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CC Docket No. 97-231 Pursuant to Section 271 of the ) Communications Act of 1934, as amended, ) To Provide In-Region, InterLATA Services ) In Louisiana ) MEMORANDUM OPINION AND ORDER Adopted: February 3, 1998 Released: February 4, 1998 By the Commission: TABLE OF CONTENTS Paragraph I. INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . .1 II. OVERVIEW. . . . . . . . . . . . . . . . . . . . . . . . . .2 III. BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . . .7 A. Statutory Framework. . . . . . . . . . . . . . . . . .7 B. State Verification of BOC Compliance with Section 271(c)9 1. The Louisiana Commission's 271 Proceeding . . . 10 2. The Louisiana Commission's Cost Proceedings . . 13 C. The Department of Justice's Evaluation . . . . . . . 16 IV. CHECKLIST COMPLIANCE. . . . . . . . . . . . . . . . . . . 20 A. Operations Support Systems . . . . . . . . . . . . . 20 1. Background. . . . . . . . . . . . . . . . . . . 20 2. Discussion. . . . . . . . . . . . . . . . . . . 21 a. Ordering and Provisioning Functions. . . . 23 b. Pre-Ordering Functions . . . . . . . . . . 47 B. Resale of Contract Service Arrangements. . . . . . . 59 1. Background. . . . . . . . . . . . . . . . . . . 59 2. Discussion. . . . . . . . . . . . . . . . . . . 63 a. No General Exemption for Contract Service Arrangements64 b. State Jurisdiction . . . . . . . . . . . . 70 V. COMPLIANCE WITH SECTION 271(c)(1)(A). . . . . . . . . . . 71 VI. CONCLUSION . . . . . . . . . . . . . . . . . . . . . 74 VII. ORDERING CLAUSE . . . . . . . . . . . . . . . . . . . . . 75 APPENDIX -- LIST OF COMMENTERS I. INTRODUCTION 1. On November 6, 1997, BellSouth Corporation, BellSouth Telecommunications, Inc., and BellSouth Long Distance, Inc. (collectively, BellSouth) filed an application for authorization under section 271 of the Communications Act of 1934, as amended, to provide interLATA services in the State of Louisiana. In many respects, the instant application is materially indistinguishable from BellSouth's application to provide interLATA services in South Carolina. As we recently determined, the BellSouth South Carolina application failed to demonstrate that BellSouth has fully implemented the competitive checklist in section 271(c)(2)(B). Applying the legal standard we adopted in the BellSouth South Carolina Order to what are materially indistinguishable facts with respect to two of the checklist items that BellSouth failed to meet in its South Carolina application, we are compelled to deny BellSouth's application to provide interLATA services in Louisiana. Specifically, we conclude that BellSouth has not demonstrated that it provides to competing carriers nondiscriminatory access to its operations support systems (OSS) functions. In addition, we conclude that BellSouth's refusal to offer contract service arrangements for resale at a wholesale discount violates the requirement in section 271(c)(2)(B)(xiv) that a Bell Operating Company (BOC) must make telecommunications services available for resale in accordance with sections 251(c)(4) and 252(d)(3) of the Act. We therefore deny BellSouth's Louisiana application. II. OVERVIEW 2. We recently considered BellSouth's application for entry into the long distance market in South Carolina. In the BellSouth South Carolina Order, we determined that BellSouth had not fully implemented the competitive checklist, as required by section 271. We concluded, inter alia, that BellSouth failed to demonstrate that it offers nondiscriminatory access to its operations support systems. We also determined that BellSouth's refusal to make its contract service arrangements available for resale at a wholesale discount violates the requirement in checklist item (xiv) that it make telecommunications services available for resale in accordance with sections 251(c)(4) and 252(d)(3) of the Act. 3. BellSouth's OSS are region-wide systems, deployed throughout BellSouth's nine- state region. We reviewed BellSouth's OSS in the BellSouth South Carolina Order and found that its OSS were deficient. Because our assessment of BellSouth's OSS in the BellSouth South Carolina Order applies to BellSouth's region-wide system as a whole, we use the determinations made in that Order as a starting point for our review of BellSouth's OSS in its Louisiana application and review any new data or information that BellSouth has provided to determine whether a different result is justified. 4. As discussed in further detail in Section IV.A. below, we have reviewed the new information BellSouth has provided and find that BellSouth has not remedied the deficiencies in its OSS that we identified in the BellSouth South Carolina Order. We note that BellSouth's application to provide in-region, interLATA services in Louisiana was filed on November 6, 1997, just 37 days after BellSouth filed its application to provide long distance service in South Carolina. Although we commend BellSouth for continuing to improve its OSS functions during the 37-day interval, we find that the marginal improvements made during this short time do not address the major deficiencies we identified in our BellSouth South Carolina Order. 5. In addition, we conclude, as we did in the BellSouth South Carolina Order, that BellSouth's refusal to offer its contract service arrangements for resale at a wholesale discount is inconsistent with the requirement in section 271(c)(2)(B)(xiv) that it make telecommunications services available for resale in accordance with sections 251(c)(4) and 252(d)(3). In this Order, we affirm our conclusion in the BellSouth South Carolina Order that neither incumbent LECs nor states may create a general exemption from the requirement that incumbent LECs offer their promotional or discounted offerings, including contract service arrangements, at a wholesale discount. 6. Finally, in light of our conclusion that BellSouth does not meet the competitive checklist, we need not and do not decide whether the Personal Communications Services (PCS) carriers on which BellSouth relies to satisfy the requirements of section 271(c)(1)(A) are "competing providers of telephone exchange service" in the State of Louisiana. In an effort to provide BellSouth and others with guidance on this issue for future applications, we conclude in Section V, below, that section 271(c)(1)(A) excludes only cellular providers, not PCS providers, from being considered "facilities-based competitors." We also note, however, that the Commission has recently concluded in other contexts that, although PCS providers appear to be positioning their service offerings to become competitive with wireline service, they are still making the transition from a complementary service to a competitive equivalent to wireline services. III. BACKGROUND A. Statutory Framework 7. The 1996 Act conditions BOC entry into in-region, interLATA services on compliance with certain provisions of section 271. Pursuant to section 271, BOCs must apply to this Commission for authorization to provide interLATA services originating in any in-region state. The Commission must issue a written determination on each application no later than 90 days after receiving such application. In acting on a BOC's application for authority to provide in-region, interLATA services, the Commission must consult with the Attorney General and give substantial weight to the Attorney General's evaluation of the BOC's application. In addition, the Commission must consult with the applicable state commission to verify that the BOC has one or more state-approved interconnection agreements with a facilities-based competitor, as required in section 271(c)(1)(A), or a statement of generally available terms and conditions (SGAT), as required in section 271(c)(1)(B), and that either the agreement(s) or general statement satisfy the "competitive checklist." 8. To obtain authorization to provide in-region, interLATA service under section 271, the BOC must show that: (1) it satisfies the requirements of either section 271(c)(1)(A), known as "Track A," or 271(c)(1)(B), known as "Track B;" (2) it has "fully implemented the competitive checklist" or the statements approved at the state level under section 252 satisfy the competitive checklist contained in section 271(c)(2)(B); (3) the requested authorization will be carried out in accordance with the requirements of section 272; and (4) the BOC's entry into the in-region, interLATA market is "consistent with the public interest, convenience, and necessity." B. State Verification of BOC Compliance with Section 271(c) 9. Under section 271(d)(2)(B), the Commission "shall consult with the State commission of any State that is the subject of the application in order to verify the compliance of the Bell operating company with the requirements of subsection (c)." In the Ameritech Michigan Order, the Commission determined that, because the Act does not prescribe any standard for Commission consideration of a state commission's verification under section 271(d)(2)(B), it has discretion in each section 271 proceeding to determine the amount of deference to accord to the state commission's consultation, in light of the nature and extent of the state commission's proceedings on the applicant's compliance with section 271 and the status of local competition. Although the Commission will consider carefully state determinations of fact that are supported by a detailed and extensive record, it is the Commission's role to determine whether the factual record supports a conclusion that particular requirements of section 271 have been met. 1. The Louisiana Commission's 271 Proceeding 10. The Louisiana Commission reviewed BellSouth's compliance with the requirements of section 271 and provided us with its written evaluation. On December 18, 1996, the Louisiana Commission commenced a proceeding to consider BellSouth's compliance with section 271 of the Act. Pursuant to the procedural schedule established in the proceeding, parties filed testimony and conducted discovery. The Louisiana Commission conducted a public hearing in May 1997, during which BellSouth and parties opposed to BellSouth's entry into the long distance market presented testimony and conducted cross-examinations. The Louisiana Commission broadened the scope of the Louisiana Section 271 Proceeding to encompass specific consideration of BellSouth's SGAT. Following the hearings, parties and the Louisiana Commission staff filed post-hearing briefs. 