Implementation of the Local Competition Provisions of the Telecommunications Act of 1996
Federal RegisterSep 6, 1996
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SUMMARY: In enacting the Telecommunications Act of 1996 (1996 Act)
Congress sought to establish a pro-competitive, deregulatory national
policy framework for the telecommunications industry. In adding a new
Section 251 to the Communications Act of 1934, Congress set forth a
blueprint for ending monopolies in local telecommunications markets. In
this Second Report and Order the Commission adopts rules implementing
certain provisions of Section 251. Specifically, this order adopts
rules requiring local exchange carriers to provide dialing parity and
nondiscriminatory access to their competitors; and requiring incumbent
local exchange carriers to give public notice of certain network
changes. In addition, this order adopts rules regarding number
administration and addresses various petitions concerning numbering
issues. These actions will serve to implement the statute, eliminate
operational barriers to competition, and provide for effective use of
numbering resources.
EFFECTIVE DATE: October 7, 1996, except that the collection of
information subject to approval by the Office of Management and Budget
(OMB) that are contained in sections 51.211(c), 51.213, 51.217,
51.305(g), 51.307(e), 51.325, 51.327, 51.329, 51.331, 51.333, 51.335
and 52.19(b) which are effective November 15, 1996.
FOR FURTHER INFORMATION CONTACT: For information concerning Dialing
Parity, Nondiscriminatory Access and Network Information Disclosure,
contact Lisa Boehley, (202) 418-2320, Network Services Division, Common
Carrier Bureau. For information concerning Numbering Administration
contact Marian Gordon, (202) 418-2320, Network Services Division,
Common Carrier Bureau.
SUPPLEMENTARY INFORMATION: This Second Report and Order contains new or
modified information collections subject to the Paperwork Reduction Act
of 1995 (PRA). It has been submitted to the Office of Management and
Budget (OMB) for review under the PRA. OMB, the general public, and
other federal agencies are invited to comment on the proposed or
modified information collections contained in this proceeding. This is
a synopsis of the Commission's Second Report and Order and Memorandum
Opinion and Order, (FCC 96-333) adopted on August 8, 1996 and released
on August 8, 1996. The full text of this Order is available for
inspection and copying during normal business hours in the FCC
Reference Center (Room 239), 1919 M Street, N.W., Washington, D.C. The
complete text also may be purchased from the Commission's copy
contractor, International Transcription Service, Inc., (202) 857-3800,
2100 M Street N.W., Suite 140, Washington, D.C. 20037.
PAPERWORK REDUCTION ACT: This Second Report and Order contains either a
new or modified information collection. The Commission, as part of its
continuing effort to reduce paperwork burdens, invites the general
public and the Office of Management and Budget (OMB) to comment on the
information collections contained in this order, as required by the
Paperwork Reduction Act of 1995, Public Law No. 104-13. OMB
notification of action is due September 6, 1996. Comments should
address: (a) whether the new or modified collection of information is
necessary for the proper performance of the functions of the
Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents including the use of automated
collection techniques or other forms of information technology.
OMB Approval Number: None.
Title: Implementation of the Local Competition Provisions of the
Telecommunications Act of 1996--Second Report and Order and Memorandum
Opinion and Order, CC Dockets No. 96-98 and 95-185.
Form No.: N/A.
Type of Review: New Collections.
Respondents: Business or other for-profit, including small
businesses, and state and local governments.
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No. of Est. time per Total annual
Section/title respondents response burden
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Dialing parity implementation plans............................. 1,350 100 135,000
Justification for noncompliance................................. 20 9 180
Sharing of directory listings................................... 500 36 18,000
Provision of technical information.............................. 500 24 12,000
Public notice of network changes................................ 500 72 36,000
Burden of proof................................................. 75 8 600
Submission of area code relief plans............................ 30 40 1,200
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Total Annual Burden: 202,980.
Estimated Costs Per Respondent: $0.
Needs and Uses: The new or modified information collections in this
Second Report and Order will be used to ensure that affected
telecommunications carriers fulfill their obligations under the
Communications Act, as amended.
Synopsis of Second Report and Order
Adopted: August 8, 1996.
Released: August 8, 1996.
Table of Contents
Section Paragraph
I. Introduction and Overview............................... 1
A. Actions to Implement Section 251(b)(3)................ 4
1. Dialing Parity...................................... 4
2. Nondiscriminatory Access............................ 12
B. Actions to Implement Section 251(c)(5)................ 16
C. Actions Taken to Implement Section 251(e)............. 18
II. Dialing Parity Requirements............................ 22
A. In General............................................ 22
1. The Need for Minimum Nationwide Dialing Parity
Standards............................................. 23
a. Background and Comments........................... 23
[[Page 47285]]
b. Discussion........................................ 25
2. Scope of the Dialing Parity Requirements............ 26
a. Background........................................ 26
b. Comments.......................................... 27
c. Discussion........................................ 29
B. Implementation of the Toll Dialing Parity Requirements 31
1. Presubscription Method of Achieving Toll Dialing
Parity................................................ 31
a. Background........................................ 31
b. Comments.......................................... 33
c. Discussion........................................ 34
2. Categories of Domestic, Long Distance Traffic
Subject to Presubscription............................ 35
a. Background........................................ 35
b. Comments.......................................... 36
c. Discussion........................................ 37
3. Separate Presubscription for International Calls.... 43
a. Background and Comments........................... 43
b. Discussion........................................ 45
4. Full 2-PIC Presubscription Method................... 46
a. Background........................................ 46
b. Comments.......................................... 48
c. Discussion........................................ 49
5. Deployment of Presub-scription Software in Each End
Office................................................ 51
a. Background........................................ 51
b. Comments.......................................... 52
c. Discussion........................................ 54
C. Implementation Schedule for Toll Dialing Parity....... 55
1. Background and Comments............................. 55
2. Discussion.......................................... 59
D. Implementation of the Local Dialing Parity
Requirements............................................ 64
1. In General.......................................... 64
a. Background........................................ 64
b. Comments.......................................... 65
c. Discussion........................................ 67
2. Local Dialing Parity Methodologies.................. 69
a. Background and Comments........................... 69
b. Discussion........................................ 71
3. Non-Uniform Local Calling Areas..................... 72
a. Background........................................ 72
b. Comments.......................................... 73
c. Discussion........................................ 75
E. Consumer Notification and Carrier Selection Procedures 76
a. Background........................................ 76
b. Comments.......................................... 77
c. Discussion........................................ 80
F. Cost Recovery......................................... 82
a. Background........................................ 82
b. Comments.......................................... 83
c. Discussion........................................ 92
G. Unreasonable Dialing Delays........................... 96
III. Nondiscriminatory Access Provisions................... 97
A. Definition of the Term ``Nondiscriminatory Access''... 97
1. Background.......................................... 97
2. Comments............................................ 98
3. Discussion.......................................... 101
B. Nondiscriminatory Access to Telephone Numbers......... 106
1. Definition.......................................... 106
2. Commission Action to Enforce Access to Telephone
Numbers............................................... 107
C. Nondiscriminatory Access to Operator Services......... 108
1. Definition of ``Operator Services''................. 108
a. Background and Comments........................... 108
b. Discussion........................................ 110
2. Definition of ``Nondiscriminatory Access to Operator
Services''............................................ 112
a. Background........................................ 112
b. Comments.......................................... 113
c. Discussion........................................ 114
3. Commission Action to Ensure Nondiscriminatory Access
to Operator Services.................................. 119
a. Background and Comments........................... 119
b. Discussion........................................ 121
4. ``Branding'' Requirements for Operator Services..... 123
a. Background........................................ 123
b. Comments.......................................... 126
c. Discussion........................................ 128
D. Nondiscriminatory Access to Directory Assistance and
Directory Listings...................................... 130
1. Definition of ``Nondiscriminatory Access to
Directory Assistance and Directory Listings''......... 130
a. Background........................................ 130
b. Comments.......................................... 131
c. Discussion........................................ 133
2. Commission Action to Implement Nondiscriminatory
Access to Directory Assistance and Directory Listings. 138
a. Background and Comments........................... 138
b. Discussion........................................ 141
3. Branding of Directory Assistance.................... 146
a. Background and Comments........................... 146
b. Discussion........................................ 148
4. Alternative Dialing Arrangements for Directory
Assistance............................................ 149
a. Background and Comments........................... 149
b. Discussion........................................ 151
E. Unreasonable Dialing Delay............................ 152
1. Definition and Appropriate Measurement Methods...... 152
a. Background and Comments........................... 152
b. Discussion........................................ 156
2. Specific Technical Standard for Dialing Delay....... 163
a. Background and Comments........................... 163
b. Discussion........................................ 164
IV. Network Disclosure..................................... 165
A. Scope of Public Notice................................ 166
1. Definition of ``Information Necessary for
Transmission and Routing''............................ 166
a. Background and Comments........................... 166
b. Discussion........................................ 171
2. Definition of ``Services''.......................... 175
a. Background and Comments........................... 175
b. Discussion........................................ 176
3. Definition of ``Interoperability''.................. 177
a. Background and Comments........................... 177
b. Discussion........................................ 178
4. Changes that Trigger the Public Notice Requirement.. 179
a. Background and Comments........................... 179
b. Discussion........................................ 182
5. Types of Information to be Disclosed................ 183
a. Background........................................ 183
b. Comments.......................................... 184
c. Discussion........................................ 188
B. How Public Notice Should be Provided.................. 192
1. Dissemination of Public Notice Through Industry Fora
and Publications...................................... 192
a. Background........................................ 192
b. Comments.......................................... 193
c. Discussion........................................ 198
2. When Should Public Notice of Changes Be Provided?... 203
a. Background........................................ 203
b. Comments.......................................... 206
c. Discussion........................................ 214
C. Relationship with other Public Notice Requirements and
Practices............................................... 237
1. Relationship of Sections 273(c)(1) and 273(c)(4)
with Section 251(c)(5)................................ 237
a. Background........................................ 237
b. Comments.......................................... 238
c. Discussion........................................ 240
[[Page 47286]]
2. Relationship of Sections 251(a) and 251(c)(5) with
Section 256........................................... 241
a. Background........................................ 241
b. Comments.......................................... 242
c. Discussion........................................ 244
D. Enforcement and Safeguards............................ 245
1. Enforcement Mechanisms.............................. 245
a. Background and Comments........................... 245
b. Discussion........................................ 247
2. Protection of Proprietary Information, Network and
National Security..................................... 249
a. Background and Comments........................... 249
b. Discussion........................................ 254
V. Numbering Administration................................ 261
A. Designation of an Impartial Number Administrator...... 262
1. Background.......................................... 262
2. Comments............................................ 263
3. Discussion.......................................... 264
B. Delegation of Numbering Administration Functions...... 267
1. Delegation of Matters Related to Implementation of
New Area Codes........................................ 268
a. Background........................................ 268
b. Comments.......................................... 269
c. Discussion........................................ 271
2. Area Code Implementation Guidelines................. 273
a. Background........................................ 273
b. Comments.......................................... 275
c. Discussion........................................ 281
3. Texas Public Utility Commission's Area Code Relief
Order for Dallas and Houston.......................... 294
a. Background........................................ 294
b. Petition and Comments............................. 295
c. Discussion........................................ 304
4. Delegation of Additional Numbering Administration
Functions............................................. 309
a. Background........................................ 309
b. Comments.......................................... 311
c. Discussion........................................ 315
5. Delegation of Existing Numbering Administration
Functions Prior to Transfer........................... 323
a. Background........................................ 323
b. Comments.......................................... 324
c. Discussion........................................ 328
C. Cost Recovery for Numbering Administration............ 336
1. Background.......................................... 336
2. Comments............................................ 337
3. Discussion.......................................... 342
D. Section 271 Competitive Checklist Requirement that the
BOCs Provide Non-Discriminatory Access to Numbers for
Entry into In-region InterLATA Services................. 344
1. Background and Comments............................. 344
2. Discussion.......................................... 345
VI. Final Regulatory Flexibility Analysis.................. 346
A. Need for and Purpose of this Action................... 347
B. Summary of Issues Raised by the Public Comments in
Response to the Initial Regulatory Flexibility Analysis. 349
C. Description and Estimate of the Small Entities Subject
to the Rules............................................ 361
D. Summary of Projected Reporting, Recordkeeping and
Other Compliance Requirements........................... 378
E. Report to Congress.................................... 398
VII. Ordering Clauses...................................... 399
I. Introduction and Overview
1. In February, 1996, Congress passed and the President signed into
law, the Telecommunications Act of 1996 (1996 Act).1 The 1996 Act
erects a ``procompetitive, de-regulatory national framework designed to
accelerate rapid private sector deployment of advanced
telecommunications and information technologies and services to all
Americans by opening all telecommunications markets to competition.''
2 Section 101 of the 1996 Act adds new section 251 to the
Communications Act of 1934. Congress intended that the provisions of
this new section would help competition grow in the market for exchange
and exchange access and related telecommunications services. It
directed the Commission to adopt rules that would implement the
requirements of this section no later than August 8, 1996.3 We
note, however, that, under section 251(f), certain rural or small local
exchange carriers (LECs) are exempt or may seek relief from the rules
we adopt herein.4
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\1\ Telecommunications Act of 1996, Public Law No. 104-104, 110
Stat. 56 (1996) (1996 Act), to be codified at 47 U.S.C. 151 et. seq.
\2\ S. Conf. Rep. No. 104-230, 104th Cong., 2d Sess. 1 (1996).
\3\ 47 U.S.C. 251(d)(1).
\4\ 47 U.S.C. 251(f) (1) and (f)(2). We note that the term
``United States'' means ``the several States and Territories, the
District of Columbia, and the possessions of the United States, but
does not include the Canal Zone.'' 47 U.S.C. 153(50).
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2. We began this rulemaking proceeding on April 19, 1996.5 The
First Report and Order, which addressed issues that were raised in this
docket, decided that the Commission should establish national rules
implementing section 251.6 The First Report and Order interprets
and implements, inter alia, sections 251 (a), (b)(1), (b)(4), (b)(5),
(c)(1), (c)(2), (c)(3), (c)(4), and (c)(6). That order promulgates
rules to open the local exchange and exchange access markets to
competition by eliminating legal and technical barriers to such
competition. This Second Report and Order and Memorandum Opinion and
Order (Order) promulgates rules to implement the parts of section 251
that relate to the elimination of certain operational barriers to
competition. Specifically, this Order addresses local exchange
carriers' obligations to provide their competitors with dialing parity
and nondiscriminatory access to certain services and functionalities;
7 incumbent local exchange carriers' duty to make network
information disclosures; 8 and numbering administration.9 In
this Order we also deny the Petition for Expedited Declaratory Ruling
on the area code relief plan for Dallas and Houston that the Texas
Public Utility Commission (Texas Commission) filed with this Commission
on May 9, 1996.10 We also address petitions for clarification or
reconsideration in the Ameritech and NANP proceedings.11
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\5\ Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, CC Docket No. 96-98, Notice of
Proposed Rulemaking, FCC 96-182 (released April 19, 1996) (NPRM) 61
FR 18311 (April 25, 1996).
