# Policy and Rules Concerning the Interstate, Interexchange Marketplace; Implementation of Section 254(g) of the Communications Act of 1934, as Amended

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## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** November 22, 1996
- **Citation:** 61 FR 59340

## Text

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 42, 61 and 64

[CC Docket No. 96-61; FCC 96-424]

Policy and Rules Concerning the Interstate, Interexchange
Marketplace; Implementation of Section 254(g) of the Communications Act
of 1934, as Amended

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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

SUMMARY: The Second Report and Order (Order) released October 31, 1996
relieves nondominant interexchange carriers from filing with the
Commission tariffs for interstate, domestic, interexchange services.
The Order furthers the pro-competitive and deregulatory objectives of
the Telecommunications Act of 1996 by ending a regulatory regime that
is no longer necessary for nondominant interexchange carriers in the
interstate, domestic, interexchange market and by fostering increased
competition in this market.

EFFECTIVE DATE: December 23, 1996.

[[Page 59341]]

FOR FURTHER INFORMATION CONTACT: Melissa Waksman, Attorney, or
Christopher Heimann, Attorney, Common Carrier Bureau, Policy and
Program Planning Division, (202) 418-1580. For additional information
concerning the information collections contained in this Report and
Order contact Dorothy Conway at 202-418-0217, or via the Internet at
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second
Report and Order adopted October 29, 1996, and released October 31,
1996. The full text of this Second Report and Order is available for
inspection and copying during normal business hours in the FCC
Reference Center (Room 239), 1919 M St., NW., Washington, DC. The
complete text also may be obtained through the World Wide Web, at
http://www.fcc.gov/Bureaus/Common Carrier/Orders/fcc96325.wp, or may be
purchased from the Commission's copy contractor, International
Transcription Service, Inc., (202) 857-3800, 2100 M St., NW., Suite
140, Washington, DC 20037. Pursuant to the Telecommunications Act of
1996, the Commission released a Notice of Proposed Rulemaking, Policy
and Rules Concerning the Interstate, Interexchange Marketplace;
Implementation of Section 254(g) of the Communications Act of 1934, as
amended, CC Docket No. 96-61 (61 FR 14717 (April 3, 1996)) to seek
comment on rules to implement section 254(g) of the 1996 Act.

Regulatory Flexibility Analysis

As required by the Regulatory Flexibility Act, the Report and Order
contains a Final Regulatory Flexibility Analysis which is set forth in
the Second Report and Order. A brief description of the analysis
follows.
Pursuant to Section 604 of the Regulatory Flexibility Act, the
Commission performed a comprehensive analysis of the Second Report and
Order with regard to small entities. This analysis includes: (1) A
succinct statement of the need for, and objectives of, the Commission's
decisions in the Second Report and Order; (2) a summary of the
significant issues raised by the public comments in response to the
initial regulatory flexibility analysis, a summary of the Commission's
assessment of these issues, and a statement of any changes made in the
Second Report and Order as a result of the comments; (3) a description
of and an estimate of the number of small entities and small incumbent
LECs to which the Second Report and Order will apply; (4) a description
of the projected reporting, recordkeeping and other compliance
requirements of the Second Report and Order, including an estimate of
the classes of small entities which will be subject to the requirement
and the type of professional skills necessary for compliance with the
requirement; (5) a description of the steps the Commission has taken to
minimize the significant economic impact on small entities consistent
with the stated objectives of applicable statutes, including a
statement of the factual, policy, and legal reasons for selecting the
alternative adopted in the Second Report and Order and why each one of
the other significant alternatives to each of the Commission's
decisions which affect small entities was rejected.
The rules adopted in this Second Report and Order are necessary to
implement the provisions of the Telecommunications Act of 1996.

Paperwork Reduction Act

OMB Approval Number: 3060-0704.
Title: Policy and Rules Concerning the Interstate, Interexchange
Marketplace; Implementation of Section 254(g) of the Communications Act
of 1934, as amended, CC Docket No. 96-61.
Respondents: Business or other for-profit.
Public reporting burden for the collection of information is
estimated as follows:

----------------------------------------------------------------------------------------------------------------
Number of respondents Annual hour burden per
Information collection (approx.) response Total annual burden
----------------------------------------------------------------------------------------------------------------
Detariffing *.................. 0 0...................... 0
Certification requirement...... 519 0.5 hour............... 259.5
Tariff cancellation 519 2 hours per page (1,252 2,504 (one-time)
requirement: completely cancel pages) (one-time).
tariffs.
Tariff cancellation 519 2 hours per page 72,094 (one-time)
requirement: revise mixed (36,047 pages) (one-
tariffs to remove domestic time).
services.
Information disclosure 519 120 hours (one-time)... 62,280 (one-time)
requirement.
Recordkeeping requirement...... 519 2 hours................ 1,038
----------------------------------------------------------------------------------------------------------------
* The Commission has eliminated the tariffing requirement now imposed on nondominant interexchange carriers for
interstate, domestic, interexchange services.

Total Annual Burden: 138,175.5 hours, of which 136,878 will be one-
time.
Frequency of Response: Annual, except for tariff cancellation
requirement, which will be one-time.
Estimates Costs Per Respondent: $435,000.
Needs and Uses: The attached item eliminates the requirement that
nondominant interexchange carriers file tariffs for interstate,
domestic, interexchange telecommunications services. In order to
facilitate enforcement of such carriers' statutory obligation to
geographically average and integrate their rates, and to make it easier
for customers to compare carriers' service offerings, the attached
Order requires affected carriers to maintain, and to make available to
the public in at least one location, information concerning their
rates, terms and conditions for all of their interstate, domestic,
interexchange services.

Synopsis of Second Report and Order

I. Introduction

1. On February 8, 1996, the Telecommunications Act of 1996 (1996
Act) was enacted. Telecommunications Act of 1996, Public Law 104-104,
110 Stat. 56, codified at 47 U.S.C. 151 et seq. The goal of the 1996
Act is to establish ``a pro-competitive, de-regulatory national policy
framework'' in order to make available to all Americans advanced
telecommunications and information technologies and services ``by
opening all telecommunications markets to competition.'' Joint
Explanatory Statement of the Committee of Conference, S. Conf. Rep. No.
230, 104th Cong., 2d Sess. 113 (1996). An integral element of this
framework is the requirement in Section 10 of the Communications Act of
1934, as amended (Communications Act), that the Commission forbear from
applying any provision of the Communications Act, or any of the
Commission's regulations, to a telecommunications carrier or
telecommunications service, or class thereof, if the Commission

[[Page 59342]]

makes certain specified findings with respect to such provisions or
regulations. 47 U.S.C. 160(a).
2. On March 25, 1996, the Commission released a Notice of Proposed
Rulemaking initiating a review of its regulation of interstate,
domestic, interexchange telecommunications services in light of the
passage of the 1996 Act and the increasing competition in the
interexchange market over the past decade. Policy and Rules Concerning
the Interstate, Interexchange Marketplace; Implementation of Section
254(g) of the Communications Act of 1934, as amended, CC Docket No. 96-
61, Notice of Proposed Rulemaking, 61 FR 14717 (April 3, 1996) (NPRM).
In this Report and Order (Order), we consider issues raised in the NPRM
relating to tariff forbearance. We also consider, but decline to act at
this time on, the Commission's proposal in the NPRM to allow
nondominant interexchange carriers to bundle customer premises
equipment (CPE) with interstate, interexchange telecommunications
services. In the NPRM, the Commission also raised issues relating to:
market definition; separation requirements for nondominant treatment of
local exchange carriers in their provision of certain interstate,
interexchange services; and implementation of the rate averaging and
rate integration requirements in new section 254(g) of the
Communications Act. On August 7, 1996, the Commission issued a Report
and Order implementing the rate averaging and rate integration
requirements. See Policy and Rules Concerning the Interstate,
Interexchange Marketplace; Implementation of Section 254(g) of the
Communications Act of 1934, as amended, CC Docket No. 96-61, Report and
Order, 61 FR 42558 (August 16, 1996) (Geographic Rate Averaging Order).
We will address the market definition and separation requirements in an
upcoming order.
3. For the reasons set forth below, we conclude that the statutory
forbearance criteria in Section 10 are met for the Commission to no
longer require or allow nondominant interexchange carriers to file
tariffs pursuant to Section 203 for their interstate, domestic,
interexchange services. We conclude that a policy of complete
detariffing (i.e., not permitting nondominant interexchange carriers to
file tariffs) for such services would further advance the statutory
objectives of the forbearance provision, Section 10. We therefore order
all nondominant interexchange carriers to cancel their tariffs for
interstate, domestic, interexchange services within nine months from
the effective date of this Order. In addition, we conclude that our
decision to order complete detariffing renders moot the contract tariff
and reseller issues raised in the NPRM.
4. The actions we take here will further the pro-competitive,
deregulatory objectives of the 1996 Act by fostering increased
competition in the market for interstate, domestic, interexchange
telecommunications services. Since the early 1980's, the Commission has
gradually adapted its regulatory regime for such services from one in
which all interexchange carriers were subject to the full panoply of
Title II regulatory requirements, including Section 203 tariff filing
requirements, to one in which pricing and other regulatory requirements
have been replaced by market forces. Our decision in this proceeding
marks the end of the transformation of the regulatory regime governing
interstate, domestic, interexchange services. After our policy of
complete detariffing has been implemented, carriers in the interstate,
domestic, interexchange marketplace will be subject to the same
incentives and rewards that firms in other competitive markets
confront. We seek ultimately to accomplish the same result in every
telecommunications market, because we believe that effectively
competitive markets produce maximum benefits for consumers, carriers
and the nation's economy.
5. Our decision to forbear from applying the statutory requirement
that compels nondominant interexchange carriers to file tariffs for
interstate, domestic, interexchange services and to implement a policy
of complete detariffing does not signify in any way a departure from
our historic commitment to protecting consumers of interstate
telecommunications services against anticompetitive practices. We
reaffirm our pledge to use our complaint process to enforce vigorously
our statutory and regulatory safeguards against carriers that attempt
to take unfair advantage of American consumers. Moreover, when
interstate, domestic, interexchange services are completely detariffed,
consumers will be able to take advantage of remedies provided by state
consumer protection laws and contract law against abusive practices.
6. We note that the California Public Utilities Commission recently
adopted a complete detariffing regime for intrastate long-distance
services offered in California. Public Utilities Commission of the
State of California, Rulemaking on the Commission's Own Motion to
Establish a Simplified Registration Process for Non-Dominant
Telecommunications Firms, R. 94-02-003, Interim Opinion, at Appendix A,
Rule 7 (released September 20, 1996). We encourage other state
regulatory commissions to seek the legislative authority necessary to
enable them to adopt a complete detariffing policy when they find, as
the California Commission did, that competition is sufficient to
obviate the need for tariffing of intrastate long-distance services.

II. Forbearance From Tariff Filing Requirements for Nondominant
Interexchange Carriers

A. Background
i. The Telecommunications Act of 1996
7. The 1996 Act provides for regulatory flexibility by requiring
the Commission to forbear from applying any regulation or any provision
of the Communications Act, to telecommunications carriers or
telecommunications services, or classes thereof, if the Commission
determines that certain conditions are satisfied. Specifically, the
1996 Act amends the Communications Act to provide that:

[T]he Commission shall forbear from applying any regulation or
any provision of this Act to a telecommunications carrier or
telecommunications service, or class of telecommunications carriers
or telecommunications services, in any or some of its or their
geographic markets, if the Commission determines that--
(1) Enforcement of such regulation or provision is not necessary
to ensure that the charges, practices, classifications or
regulations by, for, or in connection with that telecommunications
carrier or telecommunications service are just and reasonable, and
are not unjustly or unreasonably discriminatory;
(2) Enforcement of such regulation or provision is not necessary
for the protection of consumers; and
(3) Forbearance from applying such provision or regulation is
consistent with the public interest.

