$/ Part 61, 64 & 69 /$ Before the FEDERAL COMMUNICATIONS COMMISSION FCC 94-118 Washington, D.C. 20554 In the Matter of ) ) Expanded Interconnection with ) CC Docket No. 91-141 Local Telephone Company Facilities ) Transport Phase II THIRD REPORT AND ORDER Adopted: May 19, 1994 Released: May 27, 1994 By the Commission: Commissioner Barrett issuing a statement. TABLE OF CONTENTS Paragraph I. INTRODUCTION 1 II. BACKGROUND 4 III. REQUIREMENT TO PROVIDE SIGNALLING INFORMATION 7 A. Notice 7 B. Positions of the Parties 9 1. General Benefits and Costs 9 2. Technical Requirements and Network Modifications 14 3. Billing 20 C. Discussion 24 IV. COLLOCATION 32 V. PRICING ISSUES 36 A. LEC Charges for Signalling Services 36 1. Notice and Background 36 2. Positions of the Parties 37 3. Discussion 43 B. Recovery of Support Flows 47 C. ONA Framework 51 VI. TARIFFING AND IMPLEMENTATION 56 VII. LEC PRICING FLEXIBILITY 58 VIII. OTHER ISSUES 65 A. Reciprocity 65 B. Jurisdictional Measurement and Reporting 67 C. Separations Issues 72 IX. CONCLUSION 75 X. REGULATORY FLEXIBILITY ACT 76 XI. ORDERING CLAUSES 77 I. INTRODUCTION 1. In this order, we require Tier 1 local exchange carriers (LECs) (except members of the National Exchange Carrier Association (NECA)) to provide to interested third parties, including competitive access providers (CAPs), interexchange carriers, (IXCs), and end users, signalling information necessary to provide tandem switching. These parties will thus, for the first time, be able to carry traffic of multiple IXCs from LEC end offices to their own tandems, switch traffic at that point, and deliver the traffic to the appropriate IXC. 2. This measure represents another step in a series of efforts to remove barriers to competition in interstate access services. Our earlier orders opened the door to competition in special access and switched transport transmission services. Interconnectors, however, had to rely on LECs to perform the switching functions necessary to provide switched transport. The steps we now take will enable interconnectors, as well as other parties, to provide tandem switching functions for switched transport services. Thus, these measures will open the door to third parties to provide competitive tandem-switching services. By further reducing barriers to competition in switched access services, our actions will benefit all users of tandem switching, especially small IXCs that tend to rely heavily on tandem-switched transport, who will benefit from more competitively priced tandem switching services. Our actions also should promote more efficient use and deployment of the country's telecommunications networks, encourage technological innovation, and exert downward pressure on access charges and long-distance rates, all of which should contribute to economic growth and the creation of new job opportunities. In addition, these measures should increase access to diverse facilities, which could improve network reliability. 3. As discussed in more detail below, we require Tier 1 LECs (except NECA members) to provide signalling information necessary for tandem switching from LEC equal access end offices to any interested third party (hereinafter sometimes referred to as "tandem switching providers" or "TSPs"). In end offices in which common channel signalling (CCS or SS7) is available, TSPs shall have the option of receiving signalling information via SS7 or multi-frequency (MF) signalling. The provision of this information will be treated as a new service under our price caps regime, and Tier 1 LECs must file tariff amendments to reflect the availability of signalling information from LEC equal access end offices within ninety days of publication of this order in the Federal Register. Based on the record and in light of our prior decisions on pricing flexibility in the Switched Transport Expanded Interconnection Order and in the Transport proceeding, we do not grant LECs additional pricing flexibility in this order. We also find that the transport interconnection charge is sufficient to protect support flows potentially affected by the provision of signalling information. II. BACKGROUND 4. The Commission has taken several initiatives to increase competition in the long-distance access market. First, in 1992, in the Special Access Expanded Interconnection Order, we required Tier 1 LECs, except NECA pool members, to provide expanded interconnection for interstate special access to all interested parties. In 1993, we adopted the Switched Transport Expanded Interconnection Order, in which we required LECs providing expanded interconnection for special access to provide expanded interconnection for switched transport service as well. In that order, we opened the opportunity for interconnectors to provide alternative transmission services to LEC-provided direct-trunked transport and entrance facilities by collocating transmission facilities in LEC end offices, tandems, serving wire centers (SWCs), and certain remote nodes. As a result of those two actions, interconnectors now are able to provide special access and switched transport transmission services in competition with the LECs. 5. Only LECs, however, currently can provide tandem switching functions. Third parties cannot now provide such functions because they generally do not have access to the signalling information necessary to switch and route traffic to IXCs. Thus, virtually all tandem-switched transport currently must be routed through LEC tandems and switched by the LECs at that point; interconnectors can provide only the link between the LEC tandem and the IXC point-of-presence (POP). 6. In a Second Notice of Proposed Rulemaking (Notice), which is the subject of this proceeding, we proposed to broaden the scope of our access initiatives to address this limitation. Specifically, we proposed to require LECs to provide other parties access to LEC signalling information to enable such parties to offer tandem switching functions. Under this proposal, interconnectors would be able to offer tandem-switched transport, using their own tandems, in competition with the LECs. In addition, third parties, such as IXCs, could obtain economies by aggregating their traffic from end offices on a single direct trunk, routing that traffic to a third-party tandem, and switching it at that point. We address this proposal below. III. REQUIREMENT TO PROVIDE SIGNALLING INFORMATION A. Notice 7. In the Notice, we proposed to require LECs to provide third parties with access to the signalling features and functions within LEC networks necessary to create switched access networks that compete with the LECs. We tentatively concluded that the public interest benefits of this proposal would be substantial and would outweigh any potential detriments. We noted that the proposal would provide greater service choices for telecommunications users, especially small IXCs, heighten incentives for efficiency, including efficiency in aggregating interexchange traffic, accelerate technological innovation, and lower rates for switched access services. We stated further that our proposal should help ensure that the pricing relationships between tandem-switched and direct-trunked transport are based on market realities, which should reduce or perhaps eliminate the need to rely on regulatory safeguards. We also noted that because interconnectors or their customers would pay the transport interconnection charge, our measures should not impose significant additional pressure on support flows reflected in LEC rates. We asked for comment on our tentative conclusions and on whether third-party access to LEC signalling information would affect public switched network reliability. 8. The Notice proposed that third parties receive access to MF and SS7 signalling from both LEC end offices and tandem switches. Although the Notice did not detail how such arrangements would work, we contemplated that TSPs would use either their own collocated facilities or LEC facilities to carry traffic from the LEC end office to their own tandems. We also contemplated that if a TSP sought interconnection at the LEC tandem, rather than the end office, the LEC would provide tandem- switched transport for the originating traffic from its end office to its tandem. From there, either the interconnector (if collocated) or the LEC (if the TSP were not collocated) would transport the traffic to the TSP tandem. In either case, the TSP would switch the traffic at its tandem and transport it to the appropriate IXC over its own direct-routed facilities. B. Positions of the Parties 1. General Benefits and Costs 9. CAPs, IXCs, and users applaud our proposal to require LECs to provide access to LEC signalling information. These parties generally base their support on some or all of the benefits identified in the Notice. MFS and CompTel contend that competitive tandem switching would allow interconnectors to serve lower-volume transport routes economically, to the benefit of small IXCs, their customers, and, according to MFS, residents of rural areas. Similarly, ALTS, ITN, and GSA assert that the proposal would extend to a larger, more diverse universe of users the benefits of increased competition, including increased choice, improved technology, and lower rates. ALTS also contends that by enlarging the compass of the market in which competitive service may be offered, conditions conducive to increased investment and new market entry may be established. Citing similar benefits, AT&T asserts that access to LEC signalling information used for call set-up functions is indispensable to providing switched transport by interconnectors. Likewise, Prodigy maintains that absent access to signalling data, interconnectors will be "consigned to second class status" and that the proposal is valuable to information service providers like Prodigy with national networks, which can utilize CAPs to concentrate their traffic into local nodes. In addition, Ad Hoc, MCI, and ALTS argue that interconnector access to signalling information will yield greater route diversity and network redundancy. Finally, Time Warner claims that access to LEC signalling information will facilitate its development of the world's first commercial "Full Service Network," which it describes as an electronic superhighway with switched, broadband, analog, and digital network platforms capable of supporting a wide range of entertainment, educational and telecommunications services. 