ORDER

In the Order, the Commission takes the following steps:

Obligations of Incumbent LECs That Provide Advanced Services on an Integrated Basis

The Commission clarifies, in response to a petition by ALTS, that sections 251 and 252 apply to advanced telecommunications facilities and services offered by an incumbent local exchange carrier (LEC) as defined in the Communications Act, i.e., the local telephone operating company. For example, the Commission finds that an incumbent LEC is subject to the interconnection obligations of section 251(c)(2) with respect to both circuit-switched and packet-switched networks. An affiliate, however, is not an incumbent LEC unless it is a successor or assign of the incumbent LEC, or comparable to the incumbent LEC, as set forth in the statute.

The Commission also clarifies, in response to the ALTS petition, that the facilities and equipment used by incumbent LECs to provide advanced services are network elements and subject to section 251(c). Thus, upon request, the incumbent LEC must provide new entrants with unbundled loops capable of transporting high-speed digital signals, and must offer unbundled access to the equipment used in the provision of advanced services, to the extent technically feasible and subject to the provisions of section 251(d)(2).

The Commission also declares that, pursuant to the terms of section 251(c)(4), the incumbent LEC must offer for resale, at wholesale rates, any advanced services that the incumbent offers to subscribers that are not telecommunications carriers.

Forbearance from Sections 251(c) and 271

The Commission denies requests to forbear from application of sections 251(c) and/or 271, concluding that it does not have the statutory authority to forbear from either section prior to its full implementation.

The Commission denies requests for large-scale changes in LATA boundaries (such as Ameritech's request for a global, "data LATA") because that would be functionally the same as forbearing from section 271 for advanced services and would eviscerate section 271 for those services. In the NPRM, the Commission seeks comment on more targeted LATA boundary modification issues.

NOTICE OF PROPOSED RULEMAKING

In the Notice of Proposed Rulemaking, the Commission makes the following tentative conclusions and seeks comment on the following issues:

Provision of Advanced Services Through a Separate Affiliate

The Commission proposes an optional alternative pathway for incumbent LECs that would allow separate affiliates to provide advanced services free from incumbent LEC regulation. As a non-incumbent LEC, an advanced services affiliate would not be subject to the requirements of section 251(c). The Commission also tentatively concludes that, to the extent such an affiliate provides interstate exchange access service, the affiliate: (1) would be presumed to be nondominant, and, therefore, not subject to price cap regulation or rate of return regulation for such services; and (2) would not be required to file tariffs for such services.

The Commission tentatively concludes that an advanced services affiliate that meets the following specific structural separation and nondiscrimination requirements will not be an incumbent LEC: (1) the incumbent must "operate independently" from its affiliate; (2) transactions must be on an arm's length basis, reduced to writing, and made available for public inspection; (3) the incumbent and affiliate must maintain separate books, records, and accounts; (4) the incumbent and advanced services affiliate must have separate officers, directors, and employees; (5) the affiliate must not obtain credit under any arrangement that would permit a creditor, upon default, to have recourse to the assets of the incumbent; (6) the incumbent LEC, in dealing with its advanced services affiliate may not discriminate in favor of its affiliate in the provision of any goods, services, facilities or information or in the establishment of standards; and (7) an advanced services affiliate must interconnect with the incumbent LEC pursuant to tariff or pursuant to an interconnection agreement, and whatever network elements, facilities, interfaces and systems are provided by the incumbent LEC to the affiliate must also be made available to unaffiliated entities.

The Commission seeks comment on how transfers to advanced services affiliates of, among other things, facilities and customer accounts, should affect the regulatory status of the affiliates. The Commission is committed to ensuring that the separate affiliate is a realistic option for incumbent LECs. The Commission must evaluate, however, whether certain transfers would render an advanced services affiliate an "assign" of the incumbent LEC.

To the extent that an advanced services affiliate provides advanced services on an intrastate basis, the Commission encourages states to treat the affiliate equivalently to any other competing carrier offering advanced services.

Collocation and Loop Requirements

The Commission, in response to a request by ALTS, initiates a rulemaking to adopt strengthened collocation requirements. The Commission seeks comment on a number of measures that would optimize the space available for collocation and would reduce unnecessary costs and delays, and thereby facilitate deployment of advanced services, particularly to residential and rural customers. For example, the Commission seeks comment on whether it should require incumbent LECs to allow collocation of equipment that includes switching functionality. The Commission also tentatively concludes that incumbent LECs should be required to offer alternative collocation arrangements, including cageless collocation. The Commission further tentatively concludes that, upon request, incumbent LECs should provide competitors with written information regarding space availability in the incumbent's facilities, and that incumbent LECs that deny physical collocation, citing space constraints, should allow competitors to tour the incumbent's premises.

The Commission also seeks comment on whether it should revise its rules regarding the provision of loops to competitors in order further to eliminate barriers to entry for entities that seek to provide advanced services. Specifically, the Commission seeks comment on: (1) whether the operations support system rules adequately ensure that competitive LECs have access to loop information; (2) how the Commission should address loop spectrum interference issues and whether the Commission should require loop spectrum unbundling; and (3) whether the Commission should revise its definition of the local loop to take account of new technological developments. The Commission also seeks comment on how carriers should unbundle loops that pass through remote concentration devices.

Unbundling Obligations Under Section 251(c)(3)

The Commission seeks comment on the specific unbundling obligations that apply to network elements used to provide advanced services. In addition, the Commission seeks comment on whether it should adopt additional criteria when considering the extent to which network elements must be made available on an unbundled basis. The Commission also seeks comment on whether it should find section 251(c)(3) to be fully implemented on a service-by-service basis.

Resale Obligations Under Section 251(c)(4)

The Commission seeks comment on whether it should modify its prior interpretation of the requirements of section 251(c)(4) and require incumbent LECs to make available for resale, at wholesale rates, certain advanced exchange access services that they generally offer to subscribers that are not telecommunications carriers.

Limited InterLATA Relief

The Commission seeks comment on the scope of the incidental, interLATA exception in section 271.

The Commission seeks comment on types of LATA boundary modifications that might encourage deployment of advanced services to elementary and secondary schools and classrooms, and other educational institutions.

The Commission tentatively concludes that modification of LATA boundaries may be necessary for subscribers in rural areas to have high-speed connections to the Internet.

The Commission seeks comment on whether it has authority to take other targeted actions to facilitate deployment of advanced services and, if so, on the criteria it should use in evaluating such requests.