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A. 1. a.(1)(a) i) a)#)a [ PsQ)P# ## b, oT9 #)^ `> XitQ)X#`e%'Intermediate Legal WordPerfect Learning Guide   z I. A. 1. a.(1)(a) i) a)#)a [ PuQ)P# ## b, oT9 #)^ `> XivQ)X#Intermediate Legal WordPerfect Learning Guide   z I. A. 1. a.(1)(a) i) a)#)a [ PwQ)P# ## b, oT9 #)^ `> XixQ)X#   Copyright  Portola Systems, Inc.`e%APage   I. A. 1. a.(1)(a) i) a)#)a [ PyQ)P# ## b, oT9 #)^ `> XizQ)X#   Page ``e%)Copyright  Portola Systems, Inc. 1987, 1988 Update7=@6FInitial Codes for Update Module*'Ç.7=.Ee MN#)a [ P{Q)P# dn  ##  [ b, oT9 ! I. A. 1. a.(1)(a) i) a)#)a [ P|Q)P# ## b, oT9 !#)^ `> Xi}Q)X#`Ye%%Legal WordPerfect 5.0 Update Class Learning Guide   } I. 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pQ2}R"5^:MttAMMt:M:AttttttttttMMt٨[tܨ騨MAMtMtggMtAMA‚tg[Mtttg\3\y:MMMM]Mtttttt騨ggggg[A[A[A[Atttttttttttttgggggttt][[M[tt[NR:~tMttttttFMtFtFMMtttMMttMtMFNM]tt:MttAMMt:M:AttttttttttMMt٨[tܨ騨MAMtMtggMtAMA‚tg[Mtttg\3\yMttttMMMMttRtM[M:Mtttt3tMFtMt]FFM~:MFMtt騜[[[[ttttttgggggAAAAtttttttt X-#o\  PCXP# X   5 X-{  Federal Communications Commission`(# FCC 98188 ă  yxdddy ЊNORMAL+2 Before the { Federal Communications Commission  X-Washington, D.C. 20554 ă In the Matters of R) R)  Xv-Deployment of Wireline Services Offering R)hppCC Docket No. 98147 Advanced Telecommunications CapabilityR) R)  X1-Petition of Bell Atlantic CorporationR)hppCC Docket No. 9811 0(#(#X For Relief from Barriers to Deployment ofR)  X -Advanced Telecommunications ServicesR) R)  X -Petition of U S WEST Communications, Inc.R)hppCC Docket No. 9826 For Relief from Barriers to Deployment of R) Advanced Telecommunications ServicesR) R)  Xy-Petition of Ameritech Corporation toR)hppCC Docket No. 9832 Remove Barriers to Investment inR) Advanced Telecommunications TechnologyR) R)  X-Petition of the Alliance for Public R)hppCCB/CPD No. 9815  X-Technology Requesting Issuance of Notice R)hppRM 9244 of Inquiry and Notice of Proposed O ) Rulemaking to Implement Section 706 of R) the 1996 Telecommunications ActR) R)  X-Petition of the Association for Local R)hppCC Docket No. 9878  X|-Telecommunications Services (ALTS) for aR)hpp Declaratory Ruling Establishing ConditionsR) Necessary to Promote Deployment of R) Advanced Telecommunications Capabilityj) Under Section 706 of the Telecommunicationsj) Act of 1996j) j)  X-Southwestern Bell Telephone Company, j)ppCC Docket No. 9891  X -Pacific Bell, and Nevada Bell Petition for j)pp Relief from Regulation Pursuant to Section j) 706 of the Telecommunications Act of 1996 j) and 47 U.S.C.  160 for ADSL Infrastructure j) and Servicej) ":&,))ZZ$"  X- J MEMORANDUM OPINION AND ORDER, AND  X-n NOTICE OF PROPOSED RULEMAKING  X- Adopted: August 6, 1998hh,V Released: August 7, 1998  X-Comment Date: September 21, 1998  Xv-Reply Comment Date:October 13, 1998  X_-  By the Commission: Commissioners Ness, Powell and Tristani issuing separate statements.  X -! TABLE OF CONTENTS ă  X -`(#? Paragraph ă    XUI. INTRODUCTION p>"(#v 1  X-XUII. OVERVIEW p>"(#v 6 XUIII. EXECUTIVE SUMMARY p!(#p 18 XUIV. BACKGROUND p"(#s 20  X-XX` ` A.` ` Statutory Framework ` p"(#s 20  X-XX` ` B.` ` Petitions Before the Commission ` p"(#s 23  X-XX` ` C.` ` Advanced Services ` p"(#s 28  X-XUV. MEMORANDUM OPINION AND ORDER p"(#s 32  X-XX` ` A.` ` Applicability of Section 251(c) to Incumbent Local Exchange Carriers ` p"(#s 32  X-XX` ` X ` ` 1. Introduction p"(#s 32  X|-XX` ` X ` ` 2. Statutory Classification of Advanced Services p"(#s 33  Xe-XX` ` X X a.Telecommunications Services p"(#s 34  XN-XX` ` X X b.Telephone Exchange Service or Exchange Access p"(#s 38  X7-XX` ` X ` ` 3. Interconnection p"(#s 45  X -XX` ` X ` ` 4. Unbundled Network Elements p"(#s 50  X -XX` ` X ` ` 5. Resale Obligations Under Section 251(c)(4) p"(#s 59  X-XX` ` X ` ` 6. Collocation p"(#s 62  X-XX` ` B.` ` Forbearance and LATA Boundary Modifications ` p"(#s 65  X -XX` ` X ` ` 1. Background p"(#s 65  X!-XX` ` X ` ` 2. Discussion p"(#s 69  X"-XX` ` X X a.Forbearance p"(#s 69  X#-XX` ` X X b.LATA Boundary Modifications p"(#s 80 XUVI. NOTICE OF PROPOSED RULEMAKING p"(#s 83  X:&-XX` ` A.` ` Introduction ` p"(#s 83  X#'-XX` ` B.` ` Provision of Advanced Services through a Separate Affiliate ` p"(#s 85"#',-(-(ZZ%"Ԍ X-XX` ` X ` ` 1. Background p"(#s 89  X-XX` ` X ` ` 2. Advanced Services Affiliates p"(#s 92  X-XX` ` X X a.Circumstances Under Which an Advanced Services Affiliate Would Not Be an Incumbent LEC p"(#s 95  X-XX` ` X X b.Transfers from an Incumbent LEC to an Advanced Services Affiliate p!(#m 104  Xv-XX` ` X ` ` 3. State Regulation p!(#m 116  X_-XX` ` C.` ` Measures to Promote Competition in the Local Market ` p!(#m 118  XH-XX` ` X ` ` 1. Collocation Requirements p!(#m 118  X1-XX` ` X X a.Background p!(#m 118  X -XX` ` X X b.Adoption of National Standards p!(#m 122  X -XX` ` X X c.Collocation Equipment p!(#m 126  X -XX` ` X X d.Allocation of Space p!(#m 136  X -XX` ` X X e.Space Exhaustion p!(#m 145  X -XX` ` X X f.Effects of Additional Collocation Requirements p!(#m 150  X -XX` ` X ` ` 2. Local Loop Requirements p!(#m 151  X-XX` ` X X a.Overview p!(#m 151  Xy-XX` ` X X b.Background p!(#m 152  Xb-XX` ` X X c.Adoption of National Standards p!(#m 154  XK-XX` ` X X d.Loops and Operations Support Systems p!(#m 157  X4-XX` ` X X e.Loop Spectrum Management p!(#m 159  X-XX` ` X X f.Uniform Standards for Attachment of Electronic Equipment at the Central Office End of a Loop p!(#m 163  X-XX` ` X X g.Redefining the Local Loop to Ensure Competitive LEC Access to Loops Capable of Providing Advanced Services p!(#p164  X-XX` ` X X h.Unbundling Loops Passing through Remote Terminals p!(#m 165  X-XX` ` X X i.Effects of Additional Requirements for Local Loops p!(#m 177  X-XX` ` D.` ` Unbundling Obligations Under Section 251(c)(3) ` p!(#m 178  X|-XX` ` E.` ` Resale Obligations Under Section 251(c)(4) ` p!(#m 185  Xe-XX` ` F.` ` Targeted InterLATA Relief ` p!(#m 190 XUVII. PROCEDURAL MATTERS p!(#m 197  X -XX` ` A.` ` Ex Parte Presentations ` p!(#m 197  X -XX` ` B.` ` Initial Paperwork Reduction Act Analysis ` p!(#m 198  X-XX` ` C.` ` Initial Regulatory Flexibility Analysis ` p!(#m 199  X-XX` ` D.` ` Comment Filing Procedures ` p!(#m 200  X -XX` ` E.` ` Further Information ` p!(#m 206 XUVIII. ORDERING CLAUSES p!(#m 207  XUAPPENDIX A LIST OF COMMENTERS  APPENDIX B DESCRIPTION OF xDSL TECHNOLOGY APPENDIX C DESCRIPTION OF INTEGRATED DIGITAL LOOP CARRIER SYSTEMS APPENDIX D INITIAL REGULATORY FLEXIBILITY ANALYSIS"#',-(-(ZZ%"Ԍ X-ԙ -J:\POLICY\706\ORDER\SUBDOCS\INTRO.ORD- K- I. INTRODUCTION ă  X-1.` ` One of the fundamental goals of the Telecommunications Act of 1996 (1996  X-Act)$- {O4-ԍTelecommunications Act of 1996, Pub. L. No. 104104, 110 Stat. 56, codified at 47 U.S.C.  151 et  {O-seq. Hereinafter, all citations to the 1996 Act will be to the 1996 Act as it is codified in the United States Code. The 1996 Act amended the Communications Act of 1934. We will refer to the Communications Act of 1934, as amended, as the "Communications Act" or as the "Act." is to promote innovation and investment by all participants in the telecommunications marketplace, both incumbents and new entrants, in order to stimulate competition for all  X-services, including advanced services. Congress provided the blueprint in the 1996 Act for ensuring that all markets are open to competition, while encouraging the rapid deployment of  X_-new telecommunications technologies.b_- yO -ԍPreamble to Pub. L. 104104, 110 Stat. 56 (1996).b In this proceeding, we take steps to implement Congress' framework with respect to advanced services.  X -2.` ` As the demand for highspeed, highcapacity advanced services increases, incumbent telecommunications companies and new entrants alike are deploying innovative new technologies to meet that demand. The role of the Commission is not to pick winners or losers, or select the "best" technology to meet consumer demand, but rather to ensure that the marketplace is conducive to investment, innovation, and meeting the needs of consumers.  X-3.` ` This item is issued in response to six petitions suggesting action we should take to speed the deployment by wireline carriers of advanced services. Although the parties  Xb-filing these petitions seek relief pursuant to section 706bD- yOW-ԍPub.L. 104-104, Title VII,  706, Feb. 8, 1996, 110 Stat. 153, reproduced in the notes under 47 U.S.C.  157. of the 1996 Act, our authority to take action lies in the heart of the Communications Act of 1934 (the Act), in sections 201, 202, 251 and 271. For purposes of this item, we use the term "advanced services" to mean  X-wireline, broadbandlX- yOj-ԍThe term "broadband" is generally used to convey sufficient capacity or "bandwidth" to transport large amounts of information. As technology evolves, the concept of "broadband" will evolve with it: we may consider today's "broadband" services to be "narrowband" services when tomorrow's technologies appear.l telecommunications services, such as services that rely on digital  X-subscriber line technology (commonly referred to as xDSL)" - yOs!-ԍThe "x" in xDSL is a place holder for the various types of DSL service, such as ADSL (asymmetric digital subscriber line), HDSL (highspeed digital subscriber line), UDSL (universal digital subscriber line), VDSL (veryhigh speed digital subscriber line), and RADSL (rateadaptive digital subscriber line). We discuss  {O#-the functionality offered by xDSL in greater detail in section IV(C), infra. and packetswitched technology.Z- {O]%-ԍWe further describe advanced services in section IV(C), infra. We note that services that rely on digital subscriber line technology are but one of the advanced services currently in existence, and we in no way mean to suggest digital subscriber line is the preferred technology. We consider it preferable to provide illustrative"&,-(-('" examples rather than attempting to create a list of all advanced services. "X,-(-(ZZ"Ԍ X-ԙ4.` ` This item consists of a Memorandum Opinion and Order (Order) and a Notice of Proposed Rulemaking (NPRM). After clarifying in the Order our views on the applicability of existing statutory requirements in sections 251 and 271 to advanced services, we seek comment on a wide variety of issues associated with the provision of advanced services by wireline carriers. We propose measures to promote the deployment of advanced services in a competitive manner by both incumbent local exchange carriers (LECs) and new entrants.  XH- 5.` ` We note that we are also issuing another item today that addresses advanced services, a Notice of Inquiry (NOI), pursuant to our statutory obligation under section 706(b)  X -of the 1996 Act. X- {O# -ԍSee 47 U.S.C.  157 note. Section 706(b) of the Telecommunications Act of 1996 requires the Commission to initiate, within 30 months of the enactment of the 1996 Act, an inquiry into the availability of advanced telecommunications capabilities to all Americans. The Commission must complete the inquiry within six months, and must take "immediate action to accelerate the deployment" of advanced telecommunications capability if the inquiry determines that such capability is not being deployed to all Americans in a reasonable  {O -and timely fashion. See id. In the NOI, we seek information on the status of broadband deployment in all market sectors including wireless, wireline, cable, and satellite and the types of actions we can take in the future if we determine that advanced telecommunications capability  X -is not being deployed to all Americans in a reasonable and timely fashion.( - yOZ-ԍWe note that the states recently urged the Commission to initiate an NOI and solicit additional ideas, including those put forth by the states, before granting any specific remedial actions or requests for interim relief proposed in the petitions of Bell Atlantic, the Alliance for Public Technology, Ameritech, U S WEST, and SBC. NARUC Convention Floor Resolution No. 6, "Resolution Regarding Additional Petitions to the FCC for Action Under Section 706" (adopted by the Exec. Comm. on July 30, 1998).(  X -9 II. OVERVIEW  ă  Xy-6.` ` Increasingly, all electronic communications are becoming digital. Print, audio,  Xb-video, voice and data b - yO-ԍWe use the term "data" broadly to refer to a representation of facts, concepts, instructions, or information in a manner suitable for communication, interpretation, or processing. can all be transmitted in digital form, as collections of ones and zeros. Digitized information can be efficiently transmitted by means of "packet switching." Instead of maintaining an endtoend channel of communications for the length of the information transfer, packet switching breaks the information up into smaller packets that are transmitted separately over the most efficient route available, and then reassembled, microseconds later, at their destination. Packetswitched transmission of digitized information promises a revolution  X-in information, communications services, and entertainment. - {Oe&-ԍPacketswitched technology is discussed in further detail in section IV(C), infra. "n ,-(-(ZZq"Ԍ X-7.` ` Highspeed, packetswitched networks offer businesses, residential users, schools and libraries, and other end users of information the ability to access and transport information across the street or across the globe. If ordinary citizens can access these networks at high speeds using existing copper wires, a variety of new services and vast improvements to existing services will be available. In the near future, these services could include realtime video in place of telephony, so that families who connect over the phone can not only talk to each other, but can see each other as well. They could also include featurelength movies on demand, and faster access to the Internet. They are bringing about explosive growth in electronic commerce and new paths for distance learning. The ability of all Americans to access these networks, and to share in their resources, will very likely spur our growth and development as a nation.  X -8.` ` If all Americans are to have meaningful access to these advanced services, however, there must be a solution to the problem of the "last mile." No matter how fast the network is, if the connection between the network and the enduser is slow, then the enduser  X -cannot take advantage of the network's highspeed capabilities.& X - yO -ԍAlthough advanced services can also be deployed using other technologies over satellite, cable, and wireless systems, we limit the discussion here to wireline services, because none of the petitioners raise issues about these other technologies.& For example, information generally moves very quickly across the highspeed backbone of the Internet. But its speed may be cut to a tiny fraction when it passes through the ordinary copper telephone line that runs into a residence. The enduser may not be able to receive data quickly enough to take  XK-advantage of broadband applications.B XK- yO-ԍConsumers may also experience delays in accessing information that stem from sources other than the "last mile." For example, they may experience delays at the servers containing the information they wish to access, or delays relating to congestion in the Internet itself.B  X-9.` ` The six petitions we have received request that we use various tools, including  X-regulatory forbearance, to facilitate deployment of advanced services. In broad terms, four Bell Operating Companies (BOCs) request that we allow them to provide xDSLbased  X-services in a deregulated environment. L- {O-ԍPetition of Bell Atlantic Corporation for Relief from Barriers to Deployment of Advanced  {O[-Telecommunications Services, CC Docket No. 9811 (filed Jan. 26, 1998); Petition of U S WEST  {O% -Communications, Inc., for Relief from Barriers to Deployment of Advanced Telecommunications Services, CC  {O -Docket No. 9826 (filed Feb. 25, 1998); Petition of Ameritech Corporation to Remove Barriers to Investment in  {O!-Advanced Telecommunications Capability, CC Docket No. 9832 (filed Mar. 5, 1998); Southwestern Bell Telephone Company, Pacific Bell, and Nevada Bell Petition for Relief from Regulation Pursuant to Section 706  {OK#-of the Telecommunications Act of 1996 and 47 U.S.C.  160 for ADSL Infrastructure and Service, CC Docket No. 9891 (filed June 9, 1998). At the same time, the Association for Local  X-Telecommunications Services (ALTS) requests a declaratory ruling and commencement of a rulemaking to ensure that competing carriers can deploy xDSLbased services quickly and" ,-(-(ZZ4"  X-efficiently.q\- {Oy-ԍPetition of the Association for Local Telecommunications Services (ALTS) for a Declaratory Ruling Establishing Conditions Necessary to Promote Deployment of Advanced Telecommunications Capability Under  {O -Section 706 of the Telecommunications Act of 1996, CC Docket No. 9878 (filed May 27, 1998).q Finally, the Alliance for Public Technology (APT) urges the Commission to initiate a Notice of Inquiry and Notice of Proposed Rulemaking to adopt various policies to  X-remove barriers to deployment and actively promote infrastructure investment.4\- {Oo-ԍSee Petition of the Alliance for Public Technology Requesting Issuance of Notice of Inquiry and Notice  {O9-of Proposed Rulemaking to Implement Section 706 of the 1996 Telecommunications Act, CCB/CPD No. 9815 (filed Feb. 18, 1998).4  X-   X- 10.` ` Today, incumbent wireline carriers and new entrants are at the early stages of deploying xDSL and other advanced services. Thus, the incumbent does not currently enjoy the overwhelming market power that it possesses in the conventional circuitswitched voice telephony market. Incumbents assert that rules mandating that they give their competitors access to advanced services and the facilities used to provide those services reduce their incentive to invest in these new facilities, and are not necessary given their lack of market power in this area. At the same time, new entrants argue that incumbents are attempting to  X -evade their obligation to provide access to those facilities and services that are critical to competitive participation in the wireline market. We seek in this proceeding to address both of these concerns, and to encourage and enable all companies, both incumbents and new  X -entrants, to provide these advanced services.$ - {O-ԍSee Letter from Larry Irving, Assistant Secretary for Communications and Information, National Telecommunications and Information Administration, U.S. Department of Commerce, to William E. Kennard,  yO-Chairman, Federal Communications Commission, CC Docket Nos. 9891, 9832, 9826, and 9811 at 2 (filed  {O-July 17, 1998) (NTIA July 17 ex parte).  X- 11.` ` In the Order, we first conclude that the procompetitive provisions of the 1996 Act apply equally to advanced services and to circuitswitched voice services. Congress made clear that the 1996 Act is technologically neutral and is designed to ensure competition in all telecommunications markets. We therefore conclude that incumbent LECs are subject to section 251(c) in their provision of advanced services. Specifically, we find that incumbent LECs are subject to the interconnection obligations of sections 251(a) and 251(c)(2) with respect to both their circuitswitched and packetswitched networks. We also clarify that the facilities and equipment used by incumbent LECs to provide advanced services are network elements and subject to the obligations in section 251(c)(3). Thus, for example, all incumbent LECs must provide requesting telecommunications carriers with unbundled loops capable of transporting highspeed digital signals, and must offer unbundled access to the equipment used in the provision of advanced services, subject to considerations of technical feasibility and the provisions of section 251(d)(2). As discussed in the NPRM below, however, to the  Xe-extent that an incumbent LEC chooses to establish an affiliate that is truly separate from the"e ,-(-(ZZ" incumbent to provide these advanced services, that affiliate would not be an incumbent LEC  X-under the Act, and would therefore not be subject to incumbent LEC regulation.- yOb-ԍ ESTAB We recognize that the corporate holding company may be the entity that would establish the affiliate, rather than the incumbent LEC per se.  X- 12.` ` Second, we deny in the Order the petitions of Ameritech, Bell Atlantic, SBC, - yO-ԍThis petition was actually filed by SBC's incumbent LEC entities, Southwestern Bell Telephone Company, Pacific Bell, and Nevada Bell. and U S WEST to the extent that they request us to forbear from applying the requirements of sections 251(c) and/or 271 with respect to their provision of advanced services. We conclude that Congress did not provide us with the statutory authority to forbear from these critical marketopening provisions of the Act until their requirements have been fully implemented. We also decline to grant the requests to create a single, global LATA for packetswitched services, because we believe that such a determination could effectively eviscerate section 271 and circumvent the procompetitive incentives for opening the local market that Congress sought to achieve through that section of the Act.  X - 13.` ` We are committed, however, to ensuring that incumbent LECs make their decisions to invest in and deploy advanced telecommunications services based on the market and their business plans, rather than regulation. Accordingly, in the NPRM, we propose an optional alternative pathway for incumbent LECs that would allow separate affiliates to provide advanced services free from incumbent LEC regulation. In particular, if an incumbent LEC chooses to offer advanced services through an affiliate that is truly separate from the incumbent, that affiliate would not be deemed an incumbent LEC and therefore would not be subject to incumbent LEC regulation, including the obligations under section 251(c). We make specific proposals in the NPRM on how separate an affiliate would need to be so that it would not be deemed an incumbent LEC. Our proposals reflect our view that, if the advanced services affiliate derives an unfair advantage from its relationship with the incumbent, that affiliate would have to be viewed as stepping into the shoes of the incumbent LEC and would be subject to all the requirements that Congress established for incumbent LECs.   X|- 14.` ` In addition, we seek to facilitate the ability of competing carriers to offer advanced services on an equal footing with incumbent carriers and their affiliates. In particular, to provide advanced services, new entrants may need to collocate equipment on an incumbent LEC's premises for interconnection and access to unbundled network elements, such as loops. Consequently, we grant ALTS' request that we initiate a rulemaking to strengthen collocation requirements, which will reduce the costs and delays associated with  X-collocation. We also seek comment on whether to review and revise our rules regarding the provision of loops to eliminate barriers to entry for competing providers. Specifically, we seek comment on whether we should revise our definition of the loop, or require subloop unbundling in recognition of new technological and market developments. We also seek"!x,-(-(ZZ " comment on how to unbundle loops that pass through remote concentration devices. We note that, to the extent an incumbent LEC chooses to establish a separate affiliate to provide advanced services, the incumbent LEC should have an additional incentive to improve its processes and provide unbundled elements and collocation space as quickly and cheaply as possible to all competitors, including its advanced services affiliate.  Xv-15.` ` In addition, we seek comment on the specific unbundling obligations for network elements used to provide advanced services and on whether we should modify the current unbundling rules in light of technological and market advances.  X -16.` ` Finally, we seek comment on a number of proposals that would provide tailored relief to incumbent LECs and/or their affiliates. In particular, we seek comment on whether limited LATA boundary modifications or other targeted interLATA relief would be appropriate in certain circumstances.  X -17.` ` We recognize the importance of the issues we raise in the NPRM to the deployment of advanced services by both incumbents and competitors. We further recognize the importance of regulatory certainty and the impact it has on the ability of all carriers to plan and develop their products and services. We therefore seek to issue an order resolving the issues raised in the NPRM as expeditiously as possible. -J:\POLICY\706\ORDER\SUBDOCS\INTRO.ORD- 0J:\POLICY\706\ORDER\SUBDOCS\EXECSUMM.ORD0  X-s III. EXECUTIVE SUMMARY l  X-  18.