\6\ Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, CC Docket No. 96-98, Interconnection
between Local Exchange Carriers and Commercial Mobile Radio Service
Providers, CC Docket No. 95-185, First Report and Order, FCC 96-235
(released August 8, 1996) (hereinafter First Report and Order) at
section II.
\7\ 47 U.S.C. 251(b)(3).
\8\ 47 U.S.C. 251(c)(5).
\9\ 47 U.S.C. 251(e)(1).
\10\ In the Matter of Area Code Relief Plan for Dallas and
Houston, Ordered by the Public Utility Commission of Texas, Petition
for Expedited Declaratory Ruling filed May 9, 1996.
\11\ See In the Matter of Proposed 708 Relief Plan and 630
Numbering Plan Area Code by Ameritech--Illinois, IAD File No. 94-
102, Declaratory Ruling and Order, 10 FCC Rcd 4596 (1995) (Ameritech
Order) 60 FR 19255 (April 17, 1995) and Administration of the North
American Numbering Plan, CC Docket No. 92-237, Report and Order, 11
FCC Rcd 2588, 2591 (1995) (NANP Order) 60 FR 38737 (July 28, 1995).
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3. Dialing parity, nondiscriminatory access, network disclosure,
and numbering administration issues are critical issues for the
development of local competition. As stated in the First Report and
Order, incumbent local exchange carriers have little incentive to
[[Page 47287]]
provide access to potential competitors to their networks. In other
words, potential competitors in the local and long distance markets
face numerous operational barriers to entry notwithstanding their legal
right to enter such markets. The dialing parity, nondiscriminatory
access, and network disclosure requirements should remove those
barriers to entry. The rules we adopt herein will benefit consumers by
making some of the strongest aspects of local exchange carrier
incumbency--the local dialing, telephone numbers, operator services,
directory assistance, and directory listing--available to all
competitors on an equal basis.
A. Actions To Implement Section 251(b)(3)
1. Dialing Parity
4. Section 251(b)(3) of the 1996 Act directs each local exchange
carrier (LEC) 12 to provide dialing parity to competing providers
of telephone exchange and telephone toll service.13 This
requirement means that customers of these competitors should not have
to dial extra digits to have their calls routed over that LEC's
network. To implement this statutory requirement, we adopt broad
guidelines and minimum federal standards that build upon the
experiences and accomplishments of state commissions. Although the 1996
Act requires a LEC to provide dialing parity only to providers of
telephone exchange and toll services, section 251(b)(3) does not limit
the type of traffic or service for which dialing parity must be
afforded to those providers. We conclude, therefore, that section
251(b)(3) requires LECs to provide dialing parity to providers of
telephone exchange or toll service with respect to all
telecommunications services that require dialing to route a call and
encompasses international, interstate, intrastate, local and toll
services.
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\12\ 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 person
insofar as such person is engaged in the provision of commercial
mobile service under section 332(c), except to the extent that the
Commission finds that such provider should be included in the
definition of such term.'' 47 U.S.C. 153(26). For purposes of the
dialing parity and nondiscriminatory access obligations that we
impose pursuant to section 251(b)(3), we find that commercial mobile
radio service (CMRS) providers are not LECs. See infra para. 29.
\13\ According to the 1996 Act, the term ``dialing parity''
means ``that a person that is not an affiliate of a local exchange
carrier is able to provide telecommunications services in such a
manner that customers have the ability to route automatically,
without the use of any access code, their telecommunications to the
telecommunications services provider of the customer's designation
from among 2 or more telecommunications services providers
(including such local exchange carrier).'' 47 U.S.C. 153(15).
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(5) With respect to toll service, we further find that section
251(b)(3) requires, at a minimum, that customers be entitled to choose
different presubscribed, or preselected, carriers for both their
intraLATA and interLATA toll calls. In states, like Alaska and Hawaii,
that have no LATAs,14 customers must be able to choose different
presubscribed carriers for both their intrastate and interstate toll
calls. Based on this finding, we adopt a rule requiring all LECs to
implement intraLATA and interLATA toll dialing parity, using the ``full
2-PIC'' presubscription method.15 The toll dialing parity
requirement we adopt is defined by LATA boundaries given that the Bell
Operating Companies' (BOCs') operations are likely to be shaped by LATA
boundary restrictions for a period of unforeseeable duration. Given
that implementation of the 1996 Act over time may diminish the
significance of LATA boundaries, however, we permit states to redefine
the toll dialing parity requirement based on state, rather than LATA,
boundaries where a state deems such a requirement to be pro-competitive
and otherwise in the public interest.16
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\14\ 47 U.S.C. 153(25). According to the 1996 Act, a LATA is a
``local access and transport area.'' It is a ``contiguous geographic
area--
(A) established before the date of enactment of the
Telecommunications Act of 1996 by a Bell operating company such that
no exchange area includes points within more than 1 metropolitan
statistical area, consolidated metropolitan statistical area, or
State, except as expressly permitted under the AT&T Consent Decree;
or
(B) established or modified by a Bell operating company after
such date of enactment and approved by the Commission.''
\15\ We note that the abbreviation ``PIC'' in the past has
stood for the term ``primary,'' or ``preferred, interexchange
carrier.'' While we retain the acronym ``PIC,'' we define the term
to include any toll carrier for purposes of the presubscription
rules that we adopt in this Order. For a discussion of the full 2-
PIC presubscription methodology, see infra section II.B(4).
\16\ To illustrate, if the presubscription requirement were
based on LATA boundaries, a customer would be entitled to choose a
primary carrier for all intraLATA toll calls and a separate, or the
same, primary carrier for all interLATA toll calls. If the
presubscription requirement were based on state boundaries, a
customer would be entitled to choose a primary carrier for all
intrastate toll calls and a separate, or the same, primary carrier
for all interstate toll calls.
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6. In order to facilitate the orderly implementation of toll
dialing parity, we require each LEC, including a BOC, to submit a plan
to the state regulatory commission for each state in which it provides
telephone exchange service setting forth the LEC's plan for
implementing toll dialing parity, including the methods it proposes to
enable customers to select alternative providers. In the event that a
state elects not to evaluate such a plan sufficiently in advance of the
date on which a LEC is required to implement toll dialing parity, we
require the LEC to file its plan with the Commission. The Commission
will act upon such a plan within 90 days of the date on which it is
filed with the Commission.
7. Under the toll dialing parity implementation schedule we adopt,
we require each LEC, including a BOC, to implement toll dialing parity
no later than February 8, 1999. In addition, we require a LEC,
including a BOC, to provide toll dialing parity throughout a state
coincident with its provision of in-region, interLATA or in-region,
interstate toll services in that state. LECs, other than BOCs, that are
either already offering or plan to begin to provide in-region,
interLATA or in-region, interstate toll services before August 8, 1997,
must implement toll dialing parity by August 8, 1997. We note that
smaller LECs, for which this implementation schedule may be unduly
burdensome, may petition their state commission for a suspension or
modification of the application of this requirement.17
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\17\ 47 U.S.C. 251(f)(2).
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8. Those states desiring to impose more stringent presubscription
methodologies, e.g., multi-PIC or smart-PIC,18 will retain the
flexibility to impose such additional requirements. We also announce
our intention to issue a Further Notice of Proposed Rulemaking
addressing the technical feasibility and nationwide availability of a
separate presubscription choice for international calling based on the
use of multi-PIC or smart-PIC technologies.
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\18\ The multi-PIC or smart-PIC presubscription method would
enable subscribers to select multiple carriers for various
categories of toll traffic. For a discussion of multi-PIC and smart-
PIC presubscription methodologies, see infra section II.B(4).
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9. Pursuant to the local dialing parity requirements of section
251(b)(3), we require a LEC to permit telephone exchange service
customers, within a defined local calling area, to dial the same number
of digits to make a local telephone call, notwithstanding the identity
of the customer's or the called party's local telephone service
provider. We decline at this time to prescribe additional guidelines to
address the methods that LECs may use to accomplish local dialing
parity given our finding that local dialing parity will be achieved
upon implementation of the number portability and interconnection
requirements of section 251, as well as
[[Page 47288]]
the provisions requiring nondiscriminatory access to telephone numbers
found in section 251(b)(3).
10. We also decline to adopt federal consumer education programs or
procedures that would inform consumers of the existence of competitive
telecommunications providers. Instead, we leave decisions regarding
consumer education and carrier selection procedures to the states. We
conclude that, in order to ensure that dialing parity is implemented in
a pro-competitive manner, national rules are needed for the recovery of
dialing parity implementation costs.
11. Section 271 of the 1996 Act requires BOCs to provide intraLATA
toll dialing parity throughout a state coincident with the exercise of
their authority to offer interLATA services originating within the
state.19 BOC entry into the interLATA market is conditioned upon
their offering ``nondiscriminatory access to such services or
information as are necessary to allow the requesting carrier to
implement local dialing parity in accordance with the requirements of
Section 251(b)(3).'' 20
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\19\ 47 U.S.C. 271(e)(2)(A).
\20\ 47 U.S.C. 271(c)(2)(B)(xii). We decline to address section
271(c)(2)(B) issues in this Order. We will consider each BOC's
application to enter in-region, interLATA services pursuant to
section 271(c)(2)(B) on a case-by-case basis to determine whether
the BOC has complied with section 271(c)(2)(B)(xii).
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2. Nondiscriminatory Access
12. Section 251(b)(3) also requires all LECs to permit competing
providers of telephone exchange service and toll service
``nondiscriminatory access to telephone numbers, operator services,
directory assistance and directory listings.'' 21 We conclude that
``Nondiscriminatory access,'' as used in section 251(b)(3), encompasses
both: (1) Nondiscrimination between and among carriers in rates, terms
and conditions of access; and (2) the ability of competing providers to
obtain access that is at least equal in quality to that of the
providing LEC. This definition of ``nondiscriminatory access'' in
section 251(b)(3) recognizes the more general application of that
section to all LECs, whereas section 251(c) places more specific duties
upon incumbent LECs in terms of nondiscriminatory access. We conclude
that the term ``nondiscriminatory access to telephone numbers''
requires all LECs to permit competing providers access to telephone
numbers that is identical to the access the LEC provides to itself.
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\21\ 47 U.S.C. 251(b)(3).
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13. We conclude that the term ``operator services,'' for purposes
of section 251(b)(3), means any automatic or live assistance to a
consumer to arrange for billing or completion, or both, of a telephone
call. Such a definition includes busy line verification, emergency
assistance, operator-assisted directory assistance, and any other such
services used to arrange for the billing and/or completion of telephone
calls. We further conclude that any customer of a telephone service
provider that provides operator services should be able to obtain these
services by dialing ``0'' or ``0-plus the desired telephone number.''
If a dispute arises regarding a competitor's access to operator
services, the burden will be upon the providing LEC to demonstrate,
with specificity, that it has permitted nondiscriminatory access and
that any disparity is not caused by network elements within its
control. To the extent that operator services use any information
services and adjuncts that are not ``telecommunications services,'' of
which resale is required under 251(b)(1), LECs are required to make
available such services to competing providers in their entirety as a
requirement of nondiscriminatory access under 251(b)(3).22
Finally, we find that the refusal of a LEC providing nondiscriminatory
access to comply with reasonable requests of competing providers to
``brand'' resold operator services as those of the reseller, or to
remove its brand, creates a presumption that the LEC is unlawfully
restricting access to operator services.
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\22\ Id.
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14. We conclude that the requirement in section 251(b)(3) of
nondiscriminatory access to directory assistance means that LECs that
provide directory assistance must permit access to this service to
competing providers that is at least equal in quality to the access
that the LEC provides to itself. We impose obligations upon all LECs to
satisfy the requirement of nondiscriminatory access to directory
listings. If a LEC provides directory assistance, that LEC must permit
competing providers to have access to its directory assistance, so that
any customer of a competing provider can access any listed number on a
nondiscriminatory basis, notwithstanding the identity of the customer's
local service provider. Further, we require LECs to share directory
listings with competing service providers, in ``readily accessible''
tape or electronic formats, upon request, and in a timely manner. To
the extent that all or part of directory assistance services are not
``telecommunications services,'' of which resale is required under
251(b)(1), LECs must make available such services in their entirety as
part of their obligation to permit nondiscriminatory access to
competing providers.23 This requirement thus extends to any
information services and adjuncts used to provide directory assistance.
Finally, as with the branding of resold operator services, we find that
the refusal of a LEC providing nondiscriminatory access to directory
assistance to ``brand'' resold directory assistance services as those
of the reseller, or to remove its brand, creates a presumption that the
LEC is unlawfully restricting access to directory assistance.
---------------------------------------------------------------------------
\23\ Id.
---------------------------------------------------------------------------
15. We also conclude that section 251(b)(3)'s requirement of
nondiscriminatory access and its prohibition of unreasonable dialing
delays applies to both the provision of local and toll dialing parity.
We conclude that the dialing delay experienced by customers of a
competing provider should not be greater than that experienced by
customers of a LEC providing dialing parity or nondiscriminatory
access, for identical calls or call types. Finally, we conclude that
the statutory obligation to avoid unreasonable dialing delays places a
duty on LECs that provide dialing parity, or nondiscriminatory access
to operator services or directory assistance, to process all calls from
competing providers on the same terms as calls from its own customers.
B. Actions To Implement Section 251(c)(5)
16. In addition to the duties imposed by section 251(b)(3) on all
LECs, new section 251(c)(5) imposes upon incumbent LECs the duty to
``provide reasonable public notice of changes in the information
necessary for the transmission and routing of services using that local
exchange carrier's facilities or networks, as well as of any other
changes that would affect the interoperability of those facilities or
networks.'' 24 We adopt broad guidelines
[[Page 47289]]
to implement section 251(c)(5). We also specify how public notice must
be made whenever an upcoming change may affect the way in which a
competing service provider transmits, routes, or otherwise provides its
services.
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\24\ An incumbent LEC, with respect to an area, is defined under
the 1996 Act as ``the local exchange carrier that: (A) on the date
of enactment of the Telecommunications Act of 1996, provided
telephone exchange service in such area; and (B)(i) on such date of
enactment, was deemed to be a member of the exchange carrier
association pursuant to section 69.601(b) of the Commission's
regulations (47 CFR 69.601(b)); or (ii) is a person or entity that,
on or after such date of enactment, became a successor or assign of
a member described in clause (i).'' 47 U.S.C. 251(h)(1).
---------------------------------------------------------------------------
17. We conclude that ``information necessary for transmission and
routing'' in section 251(c)(5) means any information in the incumbent
LEC's possession that affects a competing service provider's
performance or ability to provide either information or
telecommunications services. We define ``interoperability'' as the
ability of two or more facilities, or networks, to be connected, to
exchange information, and to use the information that has been
exchanged.
C. Actions Taken To Implement Section 251(e)
18. New section 251(e)(1) restates 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 that pertain to the United States.''
25 This section 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.'' 26 Finally, section 251(e)(2) provides that the
cost of establishing telecommunications numbering administration
arrangements ``shall be borne by all telecommunications carriers on a
competitively neutral basis as determined by the Commission.'' 27
In this Order, we address whether further action is required to create
or designate an impartial entity to administer telecommunications
numbering. We clarify the states' role in number administration, and
provide direction to states wishing to use area code overlay plans. We
also clarify how cost recovery for numbering administration will occur.
