Implementation of the Telecommunications Act of 1996

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 51

[CC Docket Nos. 96-98 and 95-185; FCC 96-378]

Implementation of the Telecommunications Act of 1996

AGENCY: Federal Communications Commission.

ACTION: Final rule; Denial of petitions for stay of rules.

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SUMMARY: The Federal Communications Commission here denies two

petitions seeking a stay of the rules contained in

[[Page 54100]]

the Commission's First Report and Order implementing the

Telecommunications Act of 1996. The Commission concluded that

petitioners failed to meet the legal criteria required to obtain a stay

of the rules. Denial of the petitions seeking a stay of the rules

allows the implementation of the Telecommunications Act of 1996 to

proceed without delay.

EFFECTIVE DATE: September 16, 1996.

FOR FURTHER INFORMATION CONTACT: David A. Konuch, 202-418-0199.

SUPPLEMENTARY INFORMATION:

Adopted: September 16, 1996

Released: September 17, 1996

I. Introduction

1. On August 1, 1996, the Commission adopted rules implementing the

local competition provisions of the Telecommunications Act of 1996

(1996 Act). Implementation of the Local Competition Provisions in the

Telecommunications Act of 1996, CC Docket No. 96-98, First Report and

Order, FCC 96-325 (released August 8, 1996), 61 FR 45476 (August 29,

1996) (First Report and Order). On August 28, 1996, GTE Corporation

(GTE) and the Southern New England Telephone Company (SNET) filed a

joint motion for stay of the Commission's rules pending judicial

review. Oppositions to the joint motion for stay were filed by the

United States Department of Justice and 16 private parties. On

September 6, 1996, after we received these oppositions, U S West, Inc.

(``U S West'') filed a stay petition similar to that filed by GTE and

SNET. The Competitive Telecommunications Association and ALTS filed

oppositions to U S West's petition.

2. For the reasons set forth below, we deny the motions for stay.

II. Summary of the Motions and Oppositions

3. GTE and SNET assert that a petition for review of the

Commission's First Report and Order is likely to succeed on the merits

because the Commission has exceeded its statutory authority and has

acted arbitrarily and capriciously in implementing provisions of the

1996 Act. In particular, GTE and SNET contend that the Commission lacks

authority to establish national pricing standards for interconnection

and unbundled network elements. GTE and SNET argue that, even if the

Commission has such authority, the pricing standards in the First

Report and Order would force incumbent LECs to offer interconnection,

unbundled network elements, and resold services at below-cost rates,

allegedly effecting an uncompensated taking in violation of the Fifth

Amendment to the United States Constitution. GTE and SNET also maintain

that the Commission has established default pricing proxies that are

inconsistent with the 1996 Act and the cost study methodology the

Commission adopted for use by state commissions. In addition, GTE and

SNET assert that the ability of competitors to ``reassemble'' unbundled

network elements nullifies the resale and exchange access provisions of

the 1996 Act. Finally, GTE and SNET argue that the First Report and

Order establishes a number of specific requirements with regard to

resale and exchange access charges that conflict with express terms of

the 1996 Act.

4. GTE and SNET contend that they will suffer irreparable harm in

the absence of a stay because the Commission's rules will stifle the

negotiation process and will require incumbent LECs to offer unbundled

elements or services to competitors at below-cost prices. GTE and SNET

argue that a stay will cause no harm to others because private

negotiations and state-supervised arbitrations can proceed in the

absence of Commission rules. GTE and SNET also assert that the public

interest favors a stay because of the disruption to business plans that

would result if the Court of Appeals reverses the First Report and

Order and the Commission subsequently modifies its rules.