11. On September 5, 1997, by a vote of three-to-two, the Louisiana Commission approved BellSouth's SGAT, subject to modifications, and concluded that BellSouth's SGAT makes available to new entrants each of the items in the competitive checklist. The Louisiana Commission also found that BellSouth's entry into the interLATA market would create the potential for immediate rate reductions for long-distance services and would, therefore, serve the public interest. BellSouth modified its SGAT to comply with modifications ordered in the Louisiana Commission 271 Compliance Order and filed a revised SGAT on September 9, 1997. 12. On November 24, 1997, the Louisiana Commission submitted its comments to this Commission concerning BellSouth's Louisiana application. In its comments, the Louisiana Commission reiterated its view that BellSouth should be granted interLATA authority, because it has satisfied the requirements of section 271. We note that, although the Louisiana Commission has addressed every checklist item, it has not included an analysis of the state of local competition in Louisiana, as the Commission has encouraged state commissions to perform. 2. The Louisiana Commission's Cost Proceedings 13. In addition to its Section 271 Proceeding, the Louisiana Commission also conducted extensive proceedings to establish cost-based rates for interconnection and unbundled network elements pursuant to section 252(d)(1). The Louisiana Commission's consolidated cost proceeding commenced in 1996 upon BellSouth's filing of a tariff introducing rates, terms, and conditions for interconnection and unbundled network elements and supporting cost studies for the tariff. Pursuant to a revised procedural schedule established in July 1997, parties conducted discovery; AT&T and MCI filed revised cost studies; BellSouth, AT&T, and MCI conducted tutorials regarding their cost studies; and intervenors filed testimony and rebuttal testimony. The Louisiana Commission conducted nine days of hearings in September 1997, during which 34 witnesses and the Louisiana Commission staff testified and conducted cross-examinations. 14. On October 17, 1997, following the filing of post-hearing briefs by the parties and the Louisiana Commission staff, and the issuance of a recommendation by the Chief Administrative Law Judge, the Louisiana Commission adopted rates that, in its view, are based on a forward-looking, long-run, incremental cost methodology, as proposed by the Louisiana Commission's independent consultant. The Louisiana Commission ordered BellSouth to replace the interim rates in its SGAT with the permanent rates established in the Louisiana Commission Pricing Order. BellSouth incorporated into its SGAT the rates established by the Louisiana Commission in its costing proceeding. 15. The Louisiana Commission also conducted a proceeding to establish the wholesale discount for services offered for resale pursuant to section 252(d)(3). Pursuant to the procedural schedule established in the proceeding, parties reviewed BellSouth's resale cost study, filed testimony, and conducted discovery. Hearings were held on this issue in September 1996. On October 16, 1996, the Louisiana Commission adopted a wholesale discount of 20.72 percent. BellSouth incorporated into its SGAT the 20.72 percent wholesale discount established by the Louisiana Commission. C. The Department of Justice's Evaluation 16. Section 271(d)(2)(A) requires the Commission to consult with the Attorney General before making any determination approving or denying a section 271 application. The Attorney General is entitled to evaluate the application "using any standard the Attorney General considers appropriate," and the Commission is required to "give substantial weight to the Attorney General's evaluation." Section 271(d)(2)(A) specifically provides, however, that "such evaluation shall not have any preclusive effect on any Commission decision." We found in the Ameritech Michigan Order that the Commission is required to give substantial weight not only to the Department of Justice's evaluation of the effect of BOC entry on long distance competition, but also to its evaluation of each of the criteria for BOC entry under section 271. 17. The Department of Justice recommends that BellSouth's application for entry into the long distance market in Louisiana be denied. As summarized more fully below, the Department of Justice concluded that the Louisiana market is not fully and irreversibly open to competition, and that BellSouth has failed to demonstrate that it is offering access and interconnection that satisfy the requirements of the competitive checklist. 18. Evaluation of Openness of Market to Competition. The Department of Justice found that the Louisiana local market is not "fully and irreversibly open to competition." In evaluating whether competition in a local market satisfies this standard, the Department of Justice considers whether all three entry paths contemplated by the 1996 Act -- facilities-based entry involving construction of new networks, the use of unbundled network elements, and resale of the BOC's services -- are fully and irreversibly open to competition to serve both business and residential consumers. The Department of Justice examines the extent of actual local competition, whether significant barriers continue to impede the growth of competition, and whether benchmarks to prevent backsliding have been established. Applying these standards, the Department of Justice concluded that BellSouth faces no significant competition in local exchange service in Louisiana. The Department of Justice further found that the Louisiana market is not sufficiently open to competition because BellSouth has not instituted performance measurements to ensure consistent wholesale performance, i.e., to prevent "backsliding" once section 271 authority is granted. In light of its conclusion that the Louisiana market is not "fully and irreversibly open to competition," the Department of Justice found that it is not in the public interest to grant BellSouth's application. 19. Evaluation of Compliance with Competitive Checklist. The Department of Justice concluded that BellSouth has failed to demonstrate that it is offering access and interconnection that satisfy the competitive checklist requirements. The Department of Justice reaffirmed the conclusions it made in its South Carolina evaluation that, inter alia, BellSouth has not demonstrated its ability to provide adequate, nondiscriminatory access to its operations support systems. The Department of Justice discounted the Louisiana Commission's determination that BellSouth's OSS satisfy the checklist, because that determination: (1) was not based on this Commission's approach for assessing checklist compliance; (2) did not articulate the reasoning for the Louisiana Commission's conclusion; and (3) appears to have been based on a technical demonstration of BellSouth's OSS instead of a thorough test. The Department of Justice also noted that other states -- such as Florida, Georgia, and Alabama -- have concluded that BellSouth's region-wide OSS are insufficient. IV. CHECKLIST COMPLIANCE A. Operations Support Systems 1. Background 20. Congress requires incumbent LECs to share their networks with new entrants to hasten the development of competition in the local exchange market. In order for a new entrant to have access to an incumbent LEC's network, the Commission has required that incumbent LECs offer nondiscriminatory access to the systems, information, and personnel that support those network elements or services. These systems, databases, and personnel are commonly referred to, collectively, as operations support systems, or OSS. Properly functioning operations support systems allow a carrier to receive, process, and install customers' orders promptly and accurately. To ensure that all carriers are able to compete fairly for customers, the Commission has consistently emphasized that the incumbent LEC must give its competitors nondiscriminatory access to the functions of its operations support systems. More simply put, new entrants must be able to provide service to their customers at a level that matches the quality of the service provided by the incumbent LEC. Because the incumbent LEC owns and controls its operational support systems, competing carriers' entry into the local market depends upon the incumbent LEC's willingness and ability to make its OSS available in a nondiscriminatory manner. A competing carrier that lacks access to operations support systems equivalent to those the incumbent LEC provides to itself, its affiliates, or its customers, "will be severely disadvantaged, if not precluded altogether, from fairly competing" in the local exchange market. 