10. LEC positions on the signalling proposal vary. Some generally support it; some flatly oppose it. Others fall somewhere in between. In support, Ameritech argues that interconnector access to carrier signalling information will widen competitive opportunities for alternative providers of switched transport service and thereby create a more comprehensive form of switched transport competition. Ameritech asserts that this measure is consistent with its comprehensive proposal to unbundle fully its network. Rochester delineates the pro-competitive benefits of making signalling information available to third parties and states that it may do so prior to a Commission mandate. GTE agrees that promoting the availability of competitive tandem-switched services "is a worthwhile goal so long as a reasonable balance is maintained between the costs and benefits" involved. GTE maintains, however, that providing signalling information to interconnectors should not be viewed as a prerequisite for effective market pressure on LEC tandem-switched services. It asserts that a number of close substitutes for such services already exist. 11. NYNEX and United urge the Commission to proceed cautiously. NYNEX proposes various methods by which access to LEC signalling information by interconnectors could be accomplished, while urging us to study carefully the technical limitations of each. United states that it does not object to the concept that LEC signalling may be passed to interconnectors, but maintains that the benefits of competitive tandem switching may not outweigh the costs. United alleges that providing interconnectors signalling information will require potentially expensive switching and billing modifications, which could increase cost to customers and delay call processing. 12. USTA alleges that the technical issues are formidable, demand is lacking, significant investment will be required, and competitors are unwilling to pay for the signalling information. For these reasons, USTA encourages the Commission to "move forward only when it can document a clear net benefit that will be equitably available . . . and that will be sufficient in magnitude to offset the costs." Southwestern Bell opposes the signalling proposal, unless "all of the unlawful and detrimental" aspects of the Special Access and Switched Transport Expanded Interconnection Orders are rectified, LECs are granted sufficient cost recovery and increased pricing flexibility, and certain other requirements are satisfied. 13. Bell Atlantic, Pacific, and U S West argue that LECs should not be required to develop and deploy unbundled tandem signalling because the four conditions precedent to offering Basic Service Elements (BSEs) -- technical feasibility, economic feasibility, expected market demand, and utility -- have not been satisfied. Noting assertions by WilTel and CompTel that competitive tandems will rarely be deployed, Pacific and U S West argue that the parties have not demonstrated the utility of signalling services, or the demand for those services. Indeed, U S West characterizes our proposal as a "theoretical exercise" and claims that parties requesting signalling unbundling do so not because they intend to use such information, but rather to provide some kind of "theoretical check" on LEC pricing policies and practices. Pacific also claims that the tandem switching proposal would impede broader network efficiency. 2. Technical Requirements and Network Modifications 14. The record identifies four types of signalling information used to provide switched transport: (1) the Carrier Identification Code (CIC), which identifies the caller's selected IXC; (2) the OZZ, which indicates the specific IXC trunk group that is to carry the call; (3) the Automatic Number Identification (ANI), which identifies the billed number; and (4) the Called Number Identification (CNI), which identifies the called telephone number. Currently, LECs transmit ANI and CNI to their access customers on originating Feature Group D trunks from LEC end offices and tandems. They do not, however, transmit the CIC and OZZ codes to third parties because IXCs do not need this information to route and bill calls. Thus, these latter codes are dropped by the LECs from the signalling data stream after trunk selection has taken place. In the case of direct-trunked traffic, the CIC and OZZ codes are dropped at the originating end office; in the case of tandem-switched traffic, they are dropped at the tandem. Because the CIC and OZZ codes are needed for tandem switching and are not currently provided to third parties, these data are the focus of this proceeding. 15. Most parties agree that it would be relatively easy for LECs to provide third parties with the CIC and OZZ codes from LEC end offices via MF or SS7 signalling. Several commenters claim that only a change in end office routing tables would be necessary. They maintain that LECs would simply have to perform end office translations that have the effect of treating a third- party tandem as though it were a LEC tandem. Parties addressing the cost of such a change maintain that it would be minimal and equivalent to the cost of conventional routing table changes that LECs make on a regular basis. Some parties, however, contend, that because industry standards do not contemplate transmission of CIC and OZZ codes over Feature Group D, the proposal would require action by Committee T.1 of the Exchange Carrier Standards Association. MFS argues that since the costs are minor, LECs should be required to provide the CIC and OZZ from end offices within a reasonably short time. 16. Most parties also agree that providing signalling data at LEC tandems raises more difficult issues. They claim that unlike the end office, which transmits CIC and OZZ codes to LEC tandems, LEC tandems need not transmit CIC and OZZ codes to any point inside or outside the LEC network. Consequently, they argue, because LEC tandems have not been equipped with the capability of transmitting these data, this information automatically "drops off" the data stream at the LEC tandem. LECs generally agree that if they modified their tandem software, they could provide or "regenerate" the CIC and OZZ and transmit it to third-party tandems. Commenters' cost and timing estimates, however, vary considerably. For example, NYNEX claims that software changes would cost at least $1 million and take a minimum of two years to complete, while Pacific estimates they would cost $15-25 million and take two to four years to complete. Southwestern Bell estimates that software upgrades and trunk conversion costs would be $12.3 million. 17. Some LECs question whether these changes are warranted. They note that interconnectors can already collocate at LEC tandems and route traffic from those tandems to their own tandems provided that they use separate trunk groups for each IXC. They question whether the drawbacks of using separate trunk groups warrant the costs of changing tandem software. Several LECs also question whether such two-tandem architectures are really feasible. They argue that because interconnectors would have to purchase LEC tandem-switched transport in order to receive calls that are routed through a LEC tandem, interconnectors could not offer a viable tandem-switched service using this architecture. In addition, they contend, because calls would have to pass through two tandems, calls would be delayed. LECs also note that because interconnectors would have to purchase LEC tandem-switched transport to receive calls from a LEC tandem, this architecture would not increase competition for LEC tandem-switched services. At the same time, LECs acknowledge that interconnectors may require the ability to receive signalling information from LEC tandems in order to provide tandem-switched 800 service. 18. In reply, MFS denies that using separate trunks for each IXC is an adequate substitute for switching information. It asserts that while it would primarily rely on signalling information from LEC end offices, the availability of such information from tandems as well "could provide a useful adjunct to other forms of interconnection" to assure its ability to originate and terminate traffic ubiquitously. Nevertheless, acknowledging that these modifications may be more extensive and expensive than end office changes, MFS claims that signalling information should be offered at LEC tandems only upon receipt of a bona fide request, and sufficient time should be allowed for development of the requisite software. ALTS maintains that availability of signalling information from LEC tandems would allow interconnectors to route traffic from fewer end offices, and require less construction of links. 