5. U S West agrees with SNET and GTE's arguments, but additionally

claims that our default proxy prices, along with our misinterpretation

of 47 U.S.C. 252(i), the 1996 Act's ``most favored nation'' provision,

will impermissibly ``dictate'' the result of negotiations, as a

practical matter. Section 252(i) of the 1996 Act provides that a

``local exchange carrier shall make available any interconnection,

service, or network element provided under an agreement approved under

[section 252] to which it is a party to any other requesting

telecommunications carrier upon the same terms and conditions as those

provided in the agreement.'' 47 U.S.C. 252(i). Section 252(i) is known

as the 1996 Act's ``most favored nation'' provision, because it enables

carriers to obtain any interconnection, service, or network element on

terms as favorable as those contained in any state-commission-approved

interconnection agreement.

6. In general, parties opposing grant of the stay motion contend

that GTE's and SNET's motion does not satisfy the four factors that we

must consider in deciding whether to stay one of our orders. These

parties contend movants are unlikely to prevail on the merits of their

claims; that movants will suffer no irreparable harm if a stay is not

granted; that grant of a stay will harm third parties; and that the

public interest does not favor the grant of a stay.

III. Discussion

7. Petitioners' motions do not justify relief under the four-part

test for evaluating requests for interim relief. That test requires

proponents of a stay to demonstrate: (1) That they are likely to

prevail on the merits; (2) that they will suffer irreparable harm if a

stay is not granted; (3) that other interested parties will not be

harmed if the stay is granted; and (4) that the public interest favors

the grant of a stay. See Wisconsin Gas Co. v. FERC, 758 F.2d 669, 673-

74 (D.C. Cir. 1985); Washington Metropolitan Area Transit Authority v.

Holiday Tours, Inc., 559 F.2d 841, 843-43 (D.C. Cir. 1977); Virginia

Petroleum Jobbers Ass'n v. FPC, 259 F.2d 921, 925 (D.C. Cir. 1958). As

discussed below, we do not believe that petitioners have satisfied any,

much less all, of these requirements.

A. Irreparable Harm

8. A concrete showing of irreparable harm is an essential factor in

any request for a stay. `` `The key word' '' in an analysis of

irreparable harm is `` `irreparable.' '' ``[E]conomic loss does not, in

and of itself, constitute irreparable harm.'' Also, because competitive

harm is merely a type of economic loss, ``revenues and customers lost

to competition which can be regained through competition are not

irreparable.'' Moreover, even if the alleged harm is not fully

remediable, the irreparable harm factor is not satisfied absent a

demonstration that the harm is ``both certain and great; * * * actual

and not theoretical.'' ``Bare allegations of what is likely to occur

are of no value'' under this factor, because we ``must decide whether

the harm will in fact occur.'' Petitioners' three different claims of

harm absent a stay do not satisfy these exacting standards.

9. First, GTE and SNET argue specifically that they are harmed by

our interpretation of the ``just and reasonable'' standard of 47 U.S.C.

251(c) (2) and (3) for the pricing of interconnection and unbundled

network elements. They complain, in particular, that the pricing

methodology adopted in the First Report and Order unconstitutionally

prevents them from recovering the joint and common costs (hereinafter

collectively referred to as ``common costs''), and the historical

``embedded'' costs of such offerings to competing carriers. The First

Report and

[[Page 54101]]

Order generally uses the term ``common costs'' to refer to both joint

and common costs. Such ``below-cost'' pricing of section 251 offerings,

they claim, will result in unrecoverable lost revenues, customers, and

goodwill, particularly if state regulators do not allow them to

``rebalance'' (raise) rates for certain retail services that allegedly

have been subsidized in the past by the pricing regime that the section

251 offerings will erode.