` ` In the Order, we take the following steps:  X-Obligations of Incumbent LECs That Provide Advanced Services on an Integrated Basis  X-XWe clarify, in response to a petition by ALTS, that sections 251 and 252 apply to advanced telecommunications facilities and services offered by an incumbent  Xe-local exchange carrier (LEC) as defined in the Communications Act, i.e., the local telephone operating company. An affiliate is not an incumbent LEC unless it is a successor or assign of the incumbent LEC, or comparable to the incumbent LEC, as set forth in the statute. For example, we find that an incumbent LEC is subject to the interconnection obligations of section 251(c)(2) with respect to both circuitswitched and packetswitched networks.   X -XWe also clarify, in response to the ALTS petition, that the facilities and equipment used by incumbent LECs to provide advanced services are network elements and subject to section 251(c). Thus, upon request, the incumbent LEC must provide new entrants with unbundled loops capable of transporting highspeed digital signals, and must offer unbundled access to the equipment used in the provision of advanced services, to the extent technically feasible and subject to the provisions of section 251(d)(2).  "%' ,-(-(ZZ,"Ԍ X-XWe also declare that, pursuant to the terms of section 251(c)(4), the incumbent LEC must offer for resale, at wholesale rates, any advanced services that the incumbent offers to subscribers that are not telecommunications carriers.   X-Forbearance from Sections 251(c) and 271  Xv-XWe deny requests to forbear from application of sections 251(c) and/or 271, concluding that we do not have the statutory authority to forbear from either section prior to its full implementation.   X -XWe deny requests for largescale changes in LATA boundaries (such as Ameritech's request for a global, "data LATA") because that would be functionally the same as forbearing from section 271 for advanced services and would eviscerate section 271 for those services. In the NPRM, we seek  X -comment on more targeted LATA boundary modification issues.   X -  X- 19.` ` In the Notice of Proposed Rulemaking, we make the following tentative conclusions and seek comment on the following issues:  XK-Provision of Advanced Services Through a Separate Affiliate  X-XWe propose an optional alternative pathway for incumbent LECs that would allow separate affiliates to provide advanced services free from incumbent LEC regulation. As a nonincumbent LEC, an advanced services affiliate would not be subject to the requirements of section 251(c). We also tentatively conclude that, to the extent such an affiliate provides interstate exchange access service, the affiliate: (1) would be presumed to be nondominant, and, therefore, not subject to price cap regulation or rate of return regulation for such services; and (2) would not be required to file tariffs for such services.   XN-XWe tentatively conclude that an advanced services affiliate that meets the  X7-following specific structural separation and nondiscrimination requirements will not be an incumbent LEC: (1) the incumbent must "operate independently" from its affiliate; (2) transactions must be on an arm's length basis, reduced to writing, and made available for public inspection; (3) the incumbent and affiliate must maintain separate books, records, and accounts; (4) the incumbent and advanced services affiliate must have separate officers, directors, and employees; (5) the affiliate must not obtain credit under any arrangement that would permit a creditor, upon default, to have recourse to the assets of the incumbent; (6) the incumbent LEC, in dealing with its advanced services affiliate may not discriminate in favor of its affiliate in the provision of any goods, services, facilities or information or in the establishment of standards; and (7) an advanced services affiliate must interconnect with the incumbent LEC pursuant to tariff or pursuant to an interconnection agreement, and"#' ,-(-(ZZ%" whatever network elements, facilities, interfaces and systems are provided by the incumbent LEC to the affiliate must also be made available to unaffiliated entities.   X-XWe seek comment on how transfers to advanced services affiliates of, among other things, facilities and customer accounts, should affect the regulatory status of the affiliates. We are committed to ensuring that the separate affiliate is a realistic option for incumbent LECs. We must evaluate, however, whether certain transfers would render an advanced services affiliate an "assign" of the incumbent LEC.   X -XTo the extent that an advanced services affiliate provides advanced services on an intrastate basis, we encourage states to treat the affiliate equivalently to any other competing carrier offering advanced services.   X -Collocation and Loop Requirements  Xy-XWe, in response to a request by ALTS, initiate a rulemaking to adopt strengthened collocation requirements. We seek comment on a number of measures that would optimize the space available for collocation and would reduce unnecessary costs and delays, and thereby facilitate deployment of advanced services, particularly to residential and rural customers. For example, we seek comment on whether we should require incumbent LECs to allow collocation of equipment that includes switching functionality. We also tentatively conclude that incumbent LECs should be required to offer alternative collocation arrangements, including cageless collocation. We further tentatively conclude that, upon request, incumbent LECs should provide competitors with written information regarding space availability in the incumbent's facilities, and that incumbent LECs that deny physical collocation, citing space constraints, should allow competitors to tour the incumbent's premises.   X -XWe also seek comment on whether we should revise our rules regarding the provision of loops to competitors in order further to eliminate barriers to entry for entities that seek to provide advanced services. Specifically, we seek comment on: (1) whether the operations support system rules adequately ensure that competitive LECs have access to loop information; (2) how we should address loop spectrum interference issues and whether we should require loop spectrum unbundling; and (3) whether we should revise our definition of the local loop to take account of new technological developments. We also seek comment on how carriers should unbundle loops that pass through remote concentration devices.   X#'-Unbundling Obligations Under Section 251(c)(3)"#' ,-(-(ZZ%"Ԍ X-ԙXWe seek comment on the specific unbundling obligations that apply to network elements used to provide advanced services. In addition, we seek comment on whether we should adopt additional criteria when considering the extent to which network elements must be made available on an unbundled basis. We also seek comment on whether we should find section 251(c)(3) to be fully implemented on a servicebyservice basis.   X_-Resale Obligations Under Section 251(c)(4)  X1-XWe seek comment on whether we should modify our prior interpretation of the requirements of section 251(c)(4) and require incumbent LECs to make available for resale, at wholesale rates, certain advanced exchange access services that they generally offer to subscribers that are not telecommunications carriers.(#  X -  X -Limited InterLATA Relief  X -  X-XWe seek comment on the scope of the incidental, interLATA exception in section 271.(#  Xb-XWe seek comment on types of LATA boundary modifications that might encourage deployment of advanced services to elementary and secondary schools and classrooms, and other educational institutions.   X-XWe tentatively conclude that modification of LATA boundaries may be necessary for subscribers in rural areas to have highspeed connections to the Internet.   X-XWe seek comment on whether we have authority to take other targeted actions  X-to facilitate deployment of advanced services and, if so, on the criteria we should use in evaluating such requests.  0J:\POLICY\706\ORDER\SUBDOCS\EXECSUMM.ORD0  XN- /J:\POLICY\706\ORDER\SUBDOCS\BCKGRND.ORD/ _F, IV. BACKGROUND ă  X - A.` ` Statutory Framework  X -  X-20.` ` In the 1996 Act, Congress established a "procompetitive, deregulatory national policy framework" for telecommunications, opening all telecommunications markets to _competition so as to make advanced telecommunications and information technologies and  X!-services available to all Americans.k!- {O&$- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ЍJoint Statement of Managers, S. Conf. Rep. No. 104230, 104th Cong. 2d Sess. 1 (1996) (Joint  {O$-Explanatory Statement).k Congress enacted provisions opening incumbent LECs' networks to competitors, and gave the Commission the authority to adopt rules in this area to  X#-further the competitive goals of the 1996 Act."# $,-(-(ZZ("Ԍ X-ԙ21.` ` At the core of the Act's marketopening provisions are sections 251 and 271.M- yOy-ԍ47 U.S.C.  251, 271.M In section 251, Congress sought to open local telecommunications markets to competition by reducing inherent economic and operational advantages possessed by incumbents. Section 251 requires incumbent LECs to share their networks in a manner that enables competitors to choose among three methods of entry the construction of new networks, the use of  X-unbundled elements of the incumbent's network, and resale. Thus, section 251 requires incumbent LECs to offer at costbased rates nondiscriminatory interconnection with their  X_-networksM_X- yOh -ԍ47 U.S.C.  251(c)(2)(D).M and access to unbundled network elements.J_- yO -ԍ47 U.S.C.  251(c)(3).J Section 251 also requires incumbent LECs to make their retail services available at wholesale rates so they can be resold by new  X1-entrants.J1x- yOZ-ԍ47 U.S.C.  251(c)(4).J Together with other procompetitive provisions of the Act, section 251 provides new entrants with the ability to offer competitive telecommunications services.  X -  X -22.` ` Section 271 conditions the provision of inregion, interLATA services by BOCs  X -on compliance with certain requirements, including compliance with a competitive checklist.D - yO-ԍ47 U.S.C.  271.D The critical marketopening requirements of section 251 are incorporated into this competitive checklist. Thus, through section 271, Congress requires BOCs to demonstrate that they have opened their local markets to competition before they are authorized to enter the inregion long distance market.  XK- B.` ` Petitions Before the Commission  X-23.` ` A number of parties have filed petitions pursuant to section 706, seeking regulatory forbearance, initiation of a rulemaking, and declaratory rulings with respect to the  X-provision of xDSL and packetswitched services. On January 26, 1998, Bell Atlantic filed a  X-petition with the Commission pursuant to section 706 of the 1996 Act.- {O! -ԍCommission Seeks Comment on Bell Atlantic Petition for Relief from Barriers to Deployment of  {O -Advanced Telecommunications Services, CC Docket No. 9811, Public Notice, 13 FCC Rcd 2495 (1998). On February 25, 1998, the Chief, Policy and Program Planning Division, Common Carrier Bureau, issued an Order granting the motion of the Commercial Internet eXchange Association (CIX) requesting an extension of the  {OE#-comment deadline in the abovementioned docket. Bell Atlantic's Petition for Relief from Barriers to  {O$-Deployment of Advanced Telecommunications Services, CC Docket 9811, Order, 13 FCC Rcd 4495 (1998). Bell Atlantic asks the Commission to forbear from applying the provisions of sections 251 and 271 of the Act to its advanced services. Specifically, Bell Atlantic asks the Commission to permit it to offer xDSL and other highspeed broadband services free from pricing, unbundling, and separations" ,-(-(ZZQ" restrictions. In addition, Bell Atlantic asks the Commission to forbear from applying section  X-271 of the Act to its highspeed broadband services, or, in the alternative, to modify LATA  X-boundaries, so as to permit it to carry inregion interLATA traffic.N- yOK-ԍBell Atlantic Petition at 11.N  X-24.` ` On February 18, 1998, APT filed a petition asking the Commission to initiate a  X-rulemaking to address various issues related to the deployment of advanced services.3\X- {O-ԍAlliance for Public Technology Petitions the Commission for Issuance of a Notice of Inquiry and a  {O` -Notice of Proposed Rulemaking to Implement Section 706 of the Telecommunications Act, RM 9844, Public Notice, 13 FCC Rcd 5126 (1998). 3 APT urges the Commission to apply section 251(c) only to the existing incumbent LEC network  X_-and not to advanced services.C_|- yO -ԍAPT Petition at 2.C In conjunction with this request, APT asks the Commission to explore the possibility of requiring the incumbent LEC to use a separate subsidiary as a  X1-marketing device for its advanced services.A1 - {O-ԍId. at 17.A APT also asks the Commission to address various pricing issues, such as the development of an Internet service provider access charge  X -that would be acceptable to the Internet industry.B - {OR-ԍId. at 23.B APT also urges the Commission to consider what type of conditions could be attached to the Commission's approval of future  X -mergers that would promote the objectives of section 706.@ 0 - {O-ԍId. at 3.@ Finally, APT asks the Commission to consider "establishing a federal/state policy framework for developing and supporting community/provider partnerships designed to aggregate effective demand for  X-communitybased applications" of new services.  - {O-ԍId. at 3. We note that we do not address all of the issues raised by the APT Petition in the context of this rulemaking, but rather only address those issues discussed in the NPRM below.  Xb-25.` ` On February 25, 1998, and March 5, 1998, respectively, U S WEST and  XK-Ameritech filed petitions with the Commission pursuant to section 706 of the 1996 Act.!K- {O!-ԍCommission Seeks Comment on U S WEST Petition for Relief from Barriers to Deployment of Advanced  {O!-Telecommunications Services, CC Docket No. 9826, Public Notice, 13 FCC Rcd 4739 (1998); Commission Seeks Comment on Ameritech Petition for Relief from Barriers to Deployment of Advanced Telecommunications  {Ot#-Services, CC Docket No. 9832, Public Notice, 13 FCC Rcd 4741 (1998). On March 16, 1998, the Chief, Policy and Program Planning Division, Common Carrier Bureau, issued an Order granting the motion of ALTS to  {O%-consolidate the pleading cycles of the Bell Atlantic, U S WEST, and Ameritech petitions. Petition of Bell Atlantic for Relief from Barriers to Deployment of Advanced Telecommunications Services, Petition of U S WEST  {O&-for Relief from Barriers to Deployment of Advanced Telecommunications Services, Petition of Ameritech for  {Ob'-Relief from Barriers to Deployment of Advanced Telecommunications Services, Motion to Consolidate Filing of"b' ,-(-('"  {O-Comments and Replies by the Association for Local Telecommunications Services, Order, 13 FCC Rcd 5179 (1998). "K"!,-(-(ZZ" Like Bell Atlantic, both U S WEST and Ameritech ask the Commission not to apply section  X-251(c) to their respective highspeed data services.i""- yO-ԍAmeritech Petition at 2227; U S WEST Petition at 4452.i In addition, U S WEST argues that the Commission should either forbear from applying section 271 to its "data carriage," or in the alternative define LATA boundaries so as to permit U S WEST to aggregate data traffic  X-across present LATA boundaries.K#- yO -ԍU S WEST Petition at 44. K Ameritech contends that the Commission should create  X-"one global LATA for packetswitched services."J$B- yO -ԍAmeritech Petition at 13.J Ameritech also asks the Commission to clarify that its separate affiliate need comply only with the separation requirements adopted in  X_-the Competitive Carrier Fifth Report and Order,K%^_- {O-ԍPolicy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities  {O-Authorizations Therefor, CC Docket No. 79252, Fifth Report and Order, 98 F.C.C. 2d 1191 (1984) (Competitive  {Ov-Carrier Fifth Report and Order).K in order to be regulated as a nonincumbent  XJ-LEC and, therefore, not be subject to the obligations of section 251(c).M&J - yO-ԍAmeritech Petition at 1422.M  X -26.` ` On May 27, 1998, ALTS filed a petition for declaratory ruling pursuant to  X -section 706 of the 1996 Act.('\ - {O>-ԍPleading Cycle Established for Comments on Association for Local Telecommunications Services  {O-Petition for Declaratory Ruling Regarding Section 706, CC Docket No. 9878, Public Notice, DA 981019 (rel. May 28, 1998).( The ALTS petition asks the Commission to clarify that the obligations of sections 251, 252 and 271 of the Act apply fully to digital and broadband  X -services and facilities.D( - yO4-ԍALTS Petition at 2.D ALTS suggests, for example, that the Commission declare that incumbent LECs are obligated to unbundle a full range of loops and electronic elements attached to loops. In addition, ALTS asks the Commission to initiate a rulemaking to strengthen its collocation rules in order to reduce obstacles to competitive provision of  X{-telecommunications services.D){<- {Oh"-ԍId. at 1822.D "d),-(-(ZZ"Ԍ X-27.` ` On June 9, 1998, SBC filed a petition with the Commission pursuant to section  X-706 of the 1996 Act.x*\- {Ob-ԍPleading Cycle Established for Comments on SBC Petition for Relief from Regulation Pursuant to  {O,-Section 706 of the Telecommunications Act and 47 U.S.C.  160 for ADSL Infrastructure and Service,  yO-CC Docket No. 9891, Public Notice, DA 981111 (rel. June 11, 1998).x SBC does not ask the Commission to forbear from applying the provisions of section 271 of the Act, but rather seeks forbearance from the unbundling and resale provisions of sections 251(c) and 252 of the Act with respect to its ADSL facilities and  X-services.G+- yOA -ԍSBC Petition at 2528.G SBC also seeks relief from dominant carrier treatment of its ADSL service.F,|- {O -ԍId. at 3032. F In addition, SBC seeks relief from the "most favored nation" obligation of section 252(i) of the  Xv-Act.D-v- {O5-ԍId. at 3334.D We address many of the issues raised by all six of these petitions in both the Order and NPRM.  X1- C.` ` Advanced Services (#`  X -  X -28.` ` The existing telephone network in the United States, with a line running into virtually every home and business, has worked admirably for the provision of ordinary voice telephony. Until recently, however, it was not thought to be suitable for interactive video or high speed data communications. First, the copper telephone wire running the "last mile" to each home was generally thought to be capable of carrying only a relatively modest stream of information. Second, the public telephone network is circuitswitched, that is, it maintains an endtoend channel of communication for the entire duration of the call. While this is a useful means of transmitting ordinary voice telephony, it is not efficient for transmitting data and other types of information.  X-29.` ` xDSL technology, coupled with packetswitched networks, addresses both of  X-these constraints. Two xDSL modems are attached to each telephone loop: one at the subscriber's premises, and one at the telephone company's central office. The use of xDSL modems allows transmission of data over the copper loop at vastly higher speeds than those  X-used for voice telephony or analog data transmission.Z. - yO!-ԍAn ordinary voice channel, in the United States, generally allows transmission of digital information at the rate of 56,000 bits per second. By contrast, the most widely deployed xDSL service (known as ADSL)  {O"-allows data to be transmitted to the home or residence at up to several million bits per second, depending on loop length, loop design, and the technology deployed. Provision of xDSL service is subject to a variety of important technical constraints. One is the length of the subscriber loop: ADSL, the most widely deployed xDSLbased service, generally requires loops of less than 18,000 feet using current technology. Another is the quality of the loop, which must be free of excessive bridged taps, loading coils, and other impediments. "Conditioning" loops to remove those impediments, or constructing fiberbased digital loop carrier systems to overcome loop length  {OT'-difficulties, can be expensive. For further explanation of these loop electronics, see infra nn.LOOPELECTRON314, 315.Z Further, the customer can potentially"t.,-(-(ZZS" make ordinary voice calls over the public switched network at the same time as he or she is  X-using the same line for highspeed data transmission. /X- yOb-ԍWe note that, at the present time, not all existing xDSL deployments are taking advantage of that capability; some carriers offer only highspeed data services without the voice component over the xDSLequipped loop.   X-30.` ` In circumstances in which the xDSLequipped line carries separate POTS ("plain old telephone service") and data channels, the carrier must separate those two streams when they reach the telephone company's central office. This is done in a device known as a digital subscriber line access multiplexer, or DSLAM. The DSLAM and central office xDSL modem send the customer's POTS traffic to the public, circuitswitched telephone network. The DSLAM sends the customer's data traffic (combined with that of other xDSL users) to a packetswitched data network. Thus, the data traffic, after traversing the local loop, avoids the circuitswitched telephone network altogether.  X -31.` ` Once on the packetswitched network, the data traffic is routed to the location selected by the customer, for example, a corporate local area network or an Internet service  X -provider. That location may itself be a gateway to a new packetswitched network or set of networks, like the Internet. We have attached a diagram illustrating this network architecture  X-as Appendix B. / J:\POLICY\706\ORDER\SUBDOCS\BCKGRND.ORD/  Xy- .J:\POLICY\706\ORDER\SUBDOCS\DEFINS.ORD.  V. MEMORANDUM OPINION AND ORDER ă  XK- A.` ` Applicability of Section 251(c) to Incumbent Local Exchange Carriers (#`  X4-  X-` ` 1. Introduction  X-32.` ` In this section, we address several issues that ALTS raises in its petition for a  X-declaratory ruling.R0- {Oq-ԍSee ALTS Petition at 1032.R First, as described in greater detail below, we grant the ALTS petition to  the extent it asks the Commission to clarify that the obligations of sections 251 and 252 of the Act apply to advanced services and the facilities used to provide those services. We hold that, pursuant to the Act and our implementing orders, incumbent LECs are required to (1) provide interconnection for advanced services; and (2) provide access to unbundled network elements, including conditioned loops capable of transmitting highspeed digital signals, used by the incumbent LEC to provide advanced services. We also note that under the plain terms of the Act, incumbent LECs have an obligation to offer for resale, pursuant to section 251(c)(4), all advanced services that they generally provide to subscribers who are not telecommunications carriers. Finally, for the reasons discussed below, we conclude that incumbent LECs have an obligation under the statute and our implementing rules to offer collocation arrangements that reduce unnecessary costs and delays for competitors and that optimize the amount of space available for collocation.  X!-"!z0,-(-(ZZ'"Ԍ X- ` ` 2. Statutory Classification of Advanced Services  X-  X- 33.` ` Before turning to the specific declaratory rulings requested by ALTS, we first  X-must address the regulatory classification of "advanced services." The specific obligations of the 1996 Act depend on application of the statutory categories established in the Act's  X-definitions section.N1- {O-ԍSee 47 U.S.C.  153.N In particular, we consider whether advanced services constitute "telecommunications services," and, if so, what type of telecommunications service.  XH-M XX` `  a.Telecommunications Services (#`  X -` `  (1)hh,Background  X -!34.