2. Discussion 21. In the BellSouth South Carolina Order, this Commission concluded that BellSouth failed to offer nondiscriminatory access to its OSS functions to competing carriers. BellSouth has deployed the same operations support systems throughout its nine-state region, and, in its application, BellSouth relies on data from its entire region to support its assertion that it is in compliance with the requirements of section 271. We use the determinations we made about BellSouth's operations support systems in our BellSouth South Carolina Order as a starting point. We then review any new data or information that BellSouth has provided in the context of its Louisiana application and decide whether the new information justifies a different result. 22. We find in this proceeding, as we did in the BellSouth South Carolina Order, that BellSouth's operations support systems fail to offer nondiscriminatory access to OSS functions for the pre-ordering, ordering, and provisioning of resale services. During the 37-day interval between the two applications, BellSouth continued to improve its operations support systems. We commend BellSouth for these efforts. We agree with the Department of Justice and the majority of commenters, however, that the marginal improvements that BellSouth made during this short time do not address the major deficiencies of BellSouth's operations support systems, i.e., that competing carriers do not have access to the basic functionalities at parity with BellSouth's own retail operations. We identified these same deficiencies in the BellSouth South Carolina Order. BellSouth's deficiencies with respect to its operational support systems preclude competing carriers from being able to compete fairly with BellSouth and render it noncompliant with the competitive checklist. a. Ordering and Provisioning Functions 23. For the reasons stated below, we conclude that BellSouth has failed to remedy the problems with its ordering and provisioning functions that we identified in our BellSouth South Carolina Order. In the BellSouth South Carolina Order, we concluded that BellSouth failed to establish that it is providing nondiscriminatory access for the ordering and provisioning of resale services because, among other things, (1) evidence in the record shows that a significant number of orders submitted by competing carriers via BellSouth's electronic interface are rejected, resulting in substantial delays in processing new entrants' orders, and (2) BellSouth fails to provide competing carriers with information on the status of their orders in a timely manner. In the BellSouth South Carolina Order, we concluded that these deficiencies were significant and prevented competing carriers from providing service to their customers at parity with BellSouth's retail operations. Moreover, in the BellSouth South Carolina Order, we found that BellSouth failed to provide us with data establishing that it is offering nondiscriminatory access to the various operational support systems so that a competing carrier could provide service to its customers in substantially the same time and manner that BellSouth provides such service to its own retail customers. Each of these deficiencies is discussed in more detail below. (i) Order Rejections 24. We conclude here, as we did in our BellSouth South Carolina Order, that BellSouth has failed to demonstrate that it is offering competing carriers the ability to order services for resale on a nondiscriminatory basis, i.e., within substantially the same time and manner as the BOC provides the service to itself. BellSouth claims that competing carriers' access to its ordering functions is "substantially the same as the access provided to BellSouth's own retail operations." But the data show that when BellSouth representatives place an order, over 97 percent of BellSouth's residential orders and 81 percent of its business orders electronically flow through BellSouth's ordering systems and databases. In contrast, when competing carriers place an order, a significant percentage of their orders are rejected, and thus require manual intervention before the order can be processed. For example, in July 1997, only 25 percent of competing carriers' resale orders submitted through the Electronic Data Interchange (EDI) flowed through BellSouth's system. In August 1997, the flow-through rate was 40 percent, and in September 1997, the flow-through rate was 54 percent. 25. While we note that improvements in new entrants' flow-through rates have occurred, we conclude that the substantial differences between these rates and the flow-through rate that BellSouth experiences for its own orders impose a significant competitive disadvantage on new entrants. When orders do not flow through BellSouth's ordering and provisioning systems, they are rejected and sent to one of BellSouth's Local Carrier Service Centers (service centers) for manual processing. It is virtually impossible for orders that are processed manually to be completed in the same amount of time as orders that flow through electronically. Therefore, it is difficult for equivalent access to exist when BellSouth processes a significant number of competing carriers' orders manually. Although we noted in the Ameritech Michigan Order and BellSouth South Carolina Order that there may be limited instances in which it is appropriate for a BOC to intervene manually, we also found that excessive reliance on manual processing, especially for routine transactions, impedes the BOC's ability to provide equivalent access to these fundamental operational support systems. The disparity in order flow-through rates is of particular concern here because the rejections are occurring for routine transactions -- resale orders for simple "plain old telephone service" (POTS), which should be among the easiest orders to submit and process. 26. The delays in manually processing orders that "drop out" from BellSouth's electronic OSS are aggravated by the poor performance of BellSouth's service centers and the lack of electronic order rejection notices. First, evidence on the record indicates that BellSouth's service centers were inefficient and had inadequately trained employees, raising operating costs and contributing to delays in customer service. The problems at the service centers resulted in rejected orders being returned to AT&T and MCI "an average of 1.7 times -- meaning that, on average, local service requests were being returned almost twice to the two [competing carriers] before the order was finally processed." In its reply comments BellSouth responds to service center complaints by submitting a one-page letter from an outside consulting firm noting that BellSouth's service center performance has improved and that the service centers are operationally ready. While we are encouraged by these statements, we agree with AT&T that BellSouth supplies no supporting data or reports to verify these claims. 27. Second, BellSouth does not electronically notify competing carriers that an order has been rejected. Service center personnel either send an error notice to the competing carrier via facsimile or they undertake to resolve the problem and resubmit the order, causing further delay in the processing of these orders. We agree with competing carriers that prompt notification of order rejections is important so that competing carriers may make the necessary corrections and avoid further delay in processing an order. BellSouth's failure to return order rejections promptly is compounded by the fact that a competing carrier must manually input these notices into its own OSS before it can respond to them. Moreover, BellSouth's manual rejection notices do not "readily communicate" the cause for rejection of the order and sometimes require competing carriers to contact BellSouth for clarification. By contrast, the on-line edits in BellSouth's own systems instantaneously advise BellSouth representatives of any errors and prevent them from releasing orders until the errors have been corrected. This lack of prompt notification of order rejections aggravates the disparity between order flow-through rates. 28. We find that the substantial disparity between the flow-through rates of BellSouth's orders and those of competing carriers, on its face, indicates that BellSouth is not providing competing carriers with nondiscriminatory access to its OSS. Commenters' claims of poor service by BellSouth's service centers, and BellSouth's failure to provide any data on the processing of manual orders, further support our conclusion that BellSouth is not providing parity in the processing of orders. Under such circumstances, the customer is likely to view the competing carrier as slow, inefficient, or unreliable when compared to the BOC, even if the competing carrier is not at fault. 