Petitions for Limited Modification of LATA Boundaries to Provide Expanded Local Calling Service (ELCS) at Various Locations

FEDERAL COMMUNICATIONS COMMISSION

[CC Docket No. 96-159; FCC 97-244]

Petitions for Limited Modification of LATA Boundaries to Provide

Expanded Local Calling Service (ELCS) at Various Locations

AGENCY: Federal Communications Commission.

ACTION: Notice.

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

SUMMARY: In this Memorandum Opinion and Order adopted July 3, 1997 and

released July 15, 1997, the Commission grants 23 requests for limited

modification of local access and transport area (LATA) boundaries to

permit certain Bell Operating Companies (BOCs) to provide expanded

local calling service (ELCS) in various communities. The order also

sets forth guidelines for future LATA modification requests. The order

will allow the BOCs to provide ELCS in communities whose borders extend

accross existing LATA boundaries.

FOR FURTHER INFORMATION CONTACT: Pamela Gerr, (202) 418-2357, or Robin

Smolen, (202) 418-2353, both of the Network Services Division, Common

Carrier Bureau.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's

Memorandum Opinion and Order, (FCC 97-244) adopted on July 3, 1997 and

released on July 15, 1997. The full text of this Order is available for

inspection and copying during normal business hours in the FCC

Reference Center (Room 239), 1919 M Street NW, Washington, DC 20554.

The complete text may also be purchased from the Commission's copy

contractor, International Transcription Service, Inc., (202) 857-3800,

1231 20th Street NW, Washington, DC 20036.

Paperwork Reduction Act

OMB Control No.: 3060-0782.

Expiration Date: 01/31/98.

Title: Petitions for Limited Modification of LATA Boundaries to

Provide Expanded Local Calling Service (ELCS) at Various Locations.

Form No.: N/A.

Respondents: Business or other for profit.

Estimated Annual Burden: 20 respondents; 8 hours per response

(avg). x 5 responses annually; 800 total annual burden hours.

Estimated Annual Reporting and Recordkeeping Cost Burden: $0.

Frequency of Response: On occasion.

Needs and Uses: The Commission has provided voluntary guidelines

for filing expanded local calling service requests. These guidelines

will allow the Commission to conduct smooth and continuous processing

of these requests. The collection of information will enable the

Commission to determine if there is a public need for expanded local

calling service in each area subject to the request. Your response is

voluntary.

Public reporting burden for the collection of information is as

noted above. Send comments regarding the burden estimate or any other

aspect of the collection of information, including suggestions for

reducing the burden to Performance Evaluation and Records Management,

Washington, DC 20554. An agency may not conduct or sponsor and a person

is not required to respond to a collection of information unless it

displays a currently valid control number.

Synopsis of Memorandum Opinion and Order

I. Introduction

1. Five Bell Operating Companies (BOCs) have filed petitions

1 with the Commission requesting relief from the effects of

certain local access and transport area (LATA) boundaries.2

The petitions were filed pursuant to section 3(25) of the

Communications Act of 1934, as amended, which permits modification of

LATA boundaries by Bell Operating Companies (BOCs), if such

modifications are approved by the Commission.3 The petitions

request LATA relief in order to provide expanded local calling service

(ELCS) 4 between communities that lie on different sides of

existing LATA boundaries (ELCS requests).5 The petitions

were placed on public notice 6 and comments and replies were

filed.7

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

\1\ Petitions were filed by Ameritech, Bell Atlantic, BellSouth

Telecommunications, Inc. (BellSouth), Southwestern Bell Telephone

Company (SWBT), and US West Communications, Inc. (US West). These

petitions and the associated LATA modification requests are listed

in Appendix A. A LATA modification (LM) file number has been

assigned to each request. See Appendix A.

\2\ LATAs define the geographic areas within which a BOC may

provide service. See infra paras. 3, 9. A LATA is defined as ``a

contiguous geographic area (A) established before the date of

enactment of the Telecommunications Act of 1996 by a Bell operating

company such that no exchange area includes points within more than

1 metropolitan statistical area, consolidated metropolitan

statistical area, or State, except as expressly permitted under the

AT&T Consent Decree; or (B) established or modified by a Bell

operating company after such date of enactment and approved by the

Commission.'' Section 3(25) of the Communications Act of 1934, as

amended, 47 U.S.C. 153(25).

\3\ See 47 U.S.C. 153(25).

\4\ A local calling area consists of one or more telephone

exchanges and is an area within which subscribers can place calls

without incurring any additional charge over their regular monthly

service charge. See United States v. Western Electric, 569 F. Supp.

990, 1003 n.59 (D.D.C. 1983) (hereinafter Western Electric). Local

calling areas are established by state regulatory commissions. See

id. at 990, 1002 n.54. ELCS (also known as extended area service or

EAS) allows local telephone service rates to apply to nearby

telephone exchanges, thus providing an expanded local calling area.

See id.

\5\ These LATA modification requests are summarized in Appendix

B.

\6\ See Public Notice, ``Commission Seeks Comment on Petitions

for Waiver of LATA Boundaries to Provide Expanded Local Calling

Service in Texas and North Carolina,'' DA 96-1190, released July 26,

1996 (First Public Notice); Public Notice, ``Comment Requested on

Petitions for Limited Modification of LATA Boundaries to Provide:

(1) Expanded Local Calling Service (ELCS) in Nebraska, North

Carolina, Ohio, Oregon, Pennsylvania, Texas, and Virginia, and

Between Ohio and West Virginia, and Virginia and West Virginia; and

(2) Integrated Services Digital Network (ISDN) in Hearne, Texas,''

DA 97-109, released January 15, 1997 (Second Public Notice).

