Technology Transitions; USTelecom Petition for Declaratory Ruling That Incumbent Local Exchange Carriers Are Non-Dominant in the Provision of Switched Access Services
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Federal Communications Commission FCC 16-90
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Technology Transitions
USTelecom Petition for Declaratory Ruling That
Incumbent Local Exchange Carriers Are Non-
Dominant in the Provision of Switched Access
Services
Policies and Rules Governing Retirement Of
Copper Loops by Incumbent Local Exchange
Carriers
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GN Docket No. 13-5
WC Docket No. 13-3
RM-11358
DECLARATORY RULING, SECOND REPORT AND ORDER, AND ORDER ON
RECONSIDERATION
Adopted: July 14, 2016 Released: July 15, 2016
By the Commission: Chairman Wheeler and Commissioners Clyburn and Rosenworcel issuing separate
statements; Commissioner Pai approving in part, concurring in part, and issuing a
separate statement; Commissioner O�Rielly approving in part, dissenting in part, and
issuing a separate statement.
TABLE OF CONTENTS
Para.
I. INTRODUCTION.................................................................................................................................. 1
II. DECLARATORY RULING (WC DOCKET NO. 13-3) ....................................................................... 8
A. USTelecom�s Petition ...................................................................................................................... 9
B. Background.................................................................................................................................... 10
C. The Market for Interstate Switched Access Services Today ......................................................... 13
1. A New Regulatory Model for Interstate Switched Access...................................................... 14
2. Continuing Decline of Switched Access Voice Services ........................................................ 16
D
........................................ 10
C. The Market for Interstate Switched Access Services Today ......................................................... 13
1. A New Regulatory Model for Interstate Switched Access...................................................... 14
2. Continuing Decline of Switched Access Voice Services ........................................................ 16
D. Determination that Incumbent LECs Are Non-Dominant When Providing Interstate
Switched Access Services.............................................................................................................. 19
1. Market Power Analysis ........................................................................................................... 21
a. Absence of Market Power................................................................................................. 22
b. Other Arguments in the Record ........................................................................................ 35
2. Streamlined Regulation of Incumbent LEC Interstate Switched Access Services.................. 40
a. Transition to Bill and Keep............................................................................................... 43
b. Tariffing Obligations and Protections............................................................................... 44
c. Section 214 Oversight....................................................................................................... 49
d. Additional Safeguards....................................................................................................... 55
III. SECOND REPORT AND ORDER...................................................................................................... 60
A. Background.................................................................................................................................... 61
B. Overview of Our New Approach for Technology Transitions .....................................................
5
III. SECOND REPORT AND ORDER...................................................................................................... 60
A. Background.................................................................................................................................... 61
B. Overview of Our New Approach for Technology Transitions ...................................................... 63
Federal Communications Commission FCC 16-90
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C. The Three Prongs of the Adequate Replacement Test................................................................... 88
1. Network Infrastructure and Service Quality............................................................................ 89
a. Network Performance ....................................................................................................... 94
b. Service Availability ........................................................................................................ 112
c. Network Coverage .......................................................................................................... 123
2. Access to Critical Applications and Functionalities.............................................................. 126
a. 911 and Emergency Services .......................................................................................... 127
b. Communications Security............................................................................................... 136
c. Services for Individuals with Disabilities ....................................................................... 146
3. Interoperability with Key Applications and Functionalities.................................................. 157
a. Identifying Key Applications.......................................................................................... 159
b. Satisfying the Interoperability Standard for Key Applications....................................... 167
D
........................................ 146
3. Interoperability with Key Applications and Functionalities.................................................. 157
a. Identifying Key Applications.......................................................................................... 159
b. Satisfying the Interoperability Standard for Key Applications....................................... 167
D. Other Issues Regarding the Adequate Replacement Test ............................................................ 171
E. Other Issues Related to the Discontinuance Process ................................................................... 178
1. Consumer Education ............................................................................................................. 179
2. Email Notice.......................................................................................................................... 187
3. Notice to Tribal Governments ............................................................................................... 189
4. Timing of Notice ................................................................................................................... 192
F. Non-Substantive Change to Code of Federal Regulations........................................................... 193
G. Clarification of Copper Retirement Notice Rules........................................................................ 194
IV. ORDER ON RECONSIDERATION ................................................................................................. 195
A. Background.................................................................................................................................. 196
B. Discussion.................................................................................................................................... 202
V. PROCEDURAL MATTERS.............................................................................................................. 206
A
......................................................................................................... 196
B. Discussion.................................................................................................................................... 202
V. PROCEDURAL MATTERS.............................................................................................................. 206
A. Paperwork Reduction Act Analysis ............................................................................................. 206
B. Congressional Review Act........................................................................................................... 208
C. Final Regulatory Flexibility Analysis .......................................................................................... 209
VI. ORDERING CLAUSES..................................................................................................................... 210
A. Need for, and Objectives of, the Final Rules ................................................................................... 2
1. Adequate Replacement Test .................................................................................................... 14
2. Other Issues ............................................................................................................................. 28
B. Summary of Significant Issues Raised by Public Comments to the IRFA.................................... 33
C. Response to Comments by the Chief Counsel for Advocacy of the Small Business
Administration ............................................................................................................................... 34
D. Description and Estimate of the Number of Small Entities to Which Rules May Apply.............. 36
1. Wireline Providers................................................................................................................... 38
2
iness
Administration ............................................................................................................................... 34
D. Description and Estimate of the Number of Small Entities to Which Rules May Apply.............. 36
1. Wireline Providers................................................................................................................... 38
2. Wireless Providers................................................................................................................... 45
3. Cable Service Providers .......................................................................................................... 47
4. All Other Telecommunications ............................................................................................... 49
E. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements
for Small Entities ........................................................................................................................... 50
F. Steps Taken to Minimize the Significant Economic Impact on Small Entities, and
Significant Alternatives Considered .............................................................................................. 61
G. Federal Rules that Might Duplicate, Overlap, or Conflict with the Rules..................................... 72
H. Report to Congress......................................................................................................................... 73
APPENDIX A � Final Rules
APPENDIX B � Technical Appendix
APPENDIX C � List of Commenters
APPENDIX D � Final Regulatory Flexibility Analysis
Federal Communications Commission FCC 16-90
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I. INTRODUCTION
1. Technology transitions demand regulatory transitions
o Congress......................................................................................................................... 73
APPENDIX A � Final Rules
APPENDIX B � Technical Appendix
APPENDIX C � List of Commenters
APPENDIX D � Final Regulatory Flexibility Analysis
Federal Communications Commission FCC 16-90
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I. INTRODUCTION
1. Technology transitions demand regulatory transitions. In recent years, the Commission
has focused closely on the ongoing transitions from networks based on time-division multiplexed (TDM)
circuit-switched voice services running on copper loops to all-Internet Protocol (IP) multi-media networks
using copper, co-axial cable, wireless, and/or fiber as physical infrastructure.
1
We are now at a crossroads
where legacy technologies remain relevant for certain consumers but new technologies have exploded in
popularity. That crossroads necessitates a regulatory transition period, where we eliminate legacy
regulations that are no longer necessary and develop the proper framework for the transition to new
technologies.
2. The regulations�even the terminology used in those regulations�that guided our
traditional regime will grow increasingly anachronistic as a new world of technologies governs the
communications landscape. As the tectonic plates of disruptive technological change settle, our role
cannot be to avoid the turbulence but to do our best to provide nimble, common sense solutions in the
interim until this as yet not fully formed new regime emerges.
3. Our mission is to strip away the outdated and unnecessary while we build a bridge to the
new
of technologies governs the
communications landscape. As the tectonic plates of disruptive technological change settle, our role
cannot be to avoid the turbulence but to do our best to provide nimble, common sense solutions in the
interim until this as yet not fully formed new regime emerges.
3. Our mission is to strip away the outdated and unnecessary while we build a bridge to the
new. As we noted last December, we are committed �to eliminating unnecessary burdens on industry and
promoting innovation while ensuring our statutory objectives are met.�
2
We will consistently aim to
�modernize[ ] our rules by removing outmoded regulations, while preserving requirements that remain
essential to our fundamental mission to ensure competition, consumer protection, universal service, and
public safety.�
3
We seek to maximize opportunities for creative disruption and simultaneously preserve
essential regulatory protections.
4. Today, we take several actions aimed at stripping away the anachronistic while ensuring
that our fundamental values are preserved.
4
First, we remove the outdated designation of incumbent
carriers as dominant in the legacy switched access marketplace. In particular, we grant a petition from the
United States Telecom Association seeking a declaratory ruling that incumbent local exchange carriers
(LECs) are non-dominant in their provision of interstate switched access services.
5. Second, we establish a framework for evaluating requests to discontinue a legacy voice
service as part of technology transitions. In particular, the Second Report and Order announces a three-
pronged test for determining whether a new service qualifies as an adequate replacement for a legacy
voice service as part of our Section 214 discontinuance application process. The test will ensure that
consumers can continue to expect strong service quality, access to critical applications such as 911, and
interoperability with other key applications and functionalities.
6
es a three-
pronged test for determining whether a new service qualifies as an adequate replacement for a legacy
voice service as part of our Section 214 discontinuance application process. The test will ensure that
consumers can continue to expect strong service quality, access to critical applications such as 911, and
interoperability with other key applications and functionalities.
6. Third, we refine our Section 214 discontinuance notice requirements to ensure that the
public is aware of and prepared for such transitions. We require Section 214 discontinuance applicants to
implement customer outreach plans and provide consumer education materials, allow applicants to offer
notice via email to increase industry and customer convenience, and require notice to Tribal governments
in the state where a discontinuance is proposed.
7. Fourth, and finally, we issue an Order on Reconsideration granting in part a petition by
U.S. TelePacific Corporation (TelePacific) to address a gap in the Commission�s rules that potentially left
1
See, e.g., Technology Transitions et al., Notice of Proposed Rulemaking and Declaratory Ruling, 29 FCC Rcd
14968, 14969, para. 1 (2014) (Emerging Wireline Notice).
2
Petition of USTelecom for Forbearance Pursuant to 47 U.S.C. 160(c) from Enf�t of Obsolete ILEC Legacy
Regulations That Inhibit Deployment of Next-Generation Networks, WC Docket No. 14-192, Memorandum Opinion
and Order, FCC 15-166, para. 2 (rel. Dec. 28, 2015) (2015 USTelecom Forbearance Order).
3
Id.
4
See, e.g., Emerging Wireline Notice, 29 FCC Rcd at 14969, para. 1.
Federal Communications Commission FCC 16-90
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competitive LECs without recourse to avoid violating our discontinuance procedures when an incumbent
LEC files a copper retirement notice without an accompanying discontinuance of a TDM-based service
-166, para. 2 (rel. Dec. 28, 2015) (2015 USTelecom Forbearance Order).
3
Id.
4
See, e.g., Emerging Wireline Notice, 29 FCC Rcd at 14969, para. 1.
Federal Communications Commission FCC 16-90
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competitive LECs without recourse to avoid violating our discontinuance procedures when an incumbent
LEC files a copper retirement notice without an accompanying discontinuance of a TDM-based service.
We deny, however, TelePacific�s petition to the extent it would impose new obligations on copper
retirement by incumbent LECs or otherwise delay copper retirements.
II. DECLARATORY RULING (WC DOCKET NO. 13-3)
8. Today we grant a petition from the United States Telecom Association (USTelecom) for
a declaratory ruling that incumbent LECs are non-dominant in their provision of interstate switched
access services.
5
We find that incumbent LECs no longer presumptively exert market power in their
provision of these services, so dominant carrier treatment under certain of our rules is no longer
warranted. As a consequence of this declaratory ruling, incumbent LECs will enjoy streamlined treatment
under the Commission�s Section 214 review processes and some reduction of their tariffing obligations.
At the same time, the requirements imposed on incumbent LECs in the USF/ICC Transformation
Order�which are not triggered by a dominance classification�will remain in place to facilitate the
transition of interstate switched access services to a modern �bill-and-keep� regime.
6
This ruling takes
further steps to modernize the Commission�s regulation of incumbent LEC legacy telephone services and
encourage more robust deployment of broadband technologies.
A. USTelecom�s Petition
9
hich are not triggered by a dominance classification�will remain in place to facilitate the
transition of interstate switched access services to a modern �bill-and-keep� regime.
6
This ruling takes
further steps to modernize the Commission�s regulation of incumbent LEC legacy telephone services and
encourage more robust deployment of broadband technologies.
A. USTelecom�s Petition
9. On December 19, 2012, USTelecom filed a petition for a declaratory ruling that
incumbent LECs �are no longer presumptively dominant when providing interstate mass market and
enterprise switched access services.�
7
USTelecom clarified that its Petition �does not encompass
dedicated services such as special access� or seek relief from wholesale obligations such as the provision
of unbundled network elements (UNEs).
8
The Wireline Competition Bureau (Bureau) sought comment
on the Petition in 2013
9
and sought further comment to �refresh the record� in early 2016.
10
B. Background
10. Dominant Carrier Regulation. In the 1980 Competitive Carrier First Report and Order,
the Commission established a �two-tiered regulatory approach� under which common carriers are either
dominant or non-dominant in their provision of regulated services.
11
The defining characteristic of a
5
See Petition of USTelecom for a Declaratory Ruling That Incumbent LECs Are Non-Dominant in the Provision of
Switched Access Services, WC Docket No. 13-3 (filed Dec. 19, 2012) (USTelecom Petition).
6
See Connect America Fund et al., Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd
17663 (2011) (USF/ICC Transformation Order), aff�d sub nom In re: FCC 11-161, 753 F.3d 1015 (10th Cir. 2014).
7
USTelecom Petition at 9.
8
USTelecom Petition at 1 n.2
inant in the Provision of
Switched Access Services, WC Docket No. 13-3 (filed Dec. 19, 2012) (USTelecom Petition).
6
See Connect America Fund et al., Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd
17663 (2011) (USF/ICC Transformation Order), aff�d sub nom In re: FCC 11-161, 753 F.3d 1015 (10th Cir. 2014).
7
USTelecom Petition at 9.
8
USTelecom Petition at 1 n.2.
9
See Wireline Competition Bureau Seeks Comment on United States Telecom Association Petition for Declaratory
Ruling That Incumbent Local Exchange Carriers Are Non-Dominant in the Provision of Switched Access Services,
Public Notice, 28 FCC Rcd 107 (WCB 2013).
10
Wireline Competition Bureau Seeks Comment to Refresh the Record on United States Telecom Association
Petition for Declaratory Ruling That Incumbent Local Exchange Carriers Are Nondominant in the Provision of
Switched Access Services, Public Notice, 31 FCC Rcd 254 (WCB 2016). Comments responsive to the earlier public
notice are cited as �Comments [or Reply] to USTelecom Petition� and those responsive to the �refresh-the-record�
public notice are cited as �Refresh Comments [or Reply]�.
11
See Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities Authorizations
Therefor, First Report and Order, 85 FCC 2d 1, 5, para. 22, (1980) (Competitive Carrier First Report and Order).
This Report and Order was the first of several adopted in CC Docket 79-251, a docket commonly known as the
�Competitive Carrier proceeding.� See Further Notice of Proposed Rulemaking, 84 FCC 2d 445 (1981); Second
Further Notice of Proposed Rulemaking, 47 Fed. Reg. 17308 (1982); Second Report and Order, 91 FCC 2d 59
C 2d 1, 5, para. 22, (1980) (Competitive Carrier First Report and Order).
This Report and Order was the first of several adopted in CC Docket 79-251, a docket commonly known as the
�Competitive Carrier proceeding.� See Further Notice of Proposed Rulemaking, 84 FCC 2d 445 (1981); Second
Further Notice of Proposed Rulemaking, 47 Fed. Reg. 17308 (1982); Second Report and Order, 91 FCC 2d 59
(1982); Order on Reconsideration, 93 FCC 2d 54 (1983); Third Further Notice of Proposed Rulemaking, 48 Fed.
(continued . . .)
Federal Communications Commission FCC 16-90
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dominant carrier is the possession of market power, which in turn is defined as the power to control
prices.
12
The Commission explained that carriers in this position have �substantial opportunity and
incentive to subsidize the rates for [their] more competitive services with revenues obtained from [their]
monopoly or near-monopoly services.�
13
By contrast, non-dominant carriers lack �the market power
necessary to sustain prices either unreasonably above or below costs.�
14
The Commission determined that
relaxed regulatory treatment of carriers in the latter category would reduce barriers to entry and thereby
fulfill consumer demand more efficiently than applying the same regulatory requirements to all carriers.