We deny the petition for expedited declaratory ruling filed by the
Texas Commission based on our finding that the Texas Commission's
wireless-only area code overlay plan violates the guidelines set forth
in our Ameritech Order. We authorize Bellcore and the incumbent LECs to
perform number administration functions as they did prior to the
enactment of the 1996 Act until such functions are transferred to the
new North American Numbering Plan Administrator.
---------------------------------------------------------------------------
\25\ 47 U.S.C. 251(e)(1).
\26\ Id.
\27\ 47 U.S.C. 251(e)(2).
---------------------------------------------------------------------------
19. We conclude that we have taken appropriate action to designate
an impartial number administrator pursuant to section 251(e)(1). We
further conclude that the Commission should retain its authority to set
policy with respect to all facets of numbering administration to ensure
the creation of a nationwide, uniform system of numbering that is
essential to the efficient delivery of interstate and international
telecommunications services and to the development of a competitive
telecommunications services market. While we retain this policy-making
authority, we authorize the states to resolve matters involving
implementation of new area codes subject to the guidelines set forth in
this Order.
20. In this Order, we also prohibit the use of service-specific or
technology-specific area code overlay plans. States may employ all-
services overlays only if they also mandate 10-digit dialing for all
local calls within the area affected by the area code change and ensure
the availability of at least one central office code in the existing
area code to every entity authorized to provide local exchange service
in that area, including CMRS providers.
21. To fulfill the mandate of section 251(e)(2), we require that
(1) only ``telecommunications carriers,'' as defined in section 3(44)
of the 1996 Act, shall contribute to the costs of numbering
administration; 28 and (2) that such contributions shall be based
on each contributor's gross revenues from its provision of
telecommunications services reduced by all payments for
telecommunications services and facilities that have been paid to other
telecommunications carriers.
---------------------------------------------------------------------------
\28\ The term ``telecommunications carrier'' means ``any
provider of telecommunications services, except that such term does
not include aggregators of telecommunications services (as defined
in section 226). A telecommunications carrier shall be treated as a
common carrier under this Act only to the extent that it is engaged
in providing telecommunications services, except that the Commission
shall determine whether the provision of fixed and mobile satellite
service shall be treated as common carriage.'' 47 U.S.C. 153(44).
---------------------------------------------------------------------------
II. Dialing Parity Requirements
A. In General
22. With dialing parity a telephone customer can preselect any
provider of telephone exchange service or telephone toll service
without having to dial extra digits to route a call to that carrier's
network. Until now, in most states, telephone customers wishing to have
their intraLATA toll calls carried by a carrier other than their
current provider of telephone exchange service had to dial a five- or
seven-digit prefix or access code before dialing the called party's
telephone number.29 Presubscription to a carrier other than a
customer's telephone exchange service provider has not been an option
for interstate, intraLATA toll calls or in most states for intrastate,
intraLATA toll calls.30 In states where intrastate, intraLATA toll
dialing parity is available, a customer may presubscribe to a carrier
other than his or her provider of telephone exchange service and have
all of that customer's intrastate, intraLATA toll calls carried by that
selected carrier simply by dialing ``1'' plus the area code and
telephone number of the called party.31 The section 251(b)(3)
dialing parity obligation will foster vigorous local exchange and long
distance competition by ensuring that each customer has the freedom and
flexibility to choose among different carriers for different services
without the burden of dialing access codes.
---------------------------------------------------------------------------
\29\ Sometimes referred to as ``10XXX'' or ``101XXXX'' dialing,
callers may reach a long distance carrier in states where such
dialing arrangements are authorized by dialing a five-digit carrier
access code (``10XXX,'' with ``XXX'' representing a three-digit
carrier identification code) or a seven digit carrier access code
(``101XXXX,'' with ``XXXX'' representing a carrier identification
code).
\30\ An ``interstate, intraLATA toll call'' is a call that: (1)
Crosses a state boundary but does not cross a LATA boundary; and (2)
is subject to a charge. A call from Philadelphia, Pennsylvania to
Cherry Hill, New Jersey (currently handled by Bell Atlantic) is an
example of such a call.
\31\ It is our understanding that some form of intraLATA toll
dialing parity is available or has been ordered in Alaska, Arizona,
Connecticut, Florida, Georgia, Illinois, Kentucky, Michigan,
Minnesota, New Jersey, New York, Ohio, Pennsylvania, West Virginia,
Wisconsin and Wyoming. See Ex parte letter from Charles D. Cosson,
USTA, to William F. Caton, Acting Secretary, Federal Communications
Commission, filed in CC Docket No. 96-98, July 10, 1996, at 2.
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The Need for Minimum Nationwide Dialing Parity Standards
a. Background and Comments
23. Section 251(b)(3) imposes on all LECs the ``duty to provide
dialing parity to competing providers of telephone exchange service and
telephone toll service.'' 32 In the NPRM, we sought comment on
whether the Commission should adopt nationwide dialing parity standards
and, if so, what those standards should be.33
---------------------------------------------------------------------------
\32\ 47 U.S.C. 251(b)(3).
\33\ NPRM at paras. 206, 207, 209-213, 218, 219.
---------------------------------------------------------------------------
24. A majority of commenters urge the Commission to adopt uniform
nationwide dialing parity guidelines,
[[Page 47290]]
but commenters differ on how detailed such federal rules should be. For
example, the Telecommunications Resellers Association maintains that
specific national standards are needed to ensure that competing
providers are able to utilize common network designs in multiple
markets and to prevent incumbent LECs from ``gaming'' or ``manipulating
the processes'' of the states.34 Ameritech urges the Commission to
adopt ``broad rules that afford sufficient flexibility to accommodate
local conditions.'' 35 Other commenters, such as Bell Atlantic,
opposing the adoption of federal dialing parity standards, assert that
the proponents of such standards have failed to demonstrate how they or
consumers have been harmed by ``locally tailored implementation'' of
dialing parity in the intraLATA toll markets.36 Without such a
demonstration, argues Bell Atlantic, the Commission should not
interfere with states' activities.37 Cincinnati Bell Telephone
Company (CBT) likewise opposes federal standards, maintaining that so
long as a state regulatory commission adopts a toll dialing parity
arrangement that ``offers consumers a choice from at least two
carriers, one of which is the local exchange carrier, the requirements
of the 1996 Act have been met.'' 38
---------------------------------------------------------------------------
\34\ Telecommunications Resellers Association reply at 8-9.
\35\ Ameritech reply at i.
\36\ Bell Atlantic reply at 2.
\37\ Id.
\38\ CBT comments at 5.
---------------------------------------------------------------------------
b. Discussion
25. We conclude that the purpose of the statutory dialing parity
requirements--to facilitate the introduction of competition in the
local and toll markets--is best served by the adoption of broad
guidelines and minimum federal standards that build upon the states'
experiences. We conclude that such minimum nationwide standards will
facilitate competition to the extent that new entrants seeking to offer
regional or national services will not be subjected to an array of
differing state standards and timetables.39 We note that our
conclusion to adopt nationwide dialing parity standards is consistent
with our conclusion in the First Report and Order that nationwide
standards to implement other section 251 provisions are necessary to
facilitate competition by serving as a backdrop against which
interconnection negotiations and arbitration can occur.40 We are
persuaded that, contrary to the views of Bell Atlantic, the failure to
adopt minimum federal standards would harm both new entrants and
consumers by delaying the introduction of competition and imposing
additional costs on competitors, including small entities, particularly
when different network configurations are required in each market. We
conclude that uniform standards--in some cases minimum, uniform
standards--will speed competitive entry by more promptly opening the
local and toll markets to competition.
---------------------------------------------------------------------------
\39\ We note that section 271(e)(2)(B) precludes most states
from requiring a BOC to implement intraLATA toll dialing parity in a
state before the BOC has received authority to provide in-region,
interLATA services in such state or before three years after
enactment of the 1996 Act, whichever is earlier. 47 U.S.C.
271(e)(2)(B).
\40\ See First Report and Order at section II.
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2. Scope of the Dialing Parity Requirements
a. Background
26. Under section 251(b)(3) a LEC must provide dialing parity only
to competing providers of telephone exchange service and telephone toll
service.41 The scope of the obligation to provide dialing parity,
however, is not limited to a particular type of traffic or service.
Section 251(b)(3) makes no distinction among international, interstate
and intrastate traffic for purposes of the dialing parity
provisions.42 The statutory definition of ``dialing parity'' also
contains no such distinctions and, instead, speaks generally in terms
of the provision of ``telecommunications services'' by ``a person that
is not an affiliate of a local exchange carrier.'' 43 Based on the
absence of any such distinctions in defining the scope of the dialing
parity requirements, the NPRM tentatively concluded that section
251(b)(3) creates a duty to provide dialing parity to competing
providers of telephone exchange service and telephone toll service with
respect to all telecommunications services that require dialing to
route a call, and encompasses international as well as interstate and
intrastate, local and toll services.44
---------------------------------------------------------------------------
\41\ 47 U.S.C. 251(b)(3).
\42\ Id.
\43\ 47 U.S.C. 153(15).
\44\ NPRM at para. 206.
---------------------------------------------------------------------------
b. Comments
27. Numerous parties express support for the Commission's tentative
conclusion.45 Several parties qualify their support for this
conclusion, however, by asserting that the duty to provide dialing
parity to competing providers of telephone toll service applies to
international calls only to the extent that it entitles a customer to
route automatically, without the use of an access code, all of the
customer's international calls to his or her presubscribed interLATA
long distance carrier.46 These parties maintain that section
251(b)(3) does not require LECs to provide customers a separate
presubscription choice for international calling.47
---------------------------------------------------------------------------
\45\ See, e.g., MFS comments at 2; California Commission
comments at 3.
\46\ See, e.g., Sprint comments at 4-5; SBC comments at 5.
\47\ Id.
---------------------------------------------------------------------------
28. A broad range of parties also support the tentative conclusion
that section 251(b)(3) imposes a duty on the LEC to provide both local
and toll dialing parity.48 Two parties reject this tentative
conclusion, arguing that the dialing parity requirements apply only to
local calling and do not extend to toll services.49 Specifically,
Lincoln Telephone and the Pennsylvania Commission contend that Congress
addressed toll dialing parity only in section 271(e)(2) of the 1996 Act
as it relates to the conditions under which a BOC may enter the in-
region, interLATA toll business and question the Commission's authority
to implement toll dialing parity requirements.50 U S WEST
similarly argues that section 251(b)(3) imposes only a duty to provide
local dialing parity and suggests that the only affirmative obligation
to provide toll dialing parity is contained in the equal access
provisions of section 251(g) of the 1996 Act, which, U S WEST states,
applies only to the BOCs and GTE.51 Lincoln Telephone makes the
additional argument that competitive providers wishing to enter the
intraLATA toll market should be required to ``share responsibility for
serving the entire LATA, rather than simply selecting the lowest cost
customers from the most profitable exchanges without regard to that
practice's effect on other customers.'' 52 The imposition of such
a requirement, according to Lincoln Telephone, would ``reflect a
commitment to affordable universal service.'' 53
---------------------------------------------------------------------------
\48\ See, e.g., Excel comments at 6; MCI comments at 2;
BellSouth comments at 9.
\49\ Lincoln Telephone comments at 2-3; Pennsylvania Commission
comments at 1-2.
\50\ Id.
\51\ U S WEST comments at 4-5.
\52\ Lincoln Telephone comments at 5.
\53\ Id. at 6.
---------------------------------------------------------------------------
c. Discussion
29. We adopt our tentative conclusion that section 251(b)(3)
creates a duty to provide dialing parity to competing
[[Page 47291]]
providers of telephone exchange service and telephone toll service with
respect to all telecommunications services that require dialing to
route a call, and encompasses international as well as interstate and
intrastate, local and toll services.54 We note that section
251(b)(3) does not limit the types of traffic or services for which
dialing parity must be provided to competing providers of telephone
exchange and telephone toll service. The reference to these types of
providers clearly shows that dialing parity must be provided for
exchange service and toll service. Nothing in the statutory language
limits the scope of the dialing parity obligation to exchange and toll
services or distinguishes among the various types of telecommunications
services in imposing the dialing parity obligations. This conclusion is
further supported by the statutory definition of dialing parity insofar
as it refers to the provision of ``telecommunications services''
generally without distinction among various types of telecommunications
services.55 In addition, we are not persuaded that section 251(g)
relieves certain LECs of the duty to provide toll dialing parity. That
section contains no reference or cross reference to dialing parity or
to section 251(b)(3). Section 251(g) preserves the equal access
obligations already imposed on the BOCs and GTE, but does not exempt
them or other LECs from the toll dialing parity requirements. Finally,
we note that CMRS providers are not required to provide dialing parity
or nondiscriminatory access under section 251(b)(3) because the
Commission has not determined that CMRS providers are LECs and section
332(c) of the Communications Act of 1934 provides that a ``person
engaged in the provision of commercial mobile services * * * shall not
be required to provide equal access to common carriers for the
provision of toll services.'' 56
---------------------------------------------------------------------------
\54\ NPRM at para. 206.
\55\ The issue of whether a separate presubscription choice is
required for international, interstate, and intrastate toll calls is
discussed more fully in section II.B(2) infra.
\56\ 47 U.S.C. 332(c)(8).
---------------------------------------------------------------------------
30. Finally, concerning Lincoln Telephone's proposal to require
competitive providers of intraLATA toll service to serve an entire
LATA, rather than merely certain low cost customers within a LATA, we
note that Lincoln Telephone, in essence, is asking us to condition a
carrier's receipt of dialing parity upon that carrier's assuming the
obligation of an ``eligible'' telecommunications carrier.57 We
find neither the language of section 251(b)(3) nor its legislative
history supports the conclusion that Congress intended to condition a
carrier's right to receive the benefits of dialing parity upon its
assuming the obligations of an eligible telecommunications carrier. The
issue of encouraging carriers to provide universal service throughout a
service territory is beyond the scope of this proceeding.58 Also,
for the Commission to make LATA-wide or state-wide service a
precondition of entry into that LATA or state would be to erect a major
legal barrier to entry, particularly for smaller telecommunications
services providers, that is contrary to the basic thrust of the 1996
Act.
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\57\ An eligible telecommunications carrier is a common carrier
that offers all services that are supported by federal universal
service support mechanisms under section 254(c) and that uses
``media of general distribution'' to advertise the availability of
those services and its charges for them. 47 U.S.C. 214(e)(1). The
issue of which services should receive support from universal
service support mechanisms is being addressed by the Commission and
the Federal-State Joint Board on universal service, as required by
new section 254 of the Communications Act, as amended by the 1996
Act. See Federal-State Joint Board on Universal Service, CC Docket
No. 96-45, Notice of Proposed Rulemaking and Order Establishing
Joint Board, FCC 96-93, (released March 8, 1996) (Universal Service
NPRM) (proposing rules to implement section 254 of the 1996 Act) 61
FR 10499 (March 14, 1996).