In making the public interest determination, the 1996 Act requires
the Commission to consider whether forbearance will promote competitive
market conditions, including the extent to which forbearance will
enhance competition among providers of telecommunications services. New
Section 10(b) also provides that, ``[i]f the Commission determines that
such forbearance will promote competition among providers of
telecommunications services, that determination may be the basis for a
Commission finding that forbearance is in the public interest.''

[[Page 59343]]

ii. The Competitive Carrier Proceeding
8. In the Competitive Carrier proceeding, the Commission pursued
pro-competitive and deregulatory goals similar to those underlying the
1996 Act. The Commission examined how its regulations should be adapted
to reflect and promote increasing competition in interexchange
telecommunications markets, and sought to reduce or eliminate its
tariff filing and facilities authorization requirements for nondominant
interexchange carriers. In Competitive Carrier, the Commission
distinguished between two kinds of carriers--those with market power
(dominant carriers) and those without market power (nondominant
carriers).
9. In a series of orders beginning in 1982, the Commission
established a permissive detariffing policy for nondominant carriers,
pursuant to which such carriers were permitted, although not required,
to file tariffs with the Commission. See Second Report and Order, 47 FR
37899 (August 27, 1982); Fourth Report and Order, 48 FR 52452 (November
18, 1983); Fifth Report and Order, 50 FR 1215 (January 10, 1985). The
Commission found that ``there was no evidence that it is in the public
interest for us to continue receiving streamlined tariff and Section
214 filings from certain specialized common carriers to prevent them
from charging unjust and unreasonable rates or making service
unavailable.'' The Commission concluded that market forces, together
with the Section 208 complaint process and the Commission's ability to
reimpose tariff-filing and facilities-authorization requirements, were
sufficient to protect the public interest with respect to nondominant
interexchange carriers subject to forbearance. The Commission also
noted that firms lacking market power could not charge unlawful rates
because customers could always turn to competitors. Sixth Report and
Order, 50 FR 1215 (January 10, 1985).
10. In 1985, in the Sixth Report and Order, the Commission
established a mandatory detariffing policy for all carriers subject to
the Commission's forbearance policy, because it concluded that policy
would further its objectives of ensuring just and reasonable rates, and
that it could rely instead on market forces, the complaint process, and
its ability to reimpose tariff requirements, if necessary, to fulfill
its mandate under the Communications Act. The Commission stated:
``Throughout this rulemaking, we have determined that enforcement of
Sections 201 and 202 objectives of just and reasonable rates could be
effectuated for certain carriers without the filing of tariffs and
through market forces and the administration of the complaint
process.'' Carriers subject to forbearance were required to ``file
supplements to cancel their tariffs on file with the Commission within
six months of the effective date of [the Sixth Report and Order].'' In
order to facilitate the complaint process and its enforcement of
statutory requirements that carriers charge just and reasonable rates,
the Commission also ordered carriers to maintain price and service
information on file in their offices that could be produced readily
upon inquiry from the Commission in order to substantiate the
lawfulness of the carriers' rates, terms and conditions for service.
11. The Sixth Report and Order subsequently was vacated and
remanded by the U.S. Court of Appeals for the D.C. Circuit, on the
ground that the Commission lacked the statutory authority to prohibit
carriers from filing tariffs. MCI Telecommunications Corp. v. FCC, 765
F.2d 1186, 1192 (D.C. Cir. 1985). The court, however, did not reach the
issue of whether the Commission's earlier permissive detariffing orders
were valid. Id. at 1196. The Commission, accordingly, continued to
apply its permissive detariffing policy to nondominant interexchange
carriers until 1992, when the U.S. Court of Appeals for the D.C.
Circuit vacated the Commission's permissive detariffing regime in AT&T
Co. v. FCC. AT&T Co. v. FCC, 978 F.2d 727 (D.C. Cir. 1992), cert.
denied, MCI Telecommunications Corp. v. AT&T Co., 509 U.S. 913 (1993).
The court, in reviewing an FCC decision disposing of a complaint filed
by AT&T against MCI, vacated the Commission's Fourth Report and Order,
thereby invalidating the Commission's permissive detariffing policy for
nondominant carriers. Id. at 737. While stating that it did ``not
quarrel with the Commission's policy objectives,'' the court found that
the Communications Act as it existed at that time did not give the
Commission authority to adopt such a policy. Id. at 736.
12. Prior to the issuance of the U.S. Court of Appeals' decision
invalidating the permissive detariffing policy, the Commission adopted
a Report and Order in a rulemaking proceeding commenced in response to
AT&T's complaint. See Tariff Filing Requirements for Interstate Common
Carriers, CC Docket No. 92-13, Report and Order, 7 FCC Rcd 8072 (1992).
(While adopted prior to the court's finding that the Commission's
permissive detariffing policy exceeded the Commission's statutory
authority, the order was released after the court vacated the Fourth
Report and Order). The Commission again determined that permissive
detariffing was within its authority under the Communications Act. Id.
at 8074. The U.S. Court of Appeals for the D.C. Circuit granted summary
reversal of the Commission's order based on the court's earlier AT&T v.
FCC decision. AT&T Co. v. FCC, Nos. 92-1628, 92-1666, 1993 WL 260778
(D.C. Cir. June 4, 1993) (per curiam), aff'd, MCI Telecommunications
Corp. v. AT&T Co., 114 S. Ct. 2223 (1994). In affirming the U.S. Court
of Appeal's ruling, the Supreme Court found that Section 203(b)(2) of
the Communications Act gives the Commission authority to modify the
Communications Act's tariff filing requirement, but not to eliminate it
entirely. MCI Telecommunications Corp. v. AT&T Co., 114 S. Ct. 2223,
2229-31 (1994). The Commission thereafter modified the tariff filing
requirements and established a one-day tariff notice period for all
nondominant interexchange carriers after again concluding that
traditional tariff regulation of nondominant interexchange carriers is
not necessary to ensure just and reasonable rates. Tariff Filing
Requirements for Nondominant Common Carriers, 58 FR 44457 (August 23,
1993) (Nondominant Filing Order), vacated on other grounds,
Southwestern Bell Corp. v. FCC, 43 F.3d 1515 (D.C. Cir. 1995) (finding
the range of rates provision in the Nondominant Filing Order violated
Section 203(a) of the Communications Act). The Commission subsequently
eliminated the range of rates provision and reinstated the other tariff
filing requirements, including the one-day notice period, adopted in
the Nondominant Filing Order. Tariff Filing Requirements for
Nondominant Common Carriers, 60 FR 52865 (October 11, 1995)
(Nondominant Filing Order II). In addition, under the streamlined
regulatory procedures for nondominant carriers established in the
Competitive Carrier proceeding, such carriers are not subject to price
cap regulation, and their tariff filings are presumed to be lawful and
do not require cost support data. See First Report and Order, 45 FR
76148 (November 18, 1980). Nondominant carriers also are subject to
streamlined Section 214 procedures for the construction, extension or
operation of new transmission facilities, as well as for the proposed
reduction or discontinuance of service.
13. Against this background, Congress enacted Section 401 of the
1996 Act, adding Section 10 to the

[[Page 59344]]

Communications Act. As discussed below, we find that this section
provides the Commission with the forbearance authority that the courts
had previously concluded was lacking. The Commission now has express
authority to eliminate unnecessary regulation and to carry out the pro-
competitive, deregulatory objectives that it pursued in the Competitive
Carrier proceeding for more than a decade.
B. Analysis of Statutory Requirements
i. Introduction
14. In the NPRM, the Commission tentatively concluded that it could
make the determinations necessary to forbear from applying the
provisions of Section 203 to nondominant carriers with respect to their
interstate, domestic, interexchange services. Specifically, the
Commission tentatively found that enforcement of the Section 203 tariff
filing requirements with respect to nondominant interexchange carriers:
(1) Is not necessary to ensure that such carriers' charges, practices,
or classifications are just and reasonable, and are not unjustly or
unreasonably discriminatory; and (2) is not necessary for the
protection of consumers. The Commission also tentatively found that
forbearing from applying Section 203 to nondominant interexchange
carriers is consistent with the public interest. The Commission
therefore tentatively concluded that it must forbear from applying
Section 203 tariff filing requirements to nondominant interexchange
carriers with respect to their interstate, domestic, interexchange
services. The Commission also tentatively concluded that it should not
permit nondominant interexchange carriers to file tariffs for such
services (that is, that it should adopt a policy of complete
detariffing), because it found that allowing nondominant interexchange
carriers to file tariffs on a voluntary basis would not be in the
public interest, and that complete detariffing would promote
competition in the interstate, domestic, interexchange market, deter
price coordination, and better protect consumers.
15. In this section, we consider whether the complete detariffing
policy proposed in the NPRM satisfies each of the statutory forbearance
criteria. We note that our analysis under the first two criteria does
not differentiate between our proposal in the NPRM to adopt a complete
detariffing policy and other detariffing options, such as detariffing
on a permissive basis (that is, allowing, but not requiring,
nondominant interexchange carriers to file tariffs with respect to
their interstate, domestic, interexchange services). Based on the
language of the first two statutory criteria, the analysis of all
detariffing proposals under the first two forbearance criteria would be
the same, because in each case the relevant inquiries are whether
tariff filings are necessary to ensure that nondominant interexchange
carriers' charges, practices, or classifications are just and
reasonable, and are not unjustly or unreasonably discriminatory, and
whether tariff filings are necessary to protect consumers. However, the
third statutory forbearance criterion, which requires an analysis of
whether the proposed forbearance is consistent with the public
interest, necessitates an analysis specific to the type of forbearance
at issue. Accordingly, in addressing the third criterion, we consider
whether adoption of a complete, or permissive, detariffing policy is
consistent with the public interest.
ii. Statutory Criteria for Forbearance
a. Are Tariff Filing Requirements Necessary To Ensure that the
Charges, Practices, Classifications or Regulations for the Interstate,
Domestic, Interexchange Services of Nondominant Interexchange Carriers
Are Just and Reasonable, and Are Not Unjustly or Unreasonably
Discriminatory?
(1) Background
16. As noted above, the 1996 Act requires the Commission to forbear
from applying Section 203 tariff filing requirements to interstate,
domestic, interexchange services offered by nondominant interexchange
carriers if the Commission determines that the three statutory
forbearance criteria are satisfied. With respect to the first
criterion, the Commission in the NPRM tentatively concluded that tariff
filing requirements are not necessary to ensure that nondominant
interexchange carriers' charges, practices, classifications or
regulations for interstate, domestic, interexchange services are just
and reasonable, and are not unjustly or unreasonably discriminatory.
The Commission also tentatively concluded that the Communications Act's
objectives of just, reasonable, and not unjustly or unreasonably
discriminatory rates could be achieved effectively through other means,
specifically through market forces and the administration of the
complaint process. The Commission therefore tentatively concluded that
elimination of tariff filing requirements for nondominant interexchange
carriers for their interstate, domestic, interexchange offerings would
satisfy the first statutory prerequisite for forbearance.
(2) Comments
17. Many commenters concur with the Commission's tentative
conclusion that requiring nondominant interexchange carriers to file
tariffs for their interstate, domestic, interexchange service offerings
is unnecessary to ensure that charges, practices, and classifications
for such services are just and reasonable, and are not unjustly or
unreasonably discriminatory. These parties claim that nondominant
carriers cannot rationally impose prices or terms that are unjust,
unreasonable, or unjustly or unreasonably discriminatory, because any
attempt to do so would result in a loss of market share. Several of
these parties add that the Section 208 complaint process is adequate to
remedy any illegal carrier conduct that does occur. Thus, they conclude
that market forces and the administration of the complaint process will
prevent nondominant interexchange carriers from behaving
anticompetitively in violation of Sections 201(b) and 202(a) of the
Communications Act.
18. Other commenters, however, argue that market forces are
currently inadequate to ensure that the charges, practices,
classifications or regulations of nondominant interexchange carriers
are just and reasonable, and are not unjustly or unreasonably
discriminatory, because the market for interstate, domestic,
interexchange services is not yet fully competitive. In addition, the
Tennessee Attorney General and ACTA argue that AT&T is able profitably
to charge higher rates than its competitors, demonstrating that
existing competition alone does not constrain AT&T's prices, and
therefore is not sufficient to regulate the marketplace.
19. Several commenters, including a number of state commissions,
argue that in the absence of tariffs, the Section 208 complaint process
would not be adequate to ensure that the charges, practices, and
classifications of nondominant interexchange carriers are just and
reasonable, and not unjustly or unreasonably discriminatory.
These commenters insist that tariffs provide information necessary
to enforce Sections 201 and 202 and to investigate fraudulent
practices. In addition, they argue that tariffs ensure accurate
information in the event of a dispute. They conclude that, without
tariffs, consumers and other interested parties will lack adequate
information to bring a complaint. TRA adds that the