19. A number of parties raise questions about the provision of signalling information via SS7 from LEC end offices and tandems. Several LECs argue that LECs should not be required to provide SS7 interconnection at their end offices and tandems, but rather, at their signalling transfer points (STPs). They argue that only an STP has the capability to examine an SS7 signal to ensure that the signal is from an authorized source and that the SS7 messages conform to appropriate protocols. They assert that SS7 signals that are not subjected to these screening functions are more likely to cause network failures. Therefore, they argue, if interconnectors can send messages directly to a LEC end office or tandem, LECs would have to recreate, in effect, their SS7 networks to equip end offices and tandems with the screening capabilities now performed by STPs. This, the LECs argue, would be enormously costly. LECs also argue that because STPs are capable of handling large volumes of traffic, it is more efficient to route SS7 signals through a few centralized STPs, rather than to install STP capabilities in every LEC switching office. AT&T asserts that to facilitate use of CCS signalling by interconnectors, such signalling must be made available at LEC STPs. AT&T argues that it would be completely infeasible for interconnectors to build SS7 facilities to each LEC end office and that LECs should therefore be required to make it available at STPs as well as tandems and end offices. In reply, ALTS agrees that interconnectors must have access to LEC STPs, but asserts that LECs should not be permitted "to artificially constrain the locations at which the features and functions are made available." 3. Billing 20. Some LECs argue that use of interconnector tandems raises issues with respect to LEC billing of originating and terminating switched access charges. LECs explain that originating usage normally is recorded at the originating end office upon receipt by the end office switch of trunk seizure acknowledgment from the IXC. LECs assert that if interconnectors provide tandem-switched transport, originating usage recording should begin when the interconnector's tandem receives the call, rather than when the IXC switch receives the call. They also argue that the interconnector's tandem must be equipped to send a signal to the originating LEC indicating that the call has been received so that originating billing can begin. LECs state that unless the interconnector tandem provides this signal, it would be impossible for the originating LEC to bill the appropriate usage sensitive charges. LECs also claim that where an interconnector purchases LEC transport from a LEC end office to an interconnector's tandem switch, LECs would have to modify their billing procedures to charge that interconnector for the LEC-provided transport. They assert that current billing system parameters bill all calls with tandem signalling at tandem-switched transport rates. 21. Terminating traffic, according to the LECs, poses more difficult billing problems. LECs assert that terminating billing for switched access traffic is recorded in the first LEC facility that receives the traffic -- which in the case of tandem- switched transport, is the LEC tandem. LECs maintain that their end offices cannot record billing information for terminating tandem-switched transport because they have no way of identifying the amount to bill each IXC after the traffic is loaded onto common facilities. They assert that if an interconnector is deemed the customer of record for terminating usage, this would pose no problems, as the LECs could simply bill the interconnector for all terminating usage. LECs state, though, that if the LEC customer of record is an IXC that uses an interconnector tandem, special arrangements would have to be made. 22. LECs indicate that there would be three possible solutions to the terminating billing problem. First, LECs and interconnectors could modify their respective networks so that interconnectors could send and LECs could receive carrier identification information for calls terminating from an interconnector tandem. Pacific estimates that it would cost $5-10 million and take three to five years for it to make this modification. Second, LECs could bill IXCs based on data recorded at interconnector tandems and provided via usage tapes to LECs. NYNEX claims that this approach would be satisfactory if the interconnector assumed liability for any discrepancy between LEC billing records and interconnector-provided tapes. Ameritech, however, opposes this approach, claiming that it has been problematic when used in meet point billing situations. Third, some parties suggest that interconnectors could construct dedicated IXC trunks from their tandems to LEC end offices. 23. MFS strongly favors the second approach, though it opposes assuming liability for any discrepancy in LEC and interconnector records. MFS argues that interconnectors and LECs should be considered "co-carriers" of switched access service and should follow the same "well-established" procedures governing the billing and division of revenues that apply when an end office operated by one LEC is "homed" to a tandem operated by another LEC. MFS suggests that as co-carriers, both interconnectors and LECs would be required to comply with such "meet-point" billing procedures, unless the interconnector chooses not to be treated as a co-carrier, in which case the interconnector would be billed by the LEC as the LEC customer. MFS also argues that requiring interconnectors to construct direct trunks from their tandems to LEC end offices would defeat the purpose of this proceeding, which is to enable interconnectors to provide tandem-switched service in lieu of direct trunks. C. Discussion 24. We now affirm our tentative conclusion that broader interconnection requirements to facilitate access competition are in the public interest. In accordance with this finding, we require Tier 1 LECs (except NECA pool members) to provide signalling information from equal access end offices so that third parties may install their own tandems to provide tandem-switching services. Third parties may collocate at LEC end offices and provide their own tandem-switched transport between those end offices and their tandems, or they may purchase LEC transport to their tandems. We do not require LECs to provide signalling information for tandem switching from their tandems since we find that the record does not support the establishment of such a requirement at this time. 25. We conclude that the availability to third parties of signalling information needed for tandem switching could provide significant public benefits. It would facilitate broader access competition by enabling interconnectors to offer competitive interstate tandem-switching and transport services. In addition, it would increase opportunities for small IXCs to gain economies of scale by sharing direct-routed transport facilities and providing their own tandem-switching. As we stated in the Notice, broader access competition should exert downward pressure on tandem- switched transport rates, while fostering more efficient provisioning of these services by new competitors and LECs. Competition also should encourage innovation and investment in new technologies and could offer increased network reliability through route diversity and redundancy. IXCs would benefit from greater competition in the tandem-switched service market. Small IXCs would especially benefit because they tend to rely more heavily on tandem-switched transport than larger IXCs. In addition, by promoting competition in tandem-switched transport services and facilitating the use of direct-trunked transport by small IXCs, these measures should help ensure more rational cost-based pricing relationships between LEC direct-trunked and tandem-switching transport services, thereby lessening the need for regulatory controls and fostering more efficient use of these services. All of these benefits should contribute to economic growth -- by enabling IXCs to use more efficient transport arrangements, by fostering better, more reliable, and more rationally priced access services, as well as by creating new market opportunities for interconnectors. 