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I.   a7TechnicalTechnical Document Style(@D i) . a8TechnicalTechnical Document Style(D a) . 2:!e1  PleadingHeader for numbered pleading paperP@n   $] X X` hp x (#%'0*,.8135@8:6$o>7l@Technical 2Technical 24 Technical 3Technical 35 Technical 4Technical 46` hp x (#X` hp x (# X` hp x (#` hp x (#Technical 1Technical 17 2I8$1A9$UC:yE;GTechnical 7Technical 78` hp x (#X` hp x (# X` hp x (#` hp x (#Technical 8Technical 89` hp x (#X` hp x (# X` hp x (#` hp x (#toc 1toc 1:` hp x (#!(#B!(#B` hp x (#toc 2toc 2;` hp x (#` !(#B` !(#B` hp x (#2_R<I=L>#N?APtoc 3toc 3<` hp x (#` !(# ` !(# ` hp x (#toc 4toc 4=` hp x (# !(#  !(# ` hp x (#toc 5toc 5>` hp x (#h!(# h!(# ` hp x (#toc 6toc 6?` hp x (#!(#!(#` hp x (#2aY@vRASB%UCCWtoc 7toc 7@ toc 8toc 8A` hp x (#!(#!(#` hp x (#toc 9toc 9B` hp x (#!(#B!(#B` hp x (#index 1index 1C` hp x (#` !(# ` !(# ` hp x (#2^DYE[Fv]GlE^index 2index 2D` hp x (#` !(#B` !(#B` hp x (#toatoaE` hp x (#!(# !(# ` hp x (#captioncaptionF _Equation Caption_Equation CaptionG 2[fHr^I.U_JlaKlcendnote referenceendnote referenceH heading 3heading 3IX` hp x (#` p x (# ` p x (#X` hp x (#footerfooterJX` hp x (#`  (##Xv6X@CX@##XP\  P6QXP#`  (#X` hp x (#headerheaderKX` hp x (#`  (##Xx6X@DQX@##XP\  P6QXP#`  (#X` hp x (#2mLfMlhNkO5mfootnote textfootnote textLX` hp x (#` p x (#` p x (#X` hp x (#Indent .5Indent .5MX` hp x (#` p x (##Xx6X@DQX@##XP\  P6QXP#` p x (#X` hp x (#Indent 1Indent 1NX` hp x (#` p x (#` p x (#X` hp x (#page numberpage numberO11#Xx6X@DQX@##XP\  P6QXP#2BvP@!nKaoKqKsQuoteQuotePX` hp x (#` p x (#"i~'^:DpddȨDDDdp4D48ddddddddddDDpppd|Ld|pȐD8DtdDdpXpXDdp8Dp8pdppXLDpdddXP,PhD4htDDD4DDDDDDdDp8dddddȐXXXXXJ8J8J8J8pddddppppddpddddzpdddXXhXXXXXdddhdptL8LpLDLpphhp8ZDP8pppddƐXXXpLpLpLphfDtppppppȐhXXXpDppLDd4ddC6CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxHjdDdddddd8HH"&H>XHH8HB8>HH^HH>"".2",2,2,"222N2222"&22H22,006"6."""""""""2"2H,H,H,H,H,XAB,>,>,>,>,""""H2H2H2H2H2H2H2H2H2H2H,H2H1H2H2H282H,H,H,B,B,B6B,H?>,>,>,>,H2H2H2H6H2H6H2""2"""2F866H2>>(>">">H2;H2H2H2H2XHB"B"B"8&8&8&86>*>>.H2H2H2H2H2H2^HH6>,>,>,H2>"H28&>"H2?22!!WFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN$<<$.2",2222`2 LL2 LL2L"",,2d""_B {OR-#X\  P6G;ɒP#эxId.a Bell Atlantic replies that it has responded to competition by offering customers deeply discounted term and volume  X1-plans, which have substantially reduced Bell Atlantic's revenues per line.s?1 yO-#X\  P6G;ɒP#эxBell Atlantic Reply at 23.s Bell Atlantic also argues that its ability to reduce basic monthtomonth rates is limited because it must recover  X -its nonrecurring reconfiguration costs over a period of time that is potentially much shorter  X -than the time period available for cost recovery under longterm contracts.a@ d  {O-#X\  P6G;ɒP#эxId.a In addition, AT&T asserts that an indefinite extension of the reconfiguration NRCs waiver would be inappropriate because Bell Atlantic has not demonstrated that: (1) the special access and  X -switched transport markets in New York are "fully competitive;"A  {ON-#X\  P6G;ɒP#эxAT&T Opposition at 3.  See also MCI Opposition at 2. (2) an indefinite extension  X-of the waiver will not violate Bell Atlantic's nondiscrimination obligation under Section  Xy-251(c)(3) of the Telecommunications Act;By  {O-#X\  P6G;ɒP#эxAT&T Opposition at 5, citing 47 U.S.C.  251(c)(3). and (3) an indefinite extension of the waiver will not disadvantage other carriers in the event that Bell Atlantic receives authority under Section  XK-271 of the Telecommunications Act to provide inregion interLATA service in New York.CK {O!-#X\  P6G;ɒP#эxAT&T Opposition at 5, citing 47 U.S.C.  271. Bell Atlantic replies that none of these findings are required in this proceeding, and that the  X-Bureau only has to find that an indefinite extension of the reconfiguration NRCs waiver  X-would not undermine competition in those markets.sD yOc%-#X\  P6G;ɒP#эxBell Atlantic Reply at 35.s Finally, MCI argues that the Bureau should not grant an indefinite extension of the waiver at this time because the Commission is" <D0*((E"  X-currently considering significant changes to the rules that govern LEC pricing flexibility.E {Oy-#X\  P6G;ɒP#эxMCI Opposition at 3, citing Access Reform Notice, 11 FCC Rcd 21354. Bell Atlantic states that an indefinite extension of the waiver is justified at this time and that the extension would be subject to any applicable rules that are adopted in the pricing  X-flexibility rulemaking.qFZ yO-#X\  P6G;ɒP#эxBell Atlantic Reply at 1.q  X- IV. DISCUSSION ĐTP  X_- A.x Standard for Waiver  X1-x22.