\58\ See Universal Service NPRM.
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B. Implementation of the Toll Dialing Parity Requirements
1. Presubscription Method of Achieving Toll Dialing Parity
a. Background
31. The statutory definition of dialing parity provides that the
customer must have the ability to choose ``from among 2 or more
telecommunications services providers (including such local exchange
carrier).'' 59 The definition also provides that customers must be
able to exercise this choice by being able ``to route automatically
without the use of access codes, their telecommunications to the
telecommunications services provider of the customer's designation.''
60 Thus, LECs are precluded from relying on access codes as a
means of providing dialing parity to competitive service
providers.61 The 1996 Act, however, does not specify what methods
should be used to implement dialing parity. The NPRM tentatively
concluded that presubscription represents the most feasible method of
achieving dialing parity in long distance markets consistent with the
statutory definition of dialing parity and sought comment as to this
tentative conclusion.62 In this context, the NPRM defined
``presubscription'' as the process by which a customer preselects a
carrier to which all of a particular category or categories of calls on
the customer's line will be routed automatically.63
---------------------------------------------------------------------------
\59\ 47 U.S.C. 153(15).
\60\ Id.
\61\ Id.
\62\ NPRM at para. 207.
\63\ Id.
---------------------------------------------------------------------------
32. As stated in the NPRM, presubscription to a carrier other than
the customer's local exchange carrier has not been available for
interstate, intraLATA toll calls nor has it been available in most
states for intrastate, intraLATA toll calls.64 Instead, LECs
automatically carry these calls rather than routing them to a
presubscribed carrier of the customer's choice. If the state from which
the customer is calling has authorized competition, but has not ordered
presubscription in the intraLATA toll market, a customer wishing to
route an intraLATA toll call to an alternative carrier typically must
dial the carrier access code of the alternative carrier.
---------------------------------------------------------------------------
\64\ Id. at para. 208.
---------------------------------------------------------------------------
b. Comments
33. Nearly all parties concur in the Commission's tentative
conclusion that presubscription represents the most feasible method of
achieving toll dialing parity consistent with the statutory definition
of dialing parity.65 PacTel and Lincoln Telephone suggest that
presubscription is not required to achieve toll dialing parity so long
as customers can reach competing toll carriers through the use of
carrier access codes.66 Finally, BellSouth argues that the toll
dialing parity requirement is satisfied by ``removing the intraLATA
default to the incumbent LEC, thus assuring that no additional digits
need to be dialed in order to reach carriers competing with the
incumbent LEC for intraLATA toll service.'' 67 BellSouth further
argues that the Commission should confirm that such arrangements are
consistent with the statutory dialing parity requirements.68
---------------------------------------------------------------------------
\65\ See, e.g., Ohio Commission comments at 6; NEXTLINK comments
at 9.
\66\ See, e.g., PacTel reply at 10 (``Toll dialing parity, on
the other hand, should mean that customers can reach competing toll
carriers on the same dialing basis, including through the use of
carrier access codes, with an equal number of digits.''); Lincoln
Telephone comments at 2-3.
\67\ BellSouth comments at 11 n.23.
\68\ Id.
---------------------------------------------------------------------------
c. Discussion
34. We adopt our tentative conclusion that the dialing parity
requirement for toll calling can best be achieved through
presubscription because that method would enable customers to route a
[[Page 47292]]
particular category of traffic to a preselected carrier without having
to dial access codes. We note that the use of access codes to route
calls among competing providers of telephone toll service is precluded
under the statutory definition of dialing parity.69 Accordingly,
we disagree with those parties who contend that toll dialing parity can
be achieved through the use of access codes in a manner that is
consistent with the statutory definition of dialing parity.70 We
also cannot conclude that the toll dialing parity requirement is
satisfied by removing the intraLATA default, as BellSouth
maintains.71 Removing the intraLATA default would not satisfy the
toll dialing parity requirement unless the LEC also uses the full 2-PIC
presubscription methodology discussed below.72
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\69\ See 47 U.S.C. 153(15).
\70\ Although the use of access codes to access competing
providers of telephone toll service does not constitute dialing
parity as defined in 47 U.S.C. 153(15), we do not intend to preclude
their use where a customer wishes to route a call to a carrier other
than his or her presubscribed intraLATA toll carrier.
\71\ We understand BellSouth's reference to ``removing the
intraLATA default'' to mean that BellSouth would modify its switches
so they no longer automatically route all intraLATA toll calls to
BellSouth and thus, would permit customers to choose an alternative
intraLATA toll carrier.
\72\ For a discussion of the full 2-PIC methodology, see section
II.B(4) infra.
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2. Categories of Domestic, Long Distance Traffic Subject to
Presubscription
a. Background
35. In the NPRM, the Commission sought comment as to the categories
of long distance traffic (e.g., intrastate, interstate, and
international traffic) for which a customer should be entitled to
choose presubscribed carriers.73 The NPRM also sought comment on
specific alternative methods for implementing local and toll dialing
parity, including various forms of presubscription, in the interstate
and intrastate long distance and international markets, that are
consistent with the statutory requirements set forth in the 1996
Act.74
---------------------------------------------------------------------------
\73\ NPRM at para. 210.
\74\ Id. at para. 209.
---------------------------------------------------------------------------
b. Comments
36. Most parties appear to agree that customers should be entitled
to presubscribe to two separate carriers for their toll calling.75
There is a lack of consensus in the record, however, regarding how the
Commission should define the presubscription requirement. USTA, for
example, argues that ``[a]ll telecommunications carriers, including
LECs, should be permitted to define the scope of local service and toll
service in response to market forces.'' 76 USTA further argues
that the ``relevant distinction, for the long term, will be between
intrastate and interstate toll traffic.'' 77 Sprint, on the other
hand, argues in favor of maintaining a presubscription requirement
based on LATA boundaries and recommends that customers continue to be
allowed to choose separate intraLATA and interLATA toll
carriers.78 Sprint urges us to maintain the LATA distinction,
asserting that ``competition over the past 12 years has developed
around the LATA concept, and presubscription has for the most part
already occurred along these lines.'' 79
---------------------------------------------------------------------------
\75\ See, e.g., Ohio Consumers' Counsel comments at 2; see also
MCI comments at 3 (recommending that call types subject to
presubscription should include: 1-plus/0-plus interexchange, 7-digit
interexchange and 1+555-1212 calls); cf. GTE comments at 9
(maintaining that decisions regarding appropriate presubscription
categories should be left to state regulatory agencies on theory
that states are best positioned to balance value of additional
carrier choices against higher administrative and network design
costs associated with increased number of presubscription choices).
\76\ Ex parte letter from Charles D. Cosson, USTA, to William F.
Caton, Acting Secretary, Federal Communications Commission, filed in
CC Docket No. 96-98, June 17, 1996, at 2.
\77\ USTA comments at 3 n.2; see also MFS reply at 12-13 (``The
Commission should recognize that rules for intraLATA presubscription
are transitory. At some point, when the BOCs and GTE are authorized
to provide both interLATA and intraLATA service, the distinctions
between interLATA and intraLATA calls will no longer be meaningful,
and the Commission should be prepared to revisit and eliminate these
distinctions.'').
\78\ Sprint comments at 4.
\79\ Id. At the same time, Sprint asks that we eliminate the
intrastate intraLATA/interstate intraLATA distinction and make all
intraLATA toll calls (both interstate and intrastate) subject to a
single presubscription.
---------------------------------------------------------------------------
c. Discussion
37. With respect to toll service, we conclude that section
251(b)(3) requires, at a minimum, that customers be entitled to choose
presubscribed carriers for their intraLATA and interLATA toll calls.
Because of the variations that exist among LATA boundaries and toll
traffic within, and among, the various states, we have also concluded
that each state should have the opportunity to determine whether
customers should be able to presubscribe to carriers for intrastate
toll service and for interstate toll service in lieu of the intraLATA
and interLATA toll presubscription dichotomy that we have established
as a minimum nationwide standard at this time. Although toll dialing
parity typically has been based on LATA boundaries in multi-LATA states
where it has been implemented, we do not impose a requirement that toll
dialing parity be based only on LATA boundaries given our expectation
that implementation of the 1996 Act eventually will diminish the
significance of LATA boundaries.80 We are aware that BOCs remain
subject to certain LATA boundary restrictions for at least the near-
term and that some BOCs may find it technically infeasible, or
otherwise undesirable, to implement toll dialing parity based on state
boundaries.81 We thus conclude that states should be able to take
the relevance of those factors into account, where applicable, and have
the flexibility to require that toll dialing parity implementation be
based on state boundaries where they determine that implementing toll
dialing parity on the basis of state boundaries would be pro-
competitive and otherwise in the public interest. In Alaska and Hawaii,
states with no LATAs, toll dialing parity will continue to be based on
state boundaries.
---------------------------------------------------------------------------
\80\ USTA correctly notes that independent exchange carriers
have not been subject to the interLATA line of business restrictions
that were imposed on the BOCs pursuant to the AT&T Consent Decree.
See United States v. American Telephone and Telegraph Co., 552 F.
Supp. 226 (D.D.C. 1982). See USTA comments at 3 n.2.
\81\ For example, where BOCs receive authority to provide in-
region, interLATA services, they are required to provide such
services through a separate affiliate for at least three years
pursuant to section 272 of the 1996 Act. See 47 U.S.C. Secs. 272
(a)(2), (f)(1). Accordingly, it appears that the LATA distinction
will remain relevant insofar as it will continue to define the
geographic areas in which a BOC must provide toll services through
an affiliate and those in which it may provide toll services
directly.
---------------------------------------------------------------------------
38. We also direct each LEC to submit to the state regulatory
commission for each state in which it provides telephone exchange
service the LEC's plan for implementing toll dialing parity. That plan
must contain detailed implementation information, including the
proposed date for dialing parity implementation for that exchange that
the LEC operates in each state, and the method it proposes for enabling
customers to select alternative providers of telephone toll service.
For a LEC, other than a BOC, the plan also must identify the LATA with
which the LEC proposes to associate.82
---------------------------------------------------------------------------
\82\ States may require a LEC to provide other categories of
information in its plan in addition to the information categories
stated here.
---------------------------------------------------------------------------
39. We find that the states are best able to evaluate
implementation plans in a way that will avoid service disruptions for
subscribers and promote competition in the intrastate toll market. A
LEC must first obtain state approval of its implementation plan before
it implements toll dialing parity. If the LEC determines that a state
commission elects not to evaluate the LEC's toll dialing parity
implementation plan for
[[Page 47293]]
that state sufficiently in advance of the date on which a LEC is
required to implement toll dialing parity pursuant to the Commission's
rules, we direct the LEC to file its plan with the Commission.83
The Commission will release a public notice of any such LEC filings, in
order to give interested parties an opportunity to comment. The LEC's
plan will be deemed approved on the fifteenth day following release of
the Commission's public notice unless, no later than the fourteenth day
following the release of the Commission's public notice, either: (1)
The Common Carrier Bureau notifies the LEC that its plan will not be
deemed approved on the fifteenth day; or (2) an opposition to the plan
is filed with the Commission and served on the LEC that filed the plan.
The opposition must state specific reasons why the plan does not serve
the public interest.
---------------------------------------------------------------------------
\83\ See infra para. 62 , which sets forth the dates by which a
dialing parity implementation plan must be filed with the Commission
in the event that a state will not be evaluating the plan.
---------------------------------------------------------------------------
40. If one or more oppositions are filed, the LEC that filed the
plan will have seven additional days (i.e., until no later than the
twenty-first day following the release of the Commission's public
notice) within which to file a reply to the opposition(s) and serve it
on all parties that filed oppositions. The response shall: (a) Include
information responsive to the allegations and concerns identified by
the opposing party; and (b) identify possible revisions to the plan
that will address the opposing party's concerns. In the case of such
contested toll dialing parity plans, the Common Carrier Bureau will act
on the plan within ninety days of the date on which the Commission
released its public notice.84 In the event the Bureau fails to act
within 90 days, the plan will not go into effect pending Bureau action.
If the plan is not contested but did not go into effect on the
fifteenth day after the Commission released its public notice, and the
Common Carrier Bureau fails to act on the plan within ninety days of
the date on which the Commission released its public notice, the plan
will be deemed approved without further Commission action on the
ninety-first day after the date on which the Commission released its
public notice of the plan's filing.
---------------------------------------------------------------------------
\84\ We delegate to the Chief, Common Carrier Bureau, the
authority to approve, modify, or require the refiling of each plan
that is filed with the Commission pursuant to this requirement.
---------------------------------------------------------------------------
41. A LEC's plan may not accomplish toll dialing parity by
automatically assigning toll customers to itself, to a customer's
currently presubscribed interLATA or interstate toll carrier, or to any
other carrier except when, in a state that already has implemented
intrastate, intraLATA toll dialing parity, the subscriber has selected
the same intraLATA and interLATA presubscribed carrier. Finally, when
LATA boundaries encompass parts of two adjacent states, we permit the
LEC to implement in each state the procedures that that state approved
for implementing toll dialing parity within its borders. If a state
commission elects not to evaluate the LEC's intrastate toll dialing
parity plan, we direct the LEC to file both its intrastate toll dialing
plan and its interstate toll dialing plan with the Commission. The
plans will be acted on in accordance with the procedures outlined
above.
42. We note that the minimum intraLATA/interLATA toll
presubscription requirement that we adopt in this Order is necessarily
an interim measure. Specifically, we expect that the development of the
``multi-PIC'' or ``smart-PIC'' presubscription methodology will enable
customers to presubscribe to multiple carriers for various categories
of long-distance calling.85 Thus, in time, we anticipate that
service markets, and the presubscription requirement in particular,
will be defined by technological, economic and marketing considerations
and that LATA or state boundary distinctions will diminish for purposes
of the toll dialing parity requirements. As the record before us
provides an inadequate basis for adopting more specific requirements
now, we intend to monitor developments in this area and issue a Further
Notice of Proposed Rulemaking to address these long range
considerations so that end users will be able to preselect alternative
providers for operator services, directory assistance, international
and other services.
---------------------------------------------------------------------------
\85\ The terms ``smart-PIC'' and ``multi-PIC'' have been defined
differently in various contexts. For example, GVNW states that the
multi-PIC presubscription method would permit customers to choose up
to three different toll carriers, which, GVNW suggests, might
include an intraLATA toll, interLATA toll and an international
service provider. See GVNW comments at 6. GVNW states that the
smart-PIC presubscription method would allow customers more than
three carrier choices, ``as when a fourth PIC for interstate,
intraLATA is needed.'' Id. In a recent state commission decision,
the terms ``multi-PIC'' and ``smart-PIC,'' deemed to be synonymous,
were defined as the ability to ``select multiple carriers for
various subdivisions of their interLATA and intraLATA toll calls.''
Local Exchange Competition and Other Competitive Issues, Case No.
95-845-TP-COL, 164 P.U.R.4th 214 (Ohio Pub. Util. Comm'n Sept. 27,
1995).