\7\ Comments were filed by AT&T Corp. (AT&T), Intelcom Group

(U.S.A.), Inc. (Intelcom), the North Carolina Utilities Commission

and the Public Staff-North Carolina Utilities Commission (North

Carolina PUC), the Public Utilities Commission of Ohio (Ohio PUC),

the Virginia State Corporation Commission (Virginia Commission), and

Western Reserve Telephone Company (Western Reserve). Reply comments

were filed by BellSouth, the North Carolina PUC, and Southwestern

Bell. Numerous informal comments were also filed by individuals,

businesses, and local government entities in support of individual

LATA modification requests.

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

2. There are 24 ELCS requests before the Commission.8

For the reasons discussed below, we grant 23 of the ELCS requests and

order amendment of one request.9 We also provide guidelines

for future ELCS requests.

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

\8\ SWBT's petition for LATA relief in order to provide

integrated services digital network (ISDN) in the Hearne, Texas

LATA, see supra note 6, and Ameritech's request to provide ELCS from

the Aurora, Northfield and Twinsburg, Ohio exchanges to the Akron,

Ohio exchange, see id.; see also Public Notice, ``Commission

Requests Comment on Whether Section 271 of the Communications Act

Authorizes Ameritech to Carry Certain ELCS Traffic Across a LATA

Boundary,'' released June 27, 1997, will be addressed in separate

orders.

\9\ See US West's Scio/Albany request, NSD-LM-97-25, Appendix A.

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

II. Background

A. ELCS Requests Under the Consent Decree

3. On August 24, 1982, the United States District Court for the

District of Columbia (Court) entered an order (Consent Decree) that

required AT&T to divest its ownership of the BOCs.10 The

[[Page 40351]]

Court divided all Bell territory in the continental United States into

geographic areas called LATAs.11 Under the Consent Decree,

the BOCs were permitted to provide telephone service within a LATA

(intraLATA service), but were not permitted to carry traffic across

LATA boundaries (interLATA service).12 InterLATA traffic was

to be carried by interexchange carriers.13

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

\10\ United States v. American Telephone and Telegraph Co., 552

F. Supp. 131 (D.D.C. 1982), aff'd sub nom. Maryland v. United

States, 460 U.S. 1001 (1983).

\11\ See Western Electric, 569 F. Supp. at 993, 994.

\12\ Id. at 994.

\13\ Id.

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

4. The LATAs did not cover territory served by independent

telephone companies (ITCs).14 The Court, however, did

classify some independent exchanges as ``associated'' with a particular

LATA.15 Traffic between a LATA and an associated exchange

was treated as intraLATA, and could be carried by the BOC, while

traffic between a LATA and an unassociated exchange was treated as

interLATA, and could not be carried by the BOC.16 The ITCs

were not subject to the restrictions imposed by the Consent Decree, and

could carry traffic regardless of whether that traffic crossed LATA

boundaries.17

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

\14\ See id. at 1008 n.85.

\15\ See United States v.Western Electric Co., Inc., 569 F.

Supp. 1057, 1110-13 & n.234 (D.D.C. 1983).

\16\ See id.; Western Electric, 569 F. Supp. at 1008-09.

\17\ Western Electric, 569 F. Supp. at 1008, 1010, 1113.

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

5. In establishing the LATAs, the Court recognized that there were

existing local calling areas 18 that would cross the newly

created LATA boundaries.19 The Court stated that the LATAs

were not intended to interfere with local calling areas that had been

established by state regulators.20 Accordingly, the Court

granted ``exceptions'' to permit BOCs to carry interLATA traffic if

necessary to preserve existing ELCS arrangements.21 The

Court found that such exceptions were consistent with the purposes of

the Consent Decree because (1) they were limited in scope, (2) they

would avoid additional charges being imposed on ratepayers, and (3) it

was unlikely that toll traffic potentially subject to competition would

be affected.22

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

\18\ See supra note 4.

\19\ Western Electric, 569 F. Supp. at 995, 1002 n.54.

\20\ Id. at 995.

\21\ Id. at 1002 n.54.

\22\ Id.

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

6. The Court subsequently received more than a hundred requests for

waivers of the Consent Decree to permit new interLATA ELCS routes. The

requests for new ELCS routes were generally initiated by local

subscribers who asked their state commission to approve an expanded

local calling area. If the proposed ELCS route was intraLATA it could

be ordered by the state commission; if the route was interLATA, the BOC

would also have to obtain a waiver from the Court. The Court developed

a streamlined process for handling such requests both because of the

large number of requests involved and because most of the requests were

non-controversial. Under this process, the BOC would submit its waiver

request to the Department of Justice (DOJ). DOJ would review the

request and then submit the request to the Court along with DOJ's

recommendation.

7. In evaluating such requests, DOJ and the Court considered the

number of customers or access lines involved.23 They also

considered whether there was a sufficiently strong community of

interest between the exchanges to justify granting a waiver of the

Consent Decree to allow local calling.24 In particular, they

considered the state commission's community of interest finding and any

additional evidence supporting this finding. A community of interest

could be demonstrated by such evidence as: (1) Poll results indicating

that customers in the affected exchange were willing to pay higher

rates to be included in an expanded local calling area; 25

(2) usage data indicating a high level of calling between the

exchanges; and (3) narrative statements describing how the two

exchanges were part of one community and how the lack of local calling

between the exchanges caused problems for community

residents.26 The Court was willing to grant waivers when the

competitive effects were minimal and a sufficient community of interest

across LATA boundaries was shown.27 The Court frequently

granted waivers to permit interLATA ELCS.

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

\23\ See United States v. Western Electric Company, Inc., No.