` ` Under Section 1.3 of the Commission's rules, the Commission may exercise its  X -discretion to waive a rule if "good cause" for a waiver is shown.mG  yO-#X\  P6G;ɒP#эx47 C.F.R.  1.3. m Judicial interpretation of the Commission's authority to waive its rules has established the following principles: 1) the Commission may grant a waiver only if special circumstances warrant a deviation from the general rule and such a deviation will serve the public interest better than adherence to the  X -general rule;H z {O-#X\  P6G;ɒP#эxWAIT Radio v. FCC, 418 F.2d 1135, 1157 (D.C. Cir. 1969) (WAIT Radio); Northeast Cellular, 897 F.2d at 1166. and 2) the Commission's decision to grant a waiver must be based on articulated, reasonable standards that are predictable, workable, and not susceptible to  X-discriminatory application.I {O-#X\  P6G;ɒP#эxNortheast Cellular, 897 F.2d at 1166. In evaluating whether waiver of the Commission's reconfiguration NRC policy would be in the public interest, the Commission stated in the  Xb-Second Reconsideration Order that it would consider waiving its reconfiguration NRC policy only if a LEC could demonstrate that any differential treatment resulting from the waiver  X6-would not undermine competition or otherwise violate the Act.J6f  {OM-#X\  P6G;ɒP#эxSecond Reconsideration Order, 8 FCC Rcd at 7363.  X-x23.` ` As explained below, the Bureau's decision in the NRC Waiver Order, and our decision here to affirm and extend the waiver, are consistent with these waiver standards articulated by the Commission and the U.S. Court of Appeals for the District of Columbia.  X-We find that the limited waiver of the Commission's reconfiguration NRC policy has not  X-undermined, and will not undermine, competition in the access market served by NYNEX'sK"  yOW$-#X\  P6G;ɒP#эxAs previously noted, NYNEX and Bell Atlantic merged in 1997, with NYNEX becoming a wholly {O%-owned subsidiary of Bell Atlantic. See note 1 supra. See also Bell AtlanticNYNEX Merger Order, 12 FCC Rcd  yO%-19985. In the discussion section of this order, however, we refer separately to NYNEX to be consistent with previous orders in this proceeding.   X-New York State Zone 1 central offices or otherwise violate the Act because: 1) NYNEX's" K0*((" access service faces a significant level of competition from interconnectors' service in NYNEX's Zone 1 central offices in New York State and this level of competition has  X-increased during the time period in which the waiver has been in effect;L {OK-#X\  P6G;ɒP#эxSee NRC Waiver Order, 10 FCC Rcd at 5073; Section IV.B.1 infra. and 2) NYNEX  X-recovers nonrecurring reconfiguration costs over time from NYNEX's access customers and  X-interconnectors' access customers.MZ {O-#X\  P6G;ɒP#эxSee NRC Waiver Order, 10 FCC Rcd at 5074; Section IV.B.2 infra. We find that these two factors represent a reasonable, predictable, and workable standard that is not susceptible to discriminatory application. Applying this standard to the record before us results in granting NYNEX a limited waiver that provides it with the same ability as its competitors to recover nonrecurring costs through recurring charges from its access customers.  X1-  X -B.xJustification for Waiver  X -x 1.` ` Level of Competition  X -x24.