---------------------------------------------------------------------------
3. Separate Presubscription for International Calls
a. Background and Comments
43. The NPRM sought comment on whether customers should be entitled
to choose a presubscribed carrier for international calls and on what
Commission action, if any, is necessary to implement dialing parity for
such calls.86
---------------------------------------------------------------------------
\86\ NPRM at para. 210.
---------------------------------------------------------------------------
44. Most parties maintain that the 1996 Act does not require, and
the Commission should not mandate, a separate presubscription choice
for international calling.87 Several parties take the position
that the toll dialing parity requirement applies to international
calling only to the extent that it entitles a customer to route
automatically without the use of an access code the customer's
international calls to the customer's presubscribed interLATA
carrier.88 A number of parties contend that the technology
required to support a separate presubscription choice for international
calling, the so-called multi-PIC or smart-PIC methodology, is not
currently available.89 USTA suggests that the cost of providing a
separate presubscription choice for international calling should be
weighed against the amount of customer demand for such an option, and
the harm to consumers that may result from a potentially greater number
of unauthorized carrier changes.90 AT&T, Ameritech, Sprint and the
Indiana Commission urge the Commission to revisit the issue of a
separate presubscription choice for international calling only after it
is demonstrated to be technically and economically feasible.91
---------------------------------------------------------------------------
\87\ See, e.g., SBC reply at 3 n.6; AT&T comments at 4 n.4.
\88\ See, e.g., SBC comments at 5.
\89\ Ameritech comments at 18-19; Bell Atlantic reply at 3; CBT
comments at 4-6; SBC comments at 5; U S WEST comments at 6; Sprint
comments at 4-6; USTA reply at 2; cf. Sprint comments at 6 (noting
implementation of multi-PIC system by GTE-Hawaiian Telephone Company
that offers customers a separate international presubscription
option).
\90\ USTA comments at 3.
\91\ Ameritech comments at 18-19; AT&T comments at 5 n.6; Sprint
comments at 5; Indiana Commission Staff comments at 9.
---------------------------------------------------------------------------
b. Discussion
45. While we believe that a separate presubscription choice for
international calling is consistent with the intent of the 1996 Act
because it could foster additional carrier competition, we recognize
that technical limitations preclude our imposing such a
[[Page 47294]]
nationwide requirement at this time.92 To the extent that such a
capability becomes technically feasible and is ordered in a particular
state, we find that the deployment of a separate presubscription choice
for international calling is consistent with the 1996 Act. We will
address in a further notice at a future date the issue of how soon a
separate presubscription choice for international calling will be
technically feasible on a nationwide basis.93
---------------------------------------------------------------------------
\92\ Bell Atlantic reply at 3; CBT comments at 4-6; SBC comments
at 5; U S WEST comments at 6; Sprint comments at 4-6; USTA reply at
2.
\93\ Sprint comments at 6 (noting development of multi-PIC
system by GTE-Hawaiian Telephone that offers customers a separate
international presubscription option). It is our understanding that
GTE Hawaiian Telephone Company has multi-primary interexchange
carrier capability that enables customers in Hawaii to select three
long-distance carriers, i.e., an intrastate, interstate, and
international carrier. See ex parte letter from Clarence Clay M.
Nagao, Chief Counsel, State of Hawaii Public Utilities Commission,
Department of Budget and Finance, to Mr. William F. Caton, Acting
Secretary, Federal Communications Commission, filed in CC Docket No.
96-98, July 2, 1996. We note that the arrangement by which GTE
Hawaiian Telephone Company provides a third carrier choice for
international calling is a unique, interim solution that uses a
combination of carrier identification codes and switch routing
databases. This solution is not suitable for nationwide deployment
because the switch database is too limited in size and the supply of
CICs too small to support an adequate number of interLATA/
international carrier combinations in many areas of the country. Ex
parte letter from F.G. Maxson, GTE Service Corporation, to William
F. Caton, Acting Secretary, Federal Communications Commission, filed
in CC Docket No. 96-98, August 6, 1996.
---------------------------------------------------------------------------
4. Full 2-PIC Presubscription Method
a. Background
46. In the NPRM, the Commission sought comment as to whether the
Commission should adopt a nationwide presubscription methodology for
implementing the toll dialing parity requirements.94 The NPRM also
noted that states have adopted a variety of intraLATA toll dialing
parity requirements and implementation methodologies.95
---------------------------------------------------------------------------
\94\ NPRM at para. 210.
\95\ Id.
---------------------------------------------------------------------------
47. Among the presubscription methodologies that states have
examined are the ``modified 2-PIC,'' the ``full 2-PIC,'' and the
``multi-PIC'' or ``smart-PIC'' methods.96 The modified 2-PIC
method generally allows a customer to presubscribe to a
telecommunications carrier for all interLATA toll calls and to
presubscribe to either the customer's presubscribed interLATA carrier
or the customer's local exchange carrier for all intraLATA toll calls.
The full 2-PIC method generally allows customers to presubscribe to a
telecommunications carrier for all interLATA toll calls and to
presubscribe to another telecommunications carrier (including, but not
limited to, the customer's local exchange carrier) for all intraLATA
toll calls. The multi-PIC or smart-PIC methods, as known today, would
allow customers to presubscribe to multiple carriers, each one of which
would be selected to transport a specified component of toll traffic.
---------------------------------------------------------------------------
\96\ Id.
---------------------------------------------------------------------------
b. Comments
48. Nearly all parties favor adoption of the full 2-PIC
method.97 Few parties favor deploying the modified 2-PIC
method.98 Likewise, few commenters favor immediate deployment of
the multi-PIC method.99 Several parties suggest that the multi-PIC
or smart-PIC methodology and technology may warrant consideration in
the future, but is currently unavailable.100 Others maintain that
the Commission should conclude that the 2-PIC approach is consistent
with the 1996 Act based on the theory that the 1996 Act does not
require more than a two-PIC capability to achieve toll dialing
parity.101
---------------------------------------------------------------------------
\97\ See, e.g., Michigan Commission Staff comments at 4; MCI
comments at 5-6, Pennsylvania Commission comments at 2; SBC reply at
2; PacTel reply at 10-11.
\98\ See, e.g., Sprint comments at 5; USTA comments at 3.
\99\ GSA/DOD reply at 4 (In initial comments, ``GSA favored a
'multi-PIC' arrangement. * * * Although there was conceptual support
for eventual implementation of the 'multi-PIC' methodology, it is
clear that the technical and economic feasibility of this approach
has not yet been demonstrated.''); GVNW comments at 6 (``[T]he FCC
should not require [the smart-PIC method] on a nationwide basis or
schedule, as this will result in uneconomic network upgrades, added
costs for the incumbent LECs, and higher prices to customers and
competitors'').
\100\ See, e.g., Ameritech comments at 18-19; AT&T comments at 5
n.6; CBT comments at 4; GVNW comments at 3; Indiana Commission Staff
comments at 9; Sprint comments at 5.
\101\ SBC reply at 3; GTE reply at 12-13.
---------------------------------------------------------------------------
c. Discussion
49. We adopt in this Order the full 2-PIC method as the minimum
presubscription standard. Under our rules and pursuant to section
251(d)(3),102 however, state commissions may impose more stringent
presubscription requirements, such as multi-PIC or smart-PIC.
---------------------------------------------------------------------------
\102\ 47 U.S.C. 251(d)(3).
---------------------------------------------------------------------------
50. We adopt the full 2-PIC method as the minimum presubscription
standard at this time for several reasons. We conclude that, as
compared with the modified 2-PIC method, the full 2-PIC method will
maximize choice for consumers and open the long-distance
telecommunications markets to a greater number of competitive services
providers, including smaller providers, and thus is more consistent
with the congressional objectives underlying enactment of section
251(b)(3). Second, this method clearly is preferred by the majority of
state regulators and telecommunications service providers.103
Third, as compared with the multi-PIC method, the technology for the
full 2-PIC method is widely available and well defined. By contrast,
there is no evidence in the record to support a finding that the
technical and economic feasibility of the multi-PIC method has been
demonstrated on a nationwide basis. We conclude that this national
standard should speed competitive entry into the intraLATA and
intrastate toll markets while providing states that are considering a
more stringent presubscription method, i.e., multi-PIC or smart-PIC,
flexibility to impose such additional requirements. Until the
Commission considers the issue of multi-PIC or smart-PIC methods in a
further notice, we believe that the states are best situated to
evaluate the technical feasibility and economic impact of such methods
on LECs, including smaller LECs, in their jurisdictions.
---------------------------------------------------------------------------
\103\ See, e.g., Pennsylvania Commission comments at 2; SBC
reply at 2; PacTel reply at 10-11.
---------------------------------------------------------------------------
5. Deployment of Presubscription Software in Each End Office
a. Background
51. With end office equal access, presubscription software is
installed at each end office switch within the LEC's service areas.
Toll calls are then directly routed at each end office switch to the
presubscribed provider of telephone toll service. With centralized
equal access, presubscription software is installed at a central tandem
switch location. With the latter, toll calls are routed from an end
office to a tandem switch for presubscription information.104
Providers of telephone toll service may connect at the tandem to
receive this traffic rather than at each individual end office that is
associated with the tandem.
---------------------------------------------------------------------------
\104\ In this context, presubscription information refers to the
information that is used by the switch to determine which
interconnecting carrier carries and bills for the call.
---------------------------------------------------------------------------
b. Comments
52. MCI raises the issue of whether presubscription software should
be deployed in each end office or at a single tandem location and
proposes that the Commission require end office equal access rather
than centralized equal access.105 Specifically, MCI argues that
end office equal access represents a superior form of access to the
extent that
[[Page 47295]]
it enhances redundancy and reduces post dial delays.106
Centralized equal access should not be permitted, MCI maintains,
insofar as that approach requires that all end offices receive the
equal access features from the tandem and any interruption in service
from the tandem can affect a larger number of subscribers on the
system.107 In addition, because calls are routed from the end
office to the tandem and back, MCI contends that centralized equal
access would result in significant post-dial delay.108 MCI does
suggest, however, that in areas that ``would not otherwise convert to
interLATA or intraLATA equal access, centralized equal access provides
consumers at least a limited form of carrier choice.'' 109
---------------------------------------------------------------------------
\105\ MCI comments at 5.
\106\ Id.
\107\ Id.
\108\ Id. MCI does not attempt to define or quantify the term
``significant.''
\109\ Id. at 5 n.7.
---------------------------------------------------------------------------
53. Two commenters who are centralized equal access providers
oppose MCI's position.110 Specifically, Iowa Network Services and
MIEAC counter that centralized equal access is not inferior to end
office equal access and repeatedly has been found to serve the public
interest by the Commission and numerous state regulatory
commissions.111 MIEAC takes issue with MCI's argument that
centralized equal access is inferior to end office equal access, noting
that recent technological advances, and the use of SS7 trunk signaling,
in particular, have improved call set up times and reduced post dial
delay.112 Iowa Network Services calls the argument that
centralized equal access provides less network redundancy a ``red
herring'' and notes its recent installation of a redundant fiber ring
facility to connect its participating exchanges, which will allow
instant rerouting of traffic in the case of a facilities equipment
failure.113 Iowa Network Services also operates a ``diversity
access tandem'' that provides switch redundancy should its primary
tandem fail.114 MIEAC argues that centralized equal access
networks fully comply with the toll dialing parity requirement of
section 251(b)(3) insofar as these networks support 2-PIC
presubscription.115 Finally, MIEAC and Iowa Network Services
contend that centralized equal access represents an appropriate method
of providing equal access in rural areas where it otherwise would not
be technically or economically feasible.116
---------------------------------------------------------------------------
\110\ See generally Iowa Network Services joint reply; MIEAC
reply.
\111\ Iowa Network Services joint reply at 4-7; MIEAC reply at
2-4.
\112\ MIEAC reply at 3.
\113\ Iowa Network Services joint reply at 5.
\114\ Id.
\115\ MIEAC reply at 3-4.
\116\ Id. at 5-7; Iowa Network Services joint reply at 2 (noting
that centralized equal access fosters intraLATA and interLATA
competition by making equal access technology available in exchanges
where installation of end office equal access is economically or
technically infeasible).
---------------------------------------------------------------------------
c. Discussion
54. The issue of presubscription software deployment was not raised
in the NPRM and, as a result, few commenters address it. We conclude
that the record is not sufficient for us to require LECs, pursuant to
section 251(b)(3), to provide end office equal access rather than
centralized equal access to competing providers of telephone toll
service. No specific information is provided, let alone consensus
reached in this record, on such threshold issues as the technical and
economic feasibility of placing the software in one location over
another. We note that while MCI and Iowa Network Services disagree
generally on the benefits of deployment locations, neither addresses
such important implementation issues as whether different switching
equipment owned by various companies might provide obstacles to
deployment, or the relevant costs associated with one deployment scheme
over another. Iowa Network Services, we further note, does not address
how its proposal would comport with the Commission's generally
prescribed requirement under which most LECs are required to implement
equal access at end offices.117 Based on the reasons stated above,
and based on our concern regarding the harm that could come to small
telecommunications services providers if we adopt MCI's proposal, we
decline to adopt at this time a requirement prescribing the location
for deployment of presubscription software under section 251(b)(3).
---------------------------------------------------------------------------
\117\ See generally MTS and WATS Market Structure, CC Docket No.
78-72, Phase III, 100 F.C.C. 2d 860 (1985) 50 FR 52964 (December 27,
1985).
---------------------------------------------------------------------------
C. Implementation Schedule for Toll Dialing Parity
1. Background and Comments
i. Timetable for BOCs
55. Section 271(e)(2)(A) requires a BOC to provide intraLATA toll
dialing parity throughout a state ``coincident with'' its exercise of
authority to provide in-region, interLATA services in that
state.118 Section 271(e)(2)(B) precludes most states from imposing
intraLATA toll dialing parity requirements on a BOC before the earlier
of the date on which a BOC is authorized to provide in-region,
interLATA services in a state or three years from the date of enactment
of the 1996 Act.119 The NPRM sought comment on what implementation
schedule should be adopted for all LECs.120
---------------------------------------------------------------------------
\118\ 47 U.S.C. 271(e)(2)(A).
\119\ 47 U.S.C. 271(e)(2)(B). Exceptions from this requirement
are made for single-LATA states and states that issued an order by
December 19, 1995, requiring intraLATA toll dialing parity. Id.
\120\ NPRM at para. 212.
---------------------------------------------------------------------------
56. The BOCs generally argue that section 271(e)(2) establishes the
relevant implementation schedule for all BOCs and, thereby, obviates
the need for a nationwide implementation schedule for BOCs.121 For
example, Ameritech argues that, except in single-LATA states and where
a state has previously ordered intraLATA presubscription, section
271(e)(2) requires a BOC to implement intraLATA toll dialing parity
``coincident with its exercise of in-region, interLATA authority'' or
three years after enactment of the 1996 Act.122 Other parties urge
the Commission to require BOCs to implement toll dialing parity in
advance of these dates on the theory that only the states, and not the
Commission, are constrained by the limitations in section
271(e)(2)(B).123 Frontier suggests that the Commission mandate
that dialing parity be made available immediately for interstate,
intraLATA toll calls.124 AT&T asserts that ``except as provided in
section 271(e)(2)(B), the Commission should require all Tier 1 LECs to
implement dialing parity, utilizing the Full 2-PIC method, by January
1, 1997.'' 125 NYNEX maintains that the Commission should
recognize and give effect to state orders granting deferrals or waivers
of the toll dialing parity requirements.126
---------------------------------------------------------------------------
\121\ See, e.g., Ameritech comments at 19.