10. These claims mischaracterize the First Report and Order.

Contrary to GTE's and SNET's assertions, our pricing methodology does

not require ``below-cost'' pricing. On the contrary, it affirmatively

provides for the recovery of all the economic costs of providing

interconnection and unbundled network elements, and includes a

reasonable profit. We refer to the general pricing methodology we

adopted as Total Element Long Run Incremental Cost or ``TELRIC''. As we

explained, economic costs are forward-looking costs or, in other words,

the costs that an efficient provider would incur to provide the service

or facility. We also specifically provided that unbundled element

prices shall include a ``normal profit.'' In mischaracterizing our

pricing methodology as ``below-cost,'' GTE and SNET must be claiming

that historical embedded costs are always greater than economic costs,

and that sections 251 and 252 must be read to entitle them to recover

historical costs even where those costs exceed economic costs. Both

assertions are unfounded. Nothing in section 251 or 252 creates an

entitlement for GTE, SNET and other incumbent LECs to assess rates for

interconnection and unbundled network elements that are designed to

recover historical costs that exceed economic costs. Economists

generally agree that historical embedded costs are not the relevant

costs in competitive markets, and would, in fact, interfere with the

development of efficient competition. Moreover, GTE and SNET are simply

wrong in claiming that the Commission's pricing methodology denies them

an opportunity to recover common costs. We stated clearly in the First

Report and Order that ``for the aggregate of all unbundled elements,

incumbent LECs must be given a reasonable opportunity to recover their

forward-looking common costs attributable to operating the wholesale

network.''

11. Even accepting GTE's and SNET's reliance on historical costs,

their contention that the First Report and Order requires below-cost

pricing is speculative. In any given instance, forward-looking costs

``may be higher or lower than historical embedded costs.'' Thus, the

claimed loss of revenues--which does not present a question of

constitutional deprivation in any event--is premature because the

actual revenues that GTE and SNET will receive will not be known until

completion of the voluntary negotiations and state arbitration

proceedings that will actually set interconnection and unbundled

element prices. We expressly stated in the First Report and Order that

``[i]ncumbent LECs may seek relief from the Commission's pricing

methodology if they provide specific information to show that the

pricing methodology, as applied to them, will result in confiscatory

rates.'' Moreover, as DOJ correctly notes in its Opposition at page 3,

the Commission possesses discretion in ratemaking matters, so long as

the rates that result are just. See, e.g., Duquesne Light Co. v.

Barasch, 488 U.S. 299 (1989) (in which the Court rejected a takings

claim where a utility was denied recovery of a $34 million capital

investment, prudent and reasonable when made, because the financial

integrity of the company was not jeopardized). Speculation about

anticipated lost revenues in the future does not approach, at this

stage, a showing of irreparable harm.

12. Second, petitioners contend that they will be harmed by the

application of the interim default proxy rates that the Commission

adopted. This argument is fatally flawed in that there is no certainty

that those proxies will ever be applied to petitioners. These proxies

were established for use by the states if a state was not able to set

prices based on economic cost studies consistent with our methodology

within the statutory arbitration periods. If, as these carriers assert,

the proxy rates are unreasonably below costs, they have every

incentive, and possess the information necessary, to present credible

economic cost studies to the relevant state commissions to allow the

state commissions to set prices for interconnection and unbundled

network elements that are based on actual cost studies, rather than by

proxies. Their claims of harm thus lack the requisite certainty and

concreteness for a stay. Further, as discussed below, the carriers'

challenges to those proxies mischaracterize the Commission's action and

are unfounded on the merits.

13. Third, petitioners argue that the Commission's rules

unreasonably constrain both their ability to negotiate the terms of

voluntary agreements with other telecommunications carriers that

request interconnection or unbundled network elements, and the states'