` ` Teleport argues that NYNEX's evidentiary showing in support of its claim that competition would not be undermined by the waiver lacks crucial information, such as the  X-precise market segment in which NYNEX lost customers.N yO--#X\  P6G;ɒP#эxTeleport Application for Review at 56. To the contrary, we find that NYNEX has offered sufficient evidence of significant competition in the market for access service originating from NYNEX's Zone 1 central offices in New York State. The record  XK-indicates that interconnectors have been operating in the NYNEX region for a substantial  X4-period of time.O^4| {Oa-#X\  P6G;ɒP#эxSee NRC Waiver Order, 10 FCC Rcd at 5073; Petition of New York Telephone Company and New  {O+-England Telephone and Telegraph Company for Waiver at 5 n.9 (filed February 7, 1994). See also Second NRC  {O-Waiver Extension Order, 12 FCC Rcd at 20962; First NRC Waiver Extension Order, 11 FCC Rcd at 12000. Interconnectors in NYNEX's region also appear to have more collocation nodes and to have achieved higher market penetration than interconnectors in any other region  X-of the country.P( {OY-#X\  P6G;ɒP#эxSee NRC Waiver Order, 10 FCC Rcd at 5073; Letter from Dee May, Director of Federal Regulatory  {O#-Issues, NYNEX, to William F. Caton, Acting Secretary, FCC at 2 (dated July 29, 1994) (NYNEX Letter of July  {O-29, 1994). See also Second NRC Waiver Extension Order, 12 FCC Rcd at 20962; First NRC Waiver Extension  {O -Order, 11 FCC Rcd at 12000. The record shows that interconnectors have gained at least 40 percent of the high capacity special access market in the New York City central offices in which they are  X-located, which are generally Zone 1 central offices, and that interconnectors are located in 10  X-of the 11 central offices below 59th Street in Manhattan.Q"  {O%-#X\  P6G;ɒP#эxSee NRC Waiver Order, 10 FCC Rcd at 5073; NYNEX Opposition at 3; NYNEX Letter of July 29, 1994  yO%-at 23. Teleport argues that the number of physical collocation arrangements in New York City does not indicate that interconnectors have achieved marketplace success because NYNEX's physical collocation arrangements are not reasonably priced and therefore have little economic value to interconnectors. Teleport Application for"^'P0*(('" Review at 6. We note that in June of 1997 the Commission prescribed just and reasonable rates for physical  {OX-collocation service in the Physical Collocation Tariff Investigation Order. See Local Exchange Carriers' Rates, Terms, and Conditions for Expanded Interconnection Through Physical Collocation for Special Access and  {O-Switched Transport, CC Docket No. 93162, Second Report and Order, 12 FCC Rcd 18730 (1997) (Physical  {O-Collocation Tariff Investigation Order).  " ~Q0*(("Ԍ X-ԙx25.` ` Furthermore, the record indicates that competition has in fact increased in the access market served by NYNEX's Zone 1 central offices in New York State during the  X-operation of the waiver. Since the initial grant of the waiver, the number of NYNEX's New York State Zone 1 central offices with collocation arrangements has increased from 12 to  X-18.R~ {O -#X\  P6G;ɒP#эxNYNEX Letter of September 10, 1997 at 5. The number of collocation nodes at those central offices has increased from 22 to 70, with an additional 45 nodes currently under construction. Moreover, the record shows that the number of DS1 special access channel terminations connected to collocated facilities in NYNEX's New York State Zone 1 central offices has increased from 2376 to 4450 and the  XH-number of DS3 special access channel terminations connected to these collocated facilities has  X1-increased from 52 to 431.gS1 {O-#X\  P6G;ɒP#эxId. at 4.g  X -x26.` ` The Bureau's finding in the NRC Waiver Order that NYNEX faces a significant level of competition in the access market served by NYNEX's New York State  X -Zone 1 central offices is consistent with the Commission's observations in the NYNEX USPP  X -Order regarding the level of competition in NYNEX's LATA 132.T  {O-#]\  PCɒP#эxSee NYNEX USPP Order, 10 FCC Rcd at 746364. Most of NYNEX's New York State Zone 1 central offices are located within LATA 132. In the NYNEX USPP  X -Order, the Commission granted NYNEX a limited waiver of certain aspects of the Commission's access charge rules because it found that special circumstances related to competition exist in LATA 132. Specifically, the Commission found that interconnectors  Xj-have constructed extensive networks in LATA 132 and are providing service in New York City and many other portions of LATA 132. In addition, the Commission observed that the high volume of traffic in lower Manhattan enables interconnectors to carry a substantial amount of telecommunications traffic using relatively few facilities and presents special  X-opportunities for the development of competition.gU  {O -#X\  P6G;ɒP#эxId.g  X-  X-x27.