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(1) (a) (i) 1) a).K+&,$@`O5Bȗ+&>P` ` ` hhh "S^2CRddCCCdq2C28dddddddddd88qqqYzoCNzoozzC8C^dCYdYdYCdd88d8ddddCN8ddddY`(`lC2CC!CCCCCCCCCCd8YYYYYYzYzYzYzYC8C8C8C8ddddddddddYdddddodYYYYYYdzYzYzYzYdddddddCdCdCCCdNCdz8zCzCzCz8dddddCCCoNoNoNoNzCzCzCdddddzYzYNF2[dCYddddd7>d<d<$YYdCCddooCYd<d<+oodCCddddCo)b2 {O-ԍ See BOCs at 1.> Lastly, given that section 271(b) requires section 271(d)(3) approval before a BOC may provide inregion "interLATA services," a phrase that the BOCs agree includes wholesale as well as retail services, the BOCs concede that the section 271(d)(3) approval requirement must still be met before they may provide wholesale interLATA services to their affiliates and other carriers pursuant to section  X-272(e)(4).`*f b2 {O"-Ѝ See id. at 89 & n.7; BOCs Reply at 2.` Nonetheless, in the BOCs' view, the "may provide" language in section 272(e)(4) compels the conclusion that that section is fundamentally a grant of authority to the BOCs to directly offer inregion interLATA services, whatever the limits on that grant. x17. To bolster their plain language argument, the BOCs further contend that reading"P *,-(-(ZZ"  X-section 272(e)(4) as a grant of authority benefits longdistance consumers.B+b2 {Oy-ԍ See BOCs at 1013.B The BOCs generally claim that, if permitted by the statute, they intend to design, build, and operate new facilitiesbased interLATA networks, as well as maintain existing ones such as their Official  X-Services Networks.,ZZb2 yO- xЍ The Official Services Networks are interLATA networks that the BOCs were allowed to maintain under the  {O- x;MFJ for internal use. See United States v. Western Electric, 569 F.Supp. 1057, 10971101 (D.D.C.), aff'd., 464 U.S.  yOX-1013 (1983). Ā After they receive section 271(d)(3) approval to provide inregion interLATA services, the BOCs assert that they would use the authority granted by section 272(e)(4) to sell interLATA services that can be provided over these networks, on a wholesale  Xv-basis, to their affiliates (as well as other carriers).- v|b2 yO - xЍ There is no dispute that, once the separate affiliate requirement sunsets, the operating companies can own and  x=operate facilitiesbased interLATA networks, and they can sell the services provided over those networks to  xwhomever they want. There is also no dispute that the operating companies may continue to use their Official Services Networks for internal purposes. The BOCs argue that placing the design, construction, and operation of their interLATA networks in the local operating companies in this way benefits longdistance consumers because the BOCs are able to achieve considerable efficiencies that in turn lead to lower longdistance rates. A Bell Atlantic affidavit submitted by the BOCs explains the source of these potential efficiencies: XxBell Atlantic intends to place the construction, ownership and operation of its longdistance network in its operating telephone companies. . . . [T]he reason is simple. The telephone companies currently provide local exchange, exchange access, and shorthaul (or `intraLATA') long distance service. As a result, they already own some facilities, equipment and related support systems that can be used to provide both local and longdistance service. They also employ a skilled workforce that is trained in the construction, operation, installation and maintenance of telephone facilities and equipment, and that is capable of managing local and long distance facilities alike. Placing the construction and operation of long distance facilities (whether new or existing) in the operating telephone companies will allow us to make the most efficient  X-use of these existing resources..d b2 yO-ԍ BOCs at tab 2, page 2 (Declaration of James G. Cullen, Vice Chairman of Bell Atlantic Corporation).(#  X-x18. Ten parties, including the largest interexchange carriers, a trade association representing longdistance resellers, and two state commissions, filed comments and/or reply  X-comments opposing the view that section 272(e)(4) is an affirmative grant of authority./  b2 yOO$-  Ѝ AT&T, MCI, Sprint, WorldCom, Frontier, the Telecommunications Resellers Association, the Competitive   Telecommunications Association, TCG, and the Public Utilities Commission of Ohio filed comments. AT&T, MCI,   Sprint, and Worldcom also filed reply comments. The State of California and the California Public Utilities Commission filed (joint) reply comments only. " /,-(-(ZZR" These parties focus primarily on what they regard as the plain language of 272(a) and the flat prohibition they say it contains on direct BOC provision of all but a small, clearly specified  X-subset of inregion interLATA services (e.g., five of the six incidental services) prior to the sunset of the separate affiliate requirement. Specifically, they focus on the phrases "interLATA telecommunications services" and "interLATA information services" in section 272(a)(2) and argue that both phrases plainly apply to wholesale as well as retail services just as the more general phrase "interLATA services" in section 271 applies to both. Parties opposing the BOCs also focus on the clearly specified subset of interLATA services that are exempted from the separate affiliate requirement in section 272(a) "outofregion" services, "incidental" services," "previously authorized" services, "electronic publishing," and "alarm monitoring" and observe that "wholesale" services are not among them. They find it significant as well that the MFJ, which the section 271/272 framework replaces in relevant part, imposed an outright bar on BOC provision of interLATA services and in so doing, did not distinguish between retail and wholesale services. In light of the flat prohibition in section 272(a), the opponents of the BOCs conclude, the only sensible way to read section 272(e)(4) is solely as a nondiscrimination and costallocation requirement that limits the manner in which BOCs may provide interLATA services that they are otherwise authorized to provide, such as the interLATA services that fall into the subset of exceptions in section 272(a) and, when the separate affiliate requirements sunset, other interLATA services as well. x19. The opponents of the BOCs also dispute the claim that reading section 272(e)(4) as a grant of authority benefits consumers. Most broadly, they assert that the BOCs' vision of an "`integrated supplier' of local and longdistance services . . . is wholly disengaged from  X-. . . [and] at war with" the separate affiliate requirement in section 272.:0b2 yOj-ԍ AT&T Reply at 4.: Section 272, they explain, was Congress' response to the traditional concerns for discrimination and improper cost allocation that arise precisely when a dominant carrier providing local exchange and exchange access services seeks to provide longdistance service on a physically integrated basis. More specifically, they emphasize that section 272 reflects Congress' fundamental  X~-decision to impose a structural, as opposed to a nonstructural, solution in response to these concerns in the shortterm.  X;-x20. Lastly, the opponents of the BOCs argue that, in a world in which section 272(e)(4) is a grant of authority, it would be extremely difficult to enforce the nondiscrimination requirement. The Telecommunications Resellers Association (TRA), for example, complains that nonfacilitiesbased interLATA resellers, who are the wouldbe rivals of the BOCs' interLATA affiliates, "know all too well from their experience . . . that even the slightest preference or discrimination can be highly consequential in a fastpaced competitive  X!-market."Z1!Xb2 yO%-ԍ Telecommunications Resellers Association at 8. Z Moreover, according to TRA, "[g]iven the comprehensive interaction between a nonfacilitiesbased resale carrier and its network service provider, the opportunities for"" 1,-(-(ZZ!"  X-preference or discrimination abound."42b2 {Oy-ԍ Id. 4 TRA explains that resellers need equal treatment not only with respect to the general rates, terms, and conditions of service but also with respect to "myriad operational support systems such as order provisioning, trouble resolution and  X-billing."53Zb2 {O-ԍ Id. 5 Along similar lines, facilitiesbased interLATA service providers such as AT&T and MCI complain that the BOCs will be able to "customize" the networks they build and the  X-services they provide to be responsive to the needs of their interLATA affiliates.L4b2 yO* -ԍ AT&T at 1, 8; MCI at 8, 11. L The principal point of such arguments appears to be that the difficulty of enforcing the nondiscrimination requirement if we were to conclude that section 272(e)(4) is a grant of authority is one more reason to question whether Congress intended section 272(e)(4) to be such a grant of authority.  