15
Accordingly, it streamlined its regulation of non-dominant carriers while continuing to regulate dominant
carriers more extensively.
16
11. To determine whether a carrier possesses market power and is thus dominant, the
Commission historically has examined �clearly identifiable market features� such as �the number and size
distribution of competing firms, the nature of barriers to entry, and the availability of reasonably
substitutable services.�
17
The Commission has recognized that changes in the marketplace can erode the
market power of a carrier once considered dominant
r and is thus dominant, the
Commission historically has examined �clearly identifiable market features� such as �the number and size
distribution of competing firms, the nature of barriers to entry, and the availability of reasonably
substitutable services.�
17
The Commission has recognized that changes in the marketplace can erode the
market power of a carrier once considered dominant. Indeed, AT&T, the quintessential dominant carrier
in 1980, was declared non-dominant in its provision of domestic interexchange services in 1995.
18
12. Interstate Switched Access Services. Incumbent LECs are regulated as dominant carriers
in their provision of interstate switched access services.
19
These services are the means by which
interexchange carriers (IXCs) obtain access to local telephone exchanges to complete interstate long
distance telephone calls.
20
IXCs historically paid LECs a per-minute charge for this access.
21
In this
market, an IXC seeking access to a particular subscriber has no choice but to connect with the LEC that
serves that subscriber and to pay that LEC�s tariffed rate for the access service. The Commission has thus
observed that the market for interstate switched access services �does not appear to be structured in a
(Continued from previous page)
Reg. 28292 (1983); Third Report and Order, 48 Fed. Reg. 46791 (1983); Fourth Report and Order, 95 FCC 2d 554
(1983) (Competitive Carrier Fourth Report and Order), vacated, AT&T v. FCC, 978 F.2d 727 (D.C. Cir. 1992)
(AT&T v. FCC), cert. denied, MCI Telecomms. Corp. v. AT&T, 509 U.S. 913 (1993); Fifth Report and Order, 98
FCC 2d 1191 (1984); Sixth Report and Order, 99 FCC 2d 1020 (1985) (Competitive Carrier Sixth Report and
Order), vacated, MCI Telecomms. Corp. v. FCC, 765 F.2d 1186 (D.C. Cir. 1985), aff�d, MCI v. AT&T, 512 U.S. 218
Report and Order), vacated, AT&T v. FCC, 978 F.2d 727 (D.C. Cir. 1992)
(AT&T v. FCC), cert. denied, MCI Telecomms. Corp. v. AT&T, 509 U.S. 913 (1993); Fifth Report and Order, 98
FCC 2d 1191 (1984); Sixth Report and Order, 99 FCC 2d 1020 (1985) (Competitive Carrier Sixth Report and
Order), vacated, MCI Telecomms. Corp. v. FCC, 765 F.2d 1186 (D.C. Cir. 1985), aff�d, MCI v. AT&T, 512 U.S. 218
(1994) (MCI v. AT&T).
12
See 47 CFR � 61.3(q); see also Competitive Carrier First Report and Order, 85 FCC 2d at 6, para. 26, 14-15,
para. 56.
13
Competitive Carrier First Report and Order, 85 FCC 2d at 4, para. 15.
14
Id. at 4, para. 16; see also id. at 15, para. 56.
15
Id. at 8, para. 33.
16
Id. at 6, para. 25.
17
Competitive Carrier First Report and Order, 85 FCC 2d at 14, para. 57.
18
See Motion of AT&T Corp. to Be Reclassified as a Non-Dominant Carrier, Order, 11 FCC Rcd 3271 (1995)
(AT&T Non-Dominance Order).
19
See Competitive Carrier First Report and Order, 85 FCC 2d at 6, para. 26; see also id. at 15, paras. 62-64.
20
See, e.g., Petition of Qwest Corporation for Forbearance Pursuant to 47 U.S.C. � 160(C) in the Phoenix, Arizona
Metropolitan Statistical Area, Memorandum Opinion and Order, 25 FCC Rcd 8622, 8649, para. 50, 8678, para. 111
(2010) (Qwest Phoenix Forbearance Order).
21
See, e.g., FCC, Connecting America: The National Broadband Plan at 142 (2010),
http://download.broadband.gov/plan/national-broadband-plan.pdf. (National Broadband Plan).
Federal Communications Commission FCC 16-90
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manner that allows competition to discipline rates.�
22
In the 2010 Qwest Phoenix Forbearance Order, the
Commission declared that LECs �[have] market power over originating and terminating switched
access.�
23
C. The Market for Interstate Switched Access Services Today
13
d.gov/plan/national-broadband-plan.pdf. (National Broadband Plan).
Federal Communications Commission FCC 16-90
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manner that allows competition to discipline rates.�
22
In the 2010 Qwest Phoenix Forbearance Order, the
Commission declared that LECs �[have] market power over originating and terminating switched
access.�
23
C. The Market for Interstate Switched Access Services Today
13. Incumbent LECs today provide interstate switched access services under circumstances
that have continued to change dramatically even in the six years since the Commission issued the Qwest
Phoenix Forbearance Order. Specifically, the Commission has adopted rate reforms that fundamentally
change the market in which incumbent LECs provide these services. At the same time, Americans have
continued to move away from switched access voice lines as they adopt new and more advanced ways of
communicating.
1. A New Regulatory Model for Interstate Switched Access
14. The regulatory reforms adopted in the 2011 USF/ICC Transformation Order undermine
the distinction between dominant and non-dominant providers of interstate switched access services. That
order comprehensively reformed the Commission�s intercarrier compensation and universal service rules
to promote broadband availability for all Americans.
24
An integral component of these reforms was the
adoption of bill-and-keep as �the default methodology� for the exchange of telecommunications traffic,
including interstate switched access.
25
Under bill-and-keep, a carrier �looks to its end users� rather than
to �other carriers and their customers� to recover the costs of exchanging traffic.
26
Bill-and-keep has been
a success for the mobile wireless industry and offers many advantages over per-minute access charges as
a method of compensating LECs for their provision of interstate switched access.
27
Perhaps most
significantly, bill-and-keep exposes end users more directly to the costs of their telephone service
their customers� to recover the costs of exchanging traffic.
26
Bill-and-keep has been
a success for the mobile wireless industry and offers many advantages over per-minute access charges as
a method of compensating LECs for their provision of interstate switched access.
27
Perhaps most
significantly, bill-and-keep exposes end users more directly to the costs of their telephone service.
28
Doing so reduces opportunities for �arbitrage and competitive distortions� in the pricing of interstate
switched access and encourages deployment of advanced networks and services.
29
15. To facilitate the transition to bill-and-keep, the Commission established a transition path
requiring scheduled reductions to intercarrier compensation charges, including interstate switched access
charges.
30
Under this transition, interstate switched access services are no longer subject to traditional
price cap and rate-of-return regulation.
31
All interstate switched access rate elements are capped, and
22
See Access Charge Reform; Reform of Access Charges Imposed by Competitive Local Exchange Carriers,
Seventh Report and Order and Further Notice of Proposed Rulemaking, 16 FCC Rcd 9923, 9936, para. 32 (2001)
(CLEC Access Charge Reform Order).
23
Qwest Phoenix Forbearance Order, 25 FCC Rcd at 8664, para. 79.
24
See generally USF/ICC Transformation Order. While the Commission�s intercarrier compensation reforms
encompass both interstate and intrastate switched access services, see USF/ICC Transformation Order, 26 FCC Rcd
at 17916-17, paras. 764-65, USTelecom�s petition�and our ruling�concerns only the former. See USTelecom
Petition at 9.
25
USF/ICC Transformation Order, 26 FCC Rcd at 17904, para. 736.
26
Id. at 17904, para. 737.
27
Id. at 17904, para. 737. VoIP-PSTN �toll� traffic is subject to interstate access charges. See id. at 18008, paras.
943-44.
28
Id. at 17904, para. 738.
29
Id. at 17911, para
16-17, paras. 764-65, USTelecom�s petition�and our ruling�concerns only the former. See USTelecom
Petition at 9.
25
USF/ICC Transformation Order, 26 FCC Rcd at 17904, para. 736.
26
Id. at 17904, para. 737.
27
Id. at 17904, para. 737. VoIP-PSTN �toll� traffic is subject to interstate access charges. See id. at 18008, paras.
943-44.
28
Id. at 17904, para. 738.
29
Id. at 17911, para. 752 (capitalization removed).
30
See 47 CFR pt. 51 subpt. J (Transitional Access Service Pricing). When referring to rules and reforms adopted
�in� or �as part of� the USF/ICC Transformation Order, we include subsequent amendments to those rules.
31
See USF/ICC Transformation Order, 26 FCC Rcd at 17916, para. 764; see also 47 CFR � 51.907(a) (�Carriers
will remove [interstate switched access] services from price cap regulation in their July 1, 2012 annual tariff
filing.�); Connect America Fund et al., Order, 28 FCC Rcd 3319, 3323, para. 8 (2013) (explaining that the
(continued . . .)
Federal Communications Commission FCC 16-90
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terminating access rate elements are being transitioned to bill-and-keep on a multi-year timetable.
32
A
recovery mechanism is in place to partially offset incumbent LECs� loss of access charge revenues during
this transition.
33
2. Continuing Decline of Switched Access Voice Services
16. The ability of callers to place and receive long distance calls over their landlines is what
historically made interstate switched access a valuable service.
34
Yet demand for this service continues to
plummet as subscribership to traditional voice phone service reaches new lows. The Commission
observed last year that �almost 75 percent of U.S. residential customers (approximately 88 million
households) no longer receive[d] telephone service over traditional copper facilities.�
35
By USTelecom�s
estimate, only 16 percent of households retained incumbent LEC switched access lines as of the end of
2015
ribership to traditional voice phone service reaches new lows. The Commission
observed last year that �almost 75 percent of U.S. residential customers (approximately 88 million
households) no longer receive[d] telephone service over traditional copper facilities.�
35
By USTelecom�s
estimate, only 16 percent of households retained incumbent LEC switched access lines as of the end of
2015.
36
As USTelecom documents in its Petition and in subsequent filings, the switched access lines that
once dominated the landscape �have been displaced by wireless and VoIP connections.�
37
USTelecom
asserts that, as of the end 2013, 43 percent of households relied solely on wireless connections for voice
service and 30 percent used wired alternatives to incumbent LEC switched voice.
38
In addition,
USTelecom presents evidence that �the widespread deployment of wired and wireless IP-based networks�
has fostered greater reliance on voice alternatives such as text, email, video chat, and social networking
applications.
39
17. While we agree with commenters that these statistics are too broad and general to support
detailed competitive findings,
40
the overall trends are clear and have only accelerated since USTelecom
(Continued from previous page)
transitional rules �removed rate-of-return carriers from rate-of-return cost-based recovery for interstate switched
access services�).
32
See 47 CFR �� 51.907 (Transition of price cap carrier access charges.), 51.909 (Transition of rate-of-return carrier
access charges.).
33
See 47 CFR �� 51.915 (Recovery mechanism for price cap carriers.), 51.917 (Revenue recovery for Rate-of-
Return Carriers.)
onal rules �removed rate-of-return carriers from rate-of-return cost-based recovery for interstate switched
access services�).
32
See 47 CFR �� 51.907 (Transition of price cap carrier access charges.), 51.909 (Transition of rate-of-return carrier
access charges.).
33
See 47 CFR �� 51.915 (Recovery mechanism for price cap carriers.), 51.917 (Revenue recovery for Rate-of-
Return Carriers.). As part of the transitional recovery mechanism, the Commission defined as Eligible Recovery the
amount of intercarrier compensation revenue reductions that incumbent LECs would be eligible to recover through a
combination of end-user charges (the Access Recovery Charge (ARC)) and, where eligible and if a carrier elects to
receive it, intercarrier compensation replacement Connect America Fund support. A carrier�s Eligible Recovery is
based on a percentage of the reduction in revenue each year resulting from the intercarrier compensation reform
transition. See USF/ICC Transformation Order, 26 FCC Rcd at 17957-61, paras. 850-51.
34
See CLEC Access Charge Reform Order, 16 FCC Rcd at 9938, para. 38 (noting that end users are �beneficiaries�
of interstate switched access).
35
2015 USTelecom Forbearance Order at 5-6, para. 6.
36
See USTelecom Refresh Comments at 4 (Chart: ILEC Switched vs. Wireless-Only and Interconnected VoIP
Households).
37
USTelecom Petition at iii; see also Verizon Comments to USTelecom Petition at 3-7.
38
USTelecom Refresh Comments at 3.
39
USTelecom Petition at 41-42; see also Verizon Comments to USTelecom Petition at 7-8.
40
See COMPTEL Comments to USTelecom Petition at 3-4; MDTC Comments to USTelecom Petition at 5-7; Cox
Comments to USTelecom Petition at 4; NCTA Comments to USTelecom Petition at 6-7; Cbeyond et al. Comments
to USTelecom Petition at 6; Ad Hoc Telecommunications Users Committee Comments to USTelecom Petition at 4-
5; XO Reply to USTelecom Petition at 5-6; Mich. PSC Refresh Comments at 1-4; GCI Refresh Comments at 4-5;
South Dakota Telecom. Assoc
MDTC Comments to USTelecom Petition at 5-7; Cox
Comments to USTelecom Petition at 4; NCTA Comments to USTelecom Petition at 6-7; Cbeyond et al. Comments
to USTelecom Petition at 6; Ad Hoc Telecommunications Users Committee Comments to USTelecom Petition at 4-
5; XO Reply to USTelecom Petition at 5-6; Mich. PSC Refresh Comments at 1-4; GCI Refresh Comments at 4-5;
South Dakota Telecom. Assoc. Refresh Reply at 1-2.
Federal Communications Commission FCC 16-90
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filed its Petition.
41
There has been an indisputable �societal and technological shift� away from switched
telephone service as a fixture of American life.
42
Consumers are increasingly able and willing to abandon
their landlines in favor of communications technologies that do not rely on local telephone switches. In
turn, they are depending less and less on the interstate switched access services of incumbent LECs to
facilitate communications across state lines.
18. With these marketplace developments in mind, we turn to the question of whether
incumbent LECs remain dominant carriers in their provision of interstate switched access services. For
the reasons explained below, we find that incumbent LECs lack market power and therefore are non-
dominant in the provision of these services.
D. Determination that Incumbent LECs Are Non-Dominant When Providing Interstate
Switched Access Services
19. The Commission regulates carriers as dominant only to the extent they possess market
power. Below, we find that regulatory changes have restructured the marketplace in which incumbent
LECs provide interstate switched access services so as to deny them market power. For the reasons stated
below, we declare incumbent LECs non-dominant in their provision of interstate switched access
services
e Commission regulates carriers as dominant only to the extent they possess market
power. Below, we find that regulatory changes have restructured the marketplace in which incumbent
LECs provide interstate switched access services so as to deny them market power. For the reasons stated
below, we declare incumbent LECs non-dominant in their provision of interstate switched access
services.
43
This declaration is based in part upon our understanding, as also discussed below, of the
regulatory consequences of this ruling and our identification of safeguards that will remain in place to
protect consumers; guard against waste, fraud and abuse; and ensure the transition is implemented
properly as the marketplace continues to evolve.
20. Before proceeding further, we reject the argument that USTelecom�s request for a
declaratory ruling is procedurally improper.
44
The Commission has authority to issue a declaratory ruling
�terminating a controversy or removing an uncertainty.�
45
USTelecom has raised a significant question as
to whether recent marketplace developments have divested incumbent LECs of market power over
interstate switched access. Where carriers lack market power, they are entitled to treatment as �non-
dominant� rather than �dominant� carriers under existing Commission rules.
46
We thus find that a
declaratory ruling is appropriate to clarify the proper regulatory treatment of incumbent LECs in their
provision of interstate switched access services under the market conditions in which they provide these
41
See supra para. 1; Technology Transitions et al., Report and Order, Order on Reconsideration and Further Notice
of Proposed Rulemaking, 30 FCC Rcd 9372, 9379, para. 9 (2015) (Emerging Wireline Order and Further Notice);
see also USTelecom Refresh Comments at 3-6
d access services under the market conditions in which they provide these
41
See supra para. 1; Technology Transitions et al., Report and Order, Order on Reconsideration and Further Notice
of Proposed Rulemaking, 30 FCC Rcd 9372, 9379, para. 9 (2015) (Emerging Wireline Order and Further Notice);
see also USTelecom Refresh Comments at 3-6.
