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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 AMERITECH CORP., Transferor AND SBC COMMUNICATIONS, INC., Transferee For Consent to Transfer Control of Corporations Holding Commission Licenses and Lines Pursuant to Sections 214 and 310(d) of the Communications Act and Parts 5, 22, 24, 25, 63, 90, 95, and 101 of the Commission's Rules ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CC Docket No. 98-141 ASD File No. 99-49 SECOND MEMORANDUM OPINION AND ORDER Adopted: September 7, 2000 Released: September 8, 2000 By the Commission: Commissioner Furchtgott-Roth dissenting and issuing a statement. I.INTRODUCTION 1.In this Order, we grant the request of SBC Communications, Inc. (SBC) for a modification of certain conditions contained in the SBC/Ameritech Merger Order. Specifically, we find that the public interest is served by allowing SBC's incumbent local exchange carriers (LECs) to own certain equipment used to provide advanced services throughout SBC's service area, so long as SBC takes the actions described in this Order to ensure that competitors have the ability to compete effectively in the advanced services marketplace. The action we take today should enable competing carriers to provide advanced services in SBC's territory, while at the same time facilitating SBC's deployment of advanced services to the mass market. 2.At the outset, we stress that the modification contained in this Order is limited only to certain equipment installed in remote terminals and the necessary supporting equipment installed in central offices. By modifying the commitments adopted in the SBC/Ameritech Merger Order to allow this arrangement, we expect consumers will benefit not only from a more rapid deployment of advanced services, but from the increased choices that stem from the competitive safeguards contained in SBC's proposal. Moreover, we emphasize that this Order addresses only the commitments adopted in the SBC/Ameritech Merger Order and the harms addressed therein. Our interpretations and conclusions with respect to the Merger Conditions do not relieve SBC of any obligations under sections 251, 252, or any other provision of the Communications Act of 1934, as amended (the Act) and our implementing rules. Nor do we intend the analysis or conclusions in this Order to constrain or otherwise affect our interpretation of those rules. Finally, we emphasize that we are examining issues related to competitive access to remote terminals in the Collocation FNPRM, and that our decision herein does not prejudge any outcome in that proceeding. III.BACKGROUND 4.On October 6, 1999, the Commission approved the transfer of control of licenses and lines from Ameritech Corporation (Ameritech) to SBC (SBC). During the course of the Commission's review, SBC and Ameritech proposed a set of voluntary commitments intended to promote the deployment of advanced services, open SBC's and Ameritech's in-region markets to competition, foster local competition out-of-territory, and improve residential telephone service. Among its commitments to promote the deployment of advanced services, SBC and Ameritech proposed a condition that required the merged company to provide advanced services solely through a separate "Advanced Services Affiliate." After carefully examining the separate affiliate proposal, the Commission concluded that an Advanced Services Affiliate would mitigate the increased risk of discrimination faced by competing providers of advanced services and other carriers, while accelerating the deployment of advanced services. In making its final decision, the Commission adopted the proposed commitments as express conditions of its approval of the license transfer. 5.Subsequently that month, SBC announced its "Project Pronto" initiative, which is a $6-billion infrastructure deployment throughout SBC's 13-state region. Through its Project Pronto build-out, SBC plans to make Digital Subscriber Line (DSL) technology available to some 77 million consumers over a three-year period; 20 million of these consumers cannot receive any DSL service today because of technical and operational issues. SBC also seeks to integrate its voice and data networks to transport traffic more efficiently. To do this, SBC plans to upgrade its local loop and backbone infrastructure, lay some 12,000 miles of fiber transmission facilities, and create 25,000 "neighborhood gateways." SBC's Project Pronto plan relies in large part upon the increased use of Digital Loop Carrier (DLC) systems to reduce overall costs. In particular, SBC is planning to deploy an overlay network architecture consisting primarily of: (1) "Next Generation" DLC (NGDLC) systems installed at its remote terminal sites; (2) ADSL Digital Line Unit Cards (ADLU Card, or generically, "plug-in card") plugged into its NGDLC systems; (3) Optical Concentration Devices (OCDs) in its central offices; and (4) additional fiber transmission facilities between its central offices and remote terminals. The end result of Project Pronto will be a network architecture that brings fiber closer to homes and businesses, so that DSL services will be available to approximately 80% of SBC's customers. Over this network architecture, SBC initially plans to provide high-speed Internet access to residential and business customers, and eventually hopes to provide video and voice over DSL, personal video conferencing, home networking, and other applications. 6.On February 15, 2000, SBC filed a letter requesting an interpretation, waiver, or modification of the Merger Conditions to allow its incumbent LECs to own equipment specifically, the ADLU Cards and the OCDs used to provide advanced services as part of its Project Pronto initiative. In its initial request, SBC stated that its incumbent LECs will provide (on a nondiscriminatory basis) a wholesale "Broadband Offering" that would allow its Advanced Services Affiliate and other carriers to provide ADSL service to consumers. On February 18, 2000, the Common Carrier Bureau (Bureau) issued a public notice seeking comment on SBC's request. 7.In the course of this proceeding, SBC provided additional information about its Broadband Offering and modified its proposal in response to issues raised by other parties. Specifically, in its revised proposal SBC commits to: (1) provide all carriers (including its Advanced Services Affiliate) access to its Broadband Offering, alone and in combination with a voice offering, at rates, terms, and conditions that are just, reasonable, and nondiscriminatory and priced in accordance with the methodology applicable to unbundled network elements under sections 251 and 252; (2) make available additional features, functions, and capabilities of the plug-in ADLU Cards and other xDSL-capable plug- in cards that may become available for the host NGDLC system; (3) facilitate collocation, particularly with respect to remote terminals; (4) preserve existing copper transmission facilities; and (5) host industry collaborative sessions to address competitive access to remote terminals, as well as technical and operational issues related to its Broadband Offering. VIII.DISCUSSION 9.Before turning to the issues raised in SBC's request, we want to emphasize the narrow scope of this decision. We confine this Order to the narrow request before us to interpret and, if necessary, waive or modify the ownership restrictions in the Merger Conditions. We note that some parties have argued without providing any evidence that SBC's plans for Project Pronto represents unlawful and anticompetitive behavior on the part of SBC. These parties further argue that granting SBC's request to modify the ownership restrictions in the Merger Conditions would result in an unlawful attempt to stifle competition and innovation. We disagree. Merely owning and operating equipment used to provide advanced services does not, by itself, evidence a violation of the Act or our rules. In fact, the Merger Conditions themselves contemplate ownership of such equipment by SBC's incumbent LECs under certain circumstances, so long as they make it available to all parties on nondiscriminatory rates, terms, and conditions. 10.The modification contained in this Order is subject to the compliance oversight and enforcement processes under the Merger Conditions. All commitments that we rely upon in this decision become enforceable obligations under the Merger Conditions. We are confident that our oversight process will provide reasonable assurances that SBC's commitments are fully implemented to the benefit of consumers and that any misconduct is readily detected. We would expect to take swift action in the event our oversight uncovered evidence of violations of this Order. Such action could include revocation of the modification contained herein. 11.Nothing in this Order supersedes SBC's obligations to comply with all applicable Commission orders and rules, now and in the future. We stress again that this Order is confined only to the Merger Conditions, and so does not constitute any finding or determination with respect to SBC's compliance with section 251 or any other provision of the Act, or SBC's section 251 obligations regarding its Broadband Offering. We recognize that changes in network design and technological developments may have broad implications on competition in the telecommunications industry. We are examining issues relating to competitive access to remote terminals in a general rulemaking proceeding. Although that rulemaking will not alter our determination here to permit SBC's incumbent LECs to own the plug-in cards and associated OCDs, SBC will be bound by any rules ultimately developed in that proceeding that affect the way in which SBC's incumbent LECs provide access to remote terminals. Nothing we do in this Order is intended to prejudge in any way the outcome of that rulemaking. 12.SBC seeks to own and operate the plug-in ADLU Card and the OCD as part of its incumbent LECs. To do this, we must find that the equipment is not "Advanced Services Equipment" under the Merger Conditions or grant a waiver or modification of the condition that requires SBC's Advanced Services Affiliate to own and operate all Advanced Services Equipment deployed after November 8, 1999. For the reasons explained below, although we find that both the ADLU Card and the OCD are Advanced Services Equipment for the purposes of the Merger Conditions, we conclude that the public interest is served by allowing SBC's incumbent LECs to own, install, and operate the ADLU Cards in their remote terminals and the associated OCDs in their central offices, subject to the terms and conditions set forth in this Order. We stress, however, that SBC remains free under the Merger Conditions to deploy plug-in cards and OCDs through its unregulated separate Advanced Services Affiliate without the need for any Commission approval or action. A.Classification of Equipment 13.The SBC/Ameritech Merger Order requires SBC's Advanced Services Affiliate to own, deploy, and operate all new Advanced Services Equipment, such as Digital Subscriber Line Access Multiplexers (DSLAMs) and packet switches, after November 8, 1999. The Merger Conditions allow SBC's incumbent LECs to continue to own and operate Advanced Services Equipment purchased and installed prior to that date, so long as SBC's incumbent LECs permit unaffiliated telecommunications carriers to use the equipment under the same rates, terms, and conditions provided to SBC's Advanced Services Affiliate. The first issue to consider is whether the equipment at issue should be classified as Advanced Services Equipment under the Merger Conditions. 14.ADSL Digital Line Unit Card (ADLU Card). We look first to the language of the Merger Conditions to determine whether plug-in cards specifically, SBC's plug-in ADLU Card should be classified for the purposes of the Merger Conditions as Advanced Services Equipment. The Merger Conditions define Advanced Services Equipment as: (1) DSLAMs or functionally equivalent equipment; (2) spectrum splitters that are used solely in the provision of Advanced Services; (3) packet switches and multiplexers such as ATMs and Frame Relay engines used to provide Advanced Services; (4) modems used in the provision of packetized data; and (5) DACS frames used only in the provision of Advanced Services. Spectrum splitters (or the equivalent functionality) used to separate the voice grade channel from the Advanced Services channel shall not be considered Advanced Services Equipment. The Merger Conditions do not precisely list plug-in cards like the ADLU Card as Advanced Services Equipment. We therefore must determine whether the plug-in ADLU Card is "functionally equivalent" to a DSLAM. In doing so, we look to the features, functions, and capabilities of the plug-in card. Moreover, because the Merger Conditions do not specify the plug-in card's classification, we must also consider the underlying intent of the separate affiliate Merger Condition in determining the classification of the plug-in ADLU Card. 15.We adopted this condition to "ensure that competing providers of advanced services receive effective, nondiscriminatory access to facilities and services of the merged firm's incumbent LECs that are necessary to provide advanced services." In particular, a separate affiliate must use "the same processes as competitors and pay an equivalent price for facilities and services," thereby creating "a level playing field." These factors led us to conclude that SBC's "provision of advanced services through a separate affiliate will spur the deployment of advanced services by all entities." With this backdrop, we must consider whether that goal would be achieved if SBC's incumbent LECs were to own and operate this multi-functional ADLU Card plugged into its NGDLC systems. 