` ` The obligations imposed by sections 251 and 252 of the Act are triggered by  X -the provision of a "telecommunications service."2& Z- yO-ԍ Under the 1996 Act, any service with a communications component must be either a  {O-"telecommunications service" or an "information service" (but not both). See FederalState Joint Board on  {Or-Universal Service, CC Docket No. 9645, Report to Congress, FCC No. 9867, at  2148 (rel. Apr. 10, 1998)  {O<-(Report to Congress on Universal Service). Thus, for example, section 251(a)  X -M requirements apply to each "telecommunications carrier,"G3 H- yO-ԍ47 U.S.C.  251(a).G which is to say, each "provider of  X -telecommunications services."4 - yO0-ԍ47 U.S.C.  153(44). The definition excludes aggregators of telecommunications services, as defined in  {O-section 226. See 47 U.S.C.  226. Section 251(c)(3) obligates incumbent LECs to provide unbundled access to "network elements," which is to say, "facilit[ies] or equipment used in  Xy-the provision of a telecommunications service."W5y2 - yO\-ԍ47 U.S.C.  251(c)(3), 153(29).W The Act defines "telecommunications  Xb-service" to mean "the offering of telecommunications for a fee directly to the public . . . ."H6b - yO-ԍ47 U.S.C.  153(46).H It defines "telecommunications" to mean "the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of  X-the information as sent and received."H7R - yO "-ԍ47 U.S.C.  153(43).H "7,-(-(ZZ("Ԍ X-` `  (2)hh,Discussion  X-"35. LIZ5  TELSERV TELECOMBEG` ` We conclude that advanced services are telecommunications services. The  X-Commission has repeatedly held that specific packetswitched services are "basic services,"8- {O4-ԍThe Commission, under the regime established in its Computer II proceeding, classified all services offered over a telecommunications network as either "basic" or "enhanced." A basic service consists of the offering, on a common carrier basis, of "pure transmission capability over a communications path that is virtually  {O-transparent in terms of its interaction with customer supplied information." Amendment of Section 64.702 of the  {OX-Commission's Rules and Regulations (Computer II), 77 FCC 2d 384, 41920,  93, 96 (1980) (Computer II  {O" -Final Decision), recon., 84 FCC 2d 50 (1980) (Reconsideration Order), further recon., 88 FCC 2d 512 (1981)  {O -(Further Reconsideration Order), affirmed sub nom. Computer and Communications Industry Ass'n v. FCC, 693  {O -F.2d 198 (D.C. Cir. 1982), cert. denied, 461 U.S. 938 (1983). An enhanced service, by contrast, includes "any  {O -offering over the telecommunications network which is more than a basic transmission service." Id. at 420,  97. We have found that Congress intended the categories of "telecommunications" and "information service,"  {O -established in the 1996 Act, to parallel these "basic" and "enhanced" categories. Report to Congress on  {O -Universal Service,  21. The Commission has concluded that the definitions of "information service" and  {O-"enhanced service" should be interpreted to extend to the same functions. Implementation of the Non-Accounting  {Op-Safeguards of Sections 271 and 272 of the Communications Act of 1934, as amended, CC Docket No. 96-149,  {O:-First Report and Order and Further Notice of Proposed Rulemaking, 11 FCC Rcd 21905 (1996) (Non-Accounting  {O-Safeguards Order), Order on Reconisderation, 12 FCC Rcd 2297 (1997), recon. pending, petition for summary  {O-review in part denied and motion for voluntary remand granted sub nom., Bell Atlantic v. FCC, No. 97-1067  {O-(D.C. Cir. filed Mar. 31, 1997), Second Order on Reconsideration, 12 FCC Rcd 8653 (1997), aff'd sub nom. Bell  {Ob-Atlantic Telephone Cos. v. FCC, 131 F.3d 1044 (D.C. Cir. 1997), Second Report and Order, 12 FCC Rcd 15756 (1997). In a separate proceeding, we have sought comment on whether the definitions of "telecommunications  {O-service" and "basic service" should be interpreted to extend to the same functions. Amendment of Section 64.702  {O-of the Commission's Rules and Regulations (Computer III), Report and Order, CC Docket No. 85229, PhaseI,  {O-104 FCC 2d 958 (1986) (Phase I Order), recon., 2 FCC Rcd 3035 (1987) (Phase I Recon. Order), further  {OR-recon., 3 FCC Rcd 1135 (1988) (Phase I Further Recon. Order), second further recon., 4 FCC Rcd 5927 (1989)  {O-(Phase I Second Further Recon.), Phase I Order and Phase I Recon. Order, vacated, California v. FCC, 905  {O-F.2d 1217 (9th Cir. 1990) (CaliforniaI); Phase II, 2 FCC Rcd 3072 (1987) (Phase II Order), recon., 3 FCC Rcd  {O-1150 (1988) (PhaseII Recon. Order), further recon., 4 FCC Rcd 5927 (1989) (Phase II Further Recon. Order),  {Oz-PhaseII Order vacated, CaliforniaI, 905 F.2d 1217 (9th Cir. 1990); Computer III Remand Proceedings, 5 FCC  {OD-Rcd 7719 (1990) (ONA Remand Order), recon., 7 FCC Rcd 909 (1992), pets. for review denied, California v.  {O-FCC, 4 F.3d 1505 (9th Cir. 1993) (CaliforniaII); Computer III Remand Proceedings: Bell Operating Company  {O-Safeguards and Tier1 Local Exchange Company Safeguards, 6FCC Rcd 7571 (1991) (BOC Safeguards Order),  {O-recon. dismissed in part, Order, 11 FCC Rcd 12513 (1996); BOC Safeguards Order vacated in part and  {Ol-remanded, California v. FCC, 39 F.3d 919 (9th Cir. 1994) (CaliforniaIII), cert. denied, 115 S.Ct. 1427 (1995)  {O6-(referred to collectively as the ComputerIII proceeding). We note that we are addressing modifications to these  {O -rules in another proceeding. Computer III Further Remand Proceedings, Bell Operating Company Provision of Enhanced Services, 1998 Biennial Regulatory Review Review of Computer III and ONA Safeguards and  {O!-Requirements, CC Docket Nos. 9520 and 9810, Further Notice of Proposed Rulemaking, 13 FCC Rcd 1640  {O\"-(1998) (Computer III FNPRM).  X-that is to say, pure transmission services.9&- {O$-ԍSee Independent Data Communications Manufacturers Association, Inc. Petition for Declaratory Ruling  {O%-that AT&T's InterSpan Frame Relay Service Is a Basic Service, American Telephone and Telegraph Company Petition for Declaratory Ruling that all Interexchange Carriers be Subject to the Commission's Decision in the  {O3'-IDCMA Petition, Memorandum Opinion and Order, 10 FCC Rcd 13717 (1995) (Frame Relay Order), recon."3'8,-(-(\'"  {O-pending; American Telephone and Telegraph Company, for Authority under Section 214 of the Communications Act of 1934, as amended, to Install and Operate Packet Switches at Specified Telephone Company Locations in  {O"-the United States, Memorandum Opinion, Order and Authorization, 94 FCC 2d 48 (1983); Computer II Final  {O-Decision, 77 FCC 2d at 420,  95 ("Use internal to the carrier's facility of . . . bandwidth compression techniques, . . . packet switching, error control techniques, etc. that facilitate economical, reliable movement of  {O~-information does not alter the nature of the basic service."); see generally, Report to Congress on Universal  {OH-Service, at  41. So long as the user sees no protocol conversion on the service level, it is irrelevant whether  {O-protocol processing takes place internal to the call. See NonAccounting Safeguards Order, 11 FCC Rcd at  {O-21958,  106; see also Computer III Phase II Order, 2 FCC Rcd at 308182,  6471 (1987). xDSL and packet switching are simply"9,-(-(ZZ" transmission technologies. To the extent that an advanced service does no more than transport information of the user's choosing between or among userspecified points, without change in the form or content of the information as sent and received, it is "telecommunications," as defined by the Act. Moreover, to the extent that such a service is  X-offered for a fee directly to the public, it is a "telecommunications service."R:- {O -ԍSee 47 U.S.C.  153(46).R  Xv-#36.TELECOMEND` ` Incumbent LECs have proposed, and are currently offering, a variety of services in which they use xDSL technology and packet switching to provide members of the public with a transparent, unenhanced, transmission path. Neither the petitioners, nor any commenter, disagree with our conclusion that a carrier offering such a service is offering a  X -"telecommunications service."; 8 - {O-ԍSee, e.g., CIX Comments (CC Docket No. 9811) at 13, 15; AT&T Reply Comments (CC Docket Nos. 9811, 9826, 9832) at 11. An enduser may utilize a telecommunications service together with an information service, as in the case of Internet access. In such a case, however, we treat the two services separately: the first service is a telecommunications  X -service (e.g., the xDSLenabled transmission path), and the second service is an information  X -service, in this case Internet access.< - {O-ԍSee Frame Relay Order, 10 FCC Rcd at 1372223,  4046; Report to Congress on Universal Service, at  60; CIX Comments (CC Docket No. 9811) at 15.  X-$37.` ` We note that, pursuant to the Commission's Computer Inquiry and Open  X}-Network Architecture (ONA) proceedings, BOCs are permitted to offer information services on  Xh-either an integrated basis, i.e. through the regulated telephone company, or through a separate affiliate. The BOCs are obligated, however, to unbundle and make available to competing information service providers (ISPs): (1) the network services that underlie the BOCs' own  X%-information services (pursuant to the Computer Inquiry proceedings); and (2) additional network services that the BOCs do not use in their information service offerings (pursuant to  X-ONA).=- {O%-ԍWe also note that GTE is subject to ONA. See Application of Open Network Architecture and  {O`&-Nondiscrimination Safeguards to GTE Corporation, 9 FCC Rcd 4922, 4924, 493236,  3, 1624 (1994). We note that BOCs offering information services to end users of their advanced service offerings, such as xDSL, are under a continuing obligation to offer competing ISPs"H=,-(-(ZZ" nondiscriminatory access to the telecommunications services utilized by the BOC information services. In the NPRM, we seek comment on whether we should apply any similar safeguards if a BOC affiliate offers advanced services in conjunction with a BOC information  X-service.W>- {O4-ԍSee infra   COM349 .W  X-XX` `  b.Telephone Exchange Service or Exchange Access (#`  X_- ` `  (1)hh,Background  X1-%38.` ` Certain obligations under section 251 turn on whether the carrier is providing  X -"telephone exchange service" or "exchange access."?  Z- yO% -ԍThe Act defines "telephone exchange service" as: X(A) service within a telephone exchange, or within a connected system of telephone exchanges within the same exchange area operated to furnish to subscribers intercommunicating service of the character ordinarily furnished by a single exchange, and which is covered by the exchange service charge, or (B) comparable service provided through a system of switches, transmission equipment, or other facilities (or combination thereof) by which a subscriber can originate and terminate a telecommunications service.  47 U.S.C.  153(47). The Act defines "exchange access" as "the offering of access to telephone exchange  yO-services or facilities for the purpose of the origination or termination of telephone toll services." 47 U.S.C.  yO-153(16). "Telephone toll service" means "telephone service between stations in different exchange areas for which there is made a separate charge not included in contracts with subscribers for exchange service." 47  yOM-U.S.C.  153(48). Pursuant to section 251(c)(2), an incumbent LEC must provide interconnection only "for the transmission and routing of  X -telephone exchange service and exchange access."J@ - yO-ԍ47 U.S.C.  251(c)(2).J Section 251(b) applies to each "local exchange carrier"; section 153(26), in turn, defines "local exchange carrier" to include any  X -person "engaged in the provision of telephone exchange service or exchange access."TA - yO-ԍ47 U.S.C.  251(b), 153(26).T  X-&39.` ` Prior to 1996, the Communications Act defined "telephone exchange service" to include "service within a telephone exchange, or within a connected system of telephone exchanges within the same exchange area operated to furnish to subscribers intercommunicating service of the character ordinarily furnished by a single exchange and  X4-which is covered by the exchange service charge."`B42- yO%-ԍThis language is now 47 U.S.C.  153(47)(A).` In the 1996 Act, Congress expanded that definition to include "comparable service provided through a system of switches, transmission equipment, or other facilities (or combination thereof) by which a subscriber can originate and"B,-(-(ZZ"  X-terminate a telecommunications service."KC- yOy-ԍ47 U.S.C.  153(47)(B).K The Act defines "exchange access" to mean "the offering of access to telephone exchange services or facilities for the purpose of the  X-origination or termination of telephone toll services."HDX- yO-ԍ47 U.S.C.  153(16).H  X- ` `  (2)hh,Discussion  Xv-'40.EXCHANGEACCESS EXCHACC TELEXCBEG` ` We conclude that advanced services offered by incumbent LECs are either "telephone exchange service" or "exchange access." At this time, we do not decide whether, or to what extent, specific xDSLbased services offered by incumbent LECs are "telephone exchange service" as opposed to "exchange access." We note, however, that this question has been raised in other pending proceedings, and we will continue to address it on a casebycase  X -basis.E& - {O-ԍ EXCH2ACC See, e.g., GTE Telephone Operations, GTOC Tariff No. 1, GTOC Transmittal No. 1148 (GTE DSL  {Of-Solutions ADSL Service), CCB/CPD 9879 (set for investigation May 28, 1998); SBC Communications, Inc.,  {O0-Pacific Bell Telephone Company, Pacific Transmittal No. 1986, CC Docket No. 98103 (set for investigation June 28, 1998).  X -(41.` ` Nothing in the  statutory language or legislative history limits these terms to the provision of voice, or conventional circuitswitched service. Indeed, Congress in the 1996 Act expanded the scope of the "telephone exchange service" definition to include, for the first  X-time, "comparable service" provided by a telecommunications carrier.FZ- yO-ԍ47 U.S.C.  153(47)(B). This amendment in turn has modified the scope of "exchange access," which  {O-the Act defines as "the offering of access to telephone exchange services or facilities for the purpose of the  yO-origination or termination of telephone toll services." 47 U.S.C.  153(16) (emphasis added). The plain language of the statute thus refutes any attempt to tie these statutory definitions to a particular  Xb-technology.G b - {O -ԍSee Comments of Senators Stevens and Burns, FederalState Joint Board on Universal Service, CC Docket No. 9645 (Report to Congress) (filed Jan. 26, 1998), at 2, n.1: X[The 1996 amendment] would not have been necessary had Congress intended to limit telephone exchange service to traditional voice telephony. The new definition was intended to ensure that the definition of local exchange carrier, which hinges in large part on the definition of telephone exchange service, was not made useless by the replacement of circuit switched technology with other means for example packet switches or computer intranets of communicating information within a local area.  Consequently, we reject U S WEST's contention that those terms refer only to"bG,-(-(ZZJ" local circuitswitched voice telephone service or close substitutes, and the provision of access  X-to such services.H\- {Ob-ԍSee U S WEST Comments (CC Docket No. 9878) at 1517; see also U S WEST Reply Comments (CC  {O,-Docket No. 9826) at 1920; see also NTIA July 17 Ex Parte at 7, n.22 ("neither [section 251(c)] nor its legislative history suggests that its requirements apply only to an ILECs' circuitswitched facilities and services").  X-)42.` ` We note that in a typical xDSL service architecture, the incumbent LEC uses a DSLAM to direct the enduser's data traffic into a packetswitched network, and across that packetswitched network to a terminating point selected by the enduser. Every enduser's traffic is routed onto the same packetswitched network, and there is no technical barrier to any enduser establishing a connection with any customer located on that network (or, indeed,  XH-on any network connected to that network).tI@H- yO -ԍSubscribers typically set up what are termed "permanent virtual connections" in routing their traffic across a packetswitched network. Such a connection, which gives the end user an "alwayson" connection over a preset physical path, is easier to provision than a "switched virtual circuit," in which the connection path is determined on a callbycall basis. A "permanent virtual connection," however, is not so "permanent" as the term would suggest. Any subscriber located on a packetswitched network can request the establishment of a permanent virtual connection connecting its own computers with those of any other subscriber. Indeed, it appears that customers can easily create and tear down different permanent virtual connections to different destinations on the network, giving them a degree of "switched" functionality.t We see nothing in this service architecture mandating a conclusion that advanced services offered by incumbent LECs fall outside of the "telephone exchange service" or "exchange access" definitions set forth in the Act.  X -*43.TELEXCEND` ` U S WEST's reliance on the fact that the Commission in the Local Competition  X -Order noted that CMRS carriers "provide local, twoway switched voice service," as part of the analysis leading to its conclusion that such carriers provide telephone exchange service, is  X -misplaced.pJ - {OP-ԍSee U S WEST Comments (CC Docket No. 9878) at 16 & n.16.p The Commission nowhere suggested that twoway voice service is a necessary  X-component of telephone exchange service.sK - {O-ԍSee Local Competition Order, 11 FCC Rcd at 15999,  1013.s It certainly did not suggest that twoway voice service is a necessary component of exchange access.  XQ-+44.` ` We also reject U S WEST's contention that it is not subject to section 251(c) for its provision of advanced services because such services are neither "telephone exchange  X#-services" nor "exchange access services."L#- {O"-ԍSee U S WEST Petition at 45, n.24; U S WEST Comments (CC Docket Nos. 9811, 9832) at 7; U S WEST Reply Comments (CC Docket No. 9826) at 1820. To the extent that it offers advanced services, U S WEST contends, it is not acting as a "local exchange carrier" or "incumbent local exchange carrier," and the obligations imposed by section 251(c) on incumbent local exchange carriers do not apply. Because we have determined that advanced services offered by incumbent  X-LECs are telephone exchange service or exchange access, we need not and do not address the"rL,-(-(ZZ" section 251(c) obligations of an incumbent local exchange carrier offering services other than  X-telephone exchange service or exchange access.vM- {Ob-ԍSee supra  TELEXCBEG40שTELEXCEND43.v .J:\POLICY\706\ORDER\SUBDOCS\DEFINS.ORD.  X- /J:\POLICY\706\ORDER\SUBDOCS\ALTSPET.ORD/ _ ` ` 3. Interconnection  X-` `  a.Background  X_-` ` ,45. Section 251(a) of the Act requires all "telecommunications carriers" to "interconnect directly or indirectly with the facilities and equipment of other _telecommunications carriers." Section 251(c)(2) imposes interconnection obligations on incumbent LECs for purposes of transmitting and routing telephone exchange or exchange access traffic.  X -XX` `  b.Discussion (#`  X --46.` ` We agree with ALTS that the interconnection obligations of section 251 of the Act apply equally to facilities and equipment used to provide data transport functionality and  Xy-voice functionality.3NyZ- {O-ԍALTS Petition at 1214; see also Level 3 Comments (CC Docket No. 9878) at 4; MCI Comments (CC Docket No. 9878) at 2; NEXTLINK Comments (CC Docket No. 9878) at 1314; Teleport Comments (CC Docket Nos. 9811, 9826, 9832) at 10; TRA Comments (CC Docket No. 9878) at 2; WorldCom Comments  {O-(CC Docket No. 9878) at 2; LCI Comments (CC Docket No. 9878) at 6, 8. But see, e.g., SBC Comments (CC Docket No. 9878) at 1921; USTA Comments (CC Docket No. 9878) at 2, 47. 3 Because advanced services that provide members of the public with a transparent, unenhanced transmission path are telecommunications services, all carriers offering such services are subject to the requirements of section 251(a), including the interconnection obligation set out in section 251(a)(1). In addition, because such services offered by an incumbent LEC are either "telephone exchange services" or "exchange access," the incumbent LEC is subject to the interconnection obligations of section 251(c). Thus, any telecommunications carrier in need of interconnection with an incumbent LEC network "for purposes of transmitting and routing telephone exchange traffic or exchange access traffic or  X-both" is entitled to interconnection pursuant to section 251(c)(2) of the Act.nO- {O-ԍLocal Competition Order, 11 FCC Rcd at 15594,  184.n  X-.47.` ` For purposes of determining the interconnection obligation of carriers, the Act  X|-does not draw a regulatory distinction between voice and data services.vP|- {O#-ԍSee supra  TELEXCBEG40שTELEXCEND43.v In particular, the  Xe-Commission drew no such distinction in the Local Competition Order, when it required incumbent LECs to offer interconnection with competitors for the transmission and routing of"P2 P,-(-(ZZ*!" telephone exchange and exchange access traffic. Thus, the interconnection obligations of incumbent LECs apply to packetswitched as well as circuitswitched services.  X-/48.` ` The ability of competitive LECs to interconnect with incumbent LEC data networks "will permit all carriers, including small entities and small incumbent LECs, to plan regional or national networks using the same interconnection points in similar networks  Xv-nationwide."nQv- {O-ԍLocal Competition Order, 11 FCC Rcd at 15592,  179.n Our rules make it possible for competing telecommunications providers to offer seamless service to endusers by interconnecting with incumbents' networks. We therefore grant the ALTS request that we declare that the interconnection obligations of sections 251(a) and 251(c)(2) apply to incumbents' packetswitched telecommunications networks and the telecommunications services offered over them.  X -049.` ` We reject BellSouth's argument that Congress intended that section 251(c) not  X -apply to new technology not yet deployed in 1996.|R Z- {O-ԍSee BellSouth Comments (CC Docket Nos. 9811, 9826, 9832) at 1011.| Nothing in the statute or legislative history indicates that it was intended to apply only to existing technology. Moreover,  X -Congress was well aware of the Internet and packetswitched services in 1996,YSZ - yOD-ԍFor example, Congress in the 1996 Act favored "the continued development of the Internet," which the Act defines as "the international computer network of . . . interoperable packetswitched data services." 47  {O-U.S.C.  230(b)(1), (e)(1); see also 47 U.S.C.  223.Y and the  X-statutory terms do not include any exemption for those services.T- {OO-ԍSee, e.g., WorldCom Comments (CC Docket Nos. 9811, 9826, 9832) at 30.  Xb- ` ` 4. Unbundled Network Elements  X4-XX` `  a.Background (#`  X-150.` ` We next consider the unbundling obligations of section 251(c)(3). Section 251(c)(3) requires incumbent LECs to "provide, to any requesting telecommunications carrier for the provision of a telecommunications service, nondiscriminatory access to network elements on an unbundled basis at any technically feasible point on rates, terms, and  X-conditions that are just, reasonable, and nondiscriminatory . . . ."U- {O!-ԍ47 U.S.C.  251(c)(3); see also Local Competition Order, 11 FCC Rcd at 15640,  278. Section 153(29) defines "network element" to include any "facility or equipment used in the provision of a telecommunications service" along with the "features, functions, and capabilities that are  Xe-provided by means of such facility or equipment."Ve2 - {OH&-ԍ47 U.S.C.  153(29); see also Local Competition Order, 11 FCC Rcd at 1562734,  24964. The Commission noted in the Local  XP-Competition Order, however, that section 251(d)(2) gave it authority "to refrain from"P V,-(-(ZZ" requiring incumbent LECs to provide all network elements for which it is technically feasible  X-to provide access."nW- {Ob-ԍLocal Competition Order, 11 FCC Rcd at 15641,  279.n In considering whether to refrain from requiring the unbundling of a particular network element, the Commission is to weigh the standards set out in section 251(d)(2), as well as any other standards the Commission considers consistent with the  X-objectives of the 1996 Act.MXZ- yO-ԍ47 U.S.C.  251(d).M  Xv-251.` ` So as to "promote efficient, rapid, and widespread new entry,"tYv- {O -ԍLocal Competition Order, 11 FCC Rcd at 15624,  241.t the Commission identified a minimum list of seven network elements that incumbent LECs must  XH-make available to new entrants.NZH|- {Ou-ԍId. at 15683,  366.N The Commission did not identify DSLAMs or packet switches as network elements that incumbent LECs must unbundle. It emphasized, however, that its list was a minimum one, because an exhaustive list would not accommodate changes  X -in technology or differing local conditions.Q[ - {O-ԍId. at 1562425,  243.Q Further, the Commission noted that it might  X -identify "additional, or perhaps different" unbundling requirements in the future.N\ - {O=-ԍId. at 15626,  246.N  X -XX` `  b.Discussion (#`  X-` `  (1)hh,Loops  Xb-352. DSLCAP ALTSLOOPS` ` We grant the ALTS request for a declaratory ruling that incumbent LECs are required, pursuant to section 251(c)(3) of the Act, to provide unbundled loops capable of  X4-transporting high speed digital signals.i]"42 - {O-ԍALTS Petition at 13; see also, e.spire Comments (CC Docket No. 9878) at 5, LCI Reply Comments (CC Docket No. 9878) at 67, MCI Comments (CC Docket No. 9878) at 23, NEXTLINK Comments (CC Docket No. 9878) at 5, 89, WorldCom Comments (CC Docket No. 9878) at 11, NAS Comments (CC Docket No. 9878) at 2.i ALTS asserts that competitive LECs are having  X-extreme difficulty obtaining the digital loops needed to provide advanced services.D^- yO"-ԍALTS Petition at 3.D We agree with ALTS that, if we are to promote the deployment of advanced telecommunications"^,-(-(ZZF" capability to all Americans, competitive LECs must be able to obtain access to incumbent  X-LEC xDSLcapable loops on an unbundled and nondiscriminatory basis._ - {Ob-ԍSee, e.g., NEXTLINK Comments (CC Docket No. 9878) at 5 (Commission should clarify that for essential network elements (including the unbundled loop), incumbent LECs have a continuing obligation to provide nondiscriminatory access to such facilities for the provision of any telecommunications service); NAS Comments (CC Docket No. 9878) at 2 (Commission should reaffirm that incumbent LECs must offer xDSLcapable loops as unbundled network elements); TCG Comments (CC Docket No. 9878) at 46 (the ability of an xDSL loop to carry high speed data is an "embedded feature" functionally inseparable from the physical xDSL {O-conditioned copper loop, which is expressly an unbundled network element under the Local Competition Order); TRA Comments (CC Docket No. 9878) at 7 (competitive LECs must have unbundled access to the network elements necessary to provide advanced telecommunications services).  