X -x21. In response, the BOCs claim that any conflict between section 272(a) and section 272(e)(4) is "wholly imaginary" because section 272(a) merely establishes "a general rule"  X -providing that the BOCs must provide certain services "through" an affiliate.45 |b2 yO-ԍ BOCs at 4.4 The subsections that follow 272(a) then "detail the conduct that Congress understood to be  X -consistent with the general rule."36 b2 {Od-ԍ  Id.3 Section 272(e)(4), they say, is one such provision. The BOCs claim the conflict is wholly imaginary also because one of the principal activities for which section 272(a) requires a separate affiliate is the "[o]rigination of interLATA telecommunications services," and, in the BOCs' view, the term "origination" describes a  XK-retail interLATA service. They argue that, "[w]hen a BOC provides interLATA services to its affiliate under [section 272(e)(4)] . . . , it is not `originating' interLATA services. Rather, it is the affiliate that `originates' such services when its retail customers place interLATA  X-calls."C7b2 {OW-Ѝ Id. at 5.C x22. Alternatively, the BOCs claim that, even assuming there were a conflict between section 272(a) and section 272(e)(4), "[u]nder wellestablished canons of statutory interpretation, the specific authorization contained in section 272(e)(4) would take precedence  X-over the general language of section 272(a)."a80 b2 {Ov$-ԍ Id. at 6 (footnote omitted) (citing cases).a x23. In response to the argument that the BOCs' notion of an integrated supplier is "at war with" section 272, the BOCs contend that the separate affiliate requirement in section 272"P 8,-(-(ZZ0" was not designed to prevent a BOC from providing interLATA service on a physically integrated basis; rather it was designed "to make entirely transparent the dealings between an  X-operating company and its interLATA affiliate."99b2 {OK-ԍ Id. at 9.9 As for the traditional concerns about discrimination and improper cost allocation that arise where a BOC provides integrated service, the BOCs contend that any such concerns that Congress may have had in enacting  X-section 272 exist only where the BOC has incentives to engage in discrimination and cost shifting. According to the BOCs, the wholesale provision of interLATA services pursuant to section 272(e)(4) does not create such incentives because of the requirement that any wholesale interLATA services the BOC provides to its affiliate must be made available to any other carrier on the same rates, terms, and conditions. The BOCs assert that this requirement effectively eliminates any incentives to engage in discrimination or improper cost allocation because, according to the BOCs, any advantage the BOC would gain from engaging in such conduct could not be captured by the affiliate alone. Rather, the advantages would necessarily be offered to all carriers.  "uH   X - IV. DISCUSSION ă x24. As an initial matter, we agree with the BOCs to this extent: the phrase "may  Xb-provide" in section 272(e)(4), if viewed in isolation, could reasonably be read as a grant of authority. Thus, standing alone without reference to any other statutory provision, section 272(e)(4) could reasonably be read to allow a BOC to provide directly any interLATA services, including inregion services, to its affiliate so long as it does so in conformity with the nondiscrimination and cost allocation requirements in that provision. x25. But section 272(e)(4) cannot be viewed in isolation; it must be read in conjunction with other provisions to which it is integrally related. And a thorough analysis of sections 271 and 272 confirms our view that section 272(e)(4) is not an independent grant of authority for the BOCs to provide wholesale interLATA services on an unseparated basis.  X~-We conclude first that section 272(a), in relevant part, prohibits the BOCs from doing precisely what the BOCs claim section 272(e)(4) authorizes them to do. Specifically, section 272(a) prohibits the BOCs, after obtaining section 271(d)(3) approval and until sunset of section 272's requirements, from providing directly most inregion interLATA services, including wholesale services, except through a separate affiliate. We thus confront an apparent conflict between section 272(a) and section 272(e)(4). In so doing, we further conclude that the only plausible construction of either provision that reconciles the apparent conflict and serves the core purposes for which Congress imposed a separate affiliate requirement is a construction of section 272(e)(4) according to which it is a nondiscrimination requirement a requirement that is similar in function, not surprisingly, to the nondiscrimination requirements that appear in sections 271(e)(1), 271(e)(2), and 272(e)(3). The BOCs' reading of section 272(e)(4), by contrast, fails to serve such purposes and further, requires us to believe that Congress intended to tuck away a fundamental grant of authority in"l$ Z9,-(-(ZZF#" section 272(e). In these respects and others, our analysis indicates that the interpretation proffered by the BOCs is unpersuasive. x26. We find unconvincing the reasons advanced by the BOCs in support of their claim that the separate affiliate requirement in section 272(a) can reasonably be read to refer only to retail services. As summarized above, the BOCs first seek to justify this reading of the statute on the ground that section 272(a) establishes a "general" rule and that that general rule is necessarily read to refer only to retail services because that is the reading that makes the general rule consistent with the apparent grant of authority in section 272(e)(4) to provide wholesale services. There is nothing "general," however, about the separate affiliate requirement in section 272(a) with respect to the interLATA services that are covered by that  X -requirement. In particular, section 272(a)(1) states that a BOC may not provide "any service  X -described in [section 272(a)(2)]" unless it provides "that service" through an affiliate.Z: b2 yOe -ԍ 47 U.S.C.  272(a)(1) (emphasis added).Z Section 272(a)(2) then specifies precisely "[t]he services for which a separate affiliate is required," namely, manufacturing activities, the origination of interLATA telecommunications  X -services (with three exceptions), and interLATA information services (with two exceptions).I; Xb2 {O-ԍ Id.  272(a)(2).I Thus, the scope of section 272(a)'s separate affiliate requirement appears plainly to be fleshed  X{-out by section 272(a)(2), not by subsequent provisions in section 272 such as section 272(e)(4). x27. This last point also serves as a complete response to the BOCs' persistent emphasis on the word "through" in section 272(a)(1). In the BOCs' view, section 272(a)(1) does not categorically prohibit a BOC from providing directly the services listed in section 272(a)(2); rather, section 272(a)(1) says that the BOC may not provide such services unless  X-"it," the BOC, provides such services "through" an affiliate. And, in the BOCs' view, "one of the most natural ways" for a BOC to provide such services "through" an affiliate is to provide  X-them to an affiliate, on a wholesale basis, and then to have the affiliate resell the services on  X-a retail basis.4<b2 yO4-ԍ BOCs at 5.4 As an initial matter and as explained in more detail below, in the context of past separate affiliate requirements that have been imposed on the BOCs for the provision of competitive services that require local BOC facilities as an input, there is nothing "natural" about the BOCs' proposed wholesale/retail framework, which would allow the BOCs to provide interLATA services on a fully integrated basis. Such requirements, where a court or agency has chosen to impose them, have never allowed such integration of local BOC facilities and the extra facilities necessary to provide the competitive service at issue. In any event, whether "natural" or not, providing integrated interLATA services "through" a BOC  X-affiliate by providing such services to the affiliate cannot be squared with the language of  X -section 272(a)(2). As demonstrated above, section 272(a)(2) includes the exclusive list of services that a BOC must provide "through" an affiliate. That list includes "interLATA"!z<,-(-(ZZ " telecommunications services" and "interLATA information services," which as  X-demonstrated immediately below plainly include wholesale as well as retail services.j=b2 yOb- xhԍ We recognize that the BOCs might argue here that the term "origination" in section 272(a) indicates just such  xa distinction. We note first, however, that such an argument would undercut the BOCs' suggestion in their comments  x;that their argument based on the term "through" in section 272(a)(1) is independent of their argument based on the  {O- xterm "origination." See BOCs at 45. In any event, again as explained immediately below, we find the BOCs' "origination" argument unpersuasive.j Thus, it is clear that section 272(a) requires the BOCs to provide wholesale interLATA services "through" an affiliate, just as it requires them to provide retail interLATA services "through" an affiliate.  Xv-x28. The BOCs' other basis for reading section 272(a) to refer only to retail services rests on the use of the term "[o]rigination" in the phrase "[o]rigination of interLATA telecommunications services" in section 272(a)(2). As explained above, the BOCs assert that, "[w]hen a BOC provides interLATA services to its affiliate under [section 272(e)(4)], . . . it is  X -not `originating' interLATA services. . . . [I]t is the affiliate that `originates' such services  X -when its retail customers place interLATA calls."> zb2 {O.- xЍ See also BOCs at 5 n.3 ("`origination' refers to the specific activity of providing interLATA services to the customers who initiate interLATA calls"). Significantly, however, the BOCs do not offer any dictionary definition of "origination," nor a definition drawn from any other  X -authoritative source, that supports their particular understanding of the term.L?X b2 yOZ- xЍ Such sources might include the meaning of the term elsewhere in the Telecommunications Act of 1996, the  xmeaning of the term under traditional common carrier regulation, or under the MFJ, or the meaning of the term in an technical engineering sense.L Rather, they  X -argue that the term "origination" derives its meaning from the context of section 272.@ b2 {Oc- xԍ See BOCs Reply at 34 ("[W]e believe that our view of `origination' is the only sensible one in the context of section 272.").  X -Although we agree that the term must be understood in its proper context,aA  N b2 yO- xЍ Context is particularly important here because an overly literal reading of section 272(a)(2) leads to  xJnonsensical results. As described above, section 272(a)(2) requires, in relevant part, a separate affiliate for a service  xcalled "origination of interLATA telecommunications services." At least with respect to bundled, endtoend  xinterLATA telecommunications services, however, such "origination" service could be understood to be the service  {O- xcommonly known as originating exchange access service or originating access. See WorldCom at 8 (citing "exchange  xLaccess" as an example of an "origination" service as understood "in the telecommunications industry"). And  xYoriginating access (and terminating access, for that matter) is one of the BOCs' core local services and has long been  xiprovided by the BOCs directly, subject to regulation of course. Indeed, it is nearly a meaningless idea to speak of  xhsuch service as having to be provided through a separate affiliate, which explains why no party denies that the BOCs  xthemselves may provide both originating and terminating access for interLATA calls. In a footnote to its separate  xcomments, US WEST seems to adhere to this literal view of "origination," but for the reasons just stated, we reject  {O@%- xthat view.  