29. The record does not support BellSouth's claim that the low flow-through rates are caused primarily by new entrants making mistakes on the orders they submit. BellSouth made the same argument in its South Carolina application. We rejected this claim in the BellSouth South Carolina Order because the record there did not support these claims. Specifically, we could not determine how many of the errors assigned by BellSouth to the actions of competing carriers resulted from BellSouth's failure to provide information, such as business rules, concerning how BellSouth's internal systems process orders. Given the lack of evidence presented by BellSouth, we find no reason to alter our prior conclusion that BellSouth has not met its burden of establishing that it is providing nondiscriminatory access, because it has failed to demonstrate that competing carriers are to blame for the high order rejection rates. In reaching this decision, we are not suggesting that BellSouth is responsible if the quality of work performed by the competing carrier's workforce is, indeed, inferior. BellSouth, however, has failed to provide us with such information and, therefore, it has failed to substantiate its claim that competing carriers are to blame for the low order flow-through rate. (ii) Failure to Provide Order Status Notices to Competing Providers in Substantially the Same Time and Manner 30. We conclude here, as we did in the BellSouth South Carolina Order, that BellSouth fails to provide competitors with information about the status of their orders in substantially the same time and manner as it provides such order status notices to itself. We agree with commenters that order status notices have a direct impact on a new entrant's ability to serve its customers, because they allow competing carriers to monitor the status of their resale orders and to track the orders both for their customers and their own records. If competing carriers are not informed of changes to an order or that a due date is in jeopardy, the customer is likely to blame the competing carrier for the delay, even if the competing carrier is completely without fault. To the customer, the new entrant may appear to be a less efficient and responsive service provider than its competitor, BellSouth. Thus, we find that, in order for a competing carrier to compete through the use of resale services, it must receive information concerning the status of its customers' orders in substantially the same time and manner as the BOC provides such information to its retail operations. 31. In the BellSouth South Carolina Order, we found that BellSouth failed to provide order error and rejection notices, firm order commitment notices, and order jeopardy notices in substantially the same time and manner as BellSouth provides to its retail operations. Order rejection notices inform the competing carrier that there is a problem with its order that prevents the order from being processed. BellSouth's firm order commitment notices inform the competing carrier that BellSouth has accepted the order and provide the due date for installation of service. Order jeopardy notices inform the competing carrier that BellSouth will not be able to complete installation on or before the scheduled due date. 32. Order Error and Rejection Notices. Timely delivery of order rejection notices directly affects a competing carrier's ability to serve its customers, because new entrants cannot correct errors and resubmit orders until they are notified by BellSouth that the order contains an error. Currently, rejected orders are reviewed for errors by a BellSouth service center employee and then a written error rejection notice is sent to the competing carrier via facsimile. 33. The evidence in the record indicates that there are two problems with BellSouth's manual notification of order rejection notices. First, BellSouth does not provide competing carriers with order rejection notices in a timely fashion. AT&T has submitted data showing that BellSouth provided AT&T with order rejection notices within one hour of order submission only six percent of the time. BellSouth has not supplied us with data indicating how long it takes to supply itself with the equivalent of an order rejection notice. Other evidence, however, indicates that BellSouth's retail operations receive the equivalent of an error notice between a few seconds and thirty minutes after entering an order. Because BellSouth has not provided the Commission with information on how long it takes its own representatives to receive notices of errors, we cannot determine whether BellSouth is providing order rejection notices to competing carriers at parity to that which it provides to itself. We are concerned, however, that BellSouth consistently continues to fail to meet the standard identified in its interconnection agreement with AT&T, which obligates BellSouth to use its best efforts to notify AT&T of errors within one hour of receipt. 34. Second, the manual return of order rejection notices creates additional delay in the ordering process because competing carriers must monitor facsimile machines to receive such notices, and must then route the order rejection notices to appropriate personnel. By contrast, BellSouth need not resort to these procedures when an order is rejected, because its systems provide on-line edits that inform the BellSouth service representative of the error so that the representative can correct the problem immediately. As a result, approximately 97 percent of BellSouth's residential orders and 81 percent of its business orders electronically flow through its back office systems. Competing carriers argue that problems related to manual return of order rejection notices are compounded by the fact that BellSouth's manual order rejections do not contain codes that clearly identify the errors, which requires competing carriers to take time either to interpret the notice or to contact BellSouth service center employees. Therefore, as we concluded in the BellSouth South Carolina Order, BellSouth's manual provision of order rejection notices to competing carriers via facsimile is not equivalent to the access that BellSouth provides its retail operations. 35. Firm Order Confirmation Notices. Timely return of a firm order confirmation or FOC notice is critical because it provides the competing carrier with the status of its order by (1) confirming that the order has been accepted, and (2) providing the due date for installation. Providing the due date for installation is significant because, as discussed below, the ability of new entrants to obtain due dates from BellSouth's pre-ordering system is highly constrained. Thus, the first opportunity that competing carriers may have to inform their customers of the due date is when the firm order confirmation notice is returned. Prompt notification is important, because competing carriers need to inform their customers, who in turn may need to make special arrangements to accommodate installation. If competing carriers are not able to inform their customers of due dates in a timely manner, customers are likely to conclude that service provided by competing carriers is inferior to service provided by the BOC. 36. In the Ameritech Michigan Order and BellSouth South Carolina Order, the Commission stated that BOCs are required to include data on the timeliness of their delivery of firm order confirmation notices to competing carriers. BellSouth's application does not provide such data, nor does it indicate how long it takes to provide the equivalent information to its retail operations. In its reply comments, BellSouth presents two weeks of data for two carriers. Some of the data relate to BellSouth activity after the date of its application. Evidence that concerns BellSouth's post-application performance is not demonstrative of its performance at the time of the application. Therefore, we give this evidence no weight. Furthermore, even if we were to consider the evidence, we would not find the data to be persuasive. Instead of providing evidence of BellSouth's performance for numerous carriers consistently over a specified period of time, BellSouth provides only selected weeks' data on its performance for two carriers. We find that providing performance data pertaining to particular carriers in particular weeks does not demonstrate overall performance. 37. Several commenters, however, provide data on how long it takes BellSouth to provide firm order confirmation notices to them. AT&T submits evidence showing that BellSouth took longer than 24 hours to return a firm order confirmation notice for 38 percent of its August 1997 orders and 44 percent of its September 1997 orders. LCI claims that it received only 20 percent of its firm order confirmation notices from BellSouth within 24 hours of submitting an order and that, on average, it has taken 3.5 workdays from submission of an order to receive a firm order confirmation notice. 38. Therefore, as in the BellSouth South Carolina Order, we conclude that, because BellSouth has not provided any data that compares its delivery of firm order confirmation notices to competing carriers to delivery of equivalent notices to its own retail operations for its own orders, BellSouth has failed to demonstrate that it is providing nondiscriminatory access and therefore we cannot conclude that it has met the competitive checklist. We also conclude, based on the evidence submitted by AT&T and LCI, that BellSouth is not providing competing carriers with firm order confirmation notices on a timely basis. Our decision is based on the fact that BellSouth consistently fails to meet the standard identified in its interconnection agreement. 