[[Page 59345]]

complaint process is too limited because it focuses only on legal
issues, while the tariff review process allows policy analysis as well.
20. TRA argues that eliminating tariff filing requirements in a
market that is less than perfectly competitive will enable carriers to
discriminate against resellers, many of which are small and mid-sized
businesses. TRA claims that the resale market will not survive
detariffing, and that such a result is contrary to the objectives of
the Communications Act and Commission policy, which recognizes that a
vibrant resale market provides residential and small business customers
with access to lower rates, puts downward pressure on prices, and helps
prevent discriminatory pricing by increasing the number of parties
offering similar services.
(3) Discussion
21. We adopt the tentative conclusion in the NPRM that tariffs are
not necessary to ensure that the rates, practices, and classifications
of nondominant interexchange carriers for interstate, domestic,
interexchange services are just and reasonable and not unjustly or
unreasonably discriminatory. We conclude, consistent with the AT&T
Reclassification Order, that the high churn rate among consumers of
interstate, domestic, interexchange services indicates that consumers
find the services provided by interexchange carriers to be close
substitutes, and that consumers are likely to switch carriers in order
to obtain lower prices or more favorable terms and conditions. In
addition, as we found in the AT&T Reclassification Order, residential
and small business customers are highly demand-elastic, and will switch
carriers in order to obtain price reductions and desired features.
Because of the high elasticity of demand for interstate, domestic,
interexchange services, we find it is highly unlikely that
interexchange carriers that lack market power could successfully charge
rates, or impose terms and conditions, for interstate, domestic,
interexchange services that violate Section 201 or 202 of the
Communications Act, because any attempt to do so would cause their
customers to switch to different carriers. Thus, we believe that market
forces will generally ensure that the rates, practices, and
classifications of nondominant interexchange carriers for interstate,
domestic, interexchange services are just and reasonable and not
unjustly or unreasonably discriminatory. Moreover, if nondominant
interexchange carriers service offerings violate Section 201 or Section
202 of the Communications Act, we have other, more effective means of
remedying such conduct. Specifically, we can address any illegal
carrier conduct through the exercise of our authority to investigate
and adjudicate complaints under Section 208.
22. We also reject the unsupported suggestion that current levels
of competition are inadequate to constrain AT&T's prices. In the AT&T
Reclassification Order, we found that AT&T cannot unilaterally exercise
market power in the interstate, domestic, interexchange market. We
based this finding on, inter alia, AT&T's declining market share, the
supply elasticity in this market, the fact that both residential and
business customers are highly demand-elastic, and an analysis of AT&T's
cost, structure, size, and resources. The Tennessee Attorney General
and ACTA offer no new evidence that would lead us to alter our
conclusion that AT&T lacks market power in this market.
23. We also are not persuaded that tariffs are necessary to
constrain the prices and practices of nondominant interexchange
carriers with respect to interstate, domestic, interexchange services.
As discussed below, we find that evidence of tacit price coordination
in the market for interstate, domestic, interexchange services is
inconclusive. Moreover, we find that tariff filings by nondominant
interexchange carriers for interstate, domestic, interexchange services
may facilitate, rather than deter, price coordination, because under a
tariffing regime, all rate and service information is collected in one,
central location. Therefore, we believe that complete detariffing,
along with additional, competitive, facilities-based entry into the
interstate, domestic, interexchange market, will help deter attempts to
increase rates for interstate, domestic, interexchange services through
tacit price coordination. We therefore conclude that complete
detariffing of interstate, domestic, interexchange services offered by
nondominant interexchange carriers will further the Communications
Act's objective that carriers' rates, practices, classifications, and
regulations be just, reasonable and not unjustly or unreasonably
discriminatory.
24. In the NPRM, the Commission acknowledged that the Commission
initially relaxed its regulation of nondominant carriers in the
Competitive Carrier proceeding in part because it concluded that the
availability of service from a nationwide dominant carrier subject to
full Title II regulation would further constrain nondominant carriers.
We therefore sought comment on whether the absence of a nationwide
dominant carrier should affect our determination to forbear from
requiring nondominant interexchange carriers to file tariffs for
interstate, domestic, interexchange services. No commenter addressed
this issue, and we conclude that the absence of a dominant
interexchange carrier in today's competitive interstate, domestic,
interexchange market should not alter our analysis, because nondominant
interexchange carriers cannot successfully price their services
anticompetitively in this market. In addition, the Commission has
previously found that market forces effectively discipline nondominant
carriers even in the absence of a dominant carrier. See Implementation
of Sections 3(n) and 332 of the Communications Act, Regulatory
Treatment of Mobile Services, 59 FR 18493 (April 19, 1994).
25. We also reject the claim that, without tariffs, consumers and
other parties will lack sufficient information to challenge the
lawfulness of nondominant interexchange carriers' rates, terms and
conditions for domestic service, in particular on the ground that such
carriers' rates, practices, and classifications are unjustly or
unreasonably discriminatory. In the absence of tariffs, customers will
still receive rate information in the same manner they always have,
through the billing process. In addition, carriers likely will be
obligated to notify their customers of any changes in their rates,
terms and conditions for service as part of their contractual
relationship. Moreover, tariffs may not be the best vehicle for
disclosure of rate and service information for nondominant
interexchange carriers to residential and small business customers,
because such end-users rarely, if ever, consult these tariff filings,
and few of them are able to understand tariff filings even if they do
examine them. We further believe that nondominant interexchange
carriers will generally provide customers rate and service information
that currently is contained in tariffs, in an accessible format in
order to market their services and to retain customers. Nevertheless,
we acknowledge that, even in a competitive market, nondominant
interexchange carriers might not provide complete information
concerning all of their interstate, domestic, interexchange service
offerings to all consumers, and that some consumers may not be able to
determine the particular rate plans that are most appropriate for them,
based on their individual calling patterns. (For

[[Page 59346]]

example, nondominant interexchange carriers might engage in targeted
advertising concerning particular discounts and rate plans that might
be the least costly, and most appropriate, plan for some, but not all,
consumers.) Accordingly, and in light of considerations regarding the
enforcement of the 1996 Act's geographic rate averaging and rate
integration requirements, we will require carriers to provide rate and
service information to the public, as we discuss below. In addition, as
the Commission did in the Sixth Report and Order, we will require
nondominant interexchange carriers to maintain price and service
information and to make such information available on a timely basis to
the Commission upon request. We therefore conclude that, in the absence
of tariffs for nondominant carriers' interstate, domestic,
interexchange services, consumers and other parties will have access to
sufficient information about such services for purposes of bringing
complaints. On June 12, 1996, the Office of Management and Budget
approved the Commission's proposal in the NPRM to require nondominant
interexchange carriers to maintain at their premises price and service
information regarding their interstate, interexchange offerings that
they can submit to the Commission upon request. Notice of Office of
Management and Budget Action, OMB No. 3060-0704 (June 12, 1996). In
reviewing the proposed information collection requirements in the NPRM,
including the proposal to eliminate tariff filing requirements by
nondominant interexchange carriers for interstate, domestic,
interexchange services, the Office of Management and Budget ``strongly
recommend[ed] that the [Commission] investigate potential mechanisms to
provide consumers, State regulators, and other interested parties with
some standardized pricing information.''
26. We reject TRA's claim that the complaint process is inadequate
to protect consumers. TRA maintains that the Commission addresses only
legal issues in a complaint proceeding, whereas in the tariff review
process, the Commission can address policy issues as well. TRA is
incorrect, however. Regardless of whether the inquiry is part of a
complaint or a tariff review proceeding, the Commission can address all
relevant legal and policy issues. In the particular context of Section
208 complaint proceedings, we will continue to examine legal, and,
where appropriate, policy matters to give full effect to the
requirements that a carrier's rates, terms, and conditions are just,
reasonable, and not unreasonably discriminatory, as well as the
requirements of our rules and orders.
27. Contrary to TRA's assertions that the resale market will not
survive in the absence of tariffs, we conclude that our decision to
forbear from requiring nondominant interexchange carriers to file
tariffs for interstate, domestic, interexchange services will not
affect such carriers' obligations under Sections 201 and 202 to charge
rates, and to impose practices, classifications and regulations, that
are just and reasonable and not unjustly or unreasonably
discriminatory. In addition, as discussed below, we will require
nondominant interexchange carriers to provide rate and service
information on all of their interstate, domestic, interexchange
services to consumers, including resellers. Thus, resellers will be
able to determine whether nondominant interexchange carriers have
imposed rates, practices, classifications or regulations that
unreasonably discriminate against resellers, and to bring a complaint,
if necessary.
28. For the reasons discussed herein, we conclude that tariffs are
not necessary to ensure that the rates, practices, classifications, and
regulations of nondominant interexchange carriers for interstate,
domestic, interexchange services are just and reasonable and not
unjustly or unreasonably discriminatory. We therefore conclude that the
proposal to adopt complete detariffing meets the first of the statutory
forbearance criteria.
b. Are Tariff Filing Requirements for the Interstate, Domestic,
Interexchange Services of Nondominant Interexchange Carriers Necessary
for the Protection of Consumers?
(1) Background
29. In the NPRM, the Commission tentatively concluded that
requiring nondominant interexchange carriers to file tariffs for
interstate, domestic, interexchange services is not necessary to
protect consumers, and that such tariff filing requirements could harm
consumers by undermining the development of vigorous competition.
(2) Comments
30. A number of parties support the Commission's tentative
conclusion that requiring nondominant interexchange carriers to file
tariffs for interstate, domestic, interexchange service offerings is
not necessary to protect consumers. Several of these parties claim that
nondominant interexchange carriers cannot rationally charge prices, or
impose terms and conditions that harm consumers without losing
customers. In addition, many parties assert that the complaint process
is adequate to remedy any illegal carrier conduct that violates the
Communications Act and harms consumers.
31. Several commenters also support the Commission's tentative
conclusion that tariff filing requirements actually harm consumers by
impeding the development of vigorous competition and by leading to
higher rates.
32. A number of state commissions and other commenters assert,
however, that, without tariffs, the complaint process would not be
adequate to protect consumers. They claim that the complaint process is
cumbersome, expensive and time-consuming, and that without tariffs,
consumers will lack sufficient information on which to base a complaint
that a carrier has violated Section 201 or 202, or failed to comply
with the rate averaging and rate integration requirements of Section
254(g). A number of state commissions and other parties also assert
that detariffing will impede state regulatory or law enforcement
functions, because state officials depend on information contained in
tariffs filed with the Commission to protect consumers, to prevent
fraudulent practices, and to promote state objectives and policies,
such as ensuring that rates for intraLATA services are no higher than
those for interLATA services. In addition, some state commissions are
concerned that tariff forbearance by the Commission might preempt state
tariff filing requirements because Section 10(e) of the Communications
Act provides that ``a State commission may not continue to apply or to
enforce any provision of this Act that the Commission has determined to
forbear from applying.'' Several parties add that tariffs also ensure
that the Commission has access to accurate information in the event of
a dispute.
33. The Ad Hoc Users and BellSouth maintain, however, that, even in
the absence of tariffs, carriers will make price and service
information available to the public through methods such as
advertising, bill inserts and brochures; and that those methods are
more effective at informing consumers than tariff filings, which are
not readily available to consumers and which most consumers therefore
never examine.
34. Some commenters suggest that, if the Commission detariffs, the
Commission should limit forbearance from tariff filing requirements to
individually-negotiated service

