts

1. State Task Forces and Implementation

21. Parties to this proceeding report that several states have

established task forces of industry participants or are otherwise

beginning to investigate the development and implementation of long-

term number portability methods. Those states include: Alabama,

Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois,

Indiana, Kansas, Maryland, Michigan, Minnesota, New York, Ohio, Oregon,

Texas, Utah, Virginia, Washington, Wisconsin, and Wyoming. Of these

states, the task forces in Colorado, Florida, Georgia, Illinois,

Maryland, and New York have all selected AT&T's Location Routing Number

method for implementing service provider number portability in areas

within their states'

[[Page 38610]]

boundaries. In addition, the state commissions of Colorado, Georgia,

Illinois, Maryland, New York, and Ohio have adopted the recommendation

of their staff and task forces to implement LRN. Parties to this

proceeding assert, moreover, that state task forces or commissions in

other states, such as Indiana, Michigan, and Wisconsin, as well as in

Canada, are utilizing the results of the Illinois task force's efforts

in the area of number portability.

22. Several states have set implementation schedules for the

portability methods they have selected. Switch vendors have committed

to make available LRN software to carriers in Illinois in the second

quarter of 1997. Colorado, Illinois, and Georgia plan to begin

deploying LRN in mid-1997. New York also expects LRN to be generally

available for installation in that state in mid-1997, though deployment

in certain AT&T switches is expected to begin earlier. Maryland plans

to begin implementing LRN by no later than the third quarter of 1997.

According to NARUC, Colorado similarly expects LRN availability in the

second quarter of 1997 (but plans to monitor switch vendor progress and

reevaluate this time frame in the third quarter of 1996). Ohio will use

a LRN number portability workshop, to be established within 120 days of

the issuance of its June 12, 1996 Order, to establish the time frame

and manner of the implementation of LRN in Ohio. Michigan has ordered

that implementation of long-term number portability in Michigan start

at the same time that implementation begins in Illinois. The Illinois

and Maryland task forces are examining various implementation issues,

including a deployment schedule, cost recovery, billing and rating, and

service management system (SMS) administration. The Illinois task force

selected an SMS provider in April 1996. The Maryland and Colorado task

forces have been planning to release their requests for proposals for

their SMS administrators in the second quarter of 1996.

2. State Trials

23. Two states have conducted or are conducting number portability

trials. As we described in the NPRM, ten companies, working with the

New York Department of Public Service (NY DPS), jointly initiated two

number portability trials, one in Rochester and another in Manhattan.

The companies originally planned to test the LANP method of Stratus

Computers and US Intelco in Rochester, but that trial was canceled. The

Manhattan trial, testing the CPC method, began in early February of

this year. The New York DPS, however, now considers CPC to be, at best,

an interim method and has changed the trial's emphasis from the

technical aspects of the method to the operational and administrative

aspects of the intercompany procedures that are required to change a

customer from one local exchange provider to another. MCI, one of the

original proponents of CPC, no longer views CPC as a viable long-term

method.

24. A group of telecommunications service providers conducted a

technical trial of the LANP method in Seattle, Washington, during 1995.

That trial ended in December 1995. The objective of the technical trial

was to identify the technical, operational, and administrative issues

that arise when a telephone number is not associated with a specific

geographic location. Because the trial revealed certain technical and

operational difficulties with the LANP technology, the Washington task

force on number portability declined to adopt LANP. The Washington

Utilities and Transportation Commission has not adopted LANP, and the

companies involved in the trial have ceased advocating LANP.

3. State Interim Measures

25. Carriers are providing interim portability measures in a number

of states, either voluntarily or pursuant to state commission orders.

According to NARUC and other parties to the proceeding, LECs are

providing RCF, DID, and/or other comparable arrangements in Arizona,

California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana,

Iowa, Louisiana, Maryland, Massachusetts, Michigan, New York, Ohio,

Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Virginia, Washington,

Wisconsin, and Wyoming. According to USTA, Alabama and Minnesota are

considering interim portability requirements, while North Carolina

requires carriers to negotiate interim portability as part of their

interconnection agreements.

III. Report and Order

A. Importance of Service Provider Number Portability

1. Background

26. In the NPRM, we tentatively concluded that number portability

benefits consumers of telecommunications services and would contribute

to the development of competition among alternative providers of local

telephone and other telecommunications services. With respect to

service provider portability, we sought comment on the effects that

local number portability, or lack thereof, would have on the local

exchange marketplace. Specifically, we sought comment on the value

consumers place on their telephone numbers, the deterrent effect that a

lack of number portability would have on consumer decisions to change

service providers, and any resultant effect on competition between

incumbent local service providers and new competitors in local markets.

2. Discussion

27. Since we adopted the NPRM, Congress passed the 1996 Act, which

requires all LECs to ``provide, to the extent technically feasible,

number portability in accordance with requirements prescribed by the

Commission.'' The 1996 Act defines number portability as ``the ability

of users of telecommunications services to retain, at the same

location, existing telecommunications numbers without impairment of

quality, reliability, or convenience when switching from one

telecommunications carrier to another.'' Accordingly, we hereby modify

our proposed definition of number portability to conform to the

statutory definition of number portability and note that the statutory

definition of this term is synonymous with the NPRM's definition of

``service provider portability.''

28. Although some incumbent LECs assert that local exchange market

competition will develop without number portability, the record

developed in this proceeding confirms the congressional findings that

number portability is essential to meaningful competition in the

provision of local exchange services. Several state commissions have

also recognized the significant role that number portability will play

in the development of local exchange competition. We, therefore, affirm

our tentative conclusion that number portability provides consumers

flexibility in the way they use their telecommunications services and

[[Page 38611]]

promotes the development of competition among alternative providers of

telephone and other telecommunications services.

29. We note that several studies described in the record

demonstrate the reluctance of both business and residential customers

to switch carriers if they must change numbers. For example, MCI has

stated that, based on a nationwide Gallup survey, 83 percent of

business customers and 80 percent of residential customers would be

unlikely to change local service providers if they had to change their

telephone numbers. Time Warner Holdings states that consumers are 40

percent less likely to change service providers if a number change is

required. Citizens Utilities notes that approximately 85 percent of the

discussions that its subsidiary, ELI, has with potential customers

about switching providers end when those potential customers learn that

they must change their telephone numbers. The study commissioned by

Pacific Bell concludes that, without portability, new entrants would be

forced to discount their local exchange service and other competing

offerings by at least 12 percent below the incumbent LECs' prices in

order to induce customers to switch carriers due to customers'

resistance to changing numbers.

30. The ability of end users to retain their telephone numbers when

changing service providers gives customers flexibility in the quality,

price, and variety of telecommunications services they can choose to

purchase. Number portability promotes competition between

telecommunications service providers by, among other things, allowing

customers to respond to price and service changes without changing

their telephone numbers. The resulting competition will benefit all

users of telecommunications services. Indeed, competition should foster

lower local telephone prices and, consequently, stimulate demand for

telecommunications services and increase economic growth.

31. Conversely, the record demonstrates that a lack of number

portability likely would deter entry by competitive providers of local

service because of the value customers place on retaining their

telephone numbers. Business customers, in particular, may be reluctant

to incur the administrative, marketing, and goodwill costs associated

with changing telephone numbers. As indicated above, several studies

show that customers are reluctant to switch carriers if they are

required to change telephone numbers. To the extent that customers are

reluctant to change service providers due to the absence of number

portability, demand for services provided by new entrants will be

depressed. This could well discourage entry by new service providers

and thereby frustrate the pro-competitive goals of the 1996 Act.

B. The Commission's Role

1. Background

32. In the NPRM, we tentatively concluded that the Commission has a

significant interest in promoting the nationwide availability of number

portability due to its impact on interstate telecommunications. We

based this interest on four grounds: (1) Our obligation to promote an

efficient and fair telecommunications system; (2) the inability to

separate the impact of number portability between intrastate and

interstate telecommunications; (3) the likely adverse impact deploying

different number portability solutions across the country would have on

the provision of interstate telecommunications services; and (4) the

impact that number portability could have on the use of the numbering

resource, that is, ensuring that the use of numbers is efficient and

does not contribute to area code exhaust.

33. In the 1996 Act, Congress expressly assigned to the Commission

exclusive jurisdiction over that portion of the NANP that pertains to

the United States. Moreover, Congress directed the Commission to

prescribe regulations for LEC provision of number portability: Section

251(b)(2) requires carriers ``to provide, to the extent technically

feasible, number portability in accordance with the requirements

prescribed by the Commission.''

2. Positions of the Parties

34. Prior to passage of the 1996 Act, some LECs asserted that the

Commission should neither adopt, nor direct the adoption of, number

portability without performing a thorough cost/benefit analysis. Most

parties, however, now agree that the 1996 Act clearly directs this

Commission to implement long-term number portability. Moreover, some

parties contend that this mandate reflects the fact that Congress has

weighed the costs and benefits of implementing number portability. USTA

adds, however, that the Commission may consider economic efficiencies

in determining what rules to implement.

34. Several commenters, while agreeing that the Commission should

take a leadership role, urge us to leave certain implementation issues

to the states. USTA advocates allowing the states to determine their

own deployment schedules. The California PUC asserts that the

Commission's jurisdiction over number portability is not exclusive, and

that states must be allowed to implement number portability methods

that are most compatible with local exchange competition in each state.

3. Discussion

36. We believe that Congress has determined that this Commission

should develop a national number portability policy and has

specifically directed us to prescribe the requirements that all local

exchange carriers, both incumbents and others, must meet to satisfy

their statutory obligations. Section 251(b)(2) requires LECs ``to

provide, to the extent technically feasible, number portability in

accordance with the requirements prescribed by the Commission.''

Moreover, section 251(e)(1)'s assignment to the Commission of exclusive

jurisdiction over that portion of the NANP that pertains to the United

States gives us authority over the implementation of number portability

to the extent that such implementation will affect the NANP. Consistent

with the role assigned to the Commission by the 1996 Act, the record

developed in this proceeding overwhelmingly indicates that the

Commission should take a leadership role with respect to number

portability. We, therefore, affirm our conclusion that we should take a

leadership role in developing a national number portability policy. We

further note that, in light of Congress's mandate to us to prescribe

requirements for number portability, it is not necessary to engage in a

cost/benefit analysis as to whether to adopt rules that require LECs to

provide number portability in the first instance. We may consider

economic and other factors, however, when determining the specific

requirements in such rules.

37. The 1996 Act directs this Commission to adopt regulations to

implement number portability, and we believe it is important that we

adopt uniform national rules regarding number portability

implementation and deployment to ensure efficient and consistent use of

number portability methods and numbering resources on a nationwide

basis. Implementation of number portability, and its effect on

numbering resources, will have an impact on interstate, as well as

local, telecommunications services. Ensuring the interoperability of

networks is essential for deployment of a national number portability

regime, and for the

[[Page 38612]]

prevention of adverse impacts on the provision of interstate

telecommunications services or on the use of the numbering resource. We

believe that allowing number portability to develop on a state-by-state

basis could potentially thwart the intentions of Congress in mandating

a national number portability policy, and could retard the development

of competition in the provision of telecommunications services.

C. Performance Criteria for Long-Term Number Portability

1. Background

38. In the NPRM, we sought comment on what long-term number

portability methods would be in the public interest. Specifically, we

sought comment on various number portability proposals offered by

different industry participants, including proposals by AT&T, MCI

Metro, Stratus Computer and US Intelco, and GTE. We also sought comment

on the extent to which these proposals would support certain services

that we deemed important. We tentatively concluded that any method

should support operator services and emergency services because they

are critical to public safety and are important features of the public

switched network. We also tentatively concluded that any number

portability proposal should efficiently use telephone numbers. In

addition, we discussed and sought comment on which of three call

processing scenarios (i.e., which carrier performs the database query

in a database method), or any alternative, would best serve the public

interest. We sought comment on whether telephone numbers should be

portable within local calling areas, throughout a particular area code,

state-wide, regionally, nationwide, or on some other basis, and how the

geographic scope of portability would impact different types of

carriers and their billing systems. We also asked whether number

portability could be provided nationwide without significant network

modifications.

