******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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 ) ) The Bell Atlantic Telephone Companies ) CCBPol 98-01 Offer of Comparably Efficient Interconnection ) to Intranet Management Service Providers) ORDER Adopted: August 20, 1998 Released: August 20, 1998 By the Chief, Common Carrier Bureau: TABLE OF CONTENTS Paragraph I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . 1 II. BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . . 2 A. CEI Plans . . . . . . . . . . . . . . . . . . . . . . 2 III. SERVICE DESCRIPTION. . . . . . . . . . . . . . . . . . . 7 IV. COMPLIANCE ISSUES . . . . . . . . . . . . . . . . . . . . 9 A. CEI Plan Requirements . . . . . . . . . . . . . . . . 9 1. Unbundling of Basic Services . . . . . . . . . 10 2. Interface Functionality. . . . . . . . . . . . 12 3. Resale . . . . . . . . . . . . . . . . . . . . . 13 4. Technical Characteristics. . . . . . . . . . . 14 5. Installation, Maintenance, and Repair. . . . . 15 6. End-User Access. . . . . . . . . . . . . . . . . 17 7. CEI Availability . . . . . . . . . . . . . . . . 18 8. Minimization of Transport Costs. . . . . . . . . 20 9. Recipients of CEI. . . . . . . . . . . . . . . . 21 B. Other Nonstructural Safeguards. . . . . . . . . . . . 22 1. Customer Proprietary Network Information . . . . 23 2. Network Information Disclosure . . . . . . . . . 25 3. Nondiscrimination Reporting. . . . . . . . . . . 27 C. Accounting Safeguards . . . . . . . . . . . . . . . . 28 V. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . 29 VI. ORDERING CLAUSES. . . . . . . . . . . . . . . . . . . . . 30 I. INTRODUCTION 1. On October 3, 1997, pursuant to the requirements of the Commission's Computer III proceeding, the Bell Atlantic Telephone Companies (Bell Atlantic) filed a comparably efficient interconnection (CEI) plan for an enhanced service it plans to offer -- Intranet Management Service (IMS). Under the Computer III regulatory scheme, a carrier is permitted to provide unregulated, enhanced services if it files a CEI plan demonstrating that the underlying regulated, basic services are available on an equivalent basis to unaffiliated enhanced service providers (ESPs). Prior to offering the enhanced service, the carrier must obtain Commission approval of the CEI plan. The Common Carrier Bureau sought comment on the Bell Atlantic CEI plan for IMS on January 13, 1998. No oppositions or comments were filed in connection with Bell Atlantic's IMS plan. For the reasons discussed below, we approve Bell Atlantic's CEI plan. II. BACKGROUND A. CEI Plans 2. Pursuant to the Computer III regime, Bell Operating Companies (BOCs) are permitted to offer enhanced services on an integrated basis after Commission approval of a service-specific CEI plan. In Computer III, the Commission required BOCs to file CEI plans as a nonstructural safeguard against BOC cross-subsidization and discrimination in the provision of enhanced services. The Commission concluded in Computer III that the "basic service functions utilized by a carrier-provided enhanced service [must] be available to others on an unbundled basis, with technical specifications, functional capabilities, and other quality and operational characteristics, such as installation and maintenance times, equal to those provided to the carrier's enhanced services." BOCs were required to describe in their CEI plans: (1) the enhanced service or services to be offered; (2) how the underlying basic services would be made available for use by competing ESPs; and (3) how the BOCs would comply with the other nonstructural safeguards imposed by Computer III. 3. In Computer III, the Commission concluded that BOCs that implemented an Open Network Architecture (ONA) plan would be permitted to offer integrated enhanced services without prior Commission approval of service-specific CEI plans. In a series of orders between 1988 and 1992, the Commission approved several BOC ONA plans that described the unbundled basic services each BOC proposed to provide as ONA services and the terms under which they would be offered. During 1992-1993, the Common Carrier Bureau (Bureau) lifted structural separation requirements for individual BOCs that showed they had implemented all of the ONA services set forth in their ONA plans. 4. In California III, the United States Court of Appeals for the Ninth Circuit determined that the Commission had not justified its retreat from its initial position regarding the level of unbundling necessary for eliminating structural separation. The court concluded that the cost-benefit analysis associated with the Commission's decision to lift structural separation was flawed, and vacated the BOC Safeguards Order as arbitrary and capricious. 