16.We conclude that plug-in cards containing advanced services capability should be classified as Advanced Services Equipment for the purposes of the Merger Conditions. The plug-in ADLU Card is used to provide advanced services to consumers. As SBC itself notes, the ADLU Card plugged into an NGDLC system provides functionality similar to a DSLAM, although the plug-in card also contains voice capabilities and the spectrum splitter functionality. We note that almost all commenters contend that the plug-in card performs the functions of a DSLAM when plugged into an NGDLC system. The manufacturer's description of the equipment states that the plug-in cards integrate ADSL and Asynchronous Transfer Mode (ATM) capabilities into the NGDLC systems. Indeed, the plug-in ADLU Card is an indispensable component for providing ADSL service through the manufacturer's NGDLC system; without the plug-in ADLU Card in the NGDLC system, a carrier would have to collocate other equipment (e.g., a DSLAM) in the remote terminal to provide DSL service to consumers served by such remote terminals. Other manufacturers of competing plug-in cards describe their cards as creating a DSLAM within a remote terminal. We conclude that plug-in cards provide carriers with DSLAM functionality, so that the plug-in cards become "functionally equivalent" to a DSLAM. 17.We are not persuaded by SBC's argument that the spectrum splitter functionality in the ADLU Card mandates a finding that it is voice equipment, and therefore excluded from the ownership restrictions in the Merger Conditions. We recognize that the Merger Conditions provide that "splitters (or equivalent functionality) used to separate the voice grade channel from the Advanced Services channel shall not be considered Advanced Services Equipment." However, splitter functionality is not the sole determinant of the plug-in card's classification. As we noted in the Local Competition Third Report and Order, DSLAMs often perform a spectrum splitting function in addition to their primary multiplexing functionality. As acknowledged by SBC, the plug-in ADLU Card provides functionality similar to a DSLAM. We recognize that such plug-in cards may possess other capabilities, just as DSLAMs may possess splitting functionality. The fact that this particular equipment has multiple functions does not resolve the question of whether it should be classified as Advanced Services for the purposes of the Merger Conditions. 18.We also look to the underlying intent of the separate affiliate condition to resolve this question. If SBC's incumbent LECs were to own this equipment free of any competitive safeguards, it could undermine one of the primary benefits of the separate affiliate condition that SBC's separate affiliate must go through the same processes as competitors to collocate equipment used to provide advanced services. Under the Merger Conditions, to the extent customers are served by remote terminals, SBC could not provide its Advanced Services Affiliate with access to these remote terminals without also providing equivalent access to unaffiliated carriers. As a consequence, this condition creates a powerful incentive for SBC to solve the problems of limited space in remote terminals, as well as other technical issues related to competitive access to remote terminals. Allowing SBC's incumbent LECs to own and operate the ADLU Cards would eliminate any need for SBC's Advanced Services Affiliate to collocate in either remote terminals or central offices, and thereby eliminate SBC's incentive to improve its collocation processes. In light of the foregoing, we find that the plug-in ADLU Card is properly classified as Advanced Services Equipment under the Merger Conditions, so that SBC's incumbent LECs are not permitted to own and operate the ADLU Cards after November 8, 1999. 19.We emphasize that the modification contained herein is limited only to plug-in cards installed in remote terminals. Although from a technical standpoint the plug-in card can be deployed in central office-based applications, this Order does not allow SBC's incumbent LECs to pursue that approach. Accepting SBC's argument that the plug-in card is voice equipment would provide SBC's incumbent LECs the freedom to deploy plug-in cards (and the associated advanced services capability) throughout their networks. This course of action would substantially undermine the collocation benefit of the separate affiliate condition. We therefore stress that the modification contained in this Order applies only to plug-in ADLU Cards installed in remote terminals and the associated OCDs used to support such cards. 20.Optical Concentration Device (OCD). We likewise find that the OCD described by SBC should be classified as Advanced Services Equipment under the Merger Conditions. As SBC itself notes, the OCD is an Asynchronous Transfer Mode (ATM) switch that performs a critical routing function in providing advanced services to consumers served by the ADLU Card contained in NGDLC systems. The specific type of OCD that SBC plans to use is described by the manufacturer as an "ATM switch." As such, the OCD falls squarely within the definition in the Merger Conditions. Specifically, the Merger Conditions state that "packet switches . . . such as ATMs . . . used to provide [a]dvanced [s]ervices" are Advanced Services Equipment. As SBC states in its request, its incumbent LECs plan to use the OCD in conjunction with the plug-in cards to provide advanced services. 21.We are not persuaded by SBC's and AT&T's argument that the OCD should not be classified as Advanced Services Equipment under the Merger Conditions because it does not provide advanced services directly to end-user consumers. The definition of Advanced Services Equipment in the Merger Conditions makes no distinction between the equipment used to provide advanced services on a wholesale versus a retail basis. For these reasons, we conclude that, absent a waiver or modification, SBC's incumbent LECs are not permitted to own, deploy, and operate the OCDs under the Merger Conditions after November 8, 1999. 22.We emphasize again that our decision here is governed solely by the terms and purposes of the Merger Order. As noted above, SBC has committed to providing all carriers nondiscriminatory access to its Broadband Offering and to making available all technically feasible features, functions, and capabilities. In light of these commitments, we need not, and therefore, do not reach the broader question of whether this equipment (i.e., the plug-in card and the OCD) can be properly classified as network elements subject to the unbundling requirements of section 251(c)(3). In addition, we stress that our classification of the plug-in card and OCD as Advanced Services Equipment for the purposes of the Merger Conditions does not constitute an interpretation of what is "advanced telecommunications capability" under section 706 of the 1996 Act. A.Modification of the Ownership Restrictions 23.Because SBC's proposal provides for its incumbent LECs to own Advanced Services Equipment in contravention of the SBC/Ameritech Merger Order, we will consider whether we should modify the Merger Conditions in order to allow SBC to proceed as it proposes. In evaluating SBC's request, we consider whether changing the Merger Conditions serves the public interest. Our fundamental goal in adopting this condition was to ensure that competing carriers receive effective, nondiscriminatory access to the facilities and services of SBC's incumbent LECs that are necessary to provide advanced services. For that reason, any change in the Merger Conditions must be tailored in a way that affirmatively and identifiably promotes the underlying purpose of the condition. 24.In its initial requests and subsequent submissions, SBC contends that operational and administrative obstacles, particularly the lack of space in remote terminals and the lack of interoperable Advanced Services Equipment, prevent its incumbent LECs from serving the needs of its Advanced Services Affiliate in a manner that complies fully with the SBC/Ameritech Merger Order. Under the nondiscrimination safeguards adopted in the Merger Conditions, to the extent SBC's incumbent LECs allow its Advanced Services Affiliate to deploy and collocate special equipment in remote terminals and elsewhere, the incumbent LECs must offer the same opportunity to unaffiliated carriers on nondiscriminatory rates, terms, and conditions. SBC argues that the time and resources required to accommodate requests from multiple carriers to insert their own plug-in cards will substantially delay its efforts to deploy advanced services to the mass market. In response, parties either generally oppose any modifications or waiver of the Merger Conditions, or contend that the Commission should deny SBC's request to deploy this Advanced Services Equipment through its incumbent LECs unless SBC can demonstrate that its proposal contains safeguards sufficient to protect competitors from abuse. 25.For the reasons explained below, we find that SBC has demonstrated that the public interest is served by modifying the Merger Conditions to allow SBC's incumbent LECs to own and operate ADLU Cards in their remote terminals and the associated OCDs. The issues presented are complex and novel. We conclude that, as modified by SBC in response to issues raised by commenters, SBC's proposal serves the public interest. While SBC's proposal may not be as effective as the separate affiliate condition in ensuring that competing providers of advanced services have nondiscriminatory access to those inputs of the incumbent needed for advanced services, the immediate deployment of advanced services to consumers in SBC's regions that will occur as a result of SBC's proposal provides a significant benefit that we believe must be considered in our public interest analysis. In particular, we find that SBC's proposal should affirmatively and identifiably promote the rapid deployment of advanced services in a pro-competitive manner, thereby serving the goals of section 706. Granting SBC permission will speed the deployment of ADSL service availability to 77 million consumers within three years. In particular, SBC's Project Pronto will eliminate the distance limitations that prevent many consumers from obtaining DSL services today, and allow consumers served by remote terminals to receive DSL service where they otherwise would not. Millions of consumers that presently do not have access to advanced services thus will benefit from advanced services capabilities throughout SBC's service territory. Granting SBC's request to allow its incumbent LECs to own this equipment will allow SBC's Advanced Services Affiliate (and other carriers) to begin offering service to these consumers sooner than otherwise would be the case. In addition, SBC's proposal enables competing carriers to effectively resell SBC's ADSL service, and thereby provides these CLECs with an immediate opportunity to compete against SBC in the mass market. SBC's commitments call for its incumbent LECs to make available their Broadband Offering shortly after receiving our approval, which means that competitive LECs will soon be able to use the Broadband Offering (instead of collocating a DSLAM) to reach consumers served by remote terminals. Moreover, SBC's proposal provides a process for competitive LECs to obtain the full features, functions, and capabilities of the equipment, which will enable them to compete more effectively against SBC by differentiating their product offerings. For these reasons, we conclude that SBC's current proposal should provide consumers a greater choice of both services and providers in the near term. 26.At the same time, we agree with ALTS, Comptel, and others that granting SBC's incumbent LECs the ability to own and operate the Advanced Services Affiliate's equipment, without any associated safeguards, could eliminate substantial benefits derived from the separate affiliate model. Most significantly, the public loses the benefit of improved systems and processes that accrue to all providers of advanced services because SBC's Advanced Services Affiliate would no longer buy the same inputs used to provide advanced services as facilities-based carriers (e.g., stand-alone xDSL- capable loops). Under SBC's proposal, SBC's Advanced Services Affiliate would effectively become a reseller of SBC's Broadband Offering. SBC's Advanced Services Affiliate will no longer be seeking collocation in remote terminals on the same terms (or same scale) as it otherwise would have because it will have no need to collocate equipment in remote terminals. As a result, competing carriers would effectively lose the right to obtain similar collocation arrangements on nondiscriminatory rates, terms, and conditions. In addition, unaffiliated carriers lose the benefit of obtaining low-cost Operations Installation and Maintenance (OI&M) services for their own purposes because SBC's Advanced Services Affiliate has no need to obtain OI&M services from the SBC incumbent LECs for equipment installed at remote terminals. There is an increased risk that the separate affiliate condition will not be as effective at detecting potential discriminatory conduct because SBC's Advanced Services Affiliate may not buy the same inputs as other carriers. The public thus may lose the ability to benchmark the quality that facilities-based competitors receive against the quality SBC's incumbent LECs provide to their Advanced Services Affiliate. 