` ` We do not find, as ALTS contends, that the Bureau should have considered whether NYNEX had implemented structural changes in the local exchange services market  X-before the Bureau determined in the NRC Waiver Order that competition would not be  X-undermined by this limited waiver of the Commission's reconfiguration NRC policy.V  {O&-#X\  P6G;ɒP#эxSee Section III.A supra for a summary of ALTS' arguments.ĩ The" V0*((3" market characteristics on which the Bureau relied, and on which we rely in this Order the number of wire centers with collocation arrangements, the number of collocation nodes, and the number of channel terminations connected to collocated facilities are all important indicators of the level of competition in the access market served by NYNEX's New York State Zone 1 central offices. We find, as explained above, that these market characteristics demonstrate that the level of competition in the access market served by NYNEX's New York State Zone 1 central offices is sufficient to warrant the limited waiver granted in the Bureau's  X_-NRC Waiver Order. The implementation of the structural changes that ALTS discusses, i.e., full number portability, resale of local facilities, reciprocal compensation agreements, and interLATA dialing parity, are necessary steps to ensure full competition in the local exchange services market. The Bureau did not make a finding of full competition in the local exchange  X -services market in the NRC Waiver Order, however, and the standard articulated in the  X -Second Reconsideration Order for granting a waiver of the Commission's reconfiguration NRC policy does not require such a finding to justify a waiver of the type at issue here. Rather, this standard only requires a finding that the operation of the waiver will not undermine existing competition in the access services market.  X-x28.` ` Even if it were necessary to consider structural changes in the local exchange services market, we find that the evidence of such changes in NYNEX's New York State Zone 1 central offices supports extension of the NRC waiver. At the time the Bureau granted NYNEX a waiver of the Commission's reconfiguration NRC policy in 1995, NYNEX had made progress in removing barriers to competition in New York. At that time, NYNEX was offering the following services: physical collocation; unbundled access to business and residence links and ports; interconnection of competitors' local exchange networks; access to poles and conduits under NYNEX's control; resale of NYNEX services; reciprocal compensation and meet point billing arrangements; interim local number portability and  X-implementation of an industrywide New York trial of a permanent database solution for local number portability; cooperative engineering, operational, maintenance and administrative  X-practices; and interLATA presubscription.pW yO-#X\  P6G;ɒP#эxNYNEX Opposition at 45.p In addition, since the initial grant of the waiver,  Xk-the Telecommunications Act of 1996 and the Local Competition Order will remove other barriers to entry by requiring LECs to provide, among other things, access to unbundled  X?-network elements and retail services available at wholesale rates.X?X {OH -#X\  P6G;ɒP#эxSee 47 U.S.C.  251(c); Implementation of the Local Competition Provisions in the Telecommunications  {O!-Act of 1996, First Report and Order, CC Docket Nos. 96-98, 95-185, 11 FCC Rcd 15499 (1996) (Local  {O!