5. Following the California III decision, the Bureau issued an order allowing the BOCs to continue providing enhanced services and conducting market trials pursuant to CEI plans approved prior to the lifting of structural separation. The Bureau required BOCs to file CEI plans or market trial notifications prior to providing any new services or market trials. Thus, BOCs may not provide new enhanced services on an integrated basis, or jointly market enhanced services provided by a BOC's subsidiary, until their CEI plans are approved by the Bureau. In addition, the Bureau Interim Waiver Order required the BOCs to continue to comply with the procedures established in their approved ONA plans. For example, BOCs must still provide new ONA services that ESPs need to provide their service offerings and must file federal and state tariffs for ONA services. 6. On February 8, 1996, the Telecommunications Act of 1996 became law. Section 272 of the 1996 Act addresses the provision by BOCs of, inter alia, interLATA information services. The Commission determined in its Non-Accounting Safeguards Order that the Computer III safeguards remain in effect to govern BOC provision of intraLATA information services. III. SERVICE DESCRIPTION 7. Bell Atlantic represents that its proposed IMS will provide a customer with the capability to store information on a remote or on-premises database and provide secure Internet- like access to that database to a limited number of authorized users, such as to employees of a company. The proposed service will utilize Internet protocol and standards, such as Transmission Control Protocol/Internet Protocol, to establish and manage a customer's intranet network and associated intranet application. The proposed IMS will not, however, provide Internet connectivity. Bell Atlantic's proposed service will provide, on a customized basis, the specific hardware, software, and expertise needed to enable the customer to establish an intranet network meeting that customer's specific needs. Bell Atlantic states that its equipment will store information provided by the customer and provide secure access to that information by authorized users. Bell Atlantic states that depending on specific customer needs, it will own, manage, monitor, operate and/or provide acess to intranet related LAN-based routers and servers, and that its IMS will offer customers the ability to store and update information on servers located on Bell Atlantic premises. Alternatively, says Bell Atlantic, customers may store and maintain the intranet information on servers located on their own premises. In either event, Bell Atlantic states that it will maintain a database of authorized users and their identification numbers. 8. Bell Atlantic will also provide the needed screening and, if desired, encryption, to ensure that access to a database remains secure. Bell Atlantic states that geographically separate LANs would be interconnected via telecommunications services purchased directly by the customer or by Bell Atlantic. Finally, Bell Atlantic states that it will not bundle customer premises equipment with any telecommunications service, including those used in conjunction with IMS. IV. COMPLIANCE ISSUES A. CEI Plan Requirements 9. In the Computer III proceeding, the Commission established nine CEI requirements, which are discussed below. These CEI requirements are designed to give ESPs equal and efficient access to those basic services that the BOCs use to provide their own enhanced services. Bell Atlantic has described in its submission how its proposed enhanced service will satisfy each of the Commission's nine CEI requirements. As noted above, no parties objected to Bell Atlantic's CEI plan for IMS. We review below Bell Atlantic's CEI plan with respect to each of the requirements delineated by the Commission. 1. Unbundling of Basic Services 10. The unbundling requirement obligates the carrier to unbundle, and associate with a specific rate element in the tariff, the basic services and basic service functions that underlie the carrier's enhanced service offering. Nonproprietary information used by the carrier in providing the unbundled basic services must be made available as part of CEI. In addition, any options available to a carrier in the provision of such basic services or functions must be included in the unbundled offerings. 