WPC  2BVXZ3|P (TT)7PC2XBXP\  P6QXP"5^2BQdd$BBdq2B28dddddddddd88qqqYzoBNzoozzB8B^dBYdYdYBdd88d8ddddBN8ddddY`(`l2BBBBPBddYYYYYYzYzYzYzYB8B8B8B8ddddddddddYdddddoddYYYYzYzYzYdddddPdBdBBBdNdoNNF2ZdBYddddd7>d<d<BBYYdBBddBYBdYzzzzBBBBqodYYYYYYYYYYY8888dddddddndddddddHP LaserJet 5Si/5Si MXHPLA5SMX.WRSXP\  P6Q,,,F"VXP2 *4D Z43|P "5^*7DSS77S^*7*.SSSSSSSSSS..^^^Jxooxf]xx7Axfxx]xo]fxxxxf7.7NS7JSJSJ7SS..S.SSSS7A.SSxSSJP!PZ*7777C7SSxJxJxJxJxJooJfJfJfJfJ7.7.7.7.xSxSxSxSxSxSxSxSxSxSxJxSxSxSxSxS]SxSxJxJoJoJfJfJfJxSxSxSxSxSCS7S777SAxSx]AN:*KS7JSSSSS.4}}S2~~S}277JJS77SS7J72N7[[^C`^SS`*7DSS77S^*7*.SSSSSSSSSS..^^^Jxooxf]xx7Axfxx]xo]fxxxxf7.7NS7JSJSJ7SS..S.SSSS7A.SSxSSJP!PZv7SJSS7]777JJ:S7A7xx*7SSSS!S7~.S^7~SC[227`K*724S}}}Jxxxxxxoffff7777xxxxxxx^xxxxxx]SJJJJJJoJJJJJ....SSSSSSS[SSSSSSSHP LaserJet 5Si/5Si MXHPLA5SMX.WRSX\  P6G;,,,F"VP2PR^p` Times New Roman (TT)Times New Roman (Bold) (TT)Times New Roman (Italic) (TT) X-  Њ#Xj\  P6G;XP#"5^2BQdd$BBdq2B28dddddddddd88qqqYzoBNzoozzB8B^dBYdYdYBdd88d8ddddBN8ddddY`(`l2BBBBPBddYYYYYYzYzYzYzYB8B8B8B8ddddddddddYdddddoddYYYYzYzYzYdddddPdBdBBBdNdoNNF2ZdBYddddd7>d<d<BBYYdBBddBYBdYzzzzBBBBqodYYYYYYYYYYY8888dddddddnddddddd"5^2BoddȦ8BBdr2B28ddddddddddBBrrrdzNdzoȐB8BtdBdoYoYBdo8Bo8odooYNBodddYO,Oh2BBBBPBdodddddȐYYYYYN8N8N8N8oddddooooddoddddzodddYYYYYdddooPoNoNBNoddȐoNNF2ldBddddddd<d<BBoodBBddBoBddzzzzzzzzzzBBBBozdddddddYYYYY8888dddddddndddddYd`y.C8*X/C\  P6QPa7PC2XXP\  P6QXP.b7UC2XXU4  pQX.cy.G8*X<G4  pQdW!0(Xh0\  P6QhPeI(!X,(\  P6Q,Pg{,C8*X3VC*f9 xQX5PC2X3f_XP*f9 xQXXTimes Roman (TT)Times New Roman (Bold) (TT)Times New Roman (Italic) (TT)dersHel o X4X` hp x (#%'0*,.8135@8:' " ԍUS WEST Comments at 3; AT&T Reply at 4; SNET Comments at 1. See also NECA Comments at 3; BellSouth Comments at 2. US WEST argues that if current data rather than historic  xdata proposed by NYNEX are used to separate costs, a larger share of expenses would be  XK4 xRassigned to the interstate jurisdiction than would be assigned using Part 36 rules. GKnȓ yOj#'ԍUS WEST Comments at 4.G AT&T,"K0*&&qq"  xMCI, and Time Warner maintain that adoption of NYNEX's fixed allocation factor would distort  X4the ILECs' access rates by overstating those carriers' interstate costs.qȓ yOb'ԍAT&T Reply at 5; MCI Comments at 2; Time Warner Comments at 3,4.q  X4 " 11. The parties that support NYNEX's petition on substantive grounds generally reiterate  X4 xthe arguments appearing in NYNEX's petition. Xȓ {O' "l ԍSee Bell Atlantic Comments at 1; Ameritech Comments at 1; Pacific Bell/Nevada Bell Comments at 13; USTA Comments at 2. Bell Atlantic argues that the FCC should move  x toward eliminating all cost allocation requirements for ILECs regulated under price caps that have  Xv4 x<selected the nosharing optionsY!vȓ {O ' "/ ԍIn the LEC Price Cap Performance Review, the Commission adopted interim price cap rules establishing  x three productivity factors from which ILECs could select (4.0, 4.7 and 5.3). No sharing obligation for the interim  x period is imposed for ILECs that choose the highest factor. Carriers, however, can elect a different productivity  {O3' x factor each year. Price Cap Performance Review for Local Exchange Carriers, First Report and Order, 10 FCC Rcd 8961 (1995).Y because such requirements serve no purpose, either as a base  X_4 xpfor prices or as a safeguard against subsidization.M"_f ȓ yOv'ԍBell Atlantic Comments at 2.M Bell Atlantic argues that under a no sharing  x"pure" price cap, rates are divorced from regulated accounting costs, and returns based on these  X14 xoften arbitrary allocations have no useful purpose.:#1 ȓ {O'ԍId.: Bell Atlantic also argues that under price  xcaps, cost shifting is no longer a possibility since prices cannot be affected by any manipulation  X 