[[Page 59347]]

arrangements. They urge the Commission to retain tariff filing
requirements for mass market services offered to residential and small
business customers because, they claim, tariffs are necessary to
protect consumers of such services.
35. In addition, American Telegram argues that tariffs are
necessary to protect consumers with respect to terms and conditions,
but not rates and charges, of nondominant interexchange carriers.
American Telegram asserts that tariffs are necessary to protect
consumers with respect to terms and conditions of service, because,
without tariffs, each customer would have to challenge its individual
contract with the carrier in order to establish the illegality of the
carrier's terms or conditions for service. American Telegram claims
that, by contrast, when a tariff is challenged, any changes to the
tariffed terms and conditions apply automatically to all customers of
that service.
(3) Discussion
36. We adopt the tentative conclusion in the NPRM that tariff
filings by nondominant interexchange carriers for interstate, domestic,
interexchange services are not necessary to protect consumers. Rather,
as discussed above, we find that it is highly unlikely that
interexchange carriers that lack market power could successfully charge
rates, or impose terms and conditions, for interstate, domestic,
interexchange services that violate Sections 201 and 202 of the
Communications Act. We therefore conclude that market forces, our
administration of the Section 208 complaint process, and our ability to
reimpose tariff filing requirements, if necessary, are sufficient to
protect consumers.
37. We also adopt the tentative conclusion that in the interstate,
domestic, interexchange market, requiring nondominant interexchange
carriers to file tariffs for interstate, domestic, interexchange
services may harm consumers by impeding the development of vigorous
competition, which could lead to higher rates. We agree with NYNEX that
``forbearance will promote competition and deter price coordination,
which can threaten competitive benefits.'' By promoting competition,
detariffing will better protect consumers against the imposition of
rates, terms, or conditions that violate the Communications Act.
38. We reject the argument that, for interstate, domestic,
interexchange services offered by nondominant interexchange carriers,
the complaint process is inadequate to protect consumers. As an initial
matter, we note that we are not simply relying on the complaint process
to protect consumers. Rather, as set forth above, we believe that
market forces, together with the complaint process, will adequately
protect consumers. In addition, we find that our complaint process is
adequate to redress any harm to consumers should a nondominant
interexchange carrier establish prices, or impose terms and conditions,
that violate Sections 201 or 202, or engage in other conduct that
violates the Communications Act or our regulations. Moreover, we note
that in the absence of tariffs, consumers will be able to pursue
remedies under state consumer protection and contract laws in a manner
currently precluded by the ``filed-rate'' doctrine.
39. While we agree with those commenters that argue that the
Commission and the public may need access to information concerning
carriers' rates, terms and conditions to ensure carrier compliance with
the requirements of Sections 201, 202, and 254(g) of the Communications
Act, we are not persuaded that tariffs filed pursuant to Section 203
are the only, or most effective, means of disseminating such
information. As an initial matter, we note that the majority of
complaints by consumers about the lawfulness of carriers' rates, terms,
or conditions for interstate, domestic, interexchange services are
based on information obtained through the billing process, rather than
information obtained from carriers' tariffs. As set forth above, we
believe that nondominant interexchange carriers likely will provide
rate and service information currently contained in tariffs to their
customers in order to establish a legal relationship with such
customers or as part of the billing process. Moreover, nondominant
carriers likely will publicize their rates, terms and conditions for
service in order to maintain, or improve, their competitive positions
in the market. We therefore conclude that the public will have access
to sufficient information to bring to the Commission's attention
possible violations of the Communications Act without the risk of
anticompetitive effects inherent in tariff filing requirements.
40. Additionally, we find no basis for the claim that the
detariffing of the interstate, domestic, interexchange services of
nondominant interexchange carriers will significantly impede state
regulatory or law enforcement functions. The rules we adopt in this
proceeding will not interfere with, and in fact may facilitate, a state
agency's ability to obtain directly from carriers price and service
information regarding interstate, domestic, interexchange services. Our
action here also does not affect state tariff filing requirements for
intrastate services. Section 10(e) of the Communications Act, which
provides that ``a State commission may not continue to apply or to
enforce any provision of this Act that the Commission has determined to
forbear from applying,'' does not prohibit states from requiring
nondominant interexchange carriers to file tariffs with respect to
their intrastate, interexchange services based on our action here.
41. We reject the suggestion that tariffs are necessary to protect
consumers of mass market interstate, domestic, interexchange services
provided by nondominant interexchange carriers, and therefore that the
Commission should limit forbearance only to individually-negotiated
service arrangements. We find that the reasons supporting our
conclusion that tariff filings are not necessary to protect consumers
of interstate, domestic, interexchange services provided by nondominant
interexchange carriers apply to all such services, and not only to
those provided pursuant to individually-negotiated arrangements.
Specifically, any increase in competition resulting from the
elimination of tariffs will redound to the benefit of consumers of all
interstate, domestic, interexchange services. For example, we believe
that eliminating tariffs for mass market services will increase
carriers' incentive to reduce prices for such services, and reduce
their ability to engage in tacit price coordination. In addition,
detariffing of mass market services will likely provide greater
protection to consumers, because, as discussed below, carriers will
likely be required, as a matter of contract law, to give customers
advance notice before instituting changes that adversely affect
customers. Carriers will also continue to provide rate information to
customers as part of the billing process, and in order to market their
services and to retain customers.
42. Similarly, we do not agree with American Telegram's claim that
tariffs are necessary to protect consumers with respect to terms and
conditions, but not rates and charges, of interstate, domestic,
interexchange services provided by nondominant interexchange carriers.
Just as we believe that competition is sufficient to ensure that
nondominant interexchange carriers' charges for interstate, domestic,
interexchange services are just and reasonable, and not unreasonably
discriminatory, and to protect consumers, we believe that competitive
forces will ensure that nondominant

[[Page 59348]]

carriers' non-price terms and conditions are reasonable. Moreover, we
concur with BellSouth that even non-price tariff filings can be used to
facilitate tacit coordination by carriers. In addition, we reject
American Telegram's argument that tariffs concerning nondominant
carriers' terms and conditions for interstate, domestic, interexchange
service are necessary to protect consumers, because, without such
tariffs, each customer seeking to challenge a carrier's terms or
conditions would have to show that its individual contract is unlawful.
Nondominant interexchange carriers are likely to use standard contracts
for most services rather than individually negotiate a different
contract with each customer. As a result, following a successful
challenge to a carrier's standard service agreement, that carrier is
likely to modify the unlawful contract with all of its customers,
rather than face additional complaints or litigation in which the
previous determination that the contract is unlawful would likely be
given preclusive effect. As in nearly every other business that is
conducted without tariffs, we find that tariffs by nondominant
interexchange carriers for interstate, domestic, interexchange services
are not necessary to protect consumers. In the absence of such tariffs,
consumers will not only have our complaint process, but will also be
able to pursue remedies under state consumer protection and contract
laws.
43. For the reasons discussed herein, we conclude that tariffs for
the interstate, domestic, interexchange services of nondominant
interexchange carriers are not necessary to protect consumers. We
therefore conclude that the proposal to adopt complete detariffing
meets the second of the statutory forbearance criteria.
c. Is Forbearance From Applying Section 203 Tariff Filing
Requirements to the Interstate, Domestic, Interexchange Services
Offered By Nondominant Interexchange Carriers Consistent With the
Public Interest?
(1) Background
44. The third statutory criterion requires us to determine whether
forbearance from applying Section 203 tariff filing requirements to the
interstate, domestic, interexchange services of nondominant
interexchange carriers is consistent with the public interest. In
making this determination, the statute specifically requires us to
consider whether forbearance will promote competitive market
conditions, including the extent to which forbearance will enhance
competition among providers of telecommunications services. In
addition, Section 10(b) provides that, ``[i]f the Commission determines
that such forbearance will promote competition among providers of
telecommunications services, that determination may be the basis for a
Commission finding that forbearance is in the public interest.'' In the
NPRM, the Commission tentatively concluded that it should not permit
nondominant interexchange carriers to file tariffs for interstate,
domestic, interexchange services of nondominant interexchange carriers,
because complete detariffing of such services will promote competition
and deter price coordination in the interstate, domestic, interexchange
market, and will better protect consumers.
(2) Comments
45. Several commenters, including large consumers of
telecommunications services, agree with the Commission's tentative
conclusion that complete detariffing of nondominant interexchange
carriers' interstate, domestic, interexchange services is in the public
interest. These commenters argue that allowing nondominant
interexchange carriers to continue to file tariffs undermines the
development of vigorous competition because: (1) Tariffs delay a
carrier's ability to respond to market changes; (2) even under
streamlined tariff filing procedures, the preparation, filing, and
defense of tariffs imposes substantial uneconomic costs on carriers;
(3) absent tariffs, a carrier could no longer refuse to accommodate a
customer's request for services tailored to its specific needs on the
ground that the request is beyond the scope of the carrier's tariff;
(4) tariffs reduce incentives to engage in competitive price
discounting, because competitors can respond to any price change before
it has the desired effect of capturing market share. Several parties
further argue that tariffs facilitate coordinated pricing by enabling
carriers to ascertain their competitors' rates, terms, and conditions
for service at one, central location. APCC argues that forbearance from
tariff filing requirements would eliminate a regulatory requirement
that is especially burdensome on small carriers. Some of these
commenters additionally argue that complete detariffing would eliminate
the possible invocation of the ``filed-rate'' doctrine. It is well
established that, pursuant to the ``filed-rate'' doctrine, in a
situation where a filed tariff rate, term or condition differs from a
rate, term, or condition set in a non-tariffed carrier-customer
contract, the carrier is required to assess the tariff rate, term, or
condition. See Armour Packing Co. v. United States, 209 U.S. 56 (1908);
American Broadcasting Cos., Inc. v. FCC, 643 F.2d 818 (D.C. Cir. 1980).
Consequently, if a carrier unilaterally changes a rate by filing a
tariff revision, the newly filed rate becomes the applicable rate
unless the revised rate is found to be unjust, unreasonable, or
unlawful under the Communications Act. See Maislin Industries, U.S.,
Inc. v. Primary Steel, Inc., 497 U.S. 116 (1990).
46. Interexchange carriers and other commenters contend that
complete detariffing is not in the public interest, because prohibiting
nondominant interexchange carriers from filing tariffs with respect to
interstate, domestic, interexchange services will impede competition
and increase carriers' costs. Specifically, these parties argue that
complete detariffing would: (1) Significantly increase transaction
costs by forcing nondominant interexchange carriers to conclude
literally millions of written agreements with customers in order to
establish legally enforceable contractual relationships; (2) make
casual calling options more difficult, if not impossible; and (3)
prevent carriers from reacting quickly to market conditions because
carriers would be forced to notify each individual customer of any
changes to their rates, terms, and conditions before such changes could
be effective. (Casual calling refers to services that do not require a
consumer to open an account or otherwise presubscribe to a service,
including use of a third-party credit card, collect calling, or dial-
around through the use of an access code. Several parties argue that
tariffs are essential to casual calling services because callers use
the services on a temporary basis without a preexisting contractual
relationship, and that tariffs are the only cost-efficient way to
establish a legal relationship with casual callers.) ACTA further
argues that any increased transaction costs would be especially
burdensome on small carriers that have fewer resources. LDDS contends
that the increased transaction costs due to detariffing would
discourage nondominant interexchange carriers from serving certain
market segments (e.g., low-usage residential, small business, and
casual callers), thereby decreasing competitive choices for these
customers. In addition, several parties argue that tariffs actually
promote competition by sending accurate economic signals and
disseminating rate and service information to consumers and
competitors. In particular, they argue that residential and small
business

