Noting that it is encouraged that BellSouth meets more than 6 items on the 14-point
"competitive checklist," the Commission today denied BellSouth's second application to provide
long distance service in Louisiana and provided further guidance as to what the company must do
to comply with the statute in areas where the application fell short. In addition, the Commission
ruled that BellSouth need only certify in any future application for Louisiana that it still satisfies
the requirements of the checklist items that it has met in this application, thus streamlining the
authorization process. Also in today's decision, the Commission concluded that competition from
broadband Personal Communications Services (PCS) providers could form the basis for a
successful application to provide in-region long distance service. Today's decision should assist
BellSouth and the other Bell Operating Companies (BOCs) in complying with the market-opening
measures outlined by Congress as a prerequisite to the BOCs providing long distance service to
their local customers.
On July 9, 1998, BellSouth filed its second application for authorization under section 271
of the Communications Act of 1934, as amended, to provide long distance service in Louisiana.
Under that section, a BOC must show that (1) it has fully implemented a 14-point checklist, which
enables competing local telephone companies to connect with and gain access to elements of the
local network, (2) its long distance service would be provided in accordance with the structural
separation and nondiscrimination requirements in section 272, and (3) its entry into the long
distance market is consistent with the public interest. A BOC must also demonstrate that it either
faces competition from a facilities-based competitor (commonly referred to as "Track A") or has
created the conditions where competition may develop ("Track B"). The Commission has 90
days in which to evaluate a 271 application.
In an Order released today, the Commission reviewed all aspects of BellSouth's
application and found that BellSouth demonstrates that it meets the requirements of six checklist
items and part of a seventh. The Commission concluded that, in any future application to provide
long distance service in Louisiana, BellSouth may incorporate by reference its showing on the
checklist items deemed satisfied. The Commission expects that, with respect to these items, commenters in a future application will direct their arguments to any
new information that BellSouth fails to satisfy the checklist.
The Commission's findings are as follows:
Fourteen-Point Competitive Checklist
Checklist items that BellSouth meets in full:
Item 3 -- Access to Poles, Ducts, Conduits, and Rights-of-Way. In order to serve
customers, telephone company wires must be attached to, or pass through, poles,
ducts, conduits, and rights-of-way. BellSouth demonstrates that other carriers can
obtain access to its poles, ducts, conduits, and rights-of-way within reasonable time
frames and on reasonable terms and conditions, with a minimum of administrative
costs, and consistent with fair and efficient practices.
Item 8 -- White Pages Directory Listings. These are the listings of customers'
telephone numbers in a particular area. BellSouth demonstrates that its provision of
white pages listings to its competitors' customers is nondiscriminatory in terms of
appearance and integration, and that it provides listings for competing carriers'
customers with the same accuracy and reliability that it provides to its own customers.
Item 9 -- Numbering Administration. BellSouth demonstrates that it is in compliance
with industry guidelines and FCC requirements to ensure that its competitors have the
same access to new telephone numbers in a given area code that BellSouth enjoys.
Item 10 -- Databases and Associated Signaling. New entrants must have the same
access as BellSouth to these databases and signaling systems in order to have the same
ability as BellSouth to transmit, route, complete, and bill for telephone calls.
BellSouth demonstrates that it provides competitors with nondiscriminatory access to
Item 12 -- Local Dialing Parity. BellSouth demonstrates that its competitors'
customers do not need to dial extra digits to make a local call nor do they experience
inferior quality, such as unreasonable dialing delays, compared to BellSouth
customers. Local dialing parity ensures that consumers are not inconvenienced simply
because they subscribe to a new entrant for local telephone service.
Item 13 -- Reciprocal Compensation. BellSouth must compensate other carriers for
the cost of transporting and terminating its local calls unless it agrees with the
terminating carrier to another arrangement. BellSouth demonstrates that it has such
reciprocal compensation arrangements in place, and that it is making all required
payments in a timely fashion. The Louisiana Commission, however, has not made a
final determination regarding BellSouth's obligation to pay reciprocal compensation
for traffic delivered to Internet service providers (ISPs). In addition, the Commission
did not consider BellSouth's unwillingness to pay reciprocal compensation for traffic
that is delivered to local ISPs in assessing whether BellSouth satisfies this checklist
item. Noting that this issue is pending in other proceedings, the Commission said that
any future grant of a 271 application will be conditioned on compliance with any
decisions relating to Internet traffic.