27.In response to concerns raised by commenters, SBC modified its proposal to address five broad competitive issues: (1) access to the Broadband Offering; (2) access to the remote terminals and central offices of SBC's incumbent LECs; (3) access to the existing copper plant of SBC's incumbent LECs; (4) access to the features, functions, and capabilities of the combination of network elements used to provide SBC's Broadband Offering (e.g., the OCD and the plug-in card); and (5) access to a combined voice and data offering. SBC states that its incumbent LECs will price their Broadband Offerings "in each state in accordance with the pricing methodology then applicable to unbundled network elements under Sections 251(c)(3) and 252(d)(1) of the Communications Act." In response to concerns raised by ALTS and others, SBC states that it does not object to resolving pricing disputes through state arbitration proceedings conducted in accordance with section 252. SBC commits to provide all carriers with nondiscriminatory access to the arrangement. To assist the Commission and the public in evaluating the performance of SBC's incumbent LECs, SBC proposes to disaggregate the performance measurements contained in the Carrier-to-Carrier Performance Plan. SBC further emphasizes that its new network architecture will not remove any options previously available to competitive LECs, so that other carriers can continue to use their existing equipment or take advantage of the new offerings made available by SBC. SBC states that unaffiliated carriers will have the potential to distinguish their advanced services product offerings because SBC will allow unaffiliated carriers to use the full features, functions, and capabilities of the equipment. 28.We note that SBC's proposal still requires its Advanced Services Affiliate to operate like an unaffiliated carrier to provide advanced services. SBC's Advanced Services Affiliate must own and seek to collocate packet switches, DSLAMs, and other equipment used to provide advanced services to consumers served directly from central offices. The separate affiliate must also continue to order all interconnection facilities required to provide advanced services. SBC's Advanced Services Affiliate will also assess its own operational needs and perform its own network planning, such as deciding which markets to enter and where to build out its advanced services network. 29.In light of these considerations, we conclude that SBC's modified proposal, viewed in its entirety, is an adequate way at this time to meet the underlying goals of the separate affiliate condition adopted in the SBC/Ameritech Merger Order. As such, this proposal, including the commitments that are express conditions of our grant of the modification, maintains the public interest balance struck in the original SBC/Ameritech Merger Order. We emphasize that the modification approved in this Order applies only to the plug-in cards installed in NGDLC systems at remote terminal sites and the necessary central office OCDs supporting such cards. To the extent SBC seeks to install different equipment (e.g., DSLAMs or mini-DSLAMs) used to provide advanced services through remote terminals, the Merger Conditions still require SBC's Advanced Services Affiliate to own such equipment and to follow the standard processes for collocating such equipment in remote terminals. 30.We disagree with Rhythms that outright denial is in the public interest. As noted above, granting SBC permission should speed the deployment of advanced services to consumers throughout SBC's territory, some 20 million of whom are unable to receive any DSL service today. Our approval of SBC's request subject to its pro-competitive commitments not only should enable 20 million consumers to have access for the first time to exciting new services, but also paves the way for Rhythms and other carriers to compete for those consumers. SBC's commitments will facilitate Rhythms' access to remote terminals and enable Rhythms and others to differentiate their product offerings from those of SBC's Advanced Services Affiliate. Furthermore, we fully expect Rhythms and other carriers will continue to enjoy benefits from the separate affiliate condition, such as improved collocation processes, because SBC's Advanced Services Affiliate will still need to collocate in order to provide service to consumers served directly from central offices. 31.Finally, we note that the commitments adopted in this Order are binding only so long as the Merger Conditions remain in effect. At the same time, to the extent SBC commits to do things it currently is required to do under the Act and our rules, these obligations remain even after the Merger Conditions no longer apply. SBC's new offerings create additional choices for competitive LECs. Nothing about our modification of the ownership restrictions in the Merger Conditions limits a competitive LEC's ability to obtain an unbundled local loop or subloop, including loops capable of providing xDSL services. Nor does this decision revise or restrict our existing definition of the local loop or the subloop network elements. Carriers may therefore elect to use SBC's Broadband Offering, its Combined Voice and Data Offering, enhanced offerings based on these combinations, unbundled local loop and subloop network elements, or any other entry strategy permitted under the Act and our rules. Our approval of SBC's request for modification of the commitments contained in the SBC/Ameritech Merger Order is explicitly conditioned on SBC's compliance with its proposal as described in this Order. We describe SBC's proposal in more detail below. 1.Broadband Offering 32.The heart of SBC's original proposal is its Broadband Offering, which is a combination of network elements provided as a wholesale arrangement. SBC explains that its incumbent LECs will offer all carriers (including SBC's Advanced Services Affiliate) an amendment to their interconnection agreements filed with the state commissions to provide access to the Broadband Offering. We take no position on whether SBC's Broadband Offering is subject to sections 251-252 or any other provisions of the Act. Such issues may be raised in state proceedings relating to the proposed amendments to the interconnection agreements. 33.To use the Broadband Offering, carriers (including SBC's Advanced Services Affiliate) will first receive access to the OCD in the central office by submitting an Access Services Request (ASR) and providing additional information. In this way, a carrier will receive access to a "port" on the OCD, which is then used to establish a "permanent virtual connection." Using this access to the OCD, a carrier will be able to connect thousands of consumers served by plug-in cards installed in NGDLC systems (in this case, the ADLU Cards) to its advanced services network. Carriers will then order two elements to connect individual consumers to their broadband network: (1) the subloop element between the central office and the remote terminal (i.e., the fiber feeder portion of the local loop); and (2) the subloop element between the remote terminal and the customer's premises. Under SBC's proposal, SBC's incumbent LECs combine the capabilities of the plug-in cards and other associated electronics with the subloop elements. Carriers will order these two additional elements as a single combination by submitting a Local Service Request (LSR), which is the process already used to order unbundled network elements. 34.SBC notes that its Advanced Services Affiliate and unaffiliated carriers will use a new provisioning system and a new Graphical User Interface (GUI) to perform tasks related to ordering and provisioning the Broadband Offering. SBC also explains that its new offerings will require carriers (including its separate affiliate) to submit ASRs and LSRs to order the combination of network elements comprising the Broadband Offering. Consistent with their nondiscrimination obligations, SBC's incumbent LECs must offer unaffiliated carriers nondiscriminatory access to the OSS used to provide the Broadband Offering and the integrated voice and data offering discussed below. To the extent carriers must build interfaces to access the necessary databases and systems, SBC's incumbent LECs must provide requesting carriers with all information necessary to build such systems. We note with approval that, in its filings, SBC explains that it will offer OSS assistance to qualifying competitive LECs as part of its obligations under the Merger Conditions. We anticipate that such assistance will address concerns raised by Comptel and ATG that SBC's Advanced Services Affiliate will have an undue competitive advantage over unaffiliated carriers when ordering the Broadband Offering. 1.Access to Remote Terminals and Central Offices 35.Access to remote terminals has become increasingly important in recent years. In fact, in the Local Competition Third Report and Order we noted that "the remote terminal has, to a substantial degree, assumed the role and significance traditionally associated with the central office." As noted above, one of the primary benefits of the separate affiliate condition is that it creates incentives for SBC's incumbent LECs to make collocation available on a nondiscriminatory basis, and to improve their processes for doing so. In the SBC/Ameritech Merger Order we noted that competitive LECs experience difficulties accessing remote terminals, and we stated our expectation that the separate affiliate condition would solve these problems. SBC's proposal, as originally presented, would subvert that benefit because ownership of the equipment by SBC's incumbent LECs would allow them to deploy ADLU Cards (and the associated DSLAM functionality) in their remote terminals and packet switches in their central offices without SBC's separate affiliate experiencing the collocation processes and procedures followed by their competitors. 36.Collocation in Remote Terminals. In response to concerns raised by commenters, SBC has committed to make available additional collocation space in its remote terminals. SBC's proposal is described below. (a)Huts and Controlled Environmental Vaults Installed After September 15, 2000: SBC commits to making 20% of the space available in all huts and CEVs for use by unaffiliated carriers. This commitment applies to all huts and CEVs, which comprise approximately 25% of its remote terminal sites, installed after September 15, 2000. (b)Cabinets Installed After September 15, 2000: SBC commits to establishing a process by which unaffiliated carriers can collocate in a cabinet pursuant to a special construction arrangement. Specifically, SBC will facilitate collocation by unaffiliated carriers by either: (1) making available approximately 15% of the total space; or (2) providing an adjacent collocation structure (on the incumbent LEC's premises) with all necessary connections to the network. SBC's commitment applies to all cabinets deployed after September 15, 2000. SBC will ensure that competitive LECs have access to power supply, environmental controls, fiber feeder facilities, the copper subloop, and other technical requirements. (c)Remote Terminals Installed Before September 15, 2000: To facilitate competitive access to remote terminals installed before September 15, 2000, SBC commits to establishing a process by which its incumbent LECs will make available additional space in remote terminals. Specifically, unaffiliated carriers may request that SBC make available additional collocation space, power supply, and other requirements for collocating in the remote terminal. This commitment affords unaffiliated carriers the opportunity to choose a deployment schedule different from the one chosen by SBC. In light of SBC's commitment, competing providers of advanced services will receive quantifiable assurances that they will be able to access SBC's remote terminals and compete for consumers served through remote terminals. In this way, SBC's commitment should ensure that competing carriers will be able to offer consumers other types of DSL service through equipment deployed in the remote terminals of SBC's incumbent LECs. 4.We conclude that SBC's collocation commitments help ensure that competitive carriers will have access to the remote terminals -- a critical point of the network. We recognize that SBC's proposal may not be ideal for all circumstances, but conclude that this, coupled with the other commitments, is sufficient at this time to address the concerns that led to adoption of the original Merger Condition. Facilitating competitive access to remote terminals enables unaffiliated carriers to deploy equipment used to provide different types of DSL service, and thereby mitigates the incentive and ability of SBC's incumbent LECs to stifle innovation. In addition, we note that SBC's proposal does not eliminate any options currently available to competitive LECs under our rules, including the right to obtain access to the subloop network element, to collocate in remote terminals (when space is available), and to obtain access to unbundled DSLAM capabilities in certain circumstances. Lastly, we are exploring other methods for ensuring competitive access to remote terminals in a rulemaking, and we note that SBC will be bound by any rules developed in that proceeding. 