[[Page 59349]]

customers require access to such information to obtain the best rates
available, and that small nondominant interexchange carriers need such
information to compete with larger interexchange carriers. Several
parties further argue that complete detariffing would not deter price
coordination, to the extent it exists, both because rate and service
information would continue to be available to competitors and because
the existing streamlined tariff filing procedures prevent price
signalling. A few parties suggest that, if the Commission is concerned
about tacit price coordination, it could remedy the problem by
requiring nondominant interexchange carriers to file tariffs on no more
than one day's notice, rather than not permitting such carriers to file
tariffs.
47. Interexchange carriers and several other commenters that oppose
complete detariffing contend that permissive detariffing would be
consistent with the public interest. They maintain that: (1) Permissive
detariffing would be the most deregulatory and pro-competitive option
because carriers could determine the most efficient means to establish
contractual relations with their customers (e.g., carriers could file
tariffs for such mass market offerings as residential and small
business services, reducing transactions costs to carriers and
consumers); (2) the ``filed-rate'' doctrine would no longer apply if
the Commission adopted a permissive detariffing regime, because the
tariffed rate would no longer be the only legally permissible rate; (3)
price coordination would be difficult, if not impossible, with
permissive detariffing because carriers would at best have fragmentary
information concerning their competitors' rates, terms, and conditions;
and (4) casual calling options would still be feasible with permissive
detariffing.
48. Several commenters, however, argue that permissive detariffing,
that is, allowing nondominant interexchange carriers to file tariffs if
they wish to do so, is not in the public interest. Several of these
parties argue that permissive detariffing is contrary to the public
interest, because it would allow nondominant interexchange carriers to
``game'' the system by filing tariffs when it serves their interest to
do so, for example, to take advantage of the ``filed-rate'' doctrine or
to engage in price signaling. Contrary to the interexchange carriers'
assertions, these parties claim that the ``filed-rate'' doctrine would
continue to exist if detariffing were implemented on a permissive
basis. TRA, which opposes any detariffing at all, argues that
permissive detariffing would enable carriers to discriminate against
resellers.
49. Some commenters suggest that the Commission limit forbearance
from tariff filing requirements to individually-negotiated service
arrangements and retain tariff filing requirements for mass market
services offered to residential and small business customers, because
tariffs allow carriers to establish a legal relationship with customers
quickly and inexpensively. In addition, several parties urge the
Commission to limit the scope of forbearance only to certain
nondominant interexchange carriers, or to certain types of information.
For example, TRA and ACTA suggest that the Commission should forbear
from applying Section 203 tariff filing requirements to those carriers
with less than a certain percentage of the market and that are not
affiliated with certain incumbent local exchange carriers, such as the
BOCs.
50. In addition, several commenters contend that it is premature to
detariff now, in light of the dynamic changes occurring in the market,
such as the reclassification of AT&T in October 1995, and the opening
of all telecommunications markets to increased competition following
enactment of the 1996 Act. These commenters urge the Commission to
defer any decision concerning forbearance from tariff filing
requirements until it can evaluate the effect of these changes on the
interstate, domestic, interexchange market.
51. Finally, several parties commented on how the Commission should
treat the BOCs upon their entry into the interstate, domestic,
interexchange services market in order to promote competition in this
market. A number of BOCs and other parties argue that detariffing will
only provide competitive benefits if we also detariff the BOCs once
they enter the interstate, domestic, interexchange market. They argue
that failure to do so, would place the BOCs, which they claim lack
market power in the interstate, domestic, interexchange market, at a
competitive disadvantage vis-a-vis existing interexchange carriers,
which currently control the market, and would inhibit competition,
thereby undermining Congress' objective in passing the 1996 Act. Others
argue that, because the BOCs exercise market power in the exchange
access market, the Commission should require the BOCs to file tariffs
for interstate, domestic, interexchange services until the Commission
has experience with the type and level of safeguards necessary to
prevent cross-subsidization and other unlawful practices.
(3) Discussion
52. We adopt the tentative conclusion in the NPRM that not allowing
nondominant interexchange carriers to file tariffs for the provision of
interstate, domestic, interexchange services is consistent with the
public interest, with the limited exception, as discussed below, of
AT&T's provision of 800 directory assistance and analog private line
services. Section 10(b) specifically requires the Commission, in
determining whether forbearance from enforcing a provision of the
Communications Act or a regulation is in the public interest, to
consider whether forbearance will promote competitive market
conditions, including the extent to which forbearance will enhance
competition among providers of telecommunications services. We find
that a regime without nondominant interexchange carrier tariffs for
interstate, domestic, interexchange services is the most pro-
competitive, deregulatory system. Specifically, we find that not
permitting nondominant interexchange carriers to file tariffs with
respect to interstate, domestic, interexchange services will enhance
competition among providers of such services, promote competitive
market conditions, and achieve other objectives that are in the public
interest, including eliminating the possible invocation of the filed
rate doctrine by nondominant interexchange carriers, and establishing
market conditions that more closely resemble an unregulated
environment. Moreover, we find that permitting nondominant
interexchange carriers to file tariffs on a voluntary basis would
undermine several of these benefits, and therefore is not in the public
interest.
53. The record in this proceeding supports our tentative conclusion
that not permitting nondominant interexchange carriers to file tariffs
for interstate, domestic, interexchange services will promote
competition in the market for such services. Even under existing
streamlined tariff filing procedures, requiring nondominant
interexchange carriers to file tariffs for interstate, domestic,
interexchange services impedes vigorous competition in the market for
such services by: (1) Removing incentives for competitive price
discounting; (2) reducing or taking away carriers' ability to make
rapid, efficient responses to changes in demand and cost; (3) imposing
costs on carriers that attempt to make new offerings; and (4)
preventing consumers from seeking out or obtaining service

[[Page 59350]]

arrangements specifically tailored to their needs. (These findings are
consistent with the Commission's findings in the Competitive Carrier
proceeding. Sixth Report and Order. The Commission recently reiterated
these findings in the Regulatory Treatment of Mobile Services Order, 59
FR 18493 (April 19, 1994).) Moreover, we believe that tacit
coordination of prices for interstate, domestic, interexchange
services, to the extent it exists, will be more difficult if we
eliminate tariffs, because price and service information about such
services provided by nondominant interexchange carriers would no longer
be collected and available in one central location.
54. In addition, requiring tariffs for interstate, domestic,
interexchange services offered by nondominant interexchange carriers
impedes competition by preventing customers from seeking out or
obtaining price and service arrangements tailored to their needs. As Ad
Hoc Users and others note, carriers, in some cases, have refused to
accommodate customers' requests for particular service terms on the
ground that the requested terms are not contained in the carriers'
tariffs, and that the Commission would reject any term or condition for
service that differed from the carriers' general tariffs. Eliminating
tariff filings by nondominant interexchange carriers will prevent such
carriers from refusing to negotiate with customers based on the
Commission's tariff filing and review processes. As a result, carriers
may become more responsive to customer demands, and offer a greater
variety of price and service packages that meet their customers' needs.
55. Complete detariffing would also further the public interest by
eliminating the ability of carriers to invoke the ``filed-rate''
doctrine. As noted above, courts have long held that, in a situation
where a filed tariff rate, or other term or condition, differs from a
rate, term, or condition set in a non-tariffed carrier-customer
contract, the carrier is required to impose the tariffed rate, term or
condition. While the Commission has held that unilateral changes that
alter material terms and conditions of long-term service arrangements
are reasonable only if justified by substantial cause, the filed rate
doctrine provides carriers with the ability to alter or abrogate their
contractual obligations in a manner that is not available in most
commercial relationships. In addition, complete detariffing would
further the public interest by preventing carriers from unilaterally
limiting their liability for damages. Accordingly, by permitting
carriers unilaterally to change the terms of negotiated agreements, the
filed rate doctrine may undermine consumers' legitimate business
expectations. Absent filed tariffs, the legal relationship between
carriers and customers will much more closely resemble the legal
relationship between service providers and customers in an unregulated
environment. Thus, eliminating the filed rate doctrine in this context
would serve the public interest by preserving reasonable commercial
expectations and protecting consumers.
56. Eliminating tariffs for the interstate, domestic, interexchange
services of nondominant interexchange carriers will not, as some
suggest, reduce such carriers' incentive or ability to offer discounts
or respond quickly to market changes by forcing them to give customers
advance notice of all changes to their rates, terms, and conditions for
service. Our experience over the past several years indicates that
interexchange carriers' competitive offerings to residential and small
business customers are typically optional calling plans in which
consumers must affirmatively elect to participate. In order to induce
customers to participate in such plans, carriers have widely advertised
the terms and availability of these calling plans. Thus, detariffing of
interstate, domestic, interexchange services is likely to have little,
if any, impact on nondominant interexchange carriers' incentives or
ability to engage in competitive price discounting. In addition, as a
matter of contract law, nondominant interexchange carriers would not
necessarily be required to provide notice before instituting changes
that benefit, or do not adversely affect in a material way, customers
(e.g., reducing rates). For example, carriers could expressly reserve
the right to make rate reductions or new discounts immediately
available to existing customers. Carriers could also include in their
service contracts provisions giving them flexibility to alter specific,
incidental contract terms in a manner not adverse to the customer. See
Restatement (Second) of Contracts Sec. 34 (1981) (discussing the
analogous practice of allowing one or both parties to a contract to
select certain terms during the performance of the contract). Such
carriers would, however, likely be required, as a matter of contract
law, to give advance notice of those changes that adversely affect
customers (e.g., rate increases). We conclude that it would not be
unduly burdensome for nondominant interexchange carriers to provide
customers advance notice of the latter changes through billing inserts
or other measures. Such notice would provide greater protection to
consumers and is more pro-competitive than allowing carriers to
increase their rates by filing tariff changes with the Commission on
one day's notice.
57. We recognize that detariffing may change significant aspects of
the way in which nondominant interexchange carriers conduct their
business. Contrary to the suggestion of some parties, however, tariffs
are not the only feasible way for carriers to establish legal
relationships with their customers, nor will nondominant interexchange
carriers necessarily need to negotiate contracts for service with each,
individual customer. As some parties note, such carriers could, for
example, issue short, standard contracts that contain their basic
rates, terms and conditions for service. Moreover, parties that oppose
complete detariffing have not shown that the business of providing
interstate, domestic, interexchange services offered by nondominant
interexchange carriers should be subject to a regulatory regime that is
not available to firms that compete in any other market in this
country. We conclude that requiring nondominant interexchange carriers
to withdraw their tariffs and conduct their business as other
enterprises do will not impose undue burdens on such carriers,
substantially increase their costs, or, as LDDS suggests, force such
carriers to abandon segments of the market to the detriment of
residential and small business customers. Moreover, we reject ACTA's
argument that detariffing will disproportionately burden small,
nondominant interexchange carriers. While some of the increased
administrative costs that carriers may incur initially as a result of
the shift to a detariffed environment are likely to be fixed (such as
the cost of developing short, standard contracts), many such costs will
vary based on the area or number of customers served by such carriers
(e.g., advertising expenditures, the cost of promotional mailings or
billing inserts). Nonetheless, we find that, on balance, the pro-
competitive effects of not allowing nondominant interexchange carriers
to file tariffs for their interstate, domestic, interexchange services
outweigh any potential increase in transactional or administrative
costs resulting from the shift to a detariffed environment.
58. We are also not persuaded that complete detariffing will make
casual calling impossible. We believe nondominant interexchange
carriers have options other than tariffs by which