2. Positions of the Parties

39. Performance criteria versus selection of architecture.

Commenting parties differ on whether the Commission should establish

performance criteria or guidelines that any number portability method

must meet, or require the implementation of one national portability

method. Many parties, including several state regulatory agencies,

cable interests, and LECs, favor establishment of broad guidelines and

interoperability criteria for implementing a long-term portability

method. NYNEX maintains that this approach would encourage cooperative

industry resolutions for a true number portability method and would

properly account for legitimate state interests in the deployment of

number portability. NYNEX further claims that guidelines would allow

the Commission to ensure the implementation of compatible methods, with

seamless call flows and service operation, without expending scarce

resources by focusing on the detailed implementation of every method in

each region of the country. The California Department of Consumer

Affairs contends that the 1996 Act's pro-competitive policies mandate

that the portability method adopted be flexible and allow for future

innovation. GTE urges the Commission to determine the type of routing

information to be employed, but leave selection of the triggering

mechanism to the individual carriers. SBC Communications asserts that

section 251(d)(1) only requires the Commission to outline principles

for a long-term method within six months of enactment of the 1996 Act,

not to adopt a specific method.

40. Conversely, some parties contend that requiring a single,

national method would avoid the implementation of numerous inconsistent

and inefficient approaches, and the need for carriers to adapt to

different requirements in different states. Jones Intercable argues

that allowing number portability to develop state-by-state would give

the incumbent LECs the opportunity to delay development of local

exchange competition. BellSouth and Nortel argue that a single long-

term method is necessary to minimize the costs of implementation,

operation, and maintenance; to protect billing systems against problems

created by use of differing SS7 parameters; and to foster network

integrity. PCIA claims that a state-regulated market would inhibit

development of a nationwide wireless network. Arch/AirTouch Paging adds

that deployment of different portability methods would adversely impact

interstate telecommunications. Bell Atlantic and PCIA argue that a

national method is more likely to conserve scarce numbering resources.

Bell Atlantic further claims, however, that each individual carrier

should be allowed the flexibility to utilize whatever architecture or

technology within its own network best enables that carrier to

implement whatever national method is selected. Moreover, some parties

urge the Commission to select a particular method to be implemented

nationwide, while others advocate allowing the industry to select the

specific method.

41. Commenting parties suggest numerous performance criteria with

which any long-term number portability method must comply. These

include: (1) The ability to support emergency services, i.e., 911 and

enhanced 911 (E911) services; (2) the ability to support existing

network services and capabilities, (e.g., operator and directory

services, vertical and advanced services, custom local area signaling

services (also known as ``CLASS''), toll free and pay-per-call

services, and intercept capabilities); (3) efficient use of numbering

resources; (4) no initial change of telephone numbers; (5) no reliance

on network facilities of, or services provided by, other service

providers (e.g., incumbent LECs) in order to route calls; (6) no

degradation in service quality or network reliability (e.g., no

significant increase in call set-up time); (7) reliance on existing

network infrastructure and functionalities to the extent possible; (8)

equal application to both incumbents and new entrants (i.e., carriers

who receive ported numbers must also provide portability); (9) no

proprietary interests or licensing fees; (10) the ability to migrate to

location and service portability; and (11) no adverse impact in areas

where portability has not been deployed.

42. Call processing scenarios. In the NPRM, we discussed three call

processing scenarios. They were: (1) The terminating ``access''

provider (TAP) scenario, under which the database query is performed by

the terminating access provider (usually the incumbent LEC, who

recovers interstate access charges from interexchange carriers (IXCs)

for terminating traffic under our existing access charge regime); (2)

the originating service provider (OSP) scenario, under which the

originating service provider performs the database query; and (3) the

``N minus 1'' (N-1) scenario, under which the carrier immediately prior

to the terminating service provider performs the database query or dip.

In addition, ITN suggests a ``first-switch-that-can'' approach, under

which the first switch that handles the call and has the capability to

do the database dip performs the query.

43. Pacific Bell and Bell Atlantic recommend that carriers should

be permitted to choose a call processing scenario to enable them to

implement the QOR triggering mechanism in addition to LRN. These

parties assert that QOR would eliminate unnecessary database queries,

thereby decreasing the number of databases necessary to

[[Page 38613]]

provide number portability and the transmission capacity between

switches and databases. In contrast, AT&T argues against allowing

carriers to choose a call processing scenario, such as QOR, because

doing so would delay deployment of a long-term number portability

method and would result in significant network interoperability issues.

MCI opposes implementation of QOR because it forces competitive LECs to

rely on the incumbent LEC's network and results in inefficient routing.

AT&T and MCI also argue against use of the RTP or QOR triggering

mechanisms because they treat transferred and non-transferred numbers

differently, and significantly increase post-dial delay and the

potential for call blocking.

44. Most of the parties that favor the Commission's selection of a

particular call processing scenario prefer the N-1 scenario because

they believe it allows database queries to be made at the most

efficient points in the process of routing telephone calls. In

contrast, ITN states that use of the N-1 scenario may hinder the

evolution from localized to national number portability environments.

BellSouth contends that the Commission need not select a particular

scenario because all four triggering mechanisms (OSP, TAP, N-1, and

Look-Ahead) could exist simultaneously through engineering and business

arrangements. Citizens Utilities and NCTA oppose the TAP scenario

because it requires routing most calls to the incumbent LEC networks,

thus denying terminating access charges to competitive providers.

45. Rating and billing. Several LECs, MCI, and MFS contend that any

long-term method should preserve existing rating and billing systems to

minimize costs and impact. Conversely, AT&T and Florida PSC argue that

any long-term method should permit flexible rating and billing schemes.

Pacific Bell, US West, and BellSouth also argue that the Commission

must in this proceeding address billing problems, including issues

relating to proper mileage, rating, calling cards, and billing format.

3. Discussion

46. Performance criteria versus selection of architecture. We

conclude that establishing performance criteria that a LEC's number

portability architecture must meet would better serve the public

interest than choosing a particular technology or specific

architecture. First, we believe that to date there appears to be

sufficient momentum to deploy compatible methods, if not an identical

method, nationwide. Every state that has selected a particular

architecture for implementation within its state boundaries has

selected the same method, LRN, and numerous states are reportedly

following suit. With the exception of some of the incumbent LECs, most

parties that advocate selection of a particular method at this time are

also supporting the LRN method. Under these circumstances, mandating

the implementation of a particular number portability architecture, or

mandating that the same architecture be deployed nationwide, appears

unnecessary. Second, such a mandate might actually delay the

implementation of number portability. We are reluctant, based on the

record in this proceeding, to select one of the proposed long-term

methods. According to a number of parties, none of the currently

supported methods, including LRN, has been tested or described in

sufficient detail to permit the Commission to select the particular

architecture without further consultation with the industry. If,

however, we were to direct an industry body to recommend a specific

number portability architecture, it would likely delay the

implementation of number portability that already is underway in

several states, and would create significant uncertainty for those

switch vendors currently modifying switch software to accommodate LRN.

Third, dictating implementation of a particular method could foreclose

the ability of carriers to improve on those methods already being

deployed or to implement hybrid (but compatible) methods.

47. We believe that our establishment of criteria for long-term

number portability methods, however, will ensure an appropriate level

of national uniformity, while maintaining flexibility to accommodate

innovation and improvement. The deployment of a uniform number

portability architecture nationwide will be important to the efficient

functioning of the public switched telephone network and will reduce

the costs of implementing number portability nationwide by allowing

switch vendors to spread the costs of development over more customers.

Moreover, a uniform deployment will allow switch manufacturers to work

toward a single standard, thus avoiding the situation where different

manufacturers partition the market among different methods.

48. Performance Criteria. We thus adopt the following minimum

criteria. Any long-term number portability method, including call

processing scenarios or triggering, must:

(1) Support existing network services, features, and capabilities;

(2) Efficiently use numbering resources;

(3) Not require end users to change their telecommunications

numbers;

(4) Not require telecommunications carriers to rely on databases,

other network facilities, or services provided by other

telecommunications carriers in order to route calls to the proper

termination point;

(5) Not result in unreasonable degradation in service quality or

network reliability when implemented;

(6) Not result in any degradation of service quality or network

reliability when customers switch carriers;

(7) Not result in a carrier having a proprietary interest;

(8) Be able to accommodate location and service portability in the

future; and

(9) Have no significant adverse impact outside the areas where

number portability is deployed.

We discuss each of these performance criteria in turn below.

49. First, we require that any long-term method support existing

network services, features, or capabilities, such as emergency

services, CLASS features, operator and directory assistance services,

and intercept capabilities. The 1996 Act requires that consumers be

able to retain their numbers ``without impairment of quality,

reliability, or convenience when switching from one telecommunications

carrier to another.'' Moreover, customers are not likely to switch

carriers and retain their telephone numbers if they are required to

forego services and features to which they have become accustomed.

Thus, any long-term method that precludes the provision of existing

services and features would place competing service providers at a

competitive disadvantage.

50. The public interest also requires that service provider

portability not impair the provision of network capabilities that are

important to public safety, such as emergency services and intercept

capabilities. In our proposal to ensure that PBXs and CMRS providers

support enhanced 911 services, we reaffirmed that 911 services enable

telephone users to receive fast response to emergency situations, and

that broad availability of 911 and E911 services best promotes ``safety

of life and property through the use of wire and radio communication.''

In addition, the Communications Assistance for Law Enforcement Act

requires telecommunications carriers generally to provide capabilities

that enable secure, reliable, and non-intrusive law enforcement

interception of call setup information and call content so that law

enforcement agencies can intercept and monitor calls when necessary.

[[Page 38614]]

51. Second, we require that any long-term method efficiently use

numbering resources. Telephone numbers are the means by which

commercial and residential consumers gain access to, and reap the

benefits of, the public switched telephone network. In recent years,

the explosive growth of wireless services has caused an equally

dramatic increase in the consumption of telephone numbers. Indeed, in

January 1995, carriers began to deploy interchangeable NPA (INPA) codes

because all NPA codes had been exhausted. The anticipated shortage of

numbers has prompted several BOCs to propose the use of area code

overlays. The increased use of overlays and area code splits has

resulted in both industry and consumer inconvenience and confusion. The

consumption rate of NANP resources is likely to accelerate with the

entry of new wireline and wireless carriers. Thus, we conclude that

deploying a long-term number portability method that rapidly depletes

numbering resources would undermine the efforts of the industry, the

states, and the Commission to ensure sufficient numbering resources.

52. Third, deployment of a long-term method should not require

customers to make any telecommunications number change. The 1996 Act

mandates that end users be able ``to retain * * * existing

telecommunications numbers * * * when switching from one

telecommunications carrier to another.'' Requiring any number change

would contravene this basic requirement. Congress noted that the

ability to switch service providers is only meaningful if customers can

retain their telephone numbers.

53. Fourth, we require that any long-term method ensure that

carriers have the ability to route telephone calls and provide services

to their customers independently from the networks of other carriers.

Requiring carriers to rely on the networks of their competitors in

order to route calls can have several undesirable effects. For example,

dependence on the original service provider's network to provide

services to a customer that has switched carriers contravenes the

choice made by that customer to change service providers. In addition,

such dependence creates the potential for call blocking by the original

service provider and may make available to the original service

provider proprietary customer information. Moreover, methods which

first route the call through the original service provider's network in

order to determine whether the call is to a ported number, and then

perform a query only if the call is to be ported, would treat ported

numbers differently than non-ported numbers, resulting in ported calls

taking longer to complete than unported calls. This differential in

efficiency would disadvantage the carrier to whom the call was ported

and impair that carrier's ability to compete effectively against the

original service provider. Finally, dependence on another carrier's

network also reduces the new service provider's ability to control the

routing of telephone calls to its customers, thus inhibiting its

ability to control the costs of such routing. For these reasons, a

long-term number portability method should not require dependency on

another carrier's network. We note that this criterion does not prevent

individual carriers from determining among themselves how to process

calls, including a method by which a carrier voluntarily agrees to use

the original service provider's network.