26. We also conclude that LECs can make signalling information available from their end offices at very little cost. Indeed, the record indicates that the costs to LECs of providing such information from end offices may well be de minimis, involving only a simple change in the end office routing table. While a few LECs baldly assert that the costs of providing signalling could be significant, these LECs do not substantiate their allegations with cost estimates or data. Nor do they distinguish between end- office generated and tandem-generated signalling information. Moreover, no party has shown that the necessary modifications to LEC billing systems would be unreasonably costly or burdensome, or that the asserted need to change industry standards to accommodate the passage of CIC and OZZ codes over Feature Group D represents a significant barrier to the implementation of this proposal. On the contrary, we believe that any such measures could be accomplished without undue burden or cost. 27. Nor are we persuaded that competitive tandem switching services would require assignment of CICs to IXCs. NYNEX's assertion that multiple CICs would be required assumes that IXCs would be able to specify different routing for different calls originating at the same end office. Thus, NYNEX assumes, for example, that IXCs would seek to route certain calls to an interconnector tandem and others to a POP or a LEC tandem. NYNEX argues that the IXC would need additional CICs to reflect the additional routing options available to it. The record fails to indicate, however, that any entity would actually seek to offer or use that kind of routing dynamic. Even without additional CIC assignments, IXCs would be able to designate a primary route and an overflow route for their traffic, thereby securing the benefits of both route and carrier diversity. Moreover, IXCs could vary routing between a LEC and third party tandem on an end-office-by- end-office basis or, perhaps, based on OZZ codes -- thereby designating one as primary for a particular type of traffic and another for a different type of traffic. No IXC indicates that these options are insufficient, at least for now. Therefore, no additional CIC code assignments would have to be made to accommodate competitive tandem-switched networks. 28. U S West and others assert that third parties do not really want signalling information and that IXCs do not really want to use competitively-provided tandem-switching services. The record belies U S West's contention. The vast majority of parties, including IXCs, CAPs, users, and some LECs argue that unbundled signalling information would allow development of alternatives to LEC tandem-switched transport services and they urge us to make such information available. Moreover, even if the measures we now take do not produce an immediate change in the access market, we think they will be beneficial in the long-term. By eliminating barriers to competition in the provision of tandem-switched services, we will be paving the way to a more competitive access market in the future. Since the costs of providing signalling information from equal access end offices are so small, these benefits are well worth the costs. 29. On the other hand, it appears that providing signalling information from LEC tandems would require software upgrades to those tandems. In addition, the record indicates that tandem-provided signalling may be of less utility to TSPs than end office-provided signalling. While MFS and ALTS claim generally that tandem-provided signalling could provide a useful adjunct to other forms of interconnection, they do not explain with any specificity how they could use such an architecture, or how a two- tandem architecture could actually be competitively viable, either from a service quality or pricing standpoint. Therefore, based on the current record, we do not require LECs to provide this service at this time. 30. We clarify that in proposing access to LEC signalling information from LEC end offices and tandems, we did not intend to require LECs to reconfigure their SS7 networks. Thus, we hold that LECs may provide end-office-generated signalling information through STPs, and they may require TSPs that are terminating traffic to transmit signalling information to LEC end offices through LEC STPs. We recognize that STPs perform important network screening functions; we do not require LECs to decentralize those functions by deploying them in every switch. Moreover, the record does not indicate that TSPs would seek to interconnect via SS7 at end offices, rather than at STPs. Rather, as AT&T and others point out, it would be far more efficient for them to interconnect at STPs. 31. Finally, with respect to billing of terminating traffic, we believe that, consistent with our earlier expanded interconnection measures, the customer of record of the terminating LEC should be billed by the terminating LEC for services provided by that LEC. If the TSP is the customer of record, the LEC should bill the TSP directly. If the TSP's customer is the customer of record, then the TSP must provide the LEC with billing tapes so that the LEC may properly count and bill access minutes. We reject the suggestion of some LECs that all discrepancies between TSP- provided billing tapes and LEC billing records should be resolved in favor of the LECs. We believe that TSPs and LECs can and should establish fair and reasonable procedures to resolve billing discrepancies. IV. COLLOCATION 32. Notice. In the Notice, we tentatively concluded that collocation of competitors' switches in LEC central offices is neither necessary nor desirable to promote facilities-based competition for switched access services. We also tentatively concluded that interconnectors should not be entitled to place in the central office, or designate for their use, other types of switch-related equipment, such as that used for call recording and traffic measurement. We noted that while interconnector transmission equipment must be located in LEC central offices to terminate interconnector circuits, interconnectors could readily connect their transmission facilities to switches and related equipment located on their own premises. We also stated that we expected that interconnectors would prefer to locate their switches on their own premises. Finally, we noted that unlike transmission equipment, switching facilities can occupy a substantial amount of floor space, and as a result, mandated collocation could contribute greatly to space exhaustion. 33. Positions of the Parties. The vast majority of parties support our tentative conclusion not to require collocation of interconnector switches or switch-related equipment in LEC offices. They argue that the collocation of switching equipment offers no technical advantages because the location of switches does not affect the quality or cost of switching services. Most commenters also agree that switches take up much more floor space than transmission equipment and, as noted in the Notice, that collocation of switching equipment could thus greatly accelerate the exhaustion of available floor space. They argue that any reasonably sized switch would take up at least several hundred square feet. Pacific adds that collocation could also require upgrades to heating, ventilation, and air conditioning systems. MFS acknowledges that it would strongly prefer to locate its switching equipment on its own premises because switches generally require much more constant and careful monitoring and supervision than transmission equipment. It states, however, that its position is premised on the Commission's adoption of adequate non- discrimination safeguards to assure that interconnectors are not disadvantaged because of their inability to collocate switching equipment. Specifically, MFS requests that LECs not be permitted to manipulate rate structure or levels, or impose any technical criteria that confer an advantage due to the location of their tandem switches. Finally, U S West argues that we lack authority to order collocation of switching equipment. 34. Ad Hoc, on the other hand, favors mandatory collocation. Ad Hoc argues that only collocation can approximate the terms and conditions on which the LECs interconnect their own tandem circuits and that collocation reduces LEC opportunities for "strategic manipulation." It argues, further, that because the Commission has ordered collocation for transmission equipment, a different rule for switching equipment will require "line-drawing exercises that will create ongoing controversies, waste the Commission's scarce resources, and ultimately confuse the marketplace." Rather than perpetuate such line-drawing exercises, it states, the Commission should move towards a system of "mutual openness." 35. Discussion. We now affirm our tentative conclusion that physical collocation of switching equipment should not be required. Virtually every commenter that addressed this issue supported our tentative conclusion and the reasoning behind it. Thus, they agree that there is no competitive or technical benefit to locating switching equipment in LEC offices; that switching equipment is too large and too heavy to be collocated in LEC space; and that interconnectors would prefer to place their switching equipment on their own premises for monitoring purposes. The arguments offered in support of mandatory collocation are not convincing. No one has shown why the line-drawing process between switching and transmission equipment would be unmanageable or that collocation is necessary to ensure fair and nondiscriminatory treatment of interconnectors by LECs. Indeed, our tariffing and general nondiscrimination requirements should provide sufficient protection against unfair or unreasonably discriminatory LEC rates and practices. V. PRICING ISSUES A. LEC Charges for Signalling Services 1. Notice and Background 36. In the Notice, we sought comment on whether LECs should price signalling information according to the new services test. We also proposed that LECs not be allowed to use the net revenue test to justify new signalling service charges. 