[[Page 59351]]

they can establish legal relationships with casual callers pursuant to
which such callers would be obligated to pay for the telecommunications
services they use. For example, a carrier could seek recovery under an
implied-in-fact contract theory if a customer has used the carrier's
services, with knowledge of the carrier's charges, but has not executed
a written contract. Under this theory, the customer's acceptance of the
services rendered would evidence his agreement to the contract terms
proposed by the carrier. By providing billing or payment information
(e.g., credit card information or a billing number) and completing use
of the telecommunications service, casual callers may be deemed to have
accepted a legal obligation to pay for any such services rendered.
(Similarly, a casual caller who uses a carrier's access code to obtain
service from the carrier may be deemed to have accepted an outstanding
offer from the carrier to provide casual calling service, and therefore
be obligated to pay for any services rendered.) We do not believe that
these options will prove unduly burdensome for carriers. In any event,
we conclude that, on balance, the competitive benefits of complete
detariffing of nondominant interexchange carriers' interstate,
domestic, interexchange services outweigh any potential increased costs
resulting from the shift to detariffing. We further believe that the
nine-month transition period established by this Order, will afford
carriers sufficient time to develop efficient mechanisms to provide
casual calling services in the absence of tariffs.
59. We reject the suggestion that eliminating tariff filing
requirements for nondominant interexchange carriers' interstate,
domestic, interexchange services would impede competition for such
services by reducing information available to consumers and small
nondominant interexchange carriers. As discussed above, nondominant
interexchange carriers are likely to make rate and service information,
currently contained in tariffs, available to the public in a more user-
friendly form in order to preserve their competitive position in the
market, and as part of their contractual relationship with customers.
In addition, as we discuss below, we will require nondominant
interexchange carriers to provide rate schedules for all of their
interstate, domestic, interexchange services to consumers.
60. As noted, several parties, asserting that complete detariffing
is not in the public interest, instead argue that permissive
detariffing would be in the public interest. We reject their arguments
for several reasons. Contrary to the assertions of AT&T and others, we
believe that a permissive detariffing regime would not necessarily
eliminate possible invocation of the ``filed-rate'' doctrine by
nondominant interexchange carriers. Section 203(c) provides that a
carrier may not ``charge, demand, collect, or receive a greater or less
or different compensation * * * than the charges specified in the
schedule then in effect.'' Thus, it is possible that, once a carrier
files a tariff with the Commission, even if it is on a permissive
basis, Section 203(c) may require the carrier to provide service at the
rates, and on the terms and conditions, set forth in the tariff until
or unless the carrier files a superseding tariff cancelling, or
changing the rates and terms of, the tariff. Because the filed rate
doctrine is a legal doctrine developed by judicial precedent, it is not
entirely clear how courts would apply the filed rate doctrine if
nondominant interexchange carriers were permitted to file tariffs and
the filed tariff rate differed from the rate set in a non-tariffed
contract. We believe that only with a complete detariffing regime,
under which the carrier-customer relationship would more closely
resemble the legal relationship between service providers and customers
in an unregulated environment, can we definitively eliminate these
possible anticompetitive practices and protect consumers.
61. Another consideration that precludes us from finding that
permissive detariffing of the interstate, domestic, interexchange
services of nondominant interexchange carriers is in the public
interest is that, unlike complete detariffing, permissive detariffing
would not eliminate the collection and availability of rate information
in one centralized location. Although we recognize that nondominant
interexchange carriers under a complete detariffing regime would still
be able to obtain information concerning their competitors' rates and
service offerings, we believe that tacit price coordination, to the
extent it exists, will be more difficult. In contrast, allowing
nondominant interexchange carriers to file tariffs on a voluntary basis
would create the risk that carriers would file tariffs merely to send
price signals and thus manipulate prices. In this respect, we are not
persuaded by Frontier and CSE who argue that permissive detariffing
would eliminate any risk of coordinated pricing because carriers could
not be certain of their competitors' rates, terms, and conditions for
service. Carriers could use tariffs to engage in price signalling,
because any nondominant carrier that opted to file a tariff would be
bound by its terms until or unless the carrier cancelled or modified
the tariff through a new tariff filing, and thus competing carriers
would be certain of such carrier's rates, terms and conditions for
service while its tariff is in effect.
62. In addition, we note that permitting nondominant interexchange
carriers to file tariffs for interstate, domestic, interexchange
services imposes administrative costs on the Commission, which must
maintain and organize tariff filings for public inspection. In light of
our conclusion that market forces, the complaint process, and our
ability to reimpose tariff filing requirements are adequate to protect
consumers and ensure that nondominant interexchange carriers' rates,
terms and conditions for interstate, domestic, interexchange services
are just, reasonable and not unreasonably discriminatory, we believe
that the public interest would be better served by the Commission
devoting these resources to its enforcement duties.
63. With two limited exceptions described below, we also do not
believe that there is a sound basis for concluding that forbearance is
in the public interest only with respect to certain interstate,
domestic, interexchange services, such as individually negotiated
service arrangements offered by nondominant interexchange carriers. We
find that the competitive benefits of not permitting nondominant
interexchange carriers to file tariffs for interstate, domestic,
interexchange services, discussed above, apply equally to all segments
of the interstate, domestic, interexchange services market. Moreover,
as discussed above, we reject the argument that detariffing mass market
services offered to residential and small business customers will lead
to substantially higher transactions costs. Similarly, we are not
persuaded that the public interest benefits differ depending on the
type of tariffed information that is at issue. The public interest
benefit of removing carriers' ability to invoke the ``filed-rate''
doctrine applies equally with respect to terms and conditions as to
rates. Moreover, permitting or requiring large nondominant
interexchange carriers to file tariffs for interstate, domestic,
interexchange services would not eliminate the risk of tacit price
coordination among such carriers, and would raise the possibility that
such carriers' tariffed rates would become a price umbrella. Finally,
we agree with AT&T that there is no basis

[[Page 59352]]

to differentiate among nondominant interexchange carriers, because all
such carriers are unable to exercise market power in the interstate,
domestic, interexchange market.
64. Nor do we believe that we should delay our decision to detariff
the interstate, domestic, interexchange services of nondominant
interexchange carriers. Because we find the statutory criteria for
forbearance are met at this time for all interstate, domestic,
interexchange services offered by nondominant interexchange carriers,
we are required by the 1996 Act to forbear from applying Section 203
tariff filing requirements to these services. Should circumstances
change such that the statutory forbearance criteria are no longer met,
we have the authority to revisit our determination here, and to
reimpose Section 203 tariff filing requirements.
65. Finally, with respect to the regulatory treatment of BOC
interexchange affiliates upon their entry into the interstate,
domestic, interexchange market, we find no basis to exclude such
carriers from the purview of this Order if they are classified as
nondominant in their provision of interstate, domestic, interexchange
services. We note that we are addressing the issue of whether incumbent
local exchange carriers, including the BOCs, should be classified as
dominant or nondominant in their provision of interstate, domestic,
interexchange services in a separate ongoing proceeding. See
Implementation of the Non-Accounting Safeguards of Sections 271 and 272
of the Communications Act of 1934, as amended; Regulatory Treatment of
LEC Provision of Interexchange Services Originating in the LEC's Local
Exchange Area, CC Docket No. 96-149, Notice of Proposed Rulemaking, 61
FR 39397 (July 29, 1996).
66. For the reasons explained herein, we find that complete
detariffing of interstate, domestic, interexchange services offered by
nondominant interexchange carriers is in the public interest, and that
permissive detariffing of such services is not in the public interest.
iii. Authority To Eliminate Tariff Filings
a. Background
67. In the NPRM, the Commission sought comment on whether it has
the authority under Section 10 of the Communications Act not to permit
carriers to file tariffs.
b. Comments
68. Several interexchange carriers and others argue that the plain
language of Section 10 authorizes the Commission only to refrain from
requiring tariffs, but not to prohibit carriers from voluntarily
complying with Section 203. AT&T contends that the Commission has used
the term ``forbearance'' to apply only to permissive detariffing, and
used the terms ``cancellation'' of all filed tariffs and
``elimination'' of future filings in adopting complete detariffing in
the Competitive Carrier proceeding. AT&T adds that Congress used
different terms in other provisions of the Communications Act to
authorize the Commission to adopt complete detariffing. Specifically,
AT&T argues that Congress gave the Commission authority to specify
certain provisions of Title II of the Communications Act as
``inapplicable'' to CMRS providers. AT&T claims that by failing to use
this term in Section 10, and instead using such permissive terms as
``forbear from applying'' or ``enforcing,'' Congress did not intend to
give the Commission authority to adopt complete detariffing.
69. Other parties, however, argue that the 1996 Act gives the
Commission legal authority to prohibit carriers from filing tariffs. Ad
Hoc Users argues that the Commission has used the term ``forbearance''
to refer to both mandatory and permissive detariffing. Ad Hoc Users
further argues that federal agencies and the courts have construed
similar statutory provisions as authorizing federal agencies to adopt
mandatory deregulation. Specifically, Ad Hoc Users contends that: (1)
The Commission adopted mandatory detariffing for CMRS based on Section
332(c)(1)(A) of the Communications Act, which gave the Commission
authority to specify certain provisions of Title II of the
Communications Act as ``inapplicable'' to CMRS providers; and (2) the
Civil Aeronautics Board (CAB) mandatorily deregulated the airline
industry based on an amendment to the Federal Aviation Act that gave
the CAB authority to ``exempt'' certain domestic air carriers from the
requirements of the Federal Aviation Act if it found that such
exemption was ``consistent with the public interest.'' Ad Hoc Users
argues that these statutory grants of authority are substantially
similar to Section 10, and that AT&T's argument (i.e., that Section 10
only allows permissive deregulation) could be made about each of those
statutes.
c. Discussion
70. We conclude that the Commission has authority under Section 10
to refuse to permit nondominant interexchange carriers to file tariffs
for interstate, domestic, interexchange services. We reject the
argument advanced by AT&T and others that by using the term
``forbear,'' Congress intended to authorize the Commission merely to
``refrain from enforcing'' its regulations or provisions of the
Communications Act where the statutory forbearance criteria are met,
and not to authorize the Commission to refuse to permit nondominant
carriers to comply with such regulations or provisions voluntarily. We
conclude that the plain meaning of the statute does not support their
argument, and that federal agencies and the courts have construed
similar statutory provisions as authorizing agencies to bar regulated
entities from filing rate schedules and other tariff equivalents.
71. As noted, AT&T and others argue that the dictionary definition
of the term ``forbear'' authorizes the Commission to detariff only on a
permissive basis. We agree with Ad Hoc Users that, in this context,
such reliance solely on dictionary definitions is inappropriate, and
can be misleading, where the historical usage of a term endows that
term with a distinct meaning. The Commission has consistently used the
term ``forbear,'' or a variation thereof, to refer to mandatory, as
well as to permissive, detariffing. For example, in the Sixth Report
and Order, the Commission stated that its mandatory detariffing
proposal, if adopted, ``would result in the cancellation of all
forborne carrier tariffs currently on file with the Commission and
would eliminate future federal tariff filings by carriers treated by
forbearance.'' Similarly, in Regulatory Treatment of Mobile Services,
the Commission stated that it would ``forbear from requiring or
permitting tariffs of interstate service offered directly by CMRS
providers to their customers,'' based on the Commission's authority to
specify any provision of Title II as ``inapplicable'' to any CMRS
provider.
72. The courts and Congress have also used the term ``forbear'' to
apply to circumstances involving this agency's authority to refuse to
permit carriers to file tariffs. In MCI Telecommunications Corp. v.
FCC, the U.S. Court of Appeals for the D.C. Circuit used the term
``forbearance'' to refer to our previous mandatory detariffing policy,
noting that ``[t]he Sixth Report * * * changed the permissive
forbearance arrangement to a mandatory one.'' MCI Telecommunications
Corp. v. FCC, 765 F.2d 1186, 1189 (D.C. Cir. 1985). In addition, in
describing the Commission's previous tariff forbearance policy, the
Senate Commerce, Science, and Transportation Committee applied the term
``forbearance'' to the entire Competitive