4 xZof cost accounts.:$ ȓ {O<'ԍId.: USTA supports NYNEX's proposal, but not for any carrier currently regulated  X 4 xunder rateofreturn regulation.D% ȓ yO'ԍUSTA Comments at 3.D Sprint support NYNEX's fixed factor only as an interim  xcmeasure, and only if carriers that elect the fixed factor agree to absorb any resulting increase in  X 4the allocation of costs to the interstate jurisdiction.F& ȓ yO'ԍSprint Comments at 2.F  X' C.Discussion  Xb4 " 12. We deny NYNEX's petition for forbearance because the relief requested by NYNEX  xgoes beyond mere forbearance from regulation and instead requests that we substantially amend  xour Part 36 separations rules. Even if NYNEX had requested only elimination of our separation  xrules, NYNEX has failed to show that its petition meets each of the criteria for forbearance under Section 10.":&0*&&qq"Ԍ X4 "ԙ 13. NYNEX did not ask us merely to refrain from applying the current separations rules.  x Instead, it proposed use of the Commission's forbearance authority as a means of replacing those  xVrules with new ones without the notice and comment required by the Administrative Procedure  xAct, and without use of the Joint Board procedures set forth in section 410(c) of the  xRCommunications Act. The proposals contained in NYNEX's petition would, in fact, result in  xsignificant changes to our Part 36 rules, both structurally and in terms of anticipated results. Any  xEsignificant revisions to Part 36 separations rules are appropriately addressed in a rulemaking  xcproceeding through which interested parties have the opportunity to offer constructive comment  xon how the Commission and the FederalState Joint Board established in CC Docket No. 80286, can best address the needs of all affected parties.  X 4 "  14. In evaluating only that portion of NYNEX's petition that asks us to forbear from  xEapplying the existing rules, we find that NYNEX has failed to show that such forbearance  xwould meet the criteria established in Section 10. Section 10 of the Act requires the Commission  x"to forbear from applying any regulation to a telecommunications carrier when: (1) enforcement  xis not necessary to ensure that charges, practices, classifications and services are just and  xreasonable, and not unjustly or unreasonably discriminatory; (2) enforcement is not necessary for  Xy4 x8the protection of consumers: and (3) forbearance is consistent with the public interest.F'yȓ yO'ԍ47 U.S.C.  160(a)F In  xmaking the public interest determination, the 1996 Act requires the Commission to consider  xwhether forbearance will promote competitive market conditions, including the extent to which  X44forbearance will enhance competition among providers of telecommunications services.F(4Xȓ yO='ԍ47 U.S.C.  160(b)F  X4 "15. We agree with NYNEX that comprehensive review of our current jurisdictional  xseparations rules is necessary in light of both the procompetitive deregulatory  xtelecommunications policy framework established in the 1996 Act and technological  X4 xadvancements and market changes that have occurred in the past decade.)ȓ {OZ' " ԍSee Access Charge Reform, Price Cap Performance Review for Local Exchange Carriers, Transport Rate  x. Structure and Pricing, Usage of the Public Switched Network by Information Service and Internet Access Providers,  {O' x; Notice of Proposed Rulemaking, Third Report and Order, and Notice of Inquiry, CC Docket Nos. 941, 91213, FCC  {O' x3 96488 (rel. Dec. 24, 1996) at  6; FederalState Joint Board on Universal Service, Recommended Decision, CC  xD Docket No. 9645, FCC 96J3 (rel. Nov. 8, 1996) (separate statement of Commissioner Julia Johnson and Chairman Sharon L. Nelson) at 910. Nonetheless, we find  xthat NYNEX has not adequately addressed how forbearance from the current separations rules  xcԩ standing alone from its proposal that the Commission adopt new rules would ensure just and  xlreasonable rates, avoid unjust and unreasonable discrimination, or protect consumers and the  xpublic interest. Merely arguing that jurisdictional separations is not directly or closely linked to  x/ratemaking does not sufficiently support the first two criteria for forbearance under Section 10.  