42
USTelecom Petition at ii; see also Free State Comments to USTelecom Petition at 4-5; IIA Comments to
USTelecom Petition at 6-7; AT&T Comments to USTelecom Petition at 7-10, Attach. A, B; Digital Policy Institute
Comments to USTelecom Petition at 5-6; ITTA Comments to USTelecom Petition at 3-5.
43
The scope of this declaratory ruling is limited to interstate switched access services. We do not address the
regulatory treatment of incumbent LECs in their provision of special access services (i.e., Business Data Services).
Cf. Sprint Refresh Comments at 6. In addition, non-dominant status does not extend to centralized equal access
providers because such carriers do not provide service to end users. See, e.g., Application of Iowa Network Access
Division for Authority Pursuant to Section 214 of the Communications Act of 1934 and Section 63.01 of the
Commission�s Rules and Regulations to Lease Transmission Facilities to Provide Access Service to Interexchange
Carriers in the State of Iowa, Memorandum Opinion, Order and Certificate, 3 FCC Rcd 1468 (CCB 1988) (granting
authority to operate facilities to provide the benefits of equal access and interexchange carrier competition from a
central location in Des Moines Iowa).
44
Cbeyond at al. Comments to USTelecom Petition at 3-4; ViaSat Comments to USTelecom Petition at 1; Cox
Reply to USTelecom Petition at 1-2; XO Reply to USTelecom Petition at 1-3; South Dakota Telecom. Assoc.
Refresh Reply at 3-4.
45
See 5 U.S.C. � 554(e); see also 47 CFR � 1.2.
46
See 47 CFR � 61.3(q) (definition of �dominant carrier�)
on from a
central location in Des Moines Iowa).
44
Cbeyond at al. Comments to USTelecom Petition at 3-4; ViaSat Comments to USTelecom Petition at 1; Cox
Reply to USTelecom Petition at 1-2; XO Reply to USTelecom Petition at 1-3; South Dakota Telecom. Assoc.
Refresh Reply at 3-4.
45
See 5 U.S.C. � 554(e); see also 47 CFR � 1.2.
46
See 47 CFR � 61.3(q) (definition of �dominant carrier�).
Federal Communications Commission FCC 16-90
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services today.
47
This holds true regardless of whether we could have chosen a different procedural
vehicle, such as a forbearance proceeding, to reach a similar regulatory outcome.
1. Market Power Analysis
21. The Commission defines a dominant carrier as one that possesses market power. Below,
we determine that incumbent LECs no longer possess market power over interstate switched access. We
then respond to various arguments that incumbent LECs nevertheless remain dominant carriers. We
reject these arguments and ultimately declare incumbent LECs as non-dominant in their provision of
interstate switched access services.
a. Absence of Market Power
22. Market power is defined for this purpose as �power to control prices.�
48
The ability of a
carrier to exercise this power depends, in part, on the structure of the market in which the carrier
operates.
49
The market for switched access services has changed dramatically with the Commission�s
adoption of bill-and-keep as a new methodology for intercarrier compensation. In addition, the overall
importance of interstate switched access has continued to decline as consumers have discarded their
switched access lines in favor of more advanced technologies. In today�s marketplace, incumbent LECs
cannot control prices for, and thus lack market power over, interstate switched access.
23. Prior Commission determinations reaching a contrary conclusion about incumbent LEC
market power took place against the backdrop of an �access charge regime� for interstate switched
access
d their
switched access lines in favor of more advanced technologies. In today�s marketplace, incumbent LECs
cannot control prices for, and thus lack market power over, interstate switched access.
23. Prior Commission determinations reaching a contrary conclusion about incumbent LEC
market power took place against the backdrop of an �access charge regime� for interstate switched
access.
50
This system was �designed for an era of separate long-distance companies and high per-minute
charges.�
51
The purpose of regulated access charges was to allocate the costs of long distance telephone
service; LECs were permitted to charge above-cost rates for switched access, generating subsidies for the
local network that helped keep basic telephone service affordable.
52
24. By 2011, the Commission had long recognized that this model was no longer tenable.
The hidden subsidies it produced for traditional phone companies put wireless carriers and other voice
providers at a competitive disadvantage and discouraged investment in more advanced, IP-based
networks.
53
Moreover, the system of regulated per-minute access charges had become �riddled with
inefficiencies and opportunities for wasteful arbitrage� that ultimately meant higher telephone bills for
consumers.
54
25. Under the reforms adopted in the USF/ICC Transformation Order, the Commission is
now phasing out per-minute charges for interstate switched access as it implements bill-and-keep as �the
default methodology for all intercarrier compensation traffic.�
55
While this transition is occurring over
47
Cf. Cbeyond at al. Comments to USTelecom Petition at 3-4; ViaSat Comments to USTelecom Petition at 1; Cox
Reply to USTelecom Petition at 1-2; XO Reply to USTelecom Petition at 1-3; South Dakota Telecom. Assoc.
Refresh Reply at 3-4.
48
See 47 CFR � 61.3(q).
49
See, e.g., CLEC Access Charge Reform Order, 16 FCC Rcd at 9936, para
er
47
Cf. Cbeyond at al. Comments to USTelecom Petition at 3-4; ViaSat Comments to USTelecom Petition at 1; Cox
Reply to USTelecom Petition at 1-2; XO Reply to USTelecom Petition at 1-3; South Dakota Telecom. Assoc.
Refresh Reply at 3-4.
48
See 47 CFR � 61.3(q).
49
See, e.g., CLEC Access Charge Reform Order, 16 FCC Rcd at 9936, para. 32; see also AT&T Non-Dominance
Order, 11 FCC Rcd at 3293, para. 38.
50
See USF/ICC Transformation Order, 26 FCC Rcd at 17916, para. 764; see also Qwest Phoenix Forbearance
Order, 25 FCC Rcd at 8678, para. 111.
51
USF/ICC Transformation Order, 26 FCC Rcd at 17669, para. 9.
52
See National Broadband Plan at 142.
53
See USF/ICC Transformation Order, 26 FCC Rcd at 17669, para. 9.
54
Id. at 17669, para. 9.
55
Id. at 17904, para. 36; see also 47 CFR �� 51.901-51.919.
Federal Communications Commission FCC 16-90
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several years,
56
significant regulatory developments have already taken place. Interstate switched access
services have been removed from traditional access charge regulation and placed under transitional
pricing rules that cap the rates charged for each rate element.
57
The rules specify dates certain for the
transition of terminating switched access rate elements to bill-and-keep, with an end date of July 1, 2018,
for price cap carriers and July 1, 2020, for rate-of-return carriers.
58
Originating access and other
remaining rate elements will remain capped at current levels until a transition timetable is established for
these rate elements.
59
The rate caps these rules prescribe are �default rates,� from which the rules permit
carriers to deviate by private agreement.
60
Carriers �who are otherwise required to file tariffs� must
�tariff rates no higher than the default transitional rates� set forth in the rules.
61
26
l remain capped at current levels until a transition timetable is established for
these rate elements.
59
The rate caps these rules prescribe are �default rates,� from which the rules permit
carriers to deviate by private agreement.
60
Carriers �who are otherwise required to file tariffs� must
�tariff rates no higher than the default transitional rates� set forth in the rules.
61
26. USTelecom argues that adoption of these reforms has rendered concerns about incumbent
LEC market power over interstate switched access moot.
62
We agree. The purpose of these reforms was
to establish a uniform set of requirements governing the exchange of switched access traffic. Under the
transitional rules adopted to implement the reforms, there are two theoretical options for recovery of
interstate switched access revenues: tariffs and private agreements. Tariffed rates may not exceed the
�default� rates established under the rules, and private agreements require a willing negotiating partner.
The rules thus deny incumbent LECs unilateral control over the prices they charge IXCs for interstate
switched access services. When the reforms reach their end point, incumbent LECs will have no right to
demand payment for interstate switched access except under the terms of a private agreement.
63
We find
no basis to ascribe market power to incumbent LECs in their provision of a service that they must provide
without any expectation of payment.
27. Of course, the full implementation of bill-and-keep for interstate switched access services
is years away. Some commenters suggest that the Commission should await the completion of this
process before taking action on USTelecom�s Petition.
64
We disagree. The Commission�s intercarrier
compensation reforms have already progressed to a point where incumbent LECs no longer possess
market power over interstate switched access
bill-and-keep for interstate switched access services
is years away. Some commenters suggest that the Commission should await the completion of this
process before taking action on USTelecom�s Petition.
64
We disagree. The Commission�s intercarrier
compensation reforms have already progressed to a point where incumbent LECs no longer possess
market power over interstate switched access. The transitional access service pricing rules have already
put default rates for interstate switched access service into effect, even for rate elements that lack an
established timetable for transition to bill-and-keep. Incumbent LECs� ability to control prices for
interstate switched access under these rules is narrowly circumscribed; they only can charge rates at or
below the prescribed default rate. These rules prevent incumbent LECs from charging IXCs excessive
rates for switched access or inappropriately shifting costs among rate elements.
65
Accordingly, incumbent
LECs are already divested of market power in their provision of interstate switched access services under
these rules.
56
Its ultimate end date has yet to be established, because the Commission has not adopted a transition timetable for
originating access or other interstate switched access rate elements.
57
See 47 CFR �� 51.907, 51.909.
58
See USF/ICC Transformation Order, 26 FCC Rcd at 17934-35, Fig. 9; see also 47 CFR �� 51.507-51.509.
59
See USF/ICC Transformation Order, 26 FCC Rcd at 17905, para. 739, 17933-34, para. 800 & n.1494.
60
See 47 CFR � 51.905(a).
61
See 47 CFR � 51.905(b).
62
See USTelecom Reply to USTelecom Petition at 17-18 n.49.
63
See USF/ICC Transformation Order, 26 FCC Rcd at 17904-05, paras. 737-38; see also COMPTEL Comments to
USTelecom Petition at 11.
64
See Granite Comments to USTelecom Petition at 19-20; see also Cox Comments to USTelecom Petition at 5-6;
NCTA Comments to USTelecom Petition at 3-4; Sprint Refresh Comments at 2
7 CFR � 51.905(b).
62
See USTelecom Reply to USTelecom Petition at 17-18 n.49.
63
See USF/ICC Transformation Order, 26 FCC Rcd at 17904-05, paras. 737-38; see also COMPTEL Comments to
USTelecom Petition at 11.
64
See Granite Comments to USTelecom Petition at 19-20; see also Cox Comments to USTelecom Petition at 5-6;
NCTA Comments to USTelecom Petition at 3-4; Sprint Refresh Comments at 2.
65
See USF/ICC Transformation Order, 26 FCC Rcd at 17934, para. 800 n.1494.
Federal Communications Commission FCC 16-90
11
28. This finding is consistent with today�s marketplace realities. Interstate switched access
was once an indispensable functionality that made long distance communications across multiple
networks possible. When every telephone subscriber used a switched access line, every long distance
caller relied on interstate switched access by technological necessity. Today, switched access telephone
lines are far from �a monopoly platform for the delivery of voice services.�
66
Consumers and businesses
rely less than ever on local telephone switches�and, accordingly, on interstate switched access�to
communicate over long distances.
67
29. These �broad market trends�
68
are persuasively documented in USTelecom�s and its
supporters� filings.
69
The competitive decline of switched telephone service could provide a compelling
basis for finding that incumbent LECs lack market power over interstate switched access, at least in
markets where these competitive trends are most pronounced.
70
Yet we base our ruling today primarily
on changes to the regulatory structure of interstate switched access that are largely independent of these
trends. Accordingly, our ruling is not dependent on the extent of competition among geographic and
product markets for retail voice services
nterstate switched access, at least in
markets where these competitive trends are most pronounced.
70
Yet we base our ruling today primarily
on changes to the regulatory structure of interstate switched access that are largely independent of these
trends. Accordingly, our ruling is not dependent on the extent of competition among geographic and
product markets for retail voice services. For instance, even if Granite is correct that �most business
locations (especially small and medium business customer locations) do not face facilities-based
competitors for switched access services to business customers,�
71
that finding would not undercut our
analysis. The same is true of Michigan PSC�s claim that rural areas such as Michigan�s Upper Peninsula
lack reliable wireless service,
72
and of Sprint�s argument that alternatives to incumbent LEC switched
voice service are often provided by incumbent LECs themselves or their affiliates.
73
Claims such as these
are consistent with our finding that incumbent LECs lack market power over the interstate switched
access they provide IXCs to complete long distance calls, for the reasons discussed above.
30. Opponents of USTelecom�s Petition argue that incumbent LECs� �terminating
monopoly� compels a finding that they retain market power over interstate switched access.
74
Some insist
that USTelecom has conceded as much with its observation that LECs may �continue to have power with
respect to their own end users.�
75
We disagree. This observation proves too much in the context of
deciding whether a LEC is dominant or non-dominant in the provision of switched access services. The
Commission has long recognized that all LECs�both incumbents and their competitors�have control
66
See USTelecom Petition at iii; see also Verizon Comments to USTelecom Petition at 2-3
This observation proves too much in the context of
deciding whether a LEC is dominant or non-dominant in the provision of switched access services. The
Commission has long recognized that all LECs�both incumbents and their competitors�have control
66
See USTelecom Petition at iii; see also Verizon Comments to USTelecom Petition at 2-3.
67
See Verizon Comments to USTelecom Petition at 2 (�[M]ost voice connections and traffic no longer originate on
the traditional copper network. In fact, since the peak, ILECs have lost more than 60 percent of their switched access
lines and an even greater share of this traffic.�); see also FCC, Wireline Competition Bureau, Industry Analysis and
Technology Division, Local Telephone Competition: Status as of December 31, 2013 at 2 (2014),
https://apps.fcc.gov/edocs_public/attachmatch/DOC-329975A1.pdf.
68
See 2015 USTelecom Forbearance Order at 5, para. 6.
69
See supra Section II.C.2.
70
See Hyperion Telecommunications, Inc. Petition Requesting Forbearance et al., Memorandum Opinion and Order
and Notice of Proposed Rulemaking, 12 FCC Rcd 8596, 8609, para. 24 (1997) (citing competitive carriers�
�extremely small market share of the interstate access market� as support for the conclusion that these carriers lack
market power) (Hyperion Forbearance Order).
71
Granite Comments to USTelecom Petition at 9 (italics omitted).
72
Mich. PSC Refresh Comments at 3.
73
See Sprint Refresh Comments at 5-6.
74
See COMPTEL Comments to USTelecom Petition at 6-7; see also Granite Comments to USTelecom Petition at 3-
4; Sprint Comments to USTelecom Petition at 2
75
COMPTEL Comments to USTelecom Petition at 6 (citing USTelecom Petition at 9 n.16); see also Granite
Comments to USTelecom Petition at 3.
Federal Communications Commission FCC 16-90
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over access to their own telephone subscribers
6.
74
See COMPTEL Comments to USTelecom Petition at 6-7; see also Granite Comments to USTelecom Petition at 3-
4; Sprint Comments to USTelecom Petition at 2
75
COMPTEL Comments to USTelecom Petition at 6 (citing USTelecom Petition at 9 n.16); see also Granite
Comments to USTelecom Petition at 3.
Federal Communications Commission FCC 16-90
12
over access to their own telephone subscribers.
76
Yet the Commission has continued to regulate
competitive LECs as non-dominant in their provision of interstate switched access services.
77
The
Commission has based this regulatory treatment on external factors that served to constrain competitive
LECs� rates, notwithstanding their control over end user access.
78
Today we find that the Commission�s
intercarrier compensation reforms have placed incumbent LECs on similar footing. The market for
interstate switched access services is no longer structured in a way that permits incumbent LECs to exert
market power over these services in a way that is materially different to other (i.e., competitive) LECs.
31. We decline to engage in a more granular market power analysis as some commenters
urge.
79
The transitional pricing rules adopted for switched access services deny incumbent LECs market
power over these services.
80
Because the rules apply categorically to these services, we find no reason to
disaggregate our market power analysis by carrier or geographic region. Nor do we distinguish the mass
market from enterprise markets in our analysis. The Commission observed in the Qwest Phoenix
Forbearance Order that incumbent LECs� charges for interstate switched access do not typically vary
based on the identity of the end user that generates the traffic.
