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Federal Communications Commission
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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).

Report No. CC 98-41 COMMON CARRIER ACTION October 30, 1998

FCC Says GTE's ADSL Internet Access Service is an Interstate Service

The Commission has found that a new service offered by GTE, which permits Internet Service Providers (ISPs) to furnish customers with high-speed access to the Internet through a dedicated connection, is an interstate special access service and therefore subject to federal jurisdiction. Today's decision affirms that GTE's tariff for this service was properly filed at the FCC. The Commission intends to address next week, in a separate order, the broader issue of whether conventional dial-up access to the Internet, made through calls to information service providers, including Internet Service Providers (ISPs), is local or interstate in nature. That decision will address whether incumbent local telephone companies may be required to compensate their competitors for handling calls made by the incumbents' customers to ISPs that are the competitors' customers.

Today's decision addresses only whether GTE's new "DSL Solutions-ADSL Service," which provides a dedicated, high-speed data connection to the Internet, is an interstate service by nature. GTE filed the tariff (the document that sets forth the rates, terms, and conditions of a service offering) for the ADSL service at the FCC, as opposed to state commissions. The FCC subsequently initiated a proceeding to determine whether the ADSL service is, in fact, interstate in nature and, therefore, subject to federal jurisdiction. This was the primary issue originally designated for Commission investigation in this proceeding.

Next week, the Commission intends to issue its decision on the jurisdictional nature of more traditional, dial-up access via the local telephone company's local switch. This is the type of access currently used by most consumers to reach the Internet. Accordingly, today's decision does not consider or address whether local telephone companies are entitled to receive payments, or "reciprocal compensation," when they deliver to ISPs calls from their competitors' customers made over traditional phone lines. Unlike today's ruling on GTE's ADSL tariff, a decision on the reciprocal compensation issue involves examination of a separate body of FCC rules and precedent regarding switched access service; the applicability of any rules and policies relating to inter-carrier compensation when more than one local telephone company transmits a call from a customer to an ISP; and the applicability of interconnection agreements entered into by incumbent local telephone companies and new entrants that state commissions have found, in arbitration, to include such traffic. Because of these considerations, today's Order does not, and cannot, determine whether reciprocal compensation is owed, either for traffic handled in the past or future, pursuant to existing reciprocal compensation agreements or court decisions on disputes involving those agreements.

In confirming the interstate nature of GTE's ADSL offering, the Commission applied its long-standing rule on dedicated "special access" lines that carry both interstate and intrastate traffic. Special access lines provide a dedicated communications path between specified points. For example, businesses that make many long distance calls often use special access lines to carry calls directly to their destination. Under Commission rules and precedents, adopted in consultation with the states, special access lines that carry more than ten percent interstate traffic are properly tariffed at the federal level and those that carry less than ten percent interstate traffic are properly tariffed at the state level.

In today's decision, the Commission noted that it has traditionally determined the jurisdictional nature of communications by the end points of the communication; it consistently has rejected attempts to divide communications at any intermediate points of switching or exchanges between carriers. Consistent with these precedents, the Commission concluded that the communications at issue in this proceeding do not terminate at the ISP's local server, as some parties argued, but continue to their ultimate destination or destinations, very often at an Internet web site in another state. Put simply, the calls made by consumers to ISPs that subscribe to GTE's ADSL service are likely to terminate at Internet web sites in other states or countries, thus making these communications interstate in nature. The fact that the facilities used to provide this service offering may be located within a single state does not affect the Commission's jurisdiction.

Action by the Commission October 30, 1998, by Memorandum Opinion and Order (FCC 98-292). Chairman Kennard, Commissioners Ness, Furchtgott-Roth, Powell, and Tristani, with Commissioners Furchtgott-Roth and Tristani dissenting in part and issuing a joint statement.


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