X- 453.` ` In the Local Competition Order, the Commission identified the local loop as a  X-network element that incumbent LECs must unbundle "at any technically feasible point."t`- {O -ԍLocal Competition Order, 11 FCC Rcd at 15690,  379.t It defined the local loop to include "twowire and fourwire loops that are conditioned to transmit the digital signals needed to provide services such as ISDN, ADSL, HDSL, and DS1 Xa-level signals."Taa. - {O@-ԍId. at 15691,  380.T To the extent technically feasible, incumbent LECs must "take affirmative steps to condition existing loop facilities to enable requesting carriers to provide services not  X3-currently provided over such facilities."b3 - {O-ԍId. at 15692,  382. The requesting carrier bears the cost of such conditioning. Id.Ĝ For example, if a carrier requests an unbundled loop for the provision of ADSL service, and specifies that it requires a loop free of loading  X -coils, bridged taps, and other electronic impediment %c s %c , the incumbent must condition the loop to those specifications, subject only to considerations of technical feasibility. The incumbent may not deny such a request on the ground that it does not itself offer advanced services over the loop, or that other advanced services that the competitive LEC does not intend to offer  X -could be provided over the loop. As the Commission stated in the Local Competition Order, "section 251(c)(3) does not limit the types of telecommunications services that competitors  X}-may provide over unbundled elements to those offered by the incumbent LEC."Wc}R - {O-ԍId. at 1569192,  381.W  XO-554. RTCAP ` ` The incumbent LECs' obligation to provide requesting carriers with fully functional conditioned loops extends to loops provisioned through remote concentration  X!-devices such as digital loop carriers (DLC). The Commission concluded in the Local  X -Competition Order that it was "technically feasible" to unbundle loops that pass through an integrated DLC or similar remote concentration devices, and required incumbent LECs to  X-unbundle such loops for competitive LECs.Td- {Ou&-ԍId. at 15692,  383.T "vd,-(-(ZZ"Ԍ X-655. ROCKET ` ` To the extent that a competitive LEC cannot obtain nondiscriminatory access to an xDSLcapable loop, or any other loop capabilities to which it is entitled by virtue of  X-section 251(c)(3) and the Local Competition Order, the competitive LEC can pursue remedies before the Commission and the appropriate state commissions. We note that the Commission has recently adopted an expedited complaint process to resolve these types of competitive  X-issues in an accelerated fashion.7e\- {O-ԍImplementation of the Telecommunications Act of 1996 Amendment of Rules Governing Procedures to  {O-be Followed When Formal Complaints are Filed Against Common Carriers, CC Docket No. 96238, Second Report and Order, (rel. July 14, 1998).7  Xa-756.` ` Under our existing rules, incumbent LECs are also required to provide competing carriers with nondiscriminatory access to the operations support systems (OSS)  X3-functions for preordering, ordering, and provisioning loops.zf3- {O -ԍLocal Competition Order, 11 FCC Rcd at 15766,  523.z If new entrants are to have a meaningful opportunity to compete, they must be able to determine during the preordering process as quickly and efficiently as can the incumbent, whether or not a loop is capable of  X -supporting xDSLbased services.g ~- {O-ԍSee id. at 1576364,  518. The Commission's rules define preordering and ordering collectively as "the exchange of information between telecommunications carriers about current or proposed customer products and services or unbundled network elements or some combination thereof." 47 C.F.R.  51.5. Preordering generally includes those activities that a carrier undertakes to gather and confirm the information necessary to formulate an accurate order for a customer.  An incumbent LEC does not meet the nondiscrimination requirement if it has the capability electronically to identify xDSLcapable loops, either on an individual basis or for an entire central office, while competing providers are relegated to a slower and more cumbersome process to obtain that information. In the NPRM below, we seek comment on whether we should adopt any additional rules to ensure that competing providers have nondiscriminatory access to the loop information they need to provide  Xd-advanced services.shd0 - {OE-ԍSee infra  OSSBEG157שLOOPSJDO72.s  X6-` `   (2)hh,Other Network Elements  X-857.251(D)(2)BEGALTSNETELEMS` ` We further grant ALTS' petition to the extent that ALTS requests a declaratory ruling that advanced services are telecommunications services, and that the facilities and equipment used to provide advanced services are network elements subject to the obligations  X-in section 251(c).ni - {O6$-ԍALTS petition at 1417; NTIA July 17 Ex Parte at n.34. n Given our conclusion above that advanced services offered by incumbent"T i,-(-(ZZq" LECs are telecommunications services, all equipment and facilities used in the provision of  X-advanced services are "network elements" as defined by section 153(29).OjX- yOb-ԍThe term "network element" is defined in the Act as "a facility or equipment used in the provision of a telecommunications service. Such term also includes features, functions and capabilities that are provided by means of such facility or equipment . . . ." 47 U.S.C.  153(29). O  X-958. SUBJECT  LIZ8  LIZ1 251(D)(2)ENDPACKSWITCH` ` We seek comment in the NPRM below on the specific unbundling obligations  X-that would apply to the network elements used to provide advanced services.Zk- {O= -ԍSee infra  NPRMUNE82.Z We note, for example, that the section 251(c)(3) unbundling requirement is subject to the question of technical feasibility. We seek comment in the NPRM on whether the Commission should weigh any criteria under section 251(d)(2) other than those expressly listed in that provision to determine the extent to which network elements used to provide advanced services should  X1-be unbundled.lZ1z- {O\-ԍSee infra   D283 . We also note that, pursuant to section 251(f)(2) of the Act, incumbent LECs "with fewer than two percent of the nation's subscriber lines installed in the aggregate nationwide" may petition state commissions for suspension or modification of the requirements in section 251(c). 47 U.S.C.  251(f)(2).  X - ` ` 5. Resale Obligations Under Section 251(c)(4)   X -` `  (a)Background  X -:59.` ` Section 251(c)(4) requires incumbent LECs to offer for resale at wholesale rates "any telecommunications service that the carrier provides at retail to subscribers who are  Xy-not telecommunications carriers."Pmy- yO-ԍ47 U.S.C.  251(c)(4).P The Commission held in the Local Competition Order  Xd-that this obligation extends to all telecommunications services, not merely voice services, that  XO-an incumbent LEC provides to subscribers who are not telecommunications carriers.nO, - {O,-ԍLocal Competition Order, 11 FCC Rcd at 1593436,  87177; see also, e.g., AT&T Reply Comments (CC Docket Nos. 9811, 9826, 9832) at 11. The Commission concluded that an incumbent LEC must establish a wholesale rate for every retail service that: (1) meets the statutory definition of a "telecommunications service," and (2) is  X -provided at retail to subscribers who are not telecommunications carriers.no  - {OA"-ԍLocal Competition Order, 11 FCC Rcd at 15934,  871.n The Commission concluded, however, that exchange access services are generally offered to telecommunications carriers rather than retail subscribers, and thus were not subject to the  X-provisions of section 251(c)(4).Zp- {O&-ԍId. at 15934,  873.Z"p,-(-(ZZ"Ԍ X-ԙ` `  (b)Discussion  X-;60.RESALEORDER` ` Given our determination above that advanced services offered by incumbent LECs are telecommunications services, by the plain terms of the Act, incumbent LECs have the obligation to offer for resale, pursuant to section 251(c)(4), all advanced services that they generally provide to subscribers who are not telecommunications carriers. The Commission in  Xv-the Local Competition Order similarly emphasized that the resale obligation extends to all  Xa-such telecommunications services, including advanced services.qa- {O-ԍId. at 15930, 15931, 15934,  863, 86566, 871; see, e.g., AT&T Reply Comments (CC Docket Nos. 9811, 9826, 9832) at 11.  X3-<61.` ` To the extent that advanced services are local exchange services, they are  X -subject to the resale provisions of section 251(c)(4). In the Local Competition Order, however, the Commission concluded that exchange access services are not subject to the provisions of section 251(c)(4) because "[t]he vast majority of purchasers of interstate access  X -services are telecommunications carriers, not end users."nr "- {O-ԍLocal Competition Order, 11 FCC Rcd at 15934,  873.n To the extent that advanced services are exchange access services, we believe that advanced services are fundamentally  X -different from the exchange access services that the Commission referenced in the Local  X-Competition Order and concluded were not subject to section 251(c)(4).s- yO-ԍIn the Order, we do not decide whether or to what extent advanced services are "exchange access"  {O-services rather than local exchange services. See supra  EXCHANGEACCESS40. We expect that advanced services will be offered predominantly to residential or business users or to Internet  Xj-service providers. None of these purchasers are telecommunications carriers.tj- {O)-ԍSee Report to Congress on Universal Service, at  7382 (concluding that Internet service providers are not telecommunications carriers). We examine  XS-this issue further and propose specific requirements in the NPRM below.ZuSh - {Ol-ԍSee infra  RESALE185.Z /J:\POLICY\706\ORDER\SUBDOCS\ALTSPET.ORD/  X%- -J:\POLICY\706\ORDER\SUBDOCS\COLLO.ORD- v ` ` 6. Collocation  X-` `  a.` Background (#  X-=62.` ` In order to provide advanced services, new entrants may need to collocate equipment on the incumbent LEC's premises for interconnection and access vto network  X-elements.v - {OF%-ԍSee, e.g., Covad Comments (CC Docket Nos. 9811, 9826, 9832) at 13; DSL Access Telecommunications Alliance Comments (CC Docket Nos. 9811, 9826, 9832) at 78. Congress recognized competing providers' need for collocation in section 251(c)(6) of the Act, which requires incumbent LECs to provide "for the physical collocation"T v,-(-(ZZ" of equipment necessary for interconnection or access to unbundled network elements at the premises of the local exchange carrier, except that the carrier may provide for virtual collocation if the local exchange carrier demonstrates to the State commission that physical  X-collocation is not practical for technical reasons or because of space limitations."Jw- yO4-ԍ47 U.S.C.  251(c)(6).J In the  X-Local Competition Order, the Commission implemented specific minimum requirements to  X-implement the collocation requirements of section 251(c)(6).}xX- {O-ԍLocal Competition Order, 11 FCC Rcd at 1578215811,  555617. } The Commission adopted rules for, among other things, space allocation and exhaustion, types of equipment that could  Xa-be collocated, and LEC premises where parties could collocate equipment.:ya- {O -ԍId.:  X3->63.` ` ALTS asserts that excessive rates and unreasonably burdensome terms and  X -conditions for collocation are blocking competitive entry into data service markets..zZ |- {OI-ԍALTS Petition at 23; see also Intermedia Comments (CC Docket No. 9878) at 5 (the costs, delays, and restrictions associated with collocation are an impediment to the growth of facilitiesbased competition in local and advanced services markets).. As a result, ALTS requests that we initiate proceedings to help ensure implementation of section 251 and 252 of the Act with respect to deployment of advanced services. Among other requests, ALTS asks us to exercise our authority under section 251(c)(6) of the Act and  X -establish additional rules governing collocation arrangements.F{ - yO-ԍALTS Petition at 23.F  X-` `  b.` Discussion (#  Xd-?64.` ` We conclude that the availability of cost efficient collocation arrangements is essential for the deployment of advanced services by facilitiesbased competing providers. Given incumbent LECs' statutory duty to provide physical collocation on just, reasonable, and  X-nondiscriminatory rates, terms, and conditions,J|. - yO-ԍ47 U.S.C.  251(c)(6).J we believe that incumbent LECs have a statutory obligation to offer cost efficient and flexible collocation arrangements. In addition, we expect that incumbent LECs will fulfill their statutory collocation duty by taking steps to offer collocation arrangements that permit new entrants to provide advanced services using  X-equipment that the new entrant provides.k}Z - yO2$-ԍSeveral of the petitioners acknowledge this obligation to allow competitors to collocate the equipment  {O$-necessary to provide advanced services. See SBC Petition at 2021; U S WEST Comments (CC Docket No. 9878) at 3134; Bell Atlantic Reply (CC Docket Nos. 9811, 9826, 9832) at 2627. k Such steps include offering collocation to competing providers in a manner that reduces unnecessary costs and delays for the competing"},-(-(ZZ" providers and that optimizes the amount of space available for collocation. We conclude that measures that optimize the available collocation space and that reduce costs and delays for competing providers are consistent with an incumbent LEC's obligation under both the statute and our rules. In addition, we agree with ALTS that we should build upon our current  X-physical and virtual collocation requirements adopted in the Expanded Interconnection%~P- {O-ԍSPECIALACCESSVIRTUALORDERExpanded Interconnection with Local Telephone Company Facilities, First Report and Order, 7 FCC  {O-Rcd 7369 (1992) (Special Access Order), vacated in part and remanded, Bell Atlantic Telephone Cos. v. FCC,  {O-24 F.3d 1441 (D.C. Cir. 1994) (Bell Atlantic v. FCC); First Reconsideration, 8 FCC Rcd 127 (1993); vacated in  {O{-part and remanded, Bell Atlantic v. FCC, 24 F.3d 1441; Second Reconsideration, 8 FCC Rcd 7341 (1993);  {OE -Second Report and Order, 8 FCC Rcd 7374 (1993) (Switched Transport Order), vacated in part and remanded,  {O -Bell Atlantic v. FCC, 24 F.3d 1441; Remand Order, 9 FCC Rcd 5154 (1994) (Virtual Collocation Order),  {O -remanded, Pacific Bell v. FCC, 81 F.3d 1147 (D.C. Cir. 1996), further recon. pending (collectively referred to as  {O -Expanded Interconnection). % and  X-Local Competition|- {O -ԍLocal Competition Order, 11 FCC Rcd at 1578215811,  555617.| proceedings to ensure that our rules promote, to the greatest extent possible, the rapid deployment of advanced telecommunications capability to all Americans. We, therefore, propose specific additional physical and virtual collocation requirements in the  XL-NPRM below.vLr - {Oo-ԍSee infra  COLLOBEG118שCOLLOEND150.vCOLLOSTART -J:\POLICY\706\ORDER\SUBDOCS\COLLO.ORD-  X - /J:\POLICY\706\ORDER\SUBDOCS\FORBEAR.ORD/  B.` ` Forbearance and LATA Boundary Modifications  X - ` ` 1. Background  X -@65.` ` As discussed above, sections 251(c)(3) and (4) require incumbent LECs to provide nondiscriminatory access to unbundled network elements and to offer for resale, at  X-wholesale rates, any telecommunications service the carrier provides at retail.] - {OI-ԍSee 47 U.S.C.  251(c)(3), (4).] Section 271(b)(1) provides that a BOC or BOC affiliate "may provide interLATA services originating in any of its inregion States" only "if the Commission approves the application of such  XO-company for such State under [section 271(d)(3)]."O - yO-ԍ47 U.S.C.  271(b)(1). Section 3(25) of that Act defines local access and transport area (LATA) as: X[A] contiguous geographic area  XX` `  (A) established before the date of enactment of the Telecommunications Act of 1996 by a Bell operating company such that no exchange area includes points within more than 1 metropolitan statistical area, consolidated metropolitan statistical area, or State, except as expressly permitted under the AT&T Consent Decree; or ` XX` `  (B) established or modified by a Bell operating company after such date of enactment and approved by the Commission. ` "&,-(-('"Ԍ47 U.S.C. 153(25).  XX Under section 271(d)(3), the"O X,-(-(ZZ" Commission may grant a BOC authorization to originate inregion, interLATA services only if it finds that the BOC has met the competitive checklist set forth in section 271(c)(2)(B) and  X-other statutory requirements.LX- yO-ԍ47 U.S.C.  271(d)(3). L  X-A66.` ` Section 706(a) of the 1996 Act instructs the Commission and each state commission to "encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans . . . by utilizing, in a manner consistent with  X_-the public interest, convenience, and necessity, price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other  X3-regulating methods that remove barriers to infrastructure investment."[3- yO -ԍ47 U.S.C.  157 note (emphasis added). [  X -B67.` ` Section 10 of the Communications Act requires the Commission to forbear from applying any regulation or any provision of the Communications Act to telecommunications carriers or telecommunications services, or classes thereof, if the  X -Commission determines that certain conditions are satisfied.L x- yO-ԍ47 U.S.C.  160. L Section 10(d) specifies, however, that "[e]xcept as provided in section 251(f), the Commission may not forbear from applying the requirements of section 251(c) or 271 under [section 10(a)] until it determines  X{-that those requirements have been fully implemented."G{- yO4-ԍ47 U.S.C.  160(d).G  XM-C68.` ` In their petitions, Ameritech, U S WEST, Bell Atlantic, and SBC seek regulatory relief from the application of section 251 and/or section 271 through Commission  X-forbearance from applying those sections or through LATA boundary changes.2 - yOh-ԍ We note that each petitioner seeks slightly different relief. Ameritech requests that the Commission provide section 271 relief either by exercising forbearance authority with respect to advanced data services or by  {O-establishing a single, global "data LATA" for packet switched services. See Ameritech Petition at 23 & 1214. Ameritech notes that if the Commission grants section 271 relief through forbearance, it should likewise forbear  {O -from applying section 272 requirements. Id.Ġat 3 n.4. Bell Atlantic seeks regulatory relief from the requirements of section 271 through, among other things, forbearance pursuant to section 706, and relief from LATA  {O"-boundaries, with "one large access area." See Bell Atlantic Petition at 1012. U S WEST and SBC argue that the Commission should forbear from applying the unbundling requirements of section 251(c)(3) and the resale requirements of section 251(c)(4) to noncircuitswitched data services and facilities and to the provision of  {Ov$-ADSL, respectively. See US WEST Petition at 4445; SBC Petition at 2528. US WEST requests, in addition, that the Commission permit it to carry data across current LATA boundaries either by lifting the ban on such  {O&-carriage in section 271 or by redefining LATA boundaries. See US WEST Petition at 4244. SBC does not seek relief from section 271, either through forbearance or modification of LATA boundaries. SBC, however,"&,-(-(O'" requests forbearance from dominant carrier regulation for provision of ADSL as well as from the obligations of  {OX-section 252(i). See SBC Petition at 2834. FN6 Recognizing"!",-(-(ZZ" that the Commission may not forbear from application of sections 251(c) and 271 under section 10(a) until the requirements in those sections have been fully implemented, petitioners seek forbearance pursuant to section 706(a). Petitioners contend that section 706(a) constitutes an independent grant of forbearance authority that encompasses the ability to forbear from sections 251(c) and 271. Ameritech, Bell Atlantic, and U S WEST seek regulatory relief not only to provide xDSLbased services to end users, but also to obtain  Xv-freedom to become Internet backbone providers.v"- {OI -ԍSee Ameritech Petition at 9 (stating that section 271 bars Ameritech from providing Internet backbone services); Bell Atlantic Petition at 4 (stating that Commission relief "would enable Bell Atlantic to proceed with current plans to build a regional backbone network"); U S WEST Petition at 42 (urging that the Commission "carry out its mandate [under section 706] by allowing U S WEST to enter and compete in th[e] market for [I]nternet backbone services"). Ameritech and US WEST, notwithstanding their request here for LATA boundary changes, argue that this relief would  XH-not affect their compliance with section 271 for voice services.g@H- yO-ԍAmeritech argues that its proposal would not undermine the objectives of section 271 and 10(d). Ameritech asserts that it "remains committed to meeting the requirements of section 271 . . . so that it can satisfy its customers' demands for integrated packages that include circuitswitched, voicegrade, long distance services." Ameritech Reply Comments (CC Docket No. 9832) at 10. U S WEST asserts that the LATA boundary relief proposed by Ameritech would not affect LATA boundaries and associated restrictions applicable to twoway voice telephone service. U S WEST asserts further that it "has made a firm commitment that it will not use... relief [for the provision of advanced data services] to evade restrictions on the provision of voice services." U S WEST Reply Comments (CC Docket No. 9826) at 2122. g  X - ` ` 2. Discussion  X -` `  a.Forbearance  X -D69.` ` After reviewing the language of section 706(a), its legislative history, the broader statutory scheme, and Congress' policy objectives, we agree with numerous commenters that section 706(a) does not constitute an independent grant of forbearance  Xy-authority or of authority to employ other regulating methods.&y- {O -ԍSee, e.g., ACSI Comments (CC Docket Nos. 9811, 9826, 9832) at 5; AT&T Comments (CC Docket No. 9811) at 56; Cablevision Lightpath Comments (CC Docket Nos. 9811, 9826, 9832) at 8; CIX Comments (CC Docket No. 9811) at 2426; CompTel Comments (CC Docket Nos. 9811, 9826, 9832) at 1012; CPI Comments (CC Docket Nos. 9811, 9826, 9832) at 21; Electric Lightwave Comments (CC Docket Nos. 9811, 9826, 9832) at 31; Excel Comments (CC Docket Nos. 9811, 9826, 9832) at 45; Focal Communications Comments (CC Docket Nos. 9811, 9826, 9832) at 56; ITAA Comments (CC Docket No. 9811) at 5; LCI Comments (CC Docket Nos. 9811, 9826, 9832) at 18; Level 3 Communications Comments (CC Docket Nos.  yO%-9811, 9826, 9832) at 8; MCI Comments (CC Docket No. 9832) at 2425; TRA Comments (CC Docket Nos. 9811, 9826, 9832) at 56; WorldCom Comments (CC Docket Nos. 9811, 9826, 9832) at 1011, 2829;  {O'-XCOM Comments (CC Docket Nos. 9811, 9826, 9832) at 45, 1114; NTIA July 17 Ex ParteĠat 57. But see,"',-(-(w'"  {O-e.g., Ameritech Petition at 14; Bell Atlantic Petition at 1011; SBC Petition at 56; US WEST Petition at 3740.& Rather, we conclude that"y"Z,-(-(ZZ-" section 706(a) directs the Commission to use the authority granted in other provisions, including the forbearance authority under section 10(a), to encourage the deployment of advanced services.  X-E70.` ` To determine whether section 706(a) constitutes an independent grant of forbearance authority, we look first to the text of the statute. We recognize that the language of section 706 directs the Commission to encourage the deployment of advanced services "by  X_-utilizing. . . regulatory forbearance. . . ."I_Z- yOj -ԍ47 U.S.C.  157 note.I It is not clear from the text of section 706(a), however, whether Congress intended that provision to constitute an independent grant of forbearance authority, or, alternatively, a directive that the Commission use forbearance  X -authority granted elsewhere, in encouraging the deployment of advanced services. - {O-ԍCompare Chevron v. National Resources Defence Council, 467 U.S. 837, 84243 (1984).  X -F71.