39. Order Jeopardy Notices. As stated above, order jeopardy notices inform the competing carrier that BellSouth will not be able to complete installation on or before the scheduled due date. It is critical that a BOC provide a competing carrier with timely notice if the BOC, for any reason, can no longer meet the scheduled due date, so that the competing carrier can inform its customer of the delay before it occurs and reschedule the time for service installation. The alternative would be that the scheduled due date is not met and the customer discovers this after the fact. Evidence in the record shows that BellSouth provides competing carriers with notice of those order jeopardies caused by the competing carrier or its customer, but not for delays caused by BellSouth. Thus, as we found in the BellSouth South Carolina Order, because BellSouth is not providing order jeopardy notices for those delays it causes, we conclude that BellSouth is not providing competing carriers with nondiscriminatory access to OSS functions. 40. In sum, we reiterate our finding in the BellSouth South Carolina Order that BellSouth has failed to establish that it is providing competitors with information about their orders in a nondiscriminatory manner. BellSouth has not provided sufficient data on (1) the timeliness of its delivery of order rejection notices or firm order confirmation notices to competing carriers, or (2) the amount of time it takes to provide the equivalent information to its retail operations. We identified the lack of such data as a deficiency in BellSouth's South Carolina application, and we find the lack of such data to be a deficiency here. Competing carriers, however, have added another month's worth of data showing that BellSouth is still not providing such notices in a timely manner. With respect to order jeopardy notices, the record indicates that BellSouth fails to notify carriers promptly when the due date cannot be met due to delays caused by BellSouth. (iii) Average Installation Intervals 41. We conclude here, as we did in our BellSouth South Carolina Order, that BellSouth has failed to supply us with the data required to determine whether a competing carrier is able to provide service to its customers, using BellSouth's resold service, in substantially the same time and manner that BellSouth provides service to its own retail customers. As we stated in the BellSouth South Carolina Order, to demonstrate nondiscriminatory access, BellSouth must establish that the ordering/provisioning intervals are at parity. A critical measurement in determining whether a BOC has been providing competing carriers with nondiscriminatory access to its operational support systems is average installation intervals. As we stated in the BellSouth South Carolina Order, the most meaningful average installation interval measure is the average time it takes from when BellSouth first receives an order from a competing carrier to when BellSouth provisions the service for that order. Without data on average installation intervals comparing a BOC's retail performance with the performance provided to competing carriers, the Commission is unable to conclude that a BOC is providing nondiscriminatory access to OSS functions for the ordering and provisioning of resale. Parity is especially important with respect to average installation intervals for both resale and retail services because competing carriers will be at a competitive disadvantage if their customers have to wait a longer period for their service to be installed. 42. BellSouth, however, has not provided data showing average installation intervals as we defined them in the BellSouth South Carolina Order. Instead, attempting to demonstrate parity in its provision of resale services, BellSouth provided other performance measurements. The first measure, "percentage of provisioning appointments met," shows how often BellSouth met the due date it assigned to itself and how often BellSouth met the due dates it assigned to new entrants. The second measure, "issue to original due date intervals," presents data on the number of days between the date the order was issued, i.e., the day it was processed by the Service Order Control System, and the original due date. BellSouth claims that "the use of both sets of data accurately portrays the provisioning service parity comparison for [competing carrier] end users and [BellSouth Telecommunications, Inc.] retail end users." BellSouth claims that these measures provide "more meaningful information regarding BellSouth's performance than average service order intervals [because] service order intervals reflect end user preferences and sales campaign nuances whereas the interval data, combined with the [percentage of] Provisioning Appointments Met measurement, reflect BellSouth's actual service performance." 43. As we found in the BellSouth South Carolina Order, we conclude that these measures are not sufficient to demonstrate parity. First, the "issue to original due date interval" measures the number of days between the date the order was processed by SOCS and the scheduled due date. By only measuring the time from when the order clears BellSouth's SOCS system, rather than when the order is first submitted, these measures fail to capture the delays in order processing time caused by the high order rejection rates discussed above. In addition, BellSouth's measures do not provide information on the time it takes BellSouth actually to install service. Rather, they simply measure whether assigned due dates have been met. They may thus mask discriminatory treatment of competing carriers' orders. As explained by the Department of Justice: Fundamentally, a report that shows the side of the line on which an order falls, either met or missed, does not reveal where it is in the range. As to provisioning appointments met, if all [competing carriers'] customers receive service on the due date while all BellSouth retail customers receive service in half the scheduled time, then a report of provisioning appointments met will show parity of performance, not revealing the discriminatory difference in performance between BellSouth and the [competing carrier]. Likewise, as to provisioning appointments missed, if all BellSouth retail customers receive service after one additional day while all [competing carriers'] customers receive service after five additional days, then a report of provisioning appointments met will again show parity of performance and fail to reveal the discriminatory difference. Therefore, as in the BellSouth South Carolina Order, we conclude that the measurements provided by BellSouth can mask discriminatory conduct, because they do not permit a direct comparison to BellSouth's retail performance. 44. We find here, as in the BellSouth South Carolina Order, that a far more meaningful measure of parity is one that measures the interval from when BellSouth first receives an order to when service is installed. From a customer's perspective, what is important is the average length of time it takes from when the customer first contacts the carrier for service to when that service is provided. This period of time is a crucial point of comparison between the incumbent's performance and the competing carrier's performance. Therefore, the most meaningful data would measure the interval from when BellSouth first receives an order to when service is actually installed, regardless of whether or not the order electronically flows through BellSouth's operational support systems. This interval can then be compared with the average time from when BellSouth's own service representatives first submit an order for service to when BellSouth completes provision of the service for its retail customers. Unlike the data BellSouth provides, which measure intervals that begin when orders are processed by SOCS, such a measure would expose any delays in the processing of orders. As we stated in the BellSouth South Carolina Order, we expect BellSouth to provide such a measure in future applications. 45. As we stated in the BellSouth South Carolina Order, we recognize that the average installation interval can be influenced by a number of variables. Nevertheless, as we previously concluded, these issues do not justify the withholding of information on average installation intervals by the BOC, but rather go to the weight the Commission should attach to the information. 46. For the reasons discussed above, we find that BellSouth's performance measures do not provide sufficient evidence for us to determine whether it is providing nondiscriminatory access to the ordering and provisioning of resale services. b. Pre-Ordering Functions 47. Pre-ordering generally includes those activities that a carrier undertakes with a customer to gather and confirm the information necessary to formulate an accurate order for that customer. BellSouth states that it provides the following functions as part of its pre-ordering: (1) street address validation; (2) telephone number information; (3) services and features information; (4) due date information; and (5) customer service record information. BellSouth currently provides access to pre-ordering functions through its Local Exchange Navigation System or LENS interface. BellSouth states that LENS "is an interactive system that allows the [competing carrier] direct, real-time access to BellSouth's pre-ordering OSS." 48. In the BellSouth South Carolina Order, we concluded that BellSouth did not offer nondiscriminatory access to pre-ordering OSS functions, because: (1) competing carriers cannot readily connect LENS electronically to their operations support systems and to the EDI ordering interface, and (2) BellSouth did not provide equivalent access to due dates for service installation. We found that these deficiencies place competitors at a significant disadvantage in relation to BellSouth. Because BellSouth has not corrected either of the deficiencies identified in