82-0192, slip op. at 3 n.8 (D.D.C. July 19, 1984) (hereinafter July

1984 Order).

\24\ See e.g., United States v. Western Electric Company, Inc.,

No. 82-0192 slip op. at 2, 3 n.3 (D.D.C. Jan. 31, 1985) (hereinafter

Jan. 1985 Order); United States v. Western Electric Company, Inc.,

No. 82-0192 (D.D.C. Dec. 3, 1993) (hereinafter Dec. 3, 1993 Order);

United States v. Western Electric Company, Inc., No. 82-0192 (D.D.C.

Dec. 17, 1993) (hereinafter Dec. 17, 1993 Order).

\25\ See July 1984 Order, at 2 n.5.

\26\ See Jan. 1985 Order, at 2-3 & n.3.

\27\ See July 1984 Order; Jan. 1985 Order; United States v.

Western Electric Company, Inc., No. 82-0192, slip op. at 2 (D.D.C.

May 18, 1993) (hereinafter May 1993 Order).

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

8. The Court granted waivers for more than a hundred flat-rate,

non-optional ELCS plans 28 that allow the provision of

traditional local telephone service between nearby exchanges. Under

such plans, subscribers pay no extra charge for calls beyond their

established monthly service charge (the plan involves a flat-rate), and

all subscribers in the exchange are included in the plan (the plan is

non-optional).29 The Court refused, however, to grant

waivers for optional or measured-rate ELCS plans.30 Under

optional plans, subscribers may chose to pay an additional monthly

charge for an expanded local calling area,31 while under

measured-rate plans, subscribers pay measured-rates based on such

factors as duration, distance, and time of day.32 The Court

found that granting waivers for such ELCS arrangements could have an

anticompetitive effect because these services were similar to the toll

service normally provided by interexchange carriers, and that these

arrangements were basically discounted toll service for calls that

would otherwise be carried competitively.33 The Court was

especially concerned that the discount appeared to result from the fact

that BOCs, unlike interexchange carriers, did not have to pay access

charges on such calls.34 The Court also noted that, in the

case of optional or measured-rate plans, the state commission had not

found a sufficient community of interest between the exchanges to

justify traditional local service, (i.e., flat-rate, non-optional

ELCS).35 Finally, the Court expressed concern that allowing

new exceptions for measured-rate or optional plans could lead to a

``piecemeal dismantling'' of the prohibition on the BOCs'' provision of

interLATA service.36

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

\28\ See e.g., Western Electric, 569 F. Supp. at 1002 n.54;

July 1984 Order; Jan. 1985 Order.

\29\ Id.

\30\ See e.g., Western Electric, 569 F. Supp. at 1002 n.54

(optional ELCS plans denied); May 1993 Order (optional ELCS plan

denied); Dec. 3, 1993 Order (measured-rate ELCS plan denied); Dec.

17, 1993 Order (measured-rate, optional ELCS plan denied).

\31\ Id.

\32\ See Dec. 3, 1993 Order.

\33\ See Western Electric, 569 F. Supp. at 1001, 1002 n.54;

Dec. 17, 1993 Order at 3-4; Dec. 3, 1993 Order.

\34\ Dec. 17, 1993 Order at 5.

\35\ See id. at 4; See also May 1993 Order, at 4.

\36\ See May 18, 1993 Order at 4.

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

B. ELCS Requests Under the Telecommunications Act of 1996

9. On February 8, 1996, the Telecommunications Act of 1996 (1996

Act) became law, amending the Communications Act of 1934

(Act).37 Pursuant to the 1996 Act, matters previously

subject to the Consent Decree are now governed by the Act.38

Section

[[Page 40352]]

271(b)(1) of the Act prohibits a BOC from providing ``interLATA

services originating in any of its ``in-region'' States'' 39

until the BOC takes certain steps to open its own market to competition

and the Commission approves the BOC's application to provide such

service.40 In addition, while the Commission may forbear

from applying certain provisions of the Act under certain

circumstances,41 the Commission may not forbear from section

271.42 Section 3(25)(B) of the Act provides that BOCs may

modify LATA boundaries, if such modifications are approved by the

Commission.43

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

\37\ Pub. L. 104-104, 110 Stat. 56 (1996).

\38\ Section 601(a)(1) of the 1996 Act states that ``(a)ny

conduct or activity that was, before the date of enactment of this

Act, subject to any restriction or obligation imposed by the AT&T

Consent Decree shall, on and after such date, be subject to the

restrictions and obligations imposed by the Communications Act of

1934 as amended by this Act and shall not be subject to the

restrictions and obligations imposed by such Consent Decree.'' On

April 11, 1996, the Court issued an order terminating the AT&T

Consent Decree and dismissing all pending motions under the Consent

Decree as moot, effective February 8, 1996. See United States v.

Western Electric Company, Inc., No. 82-0192, 1996 WL 255904 (D.D.C.

Apr. 11, 1996).

\39\ Section 271(i)(1) of the Act defines ``in-region State'' as

a state in which a Bell operating company or any of its affiliates

was authorized to provide wireline telephone exchange service

pursuant to the reorganization plan approved under the Consent

Decree, as in effect on the day before the date of enactment of the

Telecommunications Act of 1996. 47 U.S.C. 271(i)(1). Section 3(21)

of the Act defines ``interLATA service'' as ``telecommunications

between a point located in a local access and transport area and a

point located outside such area.'' 47 U.S.C. 153(21).

\40\ 47 U.S.C. 271(b)(1). Section 271(f), however, provides that

BOCs are not prohibited from engaging in an activity to the extent

that such activity was previously authorized by the Court. See 47

U.S.C. 271(f). Thus, BOCs may continue to serve previously

authorized interLATA ELCS routes. Id.

\41\ See 47 U.S.C. Sec. 160(a).

\42\ See 47 U.S.C. Sec. 160(d).

\43\ See 47 U.S.C. Sec. 153(25)(B).