[[Page 59353]]

Carrier proceeding, encompassing both mandatory and permissive
detariffing. See Telephone Operator Consumer Services Improvement Act
of 1990, S. Rep. No. 439, 101st Cong., 2d Sess. 3 n.10 (1990) reprinted
in 1990 U.S.C.C.A.N. 1577, 1579 (stating that ``[t]he FCC has chosen to
`forbear' from regulating the rates of `non-dominant' carriers because
they do not possess market power and thus have little ability to charge
unjust or unreasonable rates in violation of the Communications Act of
1934,'' and citing, inter alia, the Sixth Report and Order).
73. It was against this background that Congress adopted Section
10(a). Accordingly, we concur with Ad Hoc Users that the term
``forbear'' must be construed within its historical and regulatory
context, and not in a vacuum.
74. We further note that in construing a similar statutory
provision, the U.S. Court of Appeals for the D.C. Circuit rejected a
virtually identical argument that Congress had only provided the CAB
authority to deregulate the airline industry on a permissive basis. In
an amendment to the Federal Aviation Act, Congress granted the CAB
authority to ``exempt'' domestic air carriers from statutory
requirements of the Federal Aviation Act. National Small Shipments
Traffic Conference, Inc. v. CAB, 618 F.2d 819, 822 n.2, 823, 827 (D.C.
Cir. 1980). The CAB used this authority to prohibit certain air
carriers from filing tariffs and certain intercarrier agreements. In
National Small Shipments Traffic Conference, Inc., petitioners argued
that the CAB's ``authority to exempt airlines from certain requirements
cannot be used to prohibit airlines from filing [intercarrier]
agreements * * * if they choose to do so.'' Id. at 835. The court
rejected this argument, noting that the CAB's exemption authority was
``broad'' and that its refusal to permit airlines to file intercarrier
agreements was consistent with Congress' deregulatory purpose. Id.
75. Moreover, the action we take here is consistent with the
Commission's order adopting complete detariffing for domestic CMRS
providers. In Section 6002(b) of the Omnibus Budget Reconciliation Act
of 1993 (OBRA), Congress granted the Commission authority to declare
``inapplicable to [any commercial mobile] service or person'' any
provision of Title II, subject to certain limitations. This grant of
authority, while not identical, is similar to the Commission's
authority under Section 10. In response to this grant of authority
under Section 6002(b), the Commission determined that it would
``forbear from requiring or permitting tariffs for interstate service
offered directly by CMRS providers to their customers.''
76. In addition, we conclude that Section 203, which was ``enacted
to control monopoly abuse'' by the carriers, does not grant to carriers
a statutory right to file tariffs. As noted in the 1996 Act's
legislative history, ``given that the purpose of this legislation is to
shift monopoly markets to competition as quickly as possible, the
Committee anticipates this forbearance authority will be a useful tool
in ending unnecessary regulation.'' Thus, it seems inconceivable that
Congress intended Section 10 to be interpreted in a manner that allows
continued compliance with provisions or regulations that the Commission
has determined were no longer necessary in certain contexts.
iv. Summary of Findings and Conclusions
77. We therefore conclude that tariffs are not necessary to ensure
that the rates, practices, classifications, and regulations of
nondominant interexchange carriers for interstate, domestic,
interexchange services are just and reasonable and not unjustly or
unreasonably discriminatory. In addition, we conclude that tariffs for
the interstate, domestic, interexchange services of nondominant
interexchange carriers are not necessary to protect consumers.
Moreover, we find that complete detariffing of interstate, domestic,
interexchange services provided by nondominant interexchange carriers
is in the public interest, and that permissive detariffing of such
services is not in the public interest. Accordingly, pursuant to the
requirements of Section 10, we conclude that we must forbear from
applying Section 203 tariff filing requirements to the interstate,
domestic, interexchange services offered by nondominant interexchange
carriers and not permit nondominant interexchange carriers to file
tariffs for their interstate, domestic, interexchange services. We also
conclude that the Commission has authority under Section 10 to refuse
to permit nondominant interexchange carriers to file tariffs for
interstate, domestic, interexchange services. We therefore order that
nondominant interexchange carriers cancel all tariffs for such services
currently on file with the Commission, subject to the procedural
details specified below, and prohibit nondominant interexchange
carriers from filing tariffs for such services in the future.
C. Maintenance and Disclosure of Price and Service Information;
Certifications
i. Background
78. In the NPRM, the Commission tentatively concluded that, if it
were to adopt a complete detariffing policy, nondominant interexchange
carriers would be required to maintain at their premises price and
service information regarding all of their interstate, domestic,
interexchange service offerings, which they could submit to the
Commission upon request. In addition, the Commission tentatively
concluded that it would require nondominant providers of interexchange
telecommunications services to file certifications stating that they
are in compliance with the geographic rate averaging and rate
integration requirements of Section 254(g) in order to ensure
compliance with those requirements. The Commission further tentatively
concluded that it would rely on the complaint process under Section 208
to bring violations of Section 254(g) to its attention.
ii. Comments
79. Several commenters recommend that, if the Commission adopts
detariffing, it should require nondominant interexchange carriers to
make their rates available to the public in some other fashion, such as
by posting pricing information on-line, submitting current rate
information to the Commission, or making such information available to
any member of the public upon request. These commenters argue that the
public needs such information to determine whether a carrier is
complying with the geographic rate averaging and rate integration
requirements of Section 254(g) as well as with the nondiscrimination
requirements of Section 202. Several of these commenters further argue
that consumers, especially residential and small business customers,
need information on rates, terms and conditions to compare carriers'
service offerings. Several small businesses that analyze tariff
information for business and residential customers argue that they need
such information to conduct their businesses.
80. Other commenters, however, oppose any record-keeping
requirement. They argue that imposing such a requirement would
eliminate any cost savings resulting from detariffing. Several parties
further insist that carriers will make rate and service information
available to consumers through other means.

[[Page 59354]]

81. AT&T argues that, to the extent the Commission seeks to justify
its decision to detariff on the ground that complete detariffing would
eliminate the ``filed-rate'' doctrine, a requirement that carriers make
rate information available on-line or through a clearinghouse would
undermine this objective. AT&T insists that the ``filed-rate'' doctrine
would continue to apply if such a requirement is imposed, because the
doctrine is based on the imposition of a filing requirement and not on
the manner or place of filing.
82. Several interexchange carriers and BOCs contend that the
Commission's proposed certification requirement and the complaint
process are appropriate mechanisms to enforce the requirements of
Section 254(g). Others, however, argue that the Commission should not
require certifications, but should rely instead on the complaint
process and its ability to examine rates upon request. These parties
argue that certifications do little to advance the Commission's
enforcement objectives, and that the complaint process and the
Commission's ability to examine rates upon request are the only
effective means to ascertain whether carriers are in compliance with
their statutory obligations.
iii. Discussion
83. We adopt the tentative conclusion in the NPRM that nondominant
providers of interstate, domestic, interexchange telecommunications
services should be required to file annual certifications signed by an
officer of the company under oath that they are in compliance with
their statutory geographic rate averaging and rate integration
obligations. We believe that annual certifications will emphasize the
importance that we place on the rate averaging and rate integration
requirements of the 1996 Act and put carriers on notice that they may
be subject to civil and criminal penalties for violations of these
requirements, especially willful violations.
84. While we believe that carrier certifications will be an
important mechanism for enforcing the 1996 Act's geographic rate
averaging and rate integration requirements, we are persuaded by the
arguments of many parties, including numerous state regulatory
commissions and consumer groups, that publicly available information is
necessary to ensure that consumers can bring complaints, if necessary,
to enforce those requirements. As noted above, we find that it is
highly unlikely that interexchange carriers that lack market power
could successfully charge rates, or impose terms and conditions, for
interstate, domestic, interexchange services in ways that violate
Sections 201 and 202 of the Communications Act, and that such carriers
will generally provide rate and service information to consumers to
preserve or improve their competitive position in the market. We
recognize, however, that in competitive markets carriers would not
necessarily maintain geographically averaged and integrated rates for
interstate, domestic, interexchange services as required by Section
254(g). Because the public should have the ability to bring violations
of the geographic rate averaging and rate integration requirements of
the 1996 Act to our attention, we believe it is appropriate to require
carriers to make available to the public the information that is
necessary for the public to determine whether a carrier is adhering to
the geographic rate averaging and rate integration requirements of
Section 254(g). Accordingly, we will require nondominant interexchange
carriers to make information on current rates, terms, and conditions
for all of their interstate, domestic, interexchange services available
to the public in an easy to understand format and in a timely manner.
(A nondominant interexchange carrier must make available to any member
of the public such information about all of that carrier's interstate,
domestic, interexchange services.) We note that, by adopting this
requirement, we do not intend to require carriers to disclose more
information than is currently provided in tariffs, in particular in
contract tariffs.
85. The requirement that nondominant interexchange carriers make
available to the public information concerning the current rates, terms
and conditions for all of their interstate, domestic, interexchange
services also will promote the public interest by making it easier for
consumers, including resellers, to compare carriers' service offerings.
While nondominant interexchange carriers will generally provide rate
and service information to consumers in order to attract and retain
customers, some consumers may find it difficult to determine the
particular service plans that are most appropriate, and least costly,
for them, based on their calling patterns, because of the wide array of
calling plans offered by the scores of carriers. Businesses and
consumer organizations that analyze and compare the rates and services
of interexchange carriers perform a valuable function in assisting
consumers to judge the specific carriers' rates and service plans that
are best suited to their individual needs. The foregoing requirement
will ensure that such businesses, many of which are small businesses,
continue to have access to the information they need to provide their
services.
86. In order to minimize the burden on nondominant interexchange
carriers of complying with this requirement, we will not require
nondominant interexchange carriers to make rate and service information
available to the public in any particular format, or at any particular
location. We reject the suggestion that we should require nondominant
interexchange carriers to provide information on their interstate,
domestic, interexchange services at a central clearinghouse or on-line.
We find that mandating such a requirement would be unduly burdensome at
this time. Rather, we will require only that a carrier make such
information available to the public in at least one location during
regular business hours. We will also require carriers to inform the
public that this information is available when responding to consumer
inquiries or complaints, and to specify the manner in which the
consumer may obtain the information. In addition, because we are simply
requiring carriers to make information available to the public, we need
not address AT&T's argument that requiring nondominant interexchange
carriers to make price and service information available on-line or at
a central clearinghouse is a filing requirement within the meaning of
Section 203. (Although we do not require carriers to make such
information available to the public at more than one location, we
encourage carriers to consider ways to make such information more
widely available, for example, posting such information on-line,
mailing relevant information to consumers, or responding to inquiries
over the telephone.)
87. Finally, we adopt the tentative conclusion in the NPRM that we
should require nondominant interexchange carriers to maintain price and
service information regarding all of their interstate, domestic,
interexchange service offerings, that they can submit to the Commission
upon request. We believe it is appropriate that this information should
include the information that carriers provide to the public as required
above, as well as documents supporting the rates, terms, and conditions
of the carriers' interstate, domestic, interexchange offerings. We note
that we will not require carriers to make such supporting documentation
available to the public. We also find that it is appropriate to require
nondominant

