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BACKGROUND p>"(#L 6  X!-XxX` ` xA.` ` The Telecommunications Act of 1996 ` p>"(#L 6  X"-XxX` ` xB.` ` The Competitive Carrier Proceeding ` p>"(#L 7  X#-XxX` ` xC.` ` The Interexchange Competition Proceeding ` p!(#F 11  Xh$-XxX` ` xD.` ` The AT&T Reclassification Order ` p"(#I 13  XQ%-XxX` ` xE.` ` Need for Review of Commission Regulation of the Interexchange Market ` p"(#I 16 XxPIII. REGULATORY FORBEARANCE p"(#I 17  X(-XxX` ` xA.` ` Introduction ` p"(#I 17"(0*0*0**"Ԍ X-XxX` ` xB.` ` Forbearance from Tariff Filing Requirements for NonDominant Interexchange Carriers ` p"(#I 21  Y-XxX` ` X ` ` 1. Background p"(#F 21  Y-XxX` ` X ` ` 2. Discussion p"(#F 26 XxPIV. DEFINITION OF RELEVANT PRODUCT AND GEOGRAPHIC MARKETS p"(#F 40  Yv-XxX` ` xA.` ` Relevant Product Market ` p"(#F 44  Y_-XxX` ` xB.` ` Relevant Geographic Market ` p"(#F 48  Y1-XxPV.xSEPARATION REQUIREMENTS FOR INDEPENDENT LOCAL EXCHANGE CARRIER AND BELL OPERATING COMPANY PROVISION OF "OUTOFREGION" INTERSTATE, INTEREXCHANGE SERVICES p"(#F 56 XxPVI. RATE AVERAGING AND INTEGRATION REQUIREMENTS OF 1996 ACT p"(#F 64  Y -XxX` ` xA.` ` Geographic Rate Averaging ` p"(#F 66  Y -XxX` ` xB.` ` Rate Integration ` p"(#F 74 XxPVII. PRICING ISSUES p"(#F 80  Yb-XxX` ` xA.` ` Allegations of Tacit Price Coordination ` p"(#F 81  YK-XxX` ` xB.` ` Residential Services Rate Plans ` p"(#F 82 XxPVIII. BUNDLING OF CUSTOMER PREMISES EQUIPMENT p"(#F 84 XxPIX. OTHER ISSUES p"(#F 92 XxPX. PROCEDURAL ISSUES p!(#? 102  Y-XxX` ` xA. Ex Parte Presentations ` p!(#? 102 XxX` ` xB. Initial Regulatory Flexibility Analysis ` p!(#? 103 XxX` ` xC. Initial Paperwork Reduction Act of 1995 Analysis ` p!(#? 112 XxX` ` xD. Comment Filing Procedures ` p!(#? 113 XxX` ` xE. Ordering Clauses ` p!(#? 119 " 0*(("  X-B I. INTRODUCTION  T  Y-TPx1. ` ` On February 8, 1996, the Telecommunications Act of 1996 (1996 Act) YK-ԍXxTelecommunications Act of 1996, Pub. L. No. 104104, 110 Stat. 56 (1996) (hereafter cited as "1996 Act").(#Ƣ became law. The 1996 Act seeks "to provide for a procompetitive, deregulatory national policy framework" designed to make available to all Americans advanced telecommunications and information technologies and services "by opening all telecommunications markets to  Yv-competition."zvb Y -ԍXxSee S. Conf. Rep. No. 230, 104th Cong., 2nd Sess. 1 (1996).(#z Integral to achieving this goal, the 1996 Act requires the Commission to forbear from applying any provision of the Communications Act of 1934, as amended (Communications Act), or our regulations, to a telecommunications carrier or telecommunications service, or class thereof, if the Commission makes certain specified  Y -findings with respect to such provisions or regulations.?  Y-ԍXx1996 Act at  401 (adding  10(a) to the Communications Act of 1934, as amended). Hereafter, all citations noting additions are additions to the Communications Act of  Y-1934, as amended, codified at 47 U.S.C.  151 et seq.(#? In addition, the 1996 Act provides  Y -for the entry of the Bell Operating Companies (BOCs) and their affiliates  YJ-ԍXx1996 Act at  151 (adding  271). For purposes of this proceeding, we generally use the term "BOCs" as that term is defined in Section 3(a)(35) of the Communications Act of 1934, as amended. In a few instances, however, we use the term "BOCs" also to encompass BOC affiliates, such as are contemplated by Section 272 of the Communications Act of 1934, as amended.(#Ƭ into the interstate,  Y -interexchange market, after certain preconditions are satisfied.$  Y-ԍXxThe preconditions specified in the 1996 Act apply to a BOC's provision of interLATA services originating in any of its inregion states. 1996 Act at  151 (adding  271);  YZ-see also n.9 infra.(#$ This entry can be expected to intensify competition in the interstate, domestic, interexchange market.  Y -x2. ` ` Consistent with the thrust of the 1996 Act, the Commission has long pursued policies designed to facilitate the growth of competition in the domestic longdistance market.  Yy-In 1979, the Commission commenced the Competitive Carrier proceedingsv yn Y"-ԍXxPolicy and Rules Concerning Rates for Competitive Common Carrier Services and  Y#-Facilities Authorizations Therefor, CC Docket No. 79252, Notice of Inquiry and  Yj$-Proposed Rulemaking, 77 FCC 2d 308 (1979) (Competitive Carrier NPRM); First  YS%-Report and Order, 85 FCC 2d 1 (1980) (First Report and Order); Further Notice of  Y<&-Proposed Rulemaking, 84 FCC 2d 445 (1981) (Competitive Carrier Further NPRM); Second Further Notice of Proposed Rulemaking, FCC 82187, 47 Fed. Reg. 17,308"%'0*((W'" (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. Reg. 28,292 (1983); Third Report and Order, 48 Fed. Reg. 46,791 (1983); Fourth Report  YK-and Order, 95 FCC 2d 554 (1983) (Fourth Report and Order), vacated AT&T v.  Y4-FCC, 978 F.2d 727 (D.C. Cir. 1992), cert. denied, MCI Telecommunications Corp.  Y-v. AT&T, __ U.S. __, 113 S. Ct. 3020 (1993); Fourth Further Notice of Proposed Rulemaking, 96 FCC 2d 1191 (1984); Fifth Report and Order, 98 FCC 2d 1191  Y-(1984) (Fifth Report and Order); Sixth Report and Order, 99 FCC 2d 1020 (1985)  Y-(Sixth Report and Order), vacated MCI Telecommunications Corp. v. FCC, 765 F.2d  Y -1186 (D.C. Cir. 1985) (collectively referred to as the Competitive Carrier proceeding).(#s in which it"y 0*((;" considered how its regulations should be modified to reflect and promote competition in this  Y-market.m  Y--ԍXxCompetitive Carrier NPRM, 77 FCC 2d at 30910.(#m In succeeding years, in part as a result of reforms adopted in the Competitive  Y-Carrier proceeding, the interstate, domestic, interexchange market has evolved from a market of fledgling competitors overshadowed by a single, dominant service provider to a market characterized by substantial competition. The Commission explicitly acknowledged these dramatic changes when, in October 1995, we concluded that AT&T Corporation (AT&T) no longer possessed individual market power in the domestic longdistance market taken as a whole and, accordingly, reclassified AT&T as a nondominant carrier for interstate,  YH-domestic, interexchange services.HD  Y=-ԍXxSee Motion of AT&T Corp. to be Reclassified as a NonDominant Carrier, FCC 95 Y&-427 (rel. Oct. 23, 1995) (AT&T Reclassification Order), recon. pending.(#  Y -x3. ` ` The 1996 Act builds upon the progress made to date in facilitating competition in the domestic longdistance market, and provides a framework for raising competition to a higher plane. In light of the passage of the 1996 Act, changes in the interexchange market over the past decade, and our recent reclassification of AT&T as a nondominant carrier, we believe it is timely to review our regulatory regime for interstate, domestic, interexchange telecommunications services. In this proceeding, we therefore examine whether and how our policies and rules should be changed, consistent with the intent of the 1996 Act.  Yb-x4. ` ` Specifically, we propose, pursuant to the forbearance authority provided in the 1996 Act, to adopt a mandatory detariffing policy for domestic services of nondominant, interexchange carriers. We also propose to eliminate the prohibition against bundling customer premises equipment with the provision of interstate, interexchange services by nondominant interexchange carriers. In addition, we consider whether to reduce or eliminate the separation requirements for nondominant treatment of local exchange carriers in their provision of certain interstate, interexchange services. By these proposals, we seek to promote competition by reducing or eliminating existing regulations that may no longer be in the public interest in the increasingly competitive interexchange marketplace."0*((~"Ԍ Y-ԙx5. ` ` We also reexamine other aspects of our oversight of the interstate, interexchange market. In this respect, we consider whether we should more narrowly focus our definitions of relevant product and geographic markets for interexchange services to reflect current and future market conditions. We also address issues related to residential services pricing, including allegations of tacit price coordination in the interexchange market, and inquire how additional facilitiesbased competition pursuant to the 1996 Act affects this issue. We also consider other issues, including tariffrelated issues that would remain relevant if we determine not to forbear from requiring nondominant interexchange carriers to file tariffs, or if we decide to adopt a permissive detariffing policy. Finally, as required by the 1996 Act, we propose rules to implement the 1996 Act's provisions relating to geographic rate averaging and rate integration.  Y -] II. BACKGROUND ׃  X - A.XxThe Telecommunications Act of 1996 (# x  Y-x6. ` ` The 1996 Act significantly alters the legal framework governing the interstate, interexchange market. The new statutory provisions should generally promote facilitiesbased competition in the interexchange market and open the door for new entrants to compete  YL-with existing service providers. For example, the 1996 Act, inter alia, permits the BOCs immediately to provide interLATA telecommunications services originating outside their in Y-region states, as well as "incidental" interLATA services. 4  Y-ԍXxThe 1996 Act defines "incidental interLATA services" as the interLATA provision by a BOC or its affiliate:(# XxX` ` (1)(A) of audio programming, video programming, or other programming services to subscribers to such services of such company or affiliate;x` XxX` ` (B) of the capability for interaction by such subscribers to select or respond to such audio programming, video programming, or other programming services; ` XxX` ` (C) to distributors of audio programming or video programming that such company or affiliate owns or controls, or is licensed by the copyright owner of such programming (or by the assignee of such owner) to distribute; or ` XxX` ` (D) of alarm monitoring services; ` XxX` ` (2) of twoway interactive video services or Internet services over dedicated facilities to or for elementary and secondary schools as defined in section 254(h)(5); ` XxX` ` (3) of commercial mobile services in accordance with section 332(c) of this Act and with the regulations prescribed by the Commission pursuant to paragraph (8) of such section; ` "&0*((v'"ԌXxX` ` (4) of a service that permits a customer that is located in one LATA to retrieve stored information from, or file information for storage in, information storage facilities of such company that are located in another LATA; ` XxX` ` (5) of signaling information used in connection with the provision of telephone exchange services or exchange access by a local exchange carrier; or ` XxX` ` (6) of network control signaling information to, and receipt of such signaling information from, common carriers offering interLATA services at any location within the area in which such Bell operating company provides telephone exchange services or exchange access. ` Xx1996 Act at  151 (adding  271(g)).(# More significantly, after fulfilling"e  0*((" specified preconditions, BOCs may provide interLATA telecommunications services  Y-originating inside their inregion states. He  Y-ԍXxSee id. (adding  271). For purposes of this proceeding, we define the terms "inregion state," "interLATA service," and "LATA" as those terms are defined in Sections 271(i)(1), 3(a)(42), and 3(a)(43), respectively, of the Communications Act, as amended. We note that Section 271(j) of the Communications Act, as amended, provides that a BOC's inregion services include 800 service, private line service, or their equivalents that terminate in an inregion state of that BOC and that allow the called party to determine the interLATA carrier, even if such service originates outofregion.(#Ƙ In addition, the 1996 Act provides regulatory flexibility by requiring the Commission to forbear from applying any regulation or any provision of the Communications Act to telecommunications carriers or telecommunications services, or classes thereof, if the Commission determines that certain specified conditions  Y-are satisfied.` u Y-ԍXxId. at  401 (adding  10).(#` The forbearance authority applies to all provisions of the Communications Act, except the provisions added by the 1996 Act relating to interconnection and BOC entry  Y_-into longdistance services. _& Y6-ԍXxId. (adding  10(d)). We note that, under the 1996 Act, interexchange carriers, as "telecommunications carriers," are now subject to certain interconnection obligations  Y!-established under new Section 251(a). Id. at  101 (adding  251(a)), and  3(a)(49). We will address issues relating to the interconnection obligations of interexchange carriers in a separate proceeding implementing new Section 251.(#  Y1- B.xThe Competitive Carrier Proceeding   Y -x7. ` ` The Commission, since 1979, has pursued, in the Competitive Carrier proceeding, procompetitive and deregulatory goals similar to those now underlying the 1996" { 0*((m " Act. The Commission there examined how its regulations should be adapted to reflect and promote increasing competition in interexchange telecommunications markets, and sought to  Y-reduce or eliminate the application of economic regulation to new competitive entrants.  YK-ԍXxSee, e.g., First Report and Order, 85 FCC 2d at 58.(# In these efforts, the Commission pursued a forbearance policy, encompassing both permissive and mandatory detariffing. Upon judicial review, however, the Court found that the Communications Act, at that time, did not provide the Commission with the requisite  Yv-authority to do so.vy Y -ԍXxSee Section III.B.1. infra, discussing the history of the Commission's prior tariff forbearance policy.(#Ƭ  YH-x8. ` ` In its Competitive Carrier orders, the Commission distinguished two kinds of carriers those with market power (dominant carriers) and those without market power (non Y -dominant carriers).  Y-ԍXxId. at 2021. See also 47 C.F.R.  61.3(o) ("[D]ominant carrier" is defined as a  Y-"carrier found by the Commission to have market power (i.e., power to control prices)"). (# In determining whether a firm possessed market power, the Commission focused on certain "clearly identifiable market features," including the number and size distribution of competing firms, the nature of barriers to entry, the availability of  Y -reasonably substitutable services, and whether the firm controlled bottleneck facilities.j  Y-ԍXxFirst Report and Order, 85 FCC 2d at 2021.(#j The Commission relaxed its tariff filing and facilities authorization requirements for nondominant carriers, and focused its regulatory efforts on constraining the ability of dominant firms to act  Y-contrary to consumer welfare.HG  Y-ԍXxThe Commission concluded that market forces, together with the Section 208 complaint process and the Commission's ability to reimpose tarifffiling and facilitiesauthorization requirements, were sufficient to protect the public interest with respect  YC-to nondominant carriers subject to forbearance. Fourth Report and Order, 95 FCC 2d at 579. The Commission also noted that the rates of nondominant carriers would  Y-effectively be capped by the rates of dominant carriers. Sixth Report and Order, 99 FCC 2d at 1028 n.29 (noting that firms lacking market power cannot charge unlawful rates because customers can always turn to competitors).(#  Yb-x9. ` ` Under the streamlined regulatory procedures for nondominant carriers  YK-established in the Competitive Carrier proceeding, such carriers are not subject to price cap regulation, and their tariff filings are presumed to be lawful. In addition, tariff filings of"4W0*(( "  Y-nondominant carriers take effect on one day's notice_  Yy-ԍXxIn the First Report and Order, the Commission required nondominant carriers to file  Yb-tariffs on 14 days' notice. First Report and Order, 85 FCC 2d at 35. The  YK-Commission later shortened the notice period to one day. Tariff Filing Requirements  Y4-for Nondominant Common Carriers, CC Docket No. 9336, Memorandum Opinion  Y-and Order, 8 FCC Rcd 6752 (1993) (Nondominant Filing Order), vacated on other  Y-grounds, Southwestern Bell Corporation v. FCC, 43 F.3d 1515 (D.C. Cir. 1995). In  Y-its decision vacating the Nondominant Filing Order, the court found that the range of rates provision adopted in that order violated Section 203(a) of the Communications  Y -Act. Southwestern Bell Corporation v. FCC, 43 F.3d at 1520. The Commission subsequently eliminated the range of rates provision and reinstated the other tariff  Y -filing requirements, including the oneday notice period, adopted in the Nondominant  Y| -Filing Order. Tariff Filing Requirements for Nondominant Common Carriers, CC  Ye -Docket No. 9336, Order,10 FCC Rcd 13,653 (1995) (Nondominant Filing Order II).(#_ and do not require cost support data.ge  Y-ԍXxFirst Report and Order, 85 FCC 2d at 34.(#g Nondominant carriers also are subject to streamlined Section 214 procedures for the construction, extension or operation of new transmission facilities, as well as for the  Y-proposed reduction or discontinuance of service. v Y-ԍXxSee id. at 3949. We note that, pursuant to Section 402(b)(2)(A) of the 1996 Act (to be added as a note to Section 214), the Commission is required to "permit any common carrier . . . to be exempt from the requirements of section 214 of the Communications Act of 1934 for the extension of any line." We will address the implementation of Section 402(b)(2)(A), including the issue of what constitutes an "extension of any line," in an upcoming proceeding.(#   Y-x 10. ` ` In contrast, our rules subject dominant interexchange carriers to price cap  Yv-regulation,w_vT Y{-ԍXxSee 47 C.F.R.  61.41. We note that, even with the reclassification of AT&T as a nondominant carrier, our dominant carrier rules remain relevant to the interstate,  YM-interexchange industry, because, inter alia, they continue to apply to international interexchange carriers, to local exchange companies other than the BOCs that provide domestic, interstate, interexchange services directly to customers (rather than through an affiliate), and currently to BOCs to the extent they provide domestic, interstate, interexchange services.(#w and tariff notification periods of 14, 45 or 120 days' notice.^v{ Y#-ԍXxSee id. at  61.58(c).(#^ Dominant carriers that are subject to price caps are also required to file cost support data for abovecap  YH-and outofband tariff filings, and additional information for new service offerings.sH, Y%'-ԍXxSee id. at  61.38, 61.4161.44, 61.49.