2. Positions of the Parties 37. The majority of commenters favor the new services test. On the other hand, Teleport, Teleport Denver, and Time Warner oppose it, arguing that signalling services should be priced based on incremental cost. Southwestern Bell also appears to oppose the new services test, claiming that uniform overhead loadings are not likely to be consistent with marketplace realities. 38. The parties differ on whether there should be a new rate element for signalling information. NYNEX contends that "no new rate elements would need to be created" for LEC end-office provisioning of signalling data. Similarly, Ameritech argues that providing signalling data from the end office to an interconnector tandem would be similar to a trunk rearrangement. GTE favors establishing a new rate element, arguing that even if signalling services can be based on existing network capabilities, the customers that choose to purchase those services should pay for the LEC costs incurred in developing and testing them and in making the necessary billing and ordering system changes. Similarly, United asserts that LECs will incur costs in modifying their billing systems to bill interconnectors properly for LEC-provided transport between LEC end offices and interconnector tandems, and that they should recover those costs from interconnectors on a per call basis. Pacific suggests that signalling services be offered through additional optional expanded interconnection rate elements for interconnectors that are collocated, and as optional rate elements on LEC transport services for those that are not collocated. U S West also suggests establishing a separate signalling charge. 39. MCI requests that we create a separate service category for signalling services and apply the same pricing constraints as those required for the tandem-switched transport service category. MCI argues that a separate category is necessary to prevent LECs from raising rates for signalling services and reducing tandem-switched transport rates, while staying within the limits of the banding constraints. Pacific and Rochester oppose MCI's request. Pacific contends that it would impede the price cap goal of allowing LECs to adjust rates according to demand; Rochester argues that the price cap rules are sufficient to constrain alleged anticompetitive pricing without creation of additional service categories. 40. MFS argues that rather than establishing new rate elements for signalling information needed for tandem-switching and treating interconnectors as resellers of LEC services, the Commission should treat interconnectors as "co-carriers" of switched access service. Under this paradigm, MFS argues, LECs would recover the costs of providing signalling information from either: (1) the local switching charge; or (2) a new rate element applied to all switched access minutes that use tandem signalling. Rochester supports "co-carrier" status of interconnectors, viewing it like Commission treatment of cellular carriers and adjacent LECs. Rochester claims that MFS merely seeks recognition that it is not only a LEC competitor, but also a joint service provider. 41. Most LECs, USTA, and AT&T oppose MFS' co-carrier model, including its pricing proposals. Some LECs argue that they must treat all of their customers alike and cannot practicably distinguish among customers based on the kinds of services those customers offer to others. Pacific argues that even if such distinctions could be made, they may not be appropriate. Some parties also dispute MFS' assertion that interconnectors should be viewed in the same light as a LEC that provides joint service with another LEC or as a cellular carrier that interconnects with a LEC network. They argue that neighboring LECs that provide joint service do so in order to transmit calls between separate franchise areas and do not compete in offering access service to the same locations, as do LECs and interconnectors. Similarly, Pacific argues that cellular providers, unlike interconnectors, target a separate market of mobile customers who cannot be served in their automobiles by LEC landline services. 42. Several parties strongly object to MFS' suggestion that the costs of providing signalling information to interconnectors should be borne by all switched access customers or all tandem-switched access customers. They argue that MFS is seeking a "free ride" and that its proposal is inconsistent with FCC policies dictating that the costs of providing a service should be paid by the users of that service. 3. Discussion 43. We now conclude that LEC provision of CIC and OZZ data to TSPs from LEC end offices will constitute a new service under our price caps regime, which covers all Tier 1 LECs. New services "add to the range of options already available to customers." While LECs currently transmit CIC and OZZ codes to their own access tandems, they do not provide this information to their customers. Therefore, these data "add to the range of options" of LEC customers and hence represent a new service. 44. LECs will be required to make a cost-based showing under the price caps new services test. This showing will enable us to ensure that signalling services are reasonably priced. We will not use the net revenue test in reviewing LEC tariff filings. That test is unnecessary, both because of our requirement that LECs submit cost support for new services, and because LECs clearly lack incentives to underprice signalling services provided to competitive tandem-switching providers. 45. We conclude further that LECs must establish new rate elements for CIC and OZZ signalling data as a separate service category within the trunking basket. This category will be subject to an upper pricing band of 2%. Because LECs have no incentive to price signalling services at predatory levels, we see no need for a lower band and therefore do not impose one. We agree with MCI that these measures are necessary to prevent LECs from offsetting increases in the price of signalling information provided to TSPs with price reductions in the LECs' own tandem-switched transport rates. 46. We reject MFS' pricing proposals. First, for the reasons discussed previously, we do not believe that the co-carrier model advanced by MFS aptly defines the LEC/TSP relationship. Second, the MFS pricing proposals are not necessarily consistent with a co-carrier model. For example, even though we have stated that cellular service providers are like co-carriers, we have never held that cellular interconnection charges should be imposed on all LEC customers or on all cellular users, rather than on the providers taking interconnection. Thus, a co-carrier model does not necessarily dictate that the costs unique to providing a joint service should always be directly imposed on the LEC's customers or on all customers of the service in question. Yet this is precisely the result that MFS seeks. Third, we do not believe that the specific cost recovery mechanism advocated by MFS is appropriate. Whereas MFS would have all purchasers of switched transport or tandem-switched transport bear the costs of making signalling information available to TSPs, we believe that TSPs should pay for such costs. This is consistent with the Commission's long-held view that costs should be paid by the cost causer. B. Recovery of Support Flows 47. Notice and Background. In the Transport Order, we instituted an interconnection charge to be paid by all interstate access customers that interconnect with the LEC switched access network, including IXCs and competitive access providers. The interconnection charge was created at the time we adopted the interim rate structure as a residual charge to make the transport rate structure revenue neutral. The initial transport interconnection charge was computed as the difference between the revenue generated by rates for transport before the interim rate structure was implemented and the revenues from facilities-based transport rate elements under the interim rate structure. In the Notice, we tentatively concluded that there was no need to develop an additional charge to recover support flows associated with tandem switching because the interconnection charge already includes such support flows. 48. Positions of the Parties. Several commenters, including interconnectors and some LECs, assert that there is no need to establish an additional charge to recover support flows associated with tandem switching. MCI and MFS argue that the transport interconnection charge more than adequately protects any LEC subsidy flows. According to MFS, the interconnection charge will not only recover revenues sufficient to preserve subsidies, but will recoup various LEC capital and operating costs that should be captured through cost-based charges for specific services. Further contribution, MFS maintains, would be unreasonably discriminatory, anticompetitive, and unnecessary. NYNEX states that a contribution charge is not necessary because, for an interim period, the local transport interconnection charge will recover support flows associated with switched transport, including tandem switching. U S West states, however, that if the Commission maintains the interim rate structure restrictions on LEC tandem-switching pricing, it should consider establishing a contribution charge for interconnectors. 