` ` Because the language of section 706(a) does not make clear whether section 706(a) constitutes an independent grant of forbearance authority, we look to the broader statutory scheme, its legislative history, and the underlying policy objectives to resolve the ambiguity. We examine the structure of the 1996 Act as a whole. As the courts have recognized, "[t]he literal language of a provision taken out of context cannot provide conclusive proof of congressional intent, any more than a word can have meaning without  Xb-context to illuminate its use."b|- {O-ԍSee Bell Atlantic Tel. Cos. v. FCC, 131 F.3d 1044, 1047 (D.C. Cir. 1997) (construing section 272(e)(4) of the Act). Rather, when we are "charged with understanding the relationship between two different provisions within the same statute, we must analyze the  X4-language of each to make sense of the whole.":4- {O-ԍId.:  X-G72.` ` As stated above, section 10(d) expressly forbids the Commission from forbearing from the requirements of sections 251(c) and 271 "until it determines that those  X-requirements have been fully implemented."Ih - yO -ԍ47 U.S.C.  157 note.I There is no language in section 10 that carves out an exclusion from this prohibition for actions taken pursuant to section 706.  X-H73.` ` If section 706(a) were an independent grant of authority, as the BOCs argue, - {O<%-ԍSee, e.g., Bell Atlantic Reply (CC Docket Nos. 9811, 9826, 9832) at 49; SBC Reply (RM 9244) at 19; US WEST Reply (CC Docket No. 9826) at 8. then it would allow us to forbear from applying sections 251(c) and 271 regardless of whether"|#R ,-(-(ZZP" either section were fully implemented. Sections 251(c) and 271 are cornerstones of the  X-framework Congress established in the 1996 Act to open local markets to competition.\- {Ob-ԍSee, e.g., ALTS Comments (CC Docket Nos. 9811, 9826, 9832) at 1; MCI Comments (CC Docket  yO,-No. 9832) at 13; TRA Comments (CC Docket Nos. 9811, 9826, 9832) at 7; Level 3 Communications Reply  {O-(CC Docket Nos. 9811, 9826, 9832) at 5; NTIA July 17 Ex ParteĠat 6.  The central importance of these provisions is reflected in the fact that they are the only two provisions that Congress carved out in limiting the Commission's otherwise broad forbearance authority under section 10. We find it unreasonable to conclude that Congress would have intended that section 706 allow the Commission to eviscerate those forbearance exclusions  Xv-after having expressly singled out sections 251(c) and 271 for different treatment in section  X_-10._- {O -ԍ See, e.g., ALTS Comments (CC Docket Nos. 9811, 9826, 9832) at 3 (arguing that "[t]he only way the Telecommunications Act can be interpreted as a whole is [to] make the meaning of 'forbearance' in section 706 consistent with the...limitation of the same term as used in section 10"); MCI Comments (CC Docket No. 9811) at 2122 (stating that it is hard to imagine that Congress intended section 706 to override the specific limitations on forbearance in section 10).  X1-I74.` ` We are not persuaded by Bell Atlantic's argument that a conclusion that section  X -706(a) confers no independent authority would make that section redundant.o - yOi-ԍBell Atlantic Reply (CC Docket Nos. 9811, 9826, 9832) at 5.o On the contrary, we conclude that section 706(a) gives this Commission an affirmative obligation to encourage the deployment of advanced services, relying on our authority established elsewhere in the Act. Our actions and proposals in this Order and NPRM make clear that this obligation has substance.  X-J75.` ` Furthermore, we find nothing in the legislative history of section 706 to indicate that Congress gave us independent authority in section 706(a) to forbear from provisions of the Act. Section 706 was adopted contemporaneously with the forbearance authority in section 10, with section 706 contained in section 304 of the Senate version of the Communications Act of 1996, and the forbearance authority that was later included in section  X-10 contained in section 303 of that bill.. - yO-ԍ141 Cong. Rec. H9954, H997071 (Oct. 12, 1995) (text of S. 652 as read in Senate); S.652, 104th Cong., 1st Sess. 15053 (1995) (S. 652 as passed by the Senate). Thus, when enacting section 706, Congress was well aware of the explicit exclusions of our forbearance authority in section 10(d). Congress presumably would have stated explicitly that those exclusions would not apply to forbearance under section 706 had it so intended. We are not persuaded by Ameritech's argument that the statement in the Senate Commerce Committee's Report that section 706 is intended as a "fail X-safe" indicates that Congress provided independent forbearance authority in section 706(a). - {O%-ԍAmeritech Reply (CC Docket No. 9832) at 4, citing S. Rep. No. 10423, 104th Cong., 1st Sess. 115  {O&-(1995) (1995 Senate Report). "$,-(-(ZZR" The Senate Commerce Committee's Report makes clear that section 706 "ensures that advanced telecommunications capability is promptly deployed by requiring the [Commission] to initiate and complete regular inquiries," and then take immediate action if it determines that  X-such capability is not being deployed to all Americans.Y- {O4-ԍ1995 Senate Report, supra, at 114.Y The Report does not clarify, however, whether section 706 is an independent grant of regulatory authority or directs the  X-Commission to use regulatory measures granted in other provisions of the Act.Z- {O-ԍId. at 11315. Bell Atlantic also points to a floor statement that it claims supports its view that section 706 grants independent forbearance authority. Bell Atlantic Reply (CC Docket Nos. 9811, 9826, 9832) at 7  {O* -(citing 141 Cong. Rec. S69990 (daily ed. Feb. 1, 1996). As with the statement in the Senate Commerce Committee Report, this statement does not indicate whether section 706(a) gives the Commission independent forbearance authority or whether it directs the Commission to use regulatory measures granted elsewhere in the Act to achieve the objectives stated in section 706. Even if that statement were interpreted to indicate that section 706 gives the Commission independent forbearance authority, we conclude that statements of an individual member of Congress does not overcome the other evidence discussed in this section that indicates Congress' intention that the Commission not forbear from sections 251(c) and 271 until those sections are fully  {O-implemented. See Bath Iron Works Corp. v. Office of Workers Compensation Programs, 506 U.S. 153, 166  {On-(1993); Pappas v. Buck Consultants, Inc., 923 F.2d 531, 53637 (7th Cir. 1991).   X_-K76.` ` Moreover, as a matter of policy, we believe that interpreting section 706, not as an independent grant of authority, but rather, as a direction to the Commission to use the forbearance authority granted elsewhere in the Act, will further Congress' objective of opening  X -all telecommunications markets to competition, including the market for advanced services.n - {O-ԍSee Joint Explanatory Statement, supra at 1, 113.n As discussed above, because of the central importance of the requirements in sections 251(c) and 271 to opening local markets to competition, we consider these sections to be cornerstones of the framework Congress established in the 1996 Act. We find that this conclusion that section 706 does not provide the statutory authority to forbear from sections 251(c) and 271 will better promote Congress' objectives in the Act.  Xy-L77.` ` For the foregoing reasons, we conclude that, in light of the statutory language, the framework of the 1996 Act, its legislative history, and Congress' policy objectives, the most logical statutory interpretation is that section 706 does not constitute an independent grant of authority. Rather, the better interpretation of section 706 is that it directs us to use, among other authority, our forbearance authority under section 10(a) to encourage the deployment of advanced services. Under section 10(d), we may not use that authority to forbear from applying the requirements of section 251(c) and 271 prior to their full implementation. Petitioners do not suggest that either section 251(c) or section 271 has been fully implemented, and we have no record on which to determine that either has been fully implemented. We, therefore, deny the BOC requests that we forbear from applying the requirements of sections 251(c) and 271. We seek comment in the NPRM below on whether"%T ,-(-(ZZ" there are avenues other than forbearance that might allow us to lessen the obligations of these  X-sections in appropriate circumstances.{- {Ob-ԍSee infra  PARA165X178שPARA175196.{  X- M78.` ` Ameritech also requests forbearance pursuant to section 706 from application of section 272's requirements if we grant its request to forbear from applying section 271's requirements. Because we deny that request for section 271 forbearance, we also deny Ameritech's request for section 272 forbearance.  XH-N79.` ` In addition, SBC requests forbearance, under section 10: (1) from the dominant treatment of ADSL service to the extent that treatment results in the imposition of tariff filing requirements and other obligations under the Act and under parts 61 and 69 of the  X -Commission's rules; and (2) from the obligations of section 252(i).E Z- yO-ԍSBC Petition at 56.E Section 10(a) requires us to forbear from the application of a statutory provision or regulation if we determine that  X -specific criteria are met.F - yOp-ԍ47 U.S.C. 160(a).F We conclude, on the record before us, that SBC has not demonstrated that the relief it requests pursuant to section 10 meets these criteria. In particular, to the extent that advanced services are offered by an incumbent LEC, we find, on the record before us, that it is consistent with the public interest to subject such incumbents to  Xy-full incumbent LEC regulation.Zyz- {O-ԍ47 U.S.C.  160(a)(3); see generally AT&T Comments (CC Docket No. 9811) at 17; CIEA Comments (CC Docket No. 9811) at 1718; Hyperion Comments (CC Docket No. 9811) at 10; Sprint Comments (CC Docket No. 9811) at 5. We therefore deny SBC's requests for forbearance under section 10. We note, however, that, in the NPRM below, we address the regulatory status of an advanced services affiliate that competes without any unfair advantages derived from its affiliation with the incumbent. In particular, we tentatively conclude below that such an affiliate, to the extent it provides interstate exchange access services, should, under existing Commission precedent, be presumed to be nondominant and should not be required to file  X-tariffs for its provision of any interstate services that are exchange access.e- {O<-ԍSee infra  NONDO148.e  X-` `  b.LATA Boundary Modifications  X-O80. PARA85  LATA1 ` ` As an alternative to forbearance from enforcing section 271, Ameritech, Bell Atlantic and U S WEST request that the Commission permit them to change LATA boundaries pursuant to section 3(25) of the Communications Act in order to create a large"e&. ,-(-(ZZ"ԫ X-scale "LATA" for packetswitched services.- {Oy-ԍ 47 U.S.C. 3(25). See supra n. FN6135 , for a description of the individual petitioners' requests. We decline to grant petitioners' requests for largescale changes in LATA boundaries.  X-P81.` ` Although section 3(25)(B) of the Act permits a BOC to modify LATA boundaries upon Commission approval, we conclude that petitioners' requests for largescale changes in LATA boundaries amount to more than requests for "modified" LATAs as that  Xv-term is used in section 3(25)(B).vZ- {O -ԍ47 U.S.C.  3(25)(B); see, e.g., AT&T Comments (CC Docket No. 9811) at 12; ITA Comments (CC Docket No. 9811) at 67. In MCI v. AT&T,v- {O -ԍMCI Telecommunications Corp. v. AT&T, 512 U.S. 218 (1994) (MCI v. AT&T). the Supreme Court held that the Commission's authority to "modify" portions of the Communications Act means "moderate change" and not "basic and fundamental changes in the scheme created by [the section at  X3-issue]":~3F- {O*-#X\  P6G;/P#э Id. at 225, 228 (holding that the Commission's decision to forbear from statutory tariff filing  {O-requirements exceeded the Commission's authority to modify section 203(a) of the 1934 Act); see also AT&T Comments (CC Docket No. 9811) at 1112; CIEA Comments (CC Docket No. 9811) at 2627; ITAA Comments (CC Docket No. 9811) at 67. Section 3(25)(B) appears to have been crafted to give the Commission the same authority that the district court exercised in adjusting LATA boundaries under the AT&T  {O-Consent Decree. See, e.g, Western Electric Co. v. United States, 578 F. Supp. 643 (D.C.C. 1983) (modifying LATA boundaries for mobile radio services in selected areas). : We conclude that such largescale changes in LATA boundaries for packetswitched services as proposed by petitioners would effectively eliminate LATA boundaries for  X -such services.  - yOB-ԍThe United States Court of Appeals for the District of Columbia Circuit has held that the ability of the Commission to modify a requirement does not permit the Commission to adopt a "wholesale abandonment or  {O-elimination of a requirement." MCI Telecommunications v. FCC, 765 F.2d 1186, 1192 (D.C. Cir. 1985); see also  {O-AT&T v. FCC, 978 F.2d 727, 736 (D.C. Cir. 1992), cert. denied 509 U.S. 913 (1993); ITAA Comments (CC Docket No. 9811) at 7; MCI Comments (CC Docket No. 9811) at 2829; TCG Comments (CC Docket Nos. 9811, 9826, 9832) at 59 (changing LATA boundaries as the BOCs propose would thwart Congress' objectives in section 271 and therefore are beyond the Commission's authority); WorldCom Comments (CC Docket Nos. 9811, 9826, 9832) at 29 (section 3(25) at most allows modification, not elimination, of existing LATA boundaries).  X -Q82. LATA2  PARA87 ` ` Such farreaching and unprecedented relief could effectively eviscerate section 271 and circumvent the procompetitive incentives for opening the local market to competition  X -that Congress sought to achieve in enacting section 271 of the Act." `- {O#-#X\  P6G;/P#э See, e.g., Cablevision Lightpath Comments (CC Docket No. 9811) at 9; CIEA Comments (CC Docket No. 9832) at 2425; CTA Comments (CC Docket Nos. 9811, 9826, 9832) at 1415; LCI Comments (CC Docket Nos. 9811, 9826, 9832) at 1920; Level 3 Comments (CC Docket Nos. 9811, 9826, 9832) at 8; MCI Comments (CC Docket No. 9811) at 2930; Transwire Comments (CC Docket No. 9832) at 16; WorldCom Comments ((CC Docket Nos. 9811, 9826, 9832) at 29." We conclude," ',-(-(ZZ " therefore, that the requests for largescale changes in LATA boundaries, such as Ameritech's request for a global, "data LATA," are functionally no different than petitioners' requests that we forbear from applying section 271 to their provision of these services. It would exalt form over substance if we were to grant the requested largescale changes in LATA boundaries. In the NPRM below, we seek comment on whether the Commission should, in certain  X-circumstances, modify LATA boundaries to provide targeted relief.t- {O-ԍSee infra  PARA169192שPARA175196.t /J:\POLICY\706\ORDER\SUBDOCS\FORBEAR.ORD/  X_- -J:\POLICY\706\ORDER\SUBDOCS\INTRO.NOT-  VI. NOTICE OF PROPOSED RULEMAKING ă  X1- A.` ` Introduction  X -R83.` ` In this NPRM, we propose an optional alternative pathway for incumbent LECs that would allow separate affiliates to provide advanced services free from incumbent LEC regulation. In particular, if an incumbent LEC chooses to offer advanced services through an affiliate that is truly separate from the incumbent, that affiliate would not be deemed an incumbent LEC and therefore would not be subject to incumbent LEC regulation, including the obligations under section 251(c). On the other hand, if the advanced services affiliate derives an unfair advantage from its relationship with the incumbent, that affiliate should be viewed as stepping into the shoes of the incumbent LEC and would be subject to all the requirements that Congress established for incumbent LECs. We propose in this NPRM specific structural separation and nondiscrimination requirements that we would require be in place in order for an affiliate to be deemed a nonincumbent LEC, and thus not subject to section 251(c). We also offer guidance on various factors that the Commission should consider in determining when an advanced services affiliate would be an "assign" of the incumbent LEC, and, therefore, subject to the obligations of section 251(c).  X-S84.` ` In this NPRM, we also propose additional rule changes that would apply whether or not incumbent LECs choose to establish a separate affiliate to provide advanced  X|-services. |Z- yO-ԍAs noted above, we recognize that the corporate holding company may be the entity that would establish  {OO-the affiliate, rather than the incumbent LEC per se. See supra n. ESTAB17 .  We propose rules to ensure that all entities seeking to offer advanced services have adequate access to collocation and loops, which is critical to promote competition in the marketplace for advanced services. We then seek comment on ways to modify the section 251(c) unbundling requirements, once companies are in compliance with the rule changes we propose regarding collocation and access to loops. Finally, we seek comment on measures that would provide BOCs with targeted interLATA relief to ensure that all consumers, even those in rural areas, are able to reap the benefits of advanced telecommunications capability. -J:\POLICY\706\ORDER\SUBDOCS\INTRO.NOT-  X - .J:\POLICY\706\ORDER\SUBDOCS\SEPAFF.NOT.  B.` ` Provision of Advanced Services through a Separate Affiliate "!(,-(-(ZZi-"Ԍ X-T85.AFFILIATEBEG` ` A number of parties have raised the question of whether incumbent LECs may provide advanced services through separate affiliates that would not be subject to incumbent LEC regulation. For example, APT suggests in its petition that the Commission explore the possibility of requiring incumbent LECs to form separate subsidiaries, which would not be  X-subject to rate regulation because of their lack of market power.J- yO-ԍAPT Petition at 17.J Ameritech asks that the Commission clarify that a BOC "data affiliate" that complies with the separation requirements  Xv-in the Competitive Carrier Fifth Report and Order, as modified by the LEC Classification  Xa-Order,aX- {Oj -ԍ Competitive Carrier Fifth Report and Order, 98 F.C.C. 2d 1191; Regulatory Treatment of LEC Provision of Interexchange Services Originating in the LEC's Local Exchange Area and Policy and Rules  {O -Concerning the Interstate, Interexchange Market Place, CC Docket No. 96-149, Second Report and Order, CC  {O -Docket No. 96-61, Third Report and Order, 12 FCC Rcd 15756, 15802 (LEC Classification Order), Order on  {O -Reconsideration, 12 FCC Rcd 8730 (1997); Order, 13 FCC Rcd 6427 (Comm. Car. Bur. 1998), further recon.  {OZ-pending. Hereafter, we will refer to these requirements as the Competitive Carrier Fifth Report and Order requirements. should be deemed a nonincumbent LEC, and thus not subject to section 251(c)  XL-obligations, and nondominant in its provision of interstate advanced services._L- yO-ԍAmeritech Petition at 2227._ SBC has requested that the Commission "confirm that an affiliate of an incumbent LEC that satisfies applicable structural separation requirements is not itself an incumbent LEC for purpose of  X -section 251(c)."q 2 - {O-ԍSee SBC Comments (CC Docket No. 9811, 9826, 9832) at 4.q Rhythms Net suggests that incumbent LEC separate affiliates can be "a meaningful tool in assuring parity of treatment if the separate subsidiary is required to be a  X -[competitive LEC] that functions like any other [competitive LEC] . . . ."3Z - yON-ԍLetter from Jeffrey Blumenfeld, Rhythms Net, to Kathryn C. Brown, Chief, Common Carrier Bureau, Federal Communications Commission, CC Docket Nos. 9811, 9826, 9832, 9891, at 1 (filed July 24, 1998)  {O-(Rhythms Net July 24 Ex Parte).3 The Commission also explored the separate affiliate issue with many industry representatives during an en banc  X -hearing on bandwidth issues. - {OB-ԍSee, e.g., Statement of Chuck McMinn, Chairman of the Board, Covad Communications Company, before the Federal Communications Commission, En Banc Hearing on Bandwidth, July 9, 1998, at 2 (stating that, "if [incumbent LECs] wish to provide DSL services inregion, they should be required to provide these services through a separate entity . . . [that] would have to obtain the inputs essential to provide DSL service in exactly the same manner as Covad or any other competitor.").  X}-U86.` ` We are committed to ensuring that an optional alternative pathway is available for incumbent LECs that are willing to offer advanced services on the same footing as any of their competitors. As described more fully below, we believe that, if advanced services are offered by an affiliate that is truly separate from the incumbent LEC (an "advanced services affiliate"), that affiliate should not be deemed an incumbent LEC and, therefore, should not be"!),-(-(ZZ)" subject to the incumbent LEC regime established by Congress in section 251(c). In addition, we tentatively conclude below that such an advanced services affiliate, to the extent it provides interstate exchange access services, should, under existing Commission precedent, be presumed to be nondominant (and, therefore, not be subject to price cap regulation or rate of return regulation for its provision of such services). We also tentatively conclude below that such an affiliate, as a nonincumbent, also should not be required to file tariffs for its provision of any interstate services that are exchange access. We emphasize that we are not proposing that incumbent LECs be required to establish affiliates to provide advanced services. Any incumbent LEC is free to provide advanced services on an integrated basis, but, in those circumstances, is subject to section 251(c) requirements. Simply put, each incumbent LEC seeking to provide advanced services must make a business decision as to whether it wishes to provide such services free of section 251(c) requirements.  X -V87.` ` In this NPRM we lay out a framework that will guide incumbent LECs that choose to pursue this alternative. The proposals in this NPRM are based on the underlying assumption that, to be free of incumbent LEC regulation, an advanced services affiliate must function just like any other competitive LEC and not derive unfair advantages from the incumbent LEC.  XK-W88.` ` We recognize that many states have significant practical experience in dealing with LEC affiliates in a variety of contexts. We therefore welcome input from the states on each of the issues raised below regarding provision of advanced services through a separate affiliate.  X-` ` 1. Background  X-X89.` ` The obligations set out in section 251(c) of the Act are imposed only on  X-incumbent LECs.H- yO -ԍ47 U.S.C.  251(c). H In the NonAccounting Safeguards Order, the Commission concluded that a BOC affiliate that satisfies appropriate structural separation requirements is not deemed an incumbent LEC for purposes of section 251 merely because it is engaged in local exchange  XP-activities.PX- {OY-ԍSee NonAccounting Safeguards Order, 11 FCC Rcd at 22055,  312. Consistent with the reasoning in the Non-Accounting Safeguards Order, a determination as to whether a carrier is an incumbent LEC is not based on the nature of the service the carrier provides. Rather, in order to be deemed an incumbent LEC, a carrier must meet the definition in section 251(h).  X-Y90.` ` Section 251(h)(1), in turn, defines an incumbent LEC as either a member of NECA as of the date of the enactment of the 1996 Act, or a "successor or assign" of such a  X!-member.J!- yOJ'-ԍ47 U.S.C.  251(h)(1).J When applying the definition in section 251(h)(1)(B)(i) to separate affiliates in"!*z,-(-(ZZ "  X-the NonAccounting Safeguards Order, the Commission concluded that "[n]o BOC affiliate  X-was a member of NECA when the 1996 Act was enacted."|- {Od-ԍNonAccounting Safeguards Order, 11 FCC Rcd at 2205522056,  312.| The Commission determined that an affiliate can, however, be a "successor or assign" of a BOC. The Commission concluded that, if a BOC transfers to its affiliate ownership of any network elements that must be provided on an unbundled basis pursuant to section 251(c)(3), the affiliate would be deemed an assign of the BOC under section 3(4) of the Act with respect to those network  Xx-elements.xZ- {O -ԍSee id., 11 FCC Rcd at 22054,  309; see also 47 C.F.R.  53.207.  XJ-Z91.` ` In addition, we note that the Commission, under section 251(h)(2), may, by rule, treat as an incumbent a LEC (or a class or category of LECs) that occupies a position in the market for telephone exchange service within an area that is comparable to the position occupied by the incumbent LEC, and such carrier has substantially replaced an incumbent  X -LEC. - {O-ԍ47 U.S.C.  251(h)(2); NonAccounting Safeguards Order, 11 FCC Rcd at 22060,  321. The Commission stated in the Local Competition Order that it "will not impose incumbent LEC obligations on nonincumbent LECs absent a clear and convincing showing that the LEC occupies a position in the telephone exchange market comparable to the position held by an incumbent LEC, has substantially replaced an incumbent LEC, and that such treatment would serve the public interest, convenience, and necessity and the purposes of  X}-section 251."