(#s "H0*((" Moreover, dominant carriers must obtain prior Commission approval to construct a new line,  Y-to extend a line, or to acquire, lease or operate any line,v Yb-ԍXxId. at  63.01 et seq. A dominant carrier may file an annual "blanket" Section 214  YK-application for construction planned for the year. Id. at  63.06. Any additional, unplanned project costing more than $2 million requires a separate formal application.  Y-Id. at  63.01. With certain, limited exceptions, for unplanned construction projects under $2 million, dominant carriers may file an informal application under which the  Y-addition is presumed lawful. Id. at  63.0263.03. But see n.20 supra.(#ƴ as well as to discontinue, reduce  Y-or impair service.X Y -ԍXxSee 47 C.F.R.  63.62.(#X  X- C.XxThe Interexchange Competition Proceeding (#  Yv-x 11. ` ` In 1990, the Commission commenced the Interexchange Competition proceeding to examine the state of competition in the interstate, longdistance marketplace,  YH-and to assess the efficacy of existing regulation in light of this competition. H Y-ԍXxCompetition in the Interstate Interexchange Marketplace, CC Docket No. 90132,  Y-Notice of Proposed Rulemaking, 5 FCC Rcd 2627 (1990) (Interexchange Competition  Y-NPRM); Report and Order, 6 FCC Rcd 5880 (1991) (First Interexchange Competition  Yk-Order); Order, 6 FCC Rcd 7255; Memorandum Opinion and Order, 6 FCC Rcd 7569 (1991); Memorandum Opinion and Order, 7 FCC Rcd 2677 (1992); Memorandum Opinion and Order on Reconsideration, 8 FCC Rcd 2659 (1993); Second Report and  Y&-Order, 8 FCC Rcd 3668 (1993) (Second Interexchange Competition Order); Memorandum Opinion and Order, 8 FCC Rcd 5046 (1993); Memorandum Opinion  Y-and Order on Reconsideration, 10 FCC Rcd 4562 (1995) (February 1995  Y-Interexchange Reconsideration Order) (collectively referred to as the Interexchange  Y-Competition proceeding).(# In the First  Y1-Interexchange Competition Order, the Commission found that business services (except  Y -analog private line services) had become "substantially competitive."x  YM-ԍXxFirst Interexchange Competition Order, 6 FCC Rcd at 5887.(#x The Commission  Y -accordingly streamlined its regulation of those AT&T services.K 3 Y -ԍXxId. at 5894.(#K For services subject to "streamlined" regulation, AT&T was allowed to file tariffs on 14 days' notice, without cost  Y -support, and such tariffs were presumed lawful.B  Yj$-ԍXxId.(#B In addition, price cap ceilings, bands and rate floors did not apply to streamlined services. Later, the Commission, after ordering 800 number portability, found that 800 services (except 800 directory assistance services) were" 0*((j" also subject to substantial competition, and streamlined regulation of those AT&T services as  Y-well.y Yb-ԍXxSecond Interexchange Competition Order, 8 FCC Rcd at 3671.(#y  Y-x 12. ` ` In the First Interexchange Competition Order, the Commission also authorized all interexchange carriers to offer services pursuant to individually negotiated, contractbased  Y-tariffs, provided they make such rates generally available to similarly situated customers.Tvy Y-ԍXxFirst Interexchange Competition Order, 6 FCC Rcd at 5897, 58995900. The Commission permitted AT&T to include in contractbased tariffs only services that the Commission found were subject to substantial competition and therefore were subject to streamlined regulation; other interexchange carriers were permitted to  Y[ -include any service in their contractbased tariffs. Id. at 5897, 5900; see February  YD -1995 Interexchange Reconsideration Order, 10 FCC Rcd at 588182 n.6. (#T The Commission found such arrangements would allow customers to negotiate service arrangements that best addressed their particular needs and would unleash competition by allowing AT&T to offer the same type of contract arrangements its competitors were already  Y1-offering.x 1 Y-ԍXxFirst Interexchange Competition Order, 6 FCC Rcd at 5899.(#x  X - D.XxThe AT&T Reclassification Order (#  Y -x 13. ` ` On October 23, 1995, we issued an order granting AT&T's motion to be reclassified as a nondominant carrier, based upon our finding that AT&T no longer possessed individual market power in the interstate, domestic, interexchange market taken as  Y-a whole.!h  Y-ԍXxAT&T Reclassification Order, at  35. The Commission deferred consideration of  Y-AT&T's market power in international markets. Id. at  2.(# As a result, AT&T is now generally subject to the same regulations as its long Yy-distance competitors.v"y  Y,-ԍXxWe note, however, that AT&T made certain voluntary commitments, discussed  Y-below, which relate, inter alia, to the filing of tariffs, geographic rate averaging, and  Y-the reduction or discontinuance of service. See AT&T Reclassification Order, Appendix C.(#v Like other nondominant carriers, AT&T is still subject to regulation under Title II of the Communications Act. Thus, it is required to do the following: offer interstate services under rates, terms and conditions that are just, reasonable and not unduly  Y4-discriminatory;U#4n YS%-ԍXx47 U.S.C.  201, 202.(#U file tariffs;$4 Y-ԍXxId. at  203. Nondominant carriers currently are subject to streamlined tariff  Yy-requirements. See  9 supra.(# and give notice prior to any discontinuance, reduction or"4 b$0*(( "  Y-impairment of service.L%b Y-ԍXx47 U.S.C.  214.(#L Moreover, like other nondominant carriers, AT&T continues to be  Y-subject to the Commission's complaint process.X& Y-ԍXxId. at  20609. (#X  Y-x 14. ` ` In the AT&T Reclassification proceeding, AT&T made certain voluntary commitments, which AT&T stated were intended to serve as transitional arrangements to  Y-address concerns expressed by parties about possible adverse effects of reclassifying AT&T.w' Y -ԍXxAT&T Reclassification Order, at  17, and Appendix C.(#w  Yv-These commitments concerned: service to lowincome and other customers;A(vu Y-ԍXxAT&T committed for a period of three years to offer optional calling plans, whose rates are constrained, to residential subscribers, and to provide advance notice of  Yn-changes to such plans. Id. at  8487, and Appendix C at  5.(#A analog private  Y_-line and 800 directory assistance services;?)_  Y-ԍXxAT&T committed for a period of three years to limit rate increases for these services to the rate of increase of the Consumer Price Index, and to provide advance notice of  Y-such rate increases. Id. at  106, and Appendix C at  4.(#? service to and from the State of Alaska and other  YH-regions subject to our rate integration policy;%*H{ Yt-ԍXxAT&T committed to continue to comply with the Commission's rate integration policies and with the Commission's orders regarding AT&T's purchase of Alascom,  YF-Inc. Id. at  114, and Appendix C at  12.(#% geographic rate averaging;+H Y-ԍXxAT&T committed, inter alia, to provide advance notice of any tariffs that deaverage  Y-interstate, residential direct dial rates. Id. at  114, 146, and Appendix C at  3.(# changes to  Y1-contract tariffs that adversely affect existing customers;K,1 Yz-ԍXxAT&T committed, inter alia, to comply with an agreement, for twelve months, between AT&T and the Telecommunications Resellers Association regarding changes  YL!-to existing term plans. Id. at  13435, and Appendix C at  68.(#K and dispute resolution procedures  Y -for reseller customers.-  Y#-ԍXxAT&T committed, inter alia, to establish a quick and efficient process to resolve  Y$-disputes with resellers. Id. at  135, and Appendix C at  10.(# In the AT&T Reclassification Order, we accepted AT&T's  Y -commitments and ordered AT&T to comply with those commitments.\.  Yi'-ԍXxId. at  37, 163, 170.(#\" f.0*(( "Ԍ Y-ԙx15. ` ` In the AT&T Reclassification Order, we stated that we would consider the following issues relevant to the interstate, domestic, interexchange market as a whole in this  Y-proceeding: (1) whether there is tacit price coordination in the interexchange market;N/ YK-ԍXxId. at  83.(#N (2) how changes in the interexchange market affect our rate integration and geographic averaging  Y-policies;X0y Y-ԍXxId. at  115, 146.(#X (3) reseller and large user concerns regarding contract tariffs;O1* Y -ԍXxId. at  131.(#O and (4) the  Y-application of the filed rate doctrine to contract tariff arrangements.O2 Y -ԍXxId. at  137.(#O  X_- E.XxNeed for Review of Commission Regulation of the Interexchange Market (#  Y1-x16. ` ` The Commission's obligation to be responsive to the dynamic nature of the  Y -communications industry has long been recognized.g3  YW-ԍXxFirst Report and Order, 85 FCC 2d at 12.(#g The passage of the 1996 Act, the dramatic changes in the interstate, domestic, interexchange telecommunications services  Y -market since the Interexchange Competition proceeding, and our reclassification of AT&T as a nondominant carrier in the overall interstate, domestic, interexchange market, make it timely for us to reexamine our policies and rules in light of the goals of the 1996 Act. In pursuing the procompetitive policy established by the 1996 Act, we intend to examine existing regulations to see whether they can be reduced or eliminated consistent with our public interest responsibilities.  XK- J:\POLICY\ALLIXC\INTRO J:\POLICY\ALLIXC\FORBEAR F  III. REGULATORY FORBEARANCE  T  X-TP A.xIntroduction  Y-x17.` ` The 1996 Act amends the Communications Act to require the Commission to: x` ` [F]orbear from applying any regulation or any provision of this Act to a telecommunications carrier or telecommunications service, or class of telecommunications carriers or telecommunications services, in any or some of its or their geographic markets, if the Commission determines that x` x` ` (1) enforcement of such regulation or provision is not necessary to ensure that the charges, practices, classifications or regulations by, for, or in connection with that"  = 30*((%" telecommunications carrier or telecommunications service are just and reasonable, and are not unjustly or unreasonably discriminatory; x` x` ` (2) enforcement of such regulation or provision is not necessary for the protection of consumers; and x` x` ` (3) forbearance from applying such provision or regulation is  YH-consistent with the public interest.4vH Y -ԍXx1996 Act at  401 (adding  10(a)). Section 401 of 1996 Act also provides that the Commission may not forbear from applying the requirements of the provisions of new Section 251 related to interconnection (except as provided in Section 251(f)) and of new Section 271 related to BOC provision of interLATA services until the  Ye -Commission determines that those requirements have been fully implemented. Id. (adding  10(d)).(#x` In addition, in determining whether forbearance from enforcing a particular provision or regulation is in the public interest, the Commission is specifically required to consider whether forbearance will promote competitive market conditions, including the extent to which forbearance will enhance competition among providers of telecommunications  Y -services.5  Yu-ԍXxId. (adding  10(b)). New Section 10(b) also provides that, "[i]f the Commission determines that such forbearance will promote competition among providers of telecommunications services, that determination may be the basis for a Commission  Y0-finding that forbearance is in the public interest." Id.(#Ɔ  Y-x18.` ` Accordingly, with respect to each of the existing regulations examined in this proceeding, we invite parties to comment on whether we should forbear from applying such regulations to some or all interexchange carriers or services, in particular geographic areas or regions. With respect to each issue, parties should specify the bases on which they believe we can make the findings required to meet the statutory criteria for forbearance.  Y-x19. ` ` We address below whether, given the current domestic, interstate, interexchange market, the 1996 Act requires the Commission to forbear from requiring nondominant interexchange carriers to file tariffs for domestic services. Based on the Commission's analyses and findings in prior proceedings, we tentatively conclude that: (1) applying tariff filing requirements to nondominant interexchange carriers is not necessary to ensure that such carriers' charges, practices, or classifications are just and reasonable, and are not unjustly or unreasonably discriminatory; (2) applying tariff filing requirements to nondominant interexchange carriers is not necessary for the protection of consumers; and (3) forbearing from applying tariff filing requirements to nondominant interexchange carriers is"N r 50*((>" consistent with the public interest. We, therefore, tentatively conclude that we are required by the 1996 Act to forbear from applying the Section 203 tariff filing requirements to nondominant interexchange carriers for domestic interexchange services.  Y-x20. ` ` We note that we do not address here the issue of forbearance from applying Section 226 of the Act, which requires operator service providers to file informational tariffs. That issue will be addressed in a separate upcoming proceeding.  XH- B.XxForbearance from Tariff Filing Requirements for NonDominant Interexchange  X1-Carriers (#  X -x` ` 1. Background (#  Y -x21. ` ` In the Competitive Carrier proceeding, the Commission explored the cost of  Y -imposing Title II regulation on entities lacking market power. In the Competitive Carrier  Y -Further NPRM, the Commission suggested that tariff filing requirements for nondominant carriers could harm consumers by slowing "the introduction of new services, dampening competitive responses and ultimately encouraging price collusion through the forced  Yb-publication of charges."j6b Y-ԍxCompetitive Carrier Further NPRM, 84 FCC 2d at 471.j The Commission accordingly, in a series of orders, established a  YK-permissive tariff forbearance policy for nondominant carriers.7HKy Yu-ԍXxSee Second Report and Order, 91 FCC 2d 59 (applying permissive detariffing to  Y^-resellers of terrestrial common carrier services); Fourth Report and Order, 95 FCC 2d 554 (applying permissive detariffing to all other resellers and specialized common  Y0-carriers, including MCI and GTE Sprint); Fifth Report and Order, 98 FCC 2d 1191 (applying permissive detariffing to domestic satellite carriers, miscellaneous common carriers, carriers providing domestic, interstate and interexchange digital transmission services, and certain affiliates of exchange carriers offering interstate, interexchange services).(# The Commission found that "there was no evidence that it is in the public interest for us to continue receiving streamlined tariff and Section 214 filings from certain specialized common carriers to prevent  Y-them from charging unjust and unreasonable rates or making service unavailable."a8  Y@ -ԍxFourth Report and Order, 95 FCC 2d at 578.a The Commission also addressed the treatment of international services of carriers covered by the order, and concluded that these international services would be subject to dominant carrier  Y-regulation.n9:  Y$-ԍXxFifth Report and Order, 98 FCC 2d at 1204 n.41.(#n " 90*(("Ԍ Y-x22.` ` In the Sixth Report and Order, the Commission established a mandatory  Y-detariffing policy for nondominant carriers.H: Yb-ԍXxSixth Report and Order, 99 FCC 2d at 102122. Carriers subject to forbearance were required to file supplements canceling their tariffs on file with the Commission within  Y4-six months of the effective date of the Sixth Report and Order. (#H The Commission concluded that tariff filings were not essential to its ability to ensure that nondominant carriers do not unjustly discriminate in their rates, and that other means were available to ensure that the  Y-Commission fulfilled its mandate under the Communications Act.;K Y -ԍXxId. at 1029. The Commission stated: "Throughout this rulemaking, we have determined that enforcement of Sections 201 and 202 objectives of just and reasonable rates could be effectuated for certain carriers without the filing of tariffs and through  Y[ -market forces and the administration of the complaint process." Id. at n.33.(#ơ The Commission noted that this decision furthered its objectives to achieve just and reasonable rates, and that it would continue to administer the Section 208 complaint process and could reimpose tariff  Y_-requirements if necessary..<v_ Y-ԍXxId. at 1028. With respect to carriers that had "mixed tariffs" that included services subject to different degrees of regulation, such as international services, the Commission required those carriers either to: (1) cancel the entire tariff and refile a new tariff for only those services subject to dominant or streamlined regulation; or (2) issue revised pages canceling the material that pertains to services or service points  YT-subject to forbearance. Id. at 1034.(#. The Commission also noted that carriers had an obligation to keep price and service information on file in their offices that can be produced readily upon inquiry from the Commission in order to substantiate the reasonableness and justness of  Y -carriers' rates, terms and conditions.K=  Y-ԍXxId. at 1028.(#K  Y -x23. ` ` The Sixth Report and Order subsequently was vacated and remanded by the  Y -U.S. Court of Appeals for the D.C. Circuit.>  Y,-ԍXxMCI Telecommunications Corp. v. FCC, 765 F.2d 1186 (D.C. Cir. 1985).(#ƃ The court held that the Commission lacked  Y -statutory authority to prohibit carriers from filing tariffs.K? W Y -ԍXxId. at 1192.(#K The court, however, did not reach the issue of whether the Commission's earlier permissive detariffing orders were  Y-valid.L@ YI$-ԍXxId. at 1196. (#L The Commission, accordingly, continued to apply permissive detariffing for nondominant carriers. The Commission's permissive detariffing regime subsequently was invalidated by the U.S. Court of Appeals for the D.C. Circuit in 1992. The court, in reviewing and disposing of a complaint filed by AT&T against MCI, vacated the"K@0*((9"  Y-Commission's Fourth Report and Order, thereby invalidating the Commission's tariff filing  Y-forbearance policy for nondominant carriers.A Yb-ԍXxAT&T v. FCC, 978 F.2d 727, 737 (D.C. Cir. 1992), cert. denied MCI  YK-Telecommunications Corp. v. AT&T, __ U.S. __, 113 S.Ct. 3020 (1993).(# While stating that it had no "quarrel with the Commission's policy objectives," the court found that the Communications Act did not give  Y-the Commission authority to adopt such a policy.JBb Y-ԍXxId. at 736.