Checklist item that BellSouth meets in part:
Item 7 -- 911 and E911 Services, Operator Services, and Directory Assistance. It is
critical that BellSouth provide competing carriers with accurate and nondiscriminatory
access to 911/E911 services so that these carriers' customers are able to reach
emergency assistance. BellSouth satisfies this requirement. BellSouth does
not demonstrate, however, that it provides other carriers with the same access to
directory assistance and operator services that it provides itself.
Checklist items that BellSouth does not meet:
Item 1 -- Interconnection. BellSouth must allow other carriers to link their networks
to its network for the mutual exchange of traffic. To do so, BellSouth must permit
carriers to use any available method of interconnection at any available point in
BellSouth's network. For the reasons stated in the BellSouth South Carolina Order,
the Commission found BellSouth's showing on its collocation offering to be
insufficient. Furthermore, interconnection between networks must be equal in quality
whether the interconnection is between BellSouth and an affiliate, or between
BellSouth and another carrier. BellSouth does not show that it provides
interconnection that meets this standard.
Item 2 -- Access to Unbundled Network Elements. The telephone network is
comprised of individual network elements. In order to provide "access" to an
unbundled network element, BellSouth must provide a connection to the network
element at any technically feasible point under rates, terms, and conditions that are
just, reasonable, and nondiscriminatory. To do so, BellSouth must provide access to
its operations support systems (OSS), meaning the information, systems, and
personnel necessary to support the elements and services. This is important because
access to BellSouth's OSS provides new entrants with the ability to order service for
their customers and to communicate effectively with BellSouth regarding such basic
activities as placing orders and providing repair and maintenance service for
BellSouth does not demonstrate that its OSS enables other carriers to integrate
electronically its pre-ordering and ordering functions, thus placing those carriers at a
competitive disadvantage relative to BellSouth's own retail operation. For example,
BellSouth processes orders without delay for more than 96% of its own residential
customers and more than 82% of its own business customers, but BellSouth processes
orders without delay for only 35% of its competitors' residential and business
customers combined. Although BellSouth has made some progress in addressing
deficiencies in its OSS, it has failed to address successfully other problems that the
Commission specifically identified in previous 271 decisions.
In addition, BellSouth must provide nondiscriminatory access to network elements in a
manner that allows other carriers to combine such elements. Other carriers are entitled
to request any "technically feasible" method for combining network elements. As the
Commission held in the BellSouth South Carolina Order, BellSouth fails to
demonstrate that it can provide nondiscriminatory access to unbundled network
elements through the only method it identified for such access, collocation.
Item 4 -- Unbundled Local Loops. Local loops are the wires, poles, and conduits that
connect the telephone company end office to the customer's home or business.
Nondiscriminatory access to unbundled local loops ensures that new entrants can
provide quality telephone service promptly to new customers without constructing
new loops to each customer's home or business. BellSouth failed to demonstrate that
it can efficiently furnish unbundled loops to other carriers within a reasonable time
frame, with a minimum level of service disruption, and at the same level of service
quality it provides to its own customers.
Item 5 -- Unbundled Local Transport. Nondiscriminatory access to BellSouth's
transport facilities ensures that calls carried over competitors' lines are completed
properly. Although BellSouth demonstrates that it provides transport on terms and
conditions consistent with FCC regulations, it does not provide evidence, such as
meaningful performance data, that it provides nondiscriminatory access to OSS for the
purpose of providing transport facilities. Adequate OSS is necessary so that carriers
may order transport. But for deficiencies in its OSS, BellSouth would satisfy this
Item 6 -- Unbundled Local Switching. A switch connects end user lines to each other
and to trunks used for transporting calls. Switches can also provide customers with
features such as call waiting, call forwarding, and caller ID, and can direct a call to a
specific trunk, such as to a competitor's operator services. BellSouth did not show
that it provides competitors with all of the features, functions, and capabilities of the
Item 11 -- Number Portability. Number portability enables consumers to take their
phone number with them when they change local telephone companies. BellSouth
does not sufficiently demonstrate that it provides number portability to competitors in
a reasonable timeframe, which may prevent a customer from receiving incoming calls
for a period of time after switching from BellSouth to a competitor.