#}~- {O-ԍLocal Competition Order, 11 FCC Rcd at 16110,  1248, citing 47 U.S.C.  251(h)(2). The Commission recently adopted a rule treating Guam Telephone Authority (GTA) as an incumbent LEC for  {O>-purposes of section 251. See Treatment of Guam Telephone Authority and Similarly Situated Carriers as  {O-Incumbent Local Exchange Carriers under Section 251(h)(2) of the Communications Act, CC Docket No. 97134, Report and Order, FCC 98163 (rel. Jul. 20, 1998). The Competitive Telecommunications Association recently filed a petition asking the Commission to issue a declaratory ruling determining that certain affiliates of incumbent LECs should be treated as "successors or assigns" of the incumbent LECs. CompTel asks, in the  {O*-alternative, that the Commission initiate a rulemaking under section 251(h)(2). See Commission Seeks Comment  {O-on Petition Regarding Regulatory Treatment of Affiliates of ILECs, CC Docket No. 9839, Public Notice, 13 FCC Rcd 6669 (1998). We do not address CompTel's petition in this proceeding, although we seek comment on certain issues raised by CompTel as they relate to the provision of advanced services by an affiliate.# In the NonAccounting Safeguards Order, the Commission determined that a  Xh-BOC affiliate is not "comparable" to an incumbent LEC under section 251(h)(2) merely  XQ-because it is engaged in local exchange activities.|Q- {O!-ԍNonAccounting Safeguards Order, 11 FCC Rcd at 2205522056,  312.|  X#-` ` 2. Advanced Services Affiliates  X-[92.` ` Building upon the reasoning in this existing precedent, we believe that an advanced services affiliate of an incumbent LEC that (1) satisfies adequate structural  X-separation requirements (i.e, is "truly" separate); and (2) acquires, on its own, facilities used"+z,-(-(ZZ" to provide advanced services (or leases such facilities from an unaffiliated entity) is generally not an incumbent LEC, and, therefore, is not subject to section 251(c) obligations with respect to those facilities. We also note that, although we believe an advanced services affiliate that is structured in accordance with rules we adopt in this proceeding would not be an incumbent LEC, the affiliate would remain subject to the general duties of telecommunications carriers in  X-section 251(a)G- yO-ԍ47 U.S.C.  251(a).G and the obligations of all local exchange carriers in section 251(b).[X- yO-ЍSection 251(b) imposes on each local exchange carrier the following duties: XOBLIGATIONS OF ALL LOCAL EXCHANGE CARRIERS.--Each local exchange carrier has the following duties: (1) RESALE.--The duty not to prohibit, and not to impose unreasonable or discriminatory conditions or limitations on, the resale of its telecommunications services. (2) NUMBER PORTABILITY.--The duty to provide, to the extent technically feasible, number portability in accordance with requirements prescribed by the Commission. (3) DIALING PARITY.--The duty to provide dialing parity to competing providers of telephone exchange service and telephone toll service, and the duty to permit all such providers to have nondiscriminatory access to telephone numbers, operator services, directory assistance, and directory listing, with no unreasonable dialing delays. (4) ACCESS TO RIGHTS-OF-WAY.--The duty to afford access to the poles, ducts, conduits, and rights-of-way of such carrier to competing providers of telecommunications services on rates, terms, and conditions that are consistent with section 224. (5) RECIPROCAL COMPENSATION.--The duty to establish reciprocal compensation arrangements for the transport and termination of telecommunications.   yO-47 U.S.C.  251 (b).[ Thus, for example, under section 251(a)(1), such an affiliate must "interconnect directly or indirectly  X_-with the facilities and equipment of other telecommunications carriers."$_0- {O@-ԍ47 U.S.C.  251(a)(1). Moreover, we note that in the Local Competition Order, the Commission stated that "unlike section 251(c), which applies to incumbent LECs, section 251(a) interconnection applies to all  {O-telecommunications carriers including those with no market power." Local Competition Order, 11 FCC Rcd at 15991,  997.  X1- \93.` ` In describing what we believe is an alternative pathway by which a truly separate affiliate of an incumbent LEC may provide advanced services free from the obligations of section 251(c), we emphasize that we are not proposing to forbear from section 251(c) requirements. Rather, we are setting forth proposals on the circumstances under which an affiliate is not deemed an incumbent LEC in the first place.  X -]94.` ` Certain competitive LECs argue that, regardless of how a separate affiliate is structured, new entrants should be able to obtain unbundled access to all such facilities used  Xy-by the affiliate to provide advanced services.xy- {OF&-ԍSee, e.g., LCI Comments (CC Docket No. 9878) at 34.x We believe that such an interpretation violates section 251 of the Act. Under section 251(c), obligations to unbundle and to offer"b,,-(-(ZZ," resale at wholesale rates apply only to incumbent LECs, as defined in section 251(h). Accordingly, to the extent that an entity is not an "incumbent LEC" within the meaning of section 251(h), that entity will not be subject to the obligations, under section 251(c), to  X-unbundle and to offer resale at wholesale rates.- {O4-ԍSee NonAccounting Safeguards Order, 11 FCC Rcd at 22055,  312. We believe that it would be contrary to congressional intent to impose these obligations under section 251(c) upon entities that do not fall within the definition of an incumbent LEC. We seek comment on this statutory analysis and on our belief that a truly separate affiliate of an incumbent LEC may provide advanced services free from the obligations of section 251(c).  X1-` ` a. Circumstances Under Which an Advanced Services Affiliate Would Not Be an   X -XX` ` X Incumbent LEC   X -^95.` ` Separation Requirements for NonIncumbent LEC Status. We now explore the circumstances under which an advanced services affiliate would not qualify as an "incumbent LEC" under the definition set forth by Congress in section 251(h), and thus would not be subject to section 251(c) obligations. In particular, we explore what structural separation requirements for advanced services affiliates are sufficient for those affiliates to be deemed nonincumbent LECs.  X4-_96.` ` We believe that, if an incumbent LEC wishes to establish an advanced services affiliate that would not be deemed an incumbent LEC, it should comply with the following structural separation and nondiscrimination requirements.  X-` ` First, the incumbent must "operate independently" from its affiliate.`Z- {O-ԍSee id. at 21914,  15.` In particular, the incumbent and affiliate may not jointly own switching facilities  X-or the land and buildings on which such facilities are located.:- {OG-ԍId.: In addition, the incumbent may not perform operating, installation, or maintenance  X|-functions for the affiliate.X|~- {O -ԍSee id. at 21981,  158.X (#`  XN-` ` Second, transactions must be on an arm's length basis, reduced to writing, and  X7-made available for public inspection.d7- {O$-ԍSee id. at 21992,  181.d We propose that the affiliate be required to provide a detailed written description of any asset or service transferred and the terms and conditions of the transaction on the Internet," -,-(-(ZZ"  X-through the company's home page, within ten days of the transaction.B- {Oy-ԍSee Implementation of the Telecommunications Act of 1996: Accounting Safeguards Under the  {OC-Telecommunications Act of 1996, CC Docket No. 96150, 11 FCC Rcd 17539, 17593 (1996) (Accounting  {O -Safeguards Order). We note that below we seek comment on the extent to which certain transfers of assets or  {O-services may be made without resulting in the affiliate's being considered an incumbent LEC. See, infra, subpart 2(b).B This would provide a readily accessible mechanism for new entrants to ensure they are receiving treatment equivalent to that provided to the incumbent LEC's advanced services affiliate. All transactions between the incumbent and its affiliate also must comply with the affiliate transactions rules, as modified in  X-the Accounting Safeguards proceeding.j- {O -ԍSee id., 11 FCC Rcd at 17686,  108.j We believe that these affiliate transactions rules are, in the context of transfers from incumbent LECs to their advanced services affiliates, sufficient to discourage, and facilitate detection of, improper cost allocations in order to prevent incumbent LECs from imposing the costs of their competitive ventures on telephone ratepayers.(#`  X -` ` Third, the incumbent and affiliate must maintain separate books, records, and accounts. (#` X   X -` ` Fourth, the incumbent and advanced services affiliate must have separate officers, directors, and employees.(#`  X{-` ` Fifth, the affiliate must not obtain credit under any arrangement that would permit a creditor, upon default, to have recourse to the assets of the incumbent.(#`  X6-` ` Sixth, the incumbent LEC, in dealing with its advanced services affiliate may not discriminate in favor of its affiliate in the provision of any goods, services,  X-facilities or information or in the establishment of standards.J- yO-ԍ47 U.S.C.  272(c)(1).J(#`  X-` ` Seventh, an advanced services affiliate must interconnect with the incumbent LEC pursuant to tariff or pursuant to an interconnection agreement, and whatever network elements, facilities, interfaces and systems are provided by the incumbent LEC to the affiliate must also be made available to unaffiliated  X~-entities.X~- {O#-ԍSee Letter from Jim Earl, Covad Communications, to Rebecca Dorch, Office of Engineering Technology, and Marcelino FordLivene, Office of Plans and Policy, Federal Communications Commission,  yOc%-CC Docket Nos. 9811, 9826, 9832, 9878, 9891 (filed July 20, 1998) (arguing that an incumbent LEC's affiliate providing advanced services must use an existing interconnection agreement rather than one that is  {O&-unique to the affiliate) (July 20 Covad Ex Parte); NTIA July 17 Ex Parte at 11 (stating that an incumbent LEC's"&,-(-(('" affiliate providing DSL would have to negotiate an interconnection agreement in order to secure unbundled DSLcompatible loops and collocation space on the same terms and conditions as are made available to other DSL providers).(#` "~.,-(-(ZZ"ԌWe seek comment on our proposal.  X-`97.` ` To the extent commenters disagree with our reasoning, we invite them to propose specific modifications to the framework set forth above, and to describe with particularity why such modifications should be adopted. In particular, commenters should address how any proposed modification addresses concerns that incumbent LECs could improperly discriminate against competing providers, for instance, by using control over key facilities and services, in order to gain a competitive advantage for their advanced services  XH-affiliates.H- {O -ԍSee, e.g., MCI Comments (CC Docket No. 9811, 9826, 9832) at 39; CIX Comments (CC Docket No. 9878) at 45. Commenters also should address how any proposed modification addresses concerns about cost misallocation.  X -a98.` ` We seek comment on whether the same separation requirements should apply to all advanced services affiliates for them to be deemed not incumbent LECs, regardless of the size of the associated incumbent LECs. We note, for example, that section 251(f) provides exemptions from section 251(c) obligations for certain rural telephone companies and allows a local exchange carrier with fewer than 2 percent of the Nation's subscriber lines to petition a state Commission for suspension or modification of application of a particular  Xy-requirement.QyB- {Ol-ԍSee 47 U.S.C.  251(f).Q We also note that, to the extent a BOC is authorized to provide advanced services on an interLATA basis pursuant to section 271, it will be required to offer these services through an affiliate that complies with the requirements of section 272. We seek comment on whether, as a practical matter, a BOC would choose to establish two separate affiliates to provide advanced services one to provide such services on an interLATA basis and another to provide such services on an intraLATA basis if we were to adopt separation requirements less stringent than those in section 272 for advanced services affiliates.  X-b99.` ` We seek comment on whether any separation and other safeguards should sunset after a certain period of time or change in conditions. For example, with respect to the BOCs, we seek comment on whether the safeguards necessary to be deemed a nonincumbent LEC in the provision of advanced services should sunset at the same time that the statutorilymandated section 272 requirements sunset with respect to the BOCs' provision of inregion  XN-interLATA services.N N- yO$-ԍ Section 272(f)(1) provides that the provisions of section 272 (other than subsection (e)) "shall cease to apply with respect to . . . the interLATA telecommunications services of a Bell operating company 3 years after the date such Bell operating company or any Bell operating company affiliate is authorized to provide interLATA telecommunications services under section 271(d), unless the Commission extends such 3year period by rule or"+',-(-(X'"  {O-order." 47 U.S.C.  272(f)(1).N We seek comment on what other periods may be appropriate."N/Z,-(-(ZZ"Ԍ X-ԙc100. NONDO1  NON-DOM ` ` NonDominant Status. We also tentatively conclude that an advanced services  X-affiliate, to the extent it provides interstate exchange access services,Z- yO-ԍWe conclude in the Order above that advanced services offered by incumbent LECs are "telephone  {O-exchange service" or "exchange access." See supra  EXCHACC40. As previously noted, the question of whether, or to what extent, specific xDSLbased services offered by incumbent LECs are "telephone exchange service" as opposed to "exchange access" has been raised in other pending proceedings, and the Commission will continue to  {O-address this question on a casebycase basis. See supra  EXCHACC40 and n.EXCH2ACC69. should, under existing  X-Commission precedent, be presumed to be nondominant.q - {O -ԍSee 47 C.F.R.  61.3(o), 61.3(u) (defining a dominant carrier as one that possesses market power, and  {O[ -a non-dominant carrier as a carrier not found to be dominant); Hyperion Telecommunications Inc., Petition Requesting Forbearance, Time Warner Communications Petition for Forbearance, Complete Detariffing for  {O -Competitive Access Providers and Competitive Local Exchange Carriers, CCB/CPD No. 963, CCB/CPD No. 967, CC Docket No. 97146, Memorandum Opinion and Order, 12 FCC Rcd 8596, 8608, n.71 (1997)  {O-(Hyperion/Time Warner MO&O) ("our policy since the Competitive Carrier Proceeding has consistently been  yOI-that a carrier is nondominant unless the Commission makes or has made a finding that it is dominant") and  2324 (finding no demonstration that nonincumbent LEC providers of interstate exchange access services possess  {O-market power); Access Charge Reform, Price Cap Performance Review for Local Exchange Carriers, Transport  {O-Rate Structure and Pricing, End User Common Line Charges, CC Docket Nos. 96-262, 94-1, 91-213, 95-72, First Report and Order, 12 FCC Rcd 15982, 1614016141,  36063 (1997) (determining that nonincumbent  {O5-LECs should be treated as nondominant in their provision of terminating access); Local Competition Order, 11 FCC Rcd at 15981,  976 (stating that nonincumbent LECs definitionally lack the market power possessed by incumbent LECs).q Therefore, such affiliate would not be subject to price cap regulation or rate of return regulation for its provision of such  X-services. - {O)-ЍSee Policy and Rules Concerning the Interstate, Interexchange Marketplace, Implementation of Section  {O-254(g) of the Communications Act of 1934, as amended, CC Docket No. 9661, Second Report and Order, 11  {O-FCC Rcd 20730, 20746 n.29 (1996), stayed on other grounds pending review sub nom, MCI Telecommunications  {O-Corp. v. FCC, Case No. 96-1459 (D.C. Cir., Feb. 19, 1997), Order on Reconsideration, 12 FCC Rcd 15014  {OQ-(1997); Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities  {O-Authorizations Therefor, CC Docket No. 79252, First Report and Order, 85 FCC 2d 1, 3335,  97101 (1980).  {O-See also Policy and Rules Concerning Rates for Dominant Carriers, CC Docket No. 87313, Second Report and  {O-Order, 5 FCC Rcd 6786, 6818-19,  262-65 (1990), Erratum, 5 FCC Rcd 7664 (Com. Car. Bur. 1990); modified  {Oy-on recon., 6 FCC Rcd 2637 (1991); aff'd sub nom. National Rural Telecom Ass'n v. FCC, 988 F. 2d 174 (D.C.  yOC-Cir. 1993). U S WEST, while maintaining that a separate affiliate is not necessary to qualify for nondominant  {O -status, agrees with Ameritech that an affiliate complying with the requirements in the Competitive Carrier Fifth  {O -Report and Order should be classified as nondominant. See U S WEST Comments (CC Docket Nos. 9811, 98 {O!-32) at 89. But see CompTel Comments (CC Docket Nos. 9811, 9826, 9832) at 1617 (stating that grant of nondominant status to BOCs providing advanced services is inappropriate because new entrants are dependent upon BOC provisioning of local loops and other essential facilities, providing a powerful vehicle for BOCs to exercise market power in data services).  We tentatively conclude that such an affiliate, as a nonincumbent, also should"04 ,-(-(ZZ" not be required to file tariffs for its provision of any interstate services that are exchange  X-access. - {Ob-ԍSee Hyperion/Time Warner MO&O, 12 FCC Rcd at 8596,  1 (granting petitions seeking permissive detariffing for provision of interstate exchange access services by providers other than incumbent LECs).  We seek comment on these tentative conclusions.  X-d101.` ` Miscellaneous Issues. We seek comment on whether an advanced services affiliate should be limited in its ability either to resell telecommunications services offered by the incumbent LEC or to purchase unbundled network elements from the incumbent LEC. We also seek comment on whether a virtual collocation arrangement is more practical or attractive to an incumbent's affiliate than to other competitive LECs, and, therefore, creates an unfair competitive advantage for an advanced services affiliate visavis other entrants. If so, are there ways to make virtual collocation arrangements more equal?  X -e102. COM3 ` ` We also note that some incumbent LECs have formed their own information services providers. Are advanced services affiliates likely to favor such affiliated information services providers, and, if so, in what ways? We also seek comment on whether competing information services providers (such as, for example, Internet services providers) will have the  X -ability to offer service to customers of the advanced services affiliate. "- {Oz-ԍSee, e.g., Letter from George Vradenburg III, Senior Vice President and General Counsel, America Online, to Kathryn C. Brown, Chief, Common Carrier Bureau, Federal Communications Commission, CC Docket Nos. 9811, 9832, 9878, 9891, at 3 (filed July 30, 1998) (expressing concern that a data services affiliate that is not a successor or assign "would be free to afford preferential treatment to the affiliated ISP, whose operations  {O-could even be integrated into the data services affiliate"); but see Computer II Final Decision, 77 FCC 2d at 475,  yOf- 231; 47 C.F.R.  64.702(a).Ŀ Could the advanced services affiliate and the incumbent LEC act in concert to engage in a price squeeze on unaffiliated information service providers? Parties arguing that the incentive and ability for affiliates to favor affiliated information services providers should suggest means by which the  XK-Commission could address these concerns.wK- {O-ԍSee generally, NTIA July 17 Ex Parte at 1719.w  X-f103.` ` Finally, commenters should compare any anticompetitive concerns they have with the operation of an advanced services affiliate to similar concerns they may have with the offering of such services on an integrated basis by the incumbent.  X-` `  b.` Transfers from an Incumbent LEC to an Advanced Services  X-Affiliate (#  X|-g104.` ` In order not to be subject to the requirements of section 251(c), the advanced services affiliate must not be a successor or assign of the incumbent LEC. A determination"e10 ,-(-(ZZ"  X-as to whether an affiliate is a successor or assign is ultimately factbased."- {Oy-ԍSee, e.g., Howard Johnson Co, v. Detroit Local Joint Executive Board, 417 U.S. 249, n.9 (1974) (stating that determinations about successorship must be based on "the facts of each case and the particular legal obligation which is at issue" and that "there is and can be no single definition of 'successor' which is applicable in every legal context."). In order to provide clarity and regulatory certainty, we make certain proposals below regarding when we would view an affiliate as a successor or assign. We seek to establish principles to guide the conduct of firms that choose to avail themselves of this pathway. We seek comment on how particular transactions between incumbents and their advanced services affiliates should affect the regulatory status of the affiliates. Commenters should consider whether, in a particular situation, the affiliate would be functioning like any other competitive LEC, or more like an  X_-assign of the incumbent.$_- {O -ԍSee State of Connecticut, Department of Public Utility Control Investigation of the Southern New  {O -England Telephone Company Affiliate Matters Associated with the Implementation of Public Act 9483, Decision at 37 (June 25, 1997) (determining that SNET America, Inc., is not an assign of the SNET Telco under section 251(h)(1) merely because the latter planned to transfer to the former rights to provide retail services).  X1-h105.` ` Transfers of Facilities. Under existing Commission precedent, if a BOC transfers to an affiliated entity ownership of any network elements that must be provided on an unbundled basis pursuant to section 251(c)(3), such an entity would be deemed to be an  X -assign of the BOC under section 3(4) of the Act with respect to those network elements. - {O;-ԍSee NonAccounting Safeguards Order, 11 FCC Rcd at 22054,  309; 47 C.F.R.  53.207. We seek comment on whether the converse is true: should an affiliate not be deemed an assign of the incumbent LEC if the affiliate acquires facilities on its own, and not by transfer from the incumbent LEC?  Xy-i106.` ` In the Order above, we state that network elements used to provide advanced services must be unbundled pursuant to section 251(c)(3), subject to considerations of  XK-technical feasibility.`K0 - {O,-ԍSee supra  SUBJECT58.` We seek comment on the extent to which incumbent LECs already have purchased facilities used to provide advanced services, including, but not limited to  X-DSLAMs and packet switches. We tentatively conclude that, subject to any de minimis exception as discussed below, a wholesale transfer of such facilities would make an affiliate  X-the assign of the incumbent LEC.; - yOd"-ԍWe note that, to the extent facilities used to provide advanced services remain in the incumbent LEC,  {O,#-such facilities must be unbundled pursuant to section 251(c)(3) where technically feasible. See supra   LIZ158 . ;  X-j107.` ` Moreover, we tentatively conclude that any transfer of local loops from an incumbent LEC to an advanced services affiliate would make that affiliate an assign of the"2,-(-(ZZp" incumbent LEC and subject to section 251(c) with respect to those loops. We seek comment on these tentative conclusions.  X-k108.` ` We seek comment on whether there should be a de minimis exception, under which a limited transfer of equipment would not make an advanced services affiliate an assign of the incumbent LEC. We ask commenters to address with specificity what should be  Xx-deemed a "de minimis transfer of equipment." We tentatively conclude that, if we were to  Xc-adopt a de minimis exception, such an exception should apply only to transfers of facilities used specifically to provide advanced services, such as DSLAMs, packet switches, and transport facilities, and not to other network elements, such as loops. We seek comment on  X -this tentative conclusion. We also seek comment on whether a de minimis exception should apply only to transfers of equipment that the incumbent LEC purchased and installed, or whether it should apply only to equipment that the incumbent LEC has ordered but not installed.  X -l109.` ` We seek comment on whether, if we adopt a de minimis exception, there should be a time limitation on when such transfers may occur, and if so, whether six months would be an appropriate period. We also seek comment on whether there should be any difference in treatment for transfers of equipment ordered and/or installed prior to the release date of this NPRM as opposed to prior to the effective date of any rule adopted in this proceeding.  X-m110.