See US WEST at 5 n.10 ("The appearance of [`origination'] in Section 272(a)(2)(B) was probably  xintended merely to distinguish the service for which a separate affiliate is required the origination of an interLATA  xKcall from the service a BOC may provide directly the termination of an interLATA call"). It is significant,"&@,-(-(_'"  xwnonetheless, that US WEST does not adhere to the other BOCs' view of "origination" as indicating a wholesale/retail distinction.a the difficulty with"  A,-(-(ZZ "  X-the BOCs' position is that they simply assert, without explanation, that the proper context is  X-"the specific activity of providing interLATA services to . . . customers," i.e., providing retail interLATA services. In contrast, sections 271 and 272 indicate that Congress was almost certainly using the term "origination" in section 272(a)(2) in a geographical sense. x29. Specifically, it is far more likely that, by requiring a separate affiliate for "[o]rigination of interLATA telecommunications services," Congress simply meant to clarify  Xc-that a separate affiliate is required for certain interLATA telecommunications services as  XN-judged by the point of origination of such services. Such a clarification might have been considered helpful in light of the fact that, as noted above, one of the exceptions to the separate affiliate requirement for "[o]rigination of interLATA telecommunications services" is for "outofregion" services, that is, services for which the point of origination is outside a BOC's inregion states. This outofregion versus inregion distinction is one of the fundamental distinctions in section 271; section 271 permits immediate entry for the former,  X -but requires section 272(d)(3) approval for the latter.B b2 {O- xЍ  See also 47 U.S.C.  271(b)(3) (authorizing immediate provision of "incidental interLATA services . . .  {Oa-originating in any State") (emphasis added). It is therefore only natural that Congress would have wanted to maintain and did maintain that same distinction in the separate affiliate requirement in section 272. Further, this view of "origination" in section  X-272(a)(2) appears to be consistent with the absence of that term with respect to "interLATA information services." Because Congress failed to include an "outofregion" services exception with respect to interLATA information services, a separate affiliate is required for  X>-such services regardless of their point of origination.iC>|b2 {Ok- xЍ See NonAccounting Safeguards First Report and Order, paras. 8587 (finding that this result is compelled  x\by the language of the statute). We note that several parties have challenged this finding in petitions for  {O- xreconsideration of the NonAccounting Safeguards First Report and Order.  See US WEST Petition at 15 (filed Feb.  x20, 1997); BellSouth Petition at 1013 (filed Feb. 20, 1997). We note in addition that the term "origination" does  xI not qualify the phrase "interLATA telecommunications services" as that phrase appears in the 272(f) sunset provision, which (for obvious reasons) also does not make any express reference to an outofregion versus inregion distinction.i x30. The legislative history supports our view that the term "origination" was meant merely as a helpful clarification. It appears that the term "origination" was not part of either the Senate or the House version of section 272(a), but was added during the reconciliation conference. For example, the Senate version of section 272(a), which was the template for the final version, stated, "The services for which a separate subsidiary is required . . . are: (A)  X-Information services . . . (B) Manufacturing services . . . (C) InterLATA services . . . ."IDX b2 yOF%- x-ԍ S. 652, 252(b), 104th Cong., 1st Sess. 28 (1995); see also H.R. 1555, 246(a), 104th Cong., 1st Sess. 10  xj(1995) (imposing separate affiliate requirement on the provision of "any interLATA telecommunications or interLATA information service").I "D,-(-(ZZ" Thus, both houses of Congress passed versions of section 272(a) in which the separate affiliate requirement, even the BOCs would have to agree, clearly applied to both retail and  X-wholesale interLATA services. The explanation in the Joint Explanatory Statement of the Senate version of section 272 confirms this. It describes the services for which a separate affiliate is required as including "interLATA telecommunications services," without the term  X-"origination" preceding it and without any indication of a wholesale/retail distinction.EZb2 yO- xԍ Joint Explanatory Statement at 150.  Likewise, the description of the House version identifies the covered  xhservices as including "BOC provision of interLATA telecommunications or information services," again without the  {O-term "origination" modifying that description. Id. at 151. Thus, to accept the BOCs' argument, one would have to conclude that the addition of the term "origination" during the conference reflected Congress' decision to reject the broad consensus that had been reached on the scope of the separate affiliate requirement and to cut back on it significantly by limiting the requirement to retail service offerings that originate within the BOC's service territory. If this were the case, one would expect, at a minimum, some discussion of such a decision in the legislative history, but we have found no such discussion, and the parties have not pointed to any. The Joint Explanatory Statement, for example, is  X -silent on the issue. Rather, the explanation in the Joint Explanatory Statement of the final version of section 272 simply states, "The conference agreement adopts the Senate provisions with several modifications," and then goes on to discuss the major changes that occurred,  X-without mentioning the addition of "origination."Fb2 {O+- x,Ѝ Id. at 152. We also note that the general introduction to the Joint Explanatory Statement explains that any  xchanges adopted during the conference are "noted below" in the body of the Joint Explanatory Statement, "except  xKfor clerical corrections, conforming changes made necessary by agreements reached by the conferees, and minor  {O- xJdrafting and clerical changes." Id. at 113. Presumably, then, by not even mentioning the addition of "origination," Congress viewed this addition as one of these minor kinds of changes.  Xb-x31. Moreover, equating the "origination" of a service with the retail provision of that service appears to lead to unlikely results in two respects. First, as just noted, the term "origination" does not precede the other main category of interLATA service for which a separate affiliate is required, namely, interLATA information services. Under the BOCs' reading of the statute, then, inregion wholesale interLATA information services would still generally require a separate affiliate, while inregion wholesale interLATA telecommunications services would not. Yet Congress treated these two kinds of inregion interLATA services identically for section 271 purposes, requiring section 271(d)(3) approval for both. The BOCs have not advanced any plausible rationale for why Congress would have  X-treated them fundamentally differently for section 272 purposes.Gb2 yO"- x<ԍ We recognize that the BOCs might argue here that their alternative argument for why there is no conflict  xKbetween section 272(a) and 272(e)(4) their argument based on the term "through" in section 272(a)(1) still  x;applies to interLATA information services and thus that they are, in fact, allowed to provide wholesale interLATA  xyinformation services to their affiliates. While we do not agree, as explained above, that the BOCs' "through"  xargument is a persuasive one, we do agree that if it were persuasive, it would apply equally to both interLATA  x.telecommunications services and interLATA information services. Nonetheless, such an argument would be"&F,-(-( '"  x,tantamount to a concession that the term "origination" in section 272(a)(2), under the BOCs' reading of that term,  xis at most a clarification of the wholesale/retail distinction that section 272(a)(1) purportedly establishes. Such a  xconcession weighs against the BOCs' reading of that term because it is hard to think of a reason why Congress  xwould have wanted to clarify this distinction with respect only to interLATA telecommunications services but not with respect to interLATA information services. "xG,-(-(ZZ"Ԍx32. Second, equating the "origination" of a service with the retail provision of that service also appears to lead to unlikely results because of the interplay between sections 271(a) and 271(b). Section 271(a) bars BOC provision of "interLATA services" which, as noted above, the BOCs agree include wholesale services "except as provided in this section." Section 271(b) then authorizes, on various timetables, "interLATA services originating in any of [a BOC's] inregion States," "interLATA services originating outside its inregion States," and certain "incidental interLATA services . . . originating in any State." If the term "origination" in section 272(a)(2) refers only to the provision of retail interLATA services, then the references to "originating" in section 271(b) would also appear to refer to retail interLATA services. Consequently, under the BOCs' reading of the statute, section  X -271(a) bars a BOC from providing wholesale interLATA services, but no provision of section  X -271(b) authorizes the BOCs to provide these services, including outofregion and incidental  X -wholesale services.HB xb2 yO- x,ԍ It might be argued that, under the BOCs' reading, section 272(e)(4) itself provides the requisite authorization.  