Item 14 -- Resale. BellSouth must offer other carriers all of its retail services at
wholesale rates without unreasonable or discriminatory conditions or limitations so
that other carriers may resell those services to customers. BellSouth demonstrates that
it offers all of its retail services for resale at wholesale rates without unreasonable or
discriminatory conditions or limitations. It does not show, however, that it provides
nondiscriminatory access to OSS for the resale of its retail telecommunications
services. Carriers need adequate OSS in order to resell BellSouth's services.
Section 272's Structural Separation and Nondiscrimination Requirements
Although BellSouth has undertaken significant efforts to institute policies and procedures
to ensure compliance with section 272, it does not meet all of that provision's
requirements. In particular, it does not demonstrate adequately that it discloses all
transactions with its long distance affiliate, which means its affiliate has superior access to
information about these transactions compared with unaffiliated competitors. As a result,
unaffiliated entities lack the information necessary to take advantage of the same rates,
terms, and conditions enjoyed by BellSouth's affiliate. In addition, BellSouth does not
provide nondiscriminatory access to its OSS, and thereby fails to provide the same
information to unaffiliated entities that it provides to its affiliate.
The Public Interest
Because BellSouth does not meet the other requirements of the statute, it was unnecessary
for the Commission to conduct an analysis of whether BellSouth's entry into the Louisiana
long distance market would be in the public interest. The Commission nevertheless took
the opportunity to reaffirm its prior conclusion that it has discretion to identify and weigh
relevant factors in determining whether BOC entry into a particular in-region long distance
market is consistent with the public interest. For example, the Commission would
consider whether a BOC has agreed to performance monitoring (including performance
standards and reporting requirements) and whether the BOC has agreed to enforcement
mechanisms. The Commission also reaffirmed that it will consider as part of its public
interest inquiry whether approval of a section 271 application will foster competition in all
relevant markets, including the local market, not just the in-region, long distance market.
BellSouth cited competition from broadband PCS providers to satisfy the Track A
requirement that there be a facilities-based competitor in the state for which a BOC applies
to provide long distance service. Though the statute precludes a BOC from relying on the
presence of cellular providers to meet Track A, the Commission concluded that the PCS
services cited by BellSouth could serve as the basis for a qualifying application. Based on
the facts presented in this application, however, BellSouth has not shown that broadband
PCS is a substitute for the wireline telephone service offered by BellSouth in Louisiana.
The Commission also discussed, but did not decide, whether BellSouth demonstrates
compliance with Track A based on its agreements with wireline providers in Louisiana.
In reaching today's decision, the Commission consulted with the Louisiana Commission
and the Department of Justice. Though the Louisiana Commission recommended approval of
BellSouth's application, the Department of Justice found that BellSouth did not meet the market-opening requirements of the statute.
While the Commission commended BellSouth for making significant improvements over
the past eight months since the First BellSouth Louisiana Order, the Commission noted that
BellSouth filed a second application for Louisiana without fully addressing problems the FCC
previously identified. This situation is particularly evident with regard to BellSouth's provision of
OSS. The Commission cautioned that it expects future applicants to remedy deficiencies
identified in prior orders before filing a new section 271 application or face the possibility of
Action by the Commission, October 13, 1998, by Memorandum Opinion and Order (FCC
98-271). Chairman Kennard, Commissioners Ness, Powell, and Tristani, with Commissioner
Ness concurring in part, Commissioner Furchtgott-Roth concurring, and each issuing a separate statement.
News media contact: Rochelle Cohen at (202) 418-0253.
Common Carrier Bureau contacts: Claudia Pabo and William Bailey at (202) 418-1580.
TTY: (202) 418-2555.