our BellSouth South Carolina Order, we conclude that BellSouth has failed to establish in its Louisiana application that it offers nondiscriminatory access to all OSS functions. (i) Lack of Equivalent Access in General 49. We conclude here, as we did in our BellSouth South Carolina Order, that BellSouth's current pre-ordering system does not provide competing carriers with equivalent access to operational support systems for pre-ordering. BellSouth provides competing carriers with two separate systems for pre-ordering and ordering: LENS for pre-ordering and EDI for ordering. BellSouth does not integrate these two systems for competing carriers, nor has BellSouth provided competing carriers with the technical specifications necessary to integrate BellSouth's pre-ordering interface with competing carriers' operational support systems and the EDI ordering interface. As a result, competing carriers cannot readily connect electronically the LENS interface to either their operations support systems or to BellSouth's EDI interface for ordering, notwithstanding their desire to do so. Without this ability, competing carriers must first retrieve information from the LENS pre-ordering interface and then manually re-key the information into their own operational support systems and the EDI ordering interface. By contrast, BellSouth's retail operations use an integrated pre-ordering/ordering system, which eliminates the need for re-keying information. We therefore concluded that LENS did not provide competing carriers with equivalent access to OSS functions for pre-ordering, and that this lack of parity had a significant impact on a competing carrier's ability to compete effectively in the local exchange market and to provide service to customers in a timely and efficient manner. We based this decision on a number of reasons. 50. First, because many "pre-ordering" activities generally occur in the context of actually negotiating a service order, and thus there is no strict delineation between pre-ordering and ordering, an integrated pre-ordering/ordering system is much more efficient. Without an integrated system, a new entrant is forced to enter information manually to use the EDI interface for ordering and to import the data into its operations support systems. In comparison to BellSouth's integrated ordering and pre-ordering system, entering information manually can lead to significant delays while the customer is on the line, assuming that a carrier wants to complete the order while speaking to the customer. Moreover, whether a carrier completes the order while the customer is on the line, as BellSouth's customer service representatives generally do, or enters the information at a later time, such manual entry of data requires a greater amount of time than BellSouth's retail operation requires. As a result, the need to reenter information would require a new entrant to expend more resources than BellSouth to conduct the same number of pre-ordering transactions. 51. Second, manual entry of data could also lead to increased errors in entering information when placing an order. As discussed above, BellSouth's systems are rejecting the majority of orders submitted by competing carriers. Although BellSouth claims that these high rejection rates are due to mistakes made by competing carriers, we conclude above that BellSouth failed to substantiate its claim and that BellSouth's actions may have contributed to such errors. Moreover, as we found in the BellSouth South Carolina Order, and as commenters contend, it is reasonable to assume that manual entry of information is a contributing factor to the high error rate. 52. Finally, as we found in the BellSouth South Carolina Order, the lack of a machine-to-machine interface prevents a carrier from developing its own customized interface that its customer service representatives could use on a nation-wide basis. As a result, new entrants that seek to enter other BOC markets would need to train their staff on BellSouth's proprietary system and also on systems used in other regions of the country. For these reasons, as in the BellSouth South Carolina Order, we conclude that BellSouth's pre-ordering interface significantly restricts competing carriers' ability to market their services. 53. BellSouth suggests three methods for overcoming the problem of transferring data from LENS to competing carriers' operational support systems and the EDI-ordering interface: "cut and paste," HTML parsing, and Computer Gateway Interface (CGI). In the BellSouth South Carolina Order, we rejected BellSouth's "cut and paste" and HTML parsing methods for overcoming the lack of integration, because they did not provide access to operational support system functions for pre-ordering that was equivalent to BellSouth's integrated pre-ordering/ordering interface for its retail operations. The record indicates that BellSouth has not provided any more information than it provided in its South Carolina application regarding HTML parsing and "cut and paste." We therefore find no reason to alter the conclusion we reached in the BellSouth South Carolina Order. 54. BellSouth's other method for electronically connecting its pre-ordering interface with competing carriers' operational support system, Computer Gateway Interface or CGI, is also deficient because BellSouth has failed to provide the necessary technical specifications to develop such an interface. BellSouth claims that competing carriers can integrate LENS and EDI by developing CGI. To develop CGI, however, a competing carrier would need detailed technical specifications of BellSouth's interface, and BellSouth has failed to provide the necessary technical specifications. We previously found that a BOC has an obligation "to provide competing carriers with the specifications necessary to instruct competing carriers on how to modify or design their systems in a manner that will enable them to communicate with the BOC's legacy systems and any interfaces utilized by the BOC for such access." Thus, as in the BellSouth South Carolina Order, we conclude that BellSouth has not met its obligation to provide complete, detailed, and updated specifications that competing carriers need to use CGI to connect electronically their operations support systems to BellSouth's interface. 55. Therefore, we agree with commenters that BellSouth has not met the competitive checklist because it has failed to demonstrate that competing carriers are able to use or develop a machine-to-machine interface or CGI that is substantially similar to what BellSouth's representatives use. Moreover, BellSouth's other methods of electronically transferring information, "cut and paste" and HTML parsing, are inadequate. Therefore, as we found in the BellSouth South Carolina Order, we conclude that competing carriers cannot readily transfer information electronically from LENS to their operations support systems and deploy an integrated pre-ordering and ordering system. (ii) Lack of Equivalent Access to Due Dates 56. As we concluded in the BellSouth South Carolina Order, we find that BellSouth does not offer competing carriers nondiscriminatory access to due dates. New entrants do not obtain actual due dates from LENS during the pre-ordering stage; rather, LENS provides information that competing carriers can use to determine a due date. The actual, firm due date is assigned once BellSouth processes the order through SOCS. A new entrant therefore will not be informed of the actual due date until it receives a firm order confirmation from BellSouth. 57. BellSouth states that this same process is used for its retail operations, i.e., it does not provide actual due dates for its service representatives until the order is processed through SOCS. This fact, however, does not lead to parity in the access to due dates, because, as explained above, competing carriers are experiencing significant delays in the processing of their orders. As a result of these delays, by the time competing carriers' EDI orders are processed, the original due date, i.e., the one the competing carrier determined using the information provided by LENS, might have passed or the relevant central office and work center may no longer be accepting orders for the date the new entrant promised to its customer. New entrants therefore cannot be confident that the due date actually provided after the order is processed will be the same date that the new entrants promised their customers at the pre-ordering stage based on the information obtained from LENS. By contrast, BellSouth's retail service representatives can be confident of the due dates they quote customers at the pre-ordering stage, because BellSouth does not experience the same delays in processing orders that competing carriers currently experience. 58. BellSouth could ameliorate this pre-ordering problem by correcting the deficiencies in its ordering systems and by providing equivalent access to OSS functions through its current systems. We therefore do not suggest that BellSouth must modify its pre-ordering systems to meet the requirement that it offer nondiscriminatory access to due dates. We only conclude, as we did in the BellSouth South Carolina Order, that BellSouth's pre-ordering system for providing access to due dates does not, at the present time, offer equivalent access to competing carriers. B. Resale of Contract Service Arrangements 1. Background 59. Section 271(c)(2)(B)(xiv) of the competitive checklist requires that telecommunications services be "available for resale in accordance with the requirements of sections 251(c)(4) and 252(d)(3)." In its BellSouth South Carolina Order, this Commission determined that BellSouth failed to comply with checklist item (xiv) by, inter alia, refusing to offer contract service arrangements at a wholesale discount. Contract service arrangements are contractual agreements made between a carrier and a specific, typically high-volume, customer, tailored to that customer's individual needs. Contract service arrangements may include volume and term arrangements, special service arrangements, customized telecommunications service agreements, and master service agreements. 