xBut the point here is not that the BOCs would never, in fact, be authorized to provide wholesale interLATA services,  xbut rather that it is unlikely that Congress intended section 271(b) to have such a gaping hole in it. After all, section  x+ 271(b) is the principal authoritygranting provision in the section 271/272 framework. In this regard, it is telling that,  xin addressing the argument that their reading of "origination" leads to unlikely results, the BOCs do not argue that  xsection 272(e)(4) provides the requisite authorization. They focus instead on distinguishing the use of the term  {O- x"originating" in section 271(b) from the use of the term "origination" in section 272(a)(2). See BOCs Reply at 3 n.3.  Thus, we conclude that a carrier "originat[es]" an inregion interLATA service in a particular state when it provides inregion interLATA service regardless of whether it provides that service on a wholesale or a retail basis.  X-x 33. We note that, during the proceeding that resulted in the NonAccounting  X{-Safeguards First Report and Order, certain of the BOCs advanced a different argument as to why the language of section 272(a) does not cover wholesale services: that the phrase "telecommunications services" itself statutorily defined as "the offering of  X8-telecommunications for a fee directly to the public, . . . regardless of the facilities used"AI8 b2 yOk -ԍ 47 U.S.C.  153(46).A  X!-covers only retail services.J!b2 {O"-Ѝ See NonAccounting Safeguards First Report and Order, para. 260 (noting that PacTel took this position). Proponents of this interpretation contended that wholesale telecommunication services are not offered directly to "the public," but only to other carriers.  X-In the NonAccounting Safeguards First Report and Order, the Commission addressed this argument at length and rejected it primarily on the ground that it could find no basis in the statute, legislative history, or FCC precedent for finding the reference to "the public" in the"J,-(-(ZZS" statutory definition to be intended to exclude wholesale telecommunications services. Rather, the Commission concluded that the phrase "the public" was meant only to exclude private  X-carriage services, as opposed to common carrier services.GKb2 {OK-ԍ See id. paras. 263265.G While the BOCs have not pressed this particular argument before the court or before the Commission on reconsideration, Omnipoint has pressed a variant of it in response to the Bureau's request for comments on the scope of section 272(e)(4). x!34. In providing wireless service, Omnipoint explains that it often needs transport  XH-services that cross LATA boundaries and that it could deliver a more efficient wireless service if it could use the BOCs' interLATA transport facilities, such as the existing transport facilities that are part of the BOCs' Official Services Networks, rather than build its own interLATA transport facilities or lease the interLATA transport facilities of existing interLATA service providers (facilities which Omnipoint says are inconveniently located for  X -its purposes).OL Zb2 {O-Ѝ See Omnipoint at 36.O Its principal legal argument is that our conclusion in the NonAccounting  X -Safeguards First Report and Order that the phrase "telecommunications services" covers all  X -wholesale (as well as retail) telecommunication services was "overly broad"9M b2 {OH-ԍ Id. at 7.9 and that it should be construed to exclude at least one kind of wholesale arrangement, carriertocarrier leasing of highcapacity private lines. We find no basis in the statutory definition of "telecommunications services," however, for concluding that this kind of wholesale  XO-arrangement, as opposed to all other kinds, falls outside that definition.IN"O~b2 yO~- xxЍ More broadly, Omnipoint also suggests that such wholesale privateline leasing arrangements should not be  xunderstood as the provisioning of services, but rather solely as the provisioning of facilities, in which case such  xarrangements fall entirely outside the section 271/272 framework governing the provisioning of interLATA services.  {O-As explained below, however, such arrangements are plainly services. See infra note 110 and accompanying text.I  X8-  X!-x"35. US WEST, like the other BOCs, does not dispute that the statutory definition of "telecommunications services" applies to wholesale telecommunications services. It merely  X-observes that the statutory definition does not cover all telecommunicationslike services most significantly, it does not include private carriage services and that the BOCs should  X-be able to provide directly any service that falls outside that definition.9OZh b2 {O!- x?Ѝ See US WEST at 4 ("`[I]nterLATA service' plainly has a broader scope than does `interLATA  xtelecommunications service," and the difference between the two represents the interLATA services that a BOC may provide directly.").9 With the important reminders that (1) wholesale telecommunications services are one kind of  X-telecommunicationslike services that, as just noted, does not fall outside that definition, and (2) the separate affiliate requirement also applies to inregion interLATA information services,  Xm-we have no objection to this observation. In this regard, however, we note our serious doubts"m O,-(-(ZZ" whether there is any interLATA service that a BOC might seek to provide to its affiliate that could be properly characterized as a private carriage service, given that the BOC would be  X-under a legal obligation pursuant to sections 272(c)(1) and 272(e)(4) to make such service  X-available to any other entity a hallmark of a common carrier service.TP\b2 {O4- x-ԍ See, e.g., National Ass'n of Regulatory Utility Comm'rs v. FCC, 525 F.2d 630, 641, cert. denied, 425 U.S.  {O- x;992 (1976) (NARUC I); National Ass'n of Regulatory Utility Comm'rs v. FCC, 533 F.2d. 601, 608 (1976) (NARUC II).T  X-x#36. Firmly bolstering our view that nothing in section 272(a)(2) suggests a wholesale/retail distinction not "origination," not "telecommunication services," and not any other term or phrase is the fact that section 251(c)(4) demonstrates that, when Congress  XH-means to create an important wholesale/retail distinction, it does so clearly, a point we  X1-emphasized in the NonAccounting Safeguards First Report and Order.pQ1b2 {O -ԍ See NonAccounting Safeguards First Report and Order, para. 264.p Section 251(c)(4) imposes a duty on incumbent local exchange carriers to offer for resale at wholesale rates "any telecommunications service that the carrier provides at retail to subscribers who are not  X -telecommunications carriers."CR ~b2 yO-ԍ 47 U.S.C.  251(c)(4).C Moreover, section 272(a)(2) sets out quite specifically the three kinds of services for which a separate affiliate is required and the exceptions to each kind of service. Congress' attention to detail in this respect makes the lack of any straightforward textual indication of a wholesale/retail distinction in section 272 all the more telling. In sum, we reject the BOCs' assertion that section 272(a) prohibits a BOC from offering directly to customers only retail interLATA services originating inregion. x$37. We think that section 272(b)(1), which requires the separate affiliate to "operate independently" of the BOC, provides independent support for the fact that Congress did not intend the BOCs to provide inregion interLATA services, on a wholesale basis, to their affiliates and other carriers. To allow the BOCs to provide such services would be to allow them to place the design, construction, and operation of their interLATA facilities in their local operating companies and thus to provide their wholesale inregion interLATA services over a uniquely integrated localinterLATA network. As explained above, however, we  X-concluded in the NonAccounting Safeguards First Report and Order that section 272(b)(1) was principally designed to prevent substantial integration of the local operating company's local network facilities and the separate affiliate's longdistance network facilities (assuming the affiliate chooses to be a facilitiesbased provider rather than a reseller). And such a conclusion plainly presupposes that Congress did not intend that local and interLATA facilities could be integrated within the local operating company itself. For what purpose could Congress have had in prohibiting physical integration of the local operating company's local facilities and the affiliate's interLATA facilities if complete physical integration of local and interLATA networks within the local operating company itself would be permitted regardless? "R,-(-(ZZ"Ԍx%38. Having concluded that section 272(a), reinforced by section 272(b)(1), prohibits in relevant part precisely what the BOCs claim section 272(e)(4) authorizes, we now address the BOCs' alternative arguments regarding the proper interpretation of section 272(e)(4). As  X-summarized above, the BOCs contend that, even assuming arguendo we were to find an apparent conflict between sections 272(a) and 272(e)(4), under the wellestablished canon of construction, the more specific provision overrides the more general provision. Even  Xx-assuming arguendo that this canon were applicable, however, it is far from clear that section 272(e)(4) should be considered the more specific provision and section 272(a) the more general. While there are certain respects in which section 272(e)(4) is the more specific provision, there are also certain respects in which section 272(e)(4) is the more general. For example, one could reasonably view section 272(e)(4) as the more general provision because that section, under the BOCs' reading of it, constitutes a broad grant of authority to provide  X -directly, on a wholesale basis, any interLATA services, any interLATA facilities, any intraLATA services, and any intraLATA facilities, whereas section 272(a) is a circumscribed limitation on that broad grant that requires that, out of the entire universe of interLATA or intraLATA facilities or services that a BOC is purportedly authorized to provide directly, certain such services specifically, manufacturing activities, interLATA telecommunications services (with three exceptions), and interLATA information services (with two exceptions) be provided through a separate affiliate. x&39. It is also far from clear why, if we were to conclude that section 272(e)(4) overrides section 272(a), we would not have to conclude that it also overrides section 271(a), thus permitting the BOCs to provide any wholesale interLATA services immediately, before section 271(d)(3) approval a result, as mentioned above, the BOCs disavow. In this regard, the BOCs' attempt to distinguish section 271(a) and section 272(a) is unpersuasive.  