5.Collocation in Central Offices. We also rely on SBC's commitment to allow collocation of Advanced Services Equipment that is similar to the OCDs deployed in the central offices of SBC's incumbent LECs. In this way, we ensure that competing carriers continue to receive the benefits of the separate affiliate condition, even though SBC's incumbent LECs are permitted to own certain Advanced Services Equipment. Under the separate affiliate nondiscrimination safeguards adopted in the Merger Conditions, SBC's incumbent LECs must accommodate unaffiliated carriers in the same way they accommodate their Advanced Services Affiliate. For example, if SBC's incumbent LECs allowed their Advanced Services Affiliate to collocate routers in their central offices and remote terminals, they must also allow unaffiliated carriers to collocate routers in comparable locations. Without a modification of the Merger Conditions, SBC's Advanced Services Affiliate would collocate the OCD in the central offices of SBC's incumbent LECs. By the express terms of the Merger Conditions, unaffiliated carriers would then enjoy the right to collocate (and use as they see fit) the same type of equipment on the same rates, terms, and conditions, even if such equipment may not be strictly necessary for interconnection or access to unbundled network elements. The Merger Conditions therefore create a powerful incentive for SBC's incumbent LECs to facilitate collocation of equipment in a way that exceeds the minimum standards established in our rules. SBC's commitment in this regard ensures that competitive LECs will not be stripped of one of the benefits of the separate affiliate condition, which in this instance means collocating equipment like the OCD in the central offices of SBC's incumbent LECs. 6.Competitive Access to Remote Terminals. SBC also proposes to commence a collaborative process through which competitive LECs, SBC, manufacturers, and other interested parties can explore technical and operational issues related to competitive access to remote terminals. Through these forums, we expect SBC and others to resolve other technical issues related to collocation in remote terminals, such as the availability of a power supply, physical connections to subloops, and full use of the features, functions, and capabilities of the equipment. Similarly, we note that SBC's revised proposal establishes a "special construction arrangement," which will allow competitive LECs to address space, power, connectivity, and related issues in order to collocate in remote terminals. We expect that these forums will provide a means for the industry to develop solutions to the problems related to competitive access to remote terminals. We expect that all parties to such proceedings will address these issues expeditiously and in good faith. We recognize that a risk could exist that the special construction arrangement process would be used to create additional delays or to increase the cost of accessing a remote terminal. To address such risks, SBC modified its proposal to clarify that the special construction arrangement process may be tariffed at the state level. We anticipate that the oversight role played by state commissions, as well as our own oversight and enforcement efforts, will adequately mitigate these risks. Finally, in response to concerns raised by Northpoint, we emphasize that grant of this modification is predicated on SBC participating in these collaborative sessions concurrently with our pending rulemaking proceeding in which we are addressing competitive access to remote terminals. 1.Access to Existing Copper Facilities 7.Another benefit of the separate affiliate condition is that it provides incentives for SBC to provide copper loops to its competitors in the same manner it provides them to its separate affiliate. Such access to copper is critical to facilities-based competitive LECs seeking to offer services using xDSL technology. After moving its customers onto its new fiber-served NGDLC systems, however, SBC incumbent LECs will not have as great an incentive to work with competitors to preserve their access to existing copper transmission facilities between the central office and remote terminal. Moreover, because SBC's chosen DSL deployment strategy does not depend on copper transmission facilities, a risk exists that SBC's incumbent LECs will fail to account for the needs of unaffiliated carriers as they deploy the new network architecture. 8.In response to issues raised by commenters in this proceeding, SBC has committed to: (1) refrain from retiring any copper pairs for one year; (2) refrain from retiring (over a three year period) more than 5% of the copper pairs terminated on the Main Distribution Frames of its incumbent LECs' central offices; (3) disclose the incumbent LEC's general decision-making criteria for retiring any copper plant; (4) notify competitive LECs of SBC's intent to retire any copper plant at least 180 days before such retirement; and (5) provide unaffiliated entities an opportunity to buy any copper plant marked for retirement at net book value or the highest competitive bid, whichever is higher. Nothing about SBC's commitment supplants the authority of any state commission to establish rules, policies, and procedures pertaining to the retirement of SBC's copper plant. 9.We conclude that this commitment is an adequate interim measure to ensure that competitors have access to the essential inputs needed to provide advanced services. Our rules already require incumbents to provide unbundled access to the loop, and this commitment provides an additional assurance that competitive LECs will continue to receive access to the entire copper loop from the central office to the customer's premises (i.e., "home run copper"). In response to concerns raised by commenters, SBC clarified that, in the event a competitive LEC obtains a customer served by the new NGDLC system and the associated fiber, SBC's incumbent LECs will transition such customer back to the existing copper pairs. This will enable competitive LECs to offer service using other types of DSL service. We also expect that SBC's commitment will ensure that consumers receive a choice of DSL services that require access to a full copper loop. By ensuring that competitive LECs will have continued access to the copper plant, SBC's commitment enables these carriers to provide different types of xDSL services. In this way, SBC's competitors will be able to deliver different applications, such as video and voice over DSL, than those chosen by SBC. 1.Access to the Full Features, Functions, and Capabilities at Just, Reasonable, and Nondiscriminatory Rates, Terms, and Conditions 10. We are committed to ensuring consumers have access to a broad array of services and technologies. In the SBC/Ameritech Merger Order, we noted that SBC's incumbent LECs have an incentive to stifle innovation by locking their competitors into their choice of technology. We concluded that this incentive, if left unchecked, would most likely grow after the merger and ultimately harm consumers. One goal of the separate affiliate condition is to prevent this type of discrimination by requiring SBC's incumbent LECs to work with their competitors in the same way they work with SBC's Advanced Services Affiliate. Allowing SBC's incumbent LECs to own the Advanced Services Equipment and to provide only ADSL service could detract from this goal by removing the impetus to work with their separate affiliate and the concomitant obligation to cooperate with unaffiliated carriers to develop other product offerings. Because SBC is focused on its own business needs and target markets, it has little incentive to cooperate with competing carriers that wish to pursue different approaches and may decide against implementing certain capabilities of the equipment. We therefore agree with DATA and others that permitting SBC's incumbent LECs to own this equipment, without any offsetting commitments by SBC, could stifle innovation by locking competing providers into SBC's choice of technologies. 11.SBC's proposal, as modified in this proceeding, will help ensure that consumers will have a wide array of choice. Specifically, SBC commits to making available all features, functions, and capabilities of the equipment installed in remote terminals at just, reasonable, and nondiscriminatory rates, terms, and conditions. For example, under this commitment, SBC's incumbent LECs will provide additional classes or qualities of service, other bit rate offerings, different combinations of permanent virtual connections, remote testing, and other features, functions, and capabilities made available by the manufacturer. SBC's commitment applies both to existing and to future features, functions, and capabilities. Should the manufacturer develop new features or plug-in cards with different capabilities, SBC's commitment provides a process for competitive LECs to seek such capabilities. Competitive LECs may request existing and future features, functions and capabilities either through SBC's public forums or by contacting SBC directly. We view this commitment as critical to ensuring that the SBC incumbent LECs do not discriminate against competitors wishing to innovate and to use the full features, functions, and capabilities of the equipment. Through this commitment, SBC's competitors will receive assurances that SBC's incumbent LECs will not restrict the use of the equipment to the method of operation chosen by SBC, thus restricting competition and innovation in the advanced services marketplace. 12.We find that the collaborative session process in SBC's proposal adequately addresses the requests of AT&T, DATA, and others concerning the on-going development of new services and the risk that SBC's incumbent LECs will discriminate in favor of their chosen technology. As AT&T points out, the nondiscrimination safeguards that apply under the Merger Conditions place an obligation upon SBC's incumbent LECs to cooperate with unaffiliated parties in the establishment of standards and the development of new services such as the Broadband Offering. The collaborative sessions provide a regular forum for competitive LECs to have their own needs considered and met on an equivalent basis to SBC's Advanced Services Affiliate. Furthermore, granting SBC's request does not eliminate the separate affiliate condition. SBC's Advanced Services Affiliate will continue to perform its own network planning and engineering services, which we would expect will require the separate affiliate to work with SBC's incumbent LECs to deploy new features, functions, and capabilities of the plug-in cards and other equipment. As a result of working with SBC's Advanced Services Affiliate, SBC's incumbent LECs incur a duty to cooperate with unaffiliated carriers in the same way. We therefore find that SBC's proposed collaborative process supplements rather than replaces the separate affiliate condition by establishing a well-publicized forum for carriers (including SBC's Advanced Services Affiliate) to work with SBC's incumbent LECs to deploy other features, functions, and capabilities of the plug-in cards and other equipment. 13.We recognize that making available the full features, functions, and capabilities of the equipment may require SBC to resolve unforeseen technical and operational issues. Moreover, we understand that there may be capacity issues, in that potentially competitors may seek features that would use much of the available bandwidth of a particular feeder line. We expect that the collaborative process established by SBC will create a forum for exploring these issues. We presume that all features, functions, and capabilities made available by the manufacturer are technically and operationally feasible unless persuaded otherwise. We expect that this presumption of acceptability will facilitate access to other features, functions, and capabilities of the equipment because SBC will have to prove that a requested feature, function, or capability is not technically feasible or will impede the provision of SBC's own services. To facilitate the identification of the applicable features, functions, and capabilities, SBC will post on an Internet site the manufacturers' description of the equipment. In the event SBC fails to accommodate technically feasible requests or improperly alleges capacity restraints, parties are free to take advantage of the alternative dispute resolution commitment already contained in the Merger Conditions, to file a section 208 complaint with the Commission alleging a violation of these commitments, or to pursue other remedies before any other appropriate authority. 