(#J  Y-x24. ` ` Prior to the U.S. Court of Appeals' vacation of the Fourth Report and Order, the Commission adopted a Report and Order in a rulemaking proceeding commenced in  Y_-response to AT&T's complaint.C_ Y# -ԍXxSee Tariff Filing Requirements for Interstate Common Carriers, CC Docket No. 9213, Report and Order, 7 FCC Rcd 8072 (1992). While adopted prior to the court's finding that the Commission's permissive detariffing policy exceeded the Commission's statutory authority, the order was released after the court vacated the  Y-Fourth Report and Order.(#ƶ The Commission again determined that permissive  YH-detariffing was within its authority under the Communications Act.KDHh  Ya-ԍXxId. at 8074.(#K The U.S. Court of Appeals for the D.C. Circuit granted summary reversal of the Commission's order based on  Y -the court's earlier ruling.jE   Y-ԍXxAT&T v. FCC, 978 F.2d 727 (D.C. Cir. 1992).(#j In affirming the U.S. Court of Appeal's ruling, the Supreme Court found that Section 203(b)(2) of the Communications Act gave the Commission  Y -authority to modify the Act's tariff filing requirement, but not to eliminate it entirely.F  Yg-ԍXxMCI Telecommunications Corp. v. AT&T, __ U.S. __, 114 S.Ct. 2223, 222931 (1994).(#Ɛ The Commission thereafter established a oneday tariff notice period for all nondominant carriers after again concluding that traditional tariff regulation of nondominant carriers is not  Y -necessary to ensure just and reasonable rates.xGv d Y-ԍXxNondominant Filing Order, 8 FCC Rcd at 675657, vacated on other grounds,  Y -Southwestern Bell Corporation v. FCC, 43 F.3d 1515 (D.C. Cir. 1995) (finding the  Y!-range of rates provision in the Nondominant Filing Order violated Section 203(a) of the Act). The Commission subsequently eliminated the range of rates provision and  Y`#-reinstated the other tariff filing requirements adopted in the Nondominant Filing  YI$-Order. Nondominant Filing Order II, 10 FCC Rcd 13,653.(#x "G0*((i"Ԍ Y-x25. ` ` Against this background, Congress enacted Section 401 of the 1996 Act, adding Section 10(a) to the Communications Act, to grant the Commission authority to  Y-forbear from applying the provisions of Title II, subject to certain, limited exceptions.`H YK-ԍXx1996 Act at  401 (adding  10). (#`  X-x` ` 2. Discussion   Yv-x26. ` ` As noted above, the 1996 Act requires the Commission to forbear from applying to a telecommunications carrier or telecommunications service any regulation or any provision of the Communications Act, if the Commission makes the three specified  Y1-determinations.BI1y Y[ -ԍXxId.(#B  Y -x27. ` ` We believe, based on the Commission's prior analyses and findings, that we can make the determinations necessary in order to forbear from enforcing Section 203's tariffing requirements with respect to the domestic services offered by nondominant, interexchange carriers. Specifically, we tentatively find that enforcement of the Section 203 tariffing requirements with respect to nondominant interexchange carriers: (1) is not necessary to ensure that nondominant interexchange carriers' charges, practices, or classifications are just and reasonable, and are not unjustly or unreasonably discriminatory; and (2) is not necessary for the protection of consumers. We also tentatively find that forbearing from enforcing Section 203 tariffing requirements with respect to nondominant interexchange carriers is consistent with the public interest. Accordingly, we tentatively conclude that we must forbear from applying Section 203 tariff filing requirements to nondominant interexchange carriers for domestic services. Each of these tentative determinations is discussed below.  Y-x28. ` ` We tentatively conclude that tariff filings for nondominant interexchange carriers are not necessary to ensure that the charges, and practices of a telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or  Y|-unreasonably discriminatory. As the Commission stated in the First Report and Order: XxX` ` The economic underpinning of our proposal to streamline the regulatory procedures for nondominant carriers flows from the fact that firms lacking market power simply cannot rationally price their services in ways which, or impose terms and conditions which, contravene Sections 201(b) and 202(a) of the  Y-Act.gJ* Y%-ԍXxFirst Report and Order, 85 FCC 2d at 31.(#gx` " J0*((!"ԌTwo years ago, in adopting a mandatory detariffing policy for providers of domestic commercial mobile radio service (CMRS), the Commission reiterated its conclusion that "nondominant carriers are unlikely to behave anticompetitively, in violation of Sections 201(b) and 202(a) of the Act, because they recognize that such behavior would result in a  Y-loss of customers."K  Y-ԍXxImplementation of Sections 3(n) and 332 of the Communications Act, Regulatory  Y-Treatment of Mobile Services, GN Docket No. 93252, Second Report and Order, 9  Y-FCC Rcd 1411, 1478 (1994) (Regulatory Treatment of Mobile Services) (citing  Y-Competitive Carrier First Report and Order, 85 FCC 2d at 31); Erratum, 9 FCC Rcd 2035 (1994); Erratum, 9 FCC Rcd 2156 (1994); Further Notice of Proposed  Y -Rulemaking, 9 FCC Rcd 2863 (1994); Implementation of Sections 3(n) and 332 of the  Y -Communications Act, Regulatory Treatment of Mobile Services, Amendment of Part 90 of the Commission's Rules to Facilitate Future Development of SMR Systems in  Ye -the 800 MHx Frequency Band, Amendment of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200 Channels Outside the Designated Filing Areas in the 896901 MHz and 935940 MHz Band Allotted to the Specialized Mobile Radio  Y -Pool; GN Docket No. 93252, PR Docket No.s 93144, 89553, Third Report and Order, 9 FCC Rcd 7988 (1994).(#Ƴ Based on the Commission's experience under its prior tariff forbearance policy for nondominant interexchange carriers, as well as the Commission's  Yv-findings in the Regulatory Treatment of Mobile Services proceeding, we continue to believe that nondominant carriers are unlikely to price their services in ways which, or to impose  YH-terms and conditions which, violate Section 201(b) and Section 202(a) of the Act.7L He  Y^-ԍXxIn August 1993, we similarly stated:(# XxX` ` On the basis of the extensive record developed in response to  Y-the Notice, we now reaffirm our policy findings, adopted nearly  Y-a decade ago in Competitive Carrier, and conclude that, while tariff regulation is required by the Act, traditional tariff regulation of nondominant carriers is not only unnecessary to ensure just and reasonable rates, but is actually counterproductive since it can inhibit price competition, service innovation, entry into the market, and the ability of carriers to respond quickly to market trends.x`  YJ!-XxNondominant Filing Order, 8 FCC Rcd at 6752, vacated on other grounds. (#7 Similarly, we continue to believe that the Communications Act's objectives of just, reasonable, and not unjustly or unreasonably discriminatory rates can be achieved effectively  Y -through market forces and the administration of the complaint process.Mv  Y%-ԍXxSixth Report and Order, 99 FCC 2d at 1029 (concluding that tariffs "are not essential" to the Commission's ability to ensure that carriers' rates comply with the Act, because the Commission has "other means to ensure our enforcement of the"'L0*(('" mandates of the Act," including the Commission's Section 208 complaint process);  Yy-see Second Report and Order, 91 FCC 2d at 69 (concluding that "competitive forces in the marketplace would serve to ensure, in the first instance, carrier compliance" with the Act, and noting that the Commission can "remedy any irrational carrier  Y4-conduct or aberrations that might occur . . . through the complaint process"); see also  Y-Regulatory Treatment of Mobile Services, 9 FCC Rcd at 147879.(#Ə" M0*((n "Ԍ Y-ԙx29. ` ` We also tentatively conclude that requiring nondominant interexchange carriers to file tariffs for domestic offerings is not necessary for the protection of consumers of interexchange services. To the contrary, we believe a tariff filing requirement harms consumers by undermining the development of vigorous competition. The Commission  Y-previously has found, in the Second Report and Order, that applying tariff requirements to competitive entities is superfluous as a consumer protection device, since competition  Yv-circumscribes the prices and practices of these companies.Nvv Y--ԍXxSecond Report and Order, 91 FCC 2d at 71. See also Sixth Report and Order, 99 FCC 2d at 1030 (where the Commission suggested that required tariff filings could have the following adverse effects: "(1) taking away carriers' ability to make rapid, efficient responses to changes in demand and cost; (2) impeding and removing incentives for competitive price discounting; [and] (3) imposing costs on carriers that attempt to make new offerings"). (# Moreover, beginning with the  Y_-Second Report and Order and as recently as the 1994 Regulatory Treatment of Mobile  YH-Services Order, the Commission has consistently found that the imposition of tariff obligations in these circumstances stifles price competition and service and marketing  Y -innovations.O D  Y-ԍXxSecond Report and Order, 91 FCC 2d at 71; Nondominant Filing Order, 8 FCC Rcd  Y-at 6752, vacated on other grounds; Regulatory Treatment of Mobile Services, 9 FCC Rcd at 1479. (# We tentatively find that these conclusions remain valid in today's more competitive domestic, interexchange market.  Y -x30. ` ` Finally, we tentatively conclude that forbearing from imposing tariff filing requirements on nondominant interexchange carriers is consistent with the public interest. As part of the determination of whether forbearance is consistent with public interest, the 1996 Act requires the Commission to consider "whether forbearance from enforcing the provision or regulation will promote competitive market conditions, including the extent to which forbearance will enhance competition among providers of telecommunications  YK-services."ZPK Y#-ԍx1996 Act at  401 (adding  10(b)).Z We believe that forbearance from requiring tariff filings for nondominant  Y4-carriers will promote competition and deter price coordination. In the Sixth Report and  Y-Order, the Commission found that requiring nondominant carriers to file tariffs can: (1) take away carriers' ability to make rapid, efficient responses to changes in demand and cost; (2) impede and remove incentives for competitive price discounting; and (3) impose costs on"xP0*(("  Y-carriers that attempt to make new offerings.iQ Yy-ԍXxSixth Report and Order, 99 FCC 2d at 1030.(#i The Commission also concluded that continuing to require nondominant carriers to file tariffs presents an opportunity for collusive pricing by competing carriers because carriers can ascertain their competitors'  Y-existing rates and keep track of any changes by reviewing filed tariffs.BRy Y-ԍXxId.(#B The Commission  Y-indicated that this may encourage carriers to maintain rates at artificially high levels.BS* Y -ԍXxId.(#B  Yv-x31. ` ` The Commission recently reiterated, in the Regulatory Treatment of Mobile  Y_-Services Order, its findings in the Sixth Report and Order.KT_ Y -ԍXx9 FCC Rcd at 1479.(#K We believe that forbearance from tariff filing requirements will promote competition by enabling nondominant carriers to respond quickly to changes in the market, and reducing administrative costs on carriers making new offerings. We also believe that, without pricing and other material information available from the public tariffs of their rivals, nondominant interexchange carriers are more likely to initiate price reductions and other competitive programs. Accordingly, we tentatively conclude that forbearing from requiring nondominant carriers to file tariffs for interexchange services promotes competitive market conditions, and therefore is in the public interest.  Yy-x32. ` ` Based on the foregoing tentative determinations, we tentatively conclude that we are required by Section 10 of the Communications Act, as amended, to forbear from requiring nondominant interexchange carriers to file tariffs for domestic services. We invite comment on all of these tentative conclusions.  Y-x 33. ` ` We note that many carriers currently file bundled tariffs that include both domestic and international services. We therefore seek comment as to whether the Commission should forbear from requiring these nondominant firms to file tariffs for the international portions of their offerings as well. We reserve for another day, in a separate proceeding, the broader question of whether the Commission should consider generally forbearing from requiring tariffs for international service provided by a nondominant carrier,  Y|-given current market conditions in the international market.Uv| Y"-ԍXxAs stated in an order adopted earlier this month, we "anticipate review of our international Section 214 authorization and tariffing procedures to identify new areas where additional streamlining may be appropriate . . . . [S]uch steps should be taken in the context of a new proceeding where we can make additional determinations about the state of competition in the international market and receive more public  YF'-input." Streamlining the International Section 214 Authorization Process and Tariff"F'T0*((x'"  Y-Requirements, IB Docket No. 95118, Report and Order, at  86 (rel. Mar. 13, 1996).(#"|bU0*((|"Ԍ Y-ԙ x!34. ` ` We also tentatively conclude that forbearance from tariff filing requirements for domestic services of nondominant interexchange carriers should be implemented on a mandatory basis. Permitting nondominant interexchange carriers to file tariffs in this context does not appear to be in the public interest. We believe that a regime without nondominant interexchange carrier tariffs is the most procompetitive, deregulatory regime. The risk of anticompetitive conduct inherent in, and the costs associated with, tariff filings by nondominant interexchange carriers, discussed above, would persist if carriers were permitted to file tariffs voluntarily. In addition, the absence of tariffs would eliminate possible invocation by carriers of the filed rate doctrine, which allows carriers certain rights unilaterally to change rates, terms, and conditions of contract tariffs and other longterm  Y -service arrangments,V b Y--ԍxSee Section IX, infra, addressing issues related to the filed rate doctrine. and to limit their liability for damages.W  Y-ԍXxSee, e.g., Western Union Tel. Co. v. Esteve Bros. & Co., 256 U.S. 566, 571  Y-(1921); Western Union Tel. Co. v. Priester, 276 U.S. 252, 259 (1928). See Richman  Y-Bros. Records, Inc. v. U.S. Sprint Communications Co., Inc., 10 FCC Rcd 13,639, 13,641 (1995).(#Ɓ Absent filed tariffs, the legal relationship between carriers and customers will much more closely resemble the legal relationship between service providers and customers in an unregulated environment. Therefore, to establish a more marketbased environment that will help prevent these possible anticompetitive practices and better protect consumers, we tentatively conclude that it would be in the public interest to prohibit nondominant interexchange carriers from filing tariffs with respect to domestic interstate, interexchange services.  Yb-x"35.` ` Our proposal to adopt a mandatory tariff forbearance policy for nondominant interexchange carriers is supported by the Commission's adoption of a mandatory tariff  Y4-forbearance policy for domestic CMRS,X4  Yd-ԍXxRegulatory Treatment of Mobile Services, 9 FCC Rcd 1411 (1994). (#ƀ in response to a similar grant of forbearance authority with respect to CMRS providers and services in Section 6002(b) of the Omnibus  Y-Budget Reconciliation Act of 1993 (OBRA).YH0  Y -ԍXxOmnibus Budget Reconciliation Act of 1993, Pub. L. No. 10366, Title VI,  6002(b)(2)(A), 6002(b)(2(B), 107 Stat. 312, 392 (1993). Similar to the forbearance provision of the 1996 Act, Section 332 of the Communications Act, as amended by OBRA, authorizes the Commission to specify by regulation any provision of Title II, subject to certain limitations, as "inapplicable to [any commercial mobile] service or person" engaged in the provision of commercial mobile service, otherwise treated as a common carrier. 47 U.S.C.  332(c)(1)(A). Section 332(c)(1)(A) requires that before forbearing from applying any section of Title II the Commission must find that"F'X0*(('" each of the following conditions applies:(# XxX` ` (1) enforcement of such provision is not necessary in order to ensure that the charges, practices, classifications, or regulations for or in connection with that service are just and reasonable and are not unjustly or unreasonably discriminatory;(#` XxX` ` (2) enforcement of such provision is not necessary for the protection of consumers; and(#` XxX` ` (3) specifying such provision is consistent with the public interest.(#`  Y -XxId. In evaluating the public interest, Section 332(c)(1)(C) requires the Commission to consider:(# XxX` ` whether the proposed regulation . . . will promote competitive market conditions, including the extent to which such regulation . . . will enhance competition among providers of commercial mobile service. If the Commission determines that such regulation . . . will promote competition among providers of commercial mobile services, such determination may be the basis for a Commission finding that such regulation . . . is in the public interest.x` Xx47 U.S.C.  332(c)(1)(C).(#ƪ In Regulatory Treatment of Mobile Services,"Y0*((" the Commission concluded that, in a competitive environment, voluntary tariff filings would create a risk that competitors would use tariff filings "merely to send price signals and  Y-thereby manipulate prices."zZ Y-ԍXxRegulatory Treatment of Mobile Services, 9 FCC Rcd at 1479.(#z It also found that forbearance would promote competition by enabling providers of CMRS to respond quickly to competitors' price packages and reducing  Y-administrative costs.:[0 Y-ԍxId.: To prevent collusive pricing practices, and to protect consumers and the public interest, the Commission determined that it would "forbear from requiring or permitting tariffs for interstate service offered directly by CMRS providers to their  Y_-customers."1\_ Y!-ԍXxId. at 1480. The Commission ruled that CMRS providers with tariffs on file for domestic CMRS services had to cancel those tariffs within 90 days of publication of  Y#-the Commission's order in the Federal Register. Id.(#1  Y1-x#36.