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

10. Since passage of the 1996 Act, the Commission has received six

petitions requesting LATA relief in order that ELCS can be offered. On

July 26, 1996 the Commission issued a public notice requesting comment

on petitions filed by BellSouth and SWBT for a ``waiver'' of LATA

boundaries.44 On January 15, 1997 the Commission issued a

Second Public Notice requesting comment on petitions filed by

Ameritech, Bell Atlantic, and US West, and allowing additional comment

on the petitions previously filed by BellSouth and SWBT.45

The Second Public Notice stated that, although several of the petitions

describe the relief requested as a ``waiver'' of LATA boundaries, all

of the petitions cited section 3(25) as the basis of the Commission's

jurisdiction to act upon these requests. Accordingly, the Commission

stated that it would treat all of these petitions as requests for

modification of LATA boundaries for the limited purpose of providing

the specific service indicated in the request. The Commission further

stated that the LATA boundaries would remain unchanged for all other

purposes.

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

\44\ See supra note 6.

\45\ Id.

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

III. Comments

11. In response to the First Public Notice, formal comments or

reply comments were filed by AT&T, BellSouth, Intelcom, 46

the North Carolina PUC, and SWBT. AT&T states that the Commission lacks

authority to waive LATA boundaries and that the petitions can only be

properly characterized as LATA modification requests if they propose to

move a LATA boundary so that certain calls previously classified as

intraLATA are now interLATA, and other calls previously classified as

interLATA are now intraLATA.47 AT&T further contends that

such LATA modification requests raise serious competitive issues

because, if granted, they will completely displace the interexchange

carrier currently providing that service.48 AT&T also states

that granting such requests could allow a BOC to ``chip away'' at the

prohibition against its provision of in-region interLATA service prior

to meeting the requirements of Section 271, thus reducing the BOCs'

incentive to open its own local market to competition.49

Accordingly, AT&T concludes that LATA modifications should be granted

``sparingly, if at all.'' 50 Like AT&T, Intelcom also has

expressed concern about possible anticompetitive effects 51

and states that the Commission should approach these and future LATA

modification requests with caution.52 Intelcom, however,

takes no position on the current petitions and states that the proposed

modifications would appear to have no more than a de minimis effect on

competition.53 BellSouth, the North Carolina PUC, and SWBT

all strongly support the grant of particular ELCS requests.

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

\46\ Intelcom states that it is a provider of competitive local

access services and that it operates networks in numerous parts of

the country including some of the LATAs affected by the petitions in

this proceeding. Intelcom Comments at 2-3.

\47\ AT&T Comments at 2-3.

\48\ Id. at 4.

\49\ Id.

\50\ Id. at 5.

\51\ Intelcom Comments at 3-4.

\52\ Id. at 4.

\53\ Id.

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

12. In response to the Second Public Notice, comments were filed by

the Ohio PUC, the Virginia Commission and Western Reserve. These

petitions all support granting particular ELCS requests. The Virginia

Commission, in its comments, also requests approval for a LATA boundary

modification to permit ELCS between the Waverly and Wakefield exchanges

in Virginia (Virginia Commission's Waverly/Wakefield request).

54 This request was not included in any of the LATA

modification petitions previously filed with the

Commission.55

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

\54\ See Virginia Commission Comments at 1-2.

\55\ See supra para. 10.

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

IV. Discussion

A. General Considerations

13. Section 3(25) of the Act defines LATA as those areas

established prior to enactment of the 1996 Act or established or

modified by a BOC after such date of enactment and approved by the

Commission. Section 271 of the Act prohibits a BOC from providing

interLATA services until such time as certain enumerated conditions are

satisfied. Section 10(d) prohibits the Commission from forbearing from

applying the requirements of section 271. Thus, for a BOC to provide

service on a new ELCS route that crosses existing LATA boundaries, the

statute appears to require that BOC either to modify the LATA so that

the route no longer crosses a LATA boundary and obtain Commission

approval therefor, or satisfy the requirements of section 271.

14. The state commissions have determined that certain communities

have an immediate need for traditional local telephone

service.56 None of the BOCs, however, have yet met the

section 271 requirements and there is no time limit by which they must

do so. Thus, requiring the BOCs to meet the section 271 requirements

would not be the most expeditious way to ensure that local telephone

service can be provided to these communities in a timely manner.

Furthermore, the section 271 requirements were intended to ensure that

BOCs do not prematurely enter into the interexchange market. Given the

small number of access lines involved for each of the proposed ELCS

areas in the petitions before the Commission, as well as the type of

service to be offered (i.e., traditional local service), it is highly

unlikely that provision of ELCS service would reduce a BOC's motivation

to open its own market to competition. Similarly, the small volume of

traffic would seem inconsequential to any interexchange carrier. Thus,

requiring the BOCs to meet the section 271 requirements prior to

offering this service would not further Congress's intent to guard

against competitive abuses.

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

\56\ See infra para. 18.

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

15. While it appears that LATA modification is the preferable means

by

[[Page 40353]]

which the BOCs can achieve the goal of providing ELCS service, a

modification of the boundary for all purposes in order to accommodate

the ELCS routes could be counterproductive. If an exchange were moved

to another LATA for all purposes, any existing local calling routes

between that exchange and the original LATA would be lost because such

traffic would now be interLATA and could no longer be carried by the

BOC. Instead the traffic would generally be carried by an interexchange

carrier charging long distance rates. Consequently, such action could

merely shift the same problem from one community to another.

16. Thus, we believe that LATA modifications for a ``limited

purpose'' that would authorize BOCs to provide only flat-rate, non-

optional local calling service between specific exchanges, would best

achieve the desired goals discussed in paragraph 14. Modification of

the LATA for the limited purpose of providing the ELCS routes would

avoid the anomalous situations described above. In addition, limited

modifications would reduce the potential for anticompetitive effects to

a greater degree than general LATA modifications because the former

limit the amount of additional traffic that the BOC may carry whereas

the latter would permit the BOC to offer any type of service, including

toll service, between the new exchange and any other point in its LATA.