X-Specifically, they argue that section 271(a) does not give way to section 272(e)(4) because section 271(a) states that a BOC may not provide interLATA services "except as provided in this section," and section 272(e)(4) is not "in this section." Yet, as explained above, we think the text of section 272(a) directs equally clearly that the services for which a separate affiliate is required, along with any exceptions, are to be found in section 272(a)(2) and only that  XR-provision, not in subsequent provisions of section 272 such as section 272(e)(4).SRb2 yO- xЍ We recognize that, if we were to adopt an interpretation of section 272(e)(4) that does, in fact, override  xsection 271(a) in addition to overriding section 272(a), the practical significance would arguably be minimal. This  xis because section 272(e)(4) speaks of a BOC's interLATA services being provided, in the first instance, to the  x,BOC's "interLATA affiliate." And before section 271(d)(3) approval, the prospect of the BOC providing wholesale  xinterLATA services to its "interLATA affiliate" would appear to be a harmless, if not meaningless, prospect, for the  x"interLATA affiliate" would not be able to provide those services on a retail basis until after section 271(d)(3)  xapproval in any event. Nonetheless, it seems quite unlikely that Congress intended sections 271(a) and 271(b)(1),  xtaken together, to permit the BOCs to provide inregion interLATA services of any kind before obtaining section  x271(d)(3) approval, regardless of the practical significance of the BOCs doing so in particular situations a point that is reflected in the BOCs' own disavowal of such a result.  X$-x'40. In any event, we find that the canon the BOCs seek to invoke is not applicable in"$` S,-(-(ZZ>" this instance, at least not in the way in which the BOCs have described it. The canon that "the specific governs the general" only applies where the conflict between the statutory  X-provisions is inescapable, that is, where there is no plausible construction of either provision  X-that allows the conflict to be reconciled.Tb2 {O6- x;Ѝ See Chevron U.S.A., Inc. v. Hammond, 726 F.2d 483, 490 n.8 (9th Cir. 1984) ("[P]rinciples of construction  xrequiring the more recent and specific statute to prevail over the earlier and more general only apply when there is  {O- xan irreconcilable conflict between statutes.") (citing Watt v. Alaska, 451 U.S. 259, 266 (1981) (making clear that the  {O- xcanon that the later controls the earlier applies only where the apparent statutory conflict is "irreconcilable")); see  {O\- xalso 2A Norman J. Singer, Sutherland Statutory Construction, S. 46.05, at 105 (5th ed. 1992) ("Where there is  {O& - xLinescapable conflict between general and specific terms or provisions of a statute, the specific will prevail.") (emphasis added). This is for good reason, for the application of the canon where there is no such construction presupposes that Congress has contradicted itself a position that should be adopted only as a last resort. Thus, we are obliged to determine whether there is a plausible construction of either section 272(a) or 272(e)(4) that allows us to reconcile the apparent conflict, making sense of both provisions and serving the purposes of the statute to the greatest extent possible. x(41. We are doubtful that there is any plausible construction of section 272(a) that would allow us to reconcile the apparent conflict and adopt the BOCs' reading of section 272(e)(4). As discussed at length above, the BOCs' characterization of section 272(a) as a "general" rule, to be given content by the subsequent subsections of section 272, cannot be sustained in light of that rule's clear directive to look specifically to the list of services in section 272(a)(2). Moreover, the BOCs' interpretation of "origination" as referring to the provision of interLATA services to retail customers who place interLATA calls does not appear to have any basis in the common usage of that term and appears to lead to unlikely results. The only other possible construction would be to add to the list of exceptions in section 272(a)(2) a "wholesale services" exception. While there may be situations where it is defensible to read an exception into a statute in order to reconcile an otherwise irreconcilable statutory conflict, that seems inappropriate where, as here, Congress explicitly focused on the issue of exceptions and prescribed a specific list. Buttressing this point is the fact that the Senate version of section 272 would have expressly authorized the Commission to grant exceptions to the separate affiliate requirement, but that provision was dropped by the  X-conferees.bUb2 {O-ԍ See Joint Explanatory Statement at 151152. b x)42. By contrast, we conclude that there is a plausible construction of section 272(e)(4) that reconciles the apparent conflict with section 272(a) and does so in a way that is uniquely consistent with the specific policy choice that Congress made in enacting the separate affiliate  XP-requirement. Specifically, as we previously concluded in the NonAccounting Safeguards  X;-First Report and Order,pV;b2 {O&-ԍ See NonAccounting Safeguards First Report and Order, para. 261.p we construe section 272(e)(4) to mean that the BOC may provide";6 V,-(-(ZZ{"  X-any interLATA or intraLATA facilities or services it is otherwise authorized to provide to its interLATA affiliate if such services or facilities are made available to all carriers at the same rates and on the same terms and conditions, and so long as the costs are appropriately allocated. Thus, in our view, section 272(e)(4) is not a grant of authority; it merely prescribes the manner by which BOCs may provide interLATA and intraLATA facilities and services to their affiliates. x*43. We believe this construction of section 272(e)(4) does not have any of the defects alleged by the BOCs that might render the construction implausible. First, our reading gives effect to all of the statute's existing terms, including the key terms "may provide" and "any" on which the BOCs rely; our interpretation just does not read these terms as effectuating a grant of authority. x+44. Second, our interpretation does not render section 272(e)(4) meaningless or redundant. Far from it, the provision serves precisely the same function as the other three  X -provisions in section 272(e). As explained above, section 272(c)(1) imposes a general nondiscrimination requirement on the BOCs in their dealings with affiliates. In order "to reduce litigation," however, Congress, in section 272(e), set forth more particularized non Xd-discrimination requirements tailored to specific contexts.rWZdb2 {O- xЍ See Joint Explanatory Statement at 150. As the BOCs themselves recognize in rebutting the claim that the  xphrase "intraLATA facilities and services" is a redundant one, it is not uncommon for Congress to want to include in a statute an "added dose of clarity." BOCs at 3. r Section 272(e)(1), for example, sets forth a nondiscrimination requirement with respect to the time in which a BOC fulfills requests for local exchange or exchange access service. Similarly, section 272(e)(4) sets forth a nondiscrimination requirement with respect to the provision of interLATA or intraLATA facilities and services that a BOC is otherwise authorized to provide services such as outofregion services, five of the six incidental services, previously authorized activities, and perhaps most importantly, all other interLATA services as the separate affiliate requirements expire.  X-x,45. In light of the similar function that section 272(e)(4), under our reading, serves in relation to the other three provisions of section 272(e), our reading also draws support from the wellestablished canon of construction that statutory provisions are to be construed in light  XP-of the company they keep.X\Pb2 {O - x,ԍ  See Jarecki v. G.D. Searle & Co., 367 U.S. 303, 307 (1961) ("[A] word is known by the company it keeps");  {O!- xZsee also Mass. v. Morash, 490 U.S. 107, 115 (1989) (referring to this canon as the principle of noscitur a sociis, which literally means "it is known from its associates"). Our interpretation of section 272(e)(4) is also consistent with the  X9-overriding focus of section 272 generally. As both the text of section 272 and the"9X,-(-(ZZ{"  X-descriptions of the provision in the legislative history make clear, Yb2 yOy- xKЍ The Joint Explanatory Statement, for example, refers to the Senate version of section 272 as being about  x"impos[ing] separate subsidiary and other safeguards on certain activities of the BOCs" and refers to the House  x\version as being about "creat[ing] a separate subsidiary requirement for the BOC provision of interLATA  xhtelecommunications and information services." Joint Explanatory Statement at 150, 151. With respect to the final  xJversion of section 272, the Joint Explanatory Statement generally explains, "The conference agreement adopts the  {Oa-Senate provisions with several modifications."  Id. at 152.  