54. We recognize that this criterion will effectively preclude

carriers from implementing QOR. Those carriers that oppose QOR argue

that it would treat ported and non-ported numbers differently, force

reliance on the incumbent LEC's network, increase post-dial delay and

the potential for call blocking, result in inefficient routing, create

significant network interoperability issues, and delay deployment of a

long-term number portability method. There is little evidence in the

record to support the claim that allowing carriers to implement QOR

would result in significant cost savings. Pacific Bell submitted

summary figures indicating that it would save approximately $14.2

million per year assuming that 20 percent of subscribers port their

numbers if it implemented QOR. These savings, which represent less than

0.2 percent of Pacific Bell's total annual operating revenues, appear

insignificant in relation to the potential economic and non-economic

costs to competitors if QOR is used. According to AT&T, using QOR on

Lucent switches is more cost effective only if less than 12 percent of

subscribers have ported their numbers. Similarly, AT&T asserts that

using QOR on Siemens switches is more cost effective only if less than

23 percent of subscribers have ported their numbers. In addition,

because carriers using QOR may be required to send a QOR message to

another carrier's switch to determine if a customer has transferred the

number, the second carrier must have the ability to recognize and

respond to the QOR message, which also may increase its costs. Based on

the record before us, we conclude that the competitive benefits of

ensuring that calls are not routed through the original carrier's

network outweigh any cost savings that QOR may bring in the immediate

future.

55. Fifth, as a general matter, we require that the implementation

of any long-term method not unreasonably degrade existing service

quality or network reliability. Consumers, both business and

residential, rely on the public switched telephone network for their

livelihood, health and safety. Jeopardizing the reliability of the

network would stifle business growth and economic development, and

endanger individuals' personal safety and convenience. Consumers, both

business and residential, have also come to expect a certain level of

quality and convenience in using basic telecommunications services. We

note that this Commission has repeatedly affirmed its commitment to

maintaining service quality and network reliability. We, therefore,

require that any long-term method of providing number portability not

cause any unreasonable degradation to the network or the quality of

existing services. This requirement extends to degradation that affects

carriers operating, and end users obtaining services, outside as well

as within the area of portability.

56. Sixth, once long-term number portability is implemented, we

require that customers not experience any degradation of service

quality or network reliability when they port their numbers to other

carriers. We reiterate that the 1996 Act requires that consumers be

able to retain their numbers ``without impairment of quality,

reliability, or convenience when switching from one telecommunications

carrier to another.'' We interpret this mandate to mean, at a minimum,

that when a customer switches carriers, that customer must not

experience a greater dialing delay or call set up time, poorer

transmission quality, or a loss of services (such as CLASS features)

due to number portability compared to when the customer was with the

original carrier.

57. Seventh, we require that no carrier have a proprietary interest

in any long term method. A telecommunications carrier may not own

rights to, or have a proprietary interest in, number portability

technology. We believe that the requirement in the 1996 Act that the

costs of number portability be borne on a competitively neutral basis

precludes carrier ownership of the long-term method, and their

collection of licensing or other fees for use of the method. In

addition, it would be competitively unfair if a LEC providing

portability

[[Page 38615]]

were to benefit directly, through licensing fees or a proprietary

interest, from its competitors' use of portability. We note that one of

the first criteria required by the Illinois task force in selecting a

number portability method was that it be non-proprietary.

58. Eighth, we require that any long-term method be able to

accommodate service and location portability in the future. Although we

do not at this time mandate provision of service or location

portability, we recognize that service and location portability have

certain benefits, and we may take steps to implement them in the future

if demand for these services develops. As our society becomes

increasingly mobile, the importance that consumers attribute to the

geographic identity of their telephone numbers may change. It is,

therefore, in the public interest to take steps now to ensure that we

do not foreclose realization of future economies of scope.

59. Finally, we require that any long-term method not have a

significant adverse impact on carriers operating, and end users

obtaining services, outside the area of number portability. We believe

it is fundamentally unfair to impose any new or different obligations

on carriers and customers that do not benefit from service provider

portability. Indeed, we are adopting a phased approach to

implementation so that number portability is available only in the most

populous local markets where competition already has begun to develop

or is likely to develop in the near term.

60. We do not believe it is necessary to require that a long-term

method utilize existing network infrastructure and functionalities to

the extent possible, as some commenting parties have suggested.

Minimizing the costs of implementing a long-term method should be in

the best interests of all the parties involved in such implementation.

This conclusion is also consistent with our tentative conclusion that

the carrier-specific costs that are not directly related to number

portability must be borne by the individual carriers. Thus, existing

local service providers have an incentive to minimize the extent of the

necessary modifications and upgrades, as well as the costs of

implementing number portability-specific software. Moreover, while new

entrants may not need to modify existing networks, they must deploy and

build networks with at least the same capabilities as those of the

incumbents if they are to provide number portability.

61. We also decline to require carriers that receive ported numbers

also to provide portability because we believe the 1996 Act renders

such a requirement unnecessary. Specifically, section 251(b)(2) imposes

a duty to provide number portability on all LECs--incumbents as well as

new entrants. In light of the fact that the 1996 Act applies this duty

across all LECs, establishing a reciprocity performance criterion would

be needlessly redundant.

62. Call processing scenarios. We decline to specify the carrier

that must perform the database query in a database method, because we

recognize that individual carriers may wish to determine among

themselves how to process calls under alternative scenarios. We

therefore leave to local exchange carriers the flexibility to choose

and negotiate the scenario that best suits their networks and business

plans, as long as they act consistently with the requirements

established by this Order. While our criterion requiring carriers to be

able to route calls and provide service independently from other

carriers' networks may preclude unilateral use of the TAP scenario by a

particular carrier, there may be instances where carriers agree to use

the TAP scenario, or where the terminating provider is the only carrier

capable of performing the database query. In those instances, our

performance criterion would not preclude use of the TAP scenario.

63. Rating and billing. Finally, we decline to regulate the rating

and billing of local wireline calls to end users in connection with a

long-term number portability method. Traditionally, the billing and

rating of local wireline calls--including the establishment of mileage

standards, procedures for calling cards, and billing format--have been

left to the purview of the states and the carriers themselves. While

several parties have raised rating and billing questions with regard to

number portability, we believe that such issues are more properly

addressed by the states.

D. Mandate of Number Portability

1. Background

64. In the NPRM, we sought comment on the estimated time to design,

build, and deploy a long-term service provider number portability

system. We also requested that parties address what network and other

modifications would be necessary to effect the transition to

portability. The 1996 Act mandates that all LECs ``provide, to the

extent technically feasible, number portability in accordance with

requirements prescribed by the Commission.''

2. Position of the Parties

65. Mandate Implementation By A Date Certain. The competitive local

exchange providers generally contend that the Commission should mandate

the availability of number portability by a date certain. The incumbent

LECs, however, caution the Commission not to act with undue haste by

mandating the implementation of number portability by a date certain.

Indeed, BellSouth claims that the 1996 Act's omission of a deadline for

implementation indicates Congress's intent not to require a date

certain at this time. It adds that the industry must first give careful

attention to developing an implementation checklist that will ensure

that the necessary tasks for the implementation are properly identified

and performed. Instead of establishing a mandatory implementation date,

some LECs contend that the Commission should direct an industry body,

such as the INC, to determine the most appropriate schedule for

deployment of a long-term solution. Other commenters argue that the

implementation schedule should be determined by state regulatory

bodies. Pacific Bell warns that a Commission-mandated solution at this

time would be premature and cites a late proposal introduced by ITN as

an illustration that the optimal solution may not yet have been

introduced.

66. The wireless industry offers various implementation plans. For

instance, PageNet urges the Commission to establish federal guidelines

for number portability, and at a specified time in the future, to

evaluate the industry's standards using the guidelines through a notice

and comment proceeding. However, Omnipoint believes the Commission

should act more aggressively in mandating service provider portability

by a date certain.

67. Time Estimates for Deployment. Parties differ on their

estimates for deployment. AT&T asserts that virtually all of the

equipment vendors participating in the Illinois number portability task

force indicate that they can provide most upgrades necessary to

implement LRN by the second quarter of 1997. As noted above, Illinois,

Georgia, and Colorado plan to deploy LRN in mid-1997. New York also

expects to deploy LRN in mid-1997, though deployment in certain AT&T

switches is expected to begin earlier. Michigan has ordered that

implementation of long-term number portability in Michigan start at the

same time that implementation begins in Illinois. BellSouth, however,

estimates that three to five years are required to deploy a

[[Page 38616]]

number portability system that addresses all the necessary issues.

68. Parties also differ on the interpretation of ``technically

feasible'' as that term is used in section 251(b)(2) of the 1996 Act.

GTE argues that the term should not be equated with ``technically

possible'' because cost and timing considerations cannot be separated

from the concept of technical feasibility. GTE also maintains that no

long-term solution proposed is currently technically feasible, since

they all require further information on costs, operation, and

reliability. Bell Atlantic contends that deploying a system that is

technically feasible, but inefficient, may not be consistent with

Congress's goal of a ``rapid, efficient'' telecommunications system.

Bell Atlantic and BellSouth also claim that LRN is merely a call

handling protocol, as opposed to a technical solution for number

portability.

69. In contrast, Time Warner Holdings and Cox argue that

``feasible'' must be given common dictionary meaning--``capable of

being done, executed or effected''--and does not mean ``commercially

available.'' Time Warner Holdings points out that equal access and 800

number portability proved to be technically feasible even when they

were not commercially available. Time Warner Holdings claims, moreover,

that LECs control commercial availability because vendors will not

develop and manufacture portability methods until LECs demand them.

Similarly, Sprint argues that technically feasible does not mean that

every operational and regulatory issue must be resolved before any

decision on national number portability can be made. Sprint further

claims that Congress's use of the phrase ``technically feasible''

precludes any consideration of economic feasibility. AT&T and MCI argue

that LRN is technically feasible, although they do not explicitly

address the precise meaning of the statutory language.

70. Phased Implementation. Most parties addressing the

implementation of number portability caution against a flash-cut

approach (i.e., deployment nationwide simultaneously). USTA argues that

because section 251(b)(2) only requires provision of number

portability, not deployment of the necessary software and network

upgrades, LECs need only deploy portability upon a bona fide request.