14.By unleashing the full potential of the equipment, SBC's commitment will help competitive LECs provide innovative, exciting new services. Competitive LECs will be able to use additional "Quality of Service" Classes (QoS Classes) that will enable them to differentiate their product offerings from SBC's Advanced Services Affiliate. For example, SBC plans to use only the Unspecified Bit Rate (UBR) QoS Class in order to deliver high-speed Internet access to the mass market. Although UBR is suitable for high-speed Internet access, it is not suited for more bandwidth-intensive applications like carrier-grade voice over DSL. Under its final proposal, SBC will offer such existing features as Constant Bit Rate (CBR) and "virtual paths," which allow competitive LECs to offer carrier-grade voice over DSL and other bandwidth-intensive applications. We conclude that SBC's commitment will help Northpoint, Caprock, ATG, and other carriers differentiate their product offerings to compete more effectively in SBC's region. 15.SBC's commitment will also ensure that consumers benefit from the innovation of manufacturers in developing enhancements to the equipment. SBC will allow unaffiliated carriers to take advantage of upgraded features, such as new plug-in cards used to provide other forms of DSL. Indeed, this commitment may provide competing carriers an incentive to work directly with the manufacturers to develop features and enhancements that meet their own needs. As a result, SBC's competitors will have a greater ability to differentiate their product offerings and will not be locked into the features chosen by SBC. Such a commitment also addresses any incentive SBC may have to refrain from implementing additional features of existing equipment as they are released. 1.Combined Voice and Data Offering 16.In response to concerns raised by ATG, Comptel, and others, SBC modified its proposal to include an offering tailored to the needs of integrated voice and data providers. Specifically, SBC commits to offering a Combined Voice and Data Offering, which builds upon the combination of network elements that comprise its Broadband Offering. SBC's incumbent LECs will provide the integrated voice and data configuration by offering carriers the underlying voice loop over its NGDLC systems delivered directly to the Main Distribution Frame (or a higher-speed frame, such as a DSX-1 or DSX-3 cross-connect frame) in their central offices and combining that loop with the Broadband Offering. The Combined Voice and Data Offering will provide carriers the ability to use the voice portion of the loop just as they would any other voice loop, while complementing their offering with the capability to provide the ADSL service made available by SBC's incumbent LECs. Carriers will order SBC's combination offering in the same manner as they order its Broadband Offering. 17.An integrated voice and data offering enables SBC's competitors to deliver a bundled package of services to consumers and thereby compete more effectively against SBC in both the voice telephony and data services markets. We find that this commitment addresses the concerns raised by Northpoint that SBC's incumbent LECs might limit its Broadband Offering to prevent carriers from competing with its standard voice offerings. In its final proposal, SBC elaborates upon its commitment to make available an integrated voice and data offering. SBC commits to making its Combined Voice and Data Offering available no later than 90 days after the release of this Order. SBC further commits to pricing its integrated voice and data offering in accordance with the pricing methodology then applicable to unbundled network elements under sections 251 and 252. To ensure that its wholesale customers receive nondiscriminatory access, SBC commits to implementing performance measurements no later than 120 days after introducing the combined offering. 1.Other Proposed Conditions 18.We decline to adopt other proposals beyond those noted above. As SBC points out, this proceeding is focused on the ownership of equipment used to provide advanced services, and the effect of SBC's proposed ownership arrangement on the separate affiliate condition. Commenters proposed a wide range of potential conditions, including a temporary ban on providing advanced services, line card interoperability, and extending the duration of the SBC/Ameritech Merger Conditions. As noted above, this Order addresses only the narrow question of ownership of certain Advanced Services Equipment under the Merger Conditions. As a result, we do not think it appropriate to consider or in any way prejudge these proposals in the context of this proceeding. We recognize, however, that the issues involved with competitive access to remote terminals are difficult and complex, and we fully intend to evaluate these and related issues in the context of our pending collocation rulemaking proceeding. In addition, we have added explanatory notes to SBC's proposal in order to clarify concerns raised on the record. We discuss the major issues raised by parties in the paragraphs below. 19.Mandatory Transition Period. Comptel contends that we should prohibit SBC's incumbent LECs from making available their Broadband Offering for at least 90 days. Comptel contends that this mandatory transition period is necessary to afford competitive LECs an opportunity to understand the Broadband Offering and develop expertise in the associated ordering and provisioning processes. We conclude that such a mandatory transition period is not necessary in light of SBC's commitment to make available the Broadband Offering to all carriers (including its Advanced Services Affiliate) at the same time. We note that SBC has worked to educate its wholesale customers by hosting a series of collaborative sessions in which SBC employees have explained the Broadband Offering, the associated ordering and provisioning processes, and answered questions posed by competitive LECs. Finally, we note that the Merger Conditions already provide for OSS training for qualifying competitive LECs, and that training on the necessary ordering and provisioning processes falls within the scope of the existing Merger Conditions. 20.UNE-Platform Issues. AT&T contends in a recently filed ex parte that SBC's proposal fails to recognize other technically feasible methods of obtaining access to the Broadband Offering, such as cross-connecting the voice path to the unbundled local switching element instead of a competitive LEC's collocation space. AT&T argues that modifying SBC's proposed commitments to eliminate references to collocation in the serving central office would permit carriers that rely on the platform of unbundled network elements (UNE-P) to pursue their chosen entry strategies. We decline to modify SBC's commitments in the manner AT&T requests at this time. However, we are considering AT&T's arguments relating to the use of UNE-P to provide DSL service and line splitting in the Local Competition and Line Sharing proceedings in which we will be able to more fully evaluate the policy arguments and technical issues based on a fuller record. 21.Extending the Duration of the Merger Conditions. We reject Jato's argument that the conditions intended to preserve competitive access to existing copper facilities should be extended beyond the duration of the Merger Conditions. As noted above, SBC requires a modification of the Merger Conditions because we are classifying the plug-in card and associated OCD as Advanced Services Equipment under the Merger Conditions. Similarly, DATA contends that we should extend the effective date of the separate affiliate so that SBC must petition for Commission approval before retiring its Advanced Services Affiliate. In the SBC/Ameritech Merger Order, however, we found that a general three-year duration of the Merger Conditions (and 42 months for the separate affiliate) would be sufficient to mitigate the potential adverse effects of the merger. For the reasons expressed in the SBC/Ameritech Merger Order, we decline to extend the effective date of the Merger Conditions beyond the general three-year term. 22.Preserving Existing Copper Facilities. Jato, AT&T, and Northpoint express concern that SBC's commitments could allow SBC's incumbent LECs to perform targeted mass retirements, i.e., retire 100% of the copper facilities in certain areas and still maintain an overall retirement rate of less than 5%. In addition, Jato contends that SBC should adopt a 3% threshold instead of a 5% threshold. In response to these concerns, SBC modified its proposal to include a commitment to refrain from retiring any copper pairs prior to September 1, 2001, in addition to the overall 5% threshold over a period of three years. We conclude that this modified retirement commitment adequately addresses the risk in the near term that SBC will retire copper pairs in a way that disrupts service to its competitors. To the extent experience with these commitments reveals a practice of disruptive targeted mass retirements after September 1, 2001, Jato and other carriers are free to pursue remedies before the Commission or any other appropriate authority. We note that the issue of retirement of copper is raised in the Collocation Further Notice. 23.We decline to accept the suggestion of Northpoint, AT&T, and Jato to modify SBC's proposal to explicitly clarify the definition of "mainframe terminated copper." AT&T suggests that SBC's proposal expressly state that mainframe terminated copper refers to a continuous copper pathway (consisting of generally recognized operational parameters) connecting a customer premise to an SBC incumbent LEC's serving central office. Because we find that the term mainframe terminated copper already encompasses AT&T's request, we decline to modify SBC's proposal to make this definition more explicit. 24.SBC's Discretionary Authority. Several parties raise concerns about the risk that SBC will abuse its discretionary authority during the collaborative sessions. We recognize that SBC's incumbent LECs may have an incentive to discriminate against technology choices made by other carriers. We emphasize that we expect all parties including SBC's incumbent LECs and its Advanced Services Affiliate to participate in good faith to implement additional features, functions, and capabilities of the equipment, to develop solutions to competitive access to remote terminals, and to address other issues that arise during the collaborative sessions. We expect our presumption that all features, functions, and capabilities made available by the manufacturer are technically feasible should provide competitive LECs with an assurance that SBC cannot unilaterally and arbitrarily refuse to provide certain features. Finally, we note that carriers may seek redress before the Commission or other authorities in the event problems arise during the collaborative sessions. 25.Mandatory Technical Trials. We decline Comptel's suggestion that we require SBC's incumbent LECs to host a series of technical trials aimed solely at demonstrating that SDSL technology will not be disrupted by newly-deployed remote terminals. SBC is, of course, already prohibited from discriminating in favor of the technology chosen by its separate affiliate by deploying electronics that disrupt that ability of competitive LECs to provide different services using different technologies. We expect that good faith participation in the collaborative sessions by all parties will ensure that SBC's incumbent LECs and competitive LECs can deploy new services without adversely affecting the ability of others to provide competing services. 26.Providing DSL Modems at Cost. We decline Comptel's suggestion that we require SBC's incumbent LECs to provide DSL modems at cost to unaffiliated carriers. To the extent that SBC's incumbent LECs provide DSL modems to their Advanced Services Affiliate, the relevant nondiscrimination safeguards in the Merger Conditions require SBC's incumbent LECs to provide such modems to unaffiliated carriers on the same rates, terms, and conditions. Because all such transactions must be posted on the separate affiliate's Internet site, unaffiliated carriers have the ability to monitor the relationship between SBC's incumbent LECs and their Advanced Services Affiliate and to obtain the same goods, services, and information made available to the affiliate. We therefore find it unnecessary to establish an additional procedure to ensure competitive LECs can receive low-cost DSL modems. In addition, we expect the collaborative sessions to address Comptel's concerns about acquiring modems that are compatible with the plug-in cards because SBC must cooperate with unaffiliated parties in good faith. During these sessions, SBC should make available information that competitive LECs need to evaluate whether their equipment is compatible with the plug-in cards chosen by SBC. 27.Minimum Discount Plans. We decline to adopt AT&T's suggestion to modify SBC's proposal to expressly prohibit minimum discriminatory price structures plans that favor SBC's Advanced Services Affiliate. Because discriminatory practices like targeted pricing plans are already prohibited by the nondiscrimination safeguards that apply to SBC's incumbent LECs and its separate affiliate, we see no need to further clarify SBC's proposal. In addition, we note that the prices for SBC's offerings are subject to the normal state review process. 