17. LATA modification for a limited purpose is both consistent with

the statute and serves the public interest. Nothing in the statute or

legislative history indicates that a LATA cannot be modified for a

limited purpose. As explained above, LATA waiver requests to permit

precisely the type of ELCS traffic at issue here were regularly and

routinely granted by the Court under the terms of the AT&T Consent

Decree. Although Congress did not include corresponding authority when

it amended the Communications Act, Congress did acknowledge the

possible need for changes to the LATA boundaries by enacting section

3(25). Nothing in either the statute or the legislative history

suggests a decision by Congress intentionally to eliminate the ability

of a locality, with a demonstrated community of interest that happens

to straddle a LATA boundary, to obtain reasonably priced telephone

service. Thus a broad reading of the term ``modify'' in section 3(25)

is reasonable. Moreover, we will consider each individual request

carefully, weighing the community need for the modification against the

potential harm from BOC anticompetitive activity. We find that this

weighing can best be accomplished by considering those factors

previously considered by the Court.57

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

\57\ See supra paras. 7-8 (describing factors considered by the

Court).

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

B. ELCS Requests

1. Flat-rate, Non-optional ELCS

18. Twenty-three of the pending requests seek limited modifications

of LATA boundaries in order to provide flat-rate, non-optional ELCS

(i.e., traditional local service).58 We find that these

twenty-three requests demonstrate a strong community need for the

proposed ELCS routes. We note that each of the proposed ELCS routes, in

the twenty-three requests, was approved by a state commission.

Furthermore, each request includes a demonstration of need for the

proposed modification.59 In particular, each request

indicates that the ELCS route was approved after the state commission

found there was a sufficient community of interest between the

exchanges to justify such service. Each request also documented this

community of interest through additional evidence including: (1) Poll

results showing that subscribers were willing to pay higher monthly

rates in order to be included in the expanded local calling area; (2)

usage data showing a high level of calling between the potentially

affected exchanges; and (3) narrative statements explaining why the

exchanges to be part of the ELCS area should be considered part of one

community. These statements indicated that many community services

(such as hospitals, doctors offices, schools, stores, public

transportation facilities, and government offices) were located in a

nearby community in the adjacent LATA, and that the need to make

interLATA toll calls for such services caused significant expenses for

residents. We note that granting ELCS petitions removes the proposed

routes from the competitive interexchange market and that some LATA

modifications could reduce the BOCs' incentive to open their own

markets to competition pursuant to section 271. The LATA modifications

proposed here, however, would expand the petitioning BOCs' provision of

local service to limited areas and each request involves only a small

number of customers or access lines.60 Given the limited

amount of traffic and the type of service involved, we find that the

proposed modifications will not have a significant anticompetitive

effect on the interexchange market or on the BOCs' incentive to open

their own markets to competition. Finally, we note that several

commenters strongly urge the Commission to grant particular ELCS

requests,61 and that no commenter has argued that any one of

these 23 requests should be denied.

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

\58\ These 23 requests are summarized in Appendix B.

\59\ See id.

\60\ The number of customers in these exchanges ranged from 724

in the Claremont exchange, see Appendix B (summary of Bell

Atlantic's Claremont/Waverly request), to 7,495 in the Gloucester

exchange. Id. (summary of Bell Atlantic's Gloucester requests).

\61\ See Comments of BellSouth, the North Carolina PUC, the Ohio

PUC, SWBT, the Virginia Commission and Western Reserve. There were

also numerous informal comments from local residents, businesses and

local government entities supporting various ELCS requests.

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

19. We conclude that, in each of the twenty-three requests, the

need for the proposed ELCS routes outweighs the risk of potential

anticompetitive effects. Furthermore, we are approving these

modifications solely for the limited purpose of allowing the BOC to

provide a particular type of service, namely, flat-rate, non-optional

local calling service, between specific exchanges or geographic

areas.62 In each case, the LATA is not modified to permit

the BOC to offer any other type of service, or calls that originate or

terminate outside the specified areas. Thus, flat-rate, non-optional

ELCS between the specified exchanges will be deemed intraLATA, and the

provisions of the Act governing intraLATA service will

apply.63 Other types of service between the specified

exchanges will be deemed interLATA, and the provisions of the Act

governing interLATA service will apply.64

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

\62\ See Appendix A.

\63\ The BOC can provide the service without meeting the section

271 requirements, see 47 U.S.C. Sec. 271(a), and a separate

affiliate is not required. See 47 U.S.C. 272(a)(2)(B).

\64\ The BOC cannot provide other types of service (such as

measured-rate, optional, or toll service) between the specified

exchanges without meeting the section 271 requirements, see 47

U.S.C. 271(a).

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

2. Measured-Rate, Optional ELCS

20. US West requests a LATA modification in order to provide

measured-rate, optional ELCS from its Albany exchange in the Eugene,

Oregon LATA to the Scio Mutual Telephone Association's Scio

exchange.65 US West states that the Oregon state commission

requires carriers to offer both flat-and measured-rate options for all

ELCS routes in the state.66 Accordingly, US West's plan

would offer subscribers the

[[Page 40354]]

following options: (1) Unlimited calling for a flat monthly charge; (2)

a ``usage only'' option in which calls are charged at a set rate per

minute; and (3) a three or six hour ``measured usage''

package.67 US West argues that the proposed ELCS plan is not

the type of ``optional'' plan previously rejected by the Court because

subscribers would have to select one of the ELCS plans, and could not

choose between the ELCS plan and the service offered by an

interexchange carrier.68 US West also states that the Scio

exchange has approximately 1600 access lines,69 and that the

state commission found there was a ``community of interest'' between

the exchanges and that the ELCS route was necessary to meet the

``critical needs'' of Scio exchange customers.70

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

\65\ See US West's Scio/Albany request, Appendices A and B.