Most parties, however, recommend that service provider portability be

deployed on a per-market basis within a period of time specified by the

Commission. For example, Competitive Carriers proposes that service

provider portability be implemented in the 100 largest MSAs within 24

months of this Order. Similarly, Sprint proposes that the Commission

adopt a phased approach requiring local service providers to deploy a

long-term solution upon receipt of a bona fide request from a certified

carrier: (1) In the top 100 MSAs by the end of fourth quarter 1997; (2)

in the next 135 MSAs, within 3-4 years after this Order is issued; and

(3) within any remaining areas, beginning in the fifth year after this

Order is issued. Omnipoint maintains that service provider portability

should be made available in the top 100 MSAs between October of 1997

and October of 1998, while GO Communications proposes implementation of

service provider portability in the major metropolitan areas by early

1997. MFS supports a final cut-over in the 100 largest MSAs by October

1997, with an initial cut-over in the top 35 MSAs on March 31, 1997. It

adds that, in order to deploy this capability as competition develops

in specific markets, number portability should be implemented by LECs

within 18 months of activation of an NXX code in the Local Exchange

Routing Guide (LERG) and assignment to a competitor. AT&T has indicated

that LRN deployment could begin in the third quarter of 1997 in one MSA

in each of the seven BOC regions, followed by deployment in at least

three additional MSAs per region during both fourth quarter 1997 and

first quarter 1998. Once this initial phase is completed, AT&T suggests

that the Commission could require LRN to be deployed in at least four

additional MSAs during both second and third quarters 1998, or 105 MSAs

total. AT&T's proposed plan would result in deployment of LRN software

in a total of 7 MSAs in third quarter 1997, 21 additional MSAs in

fourth quarter 1997, 21 additional MSAs in first quarter 1998, 28

additional MSAs in second quarter 1998, and 28 additional MSAs in third

quarter 1998. AT&T further asserts that its proposed schedule would

require major switch manufacturers to update switch software at a rate

of 53 switches per week, and that one major switch manufacturer has

claimed that it alone can update 50 switches per week. MCI urges that

number portability be deployed in the top 100 MSAs, by population, over

a 10 month period beginning no later than June 30, 1997. After

implementation is complete in the initial 100 MSAs, MCI recommends that

the remaining MSAs be converted based on written requests from carriers

filed with the Commission, which may order implementation in a

particular MSA to be completed within six months of the request. MCI

and Time Warner Holdings also support the notion of requiring number

portability implementation within six months of a request of a

telecommunications carrier. Finally, Ameritech argues it is premature

to set a deployment schedule for LRN because there are several

operational issues yet to be resolved. It further argues that schedules

proposed by various carriers are too aggressive and exceed the

resources of the industry.

71. Switch vendors assert that LRN software will be generally

available for service providers to deploy in 1997. Lucent Technologies

plans general availability of LRN software for March 21, 1997, for its

1A ESS switch; March 31, 1997, for its 5ESS-2000 switch; and May 1,

1997, for its 4ESS switch. Lucent asserts that, after the new software

becomes generally available, it will be able to support up to 50

software release updates per week for the 5ESS and 1A ESS switches for

North America (each release update upgrades the software for one

switch). Nortel states that its LRN software will be available in the

second quarter of 1997 for its DMS-100, DMS-200, and DMS-500 switches,

and will be available in the third quarter of 1997 for its DMS-10 and

TOPS switches. Siemens Stromberg-Carlson asserts that its LRN software

will be available for testing on its EWSD switch in its Release 14.E

generic in October 1996, and will be generally available in the first

quarter of 1997. Siemens further claims that upgrades to EWSD switches

deployed within the top 100 MSAs can be completed within five months of

the date of general availability. Ericsson asserts that its LRN

software for Ericsson SCPs will be generally available in the second

quarter of 1997, and that its LRN software for Ericsson SSPs will be

generally available in the third quarter of 1997. Ericsson expects that

6-7 switch upgrades can be accomplished each week, with each upgrade

taking 3-4 days.

72. The Illinois Commerce Commission argues that a phased

approach--implementing number portability in those areas where local

competition is developing--may be more cost-effective and more feasible

technically than a nationwide uniform deadline. Similarly, US West

contends that a nationwide uniform deadline for service provider

portability is neither practical nor necessary due to differing levels

of competition. Sprint asserts that a phased implementation will

accommodate the concerns of the small LECs, arguing that a phased

approach best balances the need for rapid deployment with the capital

constraints facing individual carriers. Nextel asserts that a phased

approach is more efficient

[[Page 38617]]

because it results in the introduction of number portability where the

demand for service provider portability is greatest. Bell Atlantic and

US West contend that state agencies should determine when and where

service provider portability should be introduced within their

respective jurisdictions. Alternatively, US West suggests that the

Commission could use the same approach to implementing service provider

portability that it adopted in implementing equal access for

independent LECs.

73. Rural and Small LEC Exemption. In comments filed prior to

passage of the 1996 Act, GVNW, TDS Telecom, NECA, and OPASTCO argue

that, if the Commission mandates the implementation of number

portability, it should exempt small and rural LECs from such a mandate.

GNVW, NECA, and NTCA claim that the demand for service provider

portability is significantly less in areas served by rural and small

LECs because local exchange competition is not likely to develop there

soon, if at all.

3. Discussion

74. Section 251(b) requires that all local exchange carriers, as

defined by section 153(26), ``provide, to the extent technically

feasible, number portability in accordance with requirements prescribed

by the Commission.'' We believe that requiring implementation of long-

term number portability by a date certain is consistent with the 1996

Act's requirement that LECs provide number portability as soon as they

can do so and will advance the 1996 Act's goal of encouraging

competition in the local exchange market. The record indicates that at

least one long-term method will be available for deployment in mid-

1997.

75. We decline the suggestion of some parties that we direct an

industry body to determine an appropriate implementation plan. The INC

has been analyzing the issues surrounding number portability for over

two years. Delegating responsibility for number portability

implementation to an industry group such as the INC would unnecessarily

delay implementation of number portability. Similarly, we reject

BellSouth's arguments in favor of delaying implementation for three to

five years. We believe such a delay is inconsistent with the 1996 Act's

requirement that LECs make number portability available when doing so

is technically feasible, as well as with the pro-competitive goals of

the 1996 Act, and would not serve the public interest.

76. Carriers filing comments in this proceeding have suggested

various deployment schedules, with most suggesting deployment within

two years of a Commission order or sooner. According to current

schedules in Illinois, Georgia, Colorado, Maryland, and New York,

AT&T's LRN method is scheduled for deployment (most likely excluding

necessary field testing) beginning in mid-1997. Thus, the record

indicates that one method for providing number portability will be

available in mid-1997.

77. Pursuant to our statutory authority under the 1996 Act, we

require local exchange carriers operating in the 100 largest MSAs to

offer long-term service provider portability commencing on October 1,

1997, and concluding by December 31, 1998, according to the deployment

schedule set forth in Appendix F of the Report and Order. We require

deployment in one MSA in each of the seven BOC regions by the end of

fourth quarter 1997, 16 additional MSAs by the end of first quarter

1998, 22 additional MSAs by the end of second quarter 1998, 25

additional MSAs by the end of third quarter 1998, and 30 additional

MSAs by the end of fourth quarter 1998. As a practical matter, this

obligation requires LECs to provide number portability to other

telecommunications carriers providing local exchange or exchange access

service within the same MSA. This schedule is consistent with switch

vendor estimates that software for at least one long-term number

portability method will be generally available for deployment by

carriers around mid-1997, and with the schedule proposed by AT&T. One

major switch manufacturer has claimed that it alone can support the

deployment of number portability software in 50 switches per week. We

conclude that a schedule consistent with AT&T's proposed schedule,

which would require all of the major switch manufacturers collectively

to update switch software at a total rate of 53 switches per week,

appears workable.

78. We note that, in establishing this schedule, we have relied

upon representations of switch vendors concerning the dates by which

the necessary switching software will be generally available. As a

result, our deployment schedule depends directly upon the accuracy of

those estimates and the absence of any significant technical problems

in deployment. We delegate authority to the Chief, Common Carrier

Bureau, to monitor the progress of local exchange carriers implementing

number portability, and to direct such carriers to take any actions

necessary to ensure compliance with this deployment schedule. We expect

that the industry will work together to resolve any outstanding issues,

technical or otherwise, which are involved with providing long-term

number portability in accordance with our requirements and deployment

schedule. We note that while we prescribe the time constraints within

which LECs must implement number portability, we strongly encourage

carriers to provide such portability before the Commission-imposed

deadlines.

79. In addition, we direct the carriers that are members of the

Illinois Local Number Portability Workshop to conduct a field test of

LRN or another technically feasible long-term number portability method

that comports with our performance criteria concluding no later than

August 31, 1997. We select the Chicago area for the field test because

the record indicates that the Illinois workshop was responsible for

drafting requirements for switching software currently being developed

by switch manufacturers. Because of the significant work which has been

done on behalf of the Illinois workshop, we believe the Chicago area is

the best site within which to conduct a field test. The field test

should encompass both network capability and billing and ordering

systems, as well as maintenance arrangements. We delegate authority to

the Chief, Common Carrier Bureau, to monitor developments during the

field test. We further direct that the carriers participating in the

test jointly file with the Bureau a report of their findings within 30

days following completion of the test. While we do not routinely order

field testing of telecommunications technologies as part of rulemaking

proceedings, we have a significant interest in ensuring the integrity

of the public switched network as number portability is deployed

nationwide. We believe a field test will help to identify technical

problems in advance of widespread deployment, thereby safeguarding the

network.

80. After December 31, 1998, each LEC must make long-term number

portability available in smaller MSAs within six months after a

specific request by another telecommunications carrier in the areas in

which the requesting carrier is operating or plans to operate.

Telecommunications carriers may file requests for number portability

beginning January 1, 1999. Such requests should specifically request

long-term number portability, identify the discrete geographic area

covered by the request, and provide a tentative date six or more months

in the future when the carrier expects to need number

[[Page 38618]]

portability in order to port prospective customers.

81. We believe that this deployment schedule is consistent with the

requirements of sections 251(b)(2) and (d), which give the Commission

responsibility for establishing regulations regarding the provision of

number portability to the extent technically feasible. As the record

indicates, long-term number portability requires the use of one or more

databases. Such databases have yet to be deployed. As indicated above,

the methods for providing long-term number portability that would

satisfy our criteria require the development of new switching software

that is not currently available, but is under development. The record

indicates, however, that at least one method of long-term number

portability will be technically feasible by mid-1997. Requiring number

portability to be fully operational in the largest 100 MSAs by December

31, 1998, would allow a reasonable amount of time to install the

appropriate generic and application software in the relevant switches.

Moreover, such a phased deployment is preferable to implementing

nationwide number portability simultaneously in all markets (or

implementing this service in multiple large MSAs at the same time)

because a phased deployment would be less likely to impose a

significant burden on those carriers serving multiple regions of the

country. Specifically, our phased approach spreads the implementation

over 15 months, thus easing the burden on carriers serving multiple

regions by limiting the number of MSAs in which implementation is

required during a particular calendar quarter. In addition, the burden

on such carriers should be less than that upon carriers in smaller

markets because the latter may be required to undertake hardware

upgrades whereas larger carriers may already have upgraded their

switches. Our phased approach would also avoid the potential strain on

vendors caused by implementation in all the largest 100 MSAs on or

around a single date, as well as help to safeguard the integrity of the

public switched telephone network.

82. In addition, we believe that our phased implementation of long-

term number portability is in the public interest and supported by the

record. Our phased deployment schedule takes in account the differing

levels of local exchange competition that are likely to emerge in the

different geographic areas throughout the country. Thus, our deployment

schedule is designed to ensure that number portability will be made

available in those regions where competing service providers are likely

to offer alternative services. We believe that competitive local

service providers are likely to be providing service in the major

metropolitan areas soon. In those areas beyond the 100 largest MSAs,

however, the actual pace of competitive entry into local markets should

determine the need for service provider portability. We therefore agree

with those parties that argue that, in markets outside of the 100

largest MSAs, long-term number portability should be deployed within

six months of a specific request from another telecommunications

provider. We believe a six-month interval is appropriate given the more

significant network upgrades that may be necessary for carriers

operating in these smaller areas.

83. We note that the 1996 Act exempts rural telephone companies

from the ``duty to negotiate * * * the particular terms and conditions

of agreements to fulfill the (interconnection) duties'' created by the

1996 Act, including the provision of number portability, and that

carriers satisfying the statutory criteria contained in section 251(f)

may be exempt from the obligations to provide number portability as set

forth herein. In addition, section 251(f)(2) permits a LEC with fewer

than two percent of the country's total installed subscriber lines to

petition a state commission for suspension or modification of the

requirements of section 251. In our recent notice of proposed

rulemaking implementing sections 251 and 252 of the Communications Act,

we address the application of this statutory exemption, and we believe

that specific application of such provisions is best addressed in that

proceeding. We intend to establish regulations to implement these

provisions by early August 1996, consistent with the requirements of

section 251(d).