81
We find no basis in the record for
revising that view
analysis by carrier or geographic region. Nor do we distinguish the mass
market from enterprise markets in our analysis. The Commission observed in the Qwest Phoenix
Forbearance Order that incumbent LECs� charges for interstate switched access do not typically vary
based on the identity of the end user that generates the traffic.
81
We find no basis in the record for
revising that view. Accordingly, we find that incumbent LECs lack market power over both �interstate
mass market and enterprise switched access services.�
82
Also, because we find that a categorical ruling is
appropriate, we decline to grant �presumptive� relief that bases the treatment of an incumbent LEC in a
particular market on �case-by-case� factors.
83
32. We also decline to engage in a more rigorous examination of traditional market power
factors such as market share; demand and supply elasticity; and the size, resources, and cost structure of
firms operating in interstate switched access markets.
84
The Commission has taken such factors into
account when assessing whether sufficient marketplace competition exists to deny a carrier market
power.
85
We make no such assessment today. Rather, we find that the Commission�s intercarrier
compensation reforms have restructured the market for interstate switched access services in a manner
that divests incumbent LECs of market power over these services. Although we also take into account the
rising competition for voice services documented in USTelecom�s filings, standalone competition for
interstate switched access services themselves is not central to our analysis. A more thorough
examination of the competitive dynamics of this market would therefore not improve our analysis.
86
76
See Hyperion Forbearance Order, 11 FCC Rcd at 8608-09, para. 24; CLEC Access Charge Reform Order, 16
FCC Rcd at 9935, para
ompetition for
interstate switched access services themselves is not central to our analysis. A more thorough
examination of the competitive dynamics of this market would therefore not improve our analysis.
86
76
See Hyperion Forbearance Order, 11 FCC Rcd at 8608-09, para. 24; CLEC Access Charge Reform Order, 16
FCC Rcd at 9935, para. 30; see also CenturyLink Refresh Comments at 7 (�[W]hatever the merits of this
termination monopoly theory in the past, it is a phenomenon that is equally true for all providers.�).
77
See generally Hyperion Forbearance Order.
78
See id. at 8608-09, paras. 24-25; see also CLEC Access Charge Reform Order 16 FCC Rcd at 9937-40, paras. 37-
44.
79
See, e.g., COMPTEL Comments to USTelecom Petition at 3-4; Granite Comments to USTelecom Petition at 2-3;
Mich. PSC Refresh Comments at 1-2; Pa. PUC Refresh Reply at 2-3.
80
See supra Section II.D.1.a.
81
Qwest Phoenix Forbearance Order, 25 FCC Rcd at 8679, para. 112.
82
See USTelecom Petition at 9 (emphasis added).
83
See id. at 47.
84
See AT&T Non-Dominance Order, 11 FCC Rcd at 3293, para. 38; see also Competitive Carrier First R&O, 85
FCC 2d at 14, para. 57.
85
See, e.g., AT&T Non-Dominance Order.
86
Cf. MDTC Comments to USTelecom Petition at 3; Cbeyond et al. Comments to USTelecom Petition at 7-8.
Federal Communications Commission FCC 16-90
13
33. The market power analysis we perform today is tailored to the characteristics of the
markets and services at issue in USTelecom�s Petition. We assess market power by evaluating the market
conditions that would exist were incumbent LECs not regulated as dominant carriers in their provision of
interstate switched access services.
87
As explained above, we find that the Commission�s comprehensive
overhaul of its intercarrier compensation and universal service regimes has fundamentally changed the
regulatory character of interstate switched access
r by evaluating the market
conditions that would exist were incumbent LECs not regulated as dominant carriers in their provision of
interstate switched access services.
87
As explained above, we find that the Commission�s comprehensive
overhaul of its intercarrier compensation and universal service regimes has fundamentally changed the
regulatory character of interstate switched access. This regulatory restructuring of the marketplace has
led to conditions under which no carrier can exert market power in its provision of these services,
regardless of its dominance classification. Failure to take these reforms into account would yield an
analysis that exaggerates the ability of incumbent LECs to exert market power over these services in the
absence of dominant carrier treatment. We thus find it appropriate to conduct our market power analysis
against the backdrop of these regulatory reforms.
34. The possession of market power is what defines a �dominant carrier� under Part 61 of the
Commission�s rules.
88
Incumbent LECs no longer possess market power over interstate switched access,
so we find that they are no longer dominant in their provision of interstate switched access services.
Because this decision is based on our analysis of the market conditions under which incumbent LECs
provide these services today, we find irrelevant COMPTEL�s assertion that USTelecom has failed to
substantiate any harms �attributable to dominant carrier regulation.�
89
While this declaratory ruling will
have certain deregulatory consequences for incumbent LECs,
90
these consequences follow from rather
than dictate the ruling.
b. Other Arguments in the Record
35. Some commenters raise arguments against USTelecom�s Petition that do not go directly
to the question whether incumbent LECs possess market power over interstate switched access. As
explained below, we do not find any of these arguments persuasive.
36
y consequences for incumbent LECs,
90
these consequences follow from rather
than dictate the ruling.
b. Other Arguments in the Record
35. Some commenters raise arguments against USTelecom�s Petition that do not go directly
to the question whether incumbent LECs possess market power over interstate switched access. As
explained below, we do not find any of these arguments persuasive.
36. We first reject the argument that incumbent LECs� access to Connect America Fund
support as part of the transition to bill-and-keep is premised on their designation as dominant in the
provision of interstate switched access.
91
The Commission established this recovery mechanism for
incumbent but not competitive LECs because the former have �regulatory constraints on their pricing and
service requirements . . . that otherwise limit their ability to recover their costs.�
92
These �constraints�
include federal and state law requirements that limit the revenues incumbent LECs can recover from their
end user telephone subscribers; competitive LECs do not face similar restrictions.
93
Because the ruling
we issue today preserves this disparate regulatory treatment of end user charges, there remains a reasoned
basis for providing incumbent LECs with a recovery mechanism that is not available to competitive LEC
providers of interstate switched access.
37. We also are not convinced that the specialized role of price cap incumbent LECs in
Connect America Phase I and Phase II is a reason to maintain dominant treatment of these carriers in their
87
See, e.g., Competitive Carrier First Report and Order, 85 FCC 2d at 14, para. 55 (describing market power in
terms whether a carrier has the �ability [and] incentive� to engage in the very forms of misconduct to which
dominant carrier regulation is addressed).
88
47 CFR � 61.3(q).
89
Cf. COMPTEL Comments to USTelecom Petition at 8-12; Cox Comments to USTelecom Petition at 5-6
87
See, e.g., Competitive Carrier First Report and Order, 85 FCC 2d at 14, para. 55 (describing market power in
terms whether a carrier has the �ability [and] incentive� to engage in the very forms of misconduct to which
dominant carrier regulation is addressed).
88
47 CFR � 61.3(q).
89
Cf. COMPTEL Comments to USTelecom Petition at 8-12; Cox Comments to USTelecom Petition at 5-6.
90
See infra Section II.D.2.b.
91
See Sprint Comments to USTelecom Petition at 3-4; see also NCTA Comments to USTelecom Petition at 4; CCA
Comments to USTelecom Petition at 2-4; Pa, PUC Reply to USTelecom Petition at 10-11; XO Reply to USTelecom
Petition at 4.
92
USF/ICC Transformation Order, 26 FCC Rcd at 17964, para. 862.
93
Id. at 17965, para. 862 & n.1666.
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provision of interstate switched access services.
94
Phase I of the Connect America Fund provided price
cap LECs with an initial burst of funding to support immediate broadband deployment.
95
Under Phase II,
price cap LECs were granted the opportunity to receive six years of Connect America funding
conditioned on state-level build-out commitments, after which support would be provided through a
competitive bidding process.
96
The design of Connect America Phase I and Phase II reflects a careful
balancing of policy considerations, with the overriding goal of expediting broadband deployment for
�millions more unserved Americans.�
97
38. The Commission observed that the historical regulatory treatment of price cap incumbent
LECs has left these carriers particularly well-situated to deploy broadband services expeditiously across
broad geographies.
98
Accordingly, the Commission adopted a framework for disbursement of Connect
America funds that relied in the first instance on price cap incumbent LECs to deliver voice and
broadband services to rural and unserved areas
egulatory treatment of price cap incumbent
LECs has left these carriers particularly well-situated to deploy broadband services expeditiously across
broad geographies.
98
Accordingly, the Commission adopted a framework for disbursement of Connect
America funds that relied in the first instance on price cap incumbent LECs to deliver voice and
broadband services to rural and unserved areas. The decision to structure the Connect America Fund in
this manner was thus based on considerations that had nothing to do with whether or not incumbent LECs
continue to possess market power over interstate switched access or are constrained by rules that apply
specifically to dominant carriers. We are therefore not convinced that price cap LECs enjoy
�disproportionate regulatory benefits� under the Connect America Fund such that we must continue to
treat these carriers as dominant in their provision of interstate switched access services.
99
39. Finally, we dismiss a number of miscellaneous objections that have no relevance to our
decision. These include generalized claims in the record that incumbent LECs act in ways that betray
their status as dominant carriers. COMPTEL, for instance, asserts that �only a dominant carrier� would
adopt the bargaining position the largest incumbent LECs have taken with respect to IP-to-IP
interconnection.
100
Sprint meanwhile accuses �certain ILECs� of unlawful access charge practices that it
claims are �hardly consistent with a lack of dominance.�
101
Assertions such as these do not speak to the
precise question at issue in this proceeding, namely whether incumbent LECs continue to possess market
power over interstate switched access
taken with respect to IP-to-IP
interconnection.
100
Sprint meanwhile accuses �certain ILECs� of unlawful access charge practices that it
claims are �hardly consistent with a lack of dominance.�
101
Assertions such as these do not speak to the
precise question at issue in this proceeding, namely whether incumbent LECs continue to possess market
power over interstate switched access. Nor does Cbeyond et al.�s contention that �[g]rant of
USTelecom�s Petition could lead to a slippery slope in which incumbent LECs rely on the Commission�s
nondominance ruling to seek further deregulation.�
102
The ruling we issue today follows from our finding
94
Sprint Comments to USTelecom Petition at 3-4; NCTA Comments to USTelecom Petition at 4; see also ViaSat
Comments to USTelecom Petition at 1-4; CCA Comments to USTelecom Petition at 3-4.
95
USF/ICC Transformation Order, 26 FCC Rcd at 17673, para. 22.
96
Id. at 17673-74, para. 24.
97
Id. at 17673, paras. 22-23; see also id. at 17725, para. 156.
98
Id. at 17730-31, para. 175.
99
See Sprint Comments to USTelecom Petition.
100
COMPTEL Reply to USTelecom Petition at 4-6; see also Cox Comments to USTelecom Petition at 3; Cox Reply
to USTelecom Petition at 4-5. But see AT&T Comments to USTelecom Petition at 3. COMPTEL, a trade
association representing competitive carriers, changed its name to INCOMPAS on October 19, 2015. We refer to its
filings in this record under the COMPTEL name if they were filed before that date.
101
See Sprint Refresh Comments at 3 (�Although the Commission has repeatedly found that intraMTA traffic is
subject to reciprocal compensation rates, including when an interexchange carrier connects a CMRS carrier and a
LEC, certain ILECs continue to insist that access charges apply when they deliver intraMTA traffic over FGD/IXC
facilities.� (internal citations omitted)).
102
Cbeyond et al
See Sprint Refresh Comments at 3 (�Although the Commission has repeatedly found that intraMTA traffic is
subject to reciprocal compensation rates, including when an interexchange carrier connects a CMRS carrier and a
LEC, certain ILECs continue to insist that access charges apply when they deliver intraMTA traffic over FGD/IXC
facilities.� (internal citations omitted)).
102
Cbeyond et al. Comments to USTelecom Petition at 11; see also Sprint Refresh Comments at 4-5 (citing
forbearance relief granted to incumbent LECs in other proceedings as a basis for denying UST�s petition); New
Networks Institute Refresh Comments at 1 (arguing that the requested ruling �is just another part of the AT&T-
Verizon-CenturyLink-USTA plan to remove the companies� remaining overall obligations�).
Federal Communications Commission FCC 16-90
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that incumbent LECs no longer possess market power over interstate switched access.
103
The fact that
incumbent LECs may cite this ruling in future proceedings as support for �further deregulation� is of no
consequence. We will review issues raised in each proceeding independently on the basis of the facts and
law at issue therein. Similarly irrelevant is Sprint�s observation that recent decisions have already
brought incumbent LECs significant regulatory relief.
104
2. Streamlined Regulation of Incumbent LEC Interstate Switched Access
Services
40. Our declaration that incumbent LECs are non-dominant in their provision of interstate
switched access services will result in streamlined regulatory treatment of these services. We discuss
these deregulatory consequences below. In particular, our ruling will (i) reduce incumbent LEC
obligations in their tariffing of interstate switched access services; and (ii) streamline the Section 214
transfer of control and discontinuance review procedures that apply to these services.
41. At the outset, we observe that incumbent LECs are members of several overlapping
regulatory categories
deregulatory consequences below. In particular, our ruling will (i) reduce incumbent LEC
obligations in their tariffing of interstate switched access services; and (ii) streamline the Section 214
transfer of control and discontinuance review procedures that apply to these services.
41. At the outset, we observe that incumbent LECs are members of several overlapping
regulatory categories. Different obligations flow from membership in each category; for instance, some
requirements apply to price cap or rate-of-return carriers, some to incumbent LECs,
105
and still others to
common carriers or telecommunications carriers. We here identify the obligations that apply to
incumbent LECs in their provision of interstate switched access services solely by virtue of their
designation as dominant carriers. This question is subtly different from whether a requirement has been
or could be characterized as dominant carrier regulation.
106
Our ruling does not affect requirements that
may fall in this broader category but that do not turn directly on the designation of an incumbent LEC as
dominant under our rules.
42. USTelecom has presented its own analysis of the regulatory consequences of granting its
Petition.
107
This analysis includes a table that purports to identify the �affected rules.�
108
We find this
analysis relevant and informative, and it largely tracks the discussion that follows. We nevertheless make
clear that USTelecom�s analysis is not dispositive. The following discussion reflects the Commission�s
understanding and intent regarding the impact our decision will have on the regulatory treatment of
incumbent LECs and other carriers under our rules.
109
a. Transition to Bill and Keep
43. The reforms of the USF/ICC Transformation Order lie at the heart of today�s ruling
less make
clear that USTelecom�s analysis is not dispositive. The following discussion reflects the Commission�s
understanding and intent regarding the impact our decision will have on the regulatory treatment of
incumbent LECs and other carriers under our rules.
109
a. Transition to Bill and Keep
43. The reforms of the USF/ICC Transformation Order lie at the heart of today�s ruling. As
USTelecom asserts, treating incumbent LECs as non-dominant in their provision of interstate switched
103
See supra Section II.D.1.a.
104
See Sprint Refresh Comments at 4-5.
105
See 47 U.S.C. � 251(h) (defining �incumbent local exchange carrier� for purposes of Section 251 of the
Communications Act of 1934, as amended (the Act)).
106
Compare USTelecom Petition at 9-10 (describing the general concept of �dominant carrier regulation�), with
Letter from Diane Griffin Holland, V.P., Law & Policy, USTelecom, to Marlene H. Dortch, Secretary, FCC, WC
Docket No. 13-3 (filed Apr. 1, 2016) (identifying the specific regulatory consequences of declaring incumbent LECs
non-dominant in the provision of interstate switched access services) (USTelecom April 1 Ex Parte Letter).
107
See USTelecom April 1 Ex Parte Letter; cf. NCTA Comments to USTelecom Petition at 6 (insisting that
USTelecom�s petition lacked adequate detail on �the scope of the petition and the consequences of the requested
relief�) (capitalization removed).
108
See USTelecom April 1 Ex Parte Letter at Attach. (capitalization removed).
109
But see South Dakota Telecom. Assoc. Refresh Reply at 3 (arguing that USTelecom has not adequately identified
the consequences of granting its petition); NCTA Comments on USTelecom Petition at 5-6. These comments
predate USTelecom�s April 1 filing.
Federal Communications Commission FCC 16-90
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access services will not �alter the substantive requirements� of this transition
moved).