\122\ Id.
\123\ See, e.g., Sprint comments at 6 n.3.
\124\ Frontier comments at 2.
\125\ AT&T comments at 5.
\126\ NYNEX comments at 3 n.7.
---------------------------------------------------------------------------
ii. Timetable for All Other LECs
57. For all other LECs, other than BOCs, the 1996 Act provides no
timetable for implementing toll dialing parity. The NPRM sought comment
on what implementation schedule should be adopted for all LECs.127
---------------------------------------------------------------------------
\127\ NPRM at para. 212.
---------------------------------------------------------------------------
58. USTA argues that there is no need for a uniform implementation
schedule and suggests that the Commission permit states to adopt their
own timetables.128 PacTel similarly opposes our adoption of an
implementation
[[Page 47296]]
schedule and advocates that all LECs be permitted to design their own
schedules based on ``local conditions and state requirements.''
129 In contrast, MCI urges the Commission to adopt an
implementation schedule based on the concern that incumbent LECs, if
permitted to design their own timetables, would delay implementation
because they lack incentive to implement dialing parity quickly. TCC
proposes that non-BOC incumbent LECs should be required to provide toll
dialing parity by no later than January 1, 1997.130 NECA argues
that a LEC's obligation to provide dialing parity should be triggered
only upon the receipt of a bona fide request from a competitive toll
provider.131 Finally, MFS suggests that incumbent LECs be required
to implement intraLATA toll dialing parity within a year of the
effective date of the rules, or by the date previously ordered by a
state commission.132 MFS also asks the Commission to adopt rules
specifying that in any geographic area where a BOC is not required to
provide intraLATA presubscription pursuant to section 271(e)(2)(A), no
other LEC in that geographic area will be required to provide toll
dialing parity until the BOC is required to provide it.133
---------------------------------------------------------------------------
\128\ USTA reply at 3-4.
\129\ PacTel reply at 12.
\130\ TCC comments at 4.
\131\ NECA reply at 3-4; see also Rural Tel. Coalition comments
at 6-7; GVNW comments at 5.
\132\ MFS comments at 6.
\133\ Id.; cf. Ohio Commission comments at 9 (new entrant LECs
should be required to implement intraLATA toll dialing parity
coincident with their offering of local telephone service since new
entrants can equip their network switches to provide dialing parity
before installation).
---------------------------------------------------------------------------
2. Discussion
59. As discussed above, we require all LECs to provide intraLATA
and interLATA toll dialing parity no later than February 8, 1999. In
addition, we require a LEC, including a BOC, to provide toll dialing
parity throughout a state based on LATA boundaries coincident with its
provision of in-region, interLATA or in-region, interstate toll
services in that state. As discussed below, for non-BOC LECs that
currently are providing, or within a year of release of this Order
begin to provide, in-region, interLATA or in-region, interstate toll
service, we provide a grace period during which those LECs will be able
to provide such toll service before having to provide toll dialing
parity to their customers. Moreover, non-BOC LECs that implement
intraLATA and interLATA toll dialing parity may choose whichever LATA
within their state that they deem to be most appropriate to define the
area within which they will offer intraLATA toll dialing parity. State
commissions in ruling upon such a choice of LATA association shall
determine whether the proposed LATA association is pro-competitive and
otherwise in the public interest. We note, however, as discussed above,
that states may redefine the toll dialing parity requirement based on
state, rather than LATA, boundaries where a state deems such a
requirement to be pro-competitive and otherwise in the public interest.
60. We decline to adopt the recommendations of parties that urge us
to require BOCs to provide toll dialing parity in a state before the
earlier of the date on which those BOCs receive authority to provide
in-region, interLATA services in that state or February 8, 1999.
Subject to the requirements of the 1996 Act, we do, however, authorize
states to determine whether a more accelerated implementation schedule
should be utilized for LECs operating within their
jurisdictions.134 Where a state issued an order by December 19,
1995 requiring a BOC to implement toll dialing parity in advance of the
implementation deadlines we establish, we do not intend to extend the
toll dialing parity implementation deadline for the BOC beyond the
implementation deadline established by that state. In addition, where a
state issued an order prior to the release of this Order requiring a
LEC, other than a BOC, to implement toll dialing parity in advance of
the implementation deadlines we establish, we do not intend to extend
the toll dialing parity implementation deadline for the LEC beyond the
implementation deadline established by that state.
---------------------------------------------------------------------------
\134\ See 47 U.S.C. 271(e)(2)(b).
---------------------------------------------------------------------------
61. We further conclude that LECs, other than BOCs, that begin
providing in-region, interLATA or in-region, interstate toll services
before August 8, 1997, including LECs that currently offer such
services, are not required to implement toll dialing parity until
August 8, 1997.135 We do not mandate compliance with the toll
dialing parity requirement by these LECs ``coincident with'' their
provision of in-region, interLATA or in-region, interstate toll
services because it would place certain carriers in violation of this
order upon its release and would impose an unreasonably short timetable
on others. To the extent that a LEC is unable to comply with the August
8, 1997 deadline, that LEC is required to notify the Commission's
Common Carrier Bureau by May 8, 1997. The notification must state, in
detail, the justification for the LEC's inability to comply by August
8, 1997 and set forth the date by which it will be able to implement
toll dialing parity.136 Finally, we have considered the arguments
of LECs that seek to make their toll dialing parity obligation
contingent upon the receipt of a bona fide request and conclude that
special implementation schedules for smaller LECs are unnecessary
because these LECs may petition their state commission, pursuant to
section 251(f)(2), for a suspension or modification of the application
of the dialing parity requirements.137
---------------------------------------------------------------------------
\135\ We note that the 1996 Act distinguishes between in-region
services, for which BOCs must receive Commission authority to
provide under section 271(d)(1), 47 U.S.C. 271(d)(1), and out-of-
region services, which BOCs are currently authorized to provide. See
47 U.S.C. 271(b)(1), (b)(2). We note that for non-BOC LECs, it is
the provision of toll services outside of the LEC's study area or
the provision of interstate toll services that triggers the duty to
provide toll dialing parity. We use the term in-region, interLATA or
in-region interstate toll services to include those toll services,
the provision of which by a LEC triggers the LEC's duty to provide
toll dialing parity.
\136\ As recently noted in the context of waiver petitions for
certain caller identification rules, the Commission will not
hesitate to take enforcement action, including monetary fines and
other remedial measures against carriers that are unable to provide
a compelling justification for failing to comply with Commission
rules, particularly when they have been given a reasonable period
within which to comply. See Rules and Policies Regarding Calling
Number Identification Service--Caller ID, CC Docket No. 91-281,
Memorandum Opinion and Order, DA 96-875 (1996) 61 FR 20746 (May 8,
1996).
\137\ 47 U.S.C. 251(f)(2).
---------------------------------------------------------------------------
62. In summary, we establish the following toll dialing parity
implementation schedule and filing deadlines for all LECs:
(a) Each LEC, including a BOC, must implement intraLATA and
interLATA toll dialing parity based on LATA boundaries no later than
February 8, 1999. If the state commission elects not to evaluate a
LEC's toll dialing parity implementation plan,138 the LEC must
file that plan with the Commission not later than 180 days before
February 8, 1999.
---------------------------------------------------------------------------
\138\ For a discussion of the content of and procedures relating
to the toll dialing parity implementation plans, see section II.B(2)
supra.
---------------------------------------------------------------------------
(b) Except as provided in subparagraph (c) below, a LEC, including
a BOC, that begins to provide in-region, interLATA toll services or in-
region, interstate toll services in a state before February 8, 1999,
must implement intraLATA and interLATA toll dialing parity based on
LATA boundaries coincident with its provision of in-region, interLATA
or in-region, interstate toll services. If the state commission elects
not to evaluate its toll dialing parity implementation
[[Page 47297]]
plan, the LEC must file such plan with the Commission not later than
180 days before the date on which it begins to provide in-region,
interLATA toll services.
(c) A LEC, other than a BOC, that begins to provide in-region,
interLATA or in-region, interstate toll services in a state before
August 8, 1997, must implement intraLATA and interLATA toll dialing
parity based on LATA boundaries by August 8, 1997. If the LEC is unable
to comply with this August 8, 1997, implementation deadline, the LEC
must notify the Commission's Common Carrier Bureau by May 8, 1997. At
that time it must state its justification for noncompliance by August
8, 1997, and set forth the date by which it will be able to implement
toll dialing parity. If the state commission elects not to evaluate the
LEC's toll dialing parity implementation plan, the LEC must file such
plan with the Commission not later than 90 days after publication of
this Order in the Federal Register.
63. We further conclude that the 1996 Act does not authorize the
Commission to give effect to a state order that purports to grant a BOC
a deferral, waiver or suspension of the BOC's obligation to implement
dialing parity. We note that section 251(f)(2) provides procedures for
suspending or modifying application of the dialing parity requirements
only for certain LECs, i.e., those ``with fewer than 2 percent of the
Nation's subscriber lines installed in the aggregate nationwide.''
139 Given that section 251 contains no comparable procedures for
larger LECs, we are persuaded that Congress intended the dialing parity
requirements that we adopt pursuant to section 251(b)(3) to apply,
without exception, to all LECs with 2 percent or more of the Nation's
subscriber lines.
---------------------------------------------------------------------------
\139\ 47 U.S.C. 251(f)(2).
---------------------------------------------------------------------------
D. Implementation of the Local Dialing Parity Requirements
1. In General
a. Background
64. The NPRM tentatively concluded that, pursuant to section
251(b)(3), a LEC is required to permit telephone exchange service
customers within a defined local calling area to dial the same number
of digits to make a local telephone call, notwithstanding the identity
of a customer's or the called party's local telephone service
provider.140 The NPRM sought comment on this tentative
conclusion.141
---------------------------------------------------------------------------
\140\ NPRM at para. 211.
\141\ Id.
---------------------------------------------------------------------------
b. Comments
65. Nearly all parties concur with the Commission's proposed
interpretation of the local dialing parity requirements of section
251(b)(3).142 Ameritech contends, however, that the 1996 Act
requires only that local calls between competing LECs be dialed without
the use of an access code.143 Ameritech states that, while the
Senate version of the dialing parity provision would have required LECs
to provide customers with the ability ``to dial the same number of
digits'' when using any carrier providing telephone exchange and
exchange access service in the same area, Congress narrowed the dialing
parity obligation in the final legislation to require only that calls
between competing LECs be dialed without the use of an access
code.144 In response to Ameritech's proposed interpretation of the
local dialing parity requirements, the Ohio Consumers' Counsel asserts
that it does ``not believe that consumers would see any real functional
difference between having to dial extra digits and having to dial an
access code'' and, thus, urges that customers not be required to dial
access codes or extra digits when using a competing provider's
services.145
---------------------------------------------------------------------------
\142\ See, e.g., ALTS comments at 4; GTE comments at 8; Ohio
Commission comments at 8.
\143\ Ameritech comments at 3-4. Notwithstanding its
interpretation of the local dialing parity requirements, Ameritech
notes that it has exceeded these requirements by establishing
interconnection arrangements that allow customers of competing LECs
to complete calls by dialing the same number of digits. Id. at 4.
\144\ Id.
\145\ Ohio Consumers' Counsel reply at 2.
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66. Ameritech also asks the Commission to clarify that ``the
dialing parity obligation applies only to competing carriers that
provide both telephone exchange service and telephone toll service
(i.e., competing LECs).'' 146 Finally, USTA urges the Commission
to clarify that section 251(b)(3) does not include an obligation to
provide dialing parity to CMRS providers.147 USTA contends that
the provision of dialing parity to CMRS providers by LECs would
complicate implementation of ``sender pays'' arrangements that have
been adopted in certain states if dialing parity were interpreted to
preclude the use of extra digits and/or recorded announcements
associated with a ``sender pays'' arrangement.148 USTA expresses
concern that customers may receive bills for calling CMRS customers
without advance notice that they are going to be billed for such
calls.149
---------------------------------------------------------------------------
\146\ Ameritech comments at 3 n.6 (emphasis in original).
\147\ USTA comments at 5.
\148\ Id. In this context, the term ``sender pays'' refers to an
arrangement under which a customer who originates a call to a CMRS
customer pays the cost of airtime for terminating the call. Under a
sender pays arrangement, the customer typically receives information
regarding the price of the call before the call is placed. Once the
customer receives this information, the customer then may decide
whether or not to complete the call. Sender pays arrangements are
atypical insofar as it is the CMRS customer who generally pays the
cost of airtime for terminating calls.
\149\ Id.
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c. Discussion
67. We adopt our tentative conclusion that, pursuant to section
251(b)(3), a LEC is required to permit telephone exchange service
customers within a defined local calling area to dial the same number
of digits to make a local telephone call, notwithstanding the identity
of a customer's or the called party's local telephone service provider.
As we stated in the NPRM, we believe that this interpretation of the
dialing parity requirement as applied to the provision of telephone
exchange service would best facilitate the introduction of competition
in local markets by ensuring that customers of competitive service
providers are not required to dial additional access codes or personal
identification numbers in order to make local telephone calls. We
disagree with Ameritech's view that Congress intended only to preclude
the use of access codes and did not intend to preclude the dialing of
extra digits. The fact that Congress ultimately adopted a dialing
parity definition that precludes ``the use of any access code''
150 does not constrain the Commission from precluding the dialing
of extra digits, including access codes. Given that the statute does
not define the term ``access code,'' we conclude that our
interpretation of the local dialing parity requirement will avoid
potential disputes concerning what is and what is not an ``access
code.'' We are also persuaded by the argument advanced by the Ohio
Consumers' Counsel that consumers would not perceive a functional
difference between having to dial extra digits and having to dial an
access code when using a competing provider's services.
---------------------------------------------------------------------------
\150\ 47 U.S.C. 153(15).
---------------------------------------------------------------------------
68. We conclude that Ameritech's additional argument that the
dialing parity obligation applies only to competing carriers that
provide both telephone exchange service and telephone toll service,
represents an impermissibly narrow reading of the statute. We find that
the phrase ``providers of telephone exchange service and telephone toll
service''
[[Page 47298]]
imposes an obligation on LECs to provide dialing parity to providers of
solely telephone exchange service, to providers of solely telephone
toll service, or to providers of both telephone toll and exchange
service. We believe that this interpretation is consistent with both
the language of the statute and Congress' intent to encourage the entry
of new competitors in both the local and toll markets.151 We
reject USTA's argument that the section 251(b)(3) dialing parity
requirements do not include an obligation to provide dialing parity to
CMRS providers.152 To the extent that a CMRS provider offers
telephone exchange service, such a provider is entitled to receive the
benefits of local dialing parity. Regarding USTA's argument that
applying section 251(b)(3) in a way that benefits CMRS providers could
complicate implementation of sender pays arrangements in some states,
we conclude that the record before us is insufficient to determine
whether, or under what circumstances, sender pays arrangements,
including those requiring the dialing of extra digits or recorded
announcements, are consistent with the 1996 Act. Although we do not
intend to preclude the states from lawfully enforcing legitimate
consumer protection policies that do not have an anticompetitive
impact, we cannot conclude on this record that the arrangements USTA
describes would be permissible. Finally, given our expectation that
local dialing parity will be achieved through LECs' compliance with
other section 251 requirements, we do not adopt a timetable for
implementing the local dialing parity requirements.