ability to arbitrate the terms of such agreements if voluntary

negotiations fail. Quite apart from the fact that the statute directs

the Commission to adopt implementing rules in 47 U.S.C. 251(d)(1),

these allegations of harm also are too speculative to justify

injunctive relief. Section 251(d)(1) provides that, ``[w]ithin 6 months

after the date of enactment of the Telecommunications Act of 1996, the

Commission shall complete all actions necessary to establish

regulations to implement the requirements of this section.'' We also

note that section 253(a) provides that ``[n]o State or local statute or

regulation, or other State or local legal requirement, may prohibit or

have the effect of prohibiting the ability of any entity to provide any

interstate or intrastate telecommunications service.'' Further, section

253(d) provides that ``[i]f, after notice and an opportunity for public

comment, the Commission determines that a State or local government has

permitted or imposed any statute, regulation, or legal requirement that

violates subsection (a) or (b) [relating to the states' ability to take

certain actions], the Commission shall preempt the enforcement of such

statute, regulation, or legal requirement to the extent necessary to

correct such violation or inconsistency.'' Our rules clearly do not

prohibit voluntary negotiations between incumbent LECs and their

potential competitors, as contemplated in 47 U.S.C. 252(a). Indeed,

they facilitate them. Petitioners are free to negotiate agreements with

other carriers upon any terms they choose so long as they are not

discriminatory and are consistent with the public interest. Although we

fully expect the existence of our rules to provide a context in which

free negotiations can proceed consistent with the pro-competitive

purposes of the 1996 Act, petitioners cannot plausibly suggest in view

of the explicit mandate of 47 U.S.C. 251(d)(1) that they have a

cognizable right to negotiate without any rules adopted by the FCC.

14. We also conclude that petitioners have not demonstrated that

the FCC's decision to interpret the just and reasonable rate standard

would necessarily harm them, as compared with a decision to allow

states independently to interpret that standard in arbitration

proceedings. To the extent that states might adopt different standards

absent any FCC guidance, such standards could conceivably be either

more or less favorable to incumbent local exchange carriers.

15. Finally, it is a meaningful response to all of the harms that

petitioners allege that nothing in the

[[Page 54102]]

First Report and Order prevents incumbent local exchange carriers from

taking steps substantially to protect themselves by seeking to insert

into their voluntary agreements provisos that permit reformation of the

terms of those agreements in the event that the order is overturned or

modified pursuant to judicial review. Similarly, nothing in the order

prevents states, in arbitrating such agreements, from imposing such

provisos.

B. Harm to Others

16. Petitioners also have not proved that a grant of their motions

would not harm others. As discussed more fully below (paras. 28-31),

the ``stay'' they seek would not simply maintain the status quo, but

rather would have a significant impact on whether potential new

competitors currently involved in negotiations and state arbitration

proceedings choose to enter local exchange and exchange access markets

at this crucial time, and, if so, whether their entry would be pursuant

to statutory standards as interpreted by the Commission, or some other

standards. To the extent that petitioners claim that the Commission's

interpretations burden them with lost revenues and competitive harm,

other interpretations allowing them to charge new entrants higher rates

or to impose upon them more restrictive terms likely would burden new

entrants and, consequently, retard or even eliminate competitive entry.

As between incumbent LECs and new entrants, the former are more likely

to be able to repair the adverse consequences of any erroneous decision

on whether to grant a stay.

17. Moreover, to the extent that petitioners argue not only that

the Commission adopted an erroneous pricing standard, but also that the

Commission erred by failing to leave the standard to individual states,

the carriers are advocating a system that clearly would cause new

entrants particular harm and might even discourage them from entering

these markets. As we noted in the First Report and Order, efficient

entry strategies in many cases require entry on a regional, rather than

state-by-state, basis. The removal of national standards could severely

impede, or at least increase the cost of, such strategies.

C. Public Interest

18. GTE and SNET assert that a stay would serve the public interest

because it would leave interconnection negotiations to private parties,

and arbitrations in the hands of state regulators, where Congress

intended them to be. They also contend that ``progress toward

competition will be gravely impaired'' in the absence of a stay because

the Commission's rules will give potential competitors false signals

that may ``encourage entry by companies that would not normally enter

if they had known the true costs involved.'' GTE and SNET claim that

this means that a stay is necessary to protect the public from such

``uneconomic entry'' and from the disruptions that would attend

corrective actions if the Commission's rules were overturned. U S West

additionally claims that the public interest will be harmed because the

Commission's rules and ``inflexible prices'' will ``prevent carriers

from negotiating interconnection agreements with each other on terms

that are more advantageous than the defaults.''