\66\ This policy is intended to ``avoid the potential inequity

created by flat-rate (ELCS) whereby low-volume users support the

high volume (ELCS) users.'' See US West Petition, Appendix A at 8.

\67\ See Letter from John L. Traylor, Senior Attorney, US West,

Inc., to Common Carrier Bureau, Federal Communications Commission

(Feb. 14, 1997). These options and rates are for residential

subscribers. There are different rates and options offered to

business subscribers. Id.

\68\ Id.

\69\ See US West Petition at 4.

\70\ Id.

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

21. We do not approve this proposed LATA modification. US West's

request is related to a measured-rate optional ELCS plan. Furthermore,

although the state commission found that there was a ``community of

interest'' between the exchanges, it did not make a specific finding

that there was a sufficient community of interest to warrant

traditional local service (i.e., flat-rate, non-optional ELCS).

Subscribers generally can be expected to prefer, and to benefit from,

reduced rate service to nearby areas but ELCS plans with optional or

measured-rate elements are similar to the toll services traditionally

offered by interexchange carriers. We find that modifying a LATA

boundary in order to permit a BOC to provide measured-rate service

would allow the BOC to provide what would otherwise be interLATA toll

service without first meeting the requirements of section 271. Allowing

LATA modifications for such ELCS plans might well lead to substantial

expansion of BOC service, without the BOC satisfying the section 271

requirements.71 The potential anticompetitive effect of

optional and measured-rate plans, and the lack of any showing of a need

for traditional local telephone service (i.e., flat-rate, non-optional

ELCS) between the Albany and Scio exchanges, leads us to deny US West's

request. While we recognize the state commission's interest in

providing additional choices to consumers, we will not approve such

optional or measured-rate plans for the reasons discussed above.

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

\71\ Cf. May 1993 Order at 4.

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

22. We note, however, that the Scio/Albany request was placed on

public notice and that no objections were filed. Moreover, because of

its general policy requiring both flat-and measured-rate options on all

ELCS routes, the state commission apparently never considered whether a

sufficient community of interest existed between the Albany and Scio

exchanges to justify flat-rate, non-optional ELCS. Under these

circumstances, we find that the public interest will best be served by

our giving US West an opportunity to seek further clarification from

the state commission. Accordingly, we direct US West to amend its

request within 60 days of the release date of this order to state

whether it has obtained a further ruling from the state commission that

addresses whether there is a sufficient community of interest to

warrant flat-rate, non-optional ELCS between the Albany and Scio

exchanges and states whether such service has been

approved.72 If no amendment is filed within the 60 day

period, the request will be dismissed without prejudice pursuant to

Section 1.748 of the Commission's rules.73

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

\72\ We note that even if US West does not file such an

amendment at this time, our ruling here does not preclude relief to

residents of the Albany and Scio exchanges. First, the request may

be resubmitted at any time if the state commission determines that

the required community of interest exists. This service could also

be offered by an alternative provider, if available, and US West

will be able to offer interLATA service if it meets the requirements

of section 271.

\73\ 47 CFR 1.748(a). Section 1.748(a) provides that an

application may be dismissed without prejudice if the applicant

fails to comply with a request for additional information.

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

V. Future LATA Modification Requests

23. The Common Carrier Bureau has authority to act on petitions to

modify LATA boundaries, consistent with the principles established in

this order, pursuant to the delegation of authority contained in

Secs. 0.91 and 0.291 of the Commission's rules.74 We

conclude that the following set of guidelines will assist the BOCs in

filing those LATA modification petitions that involve ELCS and the

Bureau in acting on those petitions.75 First, we request

that each ELCS petition be filed by the BOC 76 pursuant to

the application filing requirements set forth in Secs. 1.742 and 1.743

of the Commission's rules.77 Second, we ask that each

individual ELCS LATA modification request be the subject of a separate

petition.78 Third, we request that each petition be labeled

``Request for Limited Modification of LATA Boundaries to Provide ELCS

Between the (exchange name) and the (exchange name).'' Finally, we

request that each ELCS petition include the following information,

under separately numbered and labeled categories, as indicated below:

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

\74\ 47 CFR 0.91, 0.291.

\75\ These guidelines have been approved by the Office of

Management and Budget (OMB) under OMB control number 3060-0782. See

Paperwork Reduction Act of 1995, Pub. L. 104-13.

\76\ See section 25(3) (LATAs may be ``modified by a Bell

operating company'').

\77\ 47 CFR 1.742-43.

\78\ See the 24 individual requests listed in Appendix A.

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

(1) Type of service (e.g., flat-rate, non-optional ELCS);

(2) Direction of service (one-way, two-way; if one-way, indicate

direction of service);

(3) Exchanges involved (identity name of each exchange, the LATA

and state in which each exchange is located; if an exchange is located

in independent territory, indicate the LATA, if any, with which the

exchange is associated);79

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

\79\ See supra para. 4.

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

(4) Name of carriers (name of carrier providing local service in

each exchange);

(5) State commission approval (include a copy of that approval);

(6) Number of access lines or customers (for each exchange);

(7) Usage data (e.g., average number of calls per access line per

month from exchange A to exchange B, from exchange B to exchange A,

and, if available, percent of subscribers making such calls each

month);

(8) Poll results (for each exchange in which a poll was required by

applicable state procedures and conducted in accordance with those

procedures. Indicate the amount of proposed rate increase in those

exchanges);

(9) Community of interest statement (a statement explaining why the

two exchanges should be considered part of a single community and why

community residents need the ELCS);

(10) Map (showing the exchanges and LATA boundary involved and

including a scale showing distance); and

(11) Other pertinent information (e.g., copies of state commission

reports, summary of hearing testimony).