49. Southwestern Bell contends that new competition in the tandem-switched and switched transport markets will reduce LEC revenues from those services and create upward pressure on the prices for other LEC services, including basic local service rates. Therefore, it claims, the interconnection charge will not be sufficient to preserve universal service, as MFS and ALTS allege, unless LECs are able to alter their rates based on market conditions. 50. Discussion. It appears from the record that there is no need for additional support mechanisms in conjunction with adoption of this order. The transport interconnection charge is sufficient to protect support flows potentially affected by our decision here. C. ONA Framework 51. Notice. In the Notice, we also asked parties to comment on whether signalling functions should be treated as Basic Service Elements (BSEs) within the Open Network Architecture (ONA) framework. 52. Positions of the Parties. Several commenters argue that signalling should not be treated as a BSE. Their reasons vary. Most of the LECs, USTA, AT&T, and GSA claim that the ONA framework is inappropriate for signalling. As NYNEX states: ONA is a regulatory initiative to help the growth of unregulated enhanced services, while ensuring equal and nondiscriminatory access to basic network services for all enhanced services market participants. . . . ONA . . . was simply not designed for application to the regulated basic services market. Some commenters also assert that subjecting signalling to ONA would have only limited utility because ONA only applies to the BOCs. GTE argues that the other LECs may not have the technical ability to both unbundle a signalling service offering and also obtain the usage data required to bill for that service. Some LECs argue that because signalling is necessary to provide switched access, it is illogical to unbundle it and treat it as an option that a customer could choose not to purchase. AT&T and Ameritech claim that it does not make sense to require an interconnector that will provide its own transport to purchase a BSA in order to obtain signalling information, since transport is a BSA. 53. In contrast, Pacific and Teleport Denver favor BSE treatment of signalling information. Pacific maintains that some type of BSA would be technically required for a LEC to deliver signalling information to an interconnector: collocated interconnectors would need a "'short BSA'" (e.g., cross connect), while non-collocated interconnectors might purchase a dedicated access service BSA. Finally, although Ad Hoc argues that signalling generally should be treated within the ONA framework, it urges us to avoid the failings of ONA. 54. Discussion. We conclude that unbundled CIC and OZZ data are not BSEs as defined in our ONA orders and that there is no public policy reason to treat them equivalently. BSEs are "optional unbundled features . . . that an ESP may require or find useful in configuring an enhanced service." There has been no showing that the CIC and OZZ data that are the subject of this order will be used by ESPs to provide enhanced services. Rather, these data will be used by TSPs to provide basic network services. Thus, these data do not fall within our definition of a BSE. 55. Nor has any party convinced us that it would be in the public interest to treat CIC and OZZ codes as BSEs. While some parties argue that the four-part test that LECs use in determining whether to offer an ESP-requested BSE should apply, we have relied on similar considerations in assessing the relative costs and benefits of LEC-provided signalling information. Moreover, the "flagging" requirements associated with BSEs, under which BOCs must identify BSEs that they intend to use themselves, are irrelevant: there is no dispute that LECs use CIC and OZZ data for tandem- switched transport service. Finally, there would be no added benefit from a pricing standpoint in treating CIC and OZZ data as BSEs, since we have already held that the new services test applies to their initial rates. VI. TARIFFING AND IMPLEMENTATION 56. Positions of the Parties. Few parties commented on the tariffing aspects of our proposal. MFS argues that LECs should be required to provide the CIC and OZZ from end offices within a reasonably short time. Ameritech and U S West contend that they would be willing to provide signalling at end offices upon bona fide request, assuming that the requisite modifications were feasible, and that interconnectors would pay for them. 57. Discussion. We require Tier 1 LECs (except NECA members) to file tariffs, with requisite cost support, for the provision of CIC and OZZ codes within ninety days of publication of this order in the Federal Register, to be effective on forty-five days' notice. As discussed above, the record in this proceeding shows that LECs can provide CIC and OZZ codes to third parties from equal access end offices simply by modifying their end office routing tables, without purchasing new end office software and without making other costly and time-consuming modifications. Under the circumstances, there is no reason why the LECs cannot tariff this offering for all of their equal access end offices within ninety days of publication of this order in the Federal Register. VII. LEC PRICING FLEXIBILITY 58. Notice and Background. In the Notice, we proposed to increase LEC pricing flexibility in conjunction with our Phase I proposal for expanded interconnection for switched transport services. We also asked for comment on whether we should give LECs additional pricing flexibility as part of our proposal to require LECs to provide signalling information to third parties. 59. In the Switched Transport Expanded Interconnection Order, we granted Tier 1 LECs additional flexibility in pricing their switched transport services. We concluded that the price cap rules did not sufficiently enable LECs to respond to access competition because: (1) the study area-wide rate averaging requirement forced LECs to price above cost in the high-traffic, lower-cost areas where competition was most likely to develop; and (2) LECs were prohibited from offering any volume or term discounts in their transport rates, even if those discounts were cost- justified. We decided to proceed in stages to remove restrictions on LEC transport pricing flexibility. We authorized zone density pricing of LEC entrance facilities, direct-trunked and tandem-switched transport, and dedicated signalling transport when expanded interconnection for switched access is operational in a study area. We also permitted LECs to offer volume and term discounts on entrance and interoffice facilities when they meet one of two conditions. In the Transport proceeding, we granted LECs additional pricing flexibility, changing our rules to enable access customers to order direct-trunked transport between LEC tandems and SWCs. 60. Comments. Because comments and replies in this Phase were filed prior to the adoption of the Switched Transport Expanded Interconnection Order and the First Transport Reconsideration, the parties largely focus on the matters at issue in those proceedings. Generally, LECs, with support from GSA, argue strenuously for more pricing flexibility. They ask specifically for authority to offer volume and term discounts and to implement density zone pricing. Some also ask for permission to provide services under individually negotiated contracts with access customers. U S West, NYNEX, and Pacific seek permission to price the link between their access tandems and SWCs on a flat- rated, rather than usage, basis. Some LECs also express support for an access reform proposal advanced by USTA in Phase I of this proceeding, under which four new price cap baskets would be created and the degree of regulation of each would be tailored to the competitiveness of the market area. Several LECs argue that the pricing flexibility measures proposed in the Notice do not go far enough. These LECs state that they must have the same pricing flexibility enjoyed by their competitors if there is to be fair competition in the marketplace and if customers are to obtain the benefits of competition. Some object, in particular, to the pricing bands for service categories, arguing that such bands diminish the benefits of density zone pricing by limiting total price reductions within a service category. 61. CAPs, users, and IXCs oppose granting LECs additional pricing flexibility in conjunction with tandem signalling at this time. These parties argue that potential competition is not equivalent to actual competition, and that even after expanded interconnection arrangements are available, it will take time for interconnectors to be an effective competitive force to discipline LEC pricing. They argue that if LECs are provided additional pricing flexibility before sufficient actual competition in the provision of tandem signalling develops, LECs could use pricing flexibility to control the market. Ad Hoc proposes that LECs be granted pricing flexibility when there is "actual competition" and proposes a "good actor" test as a framework for determining its existence. ALTS and MFS argue that the Commission can determine whether additional pricing flexibility is necessary after competitive switched access networks are actually operating, based on empirical and verifiable data. 62. CompTel and WilTel also argue that LECs have competitive advantages in the provision of tandem-switched transport because LECs can enjoy economies from combining access, local, and intraLATA toll traffic on their interoffice facilities. Teleport claims that the interim transport rate structure gives the LECs a competitive advantage, since they need only recover 20% of tandem costs from users of LEC tandem services (compared to 100% that interconnectors will have to recover), and are permitted to measure mileage based on airline miles (while interconnectors will have to measure it based on actual miles). 