` ` We seek comment on our tentative conclusion that we should adopt a mandatory detariffing policy for the domestic services offered by nondominant interexchange carriers. We also seek comment on whether the Commission has the authority pursuant to" d\0*((} " the Communications Act, as amended, to prohibit carriers from filing tariffs. We tentatively conclude that, if we adopt a mandatory or a permissive detariffing policy, nondominant carriers should be required to maintain at their premises price and service information regarding all of their interstate, interexchange offerings, that they can submit to the  Y-Commission upon request.$] Y-ԍXxIn adopting its prior mandatory detariffing policy, the Commission required affected carriers to maintain such information at whatever company location they desired.  Y-Sixth Report and Order, 99 FCC 2d at 1034.(#$ We seek comment on this tentative conclusion.  Yv-x$37. ` ` We recognize that the Commission gradually relaxed its regulation of non Y_-dominant carriers in the Competitive Carrier proceeding in part because it concluded that the availability of service from a nationwide dominant carrier subject to close regulation would  Y1-effectively constrain the rates that could be charged by nondominant carriers.~^1K Y--ԍXxSee, e.g., First Report and Order, 85 FCC 2d at 28.(#~ Given the recent reclassification of AT&T, there currently are no nationwide dominant interstate, domestic, interexchange carriers. While we still believe that nondominant carriers lacking market power cannot rationally price services anticompetitively, we seek comment on whether the absence of a nationwide dominant carrier should affect our tentative conclusion to forbear from requiring nondominant interexchange carriers to file tariffs, and if so, how.  Y-x%38. ` ` We note that market conditions or other circumstances may change in the future. In the event of changed circumstances, such that the statutory prerequisites for forbearance are no longer present, the Commission can revisit tariff forbearance to consider whether it continues to meet the statutory criteria.  Y-x&39. ` ` Finally, in the AT&T Reclassification proceeding, AT&T made certain voluntary commitments regarding its provision of interstate analog private line and 800 directory assistance services. Specifically, AT&T committed, for a period of three years, to limit any price increases for these services to a maximum increase in any year of no more  Y-than the increase in the consumer price index._ Yn-ԍXxAT&T Reclassification Order, at  106, and Appendix C at  4.(#Ƃ AT&T also committed, for a period of three years, to file tariff changes increasing the prices of these services on not less than five business days' notice, and to identify clearly such tariff transmittals as affecting the  Y|-provisions of this commitment.h`| Y"-ԍXxId. at 106, and Appendix C at  4.(#h We believe that it would be consistent with AT&T's intent that its commitments act as a transitional mechanism for AT&T to continue to tariff these services in accordance with its commitments. Accordingly, we tentatively conclude that, even if we decide to forbear from requiring nondominant interexchange carriers to file tariffs, AT&T should remain subject to its prior commitments, and our corresponding order," ^ `0*((<" that AT&T file tariffs with respect to these services for the specified term of the commitments. We seek comment on these tentative conclusions.  X- J:\POLICY\ALLIXC\FORBEAR "J:\POLICY\ALLIXC\DEFINE.01" Q IV. DEFINITION OF RELEVANT PRODUCT AND GEOGRAPHIC MARKETS אTP  Y-x'40.` ` In the Competitive Carrier proceeding, the Commission found, for purposes of assessing the market power of interexchange carriers covered by that proceeding, that: "(1) interstate, domestic, interexchange telecommunications services comprise the relevant product market, and (2) the United States (including Alaska, Hawaii, Puerto Rico, U.S. Virgin Islands, and other U.S. offshore points) comprises the relevant geographic market for this  Y -product, with no relevant submarkets."ia  Y -ԍXxFourth Report and Order, 95 FCC 2d at 563.(#i In this section, we consider whether we should reexamine the geographic and product market definitions that the Commission adopted in the  Y -Competitive Carrier proceeding. We believe more sharply focused market definitions will aid us in evaluating whether the BOCs possess market power with respect to the provision of  Y -interLATA services in areas where they provide local access service.b y Y-ԍXxSee 1996 Act at  151 (adding  271) (permitting the BOCs to provide inregion interLATA services upon satisfaction of certain conditions).(# Moreover, evidence  Y -in the recent AT&T Reclassification proceeding suggests that the market definitions adopted  Y-in the Competitive Carrier proceeding might be more narrowly drawn to provide us with a more refined analytical tool for evaluating whether a carrier or group of carriers has market power. For example, there was evidence that suggested that AT&T might possess the ability to raise and sustain prices for 800 directory assistance and analog private line services above  Y4-competitive levels without making the price increase unprofitable,oc4 Y-ԍXxAT&T Reclassification Order, at  10205.(#o which may imply that these services might constitute separate relevant product markets.  Y-x(41. ` ` We invite comment on whether we should retain the relevant product and  Y-geographic market definitions adopted in the Competitive Carrier proceeding. We tentatively conclude that we should follow the approach taken in the U.S. Department of Justice/Federal  Y-Trade Commission 1992 Merger Guidelines (the "Guidelines")d Y -ԍXx1992 U.S. Department of Justice/Federal Trade Commission Merger Guidelines, 4  Y!-Trade Reg. Rep. (CCH)  13,104, at p. 20,569 (1992 Merger Guidelines).(# for defining relevant markets. "In many respects the . . . Guidelines and the scholarship on which they are based  Y|-offer important insights and substantially improved formulations of relevant market issues."e|^  Y$-ԍXxRobert Pitofsky, New Definitions of Relevant Market and the Assault on Antitrust, 90  Yt%-Colum. L. Rev. 1805, 1808 (1990). See also Price Cap Performance Review for  Y]&-Local Exchange Carriers, Second Further Notice of Proposed Rulemaking in CC Docket No. 941, Further Notice of Proposed Rulemaking in CC Docket No. 93124,"F'd0*((j'" and Second Further Notice of Proposed Rulemaking in CC Docket No. 93197, at   Yy-116 (rel. Sept. 20, 1995) (relying on the 1992 Merger Guidelines' approach to defining the relevant market).(#Ʒ "|Ke0*(( " Moreover, courts have increasingly relied on the Guidelines' approach in defining relevant  Y-markets.,fK Y-ԍXxABA Antitrust Section, Antitrust Law Developments 298 (3d ed. 1992); Steven A.  Y-Newborn & Virginia L. Snider, The Growing Judicial Acceptance of the Merger  Y-Guidelines, 60 Antitrust L.J. 849 (1992). (#, We believe the Guidelines' approach suggests that we should define as a relevant product market an interstate, interexchange service for which there are no close substitutes or a group of services that are close substitutes for each other but for which there are no other close substitutes. We tentatively conclude, however, that we need not address the issue of delineating the boundaries of specific product markets, except where there is credible evidence suggesting that there is or could be a lack of competitive performance with respect to a particular service or group of services.  Y1-x)42.` ` With respect to the relevant geographic market, we tentatively conclude that we should define a relevant geographic market for interstate, interexchange services as all calls (in the relevant product market) between two particular points. However, geographic rate averaging and other factors imply that a carrier or group of carriers cannot change interexchange rates for calls between two particular points without changing rates nationwide for calls of that distance. For purposes of market power analysis, we tentatively conclude to treat interstate, interexchange calling generally as one national market, as the Commission  Y-did in the Competitive Carrier proceeding. If there is credible evidence suggesting that there is or could be a lack of competition in a particular pointtopoint market (or group of markets), and there is a showing that geographic rate averaging will not sufficiently mitigate the exercise of market power (if it exists), however, we propose to examine individually that market (or group of markets) for the presence of market power.  Y-x*43. ` ` We note that comments and reply comments on this section are due April 19,  Y-1996; reply comments are due May 3, 1996.g Yn-ԍXxSee also Section X.D. infra regarding requirements for all pleadings.(#Ɛ  X- A.xRelevant Product Market   Y-x+44.` ` For the reasons discussed above, we tentatively conclude that we should follow  Y|-the Guidelines' approach for defining the relevant product market. In the Competitive  Ye-Carrier proceeding, the Commission defined the relevant product market as "all interstate, domestic, interexchange telecommunications services" and concluded that there were no  Y7-relevant submarkets.ih7  Yg'-ԍXxFourth Report and Order, 95 FCC 2d at 563.(#i Although we recently used this product market definition to"70 h0*((."  Y-reclassify AT&T as nondominant,ii Yy-ԍXxAT&T Reclassification Order, at  22. (#i we question whether a narrower product market definition might provide us with a more refined analytical tool for evaluating whether a carrier or group of carriers together are exerting market power. For example, our finding that the prices of 800 directory assistance and analog private line services could profitably be raised above competitive levels may imply these services constitute distinct relevant product  Y-markets.`jy Y-ԍXxSee id. at  10205.(#`  Y_-x,45. ` ` The Guidelines define the relevant product market as "the product or group of products such that a hypothetical profit maximizing firm that was the only present and future seller of those products (`monopolist') would impose at least a `small but significant and  Y -nontransitory' increase in price."fk * Y-ԍXx1992 Merger Guidelines, at p. 20,572. Such a price increase will be profitable only if it applies to all products that are good substitutes for the product or products at issue. If it does not, the price increase generally will cause buyers to switch to one or more of the substitute products.(#f Accordingly, in defining the relevant product market, one must examine whether a "small but significant and nontransitory" increase in the price of the relevant product would cause enough buyers to shift their purchases to a second product, so as to make the price increase unprofitable. If so, the two products should be considered  Y -to be in the same product market.Bl  Y-ԍXxId.(#B  Y-x-46.` ` Under the Guidelines, "[m]arket definition focuses solely on demand  Yy-substitution factors i.e., possible consumer responses.":myG  Yq-ԍXxId. at p. 20,571. However, "[s]upply substitution factors i.e., possible production responses are considered . . . in the identification of firms that participate in the  YC-relevant market and the analysis of entry." Id.(#: Consideration of substitutability of demand supports the use of narrower relevant product markets than the "all services"  YK-product market defined in the Competitive Carrier proceeding. It appears unlikely, for example, that a substantial number of residential customers would switch from residential service to 800 service in response to a small but significant nontransitory increase in the  Y-price of residential service.Mn  Y#-ԍXxSee id. (#M Thus, these two services may fall in different product markets. On the other hand, it appears that defining each interexchange service as a separate relevant product market would result in relevant markets that are too narrow. Business customers, in particular, may view certain interexchange services as sufficiently close substitutes that, if an interexchange carrier raised the price of one of the services, customers"{n0*((" would switch to one of the substitute services. Based on this analysis, we believe that we should define as a relevant product market an interstate, interexchange service for which there are no close substitutes or a group of services that are close substitutes for each other, but for which there are no other close substitutes.  Y-x.47.` ` We believe that it would be administratively burdensome to delineate all relevant product markets for interstate, interexchange services. The fact that we have previously found that there is substantial competition with respect to most interstate, domestic, interexchange service offerings suggests that we do not need to do so at this  Y1-time.yo1 Y -ԍXxSee AT&T Reclassification Order, at  74116.(#y Accordingly, we tentatively conclude that we should address the question whether a specific interstate, interexchange service (or group of services) constitutes a separate product market only if there is credible evidence suggesting that there is or could be a lack of competitive performance with respect to that service (or group of services). We seek comment on this approach and invite parties to suggest other approaches. Interested parties should provide support for the position they advocate. Parties recommending that services be grouped in relevant product markets should identify the services that should be grouped together, as well as providing evidence that there is or could be a lack of competitive performance with respect to those services. We also seek comment on what factors we should consider in defining relevant product markets, as well as what obstacles, problems, or administrative burdens we are likely to face in adopting narrower market definitions.  X- B.xRelevant Geographic Market x  Y-x/48. ` ` The Merger Guidelines define the relevant geographic market as the "region such that a hypothetical monopolist that was the only present or future producer of the relevant product at locations in that region would profitably impose at least a `small but significant and nontransitory' increase in price, holding constant the terms of sale for all  Y-products produced elsewhere."dpy Y-ԍXx1992 Merger Guidelines, at p. 20,573.(#d This definition focuses on whether products in one region are good substitutes for products in other regions. Accordingly, in defining the relevant geographic market, one must examine whether a "small but significant and nontransitory" increase in the price of the relevant product at a particular location would cause a buyer to  Y7-shift his purchase to a second location, so as to make the price increase unprofitable.Bq7* Y"-ԍXxId.(#B If  Y -so, the two locations should be considered to be in the same geographic market.\r  Y$-ԍXxId. at pp. 20,573 20,5733.(#\  Y-x049.` ` In applying the principles in the Guidelines, we note that, at its most fundamental level, interexchange calling involves a customer making a connection from a"r0*(( !"  Y-specific location to another specific location.s Yy-ԍXxFor wireless services, the originating and terminating locations are not necessarily stationary or fixed.(#Ƣ We believe that most telephone customers do not view interexchange calls originating in different locations to be close substitutes for each other. For example, it is unlikely that a person living in Chicago who wishes to make a telephone call to San Francisco will be willing to travel to another location to make the call for a lower price. Similarly, a customer will not view a call that terminates in a place other than the location of the person to whom he or she is calling to be a good substitute for a call to that person. Thus, applying the Merger Guidelines principles, we tentatively conclude that the relevant geographic market for interstate, interexchange services should be defined as all  YH-calls from one particular location to another particular location.t Hb Y[ -ԍXxWe note that defining a relevant geographic market as transport between two specific points is well established in other contexts. For example, the Department of Justice has used city pairs as the relevant geographic market for evaluating mergers in the  Y-airline industry. See, e.g., Robert D. Willig, Antitrust Lessons from the Airline  Y-Industry: The DOJ Experience, 60 Antitrust L.J. 695, 69798 (1991). Similarly, in  Y-the International Competitive Carrier proceeding, the Commission found that each  Y-country pair constitutes a separate geographic market. See International Competitive  Y-Carrier Policies, CC Docket No. 85107, Report and Order, 102 FCC 2d 812 (1985). Thus, one geographic market consists of calls between the U.S. and France, and another consists of calls between the U.S. and Great Britain.(#  Y -x150.` ` We recognize that it would be impracticable to conduct a market power analysis in each individual market implied by a pointtopoint market definition for interstate, interexchange services. We believe that, in the majority of cases, economic factors and the realities of the marketplace will cause these markets to behave in a sufficiently similar manner to allow us to aggregate them into broader, more manageable groups of markets for purposes of market power analysis. For example, residential interexchange service can be thought of as a bundle of all possible interexchange calls originating from a single point and terminating anywhere, and 800 service as a bundle of interstate, interexchange calls originating from a certain geographic region and terminating at a specific point. Similarly,  YK-the "single nationwide geographic market" the Commission adopted in the Competitive  Y4-Carrier proceeding can be viewed as an aggregate of the pointtopoint markets encompassing all points in the United States.  Y-x251.` ` We tentatively conclude for the following reasons that, in most cases, we should continue to treat interstate, interexchange services as a single national market when examining whether a carrier or group of carriers acting together has market power. First, geographic rate averaging reduces the likelihood that a carrier could exercise market power in a single pointtopoint market. Because the prices a carrier can charge in a particular"D t0*((n"  Y-market are linked to the prices it charges in all other markets,u Yy-ԍXxThe 1996 Act specifically directs the Commission to adopt rules to require interexchange carriers to provide interstate, interexchange services "to its subscribers in each State at rates no higher than the rates charged to its subscribers in any other  Y4-State." 