1.Other Issues 28.As a final matter, we disagree with Comptel that SBC's Project Pronto constitutes a per se violation of the "network planning and engineering" provisions of the Merger Conditions. As Comptel points out, the Merger Conditions allow SBC's incumbent LECs to perform limited network planning and engineering services on behalf of their Advanced Services Affiliate until April 5, 2000 in order to allow an efficient transfer of existing advanced services customers. Network planning and engineering services include such functions as determining where, when, and how much Advanced Services Equipment must be deployed, creating and maintaining certain customer records, designing advanced services offerings, identifying network components needed to provide advanced services, and assigning equipment (e.g., DSLAMs, ports on ATM switches) to customers. Although we agree with Comptel that network planning also includes such functions as choosing specific equipment and determining how best to provide service to consumers, we reject Comptel's arguments that the SBC incumbent LECs violated the network planning provisions of the Merger Conditions by planning to deploy plug-in cards in remote terminals as part of Project Pronto. During this proceeding, SBC provided evidence that it decided to use plug-in cards installed in remote terminals to provide DSL service in early 1999, well before we adopted the Merger Conditions. Comptel has not provided evidence to show that SBC's incumbent LECs improperly provided network planning services with regard to the deployment of plug- in cards in remote terminals as part of Project Pronto after the transition period, which ended on April 5, 2000. Based on the record before us in this proceeding, we have no basis for concluding that SBC has violated this Merger Condition. This conclusion does not prejudge the outcome of any investigation of this issue. We would expect to take swift enforcement action in the event we found that SBC's incumbent LECs improperly provided network planning and engineering services after the 180-day transition period. Consistent with its obligations under the Merger Conditions, we expect SBC's Advanced Services Affiliate to perform all network planning and engineering functions, such as choosing where and how to serve consumers, after April 5, 2000. XXIX.ORDERING CLAUSES 30.Accordingly, IT IS ORDERED, pursuant to sections 1-4, 201-205, 214, 251, 303(r), and 309 of the Communications Act of 1934, as amended, 47 U.S.C.  151-154, 201-205, 214, 251, 303(r), and 309 that permission for SBC's incumbent LECs to own and operate certain advanced services equipment installed in remote terminals and in their central offices IS GRANTED to the extent indicated herein. 31.IT IS FURTHER ORDERED, pursuant to sections 1-4, 201-205, 214, 251, 303(r), and 309 of the Communications Act of 1934, as amended, 47 U.S.C.  151-154, 201-205, 214, 251, 303(r), and 309 that such permission IS CONDITIONED upon the terms specified in Appendix A and to the extent described herein. 32.IT IS FURTHER ORDERED, pursuant to sections 1-4, 201-205, 214, 251, 303(r), and 309 of the Communications Act of 1934, as amended, 47 U.S.C.  151-154, 201-205, 214, 251, 303(r), and 309, that Paragraph 3(d) of the Merger Conditions contained in the SBC/Ameritech Merger Order is MODIFIED to the extent described herein. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary Appendix A: Conditions of Modification Order Incumbent LECs' Ownership of Equipment to Provide Nondiscriminatory Wholesale Services to Advanced Services Providers 1. Notwithstanding Paragraph 3d or any other provision of the SBC/Ameritech Merger Conditions, and subject to the limitations set forth herein, the SBC/Ameritech incumbent LECs may own, lease, deploy, install, maintain and/or operate: 1) facilities or network equipment, including integrated Advanced Services Equipment, Next Generation Digital Loop Carrier ("NGDLC") equipment and related equipment and software that support both POTS and xDSL services and are located in remote terminals; and 2) ATM switches/Optical Concentration Devices ("OCDs") installed in central offices that are used to provide wholesale Advanced Services arrangements to affiliated and/or unaffiliated providers of Advanced Services on nondiscriminatory rates, terms, and conditions. These facilities and network equipment shall be used, in whole or in part, to provide the wholesale Advanced Services described herein and similar nondiscriminatory wholesale Advanced Services that may be offered in the future. This paragraph shall not, however, authorize the SBC/Ameritech incumbent LECs to provide retail end users with Advanced Services that the SBC/Ameritech incumbent LECs are otherwise prohibited from providing under the Merger Conditions. 2. Broadband Service Offering. No later than September 15, 2000, the SBC/Ameritech incumbent LECs will offer all telecommunications carriers, including their separate Advanced Services affiliate(s), nondiscriminatory access to a combined wholesale broadband service where the SBC/Ameritech incumbent LEC deploys a NGDLC architecture that supports both POTS and xDSL services. The broadband service shall utilize a combined network arrangement consisting of: copper facilities from the NGDLC device deployed in remote terminals sites (includes CEVs, huts, and cabinets) to the end user location; a permanent virtual circuit that consists of ATM data transported over a common OC-3c fiber facility from the NGDLC in the remote terminal terminating on the central office fiber distribution frame and delivered to a leased affiliated or unaffiliated telecommunications carrier port on the SBC/Ameritech incumbent LEC's OCD in the serving wire center; and a port on the SBC incumbent LEC's OCD with associated cross-connects to extend the port to a point of affiliated or unaffiliated telecommunications carrier virtual or physical collocation. The rates, terms and conditions of this end-to-end wholesale broadband service will be nondiscriminatory and such service will be priced in each state in accordance with the pricing methodology then applicable to unbundled network elements under Sections 251(c)(3) and 252(d)(1) of the Communications Act, except that the service will not be subject to geographic deaveraging. Rates charged for the broadband service will be just and reasonable. SBC will establish the performance measurements set out in Attachment A within 120 days of service implementation to track the nondiscriminatory provision of such wholesale broadband service. In accordance with Section I.4(f )of the Merger Conditions, the SBC/Ameritech incumbent LEC must permit unaffiliated telecommunications carriers to order the broadband service offering under the same rates, terms, and conditions, and to utilize the same ordering interfaces, processes, and procedures as are made available to the separate Advanced Services Affiliates. The SBC/Ameritech incumbent LECs have and will continue to provide the SBC Advanced Services Affiliates and unaffiliated telecommunications carriers field by field usage rules, documentation, technical requirements and parameters that can be used by those carriers to interface with the SBC/Ameritech incumbent LEC ordering interfaces. Where a retail customer previously served by SBC/Ameritech mainframe terminated copper facilities from the central office subscribes to the broadband service and subsequently elects to receive advanced services from another carrier, upon request of that carrier, the customer will be reconnected to existing central office mainframe terminated copper facilities. 3. Combined Voice/Data Service Offering. Within 90 days of the Commission's concurrence with SBC/Ameritech's position on ownership issues described in Paragraph 1 above, SBC's incumbent LECs will offer to all telecommunications carriers, including their separate Advanced Services Affiliates, a combined voice and data service offering where the SBC/Ameritech incumbent LEC deploys a NGDLC architecture that supports both POTS and xDSL services. This offering will utilize an underlying voice loop provisioned over NGDLC delivered to the Main Distribution Frame ("MDF" or "mainframe"). Use of this element plus the existing fiber feeder and OCD port elements (to provision the high frequency portion of the loop) would be offered to provide a combined voice and data solution that allows a telecommunications carrier collocated in the SBC/Ameritech incumbent LEC's serving central office to provide voice and data services via a single copper facility from the remote terminal to the customer premises. The rates, terms and conditions of this combined voice and data service will be nondiscriminatory and such service will be priced in each state in accordance with the pricing methodology then applicable to unbundled network elements under Sections 251(c)(3) and 252(d)(1) of the Communications Act, except that the service will not be subject to geographic deaveraging. Rates charged for the combined voice and data service offering will be just and reasonable. SBC will establish the performance measurements set out in Attachment A within 120 days of service implementation to track the nondiscriminatory provision of such wholesale broadband service. In accordance with Section I.4(f) of the Merger Conditions, the SBC/Ameritech incumbent LECs must permit unaffiliated telecommunications carriers to order the combined voice and data service offering under the same rates, terms, and conditions, and to utilize the same ordering interfaces, processes, and procedures as are made available to the SBC Advanced Services Affiliates. The SBC/Ameritech incumbent LECs have and will continue to provide the SBC Advanced Services Affiliates and unaffiliated telecommunications carriers field by field usage rules, documentation, technical requirements and parameters that can be used by those carriers to interface with the SBC/Ameritech incumbent LEC ordering interfaces. Where a retail customer previously served by SBC/Ameritech incumbent LEC mainframe terminated copper facilities from the central office subscribes to the combined voice and data service and subsequently elects to receive advanced services from another carrier, upon request of that carrier, the customer will be reconnected to existing central office mainframe terminated copper facilities. 4. Features and Functions. (a) Existing Features and Functions. Upon request and except as described below, SBC/Ameritech incumbent LECs will make available to all telecommunications carriers (including SBC/Ameritech's separate Advanced Services affiliate(s)) all technically feasible Advanced Services features and functions of equipment (e.g., an ADLU card) installed in remote terminals where the SBC/Ameritech incumbent LEC deploys a NGDLC architecture that supports both POTS and xDSL services. The SBC/Ameritech incumbent LEC will provide via an Internet website posting its vendor's NGDLC software and hardware release specifications. The availability of existing features and functions is subject to the factors specified in Paragraph 8 below and a determination by the SBC/Ameritech incumbent LECs, after consultation with the affected telecommunications carriers, that such features and functions would not reduce the capacity of the remote terminal so as to render the remote terminal unable to meet the forecasted demand for SBC/Ameritech's and unaffiliated telecommunications carriers' POTS and advanced services. Rates, terms, and conditions for such features and functions will be nondiscriminatory, and rates will be just and reasonable. Specifically, the SBC/Ameritech incumbent LEC will make available for deployment for use by affiliated and unaffiliated advanced service providers: two virtual path circuits per end user and CBR Class of Service (CoS) for xDSL on a Remote Terminal per Remote Terminal basis (if xDSL-capable) starting within six months of the Commission's concurrence with SBC/Ameritech's position on the ownership issues described in Paragraph 1 above, consistent with this paragraph and subject to the factors specified in Paragraph 8 below. (b) Future Features and Functions. As to xDSL features and functions that vendors may develop in the future for use on SBC/Ameritech incumbent LEC equipment deployed in remote terminals, the SBC incumbent LECs will evaluate and discuss with interested telecommunications carriers in collaborative sessions described in Paragraph 8 below such features or functions, including in response to specific requests from telecommunications carriers, to determine whether there is a practical and technically feasible means to deploy such features and functions where the SBC/Ameritech incumbent LEC deploys a NGDLC architecture that supports both POTS and xDSL services. The availability of such future features and functions will be subject to factors listed in Paragraph 8 below. Rates of such future features and functions will be just and reasonable and rates, terms, and conditions for deployment of such future features and functions will be nondiscriminatory and may include terms for testing, technical and market trials, and demand forecasts and commitments. Such negotiations shall be consistent with the principle that SBC/Ameritech seeks to optimize the use of its network by SBC/Ameritech and unaffiliated telecommunications carriers and supports the development of new xDSL features and functions. Deployment will be subject to a determination by the SBC/Ameritech incumbent LECs, after consultation with affected carriers, that such features and functions would not reduce the capacity of the remote terminal so as to render the remote terminal unable to meet the forecasted demand for SBC/Ameritech's and unaffiliated telecommunications carriers' POTS and Advanced Services. Specifically, SBC/Ameritech will make G.lite available for deployment for use by affiliated and unaffiliated Advanced Services providers, on a remote terminal by remote terminal basis (if xDSL-capable) starting within six months after development and commercial availability by its vendors, consistent with this Paragraph and subject to the factors listed in Paragraph 8 below. All other future-developed features and functions such as SHDSL and other ATM qualities of service (nrt-VBR and rt-VBR) will be considered within the context of collaborative sessions described in Paragraph 8. When making purchasing decisions with respect to future xDSL features and functions, SBC/Ameritech shall evaluate both retail and wholesale customer needs. 