section 272 primarily establishes structural separation requirements and other safeguards applicable to the BOCs' provision of interLATA and other services that the BOCs are elsewhere authorized to provide (in section 271, for the most part). In contrast, the BOCs' proposed reading of section 272(e)(4) as a grant of authority is flatly inconsistent with the thrust of section 272(e) in particular and section 272 in general. It seems unlikely enough that Congress would have placed a fundamental grant of authority to the BOCs in section 272, the thrust of which, as just noted, is to prescribe the manner in which the BOCs may enter certain new markets; but it seems utterly implausible that Congress would have placed such a grant in section 272(e) as the fourth subsection of a provision entitled "Fulfillment of Certain Requests," following three other subsections that all impose restrictions on the BOCs.  X - x-46. We recognize that our preferred interpretation of section 272(e)(4) does not give this provision the great significance the BOCs' interpretation does. We think this fact weighs in favor of our interpretation, however, because judging from the legislative history, Congress did not appear to regard section 272(e)(4) as a particularly significant provision, just as it did not appear to attach great significance to the addition of the term "origination" in section 272(a). Specifically, section 272(e)(4) was introduced as part of a lengthy managers'  Xb-amendment to the Senate version of section 272.ZbBb2 {OU- xЍ See 141 Cong. Rec. S792601, S7928, 104th Cong. June 7, 1995 ("Pressler (and Hollings) Amendment No. 1258"). Significantly, the amendment as a whole  XK-was described merely as "mak[ing] certain technical corrections."K[Kb2 {O-ԍ Id. S7942 (June 8, 1995). K Moreover, at no point during the discussion of the managers' amendment was there any specific discussion of section 272(e)(4) or its impact. Nor does there appear to have been any such discussion of this provision at any later point in the legislative history. The absence of any discussion on the measure would seem highly unlikely, however, if section 272(e)(4) were really intended to  X-be a fundamental grant of authority as the BOCs claim.\B(. b2 {O!- xԍ In an ex parte presentation filed after the pleading cycle closed, see Letter and Memorandum from Mark L.  xEvans, Counsel for Bell Companies, to Mr. William F. Caton, Acting Secretary, Office of the Secretary (filed June  yOI#- xw4, 1997), the BOCs submitted a provision of a bill reported by the Senate Commerce Committee that was the Senate  xpredecessor to section 272 section 236(f) and that the BOCs say confirms that the Committee viewed section  xh272(e)(4) as a grant of authority. The particular section on which the BOCs rely is section 236(f)(3)(D), which was  xthe predecessor to section 272(e)(4) in particular. Section 236(f)(3)(D) stated that the separate affiliate "shall be  xpermitted to use interLATA facilities and services provided by its affiliated [BOC], so long as its costs are  xappropriately allocated and such facilities and services are provided to its subsidiaries and other carriers on"1'[,-(-('"  {O- xnondiscriminatory rates, terms, and conditions." S. 1822, 103d Cong., 2d Sess. 236(f)(3)(D) (1994); see also Senate  {OZ- xCommittee on Commerce, Science, and Transportation, S. Rep. No. 23, 104th Cong., 1st Sess. 10 (1995). As an  xinitial matter, we note that section 236(f) was part of a bill that was reported by the Senate Commerce Committee  xof an entirely different (i.e., earlier) Congress than the Congress that passed the Telecommunications Act of 1996.  xWe also note that the provision changed in what appear to be important respects when it was reintroduced in the  {O|- xsubsequent Congress. For example, the "operate independently" requirement was added. See Letter from Frank  yOF- xKrogh, Counsel for MCI, to Mr. William F. Caton, Acting Secretary, Office of the Secretary (filed June 18, 1997).  xIn any event, even if section 236(f)(3)(D) had passed as written, the same arguments advanced in this order against  xconstruing 272(e)(4) as a grant of authority would have applied against construing section 236(f)(3)(D) as a grant.  xLike section 272, section 236(f) contained an analog to section 272(a), namely section 236(f)(1). Section 236(f)(1)  {Of - xstated that "[o]ther than interLATA services authorized [by an MFJ court order], a [BOC] providing interLATA  {O0 - xservices authorized under [section 236(c)] shall provide such interLATA services in that market only through a  yO - xhsubsidiary that is separate from an [BOC] entity that provides regulated local telephone exchange service." S. 1822,  {O - x103d Cong., 2d Sess. 236(f)(1) (1994) (emphasis added); see also id. 236(c) (authorizing, on various conditions,  xzthe BOCs to provide inregion "interLATA telecommunications services" and outofregion "interLATA  yOT - xYtelecommunications services"). And like section 272(a), nothing in section 236(f)(1), or section 236(c) to which it  {O- xrefers, suggested an exception for wholesale interLATA telecommunications services. Thus, in the same way that  xKthere is an apparent conflict between sections 272(a) and 272(e)(4), there would have been an apparent conflict  xbetween sections 236(f)(1) and 236(f)(3)(D). And just as the only way to resolve the conflict between sections  xJ272(a) and 272(e)(4) consistently with the policy choice Congress made to require a separate affiliate is to construe  xsection 272(e)(4) not to be a grant of authority, the only way to resolve the conflict between sections 236(f)(1) and  x.236(f)(3)(D) would have been to construe 236(f)(3)(D) not to be a grant as well. In this regard, like section  xJ272(e)(4), section 236(f)(3)(D) could have plausibly been construed not to be a grant of authority. That is, it could  yO- xhave plausibly been read to mean that the separate affiliate shall be permitted to use interLATA facilities and services  {O^- xprovided by its affiliated BOC where the BOC is otherwise authorized to provide such facilities and services, so long  xas its costs are appropriately allocated and such facilities and services are provided to its subsidiaries and other  yO-carriers on nondiscriminatory rates, terms, and conditions.ğ"\,-(-(ZZr"Ԍx.47. Finally, and most importantly, we think our interpretation is not only a plausible construction of the text, but also the only construction that can be squared with the considered policy choice Congress made in imposing a separate affiliate requirement for inregion  X-interLATA services. For many years, until the passage of the Telecommunications Act of 1996, a wellknown regulatory debate took place in the federal courts, in the Department of Justice, in the Commission, and among industry groups, antitrust law experts, and economists regarding the wisdom of allowing the BOCs, as regulated entities that control the bottleneck facilities of the local network, to provide services in potentially competitive  XH-markets that require these bottleneck facilities as an essential input of such services.]\Hb2 {O- xKԍ For an exhaustive account of this debate with respect to various such services, including the history of the  {O{ - xMFJ and applicable FCC regulation, see Michael K. Kellog, et al., Federal Telecommunications Law (1992 & Supp. 1995). We note that the authors of this treatise represent the BOCs in this and other similar proceedings.  Examples of such services include interLATA services, which are provided by connecting a BOC's local bottleneck facilities to interLATA facilities, enhanced services, which are  X -provided by connecting the BOC's local facilities to computer facilities,x^X b2 yO%- x<ԍ "Enhanced" services, according to the Commission's rules, "refer to services, offered over common carrier  xtransmission facilities used in interstate communications, which employ computer processing applications that act  xyon format, content, code, protocol or similar aspects of the subscriber's transmitted information; provide the" '],-(-(C'"  xsubscriber additional, different, or restructured information; or involve subscriber interaction with stored information." 47 C.F.R. 64.702(a).x and wireless"  ^,-(-(ZZ "  X-services, which are provided by connecting the BOC's local facilities to wireless facilities._X b2 yO- xԍ We note that these competitive activities which, by definition, require local BOC facilities as an input to  xsuch activities may be distinguished from competitive activities that involve connection to local BOC facilities but are nonetheless standalone, unbundled offerings. The provision of customer premises equipment is an example. Certain parties in this debate emphasized the anticompetitive dangers that arise if the BOC is permitted to provide such services on a physically integrated basis. That is, they emphasized the dangers that arise if the BOC is allowed to place the design, construction, and operation  X-of the nonlocal facilities at issue such as interLATA facilities in the case of interLATA services, computer facilities in the case of enhanced services, or wireless facilities in the case of wireless services in the local operating company. For example, with respect to interLATA services, these parties were concerned that a BOC, if permitted to provide such services on an integrated basis, would have the ability and incentive to arrange more efficiently designed, higher quality connection between its local network and its interLATA facilities than between its local network and rivals' interLATA facilities. They were also concerned that a BOC might take the common costs of the facilities (and employees) that are jointly used to provide both local and interLATA service and allocate, on its books of account, an undue proportion of such costs to its local operations. As suggested above, such improper cost allocation would allow the BOCs to overcharge local service ratepayers while at the same time inefficiently undercut their interexchange competitors. On the other side of the debate, the BOCs emphasized the significant integrative efficiencies that result from being able to have the same facilities (and employees) that are used in the design, construction, and operation of their local networks used in the design, construction, and operation of their interLATA networks. And they also disputed that service on a physically integrated basis  X4-raises the anticompetitive dangers described above.Y` 4@b2 {O%- xԍ In more recent years, the BOCs have also argued that even assuming arguendo that, at the time of the MFJ,  xthere were legitimate anticompetitive dangers to be considered, any such dangers are no longer serious in light of  xcertain new developments, such as the trend towards pure price cap regulation (which lessens the BOCs' incentive  xto misallocate costs), increasing regulatory experience with the "equal access" regime initiated by the MFJ (which  xYlessens the BOCs' ability to engage in discrimination without detection), and perhaps most importantly, the opening  xof the local network to facilitiesbased competition. As explained below, however, in enacting section 272, Congress  xclearly concluded that the dangers of anticompetitive conduct, and the need for structural and nonstructural  xsafeguards, will not yet have been eliminated when the BOCs are permitted to enter the inregion longdistance business.Y The MFJ bar on the provision of interLATA services, which preceded the section 271/272 framework, clearly reflected a judgment that the dangers were serious and outweighed any benefits.  