1996 Act at  101 (adding  254(g)). See Section VI infra, implementing new Section 254(g) of the Communications Act.(# it generally would not be profitable for a carrier to raise its prices throughout the nation (with a resulting loss of market share in some areas) to take advantage of market power between two particular cities. Second, customers typically purchase ubiquitous calling that enables them to make calls to all domestic locations. Thus, because of geographic rate averaging, a price change in one pointtopoint market would require such price changes to be extended to all residential customers.  Y_-x352.` ` Another reason we can treat the relevant geographic market as a national market is that price regulation of access services and excess capacity in interstate transport further reduce the likelihood that an interexchange carrier could exercise market power in most pointtopoint markets. In making this determination, we recognize that an interstate, interexchange call from point A to point B requires three separate inputs, each of which is sold in a separate input market: (1) originating access from point A; (2) interstate transport  Y -from point A to point B;Vv  Y-ԍXxThis input market includes all means of connecting point A and point B wireline or wireless and all network paths between those points. In the future, cellular, PCS, or other wireless interexchange services may provide an effective substitute for interexchange wireline service.(#V and (3) terminating access to point B. The ability to raise the price for any of the inputs above the competitive level or to prevent competitors from assembling inputs to provide retail service would enable a firm unilaterally to raise the retail price of and thereby exercise market power with respect to interexchange calls between points A and B. We note, however, that all originating and terminating access services are  Yb-currently subject to some form of price regulation,w_b  Y-ԍXxThe BOCs and GTE are subject to price cap regulation (Policy and Rules Concerning  Y-Rates for Dominant Carriers, CC Docket No. 87313, Second Report and Order, 5  Yn-FCC Rcd 6786 (1990) (LEC Price Cap Order); Order on Reconsideration, 6 FCC  YW-Rcd 2637 (1991), aff'd sub nom., National Rural Telecom. Ass'n v. FCC, 988 F.2d 174 (D.C. Cir. 1993)), while other LECs are subject to price cap regulation, rateof Y)!-return regulation, or regulation as an averageschedule company. LEC Price Cap  Y"-Order, 5 FCC Rcd at 6818.(#ƴ which constrains a LEC's ability to  YK-raise access prices to monopoly levels.xK Y$-ԍXxWe also note that there are ways in which a LEC could exercise market power without raising the price of interstate, interexchange services. For example, a LEC could raise its interexchange rivals' costs by providing poorer interconnection to the LEC's network facilities than the LEC provides to itself or its affiliate, or by delaying"g'w0*(('" fulfillment of its rivals' requests to connect to the LEC's network. We will be addressing these issues in upcoming proceedings that address implementation of new Sections 251 and 272 of the Communications Act, as amended.(#ƒ While interstate transport service is not subject to"KKx0*(("  Y-price regulation, we concluded in the AT&T Reclassification Order that, between most points, excess transport capacity undermines the ability of any carrier to raise and maintain  Y-the price of interstate transport above the competitive level.;y1K Y-ԍXxWe found that AT&T's competitors have enough readily available excess capacity to constrain the retail pricing behavior of AT&T, the nation's largest interexchange  Y -carrier. AT&T Reclassification Order, at  58. We noted, for example, that AT&T's largest competitors could absorb almost onethird of AT&T's existing traffic  Yr -within 90 days and twothirds of that traffic within twelve months. Id. at  59. Evidence was also presented that AT&T faced at least three national facilitiesbased competitors, dozens of regional carriers providing service in at least four states, and  Y--more than 500 carriers providing longdistance service in the United States. Id. at  46, 6061. (#; Thus, because the prices of access and transport services are similarly constrained in all pointtopoint markets, we believe we can generally examine simply whether a carrier has market power in the group of pointtopoint markets that comprise the "nationwide geographic market."  Y_-x453.` ` Nevertheless, we believe there may be special circumstances in which treating interexchange services as a national market will not be sufficient for purposes of market power analysis. For example, the BOCs' control of access facilities in their local service regions may require us to examine those regions individually in determining whether the  Y -BOCs have market power with respect to inregion interexchange services.z D  Y-ԍXxWe are not addressing in this proceeding the circumstances, if any, in which a BOC or independent LEC should be classified as a dominant carrier with respect to the provision of interstate, interexchange services in areas where it provides local access services. We intend to address these questions in an upcoming proceeding. (#ƃ If market power were found to exist in such a large region, there is no guarantee that geographic rate averaging would provide a credible check on the exercise of such power. For instance, if a BOC's interexchange customers and traffic are concentrated in one region, the BOC might find it profitable to raise prices above competitive levels, even if geographic rate averaging might cause it to lose market share outside that region. We therefore propose to examine a particular pointtopoint market (or group of markets) for the presence of market power if there is credible evidence suggesting that there is or could be a lack of competition in that market (or group of markets) and there is a showing that geographic rate averaging will not sufficiently mitigate the exercise of market power (if it exists) in that market (or group of markets).  Y-x554.` ` We seek comment on the proposed approach. We also seek comment on how narrowly we would need to define points of origination and termination if we adopt this"z0*((" approach. Because it would be administratively infeasible to conduct a market power analysis that defines separate geographic markets between each pair of individual locations (such as homes), we need to adopt somewhat broader definitions for this situation. One possibility is to define geographic markets between two local exchange areas. An alternative approach might be to use geographic areas currently used by the Commission, such as Major Trading Areas (MTAs), Basic Trading Areas (BTAs), or Metropolitan Statistical Areas  Yv-(MSAs).N{ v Y-ԍXxWe note that Rand McNally & Company is the copyright owner of the Basic Trading Area and Major Trading Area Listings, which list the counties contained in each BTA, as embodied in Rand McNally's Trading Area System Diskette and Atlas & Marketing Guide. Rand McNally has licensed the use of its copyrighted MTA/BTA  Y -listings and maps for certain wireless telecommunications services. See Amendment of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200 Channels Outside the Designated Filing Areas in the 896901 MHz and the 935940 MHz  YN-Bands Allotted to the Specialized Mobile Radio Pool, PR Docket No. 89553, Second Report and Order and Second Further Notice of Proposed Rulemaking, 10 FCC Rcd 6884, 689556 (1995).(#N Commenters should explain why the geographic market definition they recommend is appropriate and should address the administrative benefits or burdens of their proposed definition.  Y -x655.` ` We also invite parties to suggest alternative approaches they believe better characterize the relevant geographic market for interstate, interexchange services, than the pointtopoint market definition we have proposed. Parties should explain how the market definition they recommend reflects the market for interexchange services and should describe the likely administrative benefits or burdens of their proposal. Finally, parties should discuss the factors that we should consider in defining the relevant geographic market for interstate,  Y-domestic, interexchange services.hh  Xb- "J:\POLICY\ALLIXC\DEFINE.01" J:\POLICY\ALLIXC\BOCS V.XxSEPARATION REQUIREMENTS FOR INDEPENDENT LOCAL EXCHANGE CARRIER AND BELL OPERATING COMPANY PROVISION OF "OUTOF X4-REGION" INTERSTATE, INTEREXCHANGE SERVICES (#  Y-x756.` ` The 1996 Act authorizes the BOCs, upon enactment, to provide interLATA  Y-services originating outside their inregion states.f|  YJ!-ԍXx1996 Act at  151 (adding  271(b)(2)).(#f In a recent Notice of Proposed Rulemaking, we considered what regulatory regime we should apply to BOC provision of  Y-such "outofregion" interstate, interexchange services.}H[  Y$-ԍXxBell Operating Company Provision of OutofRegion Interstate, Interexchange,  Y%-Services, CC Docket No. 9621, Notice of Proposed Rulemaking, FCC 9659 (rel.  Y&-February 14, 1996) (BOC OutofRegion NPRM). Prior to the 1996 Act, the BOCs were prohibited from providing interLATA services by the terms of the Modification"'|0*(('" of Final Judgment (MFJ). The BOCs were not barred by the MFJ from providing  Yy-interstate, interexchange services within a LATA boundary. See United States v.  Yb-Western Electric Co., 552 F. Supp. 131 (D.D.C. 1982), aff'd sub nom. Maryland v.  YK-United States, 460 U.S. 1001 (1983) (approving MFJ); United States v. AT&T, 569  Y4-F. Supp. 1057 (D.D.C. 1983) (Plan of Reorganization), aff'd sub nom. California v.  Y-United States, 464 U.S. 1013 (1983). BOC provision of interstate, intraLATA,  Y-interexchange services was subject to dominant carrier regulation. See Fourth Report  Y-and Order, 95 FCC 2d 554.(# Specifically, we considered"}0*((" whether such services should be subject to dominant carrier or nondominant carrier  Y-regulation.~ Yr -ԍXxThe BOC OutofRegion NPRM addresses only BOC provision of outofregion interstate, interexchange services; BOC provision of inregion interstate, interexchange services will be considered in a separate proceeding.(# In that Notice, we tentatively concluded that the separation requirements  Y-imposed for nondominant treatment of independent LEC[  Y-ԍXxBy "independent LECs" we refer to exchange telephone companies other than the BOCs.(#ƌ provision of interexchange services, presented a useful model upon which to base, on an interim basis, oversight of  Y-BOC provision of outofregion interstate, interexchange services.b YJ-ԍXxBOC OutofRegion NPRM, at  11.(#b  Yv-x857.` ` The separation requirements imposed on independent LECs were established  Y_-by the Commission in the Competitive Carrier proceeding. The Commission there determined that interexchange carriers affiliated with independent LECs would be regulated  Y1-as nondominant carriers.n1 Y-ԍXxFourth Report and Order, 95 FCC 2d at 57579. (#n In the Fifth Report and Order, the Commission specified that an "affiliate" of an independent LEC was "a carrier that is owned (in whole or in part) or controlled by, or under common ownership (in whole or in part) or control with, an  Y -exchange telephone company."i W Y-ԍXxFifth Report and Order, 98 FCC 2d at 1198.(#i The Commission further clarified that, to qualify for nondominant treatment, the affiliate providing interstate, interexchange services must: (1) maintain separate books of account; (2) not jointly own transmission or switching facilities with its affiliated exchange telephone company; and (3) acquire any services from its  Y-affiliated exchange telephone company at tariffed rates, terms and conditions.B YI$-ԍXxId.(#B The" 0*((K"  Y-Commission also stated that any interstate service offered directly by an independent LEC,  Y-rather than through a separate affiliate, would be regulated as dominant._ Yb-ԍXxId. at 119899 (emphasis added).(#_  Y-x958.` ` The Commission observed that the separation requirements would provide some "protection against costshifting and anticompetitive conduct" by an independent LEC  Y-that could result from using its control of local bottleneck facilities.By Y-ԍXxId.(#B Noting that the  Yv-requirements it had specified were less stringent than those established in the Second  Y_-Computer Inquiry,H_* Y: -ԍXxAmendment of Section 64.702 of the Commission's Rules and Regulations, CC  Y# -Docket No. 20828, Final Decision, 77 FCC 2d 384 (1980) (Second Computer  Y -Inquiry); Memorandum Opinion and Order on Reconsideration, 84 FCC 2d 50 (1980); Memorandum Opinion and Order on Further Reconsideration, 88 FCC 2d 512  Y-(1981), aff'd sub nom., Computer and Communications Industry Ass'n v. FCC, 693  Y-F.2d 198 (D.C. Cir. 1982), cert. denied sub nom., Louisiana Public Service Comm'n  Y-v. FCC, 461 U.S. 938 (1983); Memorandum Opinion and Order on Further Reconsideration, FCC 84190 (rel. May 4, 1984). (# the Commission concluded that the separation requirements would not  YH-impose excessive burdens on independent LECs.H:  Y3-ԍXxFifth Report and Order, 98 FCC 2d at 1198. We note that the Fifth Report and  Y-Order separation requirements are also less stringent than the separation safeguards established in the 1996 Act for BOC provision of manufacturing activities, inregion  Y-interLATA services, interLATA information services, and electronic publishing. See 1996 Act at  151 (adding  272, 274).(#  Y -x:59.` ` The Commission stated in the Fifth Report and Order that the nondominant treatment accorded to interexchange carriers affiliated with independent LECs did not apply to the BOCs, which, the Commission noted, were then prohibited from offering interLATA  Y -services.  Y-ԍXxFifth Report and Order, 98 FCC 2d at 119899 n.23 (citing United States v. Western  Y-Electric Co., 552 F. Supp. 131 (D.D.C. 1982)).(# The Commission added that, "if this bar is lifted in the future, we would regulate the BOCs' interstate, interLATA services as dominant until we determined what degree of separation, if any, would be necessary for the BOCs or their affiliates to qualify  Y-for nondominant regulation."B) Yj$-ԍXxId.(#B  Yb- x;60.` ` As noted, in the BOC OutofRegion NPRM, we tentatively concluded that the separation requirements imposed upon independent LECs providing interexchange services,"K!0*((*" presented a useful model upon which to base, on an interim basis, oversight of BOC  Y-provision of outofregion interstate, interexchange services.b Yb-ԍXxBOC OutofRegion NPRM, at  11.(#b Accordingly, we tentatively concluded that, if a BOC provides outofregion interstate, interexchange services through an  Y-affiliate that satisfies the separation requirements established in the Competitive Carrier Fifth  Y-Report and Order, the BOC affiliate should be regulated as a nondominant carrier.Py Y-ԍXxId. at  13. (#P We also tentatively concluded that, if a BOC provides outofregion interstate, interexchange services directly, or through an affiliate that does not meet the separation requirements, those  Y_-services should be regulated as dominant carrier offerings.B_* Y: -ԍXxId.(#B  Y1-x<61.` ` We stated in that Notice, however, our intent to consider in this proceeding whether it may be appropriate at some future date to modify or eliminate the separation requirements that are currently imposed upon independent LECs, and that we tentatively concluded should be imposed on BOCs, in order to qualify for nondominant treatment in the  Y -provision of outofregion interstate, interexchange services.N  Ya-ԍXxId. at  11.(#N Accordingly, we now seek comment on whether we should modify or eliminate these separation requirements as a condition for nondominant treatment of independent LEC provision of interstate, interexchange services outside their local exchange areas. We also seek comment on whether, if we modify or eliminate these separation requirements for nondominant treatment of independent LEC provision of interstate, interexchange services outside their local exchange areas, we should apply the same requirements to BOC provision of outofregion interstate, interexchange services. We defer to another proceeding consideration of the appropriate regulatory treatment of BOCs that provide inregion interstate, interexchange  Y-services YC-ԍXxSee 1996 Act at  151 (adding  271) (permitting BOCs to offer interLATA services originating within their regions upon obtaining Commission approval that they meet the requirements, including the "competitive checklist," established in the 1996 Act for such service, and that such service is in the public interest).(#Ƃ and independent LECs that provide interstate, interexchange services within the area in which they also provide local exchange service.  Y-x=62.` ` Parties should identify the requirement or requirements that they believe should be modified or eliminated, and offer support for their positions. Parties should comment on whether complying with the separation requirements would create an unnecessary burden for LECs subject to those requirements. Parties should also comment on whether there is a possibility of costshifting or other anticompetitive conduct that could"e" 0*(({" result if the separation requirements are modified or eliminated, and if so, how we can or should address such conduct.  Y-x>63. ` ` We note that comments and reply comments on this section are due April 19,  Y-1996; reply comments are due May 3, 1996. Y-ԍXxSee also Section X.D. infra regarding requirements for all pleadings.(#Ɛ  Xv- J:\POLICY\ALLIXC\BOCS #J:\POLICY\ALLIXC\GEOAVE.SEC# L VI. RATE AVERAGING AND INTEGRATION REQUIREMENTS OF 1996 ACT  TP  YH-x?64. ` ` Section 254(g) of the Communications Act, as amended by the 1996 Act, provides that the Commission, within six months after the date of enactment, must: XxX` ` [A]dopt rules to require that the rates charged by providers of interexchange telecommunications services to subscribers in rural and high cost areas shall be no higher than the rates charged by each such provider to its subscribers in urban areas. Such rules shall also require that a provider of interstate interexchange telecommunications services shall provide such services to its subscribers in each State at rates no higher than  Yb-the rates charged to subscribers in any other State.cby Y-ԍXx1996 Act at  101 (adding  254(g)).(#c x` Accordingly, we propose and address here the rules necessary to implement these requirements.  