19. Contrary to GTE's and SNET's argument that a stay is needed to

avoid ``entry by companies that would not normally enter,'' a stay

might discourage entry by some who have every reasonable qualification

to compete and would do so under our rules. A stay in this crucial

initial period for the development of local exchange and local access

competition would not serve the public interest unless our rules were

virtually certain to be set aside on review and the actions taken on

interconnection requests in the meantime were irreversible. We believe

that our rules correctly carry out the objectives of Congress in

adopting section 251. Congress expressly mandated rulemaking by the

Commission to implement effectively the new statutory requirements.

Congress also made clear that time was of the essence, directing us to

``complete all actions necessary to establish [such] regulations'' by

August 8, 1996. As explained more fully below (paras. 30-31), a stay of

our rules would subvert Congress' plan to have such rules in place

during arbitration proceedings. Moreover, as we emphasized in the First

Report and Order, the rules we adopted under section 251 will have a

significant impact on the implementation of other provisions of the

1996 Act. We noted, for example, that our 251 rules ``will help the

states, the DOJ, and the FCC carry out their responsibilities under

section 271, and assist BOCs in determining what steps must be taken to

meet the requirements of section 271(c)(2)(B), the competitive

checklist.'' Section 271 establishes the requirements that a BOC must

satisfy in order to receive authorization to provide in-region

interLATA telecommunications services. Section 271(c)(2)(B) sets forth

a specific ``checklist'' of requirements that a BOC must meet as part

of the authorization process.

20. As to any necessary corrections after the fact, we believe that

agreements and arbitrations can take account of this possibility. As

noted above (paragraph 15), agreements and arbitrations could include

provisos calling for revisions if the Commission's rules should be

struck down. The joint motion acknowledges that the agreements can be

revised after the fact if the Commission's rules are upheld after a

stay is granted; its assertion that such revisions would not work if a

stay is denied and the rules later are struck down is implausible and

unexplained.

21. We further reject U S West's argument that our rules will harm

the public interest by providing carriers with insufficient flexibility

to negotiate agreements. For the reasons set out in this Order and in

the First Report and Order, we believe that our rules provide all

carriers with a full and fair opportunity, pursuant to the requirements

of the 1996 Act, voluntarily to negotiate interconnection agreements.

22. In summary on this point, the primary beneficiary of the

competitive policies our rules were designed to implement is the

public. We conclude that a stay would disserve the public interest

profoundly by eliminating our rules from the process of negotiation and

arbitration at the very most crucial time.

D. Likelihood of Success on the Merits

23. Because of the clear failure of petitioners to meet the

irreparable harm, harm to others, and public interest requirements for

obtaining a stay, we do not address specifically in this order all

their claims that we exceeded our statutory authority or that we acted

arbitrarily or capriciously. All the significant arguments raised by

the petitioners were squarely addressed in the First Report and Order.

We addressed issues concerning the Commission's authority under the

1996 Act to establish national pricing rules in section II.C. and II.D.

of the order. We discussed the legal and economic bases for the

establishment of the Commission's pricing methodology, including the

Fifth Amendment takings issue and the justification for the default

proxy ceilings and ranges, in section VII of the order. We addressed

arguments about whether we should permit competitors to reassemble

unbundled network elements, including possible effects on the resale

provisions of the 1996 Act and our access charge rules, in sections

V.H. and VII.B., respectively. In

[[Page 54103]]

section V.J., we set forth our rationale for including vertical

features within the definition of unbundled local switching; and in

sections IV.H., V.J., and VII.B., we discussed the compensation to

incumbent LECs for modifications made to their networks to accommodate

interconnection and unbundling. Finally, in section XIV.B of the First

Report and Order, we addressed arguments regarding the rights of third

parties to obtain ``any individual interconnection, service, or network

element arrangement'' under section 252(i). We need not repeat those

discussions in this order.