63. Discussion. We do not here grant LECs additional pricing flexibility but will continue to examine these issues in a broader context in future consideration of pending access reform petitions. We have already addressed virtually all of the specific proposals suggested by LECs in the Switched Transport Expanded Interconnection Order and the First Transport Reconsideration. Thus, LECs may offer density zone pricing and volume and term discounts under certain conditions. In addition, they may price transport between their tandems and SWCs on a flat-rate basis. We considered and rejected in the Switched Transport Expanded Interconnection Order various other requests for flexibility. For example, the Commission rejected the suggestion that LECs receive the same pricing flexibility as their competitors, noting that giving LECs too much flexibility could stifle competitive entry and harm customers of less competitive services. The Commission also declined to eliminate service category pricing bands, stating that these bands serve important public policy goals. No party has shown that providing signalling information to TSPs warrants a different outcome. Nor has any party set forth any other specific pricing flexibility request related to providing signalling information. Finally, no party has demonstrated that the availability of signalling warrants authorization of LEC contract tariffs. The Commission has limited contract carriage to services found to be "substantially competitive." While the measures we now take should permit alternatives to LEC tandem-switched access services to develop, we cannot conclude that these services are now subject to substantial competition. 64. For these reasons, we do not grant LECs additional pricing flexibility in conjunction with our decision to make tandem signalling information available. This decision is not intended, however, to prejudge broader questions regarding the possible need for access charge reform. Indeed, by opening the door to greater competition in the provision of tandem-switched services, we are continuing the process of removing barriers to the development of a more competitive access market in which CAPs and other entities can participate. VIII. OTHER ISSUES A. Reciprocity 65. Positions of the Parties. Teleport Denver and Pacific ask that any obligations that the Commission imposes on LECs with respect to providing signalling information also be imposed on interconnectors. They argue that reciprocal interconnection will promote efficient network design by allowing all service providers, including LECs, to purchase services from the most economical vendor, and thereby avoid duplication of facilities. Ameritech requests reciprocity so that if, in the future, it wanted to provide tandem-signalling for customers served by competitors' switches, it could do so. GSA agrees with Ameritech, arguing that interconnectors should be required to provide LECs with the same type of information that LECs provide to interconnectors. Rochester asserts that reciprocity would be beneficial to development of the "'network of networks,'" because it will enable all providers to choose how best to configure their networks to offer consumers the full benefits of expanded interconnection, and will foster mutual recognition of the value of interconnection arrangements. 66. Discussion. We decline to impose reciprocal signalling obligations on interconnectors at this time. First, requests for reciprocal obligations are beyond the scope of this proceeding. The Notice proposed that LECs provide signalling information to third parties. We did not propose to impose reciprocal requirements on these third parties, and we decline to broaden this proceeding to consider such requirements here. Second, LEC requests for reciprocity seem to assume that only CAPs will purchase signalling information. As noted, this information must be made available to any interested party, including IXCs. LECs requesting reciprocity fail to address the implications of their proposal with respect to these other types of TSPs. Third, except in the few instances where CAPs have end offices, tandem switching providers simply do not have the signalling information to provide to the LECs, and the LECs have not demonstrated specific, present needs for such information. Furthermore, we note that TSPs do not possess market power. For example, we have previously declined to impose reciprocal obligations on interconnectors, noting, inter alia, that CAPs and other interconnectors do not control bottleneck facilities. B. Jurisdictional Measurement and Reporting 67. Notice and Background. In the Phase I Notice, we stated that LECs and interconnectors are likely to provide both intrastate and interstate services using the same facilities. We also noted that LECs generally will be unable to determine the jurisdictional nature of terminating traffic. Additionally, we stated that because LECs generally apply different access charges for interstate and intrastate traffic, it might be necessary to impose some jurisdictional reporting requirements on interconnectors. Thereafter, in the Phase I Order, we required the customer of record to provide percentage of interstate use (PIU) reports to the LEC. We found that the switched access customer is in the best position to provide information on the jurisdictional nature of minutes of use. In that order, we also decided that where an end user is the switched access customer, the IXC providing service to that end user must report the PIU. 68. In the Phase II Notice, we tentatively concluded that interconnectors or their customers should be required to measure the jurisdictional nature of their traffic, and report it to the LECs. We sought comment on whether interconnectors or their IXC customers should be responsible for reporting this information. 69. Positions of the Parties. The majority of commenters argue that the PIU should be reported by the customer of record, i.e., the party that purchases access from the LEC. Parties differ on which party should be the customer of record. MCI claims that the customer of record should be the CAP or IXC, while Ameritech argues that it would probably be the CAP. GTE maintains that the interconnector must report the PIU for terminating traffic because LECs would not be able to identify the appropriate IXC; United contends that, when technically feasible, the interconnector should report the PIU. ALTS, on the other hand, argues that either the IXC or end user would likely be the customer of record, while Time Warner contends that generally IXCs should report the PIU. ALTS contends that the CAP would be functioning as a LEC co-carrier, not as a customer of access services, and that the entity that orders and pays for LEC terminating access should bear responsibility for reporting the jurisdictional nature of its traffic. Like ALTS, MFS argues that interconnectors are carriers. In contrast to ALTS, however, MFS, asserts that interconnectors should be required to record traffic that is capable of being recorded. MFS states that IXCs should be required to provide jurisdictional data for traffic that cannot be recorded and that interconnectors and LECs should divide responsibility for jurisdictional measurement and should exchange information, as do LECs participating in meet-point switched access arrangements. Prodigy requests that we exempt information service providers from the PIU reporting requirement. U S West objects to this request, arguing that PIU reports are essential and no party should be exempted from the requirement to provide them. 70. The DC PSC contends that CAP or IXC estimates of interstate use are likely to be biased. It argues further that measurement is possible with SS7 technology and requests that we require "as a condition of expanded interconnection, that all CAPs implement SS7 technology and that the CAPs' SS7 facilities be interconnected with those of the LECs." Finally, Rochester maintains that the Commission should establish strict PIU reporting and auditing requirements. 71. Discussion. Most parties agree that the customer of record should be responsible for reporting the PIU factor for terminating traffic when the LEC cannot itself measure jurisdiction. This is consistent with existing reporting arrangements that have worked satisfactorily. If the customer of record is a TSP, it shall be the responsibility of that TSP to compile PIU reports based on data from those to whom it provides tandem-switching. If the customer of record is an IXC or other purchaser of access, that entity shall continue to provide PIU reports directly to the LEC providing terminating access. C. Separations Issues 72. Notice. The Notice asked parties to discuss whether our proposal for competitive provision of tandem switched transport service raises separations issues that should be referred to a Joint Board. 