[[Page 59355]]

interexchange carriers to retain the foregoing records for a period of
at least two years and six months following the date the carrier ceases
to provide services on such rates, terms and conditions, in order to
afford the Commission sufficient time to notify a carrier of the filing
of a complaint, which generally must be commenced within two years from
the time the cause of action accrues. We note that, in the event a
complaint is filed against a carrier, we will require the carrier to
retain documents relating to the complaint until the complaint is
resolved. We will also require nondominant interexchange carriers to
file with the Commission, and update as necessary, the name, address,
and telephone number of the individual, or individuals, designated by
the carrier to respond to Commission inquiries and requests for
documents. We will further require that nondominant interexchange
carriers maintain the foregoing records in a manner that allows
carriers to produce such records within ten business days of receipt of
a Commission request. We conclude that the availability of such records
will enable the Commission to meet its statutory duty of ensuring that
such carriers' rates, terms, and conditions for service are just,
reasonable, and not unreasonably discriminatory, and that these
carriers comply with the geographic rate averaging and rate integration
requirements of the 1996 Act. In addition, maintenance of such records
will enable the Commission to investigate and resolve complaints.
D. Transition
i. Comments
88. Several commenters suggest that if the Commission were to adopt
the complete detariffing proposal, it should also implement an
appropriate transition period to afford nondominant interexchange
carriers time to adapt their operations to a detariffed regime. Ad Hoc
Users and API suggest that we adopt a six-month transition period.
Eastern Tel, AT&T, and LDDS recommend a period of at least one year,
and LCI suggests a phase-in period of 18-24 months. In addition, AT&T
urges the Commission to ``make clear that the terms of individual
carrier/customer deals currently on file at the Commission stay on file
and remain unchanged by a decision to prohibit the filing of tariffs.''
Ad Hoc Users and API, on the other hand, urge the Commission to prevent
carriers from filing tariffs that supersede existing contracts during
the transition period. API further recommends that during the
transition period, carriers should not be permitted to require that the
terms of existing pricing arrangements be extended as a condition for
negotiating contracts to replace existing tariffs. Finally, Eastern Tel
requests the Commission to work with industry to develop a standard
contract for telecommunications services, similar to the form contracts
used in the real estate industry, that address such issues as the
collection procedures that can be utilized.
ii. Discussion
89. We agree that we should allow nondominant interexchange
carriers an appropriate transition period to adjust to detariffing. We
conclude that a nine-month period is sufficient to provide for an
orderly transition. We believe that this transition period will afford
carriers sufficient time to adjust to detariffing. We do not believe
that a more extended period is needed for nondominant interexchange
carriers to adjust their operations. Nondominant interexchange carriers
are not required to negotiate a new contract with each customer.
Nondominant interexchange carriers may utilize various methods to
establish legal relationships with customers in the absence of tariffs,
including, for example, the use of short standard agreements. We
therefore order all nondominant interexchange carriers to cancel their
tariffs for interstate, domestic, interexchange services on file with
the Commission within nine months of the effective date of this Order
and not to file any such tariffs thereafter. We note that the effective
date of this Order (i.e., the date the rules and requirements
promulgated by this Order will become effective) will be 30 days from
the date of publication of this Order in the Federal Register.
90. Nondominant interexchange carriers may cancel their tariffs for
interstate, domestic, interexchange services at any time during the
nine-month period. Pending such cancellation, the Commission will
accept new tariffs and revisions to the carrier's tariffs for mass
market interstate, domestic, interexchange services. We believe that it
is appropriate to allow nondominant interexchange carriers to revise
their tariffs for mass market interstate, domestic, interexchange
services on file with the Commission during the nine-month transition
period in order to respond to changes in the market. However, in order
to preserve the legitimate business expectations of customers taking
service pursuant to long-term service arrangements, and to limit the
ability of carriers to unilaterally alter or abrogate such arrangements
by invoking the filed rate doctrine, the Commission will not accept new
tariffs, or revisions to carriers' existing tariffs, for long-term
service arrangements (such as contract tariffs, AT&T's Tariff 12
options, MCI's special customer arrangements, and Sprint's custom
network service arrangements) during the transition period. We
recognize that many such long-term service arrangements incorporate by
reference mass market tariffs. By precluding carriers during the
transition period from filing tariffs or revisions to tariffs for long-
term service arrangements, we do not intend to limit carriers' ability
to file tariffs and tariff revisions for mass market services.
91. Carriers that have on file with the Commission ``mixed'' tariff
offerings that contain services subject to detariffing pursuant to this
Order, may comply with this Order either by: (1) Cancelling the entire
tariff and refiling a new tariff for only those services subject to
tariff filing requirements; or (2) issuing revised pages cancelling the
material in the tariffs that pertain to those services subject to
forbearance. A ``mixed'' tariff offering is a tariff that includes
services for which the carrier is subject to different tariff filing
requirements. One example of a ``mixed'' tariff offering would be a
tariff that contains interstate, domestic, interexchange services for
which the carrier is nondominant and therefore prior to the
effectiveness of this Order was subject to a one-day tariff filing
requirement, as well as international services for which the carrier is
nondominant and therefore subject to a one-day tariff filing
requirement. Another example would occur where a carrier is dominant
for certain services and nondominant for others and includes both types
of services in one tariff. As discussed below in section II.E., we
determine that a carrier that has mixed tariff offerings that include
interstate, domestic, interexchange services for which the carrier is
nondominant, as well as international services for which the carrier is
nondominant, must continue to tariff the international portions of such
bundled or mixed tariff offerings. Accordingly, such a carrier must
comply with this requirement. This requirement also applies to a
carrier that has other types of mixed tariff offerings that are
affected by this Order, such as where the carrier offers in one tariff
interstate, domestic, interexchange services for which it is
nondominant with other services for which the carrier is dominant.
92. We note that, while complete detariffing will change the legal

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framework for long-term service arrangements, we do not intend by our
actions in this Order to disturb existing contractual or other long-
term arrangements. Accordingly, our detariffing policy should not be
interpreted to allow parties to alter or abrogate the terms of long-
term arrangements currently on file with the Commission. Because we
have determined that our action here does not entitle parties to a
contract-based, or other long-term, service arrangement to take a
``fresh look'' at such arrangements, we need not address API's
suggestion that we prohibit nondominant interexchange carriers from
demanding that the terms of existing pricing arrangements be extended
beyond their currently applicable terms.
93. Finally, we decline to follow Eastern Tel's suggestion that the
Commission work with industry during the transition period to establish
a standard contract for telecommunications services. As noted above, we
believe that nondominant interexchange carriers may use various methods
to provide service to their customers. We find that it would be more
consistent with the pro-competitive and deregulatory objectives of the
1996 Act to allow carriers and customers freely to determine the most
efficient methods for providing interexchange services without tariffs.
E. Tariff Filing Requirements for the International Portion of Bundled
Domestic and International Services
i. Background
94. A number of nondominant interexchange carriers currently file
bundled tariffs that include both interstate, domestic, interexchange
services and international services. In the NPRM, the Commission sought
comment on whether it should forbear from requiring nondominant
interexchange carriers to file tariffs for the international portions
of bundled domestic and international service offerings if the
Commission forbears from requiring such carriers to file tariffs for
their domestic services. The Commission noted that it was reserving for
another day, in a separate proceeding, the broader question of whether
it should consider generally forbearing from requiring tariffs for
international services provided by nondominant carriers.
ii. Comments
95. Several commenters support detariffing the international
portions of bundled domestic and international services offered by
nondominant interexchange carriers. Ad Hoc Users, API and AT&T argue
that different tariff filing requirements for the domestic and
international portions of bundled offerings would require the
artificial partition of unified service arrangements, which would
impose substantial costs on both customers and carriers. Ad Hoc Users
also contends that different tariff rules would lead to separate
minimum revenue requirements for domestic and international services.
API and the Television Networks argue that international services
offered by nondominant carriers should be detariffed whether or not the
international services are bundled with domestic services.
96. Other parties argue that the Commission should not detariff
international portions of bundled offerings until nondominant
international carriers are relieved generally of tariff filing
requirements. MCI expressed concern that, if the Commission detariffed
the international portion of bundled or ``mixed'' tariff offerings,
AT&T, which was regulated as dominant in international markets when
comments in this proceeding were due, would be freed of tariff
regulation in connection with its `` `mixed' international offerings.''
97. AMSC, which provides mobile telecommunications services using
satellites that cover the continental United States, Hawaii, Alaska,
Puerto Rico, and the U.S. Virgin Islands, as well as adjacent
international waters and northern parts of South America, urges the
Commission to detariff the international portions of the offerings of
nondominant CMRS providers, including its own services. The Commission
detariffed AMSC's domestic services two years ago when it adopted
mandatory detariffing for CMRS providers. AMSC argues that there is no
rationale for maintenance of a tariff filing requirement for the
international services of AMSC or other CMRS providers. In addition,
AMSC argues that because it offers a mobile service via satellite, it
cannot determine whether a call originates in a domestic or
international area and that most of its international service is
provided to users in international waters.
iii. Discussion
98. In the NPRM, the Commission indicated that it would consider in
a separate proceeding the question of whether it should generally
forbear from requiring tariffs for international services provided by
nondominant carriers, but it sought comment on whether it should
forbear from requiring nondominant interexchange carriers to file
tariffs for the international portions of bundled domestic and
international service offerings. There is not sufficient evidence in
the record to make findings that each of the statutory criteria are met
to forbear from requiring nondominant interexchange carriers to file
tariffs for the international portions of bundled domestic and
international service offerings. We therefore believe that detariffing
the international portions of bundled domestic and international
service offerings would be better addressed as part of a separate
proceeding in which the Commission can further examine the state of
competition in the international market. Accordingly, we will require
nondominant interexchange carriers to continue to file tariffs for the
international portions of bundled domestic and international service
offerings until we find that the statutory criteria are met for
international services provided by nondominant carriers. A nondominant
carrier with bundled domestic and international services may comply
with this Order either by cancelling its entire tariff and refiling a
new tariff only for the international portions of its service offerings
or by issuing revised pages that cancel the material in its tariffs
which pertains to those services subject to forbearance. Because we
will require nondominant interexchange carriers to continue to file
tariffs for international services, we need not address MCI's concern
that dominant international carriers might be freed from tariff
requirements for the international portions of bundled domestic and
international services.
99. Our decision here will not impose substantial administrative
expenses on carriers or customers. In addition, to respond to concerns
about the cost of partitioning bundled offerings, we are modifying our
rules to permit nondominant interexchange carriers to cross reference
detariffed interstate, domestic, interexchange service offerings in
their tariffs for international services for purposes of calculating
discounts and minimum revenue requirements.
100. We similarly find that there is insufficient record evidence
in this proceeding to detariff the international portions of CMRS
services, or to address AMSC's concerns with regard to its specific
services at this time.

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F. Effect of Forbearance on AT&T's Commitments
i. Background
101. In the AT&T Reclassification proceeding, AT&T made certain
voluntary commitments that AT&T stated were intended to serve as
transitional arrangements to address concerns expressed by parties
about possible adverse effects of reclassifying AT&T. These commitments
concerned: service to low-income and other customers; analog private
line and 800 directory assistance services; service to and from the
State of Alaska and other regions subject to the Commission's rate
integration policy; geographic rate averaging; changes to contract
tariffs that adversely affect existing customers; and dispute
resolution procedures for reseller customers. In the AT&T
Reclassification Order, the Commission accepted AT&T's commitments and
ordered AT&T to comply with those commitme

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A96-29529. Public record. Not legal advice.