84. In our Second Further Notice of Proposed Rulemaking on Billed

Party Preference (BPP), we stated that the Commission would further

consider the feasibility of implementing BPP in the upcoming proceeding

to implement the 1996 Act's local number portability requirements in

section 251(b)(2). We recognize that our deployment schedule may have

implications for the provision of BPP, the ability of a customer to

designate in advance which Operator Service Provider (OSP) should be

billed when that customer makes a call from a pay telephone. This

capability may involve querying a database, similar to the proposed

long-term number portability methods. In the BPP Second Further Notice

(61 FR 30581 (June 17, 1996)), we noted that the record indicated that

the cost of BPP would likely be substantial, and we sought comment on

the costs of requiring OSPs to disclose their rates for 0+ calls in a

variety of circumstances. In that NPRM, we reaffirmed our belief that

BPP would generate significant benefits for consumers, but stated that,

at this time, unless local exchange providers were required to install

the facilities needed to perform database queries for number

portability purposes, the incremental cost to query the database for

the customer's preferred OSP would outweigh the potential incremental

benefits that BPP would provide. While we continue to recognize the

benefits that could be achieved through such an approach, we note that

creating the capability for all LECs to query OSP databases would

require a uniform deadline to nationwide number portability which, for

the reasons discussed above, is not in the public interest.

Nonetheless, as indicated by our deployment schedule, LECs in the 100

largest MSAs will be required to install the capability to query number

portability databases by December 31, 1998, which could then

potentially be utilized for BPP in those markets.

85. Finally, we delegate to the Chief, Common Carrier Bureau, the

authority to waive or stay any of the dates in the implementation

schedule, as the Chief determines is necessary to ensure the efficient

development of number portability, for a period not to exceed 9 months

(i.e., no later than September 30, 1999). In the event a carrier is

unable to meet our deadlines for implementing a long-term number

portability method, it may file with the Commission, at least 60 days

in advance of the deadline, a petition to extend the time by which

implementation in its network will be completed. We emphasize, however,

that carriers are expected to meet the prescribed deadlines, and a

carrier seeking relief must present extraordinary circumstances beyond

its control in order to obtain an extension of time. A carrier seeking

such relief must demonstrate through substantial, credible evidence the

basis for its contention that it is unable to comply with our

deployment schedule. Such requests must set forth: (1) The facts that

demonstrate why the carrier is unable to meet our deployment schedule;

(2) a detailed explanation of the activities that the carrier has

undertaken to meet the implementation schedule prior to requesting an

extension of time; (3) an identification of the particular switches for

which the extension is requested; (4) the time within which the carrier

will

[[Page 38619]]

complete deployment in the affected switches; and (5) a proposed

schedule with milestones for meeting the deployment date.

E. Database Architecture and Administration

1. Background

86. In the NPRM, we sought comment on the type of database

architecture that would best serve the public interest and the

technical feasibility of deploying a single national database or a

series of regionally distributed databases. We also sought comment on

the type of information that should be contained within such

database(s) and who should have access to such database(s). Finally, we

sought comment on administration of the number portability database(s),

i.e., who should administer and maintain the database(s), how should

they be funded, how should the administrator(s) be selected, and what

responsibilities should the administrator(s) be given.

2. Position of the Parties

Many parties assert that any long-term number portability solution

will require the use of one or more databases. Jones Intercable states

that use of a database solution: (1) Makes numbering information

available to numerous competing carriers; (2) provides the platform to

offer other types of number portability; and (3) permits the deployment

of other advanced services. ACTA, AT&T, and Citizens Utilities assert

that the database architecture of a long-term solution should resemble

the architecture used for the toll free database, but with databases

distributed on a regional basis. US Intelco and MCI note that multiple,

regional databases, rather than one national database, will be

necessary to process the data for all portable geographic numbers. Only

Scherers Communications claims that a single national database will be

able to accommodate all portable numbers, geographic and non-

geographic, and will ensure consistency and cost efficiency.

88. AT&T and several BOCs support the ability of individual

carriers to download information from the regional databases to routing

systems associated with their own networks, i.e., downstream databases.

Several other parties add that access to the regional databases must be

open, and carriers, individually or collectively, must be permitted to

develop routing databases that obtain information from the regional

databases. ITN contends that an architecture of regionally-deployed

SCPs which correspond to blocks of NPA-NXXs would give carriers the

option of maintaining their own customer records or having a third

party provider perform such functions. It adds that such openness in

data management will help ensure number portability to all service

providers, including providers of service to end users and various

other intelligent network service providers.

89. Almost all parties, incumbent LECs and new entrants, support

administration of the database(s) by a neutral third party. MFS adds

that the operator of a number portability database must not be able to

gain a competitive advantage by manipulating the data or controlling

access to the database. ACTA urges that the database administrator be a

non-profit organization selected through a competitive bidding process

that excludes LECs and IXCs, with responsibilities established by the

North American Numbering Plan Administrator (NANPA).

90. Competitive Carriers assert that the database(s) should include

only service provider portability-specific information, and that the

carriers using the database should be responsible for the integrity of

these data. Teleport claims that an industry group should determine the

contents of any distributed databases, subject to the Commission's

criteria. The Texas Advisory Commission also asserts that the

database(s) should easily integrate with 911 databases.

3. Discussion

91. Section 251(b) directs the Commission to establish requirements

governing the provision of number portability without specifically

addressing the appropriate database architecture necessary for long-

term number portability. We find that an architecture that uses

regionally-deployed databases best serves the public interest and is

supported by the record. The deployment of multiple regional databases

will facilitate the ability of LECs to provide number portability by

reducing the distance that such carriers will have to transmit carrier

routing information. This, in turn, should reduce the costs of routing

telephone calls based on such data. Moreover, a nationwide system of

regional databases would relieve individual carriers of the burden of

deploying multiple number portability databases over various geographic

areas. A regionally-deployed database system will ensure that carriers

have the number portability routing information necessary to route

telephone calls between carriers' networks, and will also promote

uniformity in the provision of such number portability data. We agree

with those parties arguing that one national number portability

database is not feasible. The potential amount of information that such

a database would be required to process would, according to parties in

this proceeding, likely become overwhelming as number portability is

deployed nationwide.

92. We also conclude that it is in the public interest for the

number portability databases to be administered by one or more neutral

third parties. Both the record and the Commission's recent decision to

reorganize the administration of telephone numbers under the NANP

support neutral third party administration of these facilities. We also

note that section 251(e)(1) requires the Commission to ``create or

designate one or more impartial entities to administer

telecommunications numbering and to make such numbers available on an

equitable basis.'' Neutral third party administration of the databases

containing carrier routing information will facilitate entry into the

communications marketplace by making numbering resources available to

new service providers on an efficient basis. It will also facilitate

the ability of local service providers to transfer new customers by

ensuring open and efficient access for purposes of updating customer

records. As we stated above, the ability to transfer customers from one

carrier to another, which includes access to the data necessary to

perform that transfer, is important to entities that wish to compete in

the local telecommunications market. Neutral third party administration

of the carrier routing information also ensures the equal treatment of

all carriers and avoids any appearance of impropriety or anti-

competitive conduct. Such administration facilitates consumers' access

to the public switched network by preventing any one carrier from

interfering with interconnection to the database(s) or the processing

of routing and customer information. Neutral third party administration

would thus ensure consistency of the data and interoperability of

number portability facilities, thereby minimizing any anti-competitive

impacts.

93. We hereby direct the NANC to select as a local number

portability administrator(s) (LNPA(s)) one or more independent, non-

governmental entities that are not aligned with any particular

telecommunications industry segment within seven months of the initial

meeting of the NANC. Selection of the LNPA(s) falls within the duties

we established for the NANC in the

[[Page 38620]]

Numbering Plan Order (60 FR 38737 (July 28, 1995)) and the NANC

Charter. The NANC charter describes the scope the NANC's activities:

The purpose of the (NANC) is to advise the (Commission) and to

make recommendations, reached through consensus, that foster

efficient and impartial number administration. The (NANC) will

develop policy on numbering issues, initially resolve disputes, and

select and provide guidance to the North American Numbering Plan

Administrator.

The fundamental purpose of the NANC is to act as an oversight committee

with the technical and operational expertise to advise the Commission

on numbering issues. The Commission has already directed the NANC to

select a NANPA. We believe the designation of a centralized entity to

select and oversee the LNPA(s) is preferable to ensure consistency and

to provide a national perspective on number portability issues, as well

as to reduce the costs of implementing a national number portability

plan.

94. We believe that the NANC is especially well-situated to handle

matters relating to local number portability administration because of

its similarity to the administration of central office codes. Both

functions rely heavily on the use of databases, and both involve

administration of NANP resources, only at different levels.

Administration of number portability data is essentially the

administration of telephone numbers (as opposed to NXX codes) between

different carriers.

95. We believe that the NANC should determine, in the first

instance, whether one or multiple administrators should be selected,

whether LNPA(s) can be the same entity selected to be the NANPA, how

the LNPA(s) should be selected, the specific duties of the LNPA(s), and

the geographic coverage of the regional databases. Once the NANC has

selected the LNPA(s) and determined the locations of the regional

databases, it must report its decisions to the Commission. The NANC

should also determine the technical interoperability and operational

standards, the user interface between telecommunications carriers and

the LNPA(s), and the network interface between the SMS and the

downstream databases. Finally, the NANC should develop the technical

specifications for the regional databases, e.g., whether a regional

database should consist of a service management system (SMS) or an SMS/

SCP pair. In reaching its decisions, the NANC should consider the most

cost-effective way of accomplishing number portability. We note that it

will be essential for the NANPA to keep track of information regarding

the porting of numbers between and among carriers. We thus believe it

necessary for the NANC to set guidelines and standards by which the

NANPA and LNPA(s) share numbering information so that both entities can

efficiently and effectively administer the assignment of the numbering

resource. For example, the NANC might require that the databases easily

integrate with 911 databases.

96. We recognize that authorizing the NANC to select a LNPA(s) may

have an impact on Illinois's April 1996 selection of Lockheed-Martin as

the administrator of the Illinois SMS, as well as the Maryland and

Colorado task forces' plans to release their RFPs for their SMS

administrators in the second quarter of 1996. Therefore, in light of

these and other ongoing efforts by state commissions, we conclude that

any state that prefers to develop its own statewide database rather

than participate in a regionally-deployed database may opt out of its

designated regional database and implement a state-specific database.

We direct the Chief, Common Carrier Bureau, to issue a Public Notice

that identifies the administrator selected by the NANC and the proposed

locations of the regional databases. A state will have 60 days from the

release date of the Public Notice to notify the Common Carrier Bureau

and NANC that the state does not wish to participate in the regional

database system for number portability. Carriers may challenge a

state's decision to opt out of the regional database system by filing a

petition with the Commission. Relief will be granted if the petitioner

can demonstrate that the state decision to opt out would significantly

delay deployment of permanent number portability or result in excessive

costs to carriers. We note that state databases would have to meet the

national requirements and operational standards recommended by the NANC

and adopted by this Commission. In addition, such state databases must

be technically compatible with the regional system of databases and

must not interfere with the scheduled implementation of the regional

databases.

97. We further note that any administrator selected by a state

prior to the release of this Order that wishes to bid for

administration of one of the regional databases must submit a new

proposal in accordance with the guidelines established by the NANC. We

emphasize that nothing in this section affects any other action that

the Commission may take regarding the delegation and transfer of

functions related to number administration. We delegate authority to

the Chief, Common Carrier Bureau, to monitor the progress of the NANC

in selecting the LNPA(s) and in developing and implementing the

database architecture described above.