73. Positions of the Parties. NARUC states that switched access restructuring, including the proposed competitive provision of tandem-switched transport, will have "immediate and direct effects on state regulation and, potentially, rates in rural and high cost areas." It argues that at a minimum, the Commission should require the Joint Board to address all the potential effects of interstate access restructure and pricing policies on state regulation and rates in high cost areas. NYNEX recommends that the Commission, with the assistance of the Joint Board, conduct a comprehensive review of policy issues surrounding increased access competition, access rate structure, capital recovery and other related matters prior to any review of current separations rules and procedures. The DC PSC argues that the LECs' loss of interstate revenue from increased competition in the access market will shift unused investment to intrastate jurisdictions, and raise intrastate costs. It recommends that prior to an increase in state rates, the Commission and the Joint Board should consider whether any changes should be made to reduce this impact. The DC PSC also suggests that a floor be established for usage percentage based on pre-expanded interconnection usage to protect intrastate ratepayers if LEC interstate traffic decreases as a result of competition. NARUC also argues for Joint Board referral of PIU measurement and verification procedures. 74. Discussion. We do not believe that the signalling information requirement raises separations issues that should be referred to a Joint Board. The record does not show that providing signalling information will raise any significant issues beyond those already referred to the Joint Board in the Switched Transport Expanded Interconnection Order. As noted, the costs associated with LEC provision of CIC and OZZ codes from equal access end offices should be minimal. Therefore, we do not believe that these costs or the revenues derived from providing signalling information requires Joint Board consideration. The Notice stated that we did not intend to refer to the Joint Board broader separations issues, such as those raised by the DC PSC, NARUC, and Rochester. We found and continue to believe that these matters would be more properly addressed in the context of a comprehensive separations review proceeding. IX. CONCLUSION 75. In this order, we take another step in our ongoing effort to promote competition in the interstate access market. We require Tier 1 LECs (except NECA members) to provide signalling information from equal access end offices to interested parties. This measure will allow third parties to provide tandem switching and thereby promote development of alternatives to LEC-provided tandem-switched transport services. CAPs may develop their own tandem-switching networks; other TSPs may use tandem-switching to achieve scale economies attending the aggregation of traffic. By promoting access to diverse facilities and providers, our action should permit more efficient use and deployment of interstate access services, increase network reliability and redundancy, encourage innovation, and exert downward pressure on access charges and long-distance rates. These benefits should, in turn, contribute to economic growth and the creation of new job opportunities. X. REGULATORY FLEXIBILITY ACT 76. In the Notice, we certified that the proposed rule changes would not have a significant economic impact on a substantial number of small business entities, as defined by  601(3) of the Regulatory Flexibility Act. We also stated that to the extent that a PIU reporting requirement would apply to small entities, it would not have a significant economic impact on a substantial number of small business entities. No commenting party disagreed with our analysis. The Secretary shall send a copy of this Report and Order, including the certification, to the Chief Counsel for Advocacy of the Small Business Administration in accordance with  605(b) of the Regulatory Flexibility Act, Pub. L. No. 96-354, 94 Stat. 1164, 5 U.S.C.  601 et seq. XI. ORDERING CLAUSES 77. Accordingly, it is ORDERED, pursuant to authority contained in Sections 1, 4(i), 201-205, and 214(d) of the Communications Act of 1934, as amended, 47 U.S.C.  151(i), 154, 201-205, and 214(d), that Parts 61, 64 & 69 of the Commission's rules, 47 C.F.R.  61, 64 & 69, are AMENDED as set forth in Appendix B hereto. 78. IT IS FURTHER ORDERED that the policies, rules, and requirements set forth herein ARE ADOPTED, effective 80 days after publication of this order in the Federal Register. 79. IT IS FURTHER ORDERED that the Tier 1 LECs subject to this order shall file tariff amendments as specified herein within ninety days of publication of this order in the Federal Register, to be effective on forty-five days' notice. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary APPENDIX A CC Docket 91-141 April 2, 1993 Comments 1. Ad Hoc Telecommunications Users Committee (Ad Hoc) 2. Association for Local Telecommunications Service (ALTS) 3. AT&T 4. Ameritech Operating Companies (Ameritech) 5. Bell Atlantic Telephone Companies (Bell Atlantic) 6. BellSouth Telecommunications, Inc. (BellSouth) 7. Competitive Telecommunications Association (CompTel) 8. District of Columbia Public Service Commission (DC PSC) 9. General Services Administration (GSA) 10. GTE Service Corporation (GTE) 11. Independent Data Communications Manufacturers Association (IDCMA) 12. Information Industry Association (IIA) 13. MCI Communications Corporation (MCI) 14. MFS Communications Co., Inc. (MFS) 15. National Telephone Cooperative Association (NTCA) 16. National Association of Regulatory Utility Commissioners (NARUC) 17. NYNEX Telephone Companies (NYNEX) 18. Pacific and Nevada Bell (Pacific) 19. Prodigy Services Company (Prodigy) 20. Rochester Telephone Corporation (Rochester) 21. Southwestern Bell Telephone Co. (Southwestern Bell) 22. Teleport Communications Group (Teleport) 23. Teleport Denver Limited (TDL) 24. Time Warner Telecommunications (Time Warner) 25. United States Telephone Association (USTA) 26. United Telephone Companies (United) 27. U S West Communications, Inc. (U S West) 28. WilTel, Inc. (WilTel) CC Docket 91-141 April 30, 1993 Reply Comments 1. Allnet Communications Services, Inc. (Allnet) 2. Ameritech 3. Anchorage Telephone Utility (Anchorage) 4. ALTS 5. AT&T 6. Bell Atlantic 7. BellSouth 8. CompTel 9. GSA 10. GTE 11. IDCMA 12. Independent Telecommunications Network, Inc. (ITN) 13. MCI 14. MFS 15. NTCA 16. NYNEX 17. Pacific 18. Rochester 19. Southwestern Bell 20. Teleport 21. Time Warner 22. USTA 23. United 24. U S West 25. WilTel APPENDIX B Rule Changes AMENDMENTS TO THE CODE OF FEDERAL REGULATIONS PART 61 -- TARIFFS 1. The authority citation for Part 61 continues to read as follows: AUTHORITY: Sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154. Interpret or apply sec. 203, 48 Stat. 1070; 47 U.S.C. 203. 2. Section 61.42 is amended by adding paragraph (e)(2)(vii) to read as follows:  61.42 Price cap baskets and service categories. * * * * * (e) (2) * * * (vii) Signalling for tandem switching, as described in  69.129 of this chapter. 3. Section 61.47 is amended by adding paragraph (g)(5) as follows:  61.47 Adjustments to the SBI; pricing bands. * * * * * (g) (5) The upper pricing band for the "Signalling for tandem switching" service category shall limit the upward pricing flexibility for this service category, as reflected in its SBI, to two percent, relative to the percentage change in the PCI for the trunking basket, measured from the levels in effect on the last day of the preceding tariff year. There shall be no lower pricing band for this service category. PART 64 -- MISCELLANEOUS RULES RELATING TO COMMON CARRIERS Part 64 of Title 47 of the Code of Federal Regulations is amended as follows: 1. The authority citation for Part 64 continues to read as follows: AUTHORITY: Section 4, 48 Stat. 1066, as amended; 47 U.S.C. 154, unless otherwise noted. Interpret or apply secs. 201, 218, 225, 48 Stat. 1070, as amended, 1077; 47 U.S.C. 201, 218, 225, unless otherwise noted. 2. Section 64.1401 is amended by adding paragraph (i) to read as follows: * * * * * (i) The local exchange carriers specified in paragraph (a) of this section shall offer signalling for tandem switching, as defined in  69.2 (vv) of this chapter, at central offices that are classified as equal office end offices or serving wire centers, or at signal transfer points if such information is offered via common channel signalling. PART 69 -- ACCESS CHARGES Part 69 of Title 47, Code of Federal Regulations, is amended as follows: 1. The authority citation for Part 69 continues to read as follows: AUTHORITY: Secs. 4, 201, 202, 203, 205, 218, 403, 48 Stat. 1066, 1070, 1072, 1077, 1094, as amended, 47 U.S.C. 154, 201, 202, 203, 205, 218, 403. 2. Section 69.2 is amended by adding paragraph (vv) to read as follows:  69.2 Definitions. * * * * * (vv) "Signalling for tandem switching" means the carrier identification code (CIC) and the OZZ code, or equivalent information needed to perform tandem switching functions. The CIC identifies the interexchange carrier and the OZZ identifies the interexchange carrier trunk to which traffic should be routed. 3. Section 69 of is amended by adding section 69.129, to read as follows:  69.129 Signalling for tandem switching. A charge that is expressed in dollars and cents shall be assessed upon the purchasing entity by a local telephone company for provision of signalling for tandem switching.