` ` We also seek comment on whether, if we allow any transfer of ownership of equipment from the incumbent LEC to an advanced services equipment, the affiliate should have the right to leave that equipment in its current location on the incumbent's premises. We tentatively conclude that to the extent there are space limitations on the incumbent LEC's premises, either in the central office or remote terminal, an affiliate may not leave such equipment in its current location. We seek comment on this analysis.  Xo-n111.` ` We also seek comment on whether, if we allow any transfer of equipment between the incumbent LEC and the advanced services affiliate, such transfers should be exempt from the nondiscrimination requirement we propose above, for a limited time. Without such an exception from the nondiscrimination requirement, the incumbent would be required to offer such equipment on a nondiscriminatory basis to all entities. We seek comment on whether six months would be an appropriate period for such exemption. We tentatively conclude that even if we adopt such an exemption from the nondiscrimination  X -requirement, such transfers should remain subject to the affiliate transactions rules.S - {OG#-ԍSee 47 C.F.R  32.27. In the NonAccounting Safeguards Order, the Commission concluded that, if a BOC seeks to transfer to its section 272 affiliate ownership of a unique facility (such as its official services network), the BOC must ensure that the transfer takes place in a nondiscriminatory manner, and must comport  {O%-with the Commission's affiliate transactions rules. See NonAccounting Safeguards Order, 11 FCC Rcd at 22034,  {Ok&- 266, citing 47 C.F.R.  32.27(b).S We seek comment on this analysis."!3~,-(-(ZZ "Ԍ X-ԙo112.` ` In addition, we seek comment on whether there are other circumstances under which incumbent LECs should be permitted to transfer facilities to their affiliates. For example, should the transfer of a packet switch used solely for trial purposes make the advanced services affiliate an assign of the incumbent LEC with respect to that packet switch? Commenters should suggest other situations in which transfers of network elements from an incumbent LEC to its advanced services affiliate should not render the affiliate an incumbent LEC.  XH-p113.` ` Other Transfers. Incumbent LECs also may seek to transfer to their advanced services affiliates assets other than network elements. In order to provide clarity and regulatory certainty, we ask commenters to provide examples of what types of transfers an incumbent LEC may wish to make to its advanced services affiliate and whether these transfers should make advanced services affiliates assigns of incumbent LECs. Commenters should consider, among other things, transfers of customer accounts, employees, and brand  X -names.$ - {O7-ԍSee Letter from Russell Frisby, President, Competitive Telecommunications Association, and Heather Burnett Gold, President, Association for Local Telecommunications Services, to William E. Kennard, Chairman, Federal Communications Commission, CC Docket Nos. 9811, 9826, 9832, 9891, at 3 (filed July 29, 1998)  {O-(CompTel/ALTS July 29 Ex Parte). In addition, we seek comment on whether, and if so to what extent, transfers of funds from an incumbent LEC's corporate parent to the incumbent LEC's advanced services affiliate should affect the affiliate's regulatory status as a nonincumbent LEC. We also seek comment on whether use by an affiliate of customer proprietary network information (CPNI) gathered by the incumbent LEC is one factor among many that might be relevant in making  XK-the determination that an affiliate is an assign of the incumbent LEC.K- yO-ЍThe Commission previously has concluded that customers do not expect that carriers will need their  {Ox-approval to use CPNI for offerings within the existing total service arrangement to which they subscribe. See  {MB-Implementation of the Telecommunications Act of 1996: Telecommunications Carriers' Use of Customer Proprietary Network Information and Other Customer Information; Implementation of the NonAccounting  {O-Safeguards of Sections 271 and 272 of the Communications Act of 1934, as Amended, CC Docket Nos. 96115, 96149, Second Report and Order and Further Notice of Proposed Rulemaking, 13 FCC Rcd 8061, 810207,   {Od-5559 (1998), recon. pending; clarified, Order, DA 98971 (Com. Car. Bur. rel. May 21, 1998). In this proceeding, we consider only the competitive consequences of an advanced services affiliate's use of CPNI, rather than any privacy issues. In addition, we tentatively conclude that, if an incumbent sells or conveys central offices or other real estate in which equipment used to provide telecommunications services is located to an advanced services affiliate, that would make the affiliate an assign of the incumbent. We seek comment on this analysis.  X-q114.` ` We tentatively conclude that, if we adopt a de minimis exception for transfers of network elements, we should adopt an analogous exception for any transfers of other assets. We also tentatively conclude that if we adopt any exception from the nondiscrimination requirement for transfers of network elements, we should adopt an"~4 ,-(-(ZZ" analogous exception for transfers of other assets. We seek comment on these tentative conclusions.  X-r115.` ` Other Issues. We also seek comment on whether the network disclosure  X-requirements in section 251(c)(5) - yO-ԍ47 U.S.C.  251(c)(5) (imposing on incumbent LECs "the duty to provide reasonable public notice of changes in the information necessary for the transmission and routing of services using that local exchange carrier's facilities or networks, as well as of any other changes that would affect the interoperability of those facilities and networks"). are sufficient to notify competitive LECs who might be using, or planning to use, facilities of the incumbent LEC that those facilities are being transferred to the advanced services affiliate. Parties arguing that the existing network disclosure requirements are not sufficient should suggest alternative disclosure rules, including suggestions regarding how soon prior to the transfer the incumbent LEC must notify competing carriers.  X -` ` 3. State Regulation  X -s116.` ` We note that, to the extent that an advanced services affiliate provides interstate exchange access services, the Commission has clear authority to regulate the  X -separate affiliate's provision of those services.\ - {O-ԍSee 47 U.S.C.  151 (creating Commission for "purpose of regulating interstate and foreign commerce in communication by wire and radio . . . ."). We conclude in the Order above that advanced services offered by  {O-incumbent LECs are "telephone exchange service" or "exchange access." See supra  EXCHACC40. To the extent that an advanced services affiliate provides advanced services on an intrastate basis, we encourage states to treat the affiliate equivalently to any other competing carrier offering advanced services. We believe that, if states regulate advanced services affiliates equivalently to other competitive LECs, incumbents are more likely to offer such services through separate affiliates. On the other hand, if states impose incumbent LEC regulation on such affiliates, incumbent LECs are not likely to incur the expense of establishing such affiliates. We encourage the states, therefore, to the extent they require certification for competitive carriers, to certify such advanced services affiliates within their jurisdictions in the same manner as they certify other entities to provide advanced services. Moreover, we encourage states to apply regulatory policies in a nondiscriminatory fashion to all entities seeking to provide such services, including advanced services affiliates that qualify for nonincumbent LEC treatment under the rules we adopt in this NPRM. We believe that such nondiscriminatory treatment is essential in order to encourage innovation and investment in these new technologies. Congress has determined that state actions should not "prohibit, or have the effect of prohibiting, the ability of any  XN-entity to provide interstate or intrastate telecommunications service."MN- yO$-ԍ47 U.S.C.  253(a).M We seek comment on whether, if we adopt safeguards less stringent than those proposed in this NPRM, states might have a legitimate interest in regulating an incumbent LEC's advanced services affiliate" 5d ,-(-(ZZz" differently than other competitive LECs offering advanced services, due to increased entanglement of the incumbent LEC and its advanced services affiliate.  X-t117.AFFILIATEEND` ` We note, however, that our discussion here is limited to state regulation of the provision by advanced services affiliates of advanced services. We do not address state regulation of an advanced services affiliate's provision of other services, such as circuitswitched voice services. In addition, we note that some states have expressed concerns about an incumbent LEC's incentive to continue to innovate and invest in the public switched  XH-network.H- {O -ԍSee, e.g., Public Service Commission of Wisconsin and the Indiana Utility Regulatory Commission Comments (CC Docket Nos. 9811, 9826, 9832) at 4. We are sensitive to these concerns, and we seek comment on how we and the states can work together to ensure that the incumbent LECs who choose to offer advanced services through affiliates do not allow their existing incumbent LEC networks to degrade. .J:\POLICY\706\ORDER\SUBDOCS\SEPAFF.NOT.  X - -J:\POLICY\706\ORDER\SUBDOCS\COLLO.NOT- C.` ` Measures to Promote Competition in the Local Market(#`  X -` ` 1. Collocation Requirements  X -  X- X` `  a.Background (#  Xb-u118. COLLOBEG ` ` In 1992, in the Expanded Interconnection proceeding, the Commission adopted rules pursuant to section 201 of the Act that required large incumbent LECs to offer physical  X6-and virtual collocationH6"- yO -ԍIn a physical collocation arrangement, a competitor leases space at a LEC premises for its equipment.  {O-The competing provider has physical access to this space to install, maintain, and repair its equipment. See  {O-Local Competition Order, 11 FCC Rcd at 15784, n.1361; Special Access Order, 7 FCC Rcd at 7391,  42. In a virtual collocation arrangement, the competitor designates the equipment to be placed at the incumbent LECs' premises. The competing provider, however, does not have physical access to the incumbent's premises. Instead, the equipment is under the physical control of the incumbent LEC, and the incumbent is responsible for  {O-installing, maintaining, and repairing the competing provider's equipment. See Local Competition Order, 11 FCC  {O-Rcd at 15785,  559; Virtual Collocation Order, 9 FCC Rcd at 5158,  7. for parties that want to locate interstate special access and switched  X-transport transmission facilities at LEC premises.@~2 - {O-ЍSpecial Access Order, supra, 7 FCC Rcd 7369. Interstate access is a service traditionally provided by local telephone companies and enables interexchange carriers and other customers to originate and terminate interstate telephone traffic. Special access is a form of interstate access that uses dedicated transmission lines between two points, without switching the traffic on those lines. Switched transport is another form of interstate access comprising the transmission of traffic between interexchange carriers' (or other customers') points of  {O"-presence and local telephone companies' end offices, where the traffic is switched and routed to end users. Local  {O#-Competition Order, 11 FCC Rcd at 15784, n.1359.@ In that proceeding, the Commission adopted rules governing, among other things, space allocation and exhaustion, types of equipment that could be collocated, and LEC premises where parties could collocate equipment. "6x,-(-(ZZ"Ԍ X-v119.` ` In 1994, the United States Court of Appeals for the District of Columbia Circuit concluded that the Commission lacked the authority under section 201 of the Act to  X-require physical collocation and remanded all other issues to the Commission.k- {OK-ԍBell Atlantic v. FCC, 24 F.3d 1441 (D.C. Cir. 1994).k On remand, the Commission adopted rules, which remain in place today, for both special access and  X-switched transport that required LECs to provide either virtual or physical collocation.9\Z- {O-ԍVirtual Collocation Order, supra, 9 FCC Rcd 5154; see also Pacific Bell v. FCC, 81 F.3d at 1147  {Oy-(remanding the Virtual Collocation Order to the Commission to consider the impact of the 1996 Act on the collocation rules).9  Xv-w120.` ` As part of the 1996 Act, Congress adopted section 251(c)(6). This provision requires incumbent LECs to provide "for the physical collocation of equipment necessary for interconnection or access to unbundled network elements at the premises of the local exchange carrier, except that the carrier may provide for virtual collocation if the local exchange carrier demonstrates to the State commission that physical collocation is not  X -practical for technical reasons or because of space limitations."J ~- yO2-ԍ47 U.S.C.  251(c)(6).J In the Local Competition  X -Order, the Commission adopted specific rules to implement the collocation requirements of  X -section 251(c)(6).& - {O-ԍ47 C.F.R.  51.321, 51.323; see also Local Competition Order, 11 FCC Rcd at 1578215811,  555 {Ob-617. These rules were specifically upheld by the Eighth Circuit in Iowa Utilities Board v. FCC, 120 F.3d 753,  {O,-818 (8th Cir. 1997) (Iowa Utilities Board), cert. granted sub nom, AT&T Corp. v. Iowa Utils. Bd., 118 S.Ct. 879 (1998).  X -x121.` ` ALTS, in its petition, argues that the rules adopted in the Local Competition  X-Order do not go far enough. - {OC-ԍALTS Petition at 2022; see also e.spire Comments (CC Docket No. 9878) at 67; NTIA July 17 Ex  {O -Parte at 1417. ALTS contends that incumbent LECs offer physical collocation, but impede competition by: (1) restricting equipment that can be placed in  Xj-collocation spaces;jX - {Os-ԍALTS Petition at 21; see also Covad Comments (CC Docket Nos. 9811, 9826, 9832) at 17; e.spire Comments (CC Docket No. 9878) at 7. and (2) imposing substantial costs and delays on competing carriers for  XS-space and construction of collocation cages.ZS- {O"-ԍALTS Petition at 1822; see also Covad Comments (CC Docket Nos. 9811, 9826, 9832) at 1316; DATA Comments (CC Docket Nos. 9811, 9826, 9832) at 78, Att. 1; LCI Comments (CC Docket No. 9878), Attach. at 2227. In addition, ALTS contends that the space available for physical collocation at many LEC premises is extremely limited, and in an"<7,-(-(ZZf"  X-increasing number of cases, altogether unavailable.Z- {Oy-ԍALTS Petition at 20; see also Covad Comments (CC Docket Nos. 9811, 9826, 9832) at 14; DATA Comments (CC Docket Nos. 9811, 9826, 9832), Attach. 1 at 45; e.spire Comments (CC Docket No. 9878) at 6. ALTS, therefore, urges the Commission to adopt additional collocation rules to ensure that competing providers have access to physical collocation space so that they are able to provide advanced services using their  X-equipment.~- {OV-ԍALTS Petition at 1822; see also CIX Comments (CC Docket No. 9878) at 56 (collocation is a necessity for competitors because xDSL services can only be offered to customers in close proximity of the incumbent LEC central office; Covad Comments (CC Docket Nos. 9811, 9826, 9832) at 1316; DATA Comments (CC Docket Nos. 9811, 9826, 9832) at 78, Attach. 1; e.spire Comments (CC Docket No. 9878) at 68 (the accomplishment of the purposes of Section 706 requires that the Commission revise its collocation rules to increase available collocation space, broaden the use that may be made of such collocation space, and dramatically reduce the expense of physical collocation); Intermedia Comments (CC Docket No. 9878) at 56 (Commission should revisit the existing collocation rules and include cageless collocation, cage sharing, crossconnection, and removal of equipment limitations in the collocation rules); LCI Comments (CC Docket No. 9878), Attach. at 2227; MCI Comments (CC Docket No. 9878) at 6 (competitive LECs need to be able to collocate xDSL equipment); NAS Comments (CC Docket No. 9878) at 45 (Commission should update central office collocation rules to require that incumbent LECs provide xDSL access providers with a right to small collocation cages or cageless collocation; to permit shared collocation cages and establish crossconnections to cages of other collocated carriers; to permit collocation of xDSL line cards, Internet routers, and remote  yOH-switching modules); NEXTLINK Comments (CC Docket No. 9878) at 56 (Commission should reopen its proceeding to revise the collocation rules, because the rules were developed before the development of xDSL {O-based services); CIX Ex Parte, CC Docket Nos. 9811, 9826, 9832, 9878, RM 9244, at 2 (filed July 30, 1998)  {O-(CIX July 30 Ex Parte) (a competitive Internet industry requires competitive LEC collocation at incumbent LEC  {Ol-offices on terms that are more efficient and flexible); NTIA July 17 Ex Parte at 1417.~  X-  X-  X` `  b.Adoption of National Standards(#  Xv-  X_-X X` `  (1)hh,Background (#`  X1-y122.` ` In the Local Competition Order, the Commission adopted minimum  X -requirements for nondiscriminatory collocation arrangements. - {O_-ԍLocal Competition Order, 11 FCC Rcd at 1578215811,  555617. The relevant collocation requirements are summarized in the following sections dealing with specific collocation issues. The Commission adopted rules for, among other things, space allocation and exhaustion, types of equipment that could  X -be collocated, and LEC premises where parties could collocate equipment.: - {O"-ԍId.: The Commission also  concluded that state commissions should have the flexibility to adopt additional collocation requirements that are otherwise consistent with the Act and the  X -Commission's regulations.Q ~- {O&-ԍId. at 1578384,  558.Q " 8,-(-(ZZ "Ԍ X-ԙ` `  `  (2)hh,Discussion (#  X-z123.` ` We seek comment on the extent to which we should establish additional national rules for collocation pursuant to sections 201 and 251 in order to remove barriers to  X-entry and speed the deployment of advanced services.- {O-ԍSee ALTS Petition at 1822; MCI July 30 Ex Parte at 24; NTIA July 17 Ex Parte at 1417. Parties should address whether adoption of additional uniform standards would encourage the deployment of advanced services by increasing predictability and certainty, and by facilitating entry by competitors providing advanced services in multiple states. We also ask commenters to address how any collocation requirements they suggest would affect investment in, and deployment of,  X1-advanced services.$1Z- {O< -ԍSee Letter from Lawrence Chimerine, Senior VP and Chief Economist, Erik Olbeter, Director, Advanced Telecom and Information Technology Program, and Larry C. Darby, Visiting Fellow, Economic Strategy Institute, to William E. Kennard, Chairman, Federal Communications Commission, regarding Section 706 of the  {O-Telecommunications Act of 1996, at 56 (dated July 30, 1998) (ESI July 30 Ex Parte).  X -{124.` ` We tentatively conclude that any standards we adopt in this proceeding should serve as minimum requirements and that states should continue to have flexibility to adopt additional requirements that respond to issues specific to that state or region. In the past two years, a number of states have adopted collocation requirements that go beyond the minimum  X -requirements the Commission adopted in the Local Competition proceeding. F- {O-ԍSee, e.g., Joint Complaint of AT&T Communications of New York, Inc., et. al. Against New York Telephone Company Concerning Wholesale Provisioning of Local Exchange Service by New York Telephone  {O0-Company and Sections of New York Telephone's Tariff No. 900, Case 95-C-0657, Proceeding on Motion of the Commission to Examine Issues Related to the Continuing Provision of Universal Service and to Develop a  {O-Regulatory Framework for the Transition to Competition in the Local Exchange Market, Case 94-C-0095,  {M-Proceeding on Motion of the Commission Regarding Comparably Efficient Interconnection Arrangements for  {OT-Residential and Business Links, Case 91-C-1174, Complaint of AT&T Communications of New York, Inc. Against New York Telephone Company Concerning AT&T's Request for Four Collocated "Cages" to be Provided by New  {O-York Telephone Pursuant to its Optical Transport Interconnection Service II Tariff, Case 96-C-0036, Order Directing Tariff Changes for NonPricing Terms and Conditions for Collocation (N.Y.P.S.C. Mar. 2, 1998). With respect to each subsection that follows, we encourage commenters to address whether any state approach to collocation might provide useful guidelines for additional national standards to facilitate deployment of advanced services. We welcome input from the states on each of these issues.  X-|125.` ` We note that competitive LECs can pursue remedies for violations of our  X-collocation requirements before the Commission and the appropriate state commissions.- {O$-ԍSee supra  ROCKET55 (discussing the Commission's expedited complaint process to resolve competitive issues in an accelerated fashion). "9B,-(-(ZZ" We seek comment on any measures we could take to aid enforcement of our collocation  X-requirements.\- {Ob-ԍSee, e.g., NorthPoint July 29 Ex Parte at 4 (Commission should ensure that competitors actually receive  {O,-critical services and facilities such as cageless collocation); CIX July 30 Ex Parte at 2 (a competitive Internet industry requires swift and effective enforcement of collocation requirements).  X- X` `  c.Collocation Equipment(#  X-` `  X(1)hh,Background (#  X_-}126.` ` Section 251(c)(6) requires incumbent LECs to allow collocation of "equipment  XH-necessary for interconnection or access to unbundled network elements . . . ."JH- yO -ԍ47 U.S.C.  251(c)(6).J In the Local  X3-Competition Order, the Commission concluded that section 251(c)(6) requires collocation only of equipment used for: (1) interconnection for "the transmission and routing of telephone exchange service and exchange access" pursuant to section 251(c)(2); and (2) access to unbundled network elements for "the provision of a telecommunications service" pursuant to  X -section 251(c)(3).n |- {O-ԍLocal Competition Order, 11 FCC Rcd at 15795,  581.n  X -~127.` ` The Commission concluded in the Local Competition Order that new entrants may collocate transmission equipment, including optical terminating equipment and  X-multiplexers, on incumbent LEC premises.K- {O>-ԍId. 15794,  580.K The Commission further concluded, at the time, that incumbent LECs need not permit the collocation of other types of equipment, including  XQ-switching equipment and equipment used to provide enhanced services.`Q- {O-ԍId. at 15795,  581; 47 U.S.C.  51.323(c). The Commission noted that switching equipment generally  {Ol-performs functions other than providing interconnection or access to unbundled network elements. Local  {O6-Competition Order, 11 FCC Rcd at 15795, n.1417. The Commission indicated that it might reexamine the issue of collocation of switching equipment if it appeared that "such action would further achievement of the 1996  {O-Act's procompetitive goals." Id. at 15795,  581.`  X#-128.` ` With respect to switching equipment, however, the Commission recognized that "modern technology has tended to blur the line between switching equipment and  X-multiplexing equipment."X - {O#-ԍLocal Competition Order, 11 FCC Rcd at 15795,  581; see also NTIA July 17 Ex Parte at 15. A current trend in manufacturing appears to be to integrate  X-multiple functions into telecommunications equipment.i- {Oy&-ԍSee NTIA July 17 Ex Parte at 15.i This trend has benefited service providers and their customers by reducing costs, promoting efficient network design, and":|,-(-(ZZ"  X-expanding the range of possible service offerings.>- {Oy-ԍSee id.> As a consequence of this integration, certain facilities that competing carriers need to collocate to provide advanced services  X-efficiently may also perform switching functions.Z- {O-ԍSee ALTS Petition at 21; Covad Comments (CC Docket Nos. 9811, 9826, 9832) at 17; e.spire  {O-Comments (CC Docket No. 9878) at 7; NTIA July 17 Ex Parte at 15. Because incumbent LECs are currently not required by our rules to permit collocation of switching equipment, competing providers argue that incumbent LECs may delay competitive entry by contesting, on a casebycase basis, the functionality of a particular piece of equipment (which may perform switching  Xv-functions in addition to its other functions) and whether it may be collocated.v- {O -ԍCovad Comments (CC Docket Nos. 9811, 9826, 9832) at 17; see also ALTS Petition at 21.  XH- ` `  ` (2)hh,Discussion (#  X -129.