24. If any of the above information is unavailable or inapplicable

to a particular ELCS petition (for example, if polling is not required

by state procedures), the petition should so indicate. A carrier will

be deemed to have made a prima facie case supporting grant of the

proposed modification if the ELCS petition: (1) Has been approved by

the state commission; (2) proposes only

[[Page 40355]]

traditional local service (i.e., flat-rate, non-optional ELCS); (3)

indicates that the state commission found a sufficient community of

interest to warrant such service; (4) documents this community of

interest through such evidence as poll results, usage data, and

descriptions of the communities involved; and (5) involves a limited

number of customers or access lines.80

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

\80\ See supra para. 18 and note 60.

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

25. We request that ELCS requests filed with the Commission, but

not addressed in this order (including the Virginia Commission's

Waverly/Wakefield request),81 be re-filed so that they

comply with these guidelines. Each petition will be assigned a LATA

modification (LM) file number and placed on public notice.

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

\81\ See supra para. 12.

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

VI. Conclusion

26. For the reasons set forth above, we approve the 23 requests for

LATA relief in order to provide flat-rate, non-optional ELCS. These

LATAs are modified solely for the limited purposes indicated in the

requests, and shall remain unchanged for all other purposes. In

addition, we allow US West an additional 60 days in which to amend its

Scio/Albany request. Finally, we establish guidelines to direct the

filing of future ELCS requests. These actions serve the public interest

by permitting minor LATA modifications when such modifications are

necessary to meet the needs of local subscribers and will not have any

significant effect on competition.

VII. Ordering Clauses

27. Accordingly, it is ordered, pursuant to sections 3(25) and 4(i)

of the Communications Act of 1934, as amended, 47 U.S.C. 153(25),

154(i), that the requests of Ameritech, Bell Atlantic, BellSouth

Telecommunications, Inc. (BellSouth), Southwestern Bell Telephone

Company (SWBT), and US West Communications, Inc. (US West), for LATA

modifications for the limited purpose of providing flat-rate, non-

optional ELCS at specific locations, identified in File Nos. NSD-LM-97-

2 through NSD-LM-97-24, are approved. These LATA boundaries are

modified solely for the purpose of providing flat-rate, non-optional

ELCS between points in the specific exchanges or geographic areas

indicated in the requests. The LATA boundary for all other services

shall remain unchanged.

28. It is further ordered, pursuant to sections 3(25) and 4(i) of

the Communications Act of 1934, as amended, 47 U.S.C. 153(25), 154(i),

that the Virginia State Corporation Commission's request for a LATA

modification to permit ELCS between the Waverly and Wakefield exchanges

is dismissed without prejudice.

29. It is further ordered, pursuant to sections 3(25) and 4(i) of

the Communications Act of 1934, as amended, 47 U.S.C. 153(25), 154(i),

that US West Communications, Inc. (US West) shall amend its request for

approval of a LATA modification to provide ELCS from the Albany

exchange in the Eugene, Oregon LATA to the Scio Mutual Telephone

Association's Scio exchange, File No. NSD-LM-97-25, as indicated

herein, within 60 days of the release date of this order. If no

amendment is filed, US West's LATA modification request will be

dismissed without prejudice.

30. It is further ordered that pursuant to section 416(a) of the

Act, 47 U.S.C. 416(a), the Secretary shall serve a copy of this order

upon the petitioners listed in Attachment A.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Attachment A--List of Petitions and LATA Modification Requests

Ameritech's November 12, 1996 Petition

1. Request to provide one-way, flat-rate, non-optional ELCS from

Ameritech's Duffy exchange in the Columbus, Ohio LATA to Bell

Atlantic's New Martinsville exchange in the Clarksburg, West

Virginia LATA (Ameritech's Duffy/New Martinsville request)--File No.

NSD-LM-97-2.

Bell Atlantic's January 14, 1997 Petition

2. Request to provide two-way, flat-rate, non-optional ELCS

between Bell Atlantic's Waverly exchange in the Norfolk, Virginia

LATA and GTE's Claremont exchange (Bell Atlantic's Claremont/Waverly

request)--File No. NSD-LM-97-3.

3. Request to provide two-way, flat-rate, non-optional ELCS

between Bell Atlantic's Hampton zone of the Metropolitan exchange

area in the Norfolk, Virginia LATA and GTE's Gloucester exchange

(Bell Atlantic's Gloucester/Hampton zone request)--File No. NSD-LM-

97-4.

4. Request to provide two-way, flat-rate, non-optional ELCS

between Bell Atlantic's Newport News zone of the Metropolitan

exchange area in the Norfolk, Virginia LATA and GTE's Gloucester

exchange (Bell Atlantic's Gloucester/Newport News zone request)--

File No. NSD-LM-97-5.

5. Request to provide two-way, flat-rate, non-optional ELCS

between Bell Atlantic's Peninsula zone of the Metropolitan exchange

area in the Norfolk, Virginia LATA and GTE's Gloucester exchange

(Bell Atlantic's Gloucester/Peninsula zone request)--File No. NSD-

LM-97-6.

6. Request to provide two-way, flat-rate, non-optional ELCS

between Bell Atlantic's Poquoson zone of the Metropolitan exchange

area in the Norfolk, Virginia LATA and GTE's Gloucester exchange

(Bell Atlantic's Gloucester/Poquoson zone request)--File No. NSD-LM-

97-7.

7. Request to provide two-way, flat-rate, non-optional ELCS

between Bell Atlantic's Hampton zone of the Metropolitan exchange

area in the Norfolk, Virginia LATA and GTE's Hayes exchange in the

Richmond, Virginia LATA (Bell Atlantic's Hayes/Hampton zone

request)--File No. NSD-LM-97-8.