-Competition Order), aff'd in part and vacated in part sub nom. Competitive Telecommunications Ass'n v. FCC,  {O"-117 F.3d 1068 (8th Cir. 1997), aff'd in part and vacated in part sub nom. Iowa Utils. Bd. v. FCC, 120 F.3d 753  {Op#-(8th Cir. 1997), cert. granted, 66 U.S.L.W. 3484 (U.S. Jan. 26, 1998) (No. 97-826), Order on Reconsideration, 11 FCC Rcd 13042 (1996), Second Order on Reconsideration, 11 FCC Rcd 19738 (1996), Third Order on  {O%-Reconsideration and Further Notice of Proposed Rulemaking, 12 FCC Rcd. 1246 (1997), further recon. pending. Moreover, the recent Bell  X*-AtlanticNYNEX Merger Order required Bell Atlantic and NYNEX, as a condition of the merger, to take a number of steps that will allow competitors to enter and compete more"X0*((=" easily in the combined Bell Atlantic and NYNEX regions. These steps include the offering of interconnection, unbundled network elements, and transport and termination at rates based on  X-forwardlooking economic costs.Y {OK-#X\  P6G;ɒP#эxSee Bell AtlanticNYNEX Merger Order,12 FCC Rcd at 1999293.  X-x29.` ` Teleport maintains that the oneyear limit placed on the waiver is not sufficient to prevent NYNEX from undermining competition because customers could agree to long Xv-term contracts with NYNEX during the oneyear waiver period.}ZvZ yO -#X\  P6G;ɒP#эxTeleport Application for Review at 8.} We find, however, that the  X_-records in the First NRC Waiver Extension Order and Second NRC Waiver Extension Order demonstrate that neither the initial grant of the waiver in 1995, nor the two subsequent waiver extensions, diluted the significant competition that had taken hold in the market for access  X -service originating from NYNEX's New York State Zone 1 central offices.[  {O-#X\  P6G;ɒP#эxSee First NRC Waiver Extension Order, 11 FCC Rcd 11988; Second NRC Waiver Extension Order, 12 FCC Rcd 20954. We also find that the record before us does not indicate that this situation is likely to change in the near future. Accordingly, we find that any longterm contracts formed during the initial oneyear waiver period have not had the effect of undermining competition in the access market served by NYNEX's New York State Zone 1 central offices.  X-x30.` ` Finally, Teleport contends that NYNEX does not need a waiver of the  X{-Commission's reconfiguration NRC policy to respond to any competition in the market for access service originating from NYNEX's New York State Zone 1 central offices because NYNEX already possesses considerable pricing flexibility under price cap regulation and can  X6-engage in zone density pricing.}\6D yO+-#X\  P6G;ɒP#эxTeleport Application for Review at 6.} We acknowledge that NYNEX and other LECs have pricing flexibility under price cap regulation, but we conclude that the significant level of competition in the access market served by NYNEX's New York State Zone 1 central offices warrants the additional pricing flexibility afforded by the waiver of the Commission's reconfiguration NRC policy.  X-x31.` ` Accordingly, we affirm the Bureau's finding in the NRC Waiver Order and the extension orders that NYNEX faces a level of competition in the access market served by its New York State Zone 1 central offices that is sufficient to warrant a waiver of the Commission's reconfiguration NRC policy. We also find that, based on the record before us, this level of competition is sufficient to warrant an indefinite extension of the waiver granted  X;-by the Bureau in the NRC Waiver Order. We delegate authority to the Chief, Common Carrier Bureau, to continue to monitor the development of competition in the access market  X-served by NYNEX's New York State Zone 1 central offices and, if the extension we now grant results in differential treatment that undermines competition or otherwise violates the"\0*((Z" Communications Act, to limit or rescind this extension. We also note that the extension that we now grant will be subject to any applicable rules on pricing flexibility adopted in the  X-Access Reform proceeding {] {OK-#X\  P6G;ɒP#эxSee note 2 supra.{  X-  X-x32.` ` Nor do we find that our conclusions here are undermined by arguments made by AT&T and MCI in response to Bell Atlantic's recent petition for extension of the waiver. We disagree with AT&T's assertion that the trend in Bell Atlantic's base pricing for special access service over the past several years indicates that Bell Atlantic has not been affected by  XJ-any competitive market pressures in New York.