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\151\ As the U.S. Court of Appeals for the Fifth Circuit stated
in Peacock v. Lubbock Compress Company, ``the word `and' is not a
word with a single meaning, for chameleonlike, it takes its color
from its surroundings.'' The court held that ``[i]n the construction
of statutes, it is the duty of the Court to ascertain the clear
intention of the legislature. In order to do this, Courts are often
compelled to construe `or' as meaning `and,' and again `and' as
meaning `or'.'' Peacock v. Lubbock Compress Company, 252 F.2d 892,
893 (5th Cir. 1958) (citing United States v. Fisk, 70 U.S. 445, 448
(1865).
\152\ See section X of the First Report and Order for a
discussion of the applicability of section 251 to CMRS providers.
---------------------------------------------------------------------------
2. Local Dialing Parity Methodologies
a. Background and Comments
69. In the NPRM, we stated our expectation that the local dialing
parity obligations would not be achieved through
presubscription.153 Rather, we anticipated that a customer's
ability to select a telephone exchange service provider and make local
telephone calls without dialing extra digits will be accomplished
through the unbundling, number portability and interconnection
requirements of section 251.154 The NPRM sought information and
comment as to how the local dialing parity requirement should be
implemented.155
---------------------------------------------------------------------------
\153\ NPRM at para. 207 n.284.
\154\ Id.
\155\ NPRM at paras. 209, 211.
---------------------------------------------------------------------------
70. The parties generally agree that local dialing parity will be
accomplished through implementation of the unbundling, number
portability and interconnection requirements of section 251.156
Parties add to this list the 1996 Act's equal access
requirements.157 A few parties contend that local dialing parity
is assured once competing providers of telephone exchange service are
permitted nondiscriminatory access to telephone numbers.158
---------------------------------------------------------------------------
\156\ See, e.g., SBC comments at 3 n.4; NEXTLINK comments at 8.
\157\ See, e.g., BellSouth comments at 9.
\158\ See, e.g., U S WEST comments at 6.
---------------------------------------------------------------------------
b. Discussion
71. We anticipate that local dialing parity will be achieved upon
implementation of the number portability and interconnection
requirements of section 251. We also concur with the view that the
ability of competing local exchange service providers to receive
telephone numbers on a nondiscriminatory basis is critical to the
achievement of local dialing parity. We believe that the
interconnection requirements that section 251(c)(2) imposes on
incumbent local exchange carriers will reduce the likelihood that
customers of a competing LEC will have to dial an access code to reach
a customer of the incumbent LEC insofar as the two networks are
connected. Number portability will ensure that customers switching
local service providers will not need to dial additional digits to make
local telephone calls. Likewise, allowing every telecommunications
carrier authorized to provide local telephone service, exchange access,
or paging service in an area code to have at least one NXX in an
existing area code also reduces the potential local dialing disparity
that may result if competing LECs can only give customers numbers from
a new area code. We therefore decline to prescribe now any additional
guidelines addressing the methods that LECs may use to accomplish local
dialing parity. We also conclude that, contrary to the views expressed
by some parties, the provision of nondiscriminatory access to telephone
numbers, by itself, does not fulfill the local dialing parity mandate
of section 251(b)(3). Given that acquisition of a central office code
by a LEC would not necessarily ensure that the LEC's customers would be
relieved of an obligation to dial extra digits, access codes or some
other special dialing protocol, the provision of nondiscriminatory
access to telephone numbers does not by itself ensure local dialing
parity. Rather, we find that under section 251(b)(3) each LEC must
ensure that its customers within a defined local calling area be able
to dial the same number of digits to make a local telephone call
notwithstanding the identity of the calling party's or called party's
local telephone service provider.
3. Non-Uniform Local Calling Areas
a. Background
72. The NPRM tentatively concluded that, pursuant to section
251(b)(3), a LEC is required to permit telephone exchange service
customers within a defined local calling area to dial the same number
of digits to make a local telephone call, notwithstanding the identity
of a customer's or the called party's local telephone service
provider.159 The NPRM did not address the potential dialing parity
implications of non-uniform local calling areas 160 nor did it
address the potential impact of our proposed interpretation of the
local dialing parity obligation on local calling area
boundaries.161
---------------------------------------------------------------------------
\159\ NPRM at para. 211.
\160\ We use the term ``non-uniform local calling area'' to
refer to a situation in which a telephone exchange service
provider's local calling area is either larger or smaller than that
of another telephone exchange service provider that is providing
telephone exchange service in the same geographic area.
\161\ Insofar as parties contend that the section 251(b)(3)
dialing parity requirements compel the use of a ten-digit dialing
plan for local calls within an area code overlay (see, e.g., MFS
comments at 3-5), we note that these concerns are addressed more
fully below in paragraphs 286 through 287.
---------------------------------------------------------------------------
b. Comments
73. A number of parties express concern about the potential
interrelationship between our proposed interpretation of the local
dialing parity requirements and local calling area boundaries.162
For example, WinStar cautions the Commission that by requiring that
customers ``within a defined local calling area'' be able to dial the
same number of digits to make a local telephone call, certain parties
may interpret this to require that a competing provider of local
exchange service must define its local calling area
[[Page 47299]]
to match the local calling area of the incumbent LEC.163 GSA/DOD
maintains that dialing is not truly at parity if different carriers
have different definitions of the geographic areas in which calls can
be made with seven-digit dialing.164 To address the potential
dialing parity issue that may arise when a new entrant's ``network
coverage'' is more limited than the incumbent LEC's, GSA/DOD recommends
that the Commission adopt rules that ensure that local calling areas
are consistently defined for LEC wholesale and retail services.165
---------------------------------------------------------------------------
\162\ See, e.g., WinStar comments at 10-11; GSA/DOD comments at
4-5; Florida Commission comments at 3.
\163\ WinStar comments at 10-11 (``The Commission should
proceed carefully to ensure that it does not inadvertently limit
carriers from experimenting with local calling areas.''); see also,
U S WEST comments at 6 (where dialing parity disputes arise over
fact that local calling areas of two competing LECs do not match,
states should resolve such disputes since they are familiar with
local calling areas and calling patterns in that state).
\164\ GSA/DOD comments at 4.
\165\ Id. at 5.
---------------------------------------------------------------------------
74. GTE contends that ``[s]o long as new entrants have the
technical ability to deploy equipment necessary to offer the same
seven-digit dialing as the incumbent LEC, dialing parity should be
deemed to exist even if one or more of the new entrants ultimately
chooses to provide ten-digit dialing.'' 166 To illustrate its
point that all local calls cannot be dialed using the same number of
digits, NYNEX notes that in the New York City Metro LATA local calls
span three different area codes, with seven-digit dialing within an
area code and ten-digit dialing between area codes.167 Finally,
the Florida Commission expresses concern regarding the potential
customer confusion that may result if customers in local calling areas
are required to dial ten rather than the currently dialed seven digits
to make local ``Extended Calling Service'' calls.168
---------------------------------------------------------------------------
\166\ GTE comments at 8 n.10.
\167\ NYNEX comments at 3 n.6.
\168\ Florida Commission comments at 3.
---------------------------------------------------------------------------
c. Discussion
75. A telephone call requiring seven-digit dialing is not
necessarily a local call 169 and a telephone call requiring ten-
digit dialing is not necessarily a toll call.170 Disparity in
local dialing plans, by itself, does not contravene our interpretation
of the local dialing parity requirements unless such plans are anti-
competitive in effect.171 By requiring that all customers ``within
a defined local calling area'' be able to dial the same number of
digits to make a local telephone call, we do not intend to require a
competing provider of local exchange service to define its local
calling area to match the local calling area of an incumbent LEC. We
further do not intend to require a competing provider of telephone
exchange service that voluntarily chooses to provide ten-digit as
opposed to seven-digit dialing in a local calling area to modify its
dialing plan in this instance in order to conform to the dialing plan
of another LEC. No other commenter addressed GSA's proposal that the
Commission adopt rules that ensure that local calling areas are
consistently defined for LEC wholesale and retail services. Therefore,
we conclude that the record is insufficient to permit us to take such
action at this time.
---------------------------------------------------------------------------
\169\ We note that several states permit seven-digit dialing
for toll calls. North American Numbering Plan, Area Codes 1996
Update, Bellcore (January 1996) at 14. For example, within the 518
area code a call from Clifton Park, New York to Hague, New York is a
toll call that can be dialed with seven digits.
\170\ Section 3(48) defines ``telephone toll service'' as
``telephone service between stations in different exchange areas for
which there is made a separate charge not included in contracts with
subscribers for exchange service.'' 47 U.S.C. 153(48). By contrast,
charges for calls within a local calling area generally are not
assessed on a per call basis. Thus, the construct of local calling
areas serves as the basis by which carriers price their services.
\171\ See, e.g., the discussion at paras. 281-291 regarding the
discriminatory and anticompetitive nature of a service-specific or
technology-specific overlay in connection with area code relief
plans.
---------------------------------------------------------------------------
E. Consumer Notification and Carrier Selection Procedures
a. Background
76. Section 251(b)(3) does not specifically require that procedures
be established to permit consumers to choose among competitive
telecommunications providers (e.g., through balloting).172 The
NPRM sought comment as to whether the Commission should require LECs to
notify consumers about carrier selection procedures or impose any
additional consumer education requirements.173 We also sought
comment on an alternative proposal that would make competitive
telecommunications providers responsible for notifying customers about
carrier choices and selection procedures through their own marketing
efforts.174
---------------------------------------------------------------------------
\172\ 47 U.S.C. 251(b)(3).
\173\ NPRM at para. 213.
\174\ Id.
---------------------------------------------------------------------------
b. Comments
77. Several parties contend that the responsibility for consumer
education should be borne, at least in part, by the incumbent LECs
175 and claim that incumbent LECs are uniquely situated to assist
in this function.176 Conversely, others maintain that
responsibility for the notification and education of consumers should
be imposed on the carriers seeking those customers' business, as part
of those carriers' marketing efforts.177 GSA/DOD favors letting
carriers ``fight it out among themselves,'' noting that carriers
themselves will have every incentive to make sure that prospective
customers are aware of their choices.178 PacTel suggests that
states are in the best position to assess the informational needs of
their citizens.179 Several commenters express concern that any
customer notification requirement must recognize that the details of
any such notification plan should reflect local circumstances,
including local carrier selection options, rates and dialing
plans.180 Ameritech maintains that a ``carrier-neutral customer
notification of the toll dialing parity selection processes is in the
public interest and should be a part of the implementation of any toll
dialing parity plan.'' 181
---------------------------------------------------------------------------
\175\ See, e.g., ACSI comments at 10; Ameritech comments at 20;
California Commission comments at 4.
\176\ See, e.g., Illinois Commission comments at 67; ACSI
comments at 10 (incumbent LECs should be required to provide bill
inserts to customers alerting them to opportunity to select
alternative service provider).
\177\ See, e.g., CBT comments at 5; Bell Atlantic comments at 5;
Frontier comments at 4; BellSouth reply at 4; GTE reply at 15.
\178\ GSA/DOD comments at 6.
\179\ PacTel comments at 13.
\180\ See, e.g., Ameritech comments at 21; GTE comments at 12;
PacTel reply at 13.
\181\ Ameritech comments at 20.
---------------------------------------------------------------------------
78. While several commenters urge the Commission to adopt rules for
balloting,182 the majority of parties urge us to reject this
option.183 Parties that oppose balloting argue that such decisions
should be left to the individual states 184 and claim that
balloting is confusing to customers,185 costly,186 and forces
consumers to make selections before they might otherwise choose to do
so.187 Commenters also argue that competition for customers will
ensure that carriers notify customers as to how their services can be
obtained.188 In stating its opposition to a balloting requirement,
MFS observes that:
\182\ See, e.g., NEXTLINK comments at 9; Excel comments at 7.
\183\ See, e.g., Ohio Consumers' Counsel comments at 3; SBC
reply at 1; MFS reply at 12; CBT reply at 3-4.
\184\ See, e.g., Florida Commission comments at 2; PacTel reply
at 13.
\185\ See, e.g., Ohio Commission comments at 7.
\186\ See, e.g., GTE comments at 13; Sprint comments at 4.
\187\ Ameritech comments at 20.
\188\ See, e.g., GTE comments at 13; U S WEST comments at 8.
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[[Page 47300]]
The long-distance market today differs markedly from the
situation in the mid-1980's, when non-dominant carriers were
virtually unknown to most consumers and balloting was mandated as a
way of educating consumers to their ability to choose a carrier. No
such education is needed today, because most consumers are well
aware of their long-distance choices, and the carriers have readily
---------------------------------------------------------------------------
available means of contacting those who are not.189
\189\ MFS comments at 6.
---------------------------------------------------------------------------
79. Commenters also raised a number of issues related to consumer
notification and carrier selection methods. For example, PacTel asserts
that ``the default carrier for both existing and new customers who do
not actively choose an intraLATA toll provider should be the dial-tone
provider.'' 190 Sprint agrees that ``existing customers who are
currently obtaining intraLATA toll service from the dial tone provider,
and do not indicate a desire to change carriers, should remain with
that intraLATA toll provider.'' 191 Sprint rejects PacTel's
proposal, however, ``to default new customers who do not choose an
intraLATA toll provider to the dial tone provider.'' 192
Concerning whether customers should be assessed a ``PIC change charge''
when they select an alternative provider of telephone toll or telephone
exchange service, parties propose allowing customers a ``grace period''
during which they could switch carriers without charge.193 The
Ohio Consumers' Counsel supports a cap on the cost of initiating both
local and toll service with a new carrier, noting that a ``customer's
old carrier should not be able to impose an `exit fee' upon the
customer who switches.'' 194 Finally, GVNW urges that the
Commission's rules, complaint procedures and penalties for ``slamming''
be applied to any carrier selection procedures that the Commission
adopts with respect to local exchange service providers.195
---------------------------------------------------------------------------
\190\ PacTel comments at 11.
\191\ Sprint reply at 5-6 n.8.
\192\ Id. On a related issue, AT&T urges the Commission to
intercede where abuse of the customer notification process occurs,
such as when a LEC uses its ``provision of exchange service to
influence toll PIC choices.'' AT&T comments at 6 n.9. AT&T adds that
the Commission should prohibit LECs from extending interLATA PIC
``freezes'' to intraLATA traffic. Id.
\193\ Ohio Commission comments at 7 (proposing 90 day grace
period with a charge for subsequent changes); Citizens Utilities
comments at 6-7 (proposing 6 month grace period).