109
But see South Dakota Telecom. Assoc. Refresh Reply at 3 (arguing that USTelecom has not adequately identified
the consequences of granting its petition); NCTA Comments on USTelecom Petition at 5-6. These comments
predate USTelecom�s April 1 filing.
Federal Communications Commission FCC 16-90
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access services will not �alter the substantive requirements� of this transition.
110
The rules adopted to
implement this transition set forth requirements that apply respectively to price cap and rate-of-return
carriers.
111
An incumbent LEC is a price cap carrier if �specified by Commission order� as such.
112
Those incumbent LECs that are not price cap carriers are rate-of-return carriers by default.
113
Because the
ruling we issue today says nothing about the �specification� of any incumbent LEC as a price cap carrier,
it does not alter the status of any incumbent LEC as either a price cap or rate-of-return carrier.
Accordingly, the rules that are not premised on a carrier�s dominant or non-dominant status will continue
to apply to each incumbent LEC as they do now. We thus reject Michigan PSC�s argument that dominant
carrier treatment of incumbent LEC interstate switched access services is necessary to �safeguard
customers� from unfair or unjust rates for these services.
114
b. Tariffing Obligations and Protections
44. The interstate switched access tariffs filed as part of the transition to bill-and-keep are
governed by procedural requirements set forth in Parts 51 and 61 of our rules.
115
These rules permit non-
dominant carriers to file tariffs on one day�s notice;
116
dominant carriers and any carrier seeking deemed
lawful treatment of its tariff filing must give seven days� notice for tariff filings that propose only a rate
decrease and fifteen days� notice for all other filings.
117
In addition, supporting data must be filed with
certain dominant carrier tariff filings
e rules permit non-
dominant carriers to file tariffs on one day�s notice;
116
dominant carriers and any carrier seeking deemed
lawful treatment of its tariff filing must give seven days� notice for tariff filings that propose only a rate
decrease and fifteen days� notice for all other filings.
117
In addition, supporting data must be filed with
certain dominant carrier tariff filings.
118
There are also customer notification and minimum effective
period requirements that apply only to dominant carriers.
119
By redesignating incumbent LECs non-
dominant with regard to interstate switched access services, we relieve them of tariffing obligations that
apply only insofar as they are dominant.
45. We reject GCI�s argument that permitting incumbent LECs to file tariffs on one day�s
notice would unfairly disadvantage competitive LECs by requiring them to adjust their �benchmark� rates
more expeditiously.
120
GCI does not cite any requirement that relief properly granted to certain carriers
must never �increase the regulatory burdens of other carriers.�
121
At any rate, GCI has not made clear the
harm that would befall competitive LECs were incumbent LEC interstate switched access tariffs filed on
one day�s notice. Competitive LECs would remain entitled to fifteen days from the effective date of an
110
USTelecom Petition at 10 n.16.
111
See 47 CFR �� 51.907 (price cap), 51.909 (rate-of-return).
112
See 47 CFR � 61.41(a)(2). While the rule subpart that contains Section 61.41 �appl[ies] to all dominant carriers,�
47 CFR � 61.31, a carrier can be both a price cap carrier and nondominant in its provision of a particular service.
Our ruling preserves treatment of price cap incumbent LECs as �dominant carriers� in their provision of such
services as special access
9 (rate-of-return).
112
See 47 CFR � 61.41(a)(2). While the rule subpart that contains Section 61.41 �appl[ies] to all dominant carriers,�
47 CFR � 61.31, a carrier can be both a price cap carrier and nondominant in its provision of a particular service.
Our ruling preserves treatment of price cap incumbent LECs as �dominant carriers� in their provision of such
services as special access. But even if a price cap LEC ceased to be dominant with regard to any service, it would
remain a �price cap local exchange carrier� unless the Commission issued an order removing this �specifi[cation].�
See 47 CFR � 61.41(a)(2).
113
See 47 CFR � 51.903(g).
114
SeeMich. PSC Refresh Comments at 5.
115
See generally 47 CFR pts. 51 & 61.
116
47 CFR � 61.58(f).
117
47 CFR � 61.58(a)(2)(i); see also 47 U.S.C. � 204(a)(3).
118
47 CFR �� 61.38-39, 61.41, 61.49, 61.58.
119
47 CFR �� 61.58(a)(4) (customer notification), 61.59 (minimum effective periods).
120
See GCI Refresh Comments at 7-8.
121
See id. at 7 (emphasis omitted).
Federal Communications Commission FCC 16-90
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incumbent LEC tariff filing to adjust benchmarked rates as necessary.
122
GCI does not explain why
fifteen days is insufficient.
46. In any event, we expect that most incumbent LEC interstate switched access tariff filings
will continue to be filed on seven or fifteen days� notice as they are now. Most of these filings are
submitted as part of an annual tariff filing process prescribed in the Part 51 rules, under which the seven-
and fifteen-day notice periods apply.
123
More generally, both dominant and non-dominant carriers must
file on seven or fifteen days� notice to receive the benefit of �deemed lawful� rates.
124
Any tariff filed on
shorter notice is not presumed to be just and reasonable and may be subject to refund. Filing on shorter
notice also precludes Commission review before a tariff filing takes effect
en-day notice periods apply.
123
More generally, both dominant and non-dominant carriers must
file on seven or fifteen days� notice to receive the benefit of �deemed lawful� rates.
124
Any tariff filed on
shorter notice is not presumed to be just and reasonable and may be subject to refund. Filing on shorter
notice also precludes Commission review before a tariff filing takes effect. Commission staff carefully
review interstate switched access tariff filings from incumbent LECs to ensure that ARCs and Connect
America Fund recovery amounts are computed correctly and to guard against waste, fraud and abuse.
125
Because the public interest demands that we preserve this opportunity for review, we will continue to
require incumbent LECs that participate in the recovery mechanism set forth in the Part 51 transitional
rules
126
to file interstate switched access tariff filings on as many days� notice as must be provided today,
whether seven or fifteen days.
127
Retaining this requirement is necessary to ensure a smooth and orderly
implementation of the Commission�s intercarrier compensation reforms, a key premise of today�s
ruling.
128
This need arises not from the analysis of whether a LEC is dominant or non-dominant, but
rather from the fact that the LECs in question receive prescribed recovery amounts, including from the
Connect America Fund, in connection with the transition to bill-and-keep
47. We also clarify that incumbent LECs may remain obligated to file cost support with their
interstate switched access tariffs for reasons not �tied to� market power over interstate switched access.
129
Those incumbent LECs that participate in the recovery mechanism are already required under the
transitional rules to submit cost support as part of their annual tariff filings.
130
Moreover, as USTelecom
observes, the Commission may require filing of additional cost support �where deemed necessary to serve
a valid regulatory purpose.�
131
48
r over interstate switched access.
129
Those incumbent LECs that participate in the recovery mechanism are already required under the
transitional rules to submit cost support as part of their annual tariff filings.
130
Moreover, as USTelecom
observes, the Commission may require filing of additional cost support �where deemed necessary to serve
a valid regulatory purpose.�
131
48. Overall, the ruling we issue today will reduce the tariffing obligations of incumbent LECs
while ensuring that the transition to bill-and-keep continues apace. Tariffing of interstate switched access
services is an integral component of that transition. Accordingly, we decline to impose mandatory
detariffing on such services as some commenters propose.
132
Finally, we clarify that this ruling leaves in
122
See 47 CFR � 61.26(c).
123
See 47 CFR � 51.919; see also July 1, 2016 Annual Access Charge Tariff Filings, Order, 31 FCC Rcd 2002
(WCB 2016).
124
See 47 U.S.C. � 204(a)(3).
125
The rules governing ARCs and Connect America Fund recovery amounts contain detailed requirements. See 47
CFR �� 51.915, 51.917.
126
See 47 CFR �� 51.915, 51.917
127
See 47 CFR � 61.58(a)(2)(i); see also 47 CFR �� 51.915, 51.917 (recovery mechanism).
128
See USTelecom Refresh Comments at 9 (�To the extent the Commission is concerned that [the requested] ruling
might have unintended consequences such as the elimination of a regulation or requirement that might ultimately
harm consumers, it has broad discretion to carve out or retain such requirements to the extent they are in the public
interest.�).
129
See USTelecom April 1 Ex Parte Letter at 2.
130
See 47 CFR � 51.919.
131
See USTelecom April 1 Ex Parte Letter at 3; see also 47 CFR �� 61.38(a), 61.39(a).
132
See Sprint Refresh Comments at 7; INCOMPAS Refresh Reply at 4, n.11
nt that might ultimately
harm consumers, it has broad discretion to carve out or retain such requirements to the extent they are in the public
interest.�).
129
See USTelecom April 1 Ex Parte Letter at 2.
130
See 47 CFR � 51.919.
131
See USTelecom April 1 Ex Parte Letter at 3; see also 47 CFR �� 61.38(a), 61.39(a).
132
See Sprint Refresh Comments at 7; INCOMPAS Refresh Reply at 4, n.11.
Federal Communications Commission FCC 16-90
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place the existing requirements that govern NECA pooling,
133
including the requirements set forth in the
transitional rules.
134
c. Section 214 Oversight
49. Dominant carriers are generally regulated more carefully than non-dominant carriers
under two application filing procedures rooted in Section 214 of the Act. We discuss each of these in
turn.
50. Service Discontinuances. A common carrier that seeks to discontinue an interstate
telecommunications service must notify affected customers and file an application for Commission
approval of the discontinuance.
135
Unless the Commission notifies the applicant otherwise, an application
is granted automatically after either 60 days for dominant carriers or 31 days for non-dominant carriers.
136
Built into these respective timelines are 30-day and 15-day comment periods, during which affected
customers or others may register concerns with the proposed discontinuance.
137
As a result of this
declaratory ruling, incumbent LEC applications for discontinuance of interstate switched access services
will be placed on the 31-day timeline for streamlined approval, with its 15-day comment period.
51. We are not convinced that preserving the 60-day timeline for review of incumbent LEC
applications to discontinue interstate switched access services is necessary to protect consumers. The
Michigan PSC does not explain why a streamlined review period would deny adequate protection of
�rural and underserved customers� of these services
reamlined approval, with its 15-day comment period.
51. We are not convinced that preserving the 60-day timeline for review of incumbent LEC
applications to discontinue interstate switched access services is necessary to protect consumers. The
Michigan PSC does not explain why a streamlined review period would deny adequate protection of
�rural and underserved customers� of these services.
138
At any rate, the Commission�s discontinuance
rules grant the Commission discretion to remove an application from streamlined treatment when the
public interest demands a more searching review. The Commission has exercised this option in the past
when addressing discontinuance applications that raised significant issues that required further scrutiny to
protect consumers and the public interest.
139
The Commission thus has broad flexibility to administer the
Section 214 process in a manner that serves the public interest, regardless of which review timeline
applies to any application.
133
Cf. GCI Refresh Comments at 7 (urging the Commission to ensure that �any relief granted has no effect on
pooling, the pooling process, or the substantive or procedural requirements that apply with regard to pooling and
NECA tariff filing�).
134
See, e.g., 47 CFR � 51.909(a)(4).
135
47 U.S.C. � 214(a); 47 CFR � 63.71. For convenience, in certain circumstances this item uses �discontinue� (or
�discontinued� or �discontinuance,� etc.) as shorthand that encompasses the statutory terms �discontinue, reduce, or
impair� unless the context indicates otherwise.
136
47 CFR � 63.71.
137
47 CFR � 63.71(a).
138
SeeMich. PSC Refresh Comments at 5. We similarly reject New Networks Institute�s claim that �once the
ILECs are ruled non-dominant they will simply have carte blanche to shut off all copper networks they want [and]
not deliver services.� Net Networks Institute Refresh Comments at 1
educe, or
impair� unless the context indicates otherwise.
136
47 CFR � 63.71.
137
47 CFR � 63.71(a).
138
SeeMich. PSC Refresh Comments at 5. We similarly reject New Networks Institute�s claim that �once the
ILECs are ruled non-dominant they will simply have carte blanche to shut off all copper networks they want [and]
not deliver services.� Net Networks Institute Refresh Comments at 1. Following today�s ruling, incumbent LECs
will remain obligated under Section 214 to seek Commission approval before discontinuing interstate switched
access services.
139
See Applications of Verizon New Jersey, Inc. and Verizon New York, Inc. to Discontinue Domestic
Telecommunications Services Will Not Be Automatically Granted, Public Notice, 28 FCC Rcd 12252, 12253 n.5
(WCB 2013) (noting that �more than 70 comments� had been received and citing the need for �a thorough
investigation of the issues involved in this proceeding�); see also, e.g., Application of Sprint Communications
Company L.P. to Discontinue Domestic Telecommunications Services is Not Automatically Granted, Public Notice,
30 FCC Rcd 10143 (WCB 2015).
Federal Communications Commission FCC 16-90
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52. We reject the Pennsylvania PUC�s argument that placing incumbent LEC service
discontinuance applications on the 31-day timeline could interfere with state law.
140
First, the
Commission�s Section 214 authority applies only to interstate telecommunications services; wholly
intrastate services such as local telephone service are excluded from its reach. Moreover, the Section 214
process is not intended to preempt or displace carrier of last resort (COLR) or other service obligations
that states may impose on incumbent LECs. Section 214 authority to discontinue an interstate switched
access service does not carry with it relief from any COLR or other state law obligations that require a
carrier to provide local service
ded from its reach. Moreover, the Section 214
process is not intended to preempt or displace carrier of last resort (COLR) or other service obligations
that states may impose on incumbent LECs. Section 214 authority to discontinue an interstate switched
access service does not carry with it relief from any COLR or other state law obligations that require a
carrier to provide local service.
141
The ruling we issue today has no effect on this balance of regulatory
oversight between the Commission and the states. Contrary to Michigan PSC�s suggestion, this ruling
will not �constrain� states in their efforts to address �unique conditions that may exist� within their
borders.
142
Rather, states will remain free to regulate intrastate services to the extent they are now.
143
Also, states retain the option of filing comments on any discontinuance application that raises particular
concerns; the Commission will take seriously concerns from a state government authority in evaluating
whether to remove an application from streamlined treatment and in evaluating whether to grant.
53. Transfers of Control. The applications that carriers must file when they seek to transfer
control of lines are also subject to rules that apply differently based on whether or not an applicant is a
dominant carrier.
144
Applications that fall within defined categories are eligible for streamlined treatment,
under which the application is granted on the 31st day after filing unless the Commission notifies the
applicant otherwise.
145
The dominance status of a carrier is relevant to whether an application falls in a
streamlined category; for instance, applications may be eligible for streamlining where �[n]either of the
applicants is dominant with respect to any service.�
146
Today�s declaratory ruling thus expands the range
of circumstances in which transfers of control involving incumbent LECs would be eligible for
streamlined treatment.
54
arrier is relevant to whether an application falls in a
streamlined category; for instance, applications may be eligible for streamlining where �[n]either of the
applicants is dominant with respect to any service.�
146
Today�s declaratory ruling thus expands the range
of circumstances in which transfers of control involving incumbent LECs would be eligible for
streamlined treatment.
54. This relief preserves sufficient Commission oversight of transfers of control. As with
service discontinuance applications, the Commission retains broad discretion to remove transfer-of-
control applications from streamlined processing. Accordingly, the ruling will not interfere with our
ability and willingness to �scrutinize incumbent LECs transactions carefully.�
147
We will continue to
exercise our discretion to remove applications from streamlined processing where circumstances and the
public interest warrant. Moreover, the ruling we issue today does not redesignate incumbent LECs as
non-dominant with respect to all regulated interstate services.
148
The practical impact of the ruling on
140
See Pa. PUC Reply to USTelecom Petition at 3-5; see also MDTC Comments to USTelecom Petition at 7-8; cf.
Mich. PSC Refresh Comments at 6-7.
141
But see ITTA Comments to USTelecom Petition at 6 (implying that the relief USTelecom seeks would remove
�legacy obligations that require ILECs to maintain POTS�) (quoting National Broadband Plan at 59). As we
explain, our ruling does not affect state law obligations to provide local service. Cf. New Networks Institute Refresh
Comments at 1 (arguing that the Commission �seem[s] to have forgotten� the oversight role of states).
142
SeeMich. PSC Refresh Reply at 6-7; see alsoMDTC Comments to USTelecom Petition at 7-8
require ILECs to maintain POTS�) (quoting National Broadband Plan at 59). As we
explain, our ruling does not affect state law obligations to provide local service. Cf. New Networks Institute Refresh
Comments at 1 (arguing that the Commission �seem[s] to have forgotten� the oversight role of states).