X-x/48. There was a related wellknown debate during these years over the wisdom of requiring the BOCs, in the event they were to be permitted to provide competitive services  X-that require the BOCs' local facilities as an input for such services, to do so through a"`,-(-(ZZ"  X-separate affiliate.QaZb2 yOy- xxԍ Again, for an exhaustive account of this debate with respect to each of these services, and its resolution by  {OA- xthe MFJ court and the FCC at various points in time, see Michael K. Kellog, et al., Federal Telecommunications Law (1992 & Supp. 1995).Q For certain such services such as wireless services, the Commission decided, precisely because of the anticompetitive dangers described above, that a separate  X-affiliate would generally be required.~b\b2 {Om- xԍ   See, e.g., In the Matter of an Inquiry into the Use of the Bands 825845 MHz and 870890 MHz for Cellular  x[Communications Systems; and Amendment of Parts 2 and 22 of the Commission's Rules Relative to Cellular  {O-Communications Systems, 86 F.C.C.2d 469 at 493 (1981).~ With respect to the provision of interLATA services on a nondominant basis by local exchange carriers other than the BOCs (which were not  X-covered by the MFJ), the Commission decided the same.fc\b2 {Oc - x=ԍ Competitive Carrier Fifth Report and Order, 98 FCC 2d 1191 (1984) (previous and subsequent history  {O- - xomitted). The Competitive Carrier Fifth Report and Order separate affiliate requirement has remained our policy for the last thirteen years, since its adoption.f For other services such as enhanced services, the Commission originally determined that a separate affiliate would be  Xv-required,dv2 b2 {OY-ԍ See Computer II, 77 F.C.C.2d at 47778 (1980); BOC Separations Order, 95 F.C.C.2d 1117 (1983). but subsequently decided that nonstructural safeguards would suffice.Kev b2 {O- xԍ See Amendment of Section 64.702 of the Commission's Rules and Regulations (Computer III), CC Docket  {O- x/No. 85229, Phase I, 104 FCC 2d 958 (1986) (Phase I Order), recon., 2 FCC Rcd 3035 (1987) (Phase I  {O-Reconsideration Order), further recon., 3 FCC Rcd 1135 (1988) (Phase I Further Reconsideration Order),  {OI- xJsecond further recon., 4 FCC Rcd 5927 (1989) (Phase I Second Further Reconsideration Order); Phase I Order and  {O- xPhase I Reconsideration Order vacated, California v. FCC, 905 F.2d 1217 (9th Cir. 1990) (California I); Phase II,  {O- x2 FCC Rcd 3072 (1987) (Computer III Phase II Order), recon., 3 FCC Rcd 1150 (1988) (Phase II Reconsideration  {O- xOrder), further recon., 4 FCC Rcd 5927 (1989) (Phase II Further Reconsideration Order); Phase II Order vacated,  {Oq- xCalifornia I, 905 F.2d 1217 (9th Cir. 1990); Computer III Remand Proceeding, 5 FCC Rcd 7719 (1990) (ONA  {O;- xRemand Order), recon., 7 FCC Rcd 909 (1992), pets. for review denied, California v. FCC, 4 F.3d 1505 (9th Cir.  {O- x1993) (California II); BOC Safeguards Order, 6 FCC Rcd 7571 (1991), vacated in part and remanded, California  {O-v. FCC, 39 F.3d 919 (9th Cir. 1994) (California III), cert. denied, 115 S. Ct. 1427 (1995).K The particulars of these decisions is not the point here, however. Rather, the key point is that, as reflected in these and other similar court and agency decisions, both sides in these separate affiliate debates, as well as the decisionmakers who resolved them at various points, shared a common assumption about what was fundamentally at stake in such debates, namely, whether the BOCs could provide the competitive service at issue on an endtoend, physically integrated basis. Thus, for example, in the many years of debate over the wisdom of a separate affiliate requirement for enhanced services, it was uniformly assumed that what was at issue was the BOCs' right to place the design, construction, and operation of the computer facilities necessary to furnish enhanced services the computer hardware, the databases, etc. in the local operating company and thus to provide such services on an endtoend, physically integrated basis. x049. In any event, in enacting sections 271 and 272 of the Telecommunications Act of"K:e,-(-(ZZ+" 1996, Congress ended the debate with respect to interLATA services and decided the issue legislatively. With respect to inregion interLATA services in particular, the section 271/272 framework permits the BOCs to provide such services once they obtain section 271(d)(3) approval, but they have to do so, at least initially, through a separate affiliate. And as noted above, we are not at liberty to depart from that decision during the period in which the statutory separate affiliate requirements are in effect. x150. The BOCs respond that Congress' decision to impose a separate affiliate requirement did not necessarily include the decision to preclude a BOC from providing inregion interLATA service on a physically integrated basis, that is, from placing the design,  X -construction, and operation of interLATA network facilities in the local network operating company. Rather, in their view, the separate affiliate requirement is designed merely "to make entirely transparent the [wholesale] dealings between an operating company and its  X -interLATA affiliate,":f b2 yON-ԍ BOCs at 9.: and is entirely agnostic on whether the service ultimately being provided by the BOC to the affiliate and being sold by the affiliate to end users is a uniquely integrated one. Yet, as discussed above, a bar on the integration of a BOC's local facilities and the additional BOC facilities necessary to provide competitive services such as interLATA services has always been understood by courts and agencies, and the lawyers and  Xb-economists arguing before them, as the sine qua non of a separate affiliate requirement, and we presume that Congress chose to impose a separate affiliate requirement in section 272 with that longheld common understanding in mind. And we presume this for good reason. Again as explained above, the concerns for discrimination and improper cost allocation that  X-have always been understood as the justification for the imposition of a separate affiliate requirement are most present where interLATA services are being provided on an integrated  X-basis.PgXb2 {O-  MԍxCf. Illinois Bell Telephone Company v. FCC, 883 F.2d 104 (D.C. Cir. 1989) (explaining that "[a]fter the  xbreakup of AT&T, the Commission imposed substantially the same structural separation requirements on the divested  xBOCs [as on AT&T and its then whollyowned BOCs], based on the notion that their nearmonopoly power in  {O=- xoffering network access would give them an unfair advantage in the markets for CPE and enhanced services"). Id. at 106.P  X-  x251. Indeed, were we to conclude that the BOCs were permitted to provide interLATA services on an integrated basis, it is hard to understand why Congress would choose to require that a separate affiliate "operate independently" of the BOC, or more importantly, why it would choose to require a separate affiliate at all. To be sure, as the BOCs explain, a separate affiliate also forces the dealings between the operating company and interLATA affiliate to be "entirely transparent." But the only dealings that would take place between the operating company and the separate affiliate under the BOCs' vision of an integrated supplier are the typical dealings that take place between a facilitiesbased interLATA service provider and a reseller, that is, dealings related to the pricing, ordering, and billing of the facilitiesbased provider's interLATA services. And the possibility of discrimination in the wholesale" g,-(-(ZZ" pricing, ordering, and billing of interLATA services, by itself, has never been thought to justify, so far as we are aware, the imposition of a separate affiliate requirement in an analogous context. It is not surprising, then, that we are also not aware of a separate affiliate requirement in any analogous context, statutory or regulatory, past or present, in which a BOC or similarly regulated entity has been permitted to provide facilitiesbased integrated service to the separate affiliate, so long as it does not also sell the service to end users. x x352. The BOCs also argue that, even assuming that Congress, in enacting section 272, was generally concerned with the risks of discrimination and improper cost allocation that arise with the provision of facilitiesbased integrated service, such risks are insubstantial in light of the nondiscrimination requirement in section 272(e)(4) (even under their reading of it as a grant of authority) that bars a BOC from advantaging its interLATA affiliate. They observe that Congress viewed the risk of discrimination and improper cost allocation as problematic only where the BOCs possess not only the ability to engage in such conduct, but  X -also the incentive. In this case, the BOCs argue, the nondiscrimination requirement in  X -section 272(e)(4) removes any "conceivable incentive" they might otherwise have to engage  X-in prohibited conduct in the provision of wholesale interLATA services.hb2 {O - x-Ѝ Id. at 9; see also US WEST at 7 (explaining that for a BOC to engage in discrimination or improper cost allocation in these circumstances would be "an irrational strategy"). x453. As an initial matter, we do not think that the presence of a nondiscrimination requirement would remove a BOC's incentive to advantage its affiliate, given, among other  X6-things, the numerous practical difficulties in enforcing such a requirement.i6"b2 {O - xYЍ See supra para. 20. For ease of exposition, we focus here only on the significance of the nondiscrimination requirement. A similar argument can be made with respect to the cost allocation requirement.  