11. Bell Atlantic states that all basic services and functions that will be used by its IMS are already unbundled to the extent that they are functionally useful to competitors and end users, and represent the minimum set of network functions that are required for connectivity to the network. The underlying basic services that Bell Atlantic will use in the provision of IMS are Private Line Services, Switched Multi-Megabit Data Service, Frame Relay Service, and Integrated Services Digital Network. Bell Atlantic also states that all basic services it will use are available under tariff, and that it will not use any network functions for its IMS that are not generally available at the same rates and under the same terms and conditions. Bell Atlantic further states that all the underlying basic services are available on both an interstate basis and intrastate basis except the Basic and Primary Rate Integrated Services Digital Network (ISDN) offerings, which are limited to intrastate. According to Bell Atlantic, these services are used for local telecommunications and do not have interstate application. These services are therefore offered only in the states. At present, we waive the federal tariffing requirement for IMS. If in the future, a customer requests IMS on an interstate basis, Bell Atlantic must federally tariff this service or seek a further waiver. We find that Bell Atlantic's CEI plan for IMS, subject to the requirements outlined above, complies with the unbundling requirement established by the Commission. 2. Interface Functionality 12. The interface functionality requirement obligates the carrier to "make available standardized hardware and software interfaces that are able to support transmission, switching, and signalling functions identical to those utilized in the enhanced service provided by the carrier." Bell Atlantic states that IMS equipment will be interconnected to the network using the same existing standard interfaces and conditions that are available on the same terms and conditions to all competitors of Bell Atlantic's proposed IMS. Based upon representations made by Bell Atlantic, we find that its CEI plan for IMS comports with the interface functionality requirement established by the Commission. 3. Resale 13. The resale requirement obligates a "carrier's enhanced service operations to take the basic services used in its enhanced services offerings at their unbundled tariffed rates as a means of preventing improper cost-shifting to regulated operations and anticompetitive pricing in unregulated markets." With respect to its proposed CEI plan, Bell Atlantic states that it will procure CEI elements at the same generally-available tariffed rates, terms, and conditions as are available to competitors, add the enhanced capabilities, and resell the resulting enhanced service to customers on an unregulated basis. Based upon representations made by Bell Atlantic, we find that its CEI plan for IMS complies with the resale requirement established by the Commission. 4. Technical Characteristics 14. This requirement obligates a carrier to provide basic services with technical characteristics that are equal to the technical characteristics the carrier uses for its own enhanced services. Bell Atlantic states that interconnection to its IMS offerings and to competitors' offerings will be available through the same standard network interfaces. Based upon representations made by Bell Atlantic, we find that its CEI plan for IMS complies with the technical characteristics requirement established by the Commission. 5. Installation, Maintenance, and Repair 15. This requirement ensures that the time periods for installation, maintenance, and repair of the basic services and facilities included in a CEI offering are the same as those the carrier provides to its own enhanced service operations. Carriers also must satisfy reporting and other requirements showing that they have met this requirement. 16. With respect to its proposed CEI plan, Bell Atlantic states that the procedures for ordering, installing, maintaining, and repairing underlying basic services will be identical for affiliated and unaffiliated information service providers. Bell Atlantic states that these procedures, which have been approved by the Commission, are designed to preclude discrimination in response or intervals for these functions. Based upon its representations, we find that Bell Atlantic's CEI plan for IMS complies with the installation, maintenance, and repair requirements established by the Commission. 6. End-User Access 17. This requirement obligates the carrier to provide to all end users the same abbreviated dialing and signalling capabilities that are needed to activate or obtain access to enhanced services that use the carrier's facilities. This requirement provides to end users equal opportunities to obtain access to basic facilities through derived channels, whether they use the enhanced service offerings of the carrier or of a competing provider. Bell Atlantic states that to provide its IMS offering, Bell Atlantic will use the same tariffed services that are available to any competing provider of intranet services, and all service features and options available under tariff for Bell Atlantic IMS are available to any competing provider of intranet services at the same rates and under terms and conditions. Based upon its representations, we find that Bell Atlantic's CEI plan for IMS complies with the end-user access requirement established by the Commission. 