8. Request to provide two-way, flat-rate, non-optional ELCS

between Bell Atlantic's Newport News zone of the Metropolitan

exchange area in the Norfolk, Virginia LATA and GTE's Hayes exchange

in the Richmond, Virginia LATA (Bell Atlantic's Hayes/Newport News

zone request)--File No. NSD-LM-97-9.

9. Request to provide two-way, flat-rate, non-optional ELCS

between Bell Atlantic's Peninsula zone of the Metropolitan exchange

area in the Norfolk, Virginia LATA and GTE's Hayes exchange (Bell

Atlantic's Hayes/Peninsula zone request)--File No. NSD-LM-97-10.

10. Request to provide two-way, flat-rate, non-optional ELCS

between Bell Atlantic's Poquoson zone of the Metropolitan exchange

area in the Norfolk, Virginia LATA and GTE's Hayes exchange (Bell

Atlantic's Hayes/Poquoson zone request)--File No. NSD-LM-97-11.

11. Request to provide two-way, flat-rate, non-optional ELCS

between Bell Atlantic's Honaker exchange in the Roanoke, Virginia

LATA and GTE's Richlands exchange in the Bluefield, West Virginia

Independent Market Area (Bell Atlantic's Honaker/Richlands

request)--File No. NSD-LM-97-12.

12. Request to provide one-way, flat-rate, non-optional ELCS

from Bell Atlantic's Mason exchange in the Charleston, West Virginia

LATA to the Pomeroy and Middleport exchanges in Ohio (Bell

Atlantic's Mason/Pomeroy-Middleport request)--File No. NSD-LM-97-13.

13. Request to provide one-way, flat-rate, non-optional ELCS

from Bell Atlantic's New Florence exchange in the Pittsburgh,

Pennsylvania LATA to GTE's Johnstown exchange (Bell Atlantic's New

Florence/Johnstown request)--File No. NSD-LM-97-14.

14. Request to provide two-way, flat-rate, non-optional ELCS

between Bell Atlantic's Stone Mountain exchange in the Roanoke,

Virginia LATA and the Lynchburg exchange in the Lynchburg, Virginia

LATA (Bell Atlantic's Stone Mountain/Lynchburg request)--File No.

NSD-LM-97-15.

BellSouth Telecommunications' (BellSouth) July 2, 1996 Petition

15. Request to provide two-way, flat-rate, non-optional ELCS

between BellSouth's Raleigh exchange in the Raleigh, North Carolina

LATA and Carolina Telephone and Telegraph Company's (Carolina

Telephone) Franklinton and Louisburg exchanges (BellSouth's

Franklinton-Louisburg/Raleigh request)--File No. NSD-LM-97-16.

16. Request to provide two-way, flat-rate, non-optional ELCS

between BellSouth's Zebulon exchange in the Raleigh, North Carolina

LATA and Carolina Telephone's

[[Page 40356]]

Louisburg exchange (BellSouth's Louisburg/Zebulon request)--File No.

NSD-LM-97-17.

17. Request to provide two-way, flat-rate, non-optional ELCS

between BellSouth's Apex, Cary, and Raleigh exchanges in the

Raleigh, North Carolina LATA and Carolina Telephone's Pittsboro

exchange (BellSouth's Pittsboro/Apex-Cary-Raleigh request)--File No.

NSD-LM-97-18.

18. Request to provide two-way, flat-rate, non-optional ELCS

between BellSouth's Chapel Hill exchange in the Raleigh, North

Carolina LATA and the Saxapahaw exchange in the Greensboro, North

Carolina LATA (BellSouth's Saxapahaw/Chapel Hill request)--File No.

NSD-LM-97-19.

19. Request to provide two-way, flat-rate, non-optional ELCS

between BellSouth's Wilmington exchange and that portion of the

Scotts Hill exchange served by the 270 prefix in the Wilmington,

North Carolina LATA, and Carolina Telephone's Holly Ridge exchange

(BellSouth's Scotts Hill-Holly Ridge/Wilmington request)--File No.

NSD-LM-97-20.

Southwestern Bell Telephone Company's (SWBT) June 25, 1996 Petition

20. Request to provide two-way, flat-rate, non-optional ELCS

between SWBT's Albany exchange in the Abilene, Texas LATA and SWBT's

Breckenridge exchange in the Dallas, Texas LATA (SWBT's Albany/

Breckenridge request)--File No. NSD-LM-97-21.

21. Request to provide two-way, flat-rate, non-optional ELCS

between United/Centel's Pawnee exchange and SWBT's Kenedy and

Karnes/Fall City exchanges in the San Antonio, Texas LATA (SWBT's

Pawnee/Kenedy-Karnes-Fall City request)--File No. NSD-LM-97-22.

US West Communications' (US West) November 4, 1996 Petition

22. Request to provide flat-rate, non-optional ELCS from US

West's Omaha common service area in the Omaha, Nebraska LATA to

Lincoln Telephone & Telegraph Company's (LT&T's) 234 exchange

(serving the communities of Cedar Creek, Louisville, and Manley,

Nebraska) (US West's 234/Omaha request)--File No. NSD-LM-97-23.

23. Request to provide flat-rate, non-optional ELCS from US

West's Omaha common service area in the Omaha, Nebraska LATA to

LT&T's Murray exchange (US West's Murray/Omaha request)--File No.

NSD-LM-97-24.

US West Communications' (US West) November 4, 1996 Petition

24. Request to provide measured-rate, optional ELCS from US

West's Albany exchange in the Eugene, Oregon LATA to the Scio Mutual

Telephone Association's Scio exchange (US West's Scio/Albany

request)--File No. NSD-LM-97-25.

[FR Doc. 97-19776 Filed 7-25-97; 8:45 am]

BILLING CODE 6712-01-U