^JZ {OU -#X\  P6G;ɒP#эxSee AT&T Opposition at 34, Attachments. Although the reduction in Bell Atlantic's base pricing for special access service appears to have leveled off in the past several years, Bell Atlantic has offered deeply discounted term and volume plans in order to retain its access  X -customers.}_  {O-#X\  P6G;ɒP#эxSee Bell Atlantic Reply at 23.} We also disagree with the assertion by AT&T and MCI that an indefinite extension of the waiver is warranted only if Bell Atlantic can demonstrate that the special  X -access and switched transport markets in New York are fully competitive.` ~ {O-#X\  P6G;ɒP#эxSee AT&T Opposition at 3; MCI Opposition at 2. Under the waiver standard adopted by the Commission for this proceeding, Bell Atlantic is not required to demonstrate that the New York access service markets are fully competitive, but rather that any differential treatment resulting from a waiver would not undermine competition or  X{-otherwise violate the Act.a{ {O<-#X\  P6G;ɒP#эxSee Second Reconsideration Order, 8 FCC Rcd at 7363. As discussed above, we find that Bell Atlantic has made this  Xd-requisite showing. In addition, we reject AT&T's argument that Bell Atlantic must justify an indefinite extension of the reconfiguration NRCs waiver under Sections 251(c)(3) and 271 of  X6-the Telecommunications Act.b6 {O-#X\  P6G;ɒP#эxSee AT&T Opposition at 5; 47 U.S.C.  251(c)(3), 271. Section 251's requirements for access to unbundled network elements do not govern the process of taking expanded interconection service pursuant to the  X-Section 201 tariffing process, and thus do not govern our waiver decision here.c4  {O-#X\  P6G;ɒP#эxSee Local Competition Order, 11 FCC Rcd at 15808; Second NRC Waiver Extension Order, 12 FCC  {O -Rcd at 2096162.  See also 47 U.S.C.  201. Similarly,  X-Section 271, which establishes prerequisites to BOC entry into the inregion, interLATA  X-service market, does not apply to this proceeding.wd  {O$-#X\  P6G;ɒP#эxSee 47 U.S.C.  271. w  X- ""d0*(("Ԍ X-x2.` ` Comparability of NYNEX's Methods for Recovering Nonrecurring  X-Reconfiguration Costs (#`  X-  X-x 33.` ` In the NRC Waiver Order, the Bureau required NYNEX to permit customers of interconnectors to pay reconfiguration NRCs over a 12month period, which the Bureau determined would be comparable to NYNEX's method of recovering reconfiguration NRCs  Xx-from its own access customers.ex {O-#X\  P6G;ɒP#эxNRC Waiver Order, 10 FCC Rcd at 5074. We agree with the Bureau's findings. As the Bureau  Xa-noted, although NYNEX does not impose reconfiguration NRCs on its own access customers, NYNEX recovers reconfiguration costs from these customers over time through revenues it  X3-receives from recurring rates.mf3Z {O> -#X\  P6G;ɒP#эxId.m As a result of the condition imposed on NYNEX by the Bureau, NYNEX also permits customers of interconnectors to pay NRCs over a 12month period.  X -  X -x!34.` ` We reject Teleport's contention that the difference in NYNEX's methods of recovering nonrecurring reconfiguration costs constitutes unreasonable discrimination in  X -violation of section 202(a) of the Act.g  {OF-#X\  P6G;ɒP#эxSee Teleport Application for Review at 7, citing 47 U.S.C.  202(a). Section 202(a) of the Act prohibits unjust or unreasonable discrimination in charges, practices, classifications, and services by common  X{-carriers in connection with any "like" communications services.nh{~ yO-#X\  P6G;ɒP#эx47 U.S.C.  202(a).n In examining whether NYNEX's charges for reconfigurations are unreasonably discriminatory, we must determine: 1) whether the services at issue are "like" communications services, which is based on whether they are the "functional equivalent" of each other; 2) whether there is a difference in  X-charges or treatment; and 3) whether the difference is reasonable.i {O-#X\  P6G;ɒP#эxSee, e.g., Competitive Telecommunications Ass'n v. FCC, 998 F.2d 1058 (D.C. Cir. 1993); MCI  {O-Telecommunications Corp. v. FCC, 917 F.2d 30 (D.C. Cir. 1990). While the waiver of the Commission's reconfiguration NRC policy permits NYNEX to use slightly different rate structures for apparently equivalent services, we find that the difference between the reconfiguration charges that NYNEX imposes on its own access customers and the reconfiguration charges it imposes