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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 ) In the Matter of ) ) Bell Atlantic and GTE ) Petition for Modification of LATA ) Boundaries ) File No. NSD-L-00-41 MEMORANDUM OPINION AND ORDER Adopted: June 26, 2000 Released: June 26, 2000 By the Chief, Network Services Division: I. INTRODUCTION 1. On March 7, 2000, Bell Atlantic-Pennsylvania, Inc. (Bell Atlantic) and GTE North, Inc. (GTE), pursuant to Section 3(25) of the Communications Act of 1934, as amended (the Act), filed a petition requesting that the Commission approve their request that a local access and transport area (LATA) boundary be modified so that customers in the Grand Valley exchange served by GTE may retain their current local calling arrangement should the Commission approve the merger between petitioners. The petition was placed on public notice, and no comments were received. For the reasons stated below, we grant petitioners' request. II. BACKGROUND 2. The restriction on carrying interLATA traffic dates back to the break-up of AT&T and applies only to the Bell Operating Companies (BOCs). Prior to the adoption of the Telecommunications Act of 1996 (1996 Act), BOCs often sought and were granted LATA modification requests for the purpose of providing expanded local calling service (ELCS). ELCS allows certain interLATA calls to be local calls. In seeking an ELCS LATA boundary modification, the BOC was required to secure state approval and then obtain a waiver from the United States District Court for the District of Columbia (District Court). Requests for new ELCS routes are generally initiated by local subscribers and intraLATA ELCS routes can be ordered by the state commission. In the years between the Consent Decree and the 1996 Act, the District Court received more than a hundred requests for Consent Decree waivers to permit new interLATA ELCS routes. Because of the large number of requests involved and because most of the requests were non-controversial, the District Court developed a streamlined process for handling such requests. 3. Under the streamlined process developed by the District Court, the BOC submitted its waiver request to the Department of Justice (Department). The Department reviewed the request and then submitted the request, along with the Department's recommendation, to the District Court. In evaluating ELCS requests, the Department and the District Court considered the number of customers or access lines involved as well as whether a sufficiently strong community of interest between the exchanges justified granting a waiver of the Consent Decree. A community of interest could be demonstrated by such evidence as: (1) poll results showing that customers in the affected exchange were willing to pay higher rates to be included in an expanded local calling area; (2) usage data demonstrating a high level of calling between the exchanges; and (3) narrative statements describing how the two exchanges were part of one community and how the lack of local calling between the exchanges caused problems for community residents. The Department and the District Court, generally, gave deference to the state's community of interest finding. The District Court also considered the competitive effects of granting a proposed ELCS waiver. 4. Matters previously subject to the Consent Decree are now governed by the Act. Under section 3(25)(B) of the Act, BOCs may modify LATA boundaries, if such modifications are approved by the Commission. On July 15, 1997, the Commission released a decision granting 23 requests for limited boundary modification to permit ELCS. Although calls between the ELCS exchanges would now be treated as intraLATA, each ELCS exchange would remain assigned to the same LATA for purposes of classifying all other calls. The Commission stated that it would grant requests for such limited modifications only where a petitioning BOC showed that the ELCS was a flat-rated, non- optional service, a significant community of interest existed among the affected exchanges, and grant of the requested LATA boundary modification would not have any anticompetitive effects. The Commission stated further that a carrier would be deemed to have made a prima facie case supporting grant of the proposed modification if the ELCS petition: (1) has been approved by the state commission; (2) proposes only traditional local service (i.e., flat-rated, non-optional ELCS); (3) indicates that the state commission found a sufficient community of interest to warrant such service; (4) documents this community of interest through such evidence as poll results, usage data, and descriptions of the communities involved; and (5) involves a limited number of customers or access lines. III. DISCUSSION 5. On May 23, 1996, the Pennsylvania Public Utility Commission (PPUC) issued an order authorizing one-way, flat-rated, extended area service from GTE's Grand Valley exchange to Bell Atlantic's Youngsville exchange. Petitioners propose that the Commission approve a LATA modification so that once GTE is an affiliate of Bell Atlantic the customers in the GTE exchange will continue to receive the same local calling arrangement that they enjoy today. The petition is accompanied by: (1) a statement that no new local calling service plans will result from Commission approval of this request, and that callers will retain their existing plan; (2) an order issued by the PPUC finding a community of interest and authorizing extended area service from Grand Valley to Youngsville; (3) and a statement that 3,750 access lines are involved. 6. As we noted in the July 1997 Order, granting an ELCS petition removes the proposed route from the competitive interexchange market, and some LATA modifications could reduce the BOCs' incentive to open their own markets to competition pursuant to section 271 of the Act. The present case, however, is unlikely to lessen Bell Atlantic's incentive to open its markets to competition given the small number of access lines involved. The impact on the interexchange market is de minimis and no interexchange carriers filed comments. Additionally, under these facts, we do not wish to see these GTE customers lose their current service offerings due to the merger between petitioners. Thus, the Division finds that the proposed LATA modification will not have a significant anticompetitive effect on the interexchange market or on Bell Atlantic's incentive to open its own market to competition. We conclude that the information in the petition satisfies the criteria established in the July 1997 Order. IV. CONCLUSION 7. We conclude that, in this request, the need for the proposed LATA modification outweighs the risk of potential anticompetitive effects. Granting petitioners' request serves the public interest by permitting a minor LATA modification where such modification is necessary to meet the needs of local subscribers and will not have any significant effect on competition. Accordingly, we approve this petition for limited LATA modification in order for the GTE customers to continue having their present local calling arrangement. The LATA is modified solely for this limited purpose and is not modified to permit the BOC to offer any other type of service, including calls that originate or terminate outside the specified areas. Thus, calls from the Grand Valley exchange to the Youngsville exchange will be treated as intraLATA, and the provisions of the Act governing intraLATA service will apply. V. ORDERING CLAUSES 10. Accordingly, IT IS ORDERED, pursuant to sections 3(25) and 4(i) of the Communications Act of 1934, as amended, 47 U.S.C. 153(25), 154(i), and 47 C.F.R. 0.91 and 0.291 of the Commission's rules, that the request of Bell Atlantic-Pennsylvania and GTE North for a LATA modification in Pennsylvania identified in File No. NSD-L-00-41 IS APPROVED. 11. IT IS FURTHER ORDERED that pursuant to section 416(a) of the Act, 47 U.S.C. 416(a), the Secretary SHALL SERVE a copy of this order upon the petitioners, Bell Atlantic and GTE. FEDERAL COMMUNICATIONS COMMISSION L. Charles Keller Chief, Network Services Division Common Carrier Bureau