24. We will note, however that where the GTE and SNET address the

merits of the First Report and Order, they often mischaracterize and

distort the import of our analysis and conclusions. For instance, our

default proxy pricing measures are only interim approaches, setting

bounds for unbundled element pricing in the absence of state-approved

forward-looking cost studies. Our proxies will assist states in the

very near term when, because of time or staff resource constraints,

they may be unable to set prices by conducting or approving forward-

looking economic cost studies within the statutory time period set for

arbitrations. Indeed, the first set of state arbitrations must be

completed in early November under the deadlines established in the Act.

25. An example of GTE and SNET's misguided arguments on the merits

is their criticism of the Commission's unbundled loop proxy

calculation. In asserting that the Commission ``might just as well have

picked the default prices out of a hat,'' petitioners omit any mention

of the several pages of the order describing how we calculated our loop

proxy figures. As detailed in section VII.C. of the First Report and

Order, our proxy ceilings are based on prices set by six state

commissions as their best estimates of forward-looking costs after

analysis of economic cost studies. We then derived price ceilings for

individual states throughout the nation by adjusting the average of the

prices in these six states by the relative loop costs in those states,

as estimated by the two forward-looking economic cost-based models that

received significant comment by parties during this proceeding. To

allow a reasonable margin to enable the proxy ceiling to capture the

variation among states' forward-looking economic costing prices, we

then adjusted the resulting prices upward by five percent.

26. Contrary to GTE and SNET's arguments, it is no surprise, and

certainly not error, that the price ceiling for Florida--or for

Connecticut, Colorado, Michigan, Illinois, or Oregon, for that matter--

does not equal the results of the cost studies in those individual

states. We concluded that an average of the six states' prices

represented the best estimate of forward-looking loop costs available

to us at that time, and that relying on an average of the nationwide

relative costs from the Hatfield and BCM models was the best method for

deriving proxy price ceilings in individual states. We believe our

methodology is reasonable, even though our proxy ceiling in Florida is

$13.68 while the Florida Commission set a $20 per loop price for GTE

Florida. We note that the price set by the Florida Commission for GTE-

Florida was itself significantly higher than those the commission set

for BellSouth and United/Centel--the other local telephone companies

for which the state commission has set unbundled loop prices in

Florida. We concluded that the reliability of our foundation estimate

was enhanced by using an average of the prices established in all six

states for which information was available, rather than using just one

state or the six states individually. We did not, and could not in the

time frame permitted under the statute, independently verify the

accuracy of the six states' unbundled loop prices, many of which also

were interim in nature. Instead, we emphasized that each state, in our

judgment, used a standard that appeared to be reasonably close to the

forward-looking economic cost methodology specified in the First Report

and Order, although perhaps not consistent in every detail with our

prescribed methodology. Finally, we also are unpersuaded by GTE and

SNET's assertion that it was a fatal error to rely on the Florida cost

studies because the Florida Commission failed to include any

``significant'' contribution to GTE Florida's common costs. It is not

clear on its face that the ``insignificant'' contribution to common

costs is inconsistent with our requirement that there be a reasonable

allocation of common costs. In addition, the Florida Commission

affirmatively found that their rates were not below GTE Florida's

costs, and explicitly provided for recovery of a reasonable profit. GTE

and SNET have not demonstrated that use of the Florida Commission

prices as part of setting a proxy ceiling for unbundled loop prices was

so unreasonable as to result in a flawed loop proxy methodology. In

sum, we set default proxy price ceilings and ranges for use by state

commissions, in the absence of fully approved forward-looking cost

studies, based on the best evidence available to us within the

statutory time period for our decision.

27. Finally, petitioners' discussion of our proxy prices simply

ignores two key characteristics of our proxy rules. First, our order

makes clear that these proxies are interim in nature, and that states

utilizing the proxies must replace them with prices based on the

results of forward-looking cost studies as they become available.

Second, our rules permit incumbent LECs to obtain a price higher than

the Commission's proxy ceiling by submitting to a state commission

during an arbitration an economic cost study that demonstrates that the

incumbent LEC's costs do in fact exceed the proxy price. If the

forward-looking costs for petitioners are in fact higher than our proxy

price ceiling, as applied in an individual state, they need only

demonstrate that to the state commission.