Y-x@65. ` ` We note that comments and reply comments on this section implementing Section 254(g) of the Communications Act, as amended, are due April 19, 1996; reply  Y-comments are due May 3, 1996.* Y-ԍXxSee also Section X.C. infra regarding requirements for all pleadings.(#Ɛ  X- A.xGeographic Rate Averaging   Ye-xA66. ` ` We first address the statutory requirement that the rates charged by providers of interexchange telecommunications services to subscribers in rural and high cost areas not be higher than the rates charged to subscribers in the interexchange carrier's urban areas  Y -(i.e., that rates be geographically averaged).c  Y$-ԍXx1996 Act at  101 (adding  254(g)).(#c The Commission has long supported a policy of geographic rate averaging for interstate, domestic, interexchange services. As the Commission stated in 1989: "#0*((~'"Ԍx` ` This Commission has repeatedly voiced our support for rate averaging. . . . Geographic rate averaging redounds to the benefit of rural ratepayers, and customers of high cost local exchange carriers. First, geographic rate averaging ensures that interexchange rates for rural areas, or areas served by high cost companies, will not reflect the disproportionate burdens that may be associated with common line cost recovery in these areas. Thus, geographic rate averaging furthers our goal of providing a universal nationwide telecommunications network. Second, geographic rate averaging ensures that ratepayers share in the benefits of nationwide interexchange competition. If prices are falling due to competition in the corridors carrying the most traffic, prices will also fall for rural Americans. An additional benefit of rate averaging has been its contribution to the simplicity of [message toll service] rates. Customers seeking to compare rates charged by various interexchange carriers have been substantially benefited by the relative  Yy-simplicity of the existing rate structure.]1y Y-ԍXxPolicy and Rules Concerning Rates for Dominant Carriers, CC Docket No. 87313, Report and Order and Second Further Notice of Proposed Rulemaking, 4 FCC Rcd  Y-2873, 3132 (1989) (AT&T Price Cap Order); Erratum, 4 FCC Rcd 3379 (1989);  Y-Memorandum Opinion and Order on Reconsideration, 6 FCC Rcd 665 (1991) (AT&T  Y-Price Cap Reconsideration Order). See Guidelines for Dominant Carriers' MTS  Y-Rates and Rate Structure Plans, CC Docket No. 841235, Notice of Proposed  Yh-Rulemaking, 100 FCC 2d 363, 375 (1985); Policy and Rules Concerning Rates for  YQ-Dominant Carriers, CC Docket No. 87313, Further Notice of Proposed Rulemaking, 3 FCC Rcd 3195, 34503451 (1988).(#]x`  YK-As recently as the AT&T Reclassification Order, we reaffirmed our commitment to maintain  Y4-our geographic rate averaging policy.h4  Y-ԍXxAT&T Reclassification Order, at  110.(#h  Y-xB67. ` ` While the Commission has consistently endorsed a policy of geographic rate averaging, the Commission has not formally promulgated a requirement that rates be  Y-geographically averaged.vr  Y"-ԍXxThe Commission believed that carriers would continue rate averaging practices  Y#-regardless of the development of competition. AT&T Price Cap Order, 4 FCC Rcd at 3130. The Commission, however, pledged that it would suspend and investigate any tariff filed by AT&T or a LEC that proposed geographically deaveraged rates.  Y&-Id. at 3133; Policy and Rules Concerning Rates for Dominant Carriers, CC Docket  Y'-No. 87313, Order on Reconsideration, 6 FCC Rcd 2637, 2715 (1991); AT&T Price"'0*(('"  Y-Cap Reconsideration Order, 6 FCC Rcd at 679; Interexchange Competition NPRM, 5 FCC Rcd at 2646, 2649.(# As required by the 1996 Act, we propose to adopt a rule"$b0*((" requiring that the rates charged by all providers of interexchange telecommunications services to subscribers in rural and high cost areas shall be no higher than the rates charged by each such provider to its subscribers in urban areas. As established by the 1996 Act, this requirement would apply to all providers of interexchange telecommunications services. We seek comment generally on this proposed rule.  Yv-xC68. ` ` Section 254(g) of the Communications Act, as amended by the 1996 Act, states in part: XxX` ` the Commission shall adopt rules to require that the rates charged by providers of interexchange telecommunications services to subscribers in rural and high cost areas shall be no higher than the rates charged by each such provider to its  Y -subscribers in urban areas.c b Y-ԍXx1996 Act at  101 (adding  254(g)).(#cx` Thus, the statute requires the Commission to adopt rules to require geographic rate averaging for intrastate and interstate, interexchange telecommunications services. We note that the legislative history states: XxX` ` [n]ew section 254(g) is intended to incorporate the policies of geographic rate averaging . . . of interexchange services in order to ensure that subscribers in rural and high cost areas throughout the Nation are able to continue to receive both intrastate and interstate interexchange services at rates no higher  Y-than those paid by urban subscribers. Y-ԍXxConference Committee, Joint Explanatory Statement on the Telecommunications Act of 1996, 104th Cong., 2nd Sess. at 132 (Joint Explanatory Statement).(# x` We also believe, however, that Section 254(g) preempts state laws or regulations requiring intrastate geographic rate averaging only to the extent such laws or regulations are  Y|-inconsistent with the rules we adopt with respect to geographic rate averaging.v| Y"-ԍXxPreemption may occur even when Congress has not fully foreclosed state regulation in  Y#-a specific area if state law conflicts with federal law. See Florida Lime & Avocado  Y$-Growers, Inc. v. Paul, 373 U.S. 132, 142143 (1963) (conflict when "compliance  Y%-with both federal and state regulations is a physical impossibility"); Hines v.  Y~&-Davidowitz, 312 U.S. 52, 67 (1941) (conflict when state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress"). (#Ǝ Although"|% 0*((^" the statute makes clear that the Commission is to establish the rules requiring geographic averaging, it does not appear to foreclose consistent state action in this area. Indeed, the Senate Report statement included in the Joint Explanatory Statement provides: x` ` States shall continue to be responsible for enforcing this [geographic averaging provision] with respect to intrastate interexchange services, so long as the State rules are not inconsistent with Commission rules and policies on rate  YH-averaging.vH Y -ԍXxJoint Explanatory Statement at 129. The Joint Explanatory Statement indicates that the House receded to the Senate with modifications with respect to new  Y -Communications Act Section 254. Id. at 130. We note that the geographic rate averaging provision of Section 254(g) contains only minor modifications from the  Ye -Senate Bill geographic rate averaging provision, Section 253(h). See S. 652 104th Cong., 1st Sess.  253(h) (1995).(#x` Thus, we invite comment on these views.  Y -xD69. ` ` In addition to seeking comment on preemption, we seek comment on whether there may be competitive conditions or other circumstances that could justify Commission forbearance from enforcing the proposed geographic rate averaging requirement with respect  Y -to particular interexchange telecommunications carriers or services.3  Y^-ԍXxFor example, if new entry substantially increases competition in areas with high volumes and low costs, nationwide interexchange carriers may be placed at a competitive disadvantage if they are not permitted to offer regional discounts in such areas.(#3  Yy-xE70. ` ` In light of our proposal in this Notice to forbear from requiring nondominant interexchange carriers to file tariffs, we tentatively conclude that it would not be in the public interest to attempt to enforce geographic rate averaging through the tariff process. Rather, we believe that we can ensure compliance with the proposed rate averaging requirements by requiring providers of interexchange telecommunications services to file certifications stating that they are in compliance with their statutory geographic rate averaging obligations. Such a requirement would not impose a significant burden on such providers. Accordingly, we tentatively conclude that we should require providers of interexchange telecommunications services to file such certifications. We also tentatively conclude that we should rely on the  Y-complaint process under Section 208 to bring violations to our attention.Lr  Y$-ԍXx47 U.S.C.  208.(#L We seek comment on these tentative conclusions. Parties challenging these tentative conclusions should suggest possible alternative enforcement mechanisms. "e&# 0*((]"Ԍ Y-xF71. ` ` Enforcement issues similarly arise in the absence of tariff forbearance. Because nondominant carriers currently are permitted to file tariffs on one day's notice, we seek comment on whether, in the absence of tariff forbearance, we should adopt any  Y-requirements in order to facilitate enforcement of the proposed rule that requires, inter alia, that the rates of nondominant providers of interexchange telecommunications services be geographically averaged. Parties supporting such requirements should propose specific examples of regulatory mechanisms that could be adopted.  YH-xG72. ` ` Parties in the AT&T Reclassification proceeding asserted that carriers often do not offer discount rate plans ubiquitously, and that, as a result, interexchange customers in some rural and high cost areas are forced to pay the carriers' higher basic rates, while customers in other geographic areas can take advantage of the carriers' discount plans.  Y -These parties further asserted that this disparity amounts to geographic rate deaveraging.h  Ye -ԍXxAT&T Reclassification Order, at  144.(#h We seek comment on the extent to which providers of interexchange telecommunications services do not offer optional discount plans to subscribers in rural and high cost areas and, if so, the reasons for this practice. We also seek comment on whether an interexchange carrier's failure to make a promotional plan available in the entirety of its service area constitutes geographic deaveraging, and if so, whether we should require that discount rate plans be made available and advertised in the entirety of an interexchange telecommunications service provider's service area.  Y-xH73. ` ` Finally, as noted above, in the AT&T Reclassification proceeding, AT&T made voluntary commitments related to geographic rate averaging. Specifically, AT&T committed to file any new geographically specific tariffs that depart from its traditional approach to geographic averaging for interstate residential direct dial services on five  Y-business days' notice.Zy Y-ԍXxId., Appendix C, at  3.(#Z AT&T committed that such tariff transmittals will be clearly  Y-identified as affecting the provisions of the commitment.B* Y-ԍXxId.(#B AT&T committed that "[t]his will continue for three years unless the Commission adopts rules addressing this issue for all  Y|-carriers or there is a change in federal law addressing this issue."B| Y!-ԍXxId.(#B We tentatively conclude that, given the specific limitation of AT&T's commitment on this issue, upon adoption of the foregoing proposed rules relating to geographic rate averaging, AT&T would be subject to those adopted rules, and would not be bound to the specific commitments it made with respect to geographic rate averaging. We seek comment on this tentative conclusion. "'0*(( !"Ԍ X- B.xRate Integration  Y- xI74. ` ` As noted above, the 1996 Act also requires that the Commission adopt rules to require that providers of interstate, interexchange telecommunications services provide such services to their subscribers in each State at rates no higher than the rates charged to their  Y-subscribers in any other State (i.e., that rates be integrated).c Y-ԍXx1996 Act at  101 (adding  254(g)).(#c As with geographic rate averaging, the Commission has long maintained a rate integration policy for interexchange rates between the fortyeight contiguous states and various noncontiguous United States  YH-regions, including Alaska, Hawaii, Puerto Rico and the U.S. Virgin Islands.Hy Yr -ԍXxSee Establishment of Domestic CommunicationsSatellite Facilities by Non Y[ -Governmental Entities, Docket No. 16495, Second Report and Order, 35 FCC 2d 844  YD -(1972) (Domsat II); Memorandum Opinion and Order, 38 FCC 2d 665 (1972)  Y--(Domsat II Reconsideration), aff'd sub nom. Network Project v. FCC, 511 F.2d 786  Y-(D.C. Cir. 1975); Integration of Rates and Services for the Provision of Communications by Authorized Common Carriers Between the United States  Y-Mainland and the Offshore Points of Hawaii, Alaska, and Puerto Rico/Virgin Islands, File Nos. WPC649, 710, 838, File Nos. IPC10, 13, 14, Memorandum Opinion,  Y-Order and Authorization, 61 FCC 2d 380 (1976) (1976 Integration of Rates and  Y-Services Order); Memorandum Opinion and Order, 65 FCC 2d 324 (1977);  Y-Integration of Rates and Services for the Provision of Communications by Authorized Common Carriers Between the United States Mainland and the Offshore Points of  Y^-Hawaii, Alaska, and Puerto Rico/Virgin Islands, File No. WPC649 et al.,  YG-Memorandum Opinion and Order, 72 FCC 2d 715 (1979); Integration of Rates and Services for the Provision of Communications by Authorized Common Carriers Between the United States Mainland and the Offshore Points of Hawaii, Alaska, and  Y-Puerto Rico/Virgin Islands, CC Docket No. 831376, Final Recommended Decision, 9 FCC Rcd 2196 (1993); Memorandum and Opinion, 9 FCC Rcd 3023 (1994);  Y-Application of Alascom, Inc. AT&T Corporation and Pacific Telecom, Inc. For  Y-Transfer of Control of Alascom, Inc. to AT&T Corporation, File No. WPC7037 et  Y-al., Order and Authorization, 11 FCC Rcd 734 (1995).(#  Y - xJ75. ` ` The Commission established its rate integration policy in conjunction with the introduction of satellite technology in the domestic telecommunications market in 1972. In  Y -its Domsat II order, the Commission concluded that, because the cost of providing interexchange service over satellite facilities did not vary with distance, there was a sound economic basis to support the integration into the domestic rate pattern of communications services between noncontiguous U.S. states and territories and the fortyeight contiguous  Y-states.^^ Y&-ԍXxDomsat II, 35 FCC 2d at 85657.(#^ The Domsat II order required any carrier that provided domestic satellite service between the contiguous fortyeight states and various noncontiguous states and United States"y(0*(("  Y-territories to do so pursuant to a plan to integrate the carrier's rates and services.:v Yy-ԍXxId. at 857; see Domsat II Reconsideration, 38 FCC 2d at 692697; 1976 Integration  Yb-of Rates and Services Order, 61 FCC 2d at 385390; Application of GTE Corp. and Southern Pacific Co. for Consent to Transfer Control of Southern Pacific  Y4-Communications Company and Southern Pacific Satellite Company, File No. ENF831, Memorandum Opinion and Order, 94 FCC 2d 235, 259260 (1983) (obligating GTE Sprint to integrate its MainlandtoHawaii rates).(#: The  Y-Commission also specifically required AT&T to offer services at integrated rates.[ Y -ԍXxDomsat II, 35 FCC 2d at 858.(#[ In the  Y-1976 Integration of Rates and Services Order, the Commission restated its rate integration policy requiring that message toll telephone, private line, and specialized services of Alaska, Hawaii and Puerto Rico/Virgin Islands be integrated into the uniform mileage rate pattern  Y-applicable to the mainland.z Y-ԍx1976 Integration of Rates and Services Order, 61 FCC 2d at 383384.z The 1976 Integration of Rates and Services Order also noted that domestic satellite authorization to carriers serving these points was conditioned upon the submission of a specific and acceptable proposal for integration of rates and services subject  YH-to Commission approval.JHh  Ya-ԍXxId. at 383.(#J As with geographic rate averaging, we reaffirmed our  Y1-commitment to rate integration in our recent AT&T Reclassification Order.h1  Y-ԍXxAT&T Reclassification Order, at  110.(#h  Y -xK76. ` ` As required by the 1996 Act, and guided by the Conference Committee's  Y -statement to incorporate the policies contained in our 1976 Integration of Rates and Services  Y -Order,!v  YP-ԍXxJoint Explanatory Statement at 132. "The conferees intend the Commission's rules to require geographic rate averaging and rate integration, and to incorporate the policies contained in the Commission's proceeding entitled 'Integration of Rates and Services for the Provision of Communications by Authorized Common Carriers between the United States Mainland and the Offshore Points of Hawaii, Alaska and Puerto  Y-Rico/Virgin Islands' (61 FCC 2d 380 (1976))." Id.(#! we propose to adopt a rule requiring that "a provider of interstate interexchange telecommunications services shall provide such services to its subscribers in each State at rates no higher than the rates charged to its subscribers in any other State." We seek comment on this proposed rule.  Yb-xL77. ` ` We note that the Communications Act, as amended, defines the term "State"  YK-as including "the District of Columbia and the Territories and possessions."OK Y'-ԍXx47 U.S.C.  153(v).(#O Accordingly,"K)0*((*" the 1996 Act extends rate integration to U.S. Territories and possessions, such as Guam and the Northern Mariana Islands, that currently are not subject to the Commission's domestic  Y-rate integration policy.  YK-ԍXxWe note that currently pending before the Commission are three petitions to establish rulemakings to implement domestic rate integration policies for the Territory of Guam  Y-and the Commonwealth of the Northern Mariana Islands. See Governor's Office of the Territory of Guam Petition for Rulemaking to Integrate Rates, filed May 12, 1995, Public Notice, AAD 9584 (rel. June 16, 1995); JAMA Corporation Petition for Rulemaking to Implement Domestic Rate Integration Policies for Guam, filed May 1, 1995, Public Notice, AAD 9585 (rel. June 16, 1995); Commonwealth of the Northern Mariana Islands Petition for Rulemaking to Implement Domestic Rate Integration for the Commonwealth of the Northern Mariana Islands, filed June 7, 1995, Public Notice, AAD 9586 (rel. June 16, 1995). We believe these petitions would become moot when we adopt the rules implementing new Section 254(g).