142
SeeMich. PSC Refresh Reply at 6-7; see alsoMDTC Comments to USTelecom Petition at 7-8.
143
While the USF/ICC Transformation Order expressly brought intrastate access charges under the Commission�s
Section 251(b)(5) authority, USF/ICC Transformation Order, 26 FCC Rcd at 17920, para. 772, it disclaimed any
attempt to preempt or override COLR or similar state law obligations. Id. at 17672, para. 15, 17694, para. 82.
144
See 47 CFR � 63.03; see also 47 U.S.C. � 214.
145
47 CFR � 63.03(b).
146
47 CFR � 63.03(b)(2)(i).
147
See Cbeyond et al. Comments to USTelecom Petition at 11.
148
In particular, the ruling does not affect treatment of incumbent LECs as dominant with respect to Business Data
Services (i.e., special access services).
Federal Communications Commission FCC 16-90
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Commission review of transfer-of-control applications may therefore be more limited than some
commenters surmise.
d. Additional Safeguards
55. Many of the regulatory protections that apply to incumbent LECs in their provision of
interstate switched access services do not depend on their status as dominant carriers. Perhaps the most
significant of these are the pricing rules adopted to implement the transition of interstate switched access
services to bill-and-keep. Below we discuss additional regulatory safeguards that will remain in place to
protect consumers and competition.
56. Regulation of End User Access Charges. As noted above, interstate switched access
services provide a direct benefit to two distinct customer groups: the IXCs that purchase the regulated
access service, and end users that rely on that service to place and receive long distance calls
discuss additional regulatory safeguards that will remain in place to
protect consumers and competition.
56. Regulation of End User Access Charges. As noted above, interstate switched access
services provide a direct benefit to two distinct customer groups: the IXCs that purchase the regulated
access service, and end users that rely on that service to place and receive long distance calls.
149
In
recognition of this benefit for end users, the Commission permits incumbent LECs to assess a flat-rated
charge on their subscribers to recover a portion of their interstate costs.
150
This subscriber line charge
(SLC) may not exceed $6.50 per month for any residential customer with a single telephone line.
151
The
intrastate costs of telephone service for end users are governed by state law.
57. As USTelecom concedes, treatment of incumbent LECs as non-dominant in their
provision of interstate switched access services does not relieve them from compliance with the SLC
cap.
152
The two Commission rules that implement this cap apply respectively to price cap local exchange
carriers and non-price cap incumbent local exchange carriers.
153
Logically, every incumbent LEC falls
within one, and only one, of these categories. Therefore, the charges that incumbent LECs impose on end
users in conjunction with interstate switched access service will remain capped under the existing rules.
58. Incumbent LEC Obligations. Certain obligations apply generally to incumbent LECs as a
class, whether or not they are dominant carriers. These include the local competition safeguards set forth
in Section 251(c) of the Act.
154
This declaratory ruling has no effect on the scope of these obligations,
which will continue to play a vital role in ensuring that consumers have access to competitive voice
services.
59. Other Carrier Obligations
generally to incumbent LECs as a
class, whether or not they are dominant carriers. These include the local competition safeguards set forth
in Section 251(c) of the Act.
154
This declaratory ruling has no effect on the scope of these obligations,
which will continue to play a vital role in ensuring that consumers have access to competitive voice
services.
59. Other Carrier Obligations. As USTelecom asserts, grant of its Petition has �no impact
on public policy obligations applicable to all carriers such as 911, customer privacy and disabilities
access.�
155
The ruling also leaves in place the bedrock protections of Sections 201 and 202 of the Act,
under which incumbent LECs must act justly and reasonably and without unjust or unreasonable
discrimination in their provision of interstate switched access services.
156
149
See supra Section II.C.2; see also Qwest Phoenix Forbearance Order, 25 FCC Rcd at 8678, para. 111.
150
See Qwest Phoenix Forbearance Order, 25 FCC Rcd at 8678, para. 111; see also 47 CFR �� 69.104, 69.152.
151
See Access Charge Reform et al., Sixth Report and Order in CC Docket Nos. 96-262 and 94-1, Report and Order
in CC Docket No. 99-249, and Eleventh Report and Order in CC Docket No. 96-45, 15 FCC Rcd 12962 (2000)
(CALLS Order); see also 47 CFR �� 69.104, 69.152. In the USF/ICC Transformation Order, the Commission
sought comment on possible changes to the SLC, including the eventual elimination of any distinct end user charge
for users of voice service. See USF/ICC Transformation Order, 26 FCC Rcd at 18121-22, paras. 1330-33.
152
See USTelecom April 1 Ex Parte Letter at 2 n.5.
153
47 CFR �� 69.104, 69.152.
154
See 47 U.S.C. � 251(c); see also USTelecom Petition at 1 n.2 (clarifying that the petition does not seek relief
from Section 251(c)(3) unbundling obligations).
155
USTelecom Petition at 1 n.2.
156
47 U.S.C. �� 201, 202.
Federal Communications Commission FCC 16-90
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III
18121-22, paras. 1330-33.
152
See USTelecom April 1 Ex Parte Letter at 2 n.5.
153
47 CFR �� 69.104, 69.152.
154
See 47 U.S.C. � 251(c); see also USTelecom Petition at 1 n.2 (clarifying that the petition does not seek relief
from Section 251(c)(3) unbundling obligations).
155
USTelecom Petition at 1 n.2.
156
47 U.S.C. �� 201, 202.
Federal Communications Commission FCC 16-90
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III. SECOND REPORT AND ORDER
60. In this Second Report and Order, we update our review and notice procedures governing
the filing and processing of applications pursuant to Section 214 of the Communications Act of 1934, as
amended (the Act) to discontinue, reduce, or impair service (the Section 214 discontinuance process).
157
Section 214 of the Act and the Commission�s implementing rules generally require telecommunications
carriers
158
and interconnected Voice over Internet Protocol (VoIP) providers
159
to obtain Commission
authority to discontinue interstate or foreign service to a community or a party of a community.
160
We
start with an overview of the current discontinuance process and then describe our new �adequate
replacement� test, which will apply solely to the context of Section 214 discontinuance applications that
involve technology transitions, as defined in detail below. Finally, this Second Report and Order
addresses notice and review procedures related to both the 214 discontinuance and copper retirement
rules.
A. Background
61. The Act charges the Commission with considering the �public convenience and
necessity� in evaluating any application to discontinue, reduce, or impair service.
161
All applicants
seeking to discontinue a service are currently required to file a Section 214 application in accordance with
rules governing notice, opportunity for comment, review, and processing requirements.
162
Commenters
have 15 days to file objections if the applicant is a non-dominant carrier and 30 days to file if the
applicant is a dominant carrier
e, or impair service.
161
All applicants
seeking to discontinue a service are currently required to file a Section 214 application in accordance with
rules governing notice, opportunity for comment, review, and processing requirements.
162
Commenters
have 15 days to file objections if the applicant is a non-dominant carrier and 30 days to file if the
applicant is a dominant carrier.
163
The application is automatically granted on the 31st day after filing for
non-dominant carriers and on the 60th day after filing for dominant carriers unless the Wireline
Competition Bureau (Bureau) has notified the applicant that the grant will not be automatically
effective.
164
The Bureau has considerable discretion in determining whether to grant such authority based
on the application, responsive comments, and other filings.
165
The Bureau will normally authorize the
discontinuance �unless it is shown that customers would be unable to receive service or a reasonable
157
47 U.S.C. � 214(a).
158
See 47 U.S.C. � 214(a); see also 47 CFR � 63.61 (�Any carrier subject to the provisions of Section 214 of the
Communications Act proposing to discontinue, reduce or impair interstate or foreign telephone or telegraph service
to a community, or a part of a community, shall request authority therefor by formal application or informal request
as specified in the pertinent sections of this part . . . .�). The Commission relieved Commercial Mobile Radio
Service (CMRS) providers of this obligation in 1994. Implementation of Sections 3(n) and 332 of the
Communications Act, Regulatory Treatment of Mobile Services, Second Report and Order, 9 FCC Rcd 1411, 1481,
para. 182 (1994); see also 47 CFR �� 20.15(b)(3), 63.19(c) (exempting CMRS providers).
159
VoIP Discontinuance Order, 24 FCC Rcd at 6045-46, para
sion relieved Commercial Mobile Radio
Service (CMRS) providers of this obligation in 1994. Implementation of Sections 3(n) and 332 of the
Communications Act, Regulatory Treatment of Mobile Services, Second Report and Order, 9 FCC Rcd 1411, 1481,
para. 182 (1994); see also 47 CFR �� 20.15(b)(3), 63.19(c) (exempting CMRS providers).
159
VoIP Discontinuance Order, 24 FCC Rcd at 6045-46, para. 11 (extending �the Commission�s domestic
discontinuance requirements to interconnected VoIP providers� in order to �safeguard[ ] the public interest in
continuity of such services� without classifying interconnected VoIP services as either telecommunications services
or information services). The VoIP Discontinuance Order moots any need to find a separate basis of authority over
VoIP providers in connection with this Second Report and Order, as NARUC previously contended. See Letter
from James Bradford Ramsay, General Counsel, NARUC, to Chairman Tom Wheeler and Commissioners Mignon
Clyburn, Jessica Rosenworcel, Ajit Pai, and Michael O�Reilly, GN Docket No. 13-5 at 4 (filed July 7, 2016).
(NARUC July 7, 2016 Ex Parte Letter).
160
47 U.S.C. � 214(a).
161
Id.
162
47 CFR � 63.71(a)-(b).
163
47 CFR � 63.71(a)(i)-(ii).
164
47 CFR � 63.71(e).
165
FCC v. RCA Commc�ns, Inc., 346 U.S. 86, 90 (1953); see also 47 CFR � 0.91(d) (delegating authority to the
Wireline Competition Bureau to adjudicate Section 214 discontinuance applications).
Federal Communications Commission FCC 16-90
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substitute from another carrier or that the public convenience or necessity is otherwise adversely
affected.�
166
62
).
164
47 CFR � 63.71(e).
165
FCC v. RCA Commc�ns, Inc., 346 U.S. 86, 90 (1953); see also 47 CFR � 0.91(d) (delegating authority to the
Wireline Competition Bureau to adjudicate Section 214 discontinuance applications).
Federal Communications Commission FCC 16-90
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substitute from another carrier or that the public convenience or necessity is otherwise adversely
affected.�
166
62. In evaluating whether the discontinuance will harm the public interest, the Commission
has for many years employed a five factor balancing test to analyze: (1) the financial impact on the
common carrier of continuing to provide the service; (2) the need for the service in general; (3) the need
for the particular facilities in question; (4) increased charges for alternative services; and (5) the existence,
availability, and adequacy of alternatives.
167
We have concluded that the existence, availability, and
adequacy of alternatives, or the adequate replacement factor, has heightened importance in the context of
technology transitions.
168
Indeed, the public interest demands that we define more specifically what
carriers� obligations are when discontinuing voice services as part of a technology transition.
169
B. Overview of Our New Approach for Technology Transitions
63. Consistent with the proposals in the Emerging Wireline Further Notice,
170
we now adopt
an updated approach for preparing, reviewing, and evaluating Section 214 discontinuance applications
that relate to technology transitions (technology transition discontinuance applications).
171
In this section,
we provide an overview of the framework and address generalized arguments raised by various
commenters.
64. The Framework for the Adequate Replacement Test. We conclude that the public interest
requires that applications seeking to discontinue a legacy TDM-based voice service as part of a transition
to a new technology, whether IP, wireless, or another type, indicate that a technology transition is
implicated
of the framework and address generalized arguments raised by various
commenters.
64. The Framework for the Adequate Replacement Test. We conclude that the public interest
requires that applications seeking to discontinue a legacy TDM-based voice service as part of a transition
to a new technology, whether IP, wireless, or another type, indicate that a technology transition is
implicated.
172
To be clear, the requirements articulated herein for eligibility for automatic grant of
discontinuance applications involving a technology transition apply only to legacy voice services.
173
For
166
47 CFR � 63.71(a)(5)(i)-(ii).
167
Applications for Authority Pursuant to Section 214 of the Communications Act of 1934 to Cease Providing Dark
Fiber Service, Memorandum Opinion and Order, 8 FCC Rcd 2589, 2600, para. 54 (1993), remanded on other
grounds, Southwestern Bell v. FCC, 19 F.3d 1475 (D.C. Cir. 1994). Although the five factor test described herein
generally provides the basis for reviewing discontinuance applications, our �public interest evaluation necessarily
encompasses the �broad aims of the Communications Act.�� Applications of Charter Communications, Inc., Time
Warner Cable, Inc., and Advance/Newhouse Partnership For Consent to Assign or Transfer Control of Licenses and
Authorizations, Memorandum Opinion and Order, FCC 16-59, para. 27 (May 10, 2016) (Charter) (quoting Western
Union Division, Commercial Telegrapher�s Union, A.F. of L. v. United States, 87 F. Supp. 324, 335 (D.D.C. 1949),
aff�d, 338 U.S. 864 (1949)).
168
Emerging Wireline Order and Further Notice, 30 FCC Rcd at 9481, para. 210. Previously, the Commission has
referred to this factor as the adequate substitute factor. We now conclude using the term adequate replacement more
accurately captures the concept of �the existence, availability, and adequacy of alternatives� and avoids confusion
with other related concepts that employ the term substitute
ing Wireline Order and Further Notice, 30 FCC Rcd at 9481, para. 210. Previously, the Commission has
referred to this factor as the adequate substitute factor. We now conclude using the term adequate replacement more
accurately captures the concept of �the existence, availability, and adequacy of alternatives� and avoids confusion
with other related concepts that employ the term substitute.
169
See id. at 9478, para. 204.
170
See id. at 9478, para. 208. The Commission initiated this rulemaking in November 2014 to help guide and
accelerate technology transitions and, among other things, sought comment on proposals for possible criteria against
which to measure what would constitute an adequate replacement for retail services that a carrier seeks to
discontinue in connection with a technology transition. Emerging Wireline Notice, 29 FCC Rcd at 15006, para. 93.
Subsequently, in August 2015, the Commission sought comment on specific criteria for the adequate replacement
test as well as other aspects of how the test would operate as part of the Section 214 discontinuance process.
Emerging Wireline Order and Further Notice, 30 FCC Rcd at 9478, para. 202.
171
See infra Section III; Appendix A, Final Rules, new Section 63.60(h).
172
See infra Appendix A, Final Rules, new Section 63.602(a)(2).
173
In the Further Notice, we sought comment on the scope of legacy services to which the adequate replacement test
should apply. Emerging Wireline Order and Further Notice, 30 FCC Rcd at 9481, para. 209. We conclude that the
special and long-standing importance of voice service to consumers warrants developing today additional criteria for
(continued . . .)
Federal Communications Commission FCC 16-90
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any other domestic service for which a discontinuance application is filed, section 63.71(e) of our rules
(redesignated as � 63.71(f) herein) shall continue to govern automatic grant procedures
nclude that the
special and long-standing importance of voice service to consumers warrants developing today additional criteria for
(continued . . .)
Federal Communications Commission FCC 16-90
23
any other domestic service for which a discontinuance application is filed, section 63.71(e) of our rules
(redesignated as � 63.71(f) herein) shall continue to govern automatic grant procedures. This approach
furthers the public interest because adopting clear, streamlined criteria will eliminate uncertainty that
could potentially impede the industry from a prompt transition to newer technologies. Unlike traditional
applicants, technology transition discontinuance applicants seeking streamlined treatment will be required
to submit with their application either a certification or a showing as to whether an adequate replacement
exists in the service area. Applications either (i) certifying or (ii) demonstrating successfully through
their showing that an adequate replacement exists will be eligible for automatic grant pursuant to Section
63.71(d) of the Commission�s rules as long as the existing requirements for automatic grant are
satisfied.
174
We stress that attempting to satisfy the adequate replacement test is entirely voluntary for an
applicant.
175
Voice technology transition discontinuance applicants that decline to pursue this path are not
eligible for streamlined treatment and will have their applications evaluated on a non-streamlined basis
under the traditional five factor test. Moreover, the showing made regarding an adequate alternative
under the five factor test does not require the network performance testing and other specific showings
required under the adequate replacement test for streamlined treatment.