60. The Commission's rules on resale restrictions state that, "[e]xcept as provided in  51.613 of this part, an incumbent LEC shall not impose restrictions on the resale by a requesting carrier of telecommunications services offered by the incumbent LEC." Section 51.613 provides in pertinent part that, "[w]ith respect to any restrictions on resale not permitted under paragraph (a), an incumbent LEC may impose a restriction only if it proves to the state commission that the restriction is reasonable and nondiscriminatory." The United States Court of Appeals for the Eighth Circuit specifically upheld the Commission's findings that determinations on resale restrictions are within the Commission's jurisdiction and also upheld the Commission's resale restriction rules as a reasonable interpretation of the 1996 Act. 61. As in South Carolina, BellSouth does not make contract service arrangements available at a wholesale discount in Louisiana through either its interconnection agreements or its SGAT (Statement of Generally Available Terms and Conditions). For example, in its arbitrated interconnection agreement with AT&T, BellSouth states that it will not offer for resale at a wholesale discount contract service arrangements it has entered into after the effective date of the AT&T Arbitration Order (i.e., after January 28, 1997). Pursuant to its resale agreement with ACSI, which applies to all of BellSouth's serving territory including South Carolina and Louisiana, contract service arrangements are not available for resale at any price. Nor is BellSouth obligated to provide contract service arrangements at a wholesale discount pursuant to the terms of its SGAT, which provides that "BellSouth contract service arrangements entered into after January 28, 1997 are available for resale only at the same rates, terms, and conditions offered to BellSouth end users." In the Louisiana Section 271 Proceeding, the Chief Administrative Law Judge specifically rejected AT&T's contention that BellSouth's SGAT is deficient because it exempts contract service arrangements from the wholesale pricing requirement. The Louisiana Commission did not address BellSouth's refusal to offer contract service arrangements for resale at a wholesale discount when it approved BellSouth's SGAT. 62. The Department of Justice notes that BellSouth's restrictions on the resale of contract service arrangements are analogous to restrictions the Commission has determined violate the Act and the Commission's regulations. Likewise, new entrants generally argue that BellSouth's refusal to offer contract service arrangements for resale at the general wholesale discount violates section 251(c)(4) of the Act, the Commission's rules, and the Local Competition Order. 2. Discussion 63. The Commission recently addressed BellSouth's refusal to offer contract service arrangements for resale at a wholesale discount in its review of BellSouth's South Carolina application and concluded that BellSouth did not satisfy the competitive checklist because it did not offer contract service arrangements at a wholesale rate. In this Order, we reaffirm our reasoning in the BellSouth South Carolina Order and again conclude that BellSouth does not comply with item (xiv) of the competitive checklist because it refuses to offer at a wholesale discount contract service arrangements entered into after January 28, 1997 in Louisiana. a. No General Exemption for Contract Service Arrangements 64. We conclude, based on facts nearly identical to those presented in the BellSouth South Carolina Order, that BellSouth has created, through its interconnection agreements and its SGAT in Louisiana, a general exemption from the requirement that incumbent LECs offer their promotional or discounted offerings, including contract service arrangements, at a wholesale discount. In the Local Competition Order, the Commission concluded that resale restrictions are presumptively unreasonable and that an incumbent LEC can rebut this presumption, but only if the restrictions are "narrowly tailored." Moreover, the Commission specifically concluded that the Act does not permit a general exemption from the requirement that promotional or discounted offerings, including contract service arrangements, be made available at a wholesale discount. As we stated in the BellSouth South Carolina Order, neither the Act nor the Commission's resale rules contemplate that a state commission can generally exempt all contract service arrangements from the Act's requirement that retail offerings be available for resale at a discount from the retail price. For the reasons discussed below, we find that BellSouth's refusal to offer contract service arrangements at a wholesale discount is not narrowly tailored and therefore constitutes an impermissible general exemption of contract service arrangements from the wholesale discount requirement. 65. We are unpersuaded by BellSouth's related claims that (1) the wholesale discount should not be applied to contract service arrangements because contract service arrangements are offerings that BellSouth has already discounted in order to compete for a particular end user customer, and (2) its refusal to offer contract service arrangements at a wholesale discount does not restrict new entrants' ability to resell such services because new entrants may purchase each of the tariffed services that make up the contract service arrangement separately at the wholesale rate. In the Local Competition Order, the Commission specifically considered and rejected incumbent LECs' claims that the wholesale rate obligation should not apply to high volume rate offerings because they are already discounted. The Commission instead concluded that any service sold to end users is a retail service, and thus is subject to the wholesale discount requirement, even if it is already priced at a discount off the price of another retail service. Because contract service arrangements are discounted retail service offerings that are not exempt from the statutory resale requirement in section 251(c)(4), we reiterate that BellSouth must offer contract service arrangements for resale at a wholesale discount to new entrants. 66. As in our BellSouth South Carolina Order, we also reject BellSouth's contention that application of the wholesale discount to contract service arrangements would greatly overstate the costs avoided by BellSouth because BellSouth does not bear ordinary marketing costs for contract service arrangements, which are individually negotiated arrangements. Neither BellSouth nor the Louisiana Commission has offered any evidence that the general wholesale discount rate would overstate the avoided costs of contract service arrangements, as BellSouth contends. Moreover, as we stated in the BellSouth South Carolina Order, the state commission need not apply the general wholesale discount rate, in this case 20.72 percent, to the resale of contract service arrangements, and may instead apply a single discount rate based on the costs avoidable by offering contract service arrangements at wholesale. Because similar marketing, billing, and other costs would be avoided for all contract service arrangements, it would be feasible, and sufficiently accurate, to calculate a single wholesale discount rate to be applied to all contract service arrangements. Such a wholesale discount for contract service arrangements encourages efficient competition because a reseller may compete with an incumbent LEC and facilities-based competitive LECs only to the extent that the reseller can perform marketing and billing services more efficiently and therefore at lower cost. 67. We are not persuaded by BellSouth's assertion that, if it is required to offer contract service arrangements to resellers at a wholesale discount, it will lose business customers and their contribution to BellSouth's total cost recovery, thus disrupting the balance between residential and business rates and affecting BellSouth's ability to meet the goal of "maximizing access by low-income consumers to telecommunications services." We specifically rejected BellSouth's identical claims that it would lose profit as a result of wholesale-priced, resale-based competition in the BellSouth South Carolina Order. In that Order, we concluded that claims of lost contributions to high-cost subsidies do not justify an exception from either the resale requirements or the requirement to offer unbundled network elements of sections 251 and 271. We further determine that, because the wholesale discount is limited to avoidable costs, BellSouth should lose no more contribution from resold contract service arrangements made available to resellers at an appropriate wholesale discount than it would lose from the resale of tariffed offerings at the general wholesale discount. 