5. Provision of Additional Space in or Adjacent to Remote Terminals. (a) Existing Remote Terminals. In existing remote terminals where the SBC/Ameritech incumbent LEC deploys a NGDLC architecture that supports both POTS and xDSL services, the SBC/Ameritech incumbent LECs will provide collocation in accordance with Commission rules, including requirements applicable to safety, power and heat dissipation, except that the SBC/Ameritech incumbent LECs will, where available, make space available in increments as small as a single shelf of equipment. At existing remote terminals where space is not available, no later than September 15, 2000, the SBC/Ameritech incumbent LECs will offer a Special Construction Arrangement ("SCA") process described below in response to a telecommunications carrier's request for space. (b) Future-Deployed Remote Terminals (b)(1) Future-Deployed Huts and CEVs. As to future-deployed SBC/Ameritech incumbent LEC huts and CEVs using a NGDLC architecture that supports both POTS and xDSL services, after September 15, 2000, the SBC/Ameritech incumbent LECs will deploy these structures (which generally serve 2,000 or more lines) so that approximately 20% of the space that can be used to install equipment in those structures for telecommunications carriers will be made available to all telecommunications carriers under the Commission's collocation rules without the need for a SCA. (b)(2) Future-Deployed Cabinets. As to future-deployed SBC/Ameritech incumbent LEC cabinets using a NGDLC architecture that supports both POTS and xDSL services, no later than September 15, 2000, the SBC/Ameritech incumbent LEC will offer a SCA process described below in response to a telecommunications carrier's request for space at a new cabinet site. (Cabinets generally serve fewer than 2,000 lines.) In response to a SCA and consistent with its terms and conditions, the SBC incumbent LECs will deploy the new cabinet so that approximately 15% of the space that can be used to install equipment in such cabinet will be made available to all telecommunications carriers, or at the discretion of the SBC/Ameritech incumbent LEC, otherwise make access arrangements available using an adjacent cabinet structure. Requesting carriers will pay their proportionate share of the actual costs incurred by the SBC/Ameritech incumbent LECs for preparing and making this space available to those carriers. Costs calculated by SBC/Ameritech in accordance with the costing procedures set forth in Part 64 of the Commission's rules shall be presumed to satisfy the actual cost requirement as used in Paragraph 5. For all future-deployed cabinets using a NGDLC architecture, the SBC/Ameritech incumbent LECs will pre-plan those remote terminal sites to accommodate a future adjacent structure(s). (c) Special Construction Arrangement - Structures. No later than September 15, 2000, SBC/Ameritech will establish a SCA process for processing a telecommunications carrier's request, including the request of a separate Advanced Services affiliate, for space to install the carrier's owned or leased equipment either in an existing or future deployed remote terminal or, in a newly deployed adjacent cabinet structure. Except as provided below, the following general terms shall govern the SCA process, which shall be made available for remote terminals where the SBC/Ameritech incumbent LEC deploys a NGDLC architecture that supports both POTS and xDSL services: 1) in response to a SCA, the SBC/Ameritech incumbent LEC has the discretion to install a larger cabinet with regard to future-deployed remote terminals, to enlarge existing remote terminals, or in either case to make available an adjacent cabinet structure; 2) a telecommunications carrier requesting a SCA for a particular site shall pay all of the actual construction costs, including materials, labor, and other related costs (e.g. power and cooling, including the initial and ongoing costs to provide such power and cooling) incurred in providing such additional space in either an expanded or adjacent cabinet structure; 3) a telecommunications carrier requesting a SCA shall pay an application fee that reflects SBC/Ameritech's actual costs; 4) a telecommunications carrier requesting a SCA shall provide a down payment in an amount not less than 50% of the total estimated construction costs after the estimate has been accepted by the telecommunications carrier and before actual construction begins, with the balance payable upon completion; 5) if more than one telecommunications carrier requests additional space or adjacent cabinet structure at a given remote terminal site, costs of construction shall be allocated among the requesting telecommunications carriers in proportion to the amount of space or cabinet structure that each has requested; 6) the telecommunications carrier(s) who pay for the construction and development of such adjacent cabinet structure will own the structure, except that the issue of ownership may be negotiated between the SBC/Ameritech incumbent LEC and the telecommunications carrier(s) on a site-by-site basis; 7) regardless of which entity owns the adjacent structure, the SBC/Ameritech incumbent LECs will offer to manage adjacent cabinet structures subject to reaching an agreement on acceptable terms and conditions; 8) the SCA must be submitted at least 90 days before the requested larger cabinet or adjacent cabinet structure is to be installed; 9) the rates, terms, and conditions of SCAs shall be made available to all telecommunications carriers on a nondiscriminatory basis, provided that implementation of the SCA is technically feasible and existing POTS and Advanced Services provided by SBC/Ameritech and/or other telecommunications carriers will not be adversely affected by the SCA arrangement. The above terms and conditions shall govern the SCA process and are subject to applicable state tariffs that specify the procedures, terms and conditions pursuant to which custom work is performed on outside plant construction and loop facility rearrangements requested by unaffiliated entities in that state. To the extent that the procedures, terms and conditions of the SCA process are inconsistent with the state tariff, the procedures, terms and conditions set forth in the applicable state tariff governing such custom work shall govern the SCA request. Nothing in these Voluntary Commitments is intended to affect the authority of state commissions to establish tariffed alternatives for the SCA process described above and in Paragraph 5(d). (d) Access to Copper Subloop and Dark Fiber and Associated SCA. No later than September 15, 2000, in situations where the SBC/Ameritech incumbent LEC deploys a NGDLC architecture that supports both POTS and xDSL services, the SBC/Ameritech incumbent LECs shall provide, on a case-by- case basis, a SCA process available to a requesting telecommunications carriers, including their separate Advanced Services affiliate(s), for access to the copper subloop for the purpose of enabling the requesting carrier to connect its equipment at a remote terminal site, including an adjacent cabinet structure, with applicable copper extending to the subtending Service Area Interface(s) ("SAI"). The following general terms shall govern the SCA for access to the copper subloop and dark fiber: (1) the SBC/Ameritech incumbent LECs will either use existing copper or construct new copper facilities from the SAI(s) to the telecommunications carrier in or at an remote terminal and/or construct an engineering controlled splice (which shall be owned by the SBC/Ameritech incumbent LECs) at the remote terminal site; (2) a telecommunications carrier requesting such a SCA shall pay an application fee that reflects SBC/Ameritech's actual costs; (3) a telecommunications carrier requesting a SCA shall provide a down payment of not less than 50% of the total estimated construction costs and related provisioning costs after an estimate has been accepted by the carrier and before construction begins, with the balance payable upon completion; (4) a telecommunications carrier requesting such a SCA shall pay all of the actual construction, labor, materials and related provisioning costs incurred to fulfill its SCA on a time and materials basis, provided that SBC/Ameritech will construct any engineering controlled splice requested by a telecommunications carrier in a cost-effective and efficient manner and if SBC/Ameritech elects to incur additional costs for its own operating efficiencies and that are not necessary to satisfy an SCA in a cost- effective and efficient manner, the requesting telecommunications carrier will not be liable for such extra costs; (5) the requesting telecommunications carrier shall be liable only for costs associated with cable pairs that it orders to be presented at an engineering controlled splice (regardless of whether the requesting carrier actually utilizes all such pairs), even if SBC/Ameritech places more pairs at the splice; (6) if more than one or a subsequent telecommunications carrier obtains space in expanded remote terminals or adjacent structures and interconnects with the new copper interface point at the remote terminal, the initial telecommunications carrier which incurred the costs of construction of the engineering controlled splice and/or additional copper/fiber shall be reimbursed those costs in equal proportion to the space or lines used by the requesting carriers; (7) SBC/Ameritech may require a separate SCA for each remote terminal site; (8) the SCA must be submitted at least 90 days before access to the copper subloop or dark fiber is to be provisioned; and (9) the terms and conditions of such a SCA shall not discriminate among unaffiliated telecommunications carriers or SBC/Ameritech's separate Advanced Services affiliates. The above terms and conditions shall govern the SCA process and are subject to applicable state tariffs that specify the procedures, terms and conditions pursuant to which custom work is performed on outside plant construction and loop facility rearrangements requested by unaffiliated entities in that state. To the extent that the procedures, terms and conditions of the SCA process are inconsistent with the state tariff, the procedures, terms and conditions set forth in the applicable state tariff governing such custom work shall govern the SCA request. Where SBC/Ameritech deploys new fiber feeder facilities to support a NGDLC architecture that supports both POTS and xDSL services and in response to a completed SCA, the SBC/Ameritech incumbent LECs will terminate available spare dark fiber for telecommunications carrier(s) having equipment located at such remote terminal sites or adjacent cabinet structures consistent with applicable Commission rules. (e) Preservation of Existing Services. Initiatives undertaken pursuant to these provisions are subject to developing procedures such that SBC/Ameritech's and other telecommunications carriers' existing POTS and Advanced Services and underlying network capacity are not adversely affected. (f) Easements and Rights-of-Way. The availability of space in either existing, expanded or adjacent cabinet structures at remote terminal locations is subject to the availability and requirements of private easements and/or public right-of-way obligations. Telecommunications carriers are responsible for obtaining necessary easements and rights-of-way and associated fees or obligations for placing their equipment, facilities, and structures. SBC/Ameritech will cooperate in good faith with the telecommunications carrier to facilitate obtaining all such required permissions. 6. Central Office OCD Collocation. Upon request from a telecommunications carrier, SBC will provide space for telecommunications carriers to collocate their own OCDs or functionally equivalent equipment used to provide Advanced Services in accordance with the Commission's collocation rules, including requirements applicable to safety, power and heat dissipation. 