x}Jurisdictional separations continues to play a role for price cap ILECs because the form of price"7f )0*&&qq"  xWcap regulation adopted by the Commission is not entirely divorced from rateorreturn  xRconsiderations. Among other things, jurisdictional separations may result in an adjustment to  xprice cap indices to reflect exogenous cost changes. In addition, price cap ILECs must have  xseparations results in order to report their interstate earnings to the Commission on an annual  xcbasis for monitoring purposes. For the same reasons, even if we viewed NYNEX's petition as a  xlwaiver petition, as suggested by Ameritech, we find that it would not be in the public interest  Xv4to grant it.*vȓ {O' " ԍSee generally Northeast Cellular Telephone Co. v. FCC, 897 F. 2d 1164, 1166 (D.C. Cir. 1990) (citing  {O'WAIT Radio v. FCC, 418 F. 2d 1153, 1159 (D.C. Cir. 1969)).  XH4 "16. The Commission will initiate shortly a rulemaking to begin separations reform in  xIDocket No. 80286. The issues raised in NYNEX's petition will then be referred to a Federal X 4 xState Joint Board pursuant to Section 410(c) of the Communications Act. As NYNEX correctly  X 4 x"notes, SEC v. Chenery makes clear that "the choice between proceeding by general rule or by  xindividual, ad hoc litigation is one that lies primarily in the informed discretion of the  X 4 xadministrative agency."+ $ȓ {O'ԍSee NYNEX Petition at 15 (citing SEC v. Chenery Corp., 332 U.S. 194 (1947)). While we recognize that separations reform may require us to address  xthe different needs of different classes of incumbent local exchange carriers, the issues posed by  xsuch reform are not "so specialized and varying in nature as to be impossible of capture within  X4 xthe boundaries of a general rule.",ȓ {O' " ԍSEC v. Chenery, 332 U.S. at 20203. See also Telocator Network of America v. FCC, 691 F. 2d 525, 551 (D.C. Cir. 1982). Nor does adherence to the current separations procedures  ximpose such a significant burden on ILECs to persuade us to forgo a notice and comment  xrulemaking. We note that representatives of the smaller carriers, with considerably fewer  xresources to spend on compliance, filed comments opposing NYNEX's request for immediate  X64relief.F-\6ȓ {O' "_ ԍSee GVNW Comments at 2; NECA Comments at 3; JSI Comments at 2. Even NYNEX states that it has  {O' x no inherent or substantive objection to proceeding by rulemaking and recommendation to the Joint Board. See NYNEX Reply at 8.F  X4 "17. We do not, in this Order, address the substantive proposal that we permit an ILEC  xto apply a fixed factor to separate its costs between the interstate and intrastate jurisdiction. Our  xVrulemaking on jurisdictional separations reform will present the opportunity for full consideration of that proposal.  X4G& IV. ORDERING CLAUSE  Xg4 "18. Accordingly, IT IS ORDERED, pursuant to sections 4(i), 10, 218 and 220 of the  xCommunications Act of 1934, as amended, 47 U.S.C.  154(i), 160, 218 and 220, that the"P4 -0*&&qq["  xPetition for Forbearance filed May 2, 1996 by the New England Telephone and Telegraph Company and the New York Telephone Company IS DENIED. ` `  hhCqFEDERAL COMMUNICATIONS COMMISSION ` `  hhCqWilliam F. Caton ` `  hhCqActing Secretary