68. We also take this opportunity to reiterate the important policy concerns that make restrictions on resale undesirable. In the BellSouth South Carolina Order, we expressed concern that BellSouth's failure to offer contract service arrangements for resale at a discount in South Carolina impedes competition for its large-volume customers and thus impairs the use of resale as a vehicle for competitors to enter BellSouth's market. As the Commission recognized in the Local Competition Order, "the ability of incumbent LECs to impose resale restrictions and conditions is likely to be evidence of market power and may reflect an attempt by incumbent LECs to preserve their market position." We are therefore concerned that BellSouth's refusal to offer contract service arrangements at a wholesale discount in Louisiana may impede one of the three methods Congress developed for entry into the BOCs' monopoly market. 69. We remain concerned that, as discussed in the BellSouth South Carolina Order, BellSouth might seek to convert customers to contract service arrangements in order to "evade" the Louisiana Commission's wholesale discount. In the Local Competition Order, the Commission concluded that the presumption against resale restrictions is necessary specifically for promotional or discounted offerings, such as contract service arrangements, in order to prevent incumbent LECs from "avoid[ing] the statutory resale obligation by shifting their customers to nonstandard offerings, thereby eviscerating the resale provisions of the 1996 Act." We concluded in the BellSouth South Carolina Order that BellSouth "appears to be attempting to avoid its statutory resale obligation in South Carolina by shifting its customers to contract service arrangements." AT&T contends that, unlike in South Carolina, it is "impossible" to determine whether BellSouth is attempting to evade the resale requirement in Louisiana because BellSouth is not required to disclose contract service arrangements that it has entered into with customers in Louisiana unless the customer "requests and/or consents to the disclosure." AT&T contends, however, that, in other states in which contract service arrangements are publicly disclosed, BellSouth has increased its reliance on contract service arrangements. Although we make no specific finding that, in Louisiana, BellSouth is attempting to avoid its statutory resale obligation by shifting its customers to contract service arrangements, we remain concerned that, because many of BellSouth's contract service arrangements apply throughout BellSouth's service territory, BellSouth may impede the development of competition in Louisiana by preventing resellers from competing for large- volume users. b. State Jurisdiction 70. We further conclude that BellSouth's refusal to offer contract service arrangements at a wholesale discount is not a local pricing matter within the exclusive jurisdiction of the state commission. We rejected this contention in the BellSouth South Carolina Order, noting that the United States Court of Appeals for the Eighth Circuit upheld the Commission's conclusions in the Local Competition Order regarding the scope of the resale requirement as it applies to promotions and discounts, including contract service arrangements. In upholding the Commission's determination, the court stated that the Commission's rules requiring the resale of promotions and discounts concern the "overall scope of the incumbent LECs' resale obligation" rather than "the specific methodology for state commissions to use in determining the actual wholesale rates." Moreover, as we stated in the BellSouth South Carolina Order, allowing incumbent LECs to set the wholesale discount for services subject to the resale requirement at a discount of zero would wholly invalidate such a wholesale pricing obligation. We note that the Louisiana Commission appears to have treated the resale restriction as a matter separate from its establishment of the general wholesale discount and did not conduct an analysis to determine that the appropriate wholesale discount for contract service arrangements should be zero. We are thus unconvinced by BellSouth's claim that the Louisiana Commission properly determined that no wholesale discount should be applied to contract service arrangements. V. COMPLIANCE WITH SECTION 271(c)(1)(A) 71. For the Commission to approve a BOC's application to provide in-region, interLATA services, that BOC must demonstrate that it satisfies the requirements of either section 271(c)(1)(A) or section 271(c)(1)(B) of the Act. In this instance, BellSouth argues that its agreements with three Personal Communications Services (PCS) providers, PrimeCo Personal Communications, L.P., Sprint Spectrum, L.P., and MereTel Communications L.P., "qualify BellSouth to file this application for authority to provide interLATA service in Louisiana under section 271(c)(1)(A)." 72. Given our conclusion that BellSouth does not meet the competitive checklist, we need not and do not decide in this Order whether, for purposes of section 271(c)(1)(A), the PCS carriers listed above are "competing providers of telephone exchange service" in the State of Louisiana. Nevertheless, we do wish to provide BellSouth and others with as much guidance as possible, consistent with the limitations of the 90-day deadline and the large number of section 271-related issues on which various parties have presented contrasting interpretations and arguments. In this regard, we note that the exclusion in the final sentence of subparagraph 271(c)(1)(A) excludes only cellular carriers, and not PCS carriers, from being considered "facilities-based competitors." The final sentence states: "For the purpose of this subparagraph, services provided pursuant to subpart K of part 22 of the Commission's regulations (47 C.F.R. 22.901 et seq.) shall not be considered to be telephone exchange services." The rules governing PCS services are contained in part 24 of the Commission's rules. This statutory exclusion is specific and precise. We find that Congress did not intend such a specific reference to a single subpart of our rules to apply to a service that is subject to a different subpart of a different part of our rules. We, therefore, conclude that section 271 does not preclude the Commission from considering the presence of a PCS provider in a particular state as a "facilities-based competitor." 73. We also emphasize, however, that an applicant must demonstrate that a PCS provider on which the applicant seeks to rely to proceed under section 271(c)(1)(A) offers service that both satisfies the statutory definition of "telephone exchange service" in section 3(47)(A) and competes with the telephone exchange service offered by the applicant in the relevant state. In previous orders, the Commission has stated that the use of the term "competing provider" in section 271(c)(1)(A) suggests that there must be "an actual commercial alternative to the BOC." We also note that, in other contexts, the Commission recently concluded that PCS providers appear to be positioning their service offerings to become competitive with wireline service, but they are still in the process of making the transition "from a complementary telecommunications service to a competitive equivalent to wireline services." VI. CONCLUSION 74. For the reasons discussed above, we deny BellSouth's application for authorization under section 271 of the Act to provide in-region, interLATA services in the state of Louisiana. We find that BellSouth has not satisfied all the requirements of the competitive checklist in section 271(c)(2)(B). Specifically, BellSouth fails to provide nondiscriminatory access to operational support systems and refuses to offer contract service arrangements at a wholesale discount. Except as otherwise provided herein, we make no findings with respect to BellSouth's compliance with other checklist items or other parts of section 271. VII. ORDERING CLAUSE 75. Accordingly, IT IS ORDERED that, pursuant to sections 4(i), 4(j), and 271 of the Communications Act, as amended, 47 U.S.C.  154(i), 154(j), 271, BellSouth Corporation's application to provide in-region, interLATA service in the State of Louisiana filed on November 6, 1997, IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary APPENDIX BellSouth Corporation's 271 Application for Service in Louisiana CC Docket No. 97-231 List of Commenters 1. American Communications Services, Inc. (ACSI) 2. Ad Hoc Coalition of Corporate Telecommunications Service Managers and Telecommunications Manufacturing Companies 3. Ameritech 4. Association of Directory Publishers 5. Association for Local Telecommunications Services (ALTS) 6. AT&T Corp. 7. Bell Atlantic Telephone Companies 8. BellSouth Corporation, BellSouth Telecommunications, Inc., and BellSouth Long Distance, Inc. 9. Competition Policy Institute 10. Competitive Telecommunications Association (CompTel) 11. Consumer Federation of America 12. Cox Communications, Inc. 13. Hyperion Telecommunications, Inc. 14. Independent Payphone Service Providers for Consumer Choice 15. Intermedia Communications, Inc. 16. Keep America Connected! 17. KMC Telecom Inc. 18. LCI International Telecom Corp. 19. Louisiana Public Service Commission 20. MCI Telecommunications Corporation 21. National Business League Management Education Alliance 22. Organizations Concerned About Rural Education, et al. 23. Paging and Narrowband PCS Alliance of the Personal Communications Industry Association 24. Sprint Communications Company L.P. 25. Telecommunications Resellers Association (TRA) 26. U S WEST, Inc. 27. World Institute on Disability 28. WorldCom, Inc.