7. CEI Availability 18. This requirement obligates a carrier to make its CEI offering available and fully operational on the date that it offers its corresponding enhanced service to the public. The requirement also obligates a carrier to provide a reasonable period of time prior to that date when prospective users of the CEI offering can use the CEI facilities and services for purposes of testing their enhanced service offerings. The testing period is necessary "to balance the conflicting interests of the carrier, which should have a reasonable period to develop, test, and 'de- bug' its CEI offerings before making them publicly available, and other CEI users, such as competitors, that might suffer an unfair competitive disadvantage if carriers were able to test and perfect their enhanced services -- particularly, their interconnection with the basic underlying facilities -- while withholding those same basic facilities from others." Consequently, the Commission has required the BOCs to notify unaffiliated ESPs in advance about the impending deployment of new basic services. In addition, the Commission has separately stated that a carrier's CEI plan should contain a description of the geographic areas in which it will offer the enhanced service, as well as the network locations within those areas through which it will provide such service. 19. Bell Atlantic states that in providing IMS, it will use only tariffed network services that are available at the same rates, and under the same terms and conditions, and at the same time to its competitors. If in the future Bell Atlantic chooses to offer its proposed enhanced services in areas where the basic underlying services were not previously available, Bell Atlantic must make these basic services available in these other jurisdictions for 90 days for testing by affiliates and nonaffiliates before using these services in its own offerings. Moreover, if Bell Atlantic uses any additional basic services to provide its proposed enhanced service, it must file an amendment to the relevant CEI plan. Based upon its representations, we find that Bell Atlantic's CEI plan for IMS, subject to the 90-day and future-amendment requirements outlined above, complies with the CEI availability requirement established by the Commission. 8. Minimization of Transport Costs 20. This parameter requires carriers to provide competitors with interconnection facilities that minimize transport costs. According to Bell Atlantic, affililiated and unaffiliated enhanced service providers are charged the same rates for underlying basic services. Bell Atlantic states that the purpose of the statement, which has appeared in each of Bell Atlantic's earlier CEI plans, is to comply with the Commission's requirement that underlying basic services be provided to unaffiliated providers in a cost-effective manner. Bell Atlantic further states that should the provision of IMS necessitate the collocation of IMS equipment with basic network facilities, such collocation will comply with the Commission's pricing parity rules and any applicable nondiscrimination requirements that relate to Bell Atlantic's provision of enhanced services. Based upon Bell Atlantic's representations, we find that its CEI plan for IMS complies with the minimization of transport costs requirement established by the Commission. 9. Recipients of CEI 21. This parameter prohibits carriers from restricting the availability of the CEI offering to any particular class of customer or enhanced service competitor. Bell Atlantic states that the basic services it will use to provide IMS are offered under existing tariffs to competitors and to end users. Bell Atlantic states that it will not restrict the availability of CEI services to any particular class of customer or enhanced service competitor. Based upon its representations, we find that Bell Atlantic has proposed to provide service to CEI recipients in compliance with this Commission requirement. B. Other Nonstructural Safeguards 22. In addition to the CEI requirements established in Computer III, a BOC proposing to provide enhanced services on a structurally integrated basis must comply with requirements regarding the use of customer proprietary network information (CPNI), disclosure of network information, and nondiscrimination reporting. 