(# The U.S. Virgin Islands and Puerto Rico are the only territories or possessions subject to the Commission's domestic rate integration policy at the present time. We seek comment on appropriate mechanisms to implement rate integration for U.S. territories and possessions that currently are not subject to the Commission's domestic rate integration policies.  YH-xM78. ` ` We tentatively conclude, in light of our proposal in this Notice to forbear from requiring nondominant interexchange carriers to file tariffs, that it would not be in the public interest to attempt to enforce rate integration through the tariff process. Rather, we believe that we can ensure compliance with the proposed rate integration requirements by requiring providers of interstate, interexchange telecommunications services to file certifications stating that they are in compliance with their statutory rate integration obligations. Such a requirement would not impose a significant burden on such providers. Accordingly, we tentatively conclude that we should require providers of interstate, interexchange telecommunications services to file such certifications. We also tentatively conclude that we should rely on the complaint process under Section 208 to bring violations  Yb-to our attention.Lb  Y-ԍXx47 U.S.C.  208.(#L We seek comment on these tentative conclusions. Parties challenging these tentative conclusions should suggest possible alternative enforcement mechanisms.  Y-xN79. ` ` Finally, in the AT&T Reclassification proceeding, AT&T made voluntary commitments relating to service to and from the State of Alaska and other regions subject to  Y-our rate integration policy.D  Y#-ԍXxAT&T Reclassification Order, at  114, and Appendix C at  1.(#Ƃ Specifically, AT&T committed that it "will continue to comply with all conditions and obligations contained in the various Commission orders regarding rate integration between the contiguous fortyeight states and the states of Alaska, Hawaii, Puerto Rico and the Virgin Islands, until or unless those orders are superseded by Congressional or"*0*(("  Y-Commission action."Y Yy-ԍXxId., Appendix C at  1.(#Y We tentatively conclude that, given the specific limitation of AT&T's commitment on this issue, upon adoption of the foregoing proposed rule relating to rate integration, AT&T would be subject to that rule, and would not be bound to the specific commitment it made with respect to rate integration. We seek comment on this tentative conclusion. We note that this tentative conclusion does not apply to AT&T's separate commitment to "comply with all the conditions and obligations contained in the Commission orders associated with AT&T's purchase of Alascom, Inc." as that commitment is not limited  Y_-in duration.X_y Y -ԍXxId. at Appendix C  2.(#X  X1- #J:\POLICY\ALLIXC\GEOAVE.SEC# J:\POLICY\ALLIXC\PRICING  VII. PRICING ISSUES אTP  Y -xO80. ` ` Changes in the structure of the interexchange marketplace over the past decade have raised certain issues relating to the pricing of interexchange telecommunications  Y -services. In the AT&T Reclassification proceeding, a number of parties alleged that the interexchange market is characterized by oligopolistic price coordination, and that the reclassification of AT&T would lead to an increase in basic rates for domestic residential service. We address these issues in this section.  Xb- A.XxAllegations of Tacit Price Coordination (#  Y4-xP81.` ` In the AT&T Reclassification Order, we found inconclusive and conflicting evidence in the record regarding the existence of alleged tacit price coordination among  Y-interexchange carriers for basic residential services, or residential services generally.Y* Y-ԍXxId. at  8183. (#Y We concluded that, if there were tacit price coordination in the interexchange market, the problem was generic to the industry and would be better addressed by removing regulatory  Y-requirements that may have facilitated such conduct.F YM-ԍxId. at  83.F Our reclassification of AT&T as nondominant removed one such regulatory requirement the longer advance notice period applicable only to AT&T tariff filings. In addition, we believe that the 1996 Act provides the best solution to any problem of tacit price coordination, to the extent that it exists currently, by allowing for competitive entry in the interstate interexchange market by the  YN-facilitiesbased BOCs and others.jN Y$-ԍXxSee 1996 Act at  151 (adding  271).(#j Increasing the number of facilitiesbased carriers should make tacit price coordination more difficult. Moreover, we believe that the mandatory detariffing regime we propose in this Notice similarly will discourage price coordination by eliminating carriers' ability to ascertain their competitors' interstate rates and service" += 0*((%" offerings from publicly available tariffs filed with the Commission. We seek comment on these issues.  X- B.xResidential Services Rate Plans   Y-xQ82.` ` In order to alleviate concerns expressed in the AT&T Reclassification proceeding that rates for residential services would increase if AT&T were reclassified as nondominant, AT&T voluntarily committed, for a period of three years, to offer two optional calling plans designed to mitigate the impact of future increases in basic schedule or  Y1-residential rates.1 Y -ԍXxAT&T Reclassification Order, at  8485 (citing AT&T September 21, 1995 Ex Parte Letter, at 23).(#Ư The first plan is targeted to lowincome customers, and the second is targeted to lowvolume consumers, but is generally available to all residential customers.  Y -xR83.` ` With respect to lowincome customers, in our recent Notice of Proposed Rulemaking regarding implementation of the 1996 Act's universal service directives, we solicited comment "on whether and how we should encourage domestic interstate interexchange carriers to provide optional calling plans for lowincome consumers to promote  Y-the statutory [universal service] principles enumerated [in the 1996 Act]."b Y-ԍXxFederalState Joint Board on Universal Service, CC Docket No. 9645, Notice of Proposed Rulemaking and Order Establishing Joint Board, FCC 9693, at  55 (rel. March 8, 1996).(# We anticipate resolving this issue in the Universal Service proceeding, but because the service is interstate in nature, we retain concurrent jurisdiction.  X4- J:\POLICY\ALLIXC\PRICING J:\POLICY\ALLIXC\CPE.01  VIII. BUNDLING OF CUSTOMER PREMISES EQUIPMENT  T  Y-TPxS84.` ` In 1980, the Commission adopted a rule prohibiting common carriers from bundling the provision of customer premises equipment (CPE) with the provision of common  Y-carrier telecommunications services.v Yn-ԍXxSecond Computer Inquiry, 77 FCC 2d at 496. Section 64.702(e) of our rules provides: "Except as otherwise ordered by the Commission, after March 1, 1982, the carrier provision of customerpremises equipment used in conjunction with the interstate telecommunications network shall be separate and distinct from provision of common carrier communications services and not offered on a tariffed basis." 47 C.F.R.  64.702(e).(# Carriers previously offered CPE as part of a package  Y-of services to subscribers.m#  Y%-ԍxSee Second Computer Inquiry, 77 FCC 2d at 442. m Changes in the industry, in particular the advent of competitive CPE vendors, led the Commission to conclude that carriers' continued bundling of telecommunications services with CPE could force customers to purchase unwanted CPE in",0*((" order to obtain necessary transmission services, thus restricting customer choice and  Y-retarding the development of a competitive CPE market. Yb-ԍXxId. at 443 n.52 ("in regulated markets characterized by dominant firms [like the telecommunications industry], there may be an incentive . . . to use bundling as an anticompetitive marketing strategy, e.g., to crosssubsidize competitive by monopoly services, that restricts both consumer freedom of choice as well as the evolution of a competitive marketplace").(#ƫ It therefore required carriers to  Y-separate the provision of CPE from the provision of transmission services.M Y -ԍXxId. at 44647.(#M  Y-xT85.` ` The Commission recognized, however, that "[i]f the markets for components of [a] commodity bundle are workably competitive, bundling may present no major societal problems so long as the consumer is not deceived concerning the content and quality of the  Y_-bundle."Q_ Y-ԍXxId. at 443 n.52. (#Q It further acknowledged that some consumers may believe that bundled offerings  YH-can reduce transaction costs to customers.BH  Yx-ԍXxId.(#B Bundling can also enable market participants to  Y1-compete more effectively by offering attractive sales packages.10  Y-ԍXxSee Jefferson Parish Hospital District No. 2 v. Hyde, 466 U.S. 2, 1112 (1984)  Y-(Jefferson Parish Hospital) ("Buyers often find package sales attractive; a sellers's decision to offer such packages can merely be an attempt to compete effectively conduct that is entirely consistent with the Sherman Act").(#ƒ  Y -xU86.` ` Since the adoption of the rule prohibiting CPE bundling in 1980, significant changes have occurred in the markets for CPE and interstate longdistance services. The  Y -CPE market is now widely recognized to be fully competitive.=  Y"-ԍXxSee, e.g., Price Cap Performance Review for Local Exchange Carriers, CC Docket No. 941, First Report and Order, 10 FCC Rcd 8961, 9122 (1995) ("competition today is a fact in both the customer premises equipment and the longdistance  Y-market"); Procedures for Implementing the Detariffing of Customer Premises  Y -Equipment and Enhanced Services (Second Computer Inquiry), CC Docket No. 81893, Memorandum Opinion and Order, 8 FCC Rcd 3891, 3891 (1993) (removing the National Security and Emergency Preparedness CPE reporting requirement as unnecessary, in part, because "[t]he CPE market has been very competitive for a number of years and there are many suppliers available to provide CPE") (citations omitted).(#= In the AT&T  Y -Reclassification Order, we found that AT&T no longer possesses market power in the overall" -~0*((z "  Y-interstate, domestic, interexchange market.g Yy-ԍXxAT&T Reclassification Order, at  35.(#g Moreover, in the Interexchange Competition  Y-Proceeding, we concluded that the business services market was "substantially  Y-competitive."xy Y-ԍXxFirst Interexchange Competition Order, 6 FCC Rcd at 5887.(#x  Y-xV87.` ` The Supreme Court has stated that the essential characteristic of an illegal tying or bundling arrangement "lies in the seller's exploitation of its control over [one] product to force the buyer into the purchase of a [second] product that the buyer either did  Y_-not want at all or might have preferred to purchase elsewhere on different terms."k_* Y: -ԍXxJefferson Parish Hospital, 466 U.S. at 12. (#k Under the "leverage theory" of tying, "tying provides a mechanism whereby a firm with monopoly power in one market can use the leverage provided by this power to foreclose sales in, and  Y -thereby monopolize, a second market."  Y-ԍXxMichael D. Whinston, Tying, Foreclosure, and Exclusion, 80 Am. Econ. Rev. 837, 837 (1990).(#ƙ  Y -xW88.` ` Based on our earlier findings regarding competition in both the CPE and interstate, interexchange services markets, we tentatively conclude that it is unlikely that nondominant interexchange carriers can engage in the type of anticompetitive conduct that led  Y -the Commission to prohibit the bundling of CPE with the provision, inter alia, of interstate, interexchange services. We also tentatively conclude that allowing nondominant interexchange carriers to bundle CPE with interstate, interexchange services would promote competition by allowing such carriers to create attractive service/equipment packages for customers. Accordingly, we tentatively conclude that we should amend Section 64.702(e) of the Commission's rules to allow nondominant interexchange carriers to bundle CPE with interstate, interexchange services. We seek comment on these tentative conclusions.  Y-xX89.` ` Parties that believe we should amend Section 64.702(e) should also comment on whether we should require interexchange carriers offering bundled packages of CPE and interstate, interexchange services to continue to offer separately, unbundled interstate, interexchange services on a nondiscriminatory basis. We note that the U.S. Government has committed in the Uruguay Round Agreements of the General Agreement on Tariffs and Trade, to ensure, among other things, that "service suppliers" are permitted "to purchase or lease and attach terminal or other equipment which interfaces with the [public telecommun YN-ications transport] network and which is necessary to supply a supplier's service. . . ."Nu Yt%-ԍXxSee Uruguay Round Agreements Act of 1994, Pub. L. No. 103465, Section 801, 108 Stat. 4809 (1994) (to be codifed at 47 U.S.C.  309(j)(13)). "Service supplier" is defined to mean a supplier of any service in any sector except services supplied in the"F'0*((c'" exercise of governmental authority.(#Ɖ "N.y0*((\" We seek comment on whether this commitment implies that interexchange carriers should be required to offer separately, unbundled interstate, interexchange services on a nondiscriminatory basis if they are permitted to bundle CPE with the provision of interstate, interexchange services.  Y-xY90.` ` Parties that believe that we should not amend Section 64.702(e) as proposed should set forth specific reasons in support of their position. We also seek comment on the effect that the proposed amendment of Section 64.702(e) would have on our other policies or  YH-rules.y_Hy Yr -ԍXxWe believe that our tentative conclusions regarding CPE bundling are consistent with our nation's foreign trade policy that seeks to promote, in trade negotiations with other countries, the unbundling of telecommunications services and CPE in certain international markets where monopoly providers may exist in either the services or CPE market. As described above, our domestic CPE and interstate, domestic, interexchange markets are both subject to competition, thus we believe that the potential for anticompetitive bundling behavior is highly unlikely in the U.S. market.(#y Finally, we seek comment on whether and how the anticipated entry of local exchange carriers, in particular the BOCs, into the market for interstate, interexchange services should affect our analysis.  Y -xZ91.` ` We note that we intend to initiate a comprehensive proceeding to address payphone issues, and to implement the sections of the 1996 Act relating to the provision of  Y -payphone service.j  Y-ԍXxSee 1996 Act at  151 (adding  276).(#j In that proceeding, we intend to consider the issue of bundling of pay telephone equipment with underlying transmission capacity. Accordingly, any amendment to Section 64.702(e) of our rules adopted in this proceeding will not apply to payphone bundling.  XK- J:\POLICY\ALLIXC\CPE.01 J:\POLICY\ALLIXC\TARIFF 6 IX. OTHER ISSUES  T  Y-TPx[92. ` ` For reasons set forth above, we have tentatively concluded that we are required to forbear from requiring nondominant interexchange carriers to file tariffs, and  Y-that such detariffing should be mandatory. In the AT&T Reclassification proceeding, commenters raised certain issues regarding contract tariffs. We deferred consideration of those issues to this proceeding because we found those issues were unrelated to the determination of whether AT&T possessed market power. We note that these issues will largely be mooted if, as proposed above, we adopt a mandatory detariffing policy. We examine those and other tariffrelated issues here, however, because such issues will remain relevant if we determine not to forbear from requiring nondominant interexchange carriers to file tariffs. In addition, if we determine to adopt a policy of permissive detariffing, it is possible that some carriers will choose to continue to file tariffs, including contract tariffs. "7/Q 0*((#"Ԍ Y-ԙx\93. ` ` In the First Interexchange Competition Order, the Commission established its contract carriage regime under which interexchange carriers are permitted to offer services  Y-pursuant to individually negotiated contracts.6 YK-ԍXxFirst Interexchange Competition Order, 6 FCC Rcd at 58975903. Because AT&T was classified at that time as a dominant carrier, AT&T's contract rates were limited  Y-to services subject to further streamlining. Id. at 5897.(#6 The Commission further found that, as long as all contracts were made generally available to similarly situated customers under substantially similar circumstances, the offering of individuallynegotiated contracts for interexchange services under the contract carriage regime would comply with the  Yv-nondiscrimination provisions of the Communications Act.KvK Yr -ԍXxId. at 5903.(#K The Commission later found that the "contract carriage policy serves the public interest by enabling users to purchase services that match their needs in particular ways and by facilitating user and interexchange carrier planning by increasing the availability of longterm commitments and price  Y -protection."  Y-ԍXxFebruary 1995 Interexchange Reconsideration Order, 10 FCC Rcd at 4573.(#ƅ  Y -x]94.` ` The Title II statutory scheme permits carriers to make changes to their tariffs. Moreover, it is well established that, pursuant to the "filed rate doctrine," in a situation where a filed tariff rate differs from a rate set in a nontariffed carriercustomer contract, the  Y -carrier is required to assess the tariff rate.  Y-ԍXxSee Armour Packing Co. v. United States, 209 U.S. 56 (1908) (Armour Packing);  Y-American Broadcasting Cos., Inc. v. FCC, 643 F.2d 818 (D.C. Cir. 1980); see also  Y-Aero Trucking v. Regal Tube Co., 594 F.2d 619 (7th Cir. 1979), Farley Terminal  Y-Co., Inc. v. Atchison, T. & S.F. Ry., 522 F.2d 1095 (9th Cir. 1975). (# Consequently, if a carrier unilaterally changes a rate by filing a tariff revision, the newly filed rate becomes the applicable rate unless the revised rate is found to be unjust, unreasonable, or unlawful under the Communications  Yb-Act.b  Y,-ԍXxSee 47 U.S.C.  201(b); see also Maislin Industries, U.S., Inc. v. Primary Steel,  Y-Inc., 497 U.S. 116 (1990).(# "K00*(("Ԍ Y-x^95.` ` In the RCA Americom Decisions, v Yy-ԍXxRCA American Communications Inc. Revisions to Tariff F.C.C. Nos. 1 and 2, CC Docket No. 80766, Memorandum and Opinion, 84 FCC 2d 353 (1980);  YK-Memorandum and Opinion, 86 FCC 2d 1197 (1981); RCA American  Y4-Communications Inc. Revisions to Tariff F.C.C. Nos. 1 and 2, Transmittal No. 273,  Y-Memorandum and Opinion, 2 FCC Rcd 236 (1987) (collectively RCA Americom  Y-Decisions).