\194\ Ohio Consumers' Counsel reply at 2.
\195\ GVNW comments at 7.
---------------------------------------------------------------------------
c. Discussion
80. We agree with those commenters who observe that competitive
providers of telephone exchange and telephone toll service have an
incentive to make consumers aware of the choices available, and we
perceive no need to prescribe detailed consumer notification or carrier
selection procedures at this time. We do believe, however, that states
may adopt such procedures. The states are best positioned to determine
the consumer education and carrier selection procedures that best meet
the needs of consumers and telecommunications services providers in
their states. Thus, states may adopt consumer education and carrier
selection procedures that will enable consumers to select alternative
carriers for their local and toll services. We further agree that a
customer notification requirement should take into consideration local
circumstances. The states may adopt balloting, consumer education and
notification requirements for services originating within their states,
that are not anti-competitive in effect. States also may adopt measures
to prevent abuse of the customer notification and carrier selection
processes. All such procedures, however, must be consistent with the
guidelines set forth above with respect to the requisite categories of
toll traffic for which consumers must be entitled to presubscribe and
the toll presubscription method that we require carriers to implement.
We note that the consumer notification requirements already imposed by
states' intrastate, intraLATA toll dialing parity orders have required
LECs to inform customers either once or twice of their opportunity to
choose an alternative carrier.196 We anticipate that any
subsequently imposed consumer notification requirements would be no
more be burdensome, and, in particular, would not require more than two
notifications to consumers of their opportunity to choose alternative
carriers to transport their intraLATA toll calls.
---------------------------------------------------------------------------
\196\ See, e.g., Adoption of rules relating to intra-Market
Service Area presubscription and changes in dialing arrangements
related to the implementation of such presubscription, Interim Order
(Ill. Comm. Comm'n. Apr. 7, 1995).
---------------------------------------------------------------------------
81. We conclude that ``dial-tone providers'' should not be
permitted automatically to assign to themselves new customers who do
not affirmatively choose a toll provider. New customers of a telephone
exchange service provider who fail affirmatively to select a provider
of telephone toll service, after being given a reasonable opportunity
to do so, should not be assigned automatically to the customer's dial-
tone provider or the customer's preselected interLATA toll or
interstate toll carrier. Rather, we find that consistent with current
practices in the interLATA toll market, such nonselecting customers
should dial a carrier access code to route their intraLATA toll or
intrastate toll calls to the carrier of their choice until they make a
permanent, affirmative selection. This action eliminates the
possibility that a LEC could designate itself automatically as a new
customer's intraLATA or intrastate toll carrier without notifying the
customer of the existence of alternative carrier choices. Finally,
notwithstanding our decision to entrust the issues of consumer
notification and carrier selection to the states, we emphasize that all
telecommunications carriers remain subject to the requirements of
section 258 as well as any verification or ``anti-slamming'' 197
procedures that the Commission may adopt to prevent unauthorized
changes in a customer's selection of a provider of telephone exchange
or telephone toll service.198
---------------------------------------------------------------------------
\197\ The Commission has defined slamming as the unauthorized
conversion of a customer's interexchange carrier by another
interexchange carrier, an interexchange resale carrier, or a
subcontractor telemarketer. Cherry Communications, Inc. Consent
Decree, 9 FCC Rcd 2986, 2987 (1994).
\198\ Section 258 makes it unlawful for any telecommunications
carrier to ``submit or execute a change in a subscriber's selection
of a provider of telephone exchange service or telephone toll
service except in accordance with such verification procedures as
the Commission shall prescribe.'' 47 U.S.C. 258(a). The section
further provides that:
[a]ny telecommunications carrier that violates the verification
procedures described in subsection (a) and that collects charges for
telephone exchange service or telephone toll service from a
subscriber shall be liable to the carrier previously selected by the
subscriber in an amount equal to all charges paid by such subscriber
after such violation.
47 U.S.C. 258(b). Section 258 extends the slamming prohibition
to all telecommunications carriers, not just interexchange carriers,
as is the case under the Commission's current Part 64 rules. See 47
CFR Sec. 64.1100.
---------------------------------------------------------------------------
F. Cost Recovery
a. Background
82. In the NPRM, the Commission noted that the 1996 Act does not
specify how LECs will recover the costs associated with providing
dialing parity to competing providers.199 The Commission therefore
sought comment on: (1) What, if any, standard should be used for
arbitration to determine the dialing parity implementation costs that
LECs should be permitted to recover; and (2) how those costs should be
recovered.200
---------------------------------------------------------------------------
\199\ NPRM at para. 219.
\200\ Id.
---------------------------------------------------------------------------
b. Comments
83. At the outset, we note that there does not appear to be a
consensus among commenters as to either of the
[[Page 47301]]
two cost recovery issues raised in the NPRM. The parties are generally
divided into two positions: (1) Interexchange carriers and competitive
carriers prefer a Commission standard under which carriers could
recover from competing providers only the specific incremental costs of
providing intraLATA toll dialing parity; and (2) incumbent LECs and
several states prefer that no national standards be developed, and that
cost recovery issues be left either to the states or to intercarrier
negotiations.
84. AT&T suggests that carriers only be entitled to recover
incremental costs directly associated with the implementation of
dialing parity, and states that the Commission should ``explicitly
exclude (a) recovery of costs intended to reimburse an incumbent
carrier for revenues it expects to lose as a result of implementing
dialing parity * * * as well as (b) costs associated with network
upgrades that are not necessary to implement dialing parity.'' 201
AT&T further suggests that the Commission mandate an ``Equal Access
Recovery Charge'' on all providers of toll service based on minutes of
use subject to dialing parity, and that this charge be tariffed
separately from any access charges, approved by the state commission,
and amortized over a period not to exceed eight years.202
---------------------------------------------------------------------------
\201\ AT&T comments at 7.
\202\ Id.
---------------------------------------------------------------------------
85. MCI appears to agree with AT&T's proposal, stating that
``incremental costs incurred to implement dialing parity should be
recovered from all carriers that carry intraLATA toll on a
presubscribed basis in accordance with cost causative principles.''
203 MCI also suggests that dialing parity costs be recovered on a
minutes-of-use basis, as an addition to the local switching rate
element, which would be separately identified in a tariff, and that
Commission rules for cost recovery be ``presumptively correct'' (i.e.,
states can depart from such rules if they can show their mechanism is
more effective).204 Several parties urge the Commission to draw
upon its cost recovery paradigms for interLATA equal access, and apply
the same basic principles to the intraLATA toll market.205
---------------------------------------------------------------------------
\203\ MCI comments at 3.
\204\ Id. at 7-8.
\205\ See, e.g., GVNW comments at 8; MCI comments at 7.
---------------------------------------------------------------------------
86. Many other competitive providers also advocate various forms of
incremental cost recovery, on a per-minutes of use basis, to be
assessed against all providers of presubscribed intraLATA toll
services; such costs could include, for example, hardware costs,
software costs, and consumer education costs.206 GSA/DOD asks the
Commission to ``view LEC claims for large cost compensation with
considerable skepticism,'' and suggests that the Commission
``distribute any verifiable incremental costs associated with achieving
dialing parity as a percentage surcharge on the bills of all carriers,
including the incumbent LECs.'' 207
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\206\ See, e.g., Citizens Utilities comments at 6; GSA/DOD
comments at 6-8.
\207\ GSA/DOD comments at 6-7, 8.
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87. Taking the opposite view, BOC commenters, together with GTE and
USTA, argue that there is essentially no need for the Commission to
adopt cost recovery measures for dialing parity, and that cost recovery
issues are best left for the states to address.208 Several state
public utility commissions also argue that, given the state-specific
nature of intraLATA cost recovery issues, and the omission of a
specific cost-recovery standard from Congress in section 251(b)(3), the
individual states are in the best position to address these
issues.209 In support of these arguments, some state commenters
have provided the Commission with detailed descriptions of their
current mechanisms for recovering intraLATA presubscription
costs.210
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\208\ See Bell Atlantic comments at 5; GTE comments at 20-21;
NYNEX comments at 10-11; PacTel comments at 17; SBC comments at 9;
USTA comments at 4.
\209\ See Illinois Commission comments at 72; Indiana Commission
comments at 9; Ohio Consumers' Counsel comments at 4; and Ohio
Commission comments at 11.
\210\ Id.; see also Louisiana Commission comments at 7.
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88. Ameritech argues that dialing parity costs ``should be
recovered under normal regulatory principles from the cost-causer,''
and Bell Atlantic argues that ``only carriers who will benefit from
intraLATA presubscription should pay the costs. Unless interexchange
carriers bear the full costs of implementing intraLATA presubscription,
exchange carrier customers who do not switch intraLATA toll carriers
and do not benefit from presubscription would ultimately be required to
pay for it.'' 211 On the other extreme, the Telecommunications
Resellers Association states that incumbent LECs should ``shoulder the
full financial burden of remedying this competitive imbalance [in the
intraLATA toll market].'' 212
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\211\ Ameritech comments at 10; Bell Atlantic comments at 5.
\212\ Telecommunications Resellers Association comments at 8.
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89. The reply comments reveal substantial disagreement among
carriers from the two opposing positions. Interexchange carriers and
competitive carriers reject the suggestion that they shoulder the full
cost burden for intraLATA dialing parity, and urge that, at a minimum,
costs be spread among all service providers that enjoy dialing
parity.213 AT&T states that ``the proposal by Ameritech and Bell
Atlantic to recover implementation costs exclusively from their
competitors underscores the need for explicit national rules * * *
[n]othing could be more * * * harmful to competition, than allowing
incumbent LECs to charge a fee for new entrants for the ``privilege''
of competing with them.'' 214 GSA/DOD also urges the Commission to
``reject'' the proposals of Bell Atlantic and SBC.215 MFS
correctly notes that there was ``little consensus'' on this issue, and
states ``it is entirely inappropriate in a competitive environment that
an individual carrier's costs be recovered from its competitors.''
216 The Ohio Consumer's Counsel states that Ameritech's ``cost-
causer'' proposal ``ignores the fact that the benefits of dialing
parity are network-wide.'' 217
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\213\ See, e.g., Sprint reply at 12; Telecommunications
Resellers Association reply at 7; WinStar reply at 12.
\214\ AT&T reply at iii.
\215\ GSA/DOD reply at 8.
\216\ MFS reply at 14.
\217\ Ohio Consumers' Counsel reply at 4.
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90. Incumbent LECs maintain that the Commission should not set
national cost recovery standards, and that this matter remains the
prerogative of the states.218 GTE ``strongly opposes'' AT&T's
suggestions, and PacTel states that ``LECs cost recovery should not be
limited by noncompensatory incremental methodologies or unreasonably
long amortization requirements.'' 219 SBC asserts that the
proposals of MCI and AT&T are ``examples of regulatory micro-
management, are inconsistent with Congressional intent, and would also
* * * place the major burden of dialing parity cost recovery squarely
on the backs of incumbent LECs.'' 220
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\218\ See Bell South reply at 4; Bell Atlantic reply at 5; NYNEX
reply at 4; PacTel reply at 18; and USTA reply at 5.
\219\ PacTel reply at iii.
\220\ SBC reply at 8.
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91. GCI states that ``costs should be recovered in a competitively
neutral manner because all LECs, not just incumbent LECs, must meet
this obligation.'' 221 Western Alliance contends that ``costs
incurred to achieve dialing parity should be included in the investment
recoverable through explicit
[[Page 47302]]
universal (service) supports.'' 222 Finally, NECA argues that
there is no need for the Commission to prescribe specific cost recovery
mechanisms.223
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\221\ GCI reply at 2.
\222\ Western Alliance reply at 2 n.6.
\223\ NECA reply at 2.
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c. Discussion
92. We conclude that, in order to ensure that dialing parity is
implemented in a pro-competitive manner, national rules are needed for
the recovery of dialing parity costs. We further conclude that these
costs should be recovered in the same manner as the costs of interim
number portability, as mandated in our recent Number Portability
Order.224 Our authority to promulgate national cost recovery rules
derives from section 251(d) of the 1996 Act and section 4(i) of the
1934 Act. In section 251(d), Congress directed the Commission to take
the necessary steps to implement section 251. Section 4(i) of the 1934
Act authorizes us to take any action we consider ``necessary and
proper'' to further the public interest in the regulation of
telecommunications. Because we determine that dialing parity is crucial
to the development of local exchange competition, we conclude that we
should establish pricing principles for the recovery of dialing parity
costs. Accordingly, we reject the arguments of incumbent LECs and
others who oppose national standards for cost recovery of the network
upgrades required to achieve dialing parity.
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\224\ Telephone Number Portability, CC Docket No. 95-116, FCC
96-286 (July 2, 1996) (Number Portability Order) 61 FR 38605 (July
25, 1996).
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93. Many of the network upgrades necessary to achieve dialing
parity, such as switch software upgrades, are similar to those required
for number portability. Moreover, with both dialing parity and number
portability, customer inconvenience represents the barrier to effective
competition Congress intends to eliminate, whether that inconvenience
results from the dialing of extra digits in the case of dialing parity,
or notification of family, friends and business contacts when a
customer is forced to change his or her number. For these reasons, we
determine that our recent Number Portability Order provides guidance
regarding which costs incumbent LECs should be able to recover in
implementing dialing parity, as well as how such costs should be
recovered. The rules adopted in the Number Portability Order apply only
to currently-available number portability mechanisms. We sought further
comment on cost recovery for long-term number portability, because
long-term number portability will involve a different kind of system
than currently available solutions. We tentatively concluded that under
section 251(e)(2), the same cost recovery principles should apply to
long-term number portability. In the case of dialing parity, there is a
similar distinction between currently-available solutions (i.e., full
2-PIC presubscription), and long-term solutions (i.e., multi-PIC or
smart-PIC methodologies). Like number portability, we may need to
revisit the issue of an appropriate cost recovery standard once other
presubscription technologies become available on a nationwide basis.
94. In the Number Portability Order, we concluded that costs for
number portability should be recovered on a competitively-neutral
basis.225 We also concluded that any recovery mechanism should:
(1) Not give one service provider an appreciable, incremental cost
advantage over another service provider, when competing for a specific
subscriber; and (2) not have a disparate effect on the ability of
competing service providers to earn a normal return.226 We
therefore reject the arguments of those commenters that assert that
only new entrants should bear the costs of implementing dialing parity,
because such an approach would not be competitively neutral. We also
concluded in the Number Portability Order that LECs could only recover
the incremental costs of implementing number portability. Because we
determine that number portability and dialing parity share significant
technical similarities and overcome similar barriers to competition, we
conclude that we should impose the same cost standard for dialing
parity costs that we have adopted for number portability costs. We
therefore agree with AT&T that LECs may not recover from other carriers
under a dialing parity cost recovery mechanism any network upgrade
costs not related to the provision of dialing parity.
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\225\ Section 251(e)(2) of the 1996 Act states that ``the cost
of establishing * * * number portability shall be born by all
telecommunications carriers on a competitively neutral basis, as
determined by the Commission.'' This statutory provision does not
apply to the dialing parity requirement.
\226\ Number Portability Order at paras. 121-140.
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95. In our Number Portability
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