7. Copper Maintenance and Notification. SBC/Ameritech's deployment of NGDLC architecture in remote terminals to support POTS and Advanced Services will result in a fiber overlay network, and SBC/Ameritech has no current plans or plans under development to retire mainframe terminated copper facilities related to that deployment. SBC/Ameritech has the right to manage its network facilities, including determining whether a copper facility is providing acceptable levels of service and can be economically maintained. The SBC/Ameritech incumbent LECs will continue to follow their established copper retirement policy and, as such, will consider factors including the following before retiring a mainframe terminated copper facility between the central office and the end user's premises: (1) whether the cost to maintain the copper facility for an acceptable level of service is greater than the cost to replace it with fiber and associated electronics; (2) whether public requirements force facility relocation; (3) whether all ducts and manholes are blocked and more network capacity is required on a given route; (4) whether a copper feeder cable is underutilized and the cost to maintain the copper is greater than fiber and associated electronics replacement cost; or (5) Acts of God or catastrophic failure. When making the determination whether to retire a copper facility thereof between the central office and the end user's premises, SBC/Ameritech will not give weight to whether the telecommunications carrier(s) using the copper (or that wish to use the copper) are affiliated or unaffiliated with SBC/Ameritech. Where the SBC/Ameritech incumbent LEC deploys new fiber feeder facilities to support a NGDLC architecture that supports both POTS and xDSL services and decides to retire copper related to that deployment, SBC/Ameritech will provide via an Internet website posting to local service carriers operating in SBC/Ameritech states, six months notice (with the exception of unexpected service outages and Acts of God) of any retirement of copper facilities terminated at the central office MDF. SBC/Ameritech shall offer to sell (except when ducts are blocked) such facilities that are to be retired on an "as is" basis at market-based prices to unaffiliated parties. The market-based price will be the higher of (i) the net book value of such facilities as determined by Part 32 of the Commission's Rules or (ii) a competitive bid if more than one carrier is interested in acquiring these facilities. The offer to sell such facilities need not be made on less than a sheath basis and is subject to the purchaser complying with any pole attachment, private easement, and public rights-of-way requirements. The purchaser of the copper facility also will be responsible for ongoing maintenance of the facility and resolving associated issues with other carriers that may utilize that cable. The application of the above described copper retirement policy during the next 3 years will result in the retirement of no more than 5% of SBC/Ameritech's incumbent LECs' total mainframe terminated copper facilities in service as of September 1, 2000. In addition, except for Acts of God, no mainframe terminated copper facilities overlaid by NGDLC architecture will be retired prior to September 1, 2001. 8. Industry Collaborative Sessions. No later than September 1, 2000, SBC/Ameritech incumbent LECs shall begin hosting collaborative sessions with all interested telecommunications carriers, including its separate Advanced Services affiliate(s), vendors, and other members of the telecommunications industry to address operational and technical issues regarding access to NGDLC remote terminals and new types of xDSL features and functions that may be provided via NGDLC. Any transcripts and summaries of action items that may result from such sessions will be made publicly available. During such collaborative sessions the following types of issues will be addressed regarding features and functions that are requested to be deployed by the SBC/Ameritech incumbent LECs: technical and operational feasibility; commercial arrangements pertinent to the deployment of such features and functions and how those costs (e.g., costs of procuring, developing, provisioning, deploying and maintaining such features and functions) will be recovered; whether technical, operations support systems and operational trials will be needed and how they will be conducted; and whether such features and functions will reduce the capacity of remote terminals to meet the forecasted demand for advanced services and POTS. The SBC/Ameritech incumbent LECs will approach such discussions from the presumption that it seeks to optimize the use of their network by affiliated and unaffiliated carriers and support the development of new xDSL features and functions. Within these collaborative sessions, SBC/Ameritech will follow a process that conforms to the following framework to assess telecommunications carriers' requests and to make decisions on which requests will ultimately result in service deployment: (a) Customer-specific requests. SBC/Ameritech will also provide a process that facilitates requests by a single carrier for deployment of a desired service/functionality. Under this process, the telecommunications carrier will submit a sufficiently detailed request for the service/functionality that it wants SBC/Ameritech to deploy. This request shall include desired network and operations functionality, service quality requirements, scope of deployment, and demand forecasts/commitments. SBC/Ameritech will timely develop a detailed responsive quote. The SBC/Ameritech quote will identify the technical feasibility of providing the desired service/functionality, pricing, timing of delivery and other pertinent attributes of the offering that SBC/Ameritech is able to provide in response to the customer's request. (b) General offerings. SBC/Ameritech will establish a standing Telecommunications Carrier Product Forum to facilitate regular, ongoing and expeditious customer-supplier dialogue on development and deployment of new Advanced Services/functionalities using NGDLC equipment. This forum will operate on a quarterly cycle and will have both SBC/Ameritech product and technical representation, as well as equipment vendor representation as needed, in addition to telecommunications carriers participation. SBC/Ameritech representative(s) will act as Chair of the forum and of a steering committee consisting of a single representative and alternate from each interested telecommunications carrier (or a representative of a group of carriers) actively using wholesale broadband and/or combined voice/data services deployed via NGDLC architecture. In addition, there shall be two standing subcommittees with representation from SBC/Ameritech and interested telecommunications carriers actively using wholesale broadband/or combined voice/data services deployed via NGDLC architecture: (1) Service Definition and (2) Operations. The Service Definition Subcommittee's responsibility will include identification of detailed service requirements including desired network and operations functionality, service quality requirements, scope of deployment, and demand forecasts. The Operations Subcommittee's responsibility will include organization, planning and execution of pre-deployment trials as well as early deployment process improvement recommendations. The role of forum leadership will include formalization of service definition and commitment to demand forecasts, plus prioritization of telecommunications carrier service/functionality requests, and service deployment business cases. 9. Advanced Services Applicability. These provisions apply in the context of Advanced Services and will remain in effect so long as SBC/Ameritech is required to provide Advanced Services through a separate Advanced Services affiliate in the relevant state under Paragraph 12 of the SBC-Ameritech Merger Conditions. Except to the extent expressly stated in these commitments, nothing in these commitments shall limit or waive SBC/Ameritech's existing or future rights regarding its discretion or ability to design, develop or operate its networks, including its decisions to select, own, lease, deploy, install, configure, maintain, change, upgrade and/or operate network equipment in central offices, remote terminals or other parts of the network. 10. Enforcement. These provisions are subject to the enforcement provisions of Section XXVIII of the SBC- Ameritech Merger Conditions. A. Attachment A Performance Measurements The following performance measurements will be applicable to the new broadband service and combined voice/data offerings. However, as these measures have been identified prior to implementation of the services and various regulatory bodies will have input, these measures are subject to possible modification. SWBT, Ameritech and SNET Performance Measurements OSS 1 - % Firm Order Confirmations (FOC) Received Within "X" Hours Provisioning 4c SBC Caused Missed Due Dates 5c - % Installation Trouble Reports within 30 days 8 Average Installation Interval Maintenance 11c - % Repeat Reports 12c Mean Time to Restore 13c Trouble Report Rate Pacific Bell and Nevada Bell Performance Measurements OSS 1 Average Firm Order Confirmations (FOC) Notice Interval Provisioning 4c Percent of Due Dates Missed 5c Percentage Troubles In 30 Days For New Orders 8 Average Completed Interval XXXIII. Maintenance 11c Frequency of Repeat Troubles in 30 Day Period 12c Average Time to Restore 13c Customer Trouble Report Rate Subloop Network Element (i.e., DLE- ADSL Sub-Loop) Subloop Network Element (i.e., DLE-ADSL Feeder Loop ) Includes: DLC Port Termination & Use of ATM Data Only OC-3c Transport. Also includes virtual cross-connects for PVC. APPENDIX B: BROADBAND SERVICE OFFERING (LINE SHARED OR DATA ONLY) SOURCE: SBC Communications, Inc. GR-303 OCD Port Termination OCD Port Termination (9) (9) (1) DLE ADSL SAC Cross Connect (5) DLC Virtual Circuit - Data (9) OCD Port Termination (OC-3 or DS3) (2) DLE-ADSL HFPSL (6) OC-3c Dedicated for Data (10) OCD Cross-Connect to Collocation (or UDT) (3) DLC Port Termination (7) DLE-ADSL Feeder (4) DLC Virtual Circuit - Voice (8) OCD Virtual Cross Connect (2) (7) (10) (8) (1) OCD DLC PORT TERMINATION (3) SAC FDF or DSX Collocation Fiber COT CLEC Collocation Space REMOTE TERMINAL with Plug-in Cards TELCO CENTRAL OFFICE DATA VOICE OC-3c ATM (DATA) (6) OC-3 (VOICE) Central Office Termination (COT) TELCO CLASS 5 SWITCH ANALOG LINE INTERFACE Logical DATA Cross-Connect (5) Logical VOICE Cross-Connect (4) End User Subloop Network Element (i.e., DLE-ADSL Feeder Loop) Includes: DLC Port Termination & Use of ATM Data Only OC-3c Transport. Also includes virtual cross-connects for PVC. Subloop Network Element (i.e., DLE- ADSL Sub-Loop) APPENDIX C: COMBINED VOICE & DATA OFFERING (Broadband Service Offering with Unbundled Local Loop) (2) (7) DS0 SOURCE: SBC Communications, Inc. CLEC COLLO. IDF ATM Capacity Voice Switch MDF OCD Port Termination (9) (9) (1) DLE ADSL SAC Cross Connect (5) DLC Virtual Circuit - Data (9) OCD Port Termination (OC-3 or DS3) (2) DLE-ADSL HFPSL (6) OC-3c Dedicated for Data (10) OCD Cross-Connect to Collocation (or UDT) (3) DLC Port Termination (7) DLE-ADSL Feeder (4) DLC Virtual Circuit - Voice (8) OCD Virtual Cross Connect (10) (10) (8) (1) OCD DLC PORT TERMINATION (3) SAC FDF Collocation Fiber COT REMOTE TERMINAL with Plug-in Cards TELCO CENTRAL OFFICE DATA VOICE OC-3c ATM (DATA) (6) OC-3 (VOICE) Central Office Termination (COT) (5) (4) End User DISSENTING STATEMENT OF COMMISSIONER HAROLD FURCHTGOTT-ROTH Re: Ameritech Corp. and SBC Communications, Inc., for Consent to Transfer Control of Corporations Holding Commission Licenses and Lines Pursuant to Sections 214 and 310(d) of the Communications Act and Parts 5, 22, 24, 25, 63, 90, 95, and 101 of the Commission's Rules, Second Memorandum and Order, CC Docket No. 98-141, ASD File No. 99-49. I dissent from the Commission's decision to waive various requirements that it imposed on SBC Communications last year in approving the merger of SBC Communications with Ameritech. As I made clear in my dissent from that order, the merger conditions were the product of negotiations that were hidden from the public and possibly unlawful under the Administrative Procedures Act. Some of the specific negotiated conditions are unlawful under the Communications Act. In my view, the Commission had no statutory authority to require SBC to comply with the merger conditions at issue, and I consequently cannot support its effort to tinker with these requirements here. I would, however, vote to approve a permanent waiver of all the merger conditions, recognizing that they should not have been imposed in the first instance. It is worth noting that, at the time the Bureau was engaged with SBC in negotiating the merger conditions, SBC was in the process of planning its rollout of Project Pronto. Indeed, SBC announced the venture only days after the Commission released its order approving the merger. It was therefore entirely foreseeable, at the time that the conditions were being negotiated, that SBC would not be able to pursue its plan for deploying digital subscriber line services consistent with the merger conditions. In view of this fact, I do not understand why the Bureau insisted upon or SBC agreed to conditions that required an SBC separate affiliate to own equipment used to provide advanced services, particularly since the Bureau now seems to think that the public interest is actually better served by not imposing this condition. I also observe that we recently asked for comment on many of the issues of access to an incumbent's integrated equipment that are discussed in this order. I would have preferred to address these questions for the first time in this broader context, and I hope that we issue an order resolving these issues on their merits very soon.