(#  the Commission recognized that a dominant carrier's proposal "to modify extensively a long term service tariff may present significant issues of reasonableness under Section 201(b) that are not ordinarily raised in  Y-other tariff filings." Yr -ԍXxRCA American Communications Inc. Revisions to Tariff F.C.C. Nos. 1 and 2, Memorandum and Opinion, 84 FCC 2d at 358; Memorandum and Opinion, 86 FCC 2d at 1201.(# Accordingly, the Commission held that a dominant carrier's unilateral tariff revisions that alter material terms and conditions of a longterm service tariff will be considered reasonable only if the carrier can make a showing of "substantial cause" for the  Yv-revision.v  Y-ԍXx86 FCC 2d at 12011202; see First Interexchange Competition Order, 6 FCC Rcd at 5898 n.155.(#Ơ The Commission has stated that the substantial cause test would apply to  Y_-unilateral changes by dominant carriers to longterm contract tariffs.n_#  Y3-ԍXxRCA Americom Decisions, 86 FCC 2d at 12011202.(#n In the February 1995  YH-Interexchange Reconsideration Order,H Y-ԍXxFebruary 1995 Interexchange Reconsideration Order, 10 FCC Rcd at 457374.(#ƈ the Commission indicated that the substantial cause  Y1-test would also apply to unilateral tariff modifications made by nondominant carriers.H1 Yg-ԍxId. at 4574 n.51.H  Y -x_96.` ` In the February 1995 Interexchange Reconsideration Order, we indicated that commercial contract law was highly relevant in assessing the reasonableness of a unilateral tariff revision, but we declined to declare that contract law principles constituted the sole and  Y -dispositive basis for a substantial cause showing.L 6 Y -ԍXxId. at 4574. (#L We seek comment on whether commercial contract law principles should be the sole criterion in applying the substantial cause test. If not, parties should suggest other factors that the Commission should consider in evaluating whether a carrier has shown substantial cause for unilaterally changing a contract tariff. We also seek comment on whether the substantial cause test should apply only to the carrier and the customer with whom it negotiated the original contract, or whether it also should apply to subsequent customers who take service under the contract"410*(()"  Y-tariff.H Yy-ԍXxWe note that, in the February 1995 Interexchange Reconsideration Order, we stated that in applying the substantial cause test, we would consider whether the original  YK-tariff terms were the product of negotiation and mutual agreement. Id. (#H Commenters arguing that the substantial cause test should apply only to the initial customer, should explain how this position is consistent with the nondiscrimination requirements of Section 202 of the Communications Act. In addition, in cases in which the Commission determines that a carrier has established substantial cause for a unilateral change to a contract tariff, we seek comment on whether the modified contract tariff should be treated as a new contract tariff and should be made available to other similarly situated customers.  YH-x`97.` ` The MobileSierra doctrine established a strict "public interest" standard that a carrier must meet before a regulatory agency can accept a superseding tariff that modifies the  Y -terms of a negotiated carriertocarrier contract. K Y-ԍXxSee United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956)  Y-(Mobile); FPC v. Sierra Pacific Power Co., 350 U.S. 348 (1956) (Sierra).(# In Bell Telephone Company of  Y -Pennsylvania v. FCC,  Y-ԍXx503 F.2d 1250 (3rd Cir. 1974), cert. denied, 422 U.S. 1026 (1975), rehearing  Y-denied, 423 U.S. 886 (1975) (Bell Telephone).(# the U.S. Court of Appeals for the Third Circuit, applying the  Y -MobileSierra doctrine, held that a common carrier could not abrogate a contract with  Y -another carrier simply by filing superseding tariffs.J   Y-ԍXxId. at 1281. The court found that Sections 201(b) and 211(a) of the Communications Act clearly contemplate that carriers can enter into contracts for services with other  Y-carriers, and that such contracts would then be filed with the Commission. Id. at  Y-127778. The court concluded, therefore, that the MobileSierra analysis applies to  Y-such carriertocarrier contracts. Id. at 127980. Similarly, in MCI  Y-Telecommunications Corp. v. FCC, the court applied the MobileSierra doctrine and reversed a Commission decision accepting a revised AT&T tariff on the ground that the revised tariff violated an underlying settlement agreement. The court stated: "A contract, such as the Agreement here, may refer to rates included in a tariff and yet  Y6-continue to enjoy protection under SierraMobile. . . . Contracts and tariffs are not always mutually exclusive, but may be used in concert to define the relationship of  Y!-parties." MCI Telecommunications Corp. v. FCC, 665 F.2d 1300, 1302 (D.C. Cir.  Y!-1981), appealed after remand, RCA Global Communications, Inc. v. FCC, 717 F.2d 1429 (D.C. Cir. 1983).(#J We seek comment on the relationship  Y -between the substantial cause test and the MobileSierra doctrine in cases where a carrier attempts through a tariff revision to abrogate an underlying carriertocarrier contract.  Yy-xa98.` ` In the AT&T Reclassification proceeding, resellers raised various issues concerning contract tariffs. Several commenters argued that resellers and other large"b20*((" customers need protection from the ability of carriers to revise unilaterally contractbased  Y-service arrangements.o Yb-ԍXxAT&T Reclassification Order, at  11628.(#o AT&T made certain transitional voluntary commitments, for a  Y-period of twelve months, in order to alleviate those concerns on an interim basis.Hy Y-ԍXxAT&T agreed to continue its practice of grandfathering existing and subscribed customers when it introduces changes to a term plan. In exceptional cases where grandfathering is not appropriate, AT&T committed, for a period of one year, to file tariff revisions to term plans on one day's notice if affected customers consent to the change, six days' notice if affected customers do not consent to the change following five days' meaningful advance notice of the tariff filing, and fourteen days notice for changes involving discontinuance with or without liability, deposits and advance  Y[ -payments, or transfer or assignment of service. Id. at  134, and Appendix C at  6.(# Commenters proposed, among other things, that the Commission require carriers to: give customers advance notice of any tariff filing that materially alters negotiated agreements; obtain the consent of all affected customers before making such a filing; treat the lack of  Yv-consent to a proposed tariff change as prima facie evidence of its unlawfulness; allow any nonconsenting customer either to terminate its service arrangement without liability or to enforce the unchanged term; and provide a reasonable period of rate stability to permit  Y1-service migration if the customer chooses to terminate its service agreement.V1  Yk-ԍXxId. at  11628.(#V We seek comment on the above proposals. In addition, we tentatively conclude that AT&T should remain subject to its voluntary commitments concerning unilateral changes to contract tariffs, regardless of what action we take in this proceeding with respect to the foregoing  Y -proposals. :  Y-ԍXxAs noted, AT&T made these commitments for a period of twelve months. Id. at  134, and Appendix C at  6.(#Ư We seek comment on this tentative conclusion.  Y -xb99.` ` Parties in the AT&T Reclassification proceeding also argued that the ability of nondominant carriers to file unilateral tariff modifications on one day's notice effectively  Yy-precludes customers from challenging such revisions before they become effective.Jy Y-ԍXxId. at 119.(#J We seek comment on whether we should require a longer notice period for tariff filings that materially revise longterm service or contract tariffs, and if so, what notice period should be established. We also seek comment on whether a carrier should be required to identify clearly tariff filings that unilaterally alter existing longterm service or contract tariffs.  Y-xc100. ` ` Resellers have also complained that ordering procedures are used to prevent them from subscribing to contract tariffs. Accordingly, we seek comment on whether  Y-specific ordering procedures should be allowed to be incorporated in contract tariffs (i.e.,"30*((" when is an order placed, what documents must a customer file, when must a customer identify locations that it will include in the plan). Resellers also complain that carriers use narrowly circumscribed customer descriptions in order to prevent resellers from taking service under contractbased tariffs. We seek comment on what is an appropriate level of specificity for customer descriptions that are used by carriers to determine eligibility under a contract tariff. We also seek comment on whether there are certain terms that should be  Yv-prohibited as unreasonable (e.g., extremely large upfront deposits from the customer).  YH-xd101. ` ` Finally, in the AT&T Reclassification proceeding, we indicated that we would in the future "initiate a new proceeding to identify specific areas of the interstate, domestic, interexchange market that may raise policy concerns, and if there are any, to seek comment  Y -on possible remedies."h  Y| -ԍXxAT&T Reclassification Order, at  168.(#h Further, we noted that we would monitor closely the areas in  Y -which AT&T had made voluntary commitmentsY y Y-ԍXxSee id., Appendix C.(#Y in order to protect consumers.O * Y-ԍXxId. at  168.(#O Should parties wish to raise issues in this proceeding with regard to these issues, we encourage parties to comment.  Y- J:\POLICY\ALLIXC\TARIFF !J:\POLICY\ALLIXC\PROCEDUR!  X. PROCEDURAL ISSUES   Xc- A. Ex Parte Presentations   Y5-xe102. ` ` This is a nonrestricted noticeandcomment rulemaking proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period, provided that they  Y-are disclosed as provided in the Commission's rules. See generally 47 C.F.R.  1.1202, 1.1203, 1.1206.  X- B. Initial Regulatory Flexibility Analysis   Y-xf103.` ` Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C.  601612, the Commission's Initial Regulatory Flexibility Analysis with respect to the Notice of Proposed Rulemaking is as follows:  Y8-xg104.` ` Reason for Action: The Commission is issuing this Notice of Proposed Rulemaking to review our regulatory regime for interstate, domestic, interexchange telecommunications services, and to implement certain provisions of the 1996 Act.  Y-xh105.` ` Objectives: The objective of the Notice of Proposed Rulemaking is to provide an opportunity for public comment and to provide a record for a Commission decision on the issues stated above."!40*((@)"Ԍ Y-ԙxi106.` ` Legal basis: The Notice of Proposed Rulemaking is adopted pursuant to Sections 1, 2, 4, 201205, 215, 218 and 220 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 152, 154, 201205, 215, 218 and 220.  Y-xj107.` ` Description, potential impact, and number of small entities affected: Any rule changes that might occur as a result of this proceeding could impact entities which are small business entities, as defined in Section 601(3) of the Regulatory Flexibility Act. After evaluating the comments in this proceeding, the Commission will further examine the impact of any rule changes on small entities and set forth findings in the Final Regulatory Flexibility Analysis. The Secretary shall send a copy of this Notice of Proposed Rulemaking to the Chief Counsel for Advocacy of the Small Business Administration in accordance with Section 603(a) of the Regulatory Flexibility Act, Pub. L. No. 96354, 94 Stat. 1164, 5 U.S.C.   Y -601, et seq. (1981).  Y -xk108.` ` Reporting, recordkeeping and other compliance requirement: The proposed rules would require nondominant interexchange carriers to retain business records containing price and service information regarding their interstate, domestic, interexchange offerings. The proposed rules also would require providers of interexchange services to certify their compliance with their statutory geographic rate averaging obligations, and providers of interstate, interexchange services to certify their compliance with their statutory rate integration obligations.  Y-xl109.` ` Federal rules which overlap, duplicate or conflict with the Commission's  Y-proposal: None.  Y-xm110.` ` Any significant alternatives minimizing impact on small entities and consistent  Y-with stated objectives: The Notice of Proposed Rulemaking solicits comments on alternatives.  Ye-xn111.` ` Comments are solicited: Written comments are requested on this Initial Regulatory Flexibility Analysis. These comments must be filed in accordance with the same filing deadlines set for comments on the other issues (other than those in Sections IV, V, and VI) in this Notice of Proposed Rulemaking but they must have a separate and distinct heading designating them as responses to the Regulatory Flexibility Analysis. The Secretary shall send a copy of the Notice to the Chief Counsel for Advocacy of the Small Business Administration in accordance with Section 603(a) of the Regulatory Flexibility Act, 5 U.S.C.  Y - 601, et seq.  X"- C. Initial Paperwork Reduction Act of 1995 Analysis   Yh$-xo112.` ` This Notice contains either a proposed or modified information collection. As part of its continuing effort to reduce paperwork burdens, we invite the general public and the Office of Management and Budget (OMB) to take this opportunity to comment on the information collections contained in this Notice, as required by the Paperwork Reduction Act"#'50*((P(" of 1995, Pub. L. No. 10413. Public and agency comments are due April 19, 1996; OMB comments are due 60 days from date of publication of this Notice in the Federal Register. Comments should address: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology.  X - D. Comment Filing Procedures  Y -xp113.` ` Pursuant to applicable procedures set forth in Sections 1.415 and 1.419 of the Commission's rules, 47 C.F.R.  1.415, 1.419, interested parties may file comments on Sections IV, V, and VI, on or before April 19, 1996, and reply comments on Sections IV, V, and VI on or before May 3, 1996. Interested parties may file comments on all other sections of this Notice on or before April 25, 1996, and reply comments on or before May 24, 1996.  YK-xq114.` ` To file formally in this proceeding, parties must file an original and six copies of all comments, reply comments, and supporting comments. Parties wanting each Commissioner to receive a personal copy of their comments, must file an original and eleven copies. Comments and reply comments should be sent to Office of the Secretary, Federal Communications Commission, 1919 M Street, N.W., Room 222, Washington, D.C. 20554, with a copy to Janice Myles of the Common Carrier Bureau, 1919 M Street, N.W., Room 544, Washington, D.C. 20554. Parties should also file one copy of any documents filed in this docket with the Commission's copy contractor, International Transcription Services, Inc., 2100 M Street, N.W., Suite 140, Washington, D.C. 20037. Comments and reply comments will be available for public inspection during regular business hours in the FCC Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C. 20554.  Y7-xr115.` ` In order to facilitate review of comments and reply comments, both by parties and by Commission staff, we require that comments submitted on Sections IV, V, and VI, be no longer than 45 pages and reply comments on those sections be no longer than 25 pages. We require that comments on the remaining sections of this Notice be no longer than 45 pages and reply comments on the remaining sections be no longer than 25 pages.  Y!-xs116.` ` Comments and reply comments on all sections of this Notice must include a  Y"-short and concise summary of the substantive arguments raised in the pleading." Y%-ԍXxComments and reply comments must also comply with Section 1.49 and all other  Y%-applicable sections of the Commissions Rules. See 47 C.F.R.  1.49. However, we require here that a summary be included with all comments and reply comments,"&0*((&" regardless of length. The summary may be paginated separately from the rest of the  Yy-pleading (e.g., as "i, ii"). See 47 C.F.R.  1.49.(#""6b0*((#"Ԍ Y-ԙxt117.` ` Parties are also asked to submit comments and reply comments on diskette. Such diskette submissions would be in addition to and not a substitute for the formal filing requirements addressed above. Parties submitting diskettes should submit them to Janice Myles of the Common Carrier Bureau, 1919 M Street, N.W., Room 544, Washington, D.C. 20554. Such a submission should be on a 3.5 inch diskette formatted in an IBM compatible form using MS DOS 5.0 and WordPerfect 5.1 software. The diskette should be submitted in "read only" mode. The diskette should be clearly labelled with the party's name, proceeding, type of pleading (comment or reply comments) and date of submission. The diskette should be accompanied by a cover letter.  Y -xu118.` ` Written comments by the public on the proposed and/or modified information collections are due April 19, 1996. Written comments must be submitted by the Office of Management and Budget (OMB) on the proposed and/or modified information collections on or before 60 days after date of publication in the Federal Register. In addition to filing comments with the Secretary, a copy of any comments on the information collections contained herein should be submitted to Dorothy Conway, Federal Communications Commission, Room 234, 1919 M Street, N.W., Washington, DC 20554, or via the Internet to dconway@fcc.gov and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 17th Street, N.W., Washington, DC 20503 or via the Internet to fain_t@al.eop.gov.  X4- E. Ordering Clauses   Y-xv119.` ` Accordingly, IT IS ORDERED that pursuant to Sections 1, 4, 10, 201205, 214(e), 215, 218, 220 and 254 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154, 201205, 214(e), 215, 218 and 220 a NOTICE OF PROPOSED RULEMAKING is hereby ADOPTED.  Y-xw120.` ` IT IS FURTHER ORDERED that, the Secretary shall send a copy of this NOTICE OF PROPOSED RULEMAKING, including the regulatory flexibility certification, to the Chief Counsel for Advocacy of the Small Business Administration, in accordance with  YN-paragraph 603(a) of the Regulatory Flexibility Act, 5 U.S.C.  601 et seq. (1981). x` `  FEDERAL COMMUNICATIONS COMMISSION  Y-x` `  William F. Catonhpp x` `  Acting Secretary !J:\POLICY\ALLIXC\PROCEDUR!