65
e not
eligible for streamlined treatment and will have their applications evaluated on a non-streamlined basis
under the traditional five factor test. Moreover, the showing made regarding an adequate alternative
under the five factor test does not require the network performance testing and other specific showings
required under the adequate replacement test for streamlined treatment.
65. We further conclude that an applicant for a technology transition discontinuance may
demonstrate that a service is an adequate replacement for a legacy voice service by certifying or showing
that one or more replacement service(s) offers all of the following: (i) substantially similar levels of
network infrastructure and service quality as the applicant service; (ii) compliance with existing federal
and/or industry standards required to ensure that critical applications such as 911, network security, and
applications for individuals with disabilities remain available; and (iii) interoperability and compatibility
with an enumerated list of applications and functionalities determined to be key to consumers and
competitors. One replacement service must satisfy all the criteria to retain eligibility for automatic grant.
66. We decide to codify this three-pronged test in part in response to concerns that the
proposed eight criteria test would be too complicated and burdensome.
176
This straightforward,
streamlined approach will promote clarity, certainty, and efficiency. The test encapsulates the important
criteria identified in the Emerging Wireline Further Notice, but categorizes them conceptually based on
the issues raised and the methodology involved in the analysis. As described in further detail below, we
group concepts such as service quality and network availability together as they involve a quantitative
analysis of performance and are susceptible to empirical benchmarks
important
criteria identified in the Emerging Wireline Further Notice, but categorizes them conceptually based on
the issues raised and the methodology involved in the analysis. As described in further detail below, we
group concepts such as service quality and network availability together as they involve a quantitative
analysis of performance and are susceptible to empirical benchmarks.
177
Similarly, ensuring continued
accessibility for 911 and PSAP services is naturally connected to ensuring accessibility to applications for
(Continued from previous page)
streamlined treatment during technology transitions. Other services to which Section 214(a) discontinuance
obligations apply and voice services subject to Section 214(a) being discontinued in non-technology transitions
circumstances will continue to be subject to our pre-existing discontinuance process, which provides the public an
opportunity to comment and to which our traditional five-factor balancing test applies. We thus decline to apply the
adequate replacement test to legacy data services, as suggested by some commenters. See Letter from C. Douglas
Jarrett, Counsel to NRECA, to Marlene H. Dortch, Secretary, FCC, GN Docket Nos. 13-5 & 12-353, Attach. 1 at 1
(filed July 8, 2016) (NRECA July 8 Ex Parte Letter).
174
See infra Appendix A, Final Rules, new Section 63.602(b); see also 47 CFR �� 63.71(a)(5)(i)-(ii), 63.71(d)-(e).
This approach is conceptually consistent with AT&T�s proposal. See Letter from David L. Talbott, Asst. V.P.,
Federal Regulatory, AT&T Services Inc., to Marlene H. Dortch, Secretary, FCC, GN Docket Nos. 13-5 & 12-353,
Attach. 1 at 1 (filed May 31, 2016) (AT&T May 31 Ex Parte Letter).
175
See Letter from Katherine R. Saunders, Assoc. General Counsel, Federal Regulatory and Legal Affairs, Verizon,
to Marlene H. Dortch, Secretary, FCC, GN Docket No. 13-5 et al. at 1 (filed July 7, 2016) (Verizon July 7 Ex Parte
Letter)
, AT&T Services Inc., to Marlene H. Dortch, Secretary, FCC, GN Docket Nos. 13-5 & 12-353,
Attach. 1 at 1 (filed May 31, 2016) (AT&T May 31 Ex Parte Letter).
175
See Letter from Katherine R. Saunders, Assoc. General Counsel, Federal Regulatory and Legal Affairs, Verizon,
to Marlene H. Dortch, Secretary, FCC, GN Docket No. 13-5 et al. at 1 (filed July 7, 2016) (Verizon July 7 Ex Parte
Letter).
176
See, e.g., ITTA Comments at 7; USTelecom Comments at 7.
177
See infra Section III.C.1.
Federal Communications Commission FCC 16-90
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individuals with disabilities, as both represent overarching values subject to existing bodies of
Commission rules to which an applicant can certify.
67. Technology transition applicants can either demonstrate compliance with these objective
criteria or make a demonstration that, despite not being able to meet the criteria, the totality of the
circumstances demonstrates that an adequate replacement nonetheless exists.
178
If an applicant cannot
certify or make that showing, or declines to pursue the voluntary path of streamlined treatment, it must
include in its application an explanation of how its proposed discontinuance will not harm the public
interest, with specific reference to the five factors the Commission traditionally considers.
179
The Bureau
will then weigh that information as part of the traditional multi-factor evaluation,
180
placing particular
scrutiny on the adequate replacement factor under the newly-enhanced test.
181
68. This streamlined test addresses all of the important criteria identified in the Emerging
Wireline Further Notice while categorizing them conceptually to focus on the issues most important to
consumers. We take this approach to assuage concerns about the perceived sprawling nature of the
proposed test for a replacement service serving as a barrier to technology transitions
ed test.
181
68. This streamlined test addresses all of the important criteria identified in the Emerging
Wireline Further Notice while categorizing them conceptually to focus on the issues most important to
consumers. We take this approach to assuage concerns about the perceived sprawling nature of the
proposed test for a replacement service serving as a barrier to technology transitions.
182
Nonetheless, the
approach adopted today retains the strong objective standards outlined in the Emerging Wireline Further
Notice that ensure that technology transitions benefit all Americans.
69. This framework is grounded in the values that the public interest requires us to protect
during technology transitions. First, consumers expect and deserve a replacement that will provide
comparable network quality and service performance.
183
Second, the public needs to be assured that
critical applications related to public safety and protecting those most vulnerable remain accessible and
operational through any transition.
184
Third, consumers should have access to the applications and
functionalities they have come to associate as�and which currently remain�key components of a legacy
communications service.
185
Fourth, the clarity that comes from established criteria gives applicants,
178
See infra Appendix A, Final Rules, new Section 63.602(b); see also 47 CFR � 63.71(b)(5) (requiring that a
carrier include in its discontinuance application, among other things, �[a]ny other information the Commission may
require�).
179
See supra para 62; see also AT&T May 31 Ex Parte Letter, Attach. 1 at 1.
180
See 47 CFR �� 63.51, 63.71(a)(5)(i)-(ii). Only meaningful, factual objections regarding the reliability of
certifications provided will be persuasive
� 63.71(b)(5) (requiring that a
carrier include in its discontinuance application, among other things, �[a]ny other information the Commission may
require�).
179
See supra para 62; see also AT&T May 31 Ex Parte Letter, Attach. 1 at 1.
180
See 47 CFR �� 63.51, 63.71(a)(5)(i)-(ii). Only meaningful, factual objections regarding the reliability of
certifications provided will be persuasive. We find this approach should address concerns, such as those raised by
USTelecom that �even carriers that certify that they meet all the criteria will bear an increased burden of
demonstrating that each of the criteria is met, since competitive providers will have incentive to, and thus will
challenge all such certifications.� USTelecom Comments at 3. Conversely, our approach of requiring testing data
to satisfy the criteria addresses Edison�s concerns that self-certification is not sufficient and applicants should be
required to make a detailed showing. Edison Comments at 10. Edison or any other entity or individual may object
to the certification or showing, and the Commission will consider the objection and determine if the applicant needs
to provide additional support.
181
Mich. PSC Comments at 2-4.
182
See, e.g., AT&T Comments at 3, 4; Verizon Comments at 5; Alaska Rural Coalition Comments at 4; USTelecom
Comments at; CenturyLink Comments at 25; ITTA Comments at 7.
183
See AARP Comments at 25; NARUC Comments at 6; Consumer Advisory Committee to the Federal
Communications Commission Advisory Recommendation Regarding Technology Transition 08/15 Order and
FNPRM, GN Docket No. 13-5 et al., at 3 (adopted June 10, 2016) (CAC June 10, 2016 Technology Transition
Recommendation).
184
SeeMich. PSC Comments at 10-11; NARUC Comments at 5; CAC June 10, 2016 Technology Transition
Recommendation at 3.
185
See CWA Comments at 12; NASUCA Comments at 10; CAC June 10, 2016 Technology Transition
Recommendation at 3
Technology Transition 08/15 Order and
FNPRM, GN Docket No. 13-5 et al., at 3 (adopted June 10, 2016) (CAC June 10, 2016 Technology Transition
Recommendation).
184
SeeMich. PSC Comments at 10-11; NARUC Comments at 5; CAC June 10, 2016 Technology Transition
Recommendation at 3.
185
See CWA Comments at 12; NASUCA Comments at 10; CAC June 10, 2016 Technology Transition
Recommendation at 3. Many of these applications and functionalities, such as fax machines and point-of-sale
terminals, operate over lines traditionally used for the provision of voice service.
Federal Communications Commission FCC 16-90
25
consumers, and competitors the information they need and should enable us to evaluate these types of
discontinuance applications more briskly to the benefit of applicants and the American public.
186
70. In adopting objective, quantifiable standards for the adequate replacement test, we seek to
minimize uncertainty or confusion that could slow or even discourage technology transitions.
187
Moreover, we do not want to stifle the new and innovative ways that a replacement service could benefit
customers.
188
For that reason, we announce a test that sets clear, achievable benchmarks but leaves
flexibility, recognizing that a shift from a TDM network to a new technology will never be a purely
apples-to-apples comparison.
71. The approach we adopt today places a new prominence on the adequate replacement
analysis,
189
which we conclude is entirely appropriate.
190
The five factor test is aimed at promoting�and
where necessary, balancing�the four missions of our agency, namely to protect consumers, promote
competition, ensure universal access, and strengthen public safety
apples-to-apples comparison.
71. The approach we adopt today places a new prominence on the adequate replacement
analysis,
189
which we conclude is entirely appropriate.
190
The five factor test is aimed at promoting�and
where necessary, balancing�the four missions of our agency, namely to protect consumers, promote
competition, ensure universal access, and strengthen public safety.
191
Four of the factors�(1) the
financial impact on the common carrier of continuing to provide service, (2) the need for the service in
general, (3) the need for the particular facilities in question, and (4) increased charges for alternative
services�offer a traditional balancing of the financial and competitive needs of industry against the
values of consumer affordability and expectations.
192
72. The adequate replacement factor, in contrast, aims to balance all four missions as a means
of ensuring all Americans benefit from these exciting new technologies. This has always required a
deeper analysis, but that need is particularly acute in the context of discontinuances involving legacy
voice services related to technology transitions.
193
For example, the adequate replacement test must
balance the benefits to a consumer of requiring a replacement service to offer interoperability with
applications available through the legacy voice service against the cost and difficulty of maintaining the
application in that form to the industry.
194
We conclude, however, that certain principles�such as access
186
See Emerging Wireline Order and Further Notice, 30 FCC Rcd at 9480, para. 207; CAC June 10, 2016
Technology Transition Recommendation at 3.
187
SeeMich. PSC Comments at 2; Pa. PUC Comments at 17-18.
188
See USTelecom Comments at 7; CenturyLink Comments at 25; ITTA Comments at 7.
189
See Emerging Wireline Order and Further Notice, 30 FCC Rcd at 9481, para. 210
186
See Emerging Wireline Order and Further Notice, 30 FCC Rcd at 9480, para. 207; CAC June 10, 2016
Technology Transition Recommendation at 3.
187
SeeMich. PSC Comments at 2; Pa. PUC Comments at 17-18.
188
See USTelecom Comments at 7; CenturyLink Comments at 25; ITTA Comments at 7.
189
See Emerging Wireline Order and Further Notice, 30 FCC Rcd at 9481, para. 210.
190
We thus disagree with commenters that argue we should not focus so closely on the existence of alternatives. See
USTelecom Comments at 10 (disagreeing with proposal to present more prominently the adequate replacement
factor); CenturyLink Comments at 11-12, 15. The new emphasis on the adequate replacement analysis does not,
however, displace the Commission�s traditional five-factor test outside the context of technology transition
discontinuance applications seeking streamlined treatment. See Letter from Diane Griffin Holland, V.P., Law &
Policy, USTelecom Association, to Marlene Dortch, Secretary, FCC, GN Docket Nos. 13-5 & 12-353, at 2 (filed
June 20, 2016) (USTelecom June 20 Ex Parte Letter).
191
Technology Transitions et al., Order, Report and Order and Further Notice of Proposed Rulemaking, Report and
Order, Order and Further Notice of Proposed Rulemaking, Proposal for Ongoing Data Initiative, 29 FCC Rcd 1433,
1441, para. 23 (2014) (Technology Transitions Order).
192
Verizon Tel. Cos., Section 63.71 Application to Discontinue Expanded Interconnection Service Through Physical
Collocation, Order, 18 FCC Rcd 22737, 22742, para. 8 (2003).
193
See Emerging Wireline Order and Further Notice, 30 FCC Rcd at 9478, 9480, paras. 202, 207.
194
See id. at 9480, para. 207
Data Initiative, 29 FCC Rcd 1433,
1441, para. 23 (2014) (Technology Transitions Order).
192
Verizon Tel. Cos., Section 63.71 Application to Discontinue Expanded Interconnection Service Through Physical
Collocation, Order, 18 FCC Rcd 22737, 22742, para. 8 (2003).
193
See Emerging Wireline Order and Further Notice, 30 FCC Rcd at 9478, 9480, paras. 202, 207.
194
See id. at 9480, para. 207. Compare Greenlining Comments at 2 (�The Commission should ensure that the �tech
transition� does not simply replace the current network with technology that offers equivalent service; rather, the
Commission should craft rules that ensure the tech transition fixes historical inequities in telecommunications
access.�) with AT&T Comments at 5-6 (�Rarely will a new technology duplicate each and every capability of a
legacy technology, but that hardly means that, on balance, it is not an �adequate substitute.� Indeed, in some
instances, the new technology obviates the need for the legacy service.�). We disagree with CenturyLink that the
action we take today is inconsistent with the Commission�s recent revisions to the universal service program rules,
(continued . . .)
Federal Communications Commission FCC 16-90
26
to critical applications such as 911�are not subject to balancing and must remain available and fully
functional as part of any transition.
195
The streamlined, technology neutral framework that we describe
below will help to protect those principles.
73. Limited to the Technology Transition Context. We conclude that the adequate
replacement test we discuss here should only apply to any application involving a technology transition
from TDM to IP or wireline to wireless in which the applicant intends to discontinue completely
customers� access to the legacy voice service.
196
The components of the test we set out below are
specifically tailored to measure considerations relevant to a technology transition that are not as
prominent in other contexts
d only apply to any application involving a technology transition
from TDM to IP or wireline to wireless in which the applicant intends to discontinue completely
customers� access to the legacy voice service.
196
The components of the test we set out below are
specifically tailored to measure considerations relevant to a technology transition that are not as
prominent in other contexts. For example, requiring minor discontinuances of particular applications or
functionalities (such as operator-assisted functionalities) associated with a service
197
to demonstrate that
an adequate replacement is available is not necessary. Although comments on this issue were limited,
none specifically had concerns about limiting the adequate replacement test to applications involving
technology transitions. In fact, Verizon endorsed that approach as preferable to the alternative,
198
and the
Michigan Public Service Commission (PSC) endorsed it explicitly.
199
We conclude that limiting the test
to the context of technology transitions accomplishes our regulatory goals in an appropriately narrow
manner.
200
74. No Presumptions or Exclusions Regarding Specific Technologies. We reject calls from
incumbent LECs to presume that particular technologies, by their nature, represent an adequate
replacement for legacy voice services in all instances. CenturyLink and Verizon urge adoption of a
presumption that certain services per se constitute adequate replacements.
201
Verizon urges the
Commission to establish a �safe harbor� under which it would automatically grant Section 214
applications that involve �outdated, legacy services� when discontinuing service will not terminate the
user�s ability to call 911.
202
75
ll instances. CenturyLink and Verizon urge adoption of a
presumption that certain services per se constitute adequate replacements.
201
Verizon urges the
Commission to establish a �safe harbor� under which it would automatically grant Section 214
applications that involve �outdated, legacy services� when discontinuing service will not terminate the
user�s ability to call 911.