on interconnectors' access customers is reasonable. NYNEX must apply NRCs to recover reconfiguration costs from access customers that switch to an interconnector's service because NYNEX loses those customers and therefore receives no ongoing recurring revenues from them. Although NYNEX recovers reconfiguration costs from its own customers through recurring rates rather than through NRCs, we find, as discussed above, that the difference in cost recovery methods is minimal because interconnectors' customers can pay the NRC over a 12month period. As a condition of our extension of NYNEX's waiver, we require NYNEX to continue to permit interconnectors' customers to pay the reconfiguration NRC over a 12month period. " j i0*(("Ԍ X- ÙC.xOther Arguments  X-x"35.` ` Those parties opposing the grant of the waiver make a number of other arguments that are without merit and are not directly relevant to the waiver issue. MCI and  X-ALTS argue that NYNEX should be required to report any recovery of nonrecurring costs through recurring rates separately in its annual access filings in order to "help ensure that  Xv-interexchange access rates remain costbased."jv {O-#X\  P6G;ɒP#эxMCI Petition for Reconsideration at 34; see ALTS Application for Review at 5 n.5. We disagree. When carriers subject to price cap regulation submit proposed rates for existing services that are within the applicable service bands and those rates result in an actual price index (API) value equal to or less than  X1-the applicable price cap index (PCI), the carriers are only required to file supporting materials sufficient to establish compliance with applicable service bands and sufficient to calculate the  X -necessary adjustments to the affected PCI, API, and service band index (SBI).k Z {O-#X\  P6G;ɒP#эxSee 47 C.F.R.  61.49(a), 61.49(b). Our price cap rules do not require LECs submitting proposed rates that meet the criteria listed above, such as recurring rates for access service, to file supporting materials demonstrating that the rates are costbased. The suggestion by MCI and ALTS to require LECs to report any nonrecurring costs recovered through recurring rates separately in their annual access filings is inconsistent with these rules.  Xb-x#36.` ` MCI also argues that, if NYNEX does not recover all its nonrecurring  XK-reconfiguration costs through its recurring rates, NYNEX's sharing obligation under price caps might be reduced. MCI suggests that the Commission require NYNEX to "add back" any such revenue shortfall to the trunking basket for purposes of calculating NYNEX's sharing  X-obligation.l {O-#X\  P6G;ɒP#эxMCI Petition for Reconsideration at 45. See Section III.C supra. We decline to do so. As an initial matter, we note that in the LEC Price Cap  X-Fourth Report and Order the Commission eliminated sharing obligations for all price cap  X-LECs beginning with the 199798 tariff year.m~ {O -#X\  P6G;ɒP#эxLEC Price Cap Fourth Report and Order, 12 FCC Rcd at 1670003.Ģ Thus, MCI has no basis for concern that the waiver granted to NYNEX would reduce NYNEX's sharing obligation on a goingforward basis. Furthermore, as discussed above, we find that NYNEX does recover reconfiguration costs from its own access customers over time through revenues it receives from recurring rates, and that such revenues would be reflected in NYNEX's trunking basket. Consequently, the waiver's operation from March 1995 until the 199798 tariff year would not have reduced  XR-any potential sharing obligation for NYNEX.  X$- x$37.` ` MCI next contends that the Bureau erred by failing to address MCI's argument that any efficiency gains that result when NYNEX customers move from DS1 to DS3 services  X-should be passed on to access customers in the form of lower recurring rates, in addition to"m0*((Z"  X-the waiver of reconfiguration NRCs.~n yOy-#X\  P6G;ɒP#эxMCI Petition for Reconsideration at 5.