98. We believe that telecommunications carriers should have open

access to all regional databases. Just as we conclude all carriers must

have equal access to any long-term number portability method, and that

no portion of a long-term number portability method should be

proprietary to any carrier, we further conclude that all carriers must

have equal and open access to all regionally-deployed databases

containing number portability-specific data. Allowing particular

carriers access to the databases over others would be inherently

discriminatory and anti-competitive. All carriers providing number

portability need to have access to all relevant information to be able

to provide customers with this important capability. We thus conclude

that the 1996 Act, in addition to general rules of equity and

competitive neutrality, requires equal and open access to all

regionally-deployed databases for all carriers wishing to interconnect.

99. We believe that, at this time, the information contained in the

number portability regional databases should be limited to the

information necessary to route telephone calls to the appropriate

service providers. The NANC should determine the specific information

necessary to provide number portability. To include, for example, the

information necessary to provide E911 services or proprietary customer-

specific information would complicate the functions of the number

portability databases and impose requirements that may have varied

impacts on different localities. For instance, because different

localities have adopted different emergency response systems, the

regional databases would have to be configured in such a fashion as to

provision the appropriate emergency information to each locality's

particular system. Similarly, special systems would need to be

developed to restrict access to proprietary customer-specific

information. In either instance, the necessary programming to add such

capabilities to the regional databases would complicate the

functionality of those databases.

100. Because we require open access to the regional databases, it

would be inequitable to require carriers to disseminate, by means of

those databases, proprietary or customer-specific information. We

therefore contemplate that the regional

[[Page 38621]]

deployment of databases will permit individual carriers to own and

operate their own downstream databases. These carrier-specific

databases will allow individual carriers to provide number portability

in conjunction with other functions and services. To the extent that

individual carriers wish to mix information, proprietary or otherwise,

necessary to provide other services or functions with the number

portability data, they are free to do so at their downstream databases.

We reiterate, however, that a carrier may not withhold any information

necessary to provide number portability on the grounds that such data

are combined with other information in its downstream database; it must

furnish all information necessary to provide number portability to the

regional databases as well as to its own downstream database.

101. Carriers that choose not to access directly the regional

databases or deploy their own downstream databases can seek access to

the carrier-specific databases deployed by other carriers. The

provision of access to network elements and facilities of incumbent

LECs is addressed in our proceeding implementing section 251 of the

Communications Act. We believe the issue of access to incumbent LECs'

carrier-specific databases by other carriers for purposes of number

portability is best addressed in that proceeding. Parties may negotiate

third-party access to non-incumbent LECs' carrier-specific databases on

an individual basis.

102. In the Numbering Plan Order, we concluded that the Commission

should invoke its statutory authority to recover its costs for

regulating numbering activities, including costs incurred from the

establishment, oversight of, and participation in the NANC. The

Commission is required to institute a rulemaking proceeding annually to

adjust the schedule of regulatory fees to reflect its performance of

activities relating to enforcement, policy and rulemaking, user

information services, and international activities, pursuant to the

relevant appropriations legislation. Therefore, we intend to include

the additional costs incurred by the Commission related to NANC and

regulating number portability in the fiscal 1997 adjustment of the

schedule of regulatory fees. In that proceeding, we will assess the

nature and amount of the additional burdens imposed by the activities

authorized here, and all interested parties will be afforded an

opportunity to comment.

F. Currently Available Number Portability Measures

1. Background

103. In the NPRM, we discussed certain currently available number

portability measures that LECs can use to provide service provider

number portability. We focused on RCF and DID and acknowledged that the

use of either method for number portability has significant

limitations. We sought comment on the costs of implementing these

measures, and on their limitations and disadvantages. We also requested

that parties discuss whether these currently available measures can be

improved so that they are workable, long-term solutions, and if so, at

what cost. Finally, we sought comment on how the costs of providing

service provider portability using RCF and DID should be recovered.

2. Implementation of Currently Available Number Portability Measures

a. Positions of the Parties

104. Commenting parties, with the exception of several of the

incumbent LECs, generally agree that the technical limitations

described in the NPRM render the interim measures unacceptable in the

long term. Indeed, many parties point out additional disadvantages of

RCF and DID, such as: Longer call set-up times, incumbent access to

competitors' proprietary information, complicated resolution of

customer complaints, increased potential for call blocking, and

substantial costs to new entrants. Bell Atlantic counters that calls

forwarded by RCF in its network can support CLASS features if the co-

carrier has modern digital switching equipment and common channel

signalling, and it adds that there is no limit on the number of calls

RCF can handle simultaneously.

105. Many of the new entrants, nevertheless, urge the Commission to

require incumbent LECs to provide interim measures until a long-term

solution is implemented. These carriers generally caution that use of

interim solutions should not delay implementation of a permanent

solution. While acknowledging that RCF and DID are already technically

feasible and generally available, several LECs argue that the

Commission need not take action on interim measures. They generally

focus, instead, on phasing in a long-term solution.

106. AT&T and MCI initially argued for using a medium-term database

solution, namely, the Carrier Portability Code (CPC) method, because of

its advantages over RCF or DID, but subsequently favored implementing

LRN as soon as possible. NYNEX and SBC Communications claim that

adopting CPC as an interim solution would result in wasted and

duplicative efforts. They note that CPC fails to support certain

services, such as ISDN calls, pay phone calls, and CLASS features when

customers place a call into an NXX from which a number has been

transferred to a different service provider, and that CPC may prevent

an operator from identifying the switch serving a ``ported'' number,

thereby interfering with busy line verification of that line.

107. Potential new entrants into the local exchange market

generally contend that requiring interim number portability is

consistent with the 1996 Act. Indeed, MFS maintains that the 1996 Act

requires immediate implementation of interim measures until long-term

portability is implemented. Teleport notes that the Bell Operating

Companies, at least, are required to provide interim number portability

as a condition of entry into the interLATA market. MCI agrees that

interim measures should be made available until long-term portability

is implemented, and argues that section 4(i) of the Communications Act

authorizes the Commission to perform any acts ``necessary and proper''

to execute section 251(b)(2), and that such authority is pre-existing

and remains in effect. ALTS contends that Congress clearly contemplated

that the Commission should require interim measures until long-term

portability is available because otherwise BOCs could satisfy the

competitive checklist of section 271(c)(2)(B)(xi) for entry in

interLATA services without providing any form of number portability.

AT&T argues that interim arrangements are incapable of preserving the

functionality for long-term number portability required by the 1996

Act, but should be provided until long-term number portability can be

deployed.

108. US West, in contrast, asserts that the Commission's

jurisdiction over interim measures is unclear because sections 153(30)

and 251(b)(2), giving the Commission jurisdiction over number

portability, appear to include only permanent portability. Cox and NCTA

claim that the interim measures do not satisfy the ``without impairment

of quality, reliability, or convenience'' standard in the definition of

number portability in 47 U.S.C. section 153(30).

109. Several of the cable interests argue that, although section

271(c)(2)(B)(xi) allows the BOCs initially to satisfy the competitive

[[Page 38622]]

checklist for entry into interLATA services by providing only interim

measures, the BOCs are also required to provide long-term portability

to fulfill the checklist requirements. Moreover, Cox and Time Warner

Holdings warn that the Commission will lose its leverage to encourage

prompt implementation of long-term portability once the BOCs are

permitted to provide in-region interLATA services pursuant to section

271. NCTA asserts that, since section 271(c)(2)(B)(xi) distinguishes

between ``interim'' measures and ``regulations pursuant to section 251

to require number portability,'' the portability required by section

251 is long-term number portability. CCTA urges the Commission to

review and require BOC progress toward deployment of a long-term method

when BOCs apply for in-region interLATA market entry, and to deny a BOC

application if the BOC tries to delay implementation of long-term

portability. Cox goes further and argues that, after the Commission

adopts number portability rules, BOCs must implement long-term service

provider portability, not just interim measures, before they can obtain

interexchange and manufacturing relief under section 271 because

interim measures do not satisfy section 251. In response, Ameritech

contends that provision of interim measures, and later compliance with

the Commission's portability rules, satisfies the BOC checklist and

notes that section 271(d)(4) directs the Commission not to limit or

extend the checklist terms.

b. Discussion

110. The 1996 Act requires that carriers ``provide, to the extent

technically feasible, number portability in accordance with the

requirements prescribed by the Commission.'' Number portability is

defined in the 1996 Act as ``the ability of users of telecommunications

services to retain, at the same location, existing telecommunications

numbers without impairment of quality, reliability, or convenience when

switching from one telecommunications carrier to another.'' The record

indicates that currently technically feasible methods of providing

number portability, such as RCF and DID, may impair to some degree

either the quality, reliability, or convenience of telecommunications

services when customers switch between carriers. Because of these

drawbacks, some may argue that the use of RCF and DID methods for

providing number portability would not satisfy the requirements of

sections 3(30) and 251(b)(2). We disagree. Section 251(b)(2)

specifically requires carriers to provide number portability, as

defined in section 3(30), ``to the extent technically feasible.'' Thus,

because currently RCF and DID are the only methods technically

feasible, we believe that use of these methods, in fact, comports with

the requirements of the statute. We believe that the 1996 Act

contemplates a dynamic, not static, definition of technically feasible

number portability methods. Under this view, LECs are required to offer

number portability through RCF, DID, and other comparable methods

because they are the only methods that currently are technically

feasible. LECs are required by this Order to begin the deployment of a

long-term number portability solution by October 1, 1997, because,

based on the evidence of record, such methods will be technically

feasible by that date. We believe that this conclusion is consistent

with Congress's goal of developing a national number portability

framework, as well as the general purpose of the Act to ``promote

competition * * * in order to secure lower prices and higher quality

services for American telecommunications consumers and encourage the

rapid deployment of new technologies.''

111. This interpretation finds further support in section

271(c)(2)(B)(xi), which sets forth the competitive checklist for BOC

entry into in-region interLATA services. That section requires the BOCs

wishing to enter the in-region interLATA market: (1) To provide interim

number portability through RCF, DID, and other comparable arrangements

``until the date by which the Commission issues regulations pursuant to

section 251 to require number portability,'' and then (2) to comply

with the Commission's regulations. There will necessarily be a

significant time period between the adoption date of these rules and

the availability of long-term number portability measures. Therefore,

were the Commission to promulgate rules providing only for the

provision of long-term number portability, during this time period the

BOCs could satisfy the competitive checklist without providing any form

of number portability. This could be true even if they had been

providing interim number portability pursuant to the checklist prior to

the effective date of the Commission's regulations. We do not believe

that Congress could have intended this result. We, therefore, agree

with MFS, ALTS, MCI, and AT&T that Congress intended that currently

available number portability measures be provided until a long-term

number portability method is technically feasible and available.

112. We conclude that we had authority to require the provision of

currently available methods of service provider portability prior to

passage of the 1996 Act. In the NPRM, we tentatively concluded that

sections 1 and 202 of the Communications Act establish a federal

interest in the provision of number portability. Specifically, we

concluded in the NPRM that such interest arises from: (1) Our

obligation to promote an efficient and fair telecommunications system;

(2) the inability to separate the impact of number portability between

intrastate and interstate telecommunications; (3) the potential adverse

impact deploying different number portability solutions across the

country would have on the provision of interstate telecommunications

services; and (4) the impact number portability could have on the use

of the numbering resource, that is, ensuring that the use of numbers is

efficient and does not contribute to area code exhaust. We now affirm

these tentative conclusions and conclude that we have jurisdiction to

require the provision of currently available number portability

methods, independent of the statutory changes adopted in the 1996 Act.

113. There are also substantial policy reasons that support our

requiring LECs to provide currently available number portability

measures. The ability of customers to keep their telephone numbers when

changing carriers, even with some impairment in call set-up time or

vertical service offerings, is critical to opening the local

marketplace to competition. By facilitating entry of new carriers into

the local market, currently available number portability measures will

increase competition in local markets which will result in lower prices

and higher service quality for telecommunications services consistent

with the goals of the 1996 Act. Several parties to this proceeding

likewise advocate that such measures are necessary for the development

of effective local exchange competition.