202
75. We reject such requests because our public interest analysis demands that applicants
provide objective evidence showing a replacement service will provide quality service and access to
(Continued from previous page)
particularly in the Connect America Fund proceeding. See CenturyLink Comments at 18-20. We made it clear in
the December 2014 Connect America Order that even though we were forbearing �from enforcing a federal high-
cost requirement that price cap carriers offer voice telephony service throughout their service areas pursuant to
Section 214(e)(1)(A) in three types of geographic areas,� those carriers are still subject to Section 214(a)�s mandate
regarding the need for Commission authorization before discontinuing a service. Connect America Fund et al.,
Report and Order, 29 FCC Rcd 15644, 15663-64, para. 51 (2014) (December 2014 Connect America Order).
195
See Emerging Wireline Order and Further Notice, 30 FCC Rcd at 9479, para. 205; see alsoMich. PSC
Comments at 4-5; AARP Comments at 20-22.
196
See Emerging Wireline Order and Further Notice, 30 FCC Rcd at 9478, para. 202; Emerging Wireline Notice, 29
FCC Rcd at 15014-15, para. 113; see also Verizon Comments at 6-7; AT&T May 31 Ex Parte Letter, Attach. 1 at 1.
197
See, e.g., Section 63.71 Application of AT&T Alaska et al. for Authority Pursuant to Section 214 of the
Communications Act of 1934, as Amended, to Discontinue the Provision of Service, WC Docket No. 16-13 (filed
Jan. 6, 2016), http://apps.fcc.gov/ecfs/comment/view?id=60001372231
FCC Rcd at 15014-15, para. 113; see also Verizon Comments at 6-7; AT&T May 31 Ex Parte Letter, Attach. 1 at 1.
197
See, e.g., Section 63.71 Application of AT&T Alaska et al. for Authority Pursuant to Section 214 of the
Communications Act of 1934, as Amended, to Discontinue the Provision of Service, WC Docket No. 16-13 (filed
Jan. 6, 2016), http://apps.fcc.gov/ecfs/comment/view?id=60001372231.
198
See Verizon Comments 6-7.
199
SeeMich. PSC Comments at 2.
200
See, e.g., Mich. PSC Comments at 2-4, Verizon Comments 6-7.
201
See CenturyLink Comments at 28; Verizon Comments at 8-9 (specifying VoIP, wireless, and over-the-top service
over wireline or wireless). CenturyLink contends that facilities-based VoIP has been called a �reasonable substitute�
in other proceedings and that should close the issue of whether it is an adequate replacement in this context. See
CenturyLink Comments at 31.
202
See Verizon Comments at 3-4.
Federal Communications Commission FCC 16-90
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needed applications and functionalities.
203
We agree with commenters that IP-based and other new
services should demonstrate that they meet consumers� and providers� fundamental needs through
satisfaction of performance standards, compliance with Commission rules, and harmony with key legacy
functionalities and applications before we grant permission to remove existing voice services from the
marketplace.
204
Moreover, it is critical that we retain the ability to examine each discontinuance
application given the potential for variability in different implementations of the same technology. The
same technology could nonetheless utilize different features, be produced by different vendors with
different methodologies, and use different quality measurement techniques, any of which could result in
varied service quality and thus lead to potential interoperability issues.
205
76
plication given the potential for variability in different implementations of the same technology. The
same technology could nonetheless utilize different features, be produced by different vendors with
different methodologies, and use different quality measurement techniques, any of which could result in
varied service quality and thus lead to potential interoperability issues.
205
76. At the same time, we recognize the importance of promoting speedy transitions and
therefore reject calls to eliminate the streamlining and automatic grant procedures for discontinuance
applications related to technology transitions. For example, we disagree with AARP and others who
argue that any path to automatic grant should be eliminated.
206
Our goals here are not only to protect
consumers and competition but also to do so in a manner that facilitates the benefits of technology
transitions and promotes their occurrence with all reasonable efficiency. We believe the current
discontinuance process, subject to the changes adopted today, provides the appropriate balance of
allowing for public comment and objections while retaining the opportunity for speedy and effective
resolutions.
77. We intend to retain largely the same standards for automatic grant that apply under the
current regime for the special context of technology transitions.
207
We do adopt, however, AT&T�s
proposal to allow a more streamlined approach for discontinuances involving services that are
substantially similar to those for which a Section 214 discontinuance has previously been approved, as
discussed more fully below. We also take action to streamline our Section 214 process in instances where
consumers no longer subscribe to legacy voice services. Although our actions today focus primarily on
technology transitions, we recognize that the market is constantly evolving even outside the context of
these crucial transitions
n 214 discontinuance has previously been approved, as
discussed more fully below. We also take action to streamline our Section 214 process in instances where
consumers no longer subscribe to legacy voice services. Although our actions today focus primarily on
technology transitions, we recognize that the market is constantly evolving even outside the context of
these crucial transitions. For that reason, we adopt AT&T�s common sense proposal that a Section 214
discontinuance application be eligible for automatic grant without any further showing if the applicant can
demonstrate that the service has zero customers in the relevant service area and no requests for service in
the last six months.
208
78. No Arbitrary Timelines. We are not persuaded by incumbent LECs that contend that we
should establish timelines for reviewing applications that are not eligible for automatic grant.
209
We reject
203
See, e.g., NASUCA Comments at 4-6; Public Knowledge et al. Comments at 1-2; cf. AARP Comments at 14-20
(discussing the problems associated with CenturyLink�s proposed rebuttable presumption and Verizon�s proposed
safe harbor)
204
See Pa. PUC Comments at 3.
205
See Technology Transitions Order 29 FCC Rcd at 1527-28, Appendix B, paras. 33-34. As described in further
detail below, we will allow testing data from one area to be used to support future discontinuance applications in
another area, conditioned on certifications that the network is built according to the same detailed design plan as the
network supporting the service under the prior discontinuance. See infra Section III.C.1.a. This requirement
prevents consumers from being harmed by implementation variability.
206
See AARP Comments at 8-9; cf. Letter from Harold Feld, Sr. V.P., Public Knowledge, to Marlene H. Dortch,
Secretary, FCC GN Docket Nos
that the network is built according to the same detailed design plan as the
network supporting the service under the prior discontinuance. See infra Section III.C.1.a. This requirement
prevents consumers from being harmed by implementation variability.
206
See AARP Comments at 8-9; cf. Letter from Harold Feld, Sr. V.P., Public Knowledge, to Marlene H. Dortch,
Secretary, FCC GN Docket Nos. 13-5 and 12-353, at 1 (filed June 6, 2016) (Public Knowledge June 6 Ex Parte
Letter) (�With regard to discontinu[ing ] entire TDM-based systems as part of the tech transition, however, it is
premature to discuss streamlining.�).
207
See 47 CFR � 63.71.
208
See AT&T May 31 Ex Parte Letter, Attach. 1 at 1; see also Public Knowledge June 6 Ex Parte Letter at 1;
USTelecom June 20 Ex Parte Letter at 2.
209
See, e.g., Verizon Comments at 7-9; AT&T Comments at 14-16; AT&T May 31 Ex Parte Letter, Attach. 1 at 2.
Federal Communications Commission FCC 16-90
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this request because the public interest demands that we provide appropriate scrutiny and careful review
to discontinuance applications related to technology transitions given their novelty and complexity, and
we cannot guarantee at this time how long that process will take. If we were to adopt arbitrary timelines
now, in advance of receiving a significant number of discontinuance applications associated with
technology transitions, it could force us to shortchange our responsibility to ensure that technology
transitions result in high service quality and successful customer experiences. In rejecting this request,
we note that an application will remain under consideration for automatic grant unless: (i) the
Commission receives comments setting forth significant, meaningful, evidence-based objections or
transitions, it could force us to shortchange our responsibility to ensure that technology
transitions result in high service quality and successful customer experiences. In rejecting this request,
we note that an application will remain under consideration for automatic grant unless: (i) the
Commission receives comments setting forth significant, meaningful, evidence-based objections or
(ii) after reviewing the application, Commission staff has concerns about the impact of the planned
discontinuance on the public convenience and necessity.
210
Should such an objection arise, we will
review the applicant�s and objector�s showings as expeditiously as possible. We do intend, as described
in further detail below, to rely on the efficiencies of precedent and data provided regarding similar
transitions when factually or legally similar disputes arise. Finally, should it be determined that the
existing process is resulting in unacceptable delay or inefficiency, we will revisit our decision not to
establish timeframes for acting on Section 214 applications.
79. Incumbent LECs further contend we should establish benchmarks for when a Public
Notice should be released for a technology transition discontinuance application following its
submission.
211
Although we recognize the importance of processing applications promptly, we decline at
this time to adopt a hard deadline. Staff review applications for completeness, accuracy, and fulfillment
of all predicate requirements, including providing notice to affected customers, before issuing the Public
Notice. Imposing a hard deadline could result in issuance of public notice of defective applications, and
commenters have not identified a pattern of undue delay. Based on actual experience with the
streamlined process we adopt today, we can revisit this issue at a future date if necessary
l predicate requirements, including providing notice to affected customers, before issuing the Public
Notice. Imposing a hard deadline could result in issuance of public notice of defective applications, and
commenters have not identified a pattern of undue delay. Based on actual experience with the
streamlined process we adopt today, we can revisit this issue at a future date if necessary. Moreover, to
facilitate public input on these types of applications,
212
the Wireline Competition Bureau will not only
continue to list such notices prominently, but will also identify them specifically as applications related to
technology transitions on the Commission�s website.
80. An Objective Factor-Based Test Is Preferable To A Subjective Case-by-Case Approach
for Technology Transition Discontinuances. We conclude that adopting a criteria-based approach is
appropriate, and retaining the existing case-by-case approach in the context of technology transitions
would be ineffective.
213
We disagree with commenters who argue in conclusory terms that imposing any
new adequate replacement test will be harmful to the success of technology transitions.
214
Indeed, the
three-pronged test tied to specific benchmarks will allow industry to establish reasonable expectations
about the investments necessary to satisfy the test while also protecting consumers.
215
Specifically, the
first prong calls for achievement of objective, measurable benchmarks. The second prong requires
certification of compliance with existing Commission rules or industry standards. The third prong
requires compatibility and interoperability with an enumerated list of applications and functionalities.
Notably, through the detailed articulation that we provide today, the adequate replacement standard will
be substantially clearer than it has been to this point.
210
See 47 CFR � 63.71(a)(5); see also Pa. PUC Comments at 18
d prong
requires compatibility and interoperability with an enumerated list of applications and functionalities.
Notably, through the detailed articulation that we provide today, the adequate replacement standard will
be substantially clearer than it has been to this point.
210
See 47 CFR � 63.71(a)(5); see also Pa. PUC Comments at 18.
211
AT&T July 7 Ex Parte Letter Attach at 3.
212
See Public Knowledge and CWA July 8 Ex Parte Letter at 1-2.
213
See Emerging Wireline Order and Further Notice, 30 FCC Rcd at 9478, para. 204; see also Greenlining
Comments at 2; Mich. PSC Comments at 2-4; CAC June 10, 2016 Technology Transition Recommendation at 3.
214
See AT&T Comments at 4; CenturyLink Comments at 25; TIA Comments at 5.
215
See infra Section III.C.
Federal Communications Commission FCC 16-90
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81. Nor does this new approach unfairly burden incumbent LECs. Common carriers have
always faced a unique set of public interest obligations under the Act, including Section 214,
216
and the
rules we announce today add meaning and structure to an existing framework.
217
Moreover, where the
adequate replacement test we adopt today is in fact tied to Commission rules, those are rules of general
applicability that apply to all carriers in the context of 911/PSAP, applications for individuals with
disabilities, and emergency operability requirements.
218
We conclude that adopting clear, streamlined
criteria will eliminate uncertainty that could potentially impede the industry from a prompt transition to
newer technologies. Moreover, we limit the burden on applicants by allowing repeat applicants the
opportunity, where appropriate, to rely on testing data from previously approved applications involving
networks constructed using the same design plan.
82. Successful Prior Certifications Will Streamline Future Applications
that could potentially impede the industry from a prompt transition to
newer technologies. Moreover, we limit the burden on applicants by allowing repeat applicants the
opportunity, where appropriate, to rely on testing data from previously approved applications involving
networks constructed using the same design plan.
82. Successful Prior Certifications Will Streamline Future Applications. We adopt a
modified form of AT&T�s proposal that a repeat applicant for a 214 discontinuance application in the
technology transition context can rely on its successful certification of compliance with all three prongs of
the adequate replacement test in a previously approved application involving a substantially similar
service.
219
A substantially similar service is one offered by the same applicant relying on the same
technology and utilizing a comparable network infrastructure. The practical effect of this rule is to allow
the applicant to bypass the performance testing requirements described in detail below.
220
This
streamlined approach will benefit applicants, while protecting the interests of all stakeholders, industry
and consumers.
83. This approach should go a long way to addressing incumbent LEC concerns that the
adoption of new requirements for Section 214 discontinuances will slow technology transitions.
221
We
agree that an application should be eligible for an automatic grant where a substantially similar showing
made by that same applicant has satisfied our public interest considerations. Nonetheless, we recognize
that expectations do not always match reality
ncumbent LEC concerns that the
adoption of new requirements for Section 214 discontinuances will slow technology transitions.
221
We
agree that an application should be eligible for an automatic grant where a substantially similar showing
made by that same applicant has satisfied our public interest considerations. Nonetheless, we recognize
that expectations do not always match reality. Therefore, commenters will have the opportunity to rebut
an applicant�s planned reliance on a previous application if they can offer substantial evidence that the
technology or network infrastructure are not in fact substantially similar to the service subject to the
certifications in the previous application or the certifications have been proven unreliable, based on
significant consumer complaints or new independent data.
84. Treating First and Third Party Services Equally. We conclude that both first and third
party services should be eligible as potential adequate replacement services. The Emerging Wireline
Further Notice raised the question of whether an applicant must show that its own replacement services,
or first party services, satisfy the criteria or whether services provided by third parties in the service area
in question should qualify.
222
Commenters were generally supportive of allowing third party services to
be deemed adequate replacement theoretically,
223
but raised legitimate practical concerns about requiring
applicants to certify to performance and compliance standards on behalf of third parties.
224
We agree with
216
See 47 U.S.C. � 214; Western Union, 87 F. Supp. at 335-36.
217
See Western Union, 87 F. Supp. at 335-36.
218
See infra Section III.C.2.
219
See AT&T May 31 Ex Parte Letter, Attach. 1 at 3.
220
See infra Section III.C.1.a.
221
See, e.g., ACS Comments at 4-5; ITTA Comments at 7; USTelecom Comments at 8-9.
222
See Emerging Wireline Order and Further Notice, 30 FCC Rcd at 9482, para
216
See 47 U.S.C. � 214; Western Union, 87 F. Supp. at 335-36.
217
See Western Union, 87 F. Supp. at 335-36.
218
See infra Section III.C.2.
219
See AT&T May 31 Ex Parte Letter, Attach. 1 at 3.
220
See infra Section III.C.1.a.
221
See, e.g., ACS Comments at 4-5; ITTA Comments at 7; USTelecom Comments at 8-9.
222
See Emerging Wireline Order and Further Notice, 30 FCC Rcd at 9482, para. 213.
223
See, e.g., AARP Comments at 8-9; Mich. PSC Comments at 3; Pa. PUC Comments at 17 ; AT&T Reply at 8-9;
Joint States Reply at 3; see also USTelecom June 20 Ex Parte Letter at 2.
224
See, e.g., AICC Comments at 3; AARP Comments at 10; Cal. PUC Comments at 8; CenturyLink Comments at
16-17; ITTA Comments at 20. On October 30, 2015, the California PUC filed a motion for acceptance of its late-
(continued . . .)
Federal Communications Commission FCC 16-90
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commenters that there is no theoretical reason to exclude third party services. Indeed, third party services
have always been eligible for consideration under the 214 discontinuance process as potential adequate
replacements.
225
The question is whether an adequate replacement exists in the service area, not who
provides the service that provides that adequate replacement.
85. Applicants seeking to discontinue a service have the burden of demonstrating that the
discontinuance will not harm the public interest. Relying on third party services inevitably raises
questions about competitive considerations and potential gamesmanship; we recognize that in many cases
third parties would be unwilling to provide access to proprietary information, which would make it
difficult for an incumbent to rely upon the existence of a third party service.
226
Moreover, we recognize
that applicants will not be able to certify on behalf of a third party and will thus be required to rely on the
option of providing enough information to make an adequate showing to demonstrate that third party
service is an adequate replacement.
86
rmation, which would make it
d
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