~ We find, however, that the Bureau properly decided not to consider this issue as a factor when it granted NYNEX a waiver of the Commission's  X-reconfiguration NRC policy in the NRC Waiver Order. The only issue in this proceeding is whether granting NYNEX a waiver of our reconfiguration NRC policy would undermine competition or otherwise violate the Act. For the reasons discussed above, we conclude that  X-the waiver has not produced, and will not produce, these untoward results. Whether NYNEX passes through to its customers any efficiency gains that result when customers move from DS1 to DS3 services is not relevant to this determination. Although we recognize that NYNEX could have encouraged its customers to move from DS1 to DS3 services by lowering rates in addition to waiving reconfiguration NRCs, MCI's preference for more encouragement does not warrant denial of NYNEX's waiver petition in this proceeding.  X - 6 V. ORDERING CLAUSES ă  X - x%38.` ` Accordingly, IT IS ORDERED that the applications for review filed by the Association for Local Telephone Services and Teleport Communications Group, Inc., and the  X-petition for reconsideration filed by MCI Telecommunications Corporation, ARE DENIED .  Xd-x&39.` ` IT IS FURTHER ORDERED that the petition by the Bell Atlantic Telephone  XM-Companies for an INDEFINITE EXTENSION of the waiver granted by the Bureau in the  X6-NRC Waiver Order for Bell Atlantic's Zone 1 central offices in New York State IS  X!-GRANTED , subject to the conditions specified herein.  X-x'40.` ` IT IS FURTHER ORDERED that authority is delegated to the Chief, Common Carrier Bureau, to continue to monitor the development of competition in the access market served by Bell Atlantic's New York State Zone 1 central offices and, if the extension we now grant results in differential treatment that undermines competition or otherwise violates 1the Communications Act, to limit or rescind this extension. x` `  hhFEDERAL COMMUNICATIONS COMMISSION  X- hhMagalie Roman Salas  X- hhSecretary1 "!Xn0*(( " x` `  hh@hpp  March 20, 1998#Xj\  P6G;ynXP#  X-  Separate Statement of Commissioner Gloria Tristani Đ X-TPx  Vv-Re:XxNew York Telephone Company and New England Telephone and Telegraph Company, Nonrecurring Charges for Reconfiguration of Circuits, Applications for Review and Petition for Reconsideration, Petition for Indefinite Extension of Waiver, Memorandum Opinion and Order(#  X -xThis Order grants NYNEX a waiver of our policy concerning the imposition of nonrecurring charges (NRCs) for the reconfiguration of access circuits. The waiver permits NYNEX to bundle these NRCs into its rates for access service. Bundling of NRCs in this way permits NYNEX to compete more effectively for access customers. xWhile I support this Order, I would have been more comfortable with a waiver of the  Xb-sort adopted by the Commission in the NYNEX USPP Order&ob {O-#X\  P6G;ɒP#эxThe NYNEX Telephone Companies Petition for Waiver; Transition Plan to Preserve Universal Service in  {O-a Competitive Environment, Memorandum Opinion and Order, 10 FCC Rcd 7445 (1995).& and the Ameritech Customers  XK-First Order.pK$ {O -#X\  P6G;ɒP#эxAmeritech Operating Companies; Petition for a Declaratory Ruling and Related Waivers to Establish a  {O-New Regulatory Model for the Ameritech Region, Order (1996). There, the Commission granted waivers of the access rules based on showings of competition in limited geographic areas. Those proceedings established the important principle that waivers of our access charge rules are justified only in locations where there is a clear showing of competition. Nonetheless, because the record contains some evidence of access competition outside of LATA 132, I am willing to support the statewide relief sought by NYNEX in this instance.  X- xThis Order, and our recent Orders concerning Southwestern Bell's requests for greater pricing flexibility, highlight the need for a comprehensive approach to LEC pricing flexibility. As competition develops, incumbent LECs should be relieved of restrictions that artificially constrain their ability to compete. At the same time, I believe we must be wary of relaxing  XN-rules in a way that permits anticompetitive behavior by incumbents. Striking that balance will be difficult, but competition in the access market continues to develop, that effort is best undertaken sooner rather than later. x` `  hh@