But even  X-assuming arguendo that it would diminish the BOC's incentive to some extent, the BOCs' argument here cannot withstand scrutiny. As explained above, in a world in which section 272(e)(4) is a grant of authority, the affiliate would be acting as a reseller that purchases finished wholesale interLATA services from a facilitiesbased interLATA service provider, i.e., the BOC. Thus, the only incentive the presence of a nondiscrimination requirement would diminish is the incentive of the local operating company to discriminate in the pricing, ordering, and billing of wholesale interLATA services in favor of the affiliate. Any benefits of this kind of unlawful conduct could not be captured entirely by the affiliate but would have to be shared. But the nondiscrimination requirement certainly would not diminish the local operating company's more serious incentive to discriminate in the internal design, construction, and operation of interLATA networks in favor of itself (concern for which, as just explained, has always been the primary justification for separate affiliate requirements in this area) and at the expense of its rival facilitiesbased interLATA service providers. Any  X-benefits of this kind of unlawful conduct could be captured entirely by the local operating company when it sells finished wholesale interLATA services to its affiliate and other"|i,-(-(ZZ"  X-resellers.Sj b2 yOy- xԍ The following hypothetical scenario might help illuminate this distinction between the incentive to  xJdiscriminate in the creation of services and the incentive to discriminate in pricing and provisioning them. Suppose  x that it costs the typical facilitiesbased interLATA wholesaler 10 cents per minute to create an endtoend interLATA  xservice (which it then sells, with a markup, to resellers and end users). Suppose also that a BOC, by engaging in  xdiscriminatory conduct and improper cost shifting, can design, construct, and operate an integrated interLATA  xnetwork that enables the BOC to produce the same service at a cost to itself of only 6 cents per minute. With the  xnondiscrimination requirement in place, if the BOC were allowed to provide wholesale interLATA services to its  xaffiliate, it is true that whatever wholesale price it offered to its affiliate would have to be offered to all other carriers  xiand thus the benefits of any unduly low price would have to be shared. But this fact does not mean that the BOC  xhas any less incentive to engage in unlawful discrimination and improper cost allocation in order to be able to  xYproduce wholesale interLATA services at a cost of 6 cents per minute. Whatever price it charges to its affiliate and  xother resellers, the difference between that price and the 6 cents per minute cost is a margin that is retained solely  xby the BOC. Indeed, because, as just noted, the BOC may have no particular incentive, in light of the non xdiscrimination requirement, to charge an unduly low price to its affiliate, the difference between that price and the  x6 cents per minute could be quite significant. For example, if the BOC charges its affiliate and other resellers 9 cents per minute, the margin is 3 cents per minute and the BOC keeps all of it.S In this regard, we find it significant that the BOCs claim that "`there is no  X-possibility that a BOC could use its supply of wholesale interLATA services to its affiliate to  X-impede competition in the retail market.'"fkb2 yO-ԍ BOCs at 11 (quoting economist's affidavit) (emphasis added).f They make no similar claim about the  X-possibility that a BOC could impede competition in the way it creates that supply. Thus, because it is clear that, with respect to the design, construction, and operation of interLATA  X-networks, the BOCs have the ability and incentive to engage in the very core prohibited conduct that Congress was concerned about when it made its policy choice to require separate affiliates, that choice is controlling.  X7-x554. Finally, our conclusion that section 272(e)(4) is not a grant of authority serves as a complete response to the BOCs' arguments regarding use of their inregion, interLATA  X -Official Services Networks. In the NonAccounting Safeguards First Report and Order, we noted that a BOC is permitted to "transfer ownership" of its Official Services Network to its affiliate (so long it did so in a way that gave other carriers an equivalent opportunity to obtain  X -ownership).rl b2 {O-ԍ  NonAccounting Safeguards First Report and Order, paras. 218, 266.r We did not offer any discussion of the issue, however, because there was no indication in the record before us that transferring ownership of these Networks to affiliates was something that the BOCs seek to do. As a Bell Atlantic affidavit filed in response to our expedited reconsideration of section 272(e)(4) notes, these networks are "currently used in the operation of the local telephone network" and thus their ownership "realistically cannot be  XS-transferred." mS2b2 yO6$- x[ԍ BOCs at tab 4, page 2 (Declaration of Hardy F. Moebius, Executive Director in Bell Atlantic's Carrier Services organization). Rather, the BOCs seek to maintain ownership of their interLATA Official Services Networks and lease excess capacity on the networks to their affiliates. The leasing of capacity on an inregion interLATA network is plainly an inregion interLATA service,"%m,-(-(ZZ"  X-however.r nX b2 yOy- xԍ This conclusion follows from the statutory definition of "interLATA services." 47 U.S.C  153(21) (defining  xJ"interLATA service" as "telecommunications between a point located in a [LATA] and a point located outside such  {O - x[LATA]"); id.  153(43) (defining "telecommunications" in relevant part as "transmission, between or among points  {O- xspecified by the user, of information of the user's choosing"); see also id.  153(46) (defining "telecommunications  xservice" in relevant part as the "offering of telecommunications for a fee directly to the public"). This conclusion  xalso follows from the fact that, under traditional common carrier law, the ordinary leasing of network facilities is  {O-- xa communications service. See, e.g., In the Matter of Applications for Authority Pursuant to Section 214 of the  {O- xCommunications Act of 1934 to Cease Providing Dark Fiber Service, 8 FCC Rcd 2589, 2593 (1993) (finding that  x<even "the provision and maintenance of fiber optic transmission capacity between customer premises where the  xelectronics and other equipment necessary to power or `light' the fiber are provided by the customer" referred to  {OQ - xas "dark fiber" is a "wire communication," i.e., a communication service, because, among other things, the provider  xof dark fiber still owns, maintains, and repairs the fiber and merely leases it to the customer for a term of months  {O - xor years),  remanded on other grounds, Southwestern Bell Telephone Co. v. FCC, 19 F.3d 1475 (D.C. Cir. 1994).  xBy contrast, the onetime transfer of ownership and control of an interLATA network is not an interLATA service,  {Ou - xhwhich means it falls entirely outside the section 271/272 framework that governs interLATA services. See, e.g., 47  {O?- xhU.S.C.  271(a) (neither a BOC nor an affiliate "may provide interLATA services except as provided in this section") (emphasis added).r And, as we conclude in this Second Order on Reconsideration, because section 272(e)(4) is not a grant of authority, a BOC may not directly provide inregion interLATA services until the separate affiliate requirement is removed.  X- V. CONCLUSION  X-TP x655. For the reasons stated, we find that the most sensible interpretation of section 272(e)(4) is that it is a nondiscrimination and cost allocation requirement that applies to interLATA services that the BOC is otherwise authorized to provide; it is not an affirmative grant of authority to provide integrated interLATA services on a wholesale basis. In so finding, we emphasize that Congress did not ignore, nor have we, the integrative efficiencies that may result when the same people and facilities of a BOC that provide local service provide interLATA service as well. Indeed, by providing for the sunset of the separate affiliate requirement within three years of BOC entry (for telecommunications services) unless the Commission acts otherwise, Congress envisioned that there may well come a point when the benefits of such efficiencies come to outweigh any risk of anticompetitive harm due to discrimination and improper cost allocation such that consumers are better off. In this respect, the BOCs' emphasis on these benefits is not misguided; it is merely premature. xpp  XM- VI. ORDERING CLAUSES ĐTP x756. Accordingly, IT IS ORDERED that, pursuant to sections 14, 201205, 214, 251, 252, 271, 272, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.   X-151154, 201205, 214, 251, 252, 271, 272, and 303(r), the Second Order on Reconsideration  X-in CC Docket No. 96149 is ADOPTED. p px@FEDERAL COMMUNICATIONS COMMISSION x@William F. Caton x@Acting Secretarypp