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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 ) ) Request by U S WEST Communications, ) Inc. for Limited Modification of LATA ) Boundaries to Provide Expanded Local ) File No. NSD-L-97-31 Calling Service Between Its Omaha ) Common Service Area and Aliant ) Communications' Yutan Exchange in ) Nebraska ) MEMORANDUM OPINION AND ORDER Adopted: March 4, 1998 Released: March 4, 1998 By the Chief, Network Services Division: I. INTRODUCTION 1. On August 22, 1997, U S WEST Communications (USW), pursuant to Section 3(25) of the Communications Act of 1934, as amended, filed a petition to provide two-way, non-optional expanded local calling service (ELCS) between the Omaha Common Service Area (OCSA) and Yutan exchange. The petition was placed on public notice and one party commented. No reply comments were filed. For the reasons stated below, we grant USW's request. II. BACKGROUND 2. Requests for new ELCS routes are generally initiated by local subscribers. IntraLATA ELCS routes can be ordered by the state commission. For interLATA routes, prior to the Telecommunications Act of 1996 (1996 Act), the BOCs were required to secure state approval and then obtain a waiver from the United States District Court for the District of Columbia (District Court). In the years between the Consent Decree and the 1996 Act, the District Court received more than a hundred requests for Consent Decree waivers to permit new interLATA ELCS routes. Because of the large number of requests involved and because most of the requests were non-controversial, the District Court developed a streamlined process for handling such requests. 3. Under the streamlined process developed by the District Court, the BOC submitted its waiver request to the Department of Justice (Department). The Department reviewed the request and then submitted the request, along with the Department's recommendation, to the District Court. In evaluating ELCS requests, the Department and the District Court considered the number of customers or access lines involved as well as whether a sufficiently strong community of interest between the exchanges justified granting a waiver of the Consent Decree. A community of interest could be demonstrated by such evidence as: (1) poll results showing that customers in the affected exchange were willing to pay higher rates to be included in an expanded local calling area; (2) usage data demonstrating a high level of calling between the exchanges; and (3) narrative statements describing how the two exchanges were part of one community and how the lack of local calling between the exchanges caused problems for community residents. In addition, the Department and the District Court gave deference to the state's community of interest finding. The District Court also considered the competitive effects of granting a proposed ELCS waiver. 4. Matters previously subject to the Consent Decree are now governed by the Act. Under section 3(25)(B) of the Act, BOCs may modify LATA boundaries, if such modifications are approved by the Commission. On July 15, 1997, the Commission released a decision granting 23 requests for limited boundary modification to permit ELCS. Although calls between the ELCS exchanges would now be treated as intraLATA, each ELCS exchange would remain assigned to the same LATA for purposes of classifying all other calls. The Commission stated that it would grant requests for such limited modifications only where a petitioning BOC showed that the ELCS was a flat-rated, non-optional service, a significant community of interest existed among the affected exchanges, and grant of the requested waiver would not have any anticompetitive effects. The Commission stated further that a carrier would be deemed to have made a prima facie case supporting grant of the proposed modification if the ELCS petition: (1) has been approved by the state commission; (2) proposes only traditional local service (i.e., flat-rated, non-optional ELCS); (3) indicates that the state commission found a sufficient community of interest to warrant such service; (4) documents this community of interest through such evidence as poll results, usage data, and descriptions of the communities involved; and (5) involves a limited number of customers or access lines. III. DISCUSSION 5. USW's petition proposes to establish two-way ELCS between OCSA and the Yutan exchange. USW would provide one-way service from OCSA to Yutan, and Aliant Communications (Aliant) would provide one-way service from Yutan to OCSA. USW currently provides service to customers in the OCSA, and, as proposed in the petition, callers making calls from OCSA to Yutan would do so under a flat-rated, non-optional ELCS plan. Aliant currently provides service to customers in the Yutan exchange, and, as proposed in the petition, callers making calls from Yutan to OCSA would pay a flat-rated monthly service charge. In addition to the flat-rated monthly service charge, Aliant customers placing calls outside their standard local calling area, but within a 25-mile radius (which includes OCSA), would be charged a per-minute fee. In lieu of the per-minute fee, customers may choose 60 minutes of calls for a flat-monthly rate; after 60 minutes, the customer is charged a per-minute fee. 6. USW's petition is accompanied by: (1) an order confirming state approval of the limited LATA modification requested; (2) a statement that USW will only provide traditional local service; (3) a community of interest finding by the Nebraska Public Service Commission; (4) usage data; and (5) a statement that OCSA has 329,669 access lines, and Yutan has 700 access lines. The usage data does not include traffic between OCSA and Yutan because such traffic is presently interLATA. Aliant, however, reported that 86% of its customers make two or more calls to OCSA, and that each account averages 32 calls per month. The brief descriptions of the basis for the requested ELCS reveal that the area's economic development is retarded due to the current local calling arrangements, and that making interLATA toll calls for such services generates significant expenses for residents and retards economic development. 7. As we stated in the July 1997 Order, granting an ELCS petition removes the proposed route from the competitive interexchange market. Some LATA modifications could reduce the incentive created by Section 271 of the Act for BOCs to open their local exchange and exchange access markets to competition. While the number of access lines in the OCSA is large, the number of lines in the Yutan exchange is not so large as to raise concerns about USW's willingness to open its local markets to competition. Additionally, although Aliant plans to provide service to OCSA through an optional plan, and the District Court refused to grant waivers for optional or measured-rate plans, the District Court's prohibition was aimed at BOCs rather than other LECs. Accordingly, given the small number of access lines involved in the Yutan exchange as well as the type of service to be offered by USW (i.e., flat-rated, non- optional), we find that the proposed LATA modification will not have a significant anticompetitive effect on the interexchange market or on USW's incentive to open its local exchange and exchange access markets to competition. IV. CONCLUSION 8. We conclude that, as shown in USW's petition, the community's need for the proposed ELCS routes outweighs the risk of potential anticompetitive effects. Granting USW's petition serves the public interest by permitting a minor LATA modification in a case where such modification is necessary to meet the needs of local subscribers and will not have any significant effect on competition. Accordingly, we approve USW's petition for limited LATA modification. The LATA is modified solely for the limited purpose of allowing two-way local calling service between the specific exchanges or geographic areas identified in the requests. The LATA is not modified to permit the BOC to offer any other type of service, including calls that originate or terminate outside the specified areas. Thus, ELCS between the specified exchanges will be treated as intraLATA, and the provisions of the Act governing intraLATA service will apply. Other types of service between the specified exchanges will remain interLATA, and the provisions of the Act governing interLATA service will apply. V. ORDERING CLAUSES 10. Accordingly, IT IS ORDERED, pursuant to sections 3(25) and 4(i) of the Communications Act of 1934, as amended, 47 U.S.C.  153(25), 154(i), and 47 C.F.R.  0.91 and 0.291 of the Commission's rules, that the request of U S WEST for LATA modification for the limited purpose of providing ELCS at specific locations, identified in File No. NSD-L-97-31, IS APPROVED to the extent described above. 11. IT IS FURTHER ORDERED that, pursuant to section 416(a) of the Act, 47 U.S.C.  416(a), the Secretary SHALL SERVE a copy of this order upon the petitioner, U S WEST. FEDERAL COMMUNICATIONS COMMISSION Geraldine A. Matise Chief, Network Services Division Common Carrier Bureau