114. We note that sections 251(b)(2) and 251(d) give to the

Commission the authority to prescribe requirements for the provision of

number portability. Pursuant to that authority, we mandate the

provision of currently available number portability measures as soon as

reasonably possible upon receipt of a specific request from another

telecommunications carrier, including from wireless service providers.

By conditioning the obligation to provide currently available number

portability measures upon a specific request,

[[Page 38623]]

number portability will be offered only in those areas where a

competing local exchange carrier seeks to provide service. Thus, it

avoids the imposition of number portability implementation costs on

carriers (and end users) in areas where no competitor is operating.

115. We agree with the many parties who claim that the technical

limitations described in the NPRM that handicap all currently available

measures for providing number portability render them unacceptable as

long-term solutions. Despite Bell Atlantic's claims to the contrary for

its own network, the record indicates that currently available number

portability measures are inferior to LRN portability or any other

method that meets our performance criteria. The 1996 Act, and

particularly the BOC checklist in section 271, clearly contemplates

that these methods should serve as only temporary measures until long-

term number portability is implemented. As indicated above, the 1996

Act requires that number portability be provided, to the extent

technically feasible, without impairment of quality, reliability, and

convenience. Therefore, when a number portability method that better

satisfies the requirements of section 251(b)(2) than currently

available measures becomes technically feasible, LECs must provide

number portability by means of such method. In addition, we find that

the existing measures fail to satisfy our criteria set forth for any

long-term solution; for example, they depend on the original service

provider's network, may result in the degradation of service quality,

and are wasteful of the numbering resource. For these reasons, we do

not believe that long-term use of the currently available measures is

in the public interest. We emphasize that we encourage all LECs to

implement a long-term solution that meets our technical standards as

soon as possible. We also note that BOCs must comply with the

requirements set forth in this Order, including the requirement to

provide currently available measures, in order to satisfy the BOC

competitive checklist. Upon the date on which long-term portability

must be implemented according to our deployment schedule, BOCs must

provide long-term number portability and will be subject to an

enforcement action under section 271(d)(6) if they fail to do so.

116. We decline to require a ``medium-term'' or short-term database

solution such as CPC. The increased costs of implementing this approach

are unwarranted given the imminent implementation of a long-term

solution that meets our criteria. In addition, devoting resources to

implement a medium-term database solution, which is currently not

available, may delay implementation of a long-term database solution.

We note that the Colorado, Georgia, Illinois, and Ohio state

commissions have declined to adopt, and the California and Maryland

task forces have declined to recommend, CPC as an interim solution,

while the emphasis on New York's CPC trial has shifted in favor of

concentrating on the adoption of LRN. We also note that several parties

originally advocating CPC have since retreated from that view and now

instead support implementing a long-term database solution as soon as

possible. To the extent carriers wish to provide a medium-term database

solution, such as CPC, however, we do not prevent them from doing so.

3. Cost Recovery for Currently Available Number Portability Measures

a. Positions of the Parties

117. In comments filed before passage of the 1996 Act, Cablevision

Lightpath argues that all carriers should pay incremental, cost-based

rates for interim measures and suggests, as an example, an annual

surcharge based on the product of the incremental cost of switching and

minutes of traffic forwarded. AT&T and MCI agree with Cablevision

Lightpath and endorse the formula used by the New York Department of

Public Service, which allocates the costs of providing interim measures

across all carriers based on the product of switching and transport

costs, and minutes of forwarded traffic. Cablevision Lightpath urges,

however, the Commission to ban incumbent LECs from treating the costs

of currently available number portability as exogenous adjustments to

their interstate price cap indices. GSA, Jones Intercable, and the

Users Committee point out that the short-term incremental costs of

providing interim measures are low.

118. Many of the new entrants advocate placing much of the burden

of cost-recovery for interim measures on the incumbent LECs. Jones

Intercable, along with several other cable interests, argues that the

incumbent LECs and new LECs should recover the costs of interim

measures under a ``bill and keep'' system, under which incumbent LECs

and new entrants would not charge each other for interim number

portability arrangements that require them to forward calls of

customers who have changed service providers. In the alternative, Jones

Intercable contends that incumbent LECs' charges for interim number

portability services should be equal to or less than the LECs'

incremental cost of providing those services. Teleport also supports

the provision of interim portability measures with no intercarrier

usage charges.

119. Several commenters propose large discounts comparable to those

mandated for non-equal access during the transition to equal access.

Competitive Carriers assert that allowing LECs to charge retail prices

would discourage provision of long-term number portability. MCI argues

that portability is a network function, not a service, and proposes

that all local carriers share the costs or at least that incumbent LECs

not be allowed to recover more than the incremental costs. AT&T and MFS

argue that any interim measures should be provided at rates that

encourage incumbents to offer the most efficient routing available, or

reflect these measures' inferior quality and true costs. ALTS and MFS

further argue that competitive local exchange carriers should be

entitled to retain all terminating access charges. Similarly, MCI and

NCTA argue that the terminating access charges paid by IXCs should be

shared with the competitor that actually completes calls forwarded to

it.

120. AT&T and MCI argue that the 1996 Act requires that the costs

of providing interim number portability measures be borne by all

telecommunications carriers on a competitively neutral basis. MFS

argues that interim measures should be provided at no cost or in the

alternative, allocated on revenues net of payments to intermediaries.

Several LECs, in contrast, claim that the competitively neutral

standard prohibits requiring incumbent LECs to subsidize their

competitors by providing interim measures for free or at deeply

discounted rates. Ameritech asserts that section 251(e)(2)'s

``competitively neutral'' standard for cost recovery does not apply to

interim portability at all. It asserts that interim portability is

addressed in section 271(c)(2)(B)(xi), and therefore the Commission is

not authorized under the BOC checklist to eliminate or discount interim

portability rates below levels that state commissions have already

judged reasonable. Similarly, BellSouth argues that Congress's

endorsement of interim RCF and DID arrangements in the BOC checklist,

and the 1996 Act's structure of requiring state-approved carrier

negotiations for interconnection agreements, compel the conclusion that

RCF and DID cost recovery issues be left to the states.

[[Page 38624]]

b. Discussion

121. In light of our statutory mandate that local exchange carriers

provide number portability through RCF, DID, or other comparable

arrangements until a long-term number portability approach is

implemented, we must adopt cost recovery principles for currently

available number portability that satisfy the 1996 Act. We emphasize

that the cost recovery principles set forth below will apply only until

a long-term number portability method can be deployed. As we have

indicated, deployment of long-term number portability should begin no

later than October 1997, so currently available number portability

arrangements, and the associated cost recovery mechanism, should be in

place for a relatively short period.

122. It is also important to recognize that the costs of currently

available number portability are incurred in a substantially different

fashion than the costs of long-term number portability arrangements.

First, the capability to provide number portability through currently

available methods, such as RCF and DID, already exists in most of

today's networks, and no additional network upgrades are necessary. In

contrast, long-term, or database, number portability methods require

significant network upgrades, including installation of number

portability-specific switch software, implementation of SS7 and IN or

AIN capability, and the construction of multiple number portability

databases. Second, the costs of providing number portability in the

immediate term are incurred solely by the carrier providing the

forwarding service. Long-term number portability, in contrast, will

require all carriers to incur costs associated with the installation of

number portability-specific software and the construction of the number

portability databases. Those costs will have to be apportioned in some

fashion among all carriers. Finally, we note that, initially, the costs

of providing currently available number portability will be incurred

primarily by the incumbent LEC network because most customers will be

forwarding numbers from the incumbents to the new entrants.

123. Parties have advanced a wide range of methods for recovering

the costs of currently available number portability measures, including

arrangements whereby neither carrier charges the other for provision of

such measures and incremental, cost-based pricing schemes. In addition,

several states have adopted different cost recovery mechanisms. For

example, in Florida, carriers have negotiated appropriate rates for

currently available measures. The Louisiana PSC has adopted a two-

tiered approach to pricing of currently available measures. In the

first instance, carriers are permitted to negotiate an appropriate

rate. If the parties cannot agree upon a rate, the PSC will determine

the appropriate rate that can be charged by the forwarding carrier

based on cost studies filed by the carriers. These rates are not

required to be set at long-run incremental costs (LRIC) or total

service long-run incremental costs (TSLRIC), however.

124. In addition, incumbents and new entrants have voluntarily

negotiated a variety of cost recovery methods. Carriers in Rochester,

New York, for example, are voluntarily using a formula that allocates

the incremental costs of currently available number portability

measures, through an annual surcharge assessed by the carrier from

which the number is transferred. The charge assessed on each carrier is

the product of the total number of forwarded minutes and the

incremental per-minute costs of switching and transport, multiplied by

the ratio of a particular carrier's forwarded telephone numbers

relative to total working numbers in the area. In addition, Rochester

Telephone has agreed not to charge competitors for the first $1 million

of the cost of number portability. The New York DPS has adopted this

formula for the New York Metropolitan area as well. Ameritech and MFS

recently entered into an agreement for Ameritech's five-state region

under which MFS will pay Ameritech $3 per line per month for interim

measures. MFS plans to seek regulatory approval to allocate that cost

under a formula that would require MFS to pay a portion of the $3

charge equal to the ratio of MFS's gross telecommunications service

revenues, net of its payments to other carriers, to Ameritech's gross

telecommunications revenues, net of payments to other carriers.

125. Our cost recovery principles for currently available methods,

of course, must comply with the statutory requirements of the 1996 Act.

In addition, consistent with the pro-competitive objectives of the 1996

Act, we seek to create incentives for LECs, both incumbents and new

entrants, to implement long-term number portability at the earliest

possible date, since, as we have noted, long-term number portability is

clearly preferable to existing number portability methods. The

principles we adopt should also mitigate any anti-competitive effects

that may arise if a carrier falsely inflates the cost of currently

available number portability.

126. In our interconnection proceeding, we have sought comment on

our tentative conclusion that the 1996 Act authorizes us to set pricing

principles to ensure that rates for interconnection, unbundled network

elements, and collocation are just, reasonable, and nondiscriminatory.

We need not, however, reach in this proceeding the issue of whether

section 251 generally gives us authority over pricing for

interconnection because the statute sets forth the standard for the

recovery of number portability costs and grants the Commission the

express authority to implement this standard. Specifically, section

251(e)(2) requires that the costs of ``number portability be borne by

all telecommunications carriers on a competitively neutral basis as

determined by the Commission.'' We therefore conclude that section

251(e)(2) gives us specific authority to prescribe pricing principles

that ensure that the costs of number portability are allocated on a

``competitively neutral'' basis.

127. In exercising our authority under section 251(e)(2), we

conclude that we should adopt guidelines that the states must follow in

mandating cost recovery mechanisms for currently available number

portability methods. To date, the state commissions have adopted

different cost recovery methods. We seek to articulate general criteria

that conform to the statutory requirements, but give the states some

flexibility during this interim period to continue using a variety of

approaches that are consistent with the statutory mandate. The states

are also free, if they so choose, to require that tariffs for the

provision of currently available number portability measures be filed

by the carriers.

128. In establishing the standard for number portability cost

recovery, section 251(e)(2) sets forth three specific elements, which

we must interpret. First, we must determine the meaning of number

portability ``costs;'' second, we must interpret the phrase ``all

telecommunications carriers;'' and third, we must construe the meaning

of the phrase ``competitively neutral.''

129. The costs of currently available number portability are the

incremental costs incurred by a LEC to transfer numbers initially and

subsequently forward calls to new service providers using existing RCF,

DID, or other comparable measures. According to the record, the costs

of RCF differ depending on where the call originates in a carrier's

network. Calls that originate on the switch from which a number has

been forwarded (intraoffice

[[Page 38625]]

calls) result in fewer costs than calls that originate from other

switches (interoffice calls). This is because fewer transport and

switching costs are incurred in the forwarding of an intraoffice call.