1. Customer Proprietary Network Information 23. Bell Atlantic is required to describe the procedures it intends to establish to comply with the CPNI safeguards. In addition, section 222 of the 1996 Act contains CPNI requirements. In the CPNI Order, the Commission eliminated its Computer III CPNI framework and promulgated regulations to implement the requirements of section 222 of the Telecommunications Act of 1996. These new regulations: (1) permit carriers to use CPNI, without customer approval, to market certain offerings that are related to, but limited by, the customer's existing service relationship with their carrier; (2) require that carriers obtain express customer approval, either written, oral, or electronic, before carriers may use CPNI to market service outside the customer's existing service relationship; and (3) require carriers to provide a one-time notification of customers' CPNI rights prior to any solicitation for approval. 24. Bell Atlantic has stated that it will fully comply with the Commission's existing and any revised requirements regarding the use of CPNI. Based on this commitment, we find that Bell Atlantic's CEI plan for IMS complies with the Commission's CPNI requirements. 2. Network Information Disclosure 25. Bell Atlantic is also required to disclose to the enhanced services industry information about network changes and new network services that affect the interconnection of enhanced services with the network. Bell Atlantic must make that disclosure at the "make/buy" point, that is, when Bell Atlantic decides whether to make or to procure from an unaffiliated entity any product whose design affects or relies on the network interface. Bell Atlantic must provide that information to members of the enhanced services industry that sign a nondisclosure agreement, within 30 days after the execution of such nondisclosure agreement. Bell Atlantic also must publicly disclose technical information about a new or modified network service twelve months before that service is introduced. If a BOC is able to introduce the service within twelve months of the make/buy point, however, it may make public disclosure at the make/buy point. It may not, however, introduce the service earlier than six months after the public disclosure. 26. BOCs need not describe network disclosure procedures in their CEI plans, because they are obligated to obey those rules. Bell Atlantic states that it will fully comply with the Commission's existing requirements and with any revised requirements regarding network information disclosure. We thus find that Bell Atlantic's CEI plan for IMS complies with the Commission's network information disclosure requirements. 3. Nondiscrimination Reporting 27. BOCs are required to file quarterly nondiscrimination reports with respect to their basic services, thereby ensuring that they provide the access promised in their CEI plans. Bell Atlantic has stated that it will fully comply with the Commission's existing and any revised requirements regarding nondiscrimination reporting. Based upon its representations, we find that Bell Atlantic's CEI plan complies with the Commission's nondiscrimination reporting requirements. C. Accounting Safeguards 28. BOCs must adhere to certain accounting procedures to protect ratepayers from bearing misallocated costs. These procedures consist of five principal elements: (1) the establishment of effective accounting rules, in accordance with the Commission's Part 32 Uniform System of Acounts requirements, and cost allocation standards; (2) the filing of cost allocation manuals reflecting the accounting rules and cost allocation standards adopted by the BOC; (3) mandatory audits of carrier cost allocations by independent auditors, who must state affirmatively whether the audited carriers' allocations comply with their cost allocation manuals; (4) the establishment of detailed reporting requirements and the development of an automated system to store and analyze the data; and (5) the performance of on-site audits by Commission staff. Bell Atlantic must comply with these accounting safeguards. V. CONCLUSION 29. We conclude that Bell Atlantic's CEI plan complies with the Computer III requirements. If Bell Atlantic provides new enhanced services not described in these CEI plans, or if Bell Atlantic uses additional basic underlying services, it must file a CEI plan amendment. Accordingly, in this Order, we approve Bell Atlantic's CEI plan to offer Intranet Management Service, as described herein. VI. ORDERING CLAUSES 30. IT IS HEREBY ORDERED that, pursuant to Sections 1, 4(i) and (j), 201, 202, 203, 205, 218, and 222 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i) and (j), 201, 202, 203, 205, 218, and 222 and authority delegated thereunder pursuant to Sections 0.91 and 0.291 of the Commission's rules, 47 C.F.R.  0.91 and 0.291, Bell Atlantic's Comparably Efficient Interconnection Plan for Intranet Management Service IS APPROVED, subject to the conditions discussed herein. Federal Communications Commission Kathryn C. Brown Chief Common Carrier Bureau