E. Special Circumstances of This Case

28. In addition to movants' failure to satisfy the four-part test

for evaluating requests for stay, the circumstances of this specific

case particularly militate against the grant of their motions.

Ordinarily when we are asked to stay the effectiveness of one of our

orders or rules, the moving party seeks to maintain the status quo

until a reviewing authority can sort out the issues and render its

decision on the merits. That is not the case here, as the Joint Motion

itself recognizes. Under the terms of the 1996 Act, many voluntary

negotiations for private interconnection agreements and state-

supervised arbitrations that are now under way will be completed before

the end of the year, because Congress established strict timetables to

govern the negotiation and arbitration process. The question is whether

those proceedings will reflect the principles established by the

Commission to implement section 251.

29. Petitioners do not seek to preserve the status quo, but to

overturn Congress's requirement that state arbitrators ensure that

approved interconnection agreements reflect the Commission's

regulations implementing section 251. It is doubtful, in these

circumstances, that the ordinary standards for evaluating stay motions

should apply because, where the objective of the motion is not to

maintain the status quo, the courts have applied a more demanding

standard.

30. In our view, it is important that the regulations established

in the First Report and Order not be stayed while negotiation and

arbitration proceedings are taking place. As we stated in the First

Report and Order, the negotiations between incumbent LECs and new

[[Page 54104]]

entrants are not analogous to traditional commercial negotiations in

which each party owns or controls something the other party desires.

Under section 251, monopoly providers are required to make available

their facilities and services to requesting carriers that intend to

compete directly with the incumbent LECs for their customers and,

consequently, incumbents have strong incentives to resist such

obligations. Our national rules serve the critical role of equalizing

bargaining power by establishing certain baseline principles that will

``reduce delay and lower transaction costs''--burdens that we have

found ``impose particular hardships for small entities that are likely

to have less of a financial cushion than larger entities.'' A stay

would undermine that critical role at a most important time,

disproportionately harming the competition that the statute

contemplates from new entrants.

31. Moreover, Congress made clear that it wants our rules to be in

place at this critical time. Congress specifically ordered the

Commission to ``complete all actions necessary to establish regulations

to implement the requirements'' of section 251 by August 8, 1996. It

explained that it is ``important that the Commission rules to implement

new section 251 be promulgated within six months after the date of

enactment, so that potential competitors will have the benefit of being

informed of the Commission's rules in requesting access and

interconnection before the statutory window in new section 271(c)(1)(B)

shuts.'' Section 271(c)(1)(B) authorizes a Bell Operating Company (BOC)

to apply for approval to offer in-region interLATA telecommunications

services if it does not receive a request for access and

interconnection from a facilities-based competitor within seven months

after enactment. In section 252(c)(1), Congress further ordered state

arbitrators resolving interconnection disputes and imposing conditions

on telecommunications companies to ``ensure that such resolution and

conditions meet the requirements of section 251, including the

regulations prescribed by the Commission.'' Under the statute, those

state arbitrators must ``conclude the resolution of any unresolved

issues not later than 9 months after the date on which the local

exchange carrier received the [interconnection] request.'' Because many

LECs requested interconnection shortly after the enactment of the 1996

Act on February 8, 1996 (with the consequence that arbitration of such

requests must be completed soon), a stay of our rules would frustrate

implementation of the procedure established by Congress. As a matter of

mathematical certainty, the arbitrations cannot be completed on the

timetable established by Congress--with the arbitrators ensuring that

the agreements reflect the regulations prescribed by the Commission, as

Congress directed in section 252(c)(1)--if the regulations are stayed.

IV. Ordering Clauses

32. Accordingly, it is ordered that the joint motion for stay filed

by GTE Corporation and the Southern New England Telephone Company is

denied.

33. It is further ordered that the motion for stay filed by U S

West, Inc., is denied.

List of Subjects in 47 CFR Part 51

Communications common carriers, Telephone.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 96-26517 Filed 10-16-96; 8:45 am]

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