The BOCs claim, for example, that there are essentially three costs

incurred in the provision of RCF for an intraoffice call: (1) Switching

costs incurred by the original switch in determining that the number is

no longer resident; (2) switching costs incurred in performing the RCF

translation, which identifies the address of the receiving switch; and

(3) switching costs incurred in redirecting the call from the original

switch to the switch to which the number has been forwarded. The BOCs

further assert that the additional costs incurred for an interoffice

call include: (1) The transport costs incurred in directing the call

from the tandem or end office to the office from which the number was

transferred and back to the tandem or end office; and (2) remote tandem

or end office switching costs. There is conflicting evidence in the

record on whether these costs are incurred on a per-minute, per-call,

or some fixed basis. State commissions in some states have set cost-

based rates for currently available number portability measures. In

order to do so, states have used different methods of identifying

costs, including LRIC, TSLRIC, and direct embedded cost studies. In

California and Illinois, the state commissions set cost-based fixed

monthly rates for RCF, while in New York and Maryland, the commissions

set cost-based rates for minutes of use. In addition, there is some

evidence in the record that carriers incur some non-recurring costs in

the provision of currently available methods of number portability.

Several states, such as California, Illinois, and Maryland, have

permitted the carrier forwarding a number to recover such non-recurring

costs as a one-time, non-recurring charge.

130. Section 251(e)(2) of the Communications Act requires that the

costs of providing number portability be borne by ``all

telecommunications carriers.'' No party commented on the meaning of the

term ``all telecommunications carriers.'' Read literally, the statutory

language ``all telecommunications carriers'' would appear to include

any provider of telecommunications services. Section 3 of the

Communications Act defines telecommunications services to mean ``the

offering of telecommunications for a fee directly to the public, or to

such classes of users as to be effectively available directly to the

public, regardless of facilities used.'' Under this reading, states may

require all telecommunications carriers--including incumbent LECs, new

LECs, CMRS providers, and IXCs--to share the costs incurred in the

provision of currently available number portability arrangements. As

discussed in greater detail below, states may apportion the incremental

costs of currently available measures among relevant carriers by using

competitively neutral allocators, such as gross telecommunications

revenues, number of lines, or number of active telephone numbers.

131. Section 251(e)(2) of the Act states that the costs of number

portability are to be ``borne by all telecommunications carriers on a

competitively neutral basis as determined by the Commission.'' We

interpret ``on a competitively neutral basis'' to mean that the cost of

number portability borne by each carrier does not affect significantly

any carrier's ability to compete with other carriers for customers in

the marketplace. Congress mandated the use of number portability so

that customers could change carriers with as little difficulty as

possible. Our interpretation of ``borne * * * on a competitively

neutral basis'' reflects the belief that Congress's intent should not

be thwarted by a cost recovery mechanism that makes it economically

infeasible for some carriers to utilize number portability when

competing for customers served by other carriers. Ordinarily the

Commission follows cost causation principles, under which the purchaser

of a service would be required to pay at least the incremental cost

incurred in providing that service. With respect to number portability,

Congress has directed that we depart from cost causation principles if

necessary in order to adopt a ``competitively neutral'' standard,

because number portability is a network function that is required for a

carrier to compete with the carrier that is already serving a customer.

Depending on the technology used, to price number portability on a cost

causative basis could defeat the purpose for which it was mandated. We

emphasize, however, that this statutory mandate constitutes a rare

exception to the general principle, long recognized by the Commission,

that the cost-causer should pay for the costs that he or she incurs.

132. Our interpretation suggests that a ``competitively neutral''

cost recovery mechanism should satisfy the following two criteria.

First, a ``competitively neutral'' cost recovery mechanism should not

give one service provider an appreciable, incremental cost advantage

over another service provider, when competing for a specific

subscriber. In other words, the recovery mechanism should not have a

disparate effect on the incremental costs of competing carriers seeking

to serve the same customer. The cost of number portability borne by a

facilities-based new entrant that wins a customer away from an

incumbent LEC is the payment that the new entrant must make to the

incumbent LEC. The higher this payment, the higher the price the new

entrant must charge to a customer to serve that customer profitably,

which will put the new entrant at a competitive disadvantage. We thus

interpret our first criterion as meaning that the incremental payment

made by a new entrant for winning a customer that ports his number

cannot put the new entrant at an appreciable cost disadvantage relative

to any other carrier that could serve that customer.

133. An example illustrates the application of this criteria. When

a facilities-based carrier that competes against an incumbent LEC for a

customer, the incumbent LEC incurs no cost of number portability if it

retains the customer. If the facilities-based carrier wins the

customer, an incremental cost of number portability is generated. The

share of this incremental cost borne by the new entrant that wins the

customer cannot be so high as to put it at an appreciable cost

disadvantage relative to the cost the incumbent LEC would incur if it

retained the customer. Thus, the incremental payment by the new entrant

if it wins a customer would have to be close to zero, to approximate

the incremental number portability cost borne by the incumbent LEC if

it retains the customer.

134. A couple of additional examples may further clarify and

illustrate this criterion. On the one hand, a cost recovery mechanism

that imposes the entire incremental cost of currently available number

portability on a facilities-based new entrant would violate this

criterion. This cost recovery mechanism would impose an incremental

cost on a facilities-based entrant that neither the incumbent, nor an

entrant that merely resold the incumbent's service, would have to bear,

because neither the incumbent nor the reseller would have to use

currently available number portability measures in order for the

prospective customer to keep his or her existing number. On the other

hand, a cost recovery mechanism that recovers the cost of currently

available number portability through a uniform assessment on the

revenues of all telecommunications carriers, less any charges paid to

other carriers, would satisfy this criterion. This approach does not

disparately affect the

[[Page 38626]]

incremental cost of winning a specific customer or group of customers,

because a LEC with a small share of the market's revenue would pay a

percentage of the incremental cost of number portability that will be

small enough to have no appreciable affect on the new entrant's ability

to compete for that customer.

135. The second criterion for a ``competitively neutral'' cost

recovery mechanism is that it should not have a disparate effect on the

ability of competing service providers to earn normal returns on their

investment. If, for example, the total costs of currently available

number portability are to be divided equally among four competing local

exchange carriers, including both the incumbent LEC and three new

entrants, within a specific service area, the new entrant's share of

the cost may be so large, relative to its expected profits, that the

entrant would decide not to enter the market. In contrast, recovering

the costs of currently available number portability from all carriers

based on each local exchange carrier's relative number of active

telephone numbers would not violate this criterion, since the amount to

be recovered from each carrier would increase with the carrier's size,

measured in terms of active telephone numbers or some other measure of

carrier size. In addition, allocating currently available number

portability costs based on active telephone numbers results in

approximately equal per-customer costs to each carrier. We also believe

that assessing costs on a per-telephone number basis should give no

carrier an advantage, relative to its competitors. An alternative

mechanism that would also satisfy our competitive neutrality

requirement would be to recover currently available number portability

costs from all carriers, including local exchange, interexchange, and

CMRS carriers, based on their relative number of presubscribed

customers.

136. We conclude that a variety of approaches currently in use

today essentially comply with our competitive neutrality criteria. One

example is the formula voluntarily being used by carriers in Rochester,

NY, and adopted by the NY DPS in the New York metropolitan area.

Specifically, this mechanism allocates the incremental costs of

currently available number portability measures, through an annual

surcharge assessed by the incumbent LEC from which the number is

transferred. This surcharge is based on each carrier's number of ported

telephone numbers relative to the total number of active telephone

numbers in the local service area. Similarly, as noted above, a cost

recovery mechanism that allocates number portability costs based on a

carrier's number of active telephone numbers (or lines) relative to the

total number of active telephone numbers (or lines) in a service area

would also satisfy the two criteria for competitive neutrality. As

noted above, MFS in Illinois plans to seek regulatory approval for a

similar formula that would allocate the costs of currently available

measures between it and Ameritech based on each carrier's gross

telecommunications revenues net of charges to other carriers. A third

competitively neutral cost recovery mechanism would be to assess a

uniform percentage assessment on a carrier's gross revenues less

charges paid to other carriers. Finally, we believe that a mechanism

that requires each carrier to pay for its own costs of currently

available number portability measures would also be permissible.

137. The cost recovery mechanisms described in the preceding

paragraphs define payments made by new entrants to incumbent LECs for

providing number portability. We recognize that incumbent LECs must

make payments to new entrants if the incumbent LEC wins a customer of

the new entrant that wants to port its number. To be competitively

neutral, the incumbent LEC would have a reciprocal compensation

arrangement with each new entrant. That is, the incumbent LEC would pay

to the new entrant a rate for number portability that was equal to the

rate that the new entrant pays the incumbent LEC.

138. In contrast, requiring the new entrants to bear all of the

costs, measured on the basis of incremental costs of currently

available number portability methods, would not comply with the

statutory requirements of section 251(e)(2). Imposing the full

incremental cost of number portability solely on new entrants would

contravene the statutory mandate that all carriers share the cost of

number portability. Moreover, as discussed above, incremental cost-

based charges would not meet the first criterion for ``competitive

neutrality'' because a new facilities-based carrier would be placed at

an appreciable, incremental cost disadvantage relative to another

service provider, when competing for the same customer. Rates for

interim number portability would also not meet the second criterion if

they approximate the retail price of local service. New entrants may

effectively be precluded from entering the local exchange market if

they are required to bear all the costs of currently available number

portability measures. Retail rates for call forwarding, to the extent

they are set above incremental costs, would also not meet the

principles of competitive neutrality for the same reasons that

incremental cost-based rates would not. Finally, placing the full cost

burden of number portability on new entrants would also deter customers

of incumbent carriers from transferring to a new service provider to

the extent that the entrant passes on the cost of currently available

number portability, in the form of higher prices for customers. In

addition, if incumbent LECs were not required to bear a portion of the

incremental costs of currently available number portability measures,

they would have an incentive to delay implementation of a long-term

number portability method.

139. A carrier has a number of options for seeking relief if it

believes that the pricing provisions for number portability offered by

a LEC violate the statutory standard in section 251(e)(2), the rules we

set forth in this order, or state-mandated cost recovery mechanisms.

First, it may bring action against the carrier in federal district

court pursuant to section 207 for damages or file a section 208

complaint against another carrier alleging a violation of the Act or

the Commission's rules. Alternatively, the carrier may file a request

for declaratory ruling with the Commission, seeking our view on whether

the statute and our rules have been properly applied. Finally, carriers

in many instances will be able to pursue existing avenues before their

state commission if a dispute arises regarding recovery of currently

available number portability costs.

140. Finally, in response to questions concerning the appropriate

treatment of terminating access charges in the interim number

portability context, we conclude that the meet-point billing

arrangements between neighboring incumbent LECs provide the appropriate

model for the proper access billing arrangement for interim number

portability. We decline to require that all of the terminating

interstate access charges paid by IXCs on calls forwarded as a result

of RCF or other comparable number portability measures be paid to the

competing local service provider. On the other hand, we believe that to

permit incumbent LECs to retain all terminating access charges would be

equally inappropriate. Neither the forwarding carrier, nor the

terminating carrier, provides all the facilities when a call is ported

to the other carrier. Therefore, we direct forwarding carriers and

terminating carriers to assess on IXCs charges for terminating access

through meet-point billing

[[Page 38627]]

arrangements. The overarching principle is that the carriers are to

share in the access revenues received for a ported call. It is up to

the carriers whether they each issue a bill for access on a ported

call, or whether one of them issues a bill to the IXCs covering all of

the transferred calls and shares the correct portion of the revenues

with the other carriers involved. If the terminating carrier is unable

to identify the particular IXC carrying a forwarded call for purposes

of assessing access charges, the forwarding carrier shall provide the

terminating carrier with the necessary information to p

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