` ` We tentatively conclude that incumbent LECs should not be permitted to impede competing carriers from offering advanced services by imposing unnecessary  X -restrictions on the type of equipment that competing carriers may collocate.F H- yO-ԍALTS Petition at 21 (Commission should eliminate restrictions on competitive LECs' ability to collocate  {O-remote switching modules, xDSL electronics, Internet routers and other advanced data equipment); see also CIX  {Ow-July 30 Ex Parte at 2 (a competitive Internet industry requires that incumbent LECs permit competitive LECs to collocate a range of equipment and technologies demanded by end users); Covad Comments (CC Docket Nos. 9811, 9826, 9832) at 17; e.spire Comments (CC Docket No. 9878) at 7; Letter from Steven Gorosh, Vice President and General Counsel, NorthPoint Communications, to Magalie Salas, Secretary, Federal  yO-Communications Commission, CC Docket Nos. 9811, 9826, 9832, 9891, at 6 (filed July 7, 1998) (NorthPoint  {Oa-July 7 Ex Parte); NTIA July 17 Ex Parte at 1517. We seek comment on whether we should require incumbent LECs to allow new entrants to collocate equipment that is used for interconnection and access to unbundled network elements even if  X -such equipment also includes switching functionality. Z V - {O-ԍSee, e.g., TRA Comments (CC Docket No. 9878) at 16) at 89; WorldCom Comments (CC Docket No. 9878) at 13 (incumbent LECs must allow competitive LECs to collocate their own xDSL electronics at the central office).  Would allowing collocation of equipment that performs both switching and other functions encourage competitive LECs to use integrated equipment as a means to collocate equipment that otherwise would not be allowed in central offices? Would restrictions on placing switching equipment in collocation spaces prevent new entrants from taking advantage of integrated equipment that may be more  X4-cost efficient?4x- {O]$-ԍSee, e.g., NTIA July 17 Ex Parte at 1517 (ban on collocation of switching equipment could discourage use of multifunction equipment and disadvantage competitive providers of advanced digital services). We tentatively conclude that, if an incumbent LEC chooses to establish an advanced services affiliate, the incumbent must allow competitive LECs to collocate equipment to the same extent as the incumbent allows its advanced services affiliate to";,-(-(ZZ " collocate equipment in order to meet its existing obligation to provide collocation on  X-nondiscriminatory terms and conditions.- {Ob-ԍSee supra  AFFILIATEBEG85שAFFILIATEEND117 (discussing advanced services affiliates).  X-130.` ` If we decide to allow carriers (whether they be new entrants or advanced services affiliates) to collocate equipment that includes switching functionality, should we limit such collocation to equipment that performs both switching and other functions (such as multiplexing), or should we extend such collocation to switching equipment in general? If we allow carriers to collocate switching equipment, should we limit such collocation to packetswitching equipment or should we allow collocation of circuitswitching equipment? Does it makes sense to differentiate among technologies? To the extent that parties urge the Commission to permit collocation of switching or other equipment that is not used for  X -interconnection or access to unbundled network elements, as required by section 251(c)(6),{ Z- {O-ԍSee Local Competition Order, 11 FCC Rcd at 15795,  581 & n.1417.{ parties should indicate what sections of the Act authorize the Commission to require collocation of such equipment.  X -131.` ` We also seek comment on any other specific restrictions that we should adopt for switching equipment, assuming new entrants and advanced services affiliates are permitted to collocate such equipment. For example, given the lack of space in many central offices, we seek comment on whether we should adopt size restrictions on the switching equipment that a competing provider may collocate at a LEC's premises. Parties should address whether failure to impose size or other restrictions could impede competition by, for example, allowing the first competing provider in the market to request all of the available space, thereby potentially depriving other competitors of the opportunity to collocate facilities. We tentatively conclude that an advanced services affiliate should not be permitted to collocate its switching equipment if there is only enough room at the central office for one carrier to collocate such equipment. We seek comment on this tentative conclusion.  X-132.` ` We further seek comment on whether carriers should be permitted to collocate other equipment on LEC premises. We tentatively conclude that we should continue to  Xe-decline to require collocation of equipment used to provide enhanced services.e- yO -ԍWe conclude above that xDSLbased services are telecommunications services, not information services.  {O -See supra  TELSERV35. We seek comment on this tentative conclusion. Parties should address whether provision of other advanced services would only be possible if we allow collocation of enhanced services equipment. Parties should further address whether allowing any other equipment in the collocation space will facilitate new entrants' ability to provide advanced services and thereby encourage widespread deployment of such services. "<F,-(-(ZZ"Ԍ X-133.` ` ALTS contends that some incumbent LECs will not allow competitive LECs to  X-interconnect their collocated equipment.H- yOb-ԍALTS Petition at 1920.H Under our current rules, an incumbent LEC is required to allow competing carriers to establish crossconnects to the collocated equipment of  X-other competing carriers at the incumbent's premises.X- {O-ԍSee 47 C.F.R.  51.323(h); Local Competition Order, 11 FCC Rcd at 1580102,  59495. We seek comment on any additional steps we might take so that competitive LECs are able to establish crossconnects to the equipment of other collocated competitive LECs.  X_-134. NEBS  SECURITY ` ` Finally, we tentatively conclude that incumbent LECs may require that all equipment that a new entrant places on its premises meet safety requirements to avoid  X1-endangering other equipment and the incumbent LECs' networks.^1- yO -ԍIncumbent LECs generally require that equipment collocated at their premises complies with Bellcore's Network Equipment and Building Specifications (NEBS). These specifications, which tend to increase the cost of equipment, include both safety requirements, such as fire prevention specifications, and performance  {O$-requirements. See DATA Comments (CC Docket Nos. 9811, 9826, 9832) at 21, Attach. 1; Covad Comments  {O-(CC Docket Nos. 9811, 9826, 9832) at 1618; NorthPoint July 7 Ex Parte at 67.^ Some performance and reliability requirements, however, may not be necessary to protect LEC equipment. Such requirements may increase costs unnecessarily, which would lessen the ability of new entrants to serve certain markets and thereby harms competition. We tentatively conclude that, to the extent that incumbent LECs use equipment that does not satisfy the Bellcore Network Equipment and Building Specifications (NEBS) requirements, competitive LECs should be able to collocate the same or equivalent equipment. We further tentatively conclude that incumbent LECs should be required to list all approved equipment and all equipment they  Xy-use.y- {O-ԍSee NorthPoint July 7 Ex Parte at 7 (asserting that incumbent LECs have refused to allow it to collocate certain equipment (as nonNEBScompliant), although the incumbent LECs are using the same equipment).  XK-135. NEBSEND ` ` We seek comment on whether competitive LECs should be required to use NEBScompliant equipment where the incumbent LEC uses NEBScompliant equipment for  X-equivalent functions. - {O-ԍSee NorthPoint July 7 Ex Parte at 67 (NEBS performance requirements irrelevant for establishing safety standards). Parties should address whether allowing competitive LECs to collocate nonNEBScompliant equipment would introduce new vulnerability into the central office. Commenters should distinguish between those NEBS safety requirements, which address the need to protect central office equipment and telecommunications networks, and  X-NEBS performance requirements, which set equipment reliability standards.BXR - yO%-ԍEquipment reliability standards may be better left to the mutual agreement of the competitive LEC, its customers and its equipment providers. By requiring competitive LECs to satisfy NEBS performance requirements, on top of NEBS safety requirements, competitive LECs may be compelled to engage in"T',-(-(w'" unnecessary, costly and lengthy testing which could delay competitive LECs' ability to provide advanced  {OX-services. See NorthPoint July 7 Ex Parte at 67.B"=",-(-(ZZ"Ԍ X-ԙ_ X` `  d.XAllocation of Space (#  X-` `   (1)hh,Background  X-136.` ` ALTS contends that, although incumbent LECs offer physical collocation, they impede competition by imposing substantial costs and delays on competing carriers for space  Xv-_and construction of collocation cages.T\v"- {OI -ԍALTS Petition at 1822; see also Covad Comments (CC Docket Nos. 9811, 9826, 9832) at 1316; DATA Comments (CC Docket Nos. 9811, 9826, 9832) at 78, Attach. 1; LCI Comments (CC Docket No. 98 {O -78), Attach. at 2227; NorthPoint July 7 Ex Parte at 15.T In addition, ALTS and many commenters assert that space for physical collocation cages in many LEC premises is extremely limited, and in an  XH-increasing number of cases, is unavailable altogether.6ZHF- yO?-ԍALTS Petition at 20; Covad Comments (CC Docket Nos. 9811, 9826, 9832) at 14; DATA Comments (CC Docket Nos. 9811, 9826, 9832), Attach. 1 at 45; e.spire Comments (CC Docket No. 9878) at 6;  {O-NorthPoint July 7 Ex Parte at 12.6  X -` `  (2)hh,Discussion  X -137.` ` Given that space in incumbent LEC premises is limited, we tentatively conclude that we should require incumbent LECs to offer collocation arrangements to both new entrants and any advanced services affiliate incumbent LECs establish that minimize the space needed by each competing provider in order to promote the deployment of advanced  X-services to all Americans.zh - {O-ԍSee, e.g., CIX July 30 Ex Parte at 2 (a competitive Internet industry requires competitive LEC collocation at incumbent LEC offices on terms that are more efficient and flexible); CompTel Comments (CC Docket No. 9878) at 3, 7 (Commission should reform collocation to provide competitors the option to collocate through more economical and efficient means, such as through smaller collocation spaces, sharing of collocation space, or "cageless" collocation); WorldCom (CC Docket No. 9878) at 14, n.26 (incumbent LECs should be required to offer competitive LECs a more efficient use of collocation space, space in smaller increments, and shared space). Such alternative collocation arrangements include: (1) the use of shared collocation cages, within which multiple competing providers' equipment could be  Xb-either openly accessible or locked within a secure cabinet;rb- yO!-ԍALTS Petition at 21; e.spire Comments (CC Docket No. 9878) at 7.r (2) the option to request collocation cages of any size without any minimum requirement, so that competing providers"K>:,-(-(ZZ+"  X-will not use any more space than is reasonably necessary for their needs;- {Oy-ԍSee ALTS Petition at 21 (urging the Commission to require that incumbent LECs offer smaller collocation cages than they currently offer); e.spire Comments (CC Docket No. 9878) at 7. and (3) physical  X-collocation that does not require the use of collocation cages ("cageless" collocation)."- {O-ԍSee ALTS Petition at 21; Covad Comments (CC Docket Nos. 9811, 9826, 9832) at 1516; e.spire Comments (CC Docket No. 9878) at 7.  X-138.` ` We anticipate that requiring such alternative collocation arrangements would foster deployment of advanced services by facilitating entry into the market by competing carriers. We tentatively conclude that allowing these alternative collocation arrangements will optimize the space available at a LEC's premises, thereby allowing more competitive LECs to collocate equipment and provide service. Moreover, as ALTS indicates, more costeffective  XH-collocation solutions may spur collocation in residential and less densely populated areas.KH|- yOu-ԍALTS Petition at 21, n.38.K We seek comment on what specific rules we should adopt to ensure that these alternative arrangements are offered in a manner that facilitates deployment of advanced services to the greatest extent possible.  X -139.` ` We recognize that section 251(c)(6) requires the incumbent LEC to offer physical collocation unless the incumbent demonstrates to the state commission that such an  X -arrangement is not technically feasible.w - yOd-ԍFor the definition of "technically feasible," see 47 C.F.R.  51.5.w We note that U S WEST is currently offering a  X-cageless collocation arrangement,i- {O-ԍSee U S WEST Comments (CC Docket No. 9878) at 32.i and SBC is permitting competitive LECs to share  Xy-collocation space.EZy. - {OX-ԍSee Letter from Thomas Horn, Senior Counsel, SBC, to James Galloway, Clerk, Public Utility Commission of Texas, dated November 3, 1997, transmitting SBC Physical Collocation Tariff (section 7 of the Physical Collocation Tariff provides for sharing of collocation space).E We seek comment on whether, if an incumbent LEC offers a particular collocation arrangement, such a collocation arrangement should be presumed to be technically  XK-feasible at other LEC premises.]KP - {OL -ԍSee NTIA July 17 Ex Parte at 15.]  X-140.` ` In addition, we note that, in the Local Competition Order, the Commission concluded that incumbent LECs should be permitted reasonable security arrangements to  X-protect their equipment and ensure network security and reliability. - {O%-ԍLocal Competition Order, 11 FCC Rcd at 15803,  598; see also supra   NEBS134 שNEBSEND135. We recognize that adequate security for both incumbent LECs and competitive LECs is important to encourage deployment of advanced services. We now seek comment on the security and access issues"?t ,-(-(ZZ" and any other issues that may arise from a requirement that incumbent LECs provide these alternative collocation arrangements, including cageless collocation. In addressing any security or other issues, parties should identify any safeguards or other measures that would resolve such concerns.  X-141.` ` With cageless collocation, in particular, we seek comment on whether incumbent LECs should be allowed to require escorts for competitive LEC technicians; whether concealed security cameras or badges with computerized tracking systems would provide sufficient protection; whether security measures should vary, or be allowed to vary, by central office; and what security measures are appropriate for unstaffed offices in remote areas. Given that incumbent LECs currently maintain control over competitive LEC equipment in virtual collocation arrangements, and competitive LECs have access to each other's equipment in shared collocation space, we tentatively conclude that carriers should be able to resolve any security concerns raised by cageless collocation. We ask parties with knowledge of virtual collocation and shared collocation arrangements to address how these arrangements might serve as models for costeffective cageless collocation arrangements.  Xy-142.` ` We further seek comment on any other alternative physical collocation arrangements that we should require to lower the cost of collocation and thereby facilitate competition in the advanced services marketplace. In addition, we seek comment on any other measures that would facilitate the implementation of collocation arrangements and  X-thereby enable firms to enter new markets. - yO-ԍWe note that, in another proceeding, we are considering whether 251type obligations should be  {O^-extended to information service providers. See Computer III Further Remand Proceedings: Bell Operating Company Provision of Enhanced Services; 1998 Biennial Review Review of Computer III and ONA Safeguards  {O-and Requirements, CC Docket Nos. 9520, 9810, Further Notice of Proposed Rulemaking, 13 FCC Rcd 6040 (rel. Jan. 30, 1998). Given that space preparation and construction times vary greatly depending on the location, parties should address whether there should be any uniform standards that would apply on a national level. We also ask commenters to address whether we can and should require incumbent LECs to remove obsolete equipment and noncritical offices in central offices to increase the amount of space available for  X-collocation.g |- {O-ԍSee NorthPoint July 7 Ex Parte at 2.g  X|-143.` ` We also seek comment on other measures that would reduce the cost of physical collocation arrangements. For example, we seek comment on ALTS' proposal that  XN-we establish rules for the allocation of upfront space preparation charges.E N- yO $-ԍALTS Petition at 21.E One approach, adopted by Bell Atlantic in its prefiling statement in the New York Commission's section 271 docket, is that the competing provider would be responsible only for its share of the cost of conditioning the collocation space, whether or not other competing providers are" @ ,-(-(ZZ["  X-immediately occupying the rest of the space. - {Oy-ԍSee Petition of New York Telephone Company for Approval of its Statement of Generally Available Terms and Conditions pursuant to Section 252 of the Telecommunications Act of 1996 and Draft Filing of  {O -Petition for InterLATA Entry pursuant to Section 271 of the Telecommunications Act of 1996, New York Commission Case 97C0271, PreFiling Statement of Bell Atlantic New York, at 2123 (N.Y.P.S.C. filed April 6, 1998). In addition, Bell Atlantic committed to  X-allowing smaller competing providers to pay on an installment basis.:|- {O-ԍId.: We seek comment on whether we should adopt Bell Atlantic's approach, or any other approach, as a national standard in order to speed the deployment of advanced telecommunications capability to all Americans. We also seek comment on the ramifications that such a national standard would have on the implementation and enforcement of the requirements of section 251 and 271. We tentatively conclude that any standards we adopt in this proceeding should serve as minimum requirements, and that states should continue to have flexibility to adopt additional collocation requirements, consistent with the Act.  X -144.` ` Finally, we seek comment on how to address the entry barrier posed by delays  X -between the ordering and provisioning of collocation space.i - {O-ԍSee NorthPoint July 7 Ex Parte at 24.i We seek comment on ALTS' proposal that we should establish presumptive reasonable deployment intervals for new  X -collocation arrangements and expansion of existing arrangements.p - yO&-ԍALTS Petition at 21; NAS Comments (CC Docket No. 9878) at 45.p Currently, a new entrant typically must first seek state competitive LEC certification, before it can begin to negotiate an interconnection agreement. In addition, competitive LECs have asserted that some incumbent LECs will not allow a requesting carrier to order collocation space until an  Xy-interconnection agreement becomes final.y0 - {OZ-ԍSee, e.g., NorthPoint July 7 Ex Parte at 23 (alleging that U S WEST has prevented NorthPoint from ordering collocation for several months by refusing to allow NorthPoint to place an order in any state in which it has not yet been approved as a competitive LEC, signed an interconnection agreement, and obtained state commission approval of the agreement, a process that NorthPoint asserts takes a minimum of six months in most states). If certain issues are taken to arbitration, there can be considerable delay. We seek comment on ways to shorten collocation ordering intervals. We also ask commenters to address whether we should set specific intervals by which time the incumbent LEC must or should be expected to provide the competitive LEC with: (1) information on collocation availability and prices; and (2) collocation space. We also seek comment on what should be done in the event that an incumbent LEC fails to meet a  X-specified interval.i- {O%-ԍSee NorthPoint July 7 Ex Parte at 24.i "At,-(-(ZZ"Ԍ X- vX` `  e.Space Exhaustion(#  X-  X-X X` `  (1)hh,Background (#`  X-145.` ` One of the major barriers facing new entrants that seek to provide advanced services on a facilities basis is the lack of collocation space in many LEC vcentral offices. Under the Act, incumbent LECs must provide physical collocation unless they demonstrate to the state commission's satisfaction that "physical collocation is not practical for technical  XH-reasons or because of space limitations."JH- yO -ԍ47 U.S.C.  251(c)(6).J Because incumbent LECs have the incentive and capability to impede competition by reducing the amount of space available for collocation by  X -competitors, the Commission, in the Local Competition Order, required incumbent LECs that deny requests for physical collocation on the basis of space limitations to provide the state  X -commission with detailed floor plans or diagrams of their premises. X- {O-ԍLocal Competition Order, 11 FCC Rcd at 15805,  602; see also NorthPoint July 7 Ex Parte at 1. The Commission concluded that such submissions would aid the state commission in evaluating whether the  X -denial of physical collocation was justified.n - {O[-ԍLocal Competition Order, 11 FCC Rcd at 15805,  602.n  X- ` `  (2)hh,Discussion (#`  Xd-146.` ` We tentatively conclude that an incumbent LEC that denies a request for physical collocation due to space limitations should not only continue to provide the state commission with detailed floor plans, but should also allow any competing provider that is seeking physical collocation at the LEC's premises to tour the premises. Allowing competing providers to walk through a LEC's premise will enable competing providers to identify space that they believe could be used for physical collocation. If, after the tour of the premise, the incumbent LEC and competing provider disagree about whether space limitations at that premise make collocation impractical, both carriers could present their arguments to the state commission. We tentatively conclude that state commissions will be better able to evaluate whether a refusal to allow physical collocation is justified if competing providers can view the LEC's premises and present their arguments to the state commission. We seek comment on these tentative conclusions.  X9-147.` ` We further tentatively conclude that, upon request from a competitive LEC, an incumbent LEC should submit to the requesting carrier a report indicating the incumbent LEC's available collocation space. This report should specify the amount of collocation space available at each requested premises, the number of collocators, and any modifications in the use of the space since the last report. The report should also include measures that the incumbent LEC is taking to make additional space available for collocation. We seek" B|,-(-(ZZ" comment on this tentative conclusion. Parties should address whether the incumbent LEC should be required to include any additional information in such a report.  X-148.` ` We also seek comment on measures that would facilitate the use of virtual collocation for the provision of advanced services. Although competing providers may prefer physical collocation arrangements that permit their employees to install and repair their own equipment, we seek comment on measures that would make virtual collocation an effective alternative in locations where physical collocation space is unavailable. We tentatively conclude that all competitive LECs must be offered the same virtual collocation arrangements as the incumbent provides to its advanced services affiliate in order to meet its existing  X -obligation to provide collocation on nondiscriminatory terms and conditions.=z - {O -ԍSee supra  AFFILIATEBEG85שAFFILIATEEND117 (discussing advanced services affiliates); see also NorthPoint July 29 Ex Parte at 12 (If the incumbent LEC requires that it perform the installation and maintenance of virtually collocated equipment for the competitive LEC, the requirement also must extend to the incumbent's advanced services affiliate, so that the incumbent's employees (not the affiliate's employees) install the equipment and charge the affiliate. Similarly, if the incumbent allows no one else to perform maintenance functions such as emergency repair in the event of an outage, the incumbent must extend this rule to its affiliate, and must charge the affiliate for maintenance costs, such as training.).=  X -149.` ` We seek comment on any other measures that would help ensure that sufficient collocation space will be available in the future. Such measures may include, but are not  X -limited to, modifying our rules on warehousing of space. - {Oy-ԍIn the Local Competition Order, the Commission concluded that incumbent LECs may retain a limited amount of floor space for defined future uses, but must allow competing providers to reserve space for future use on terms that are no less favorable. The Commission concluded, however, that incumbent LECs must relinquish any space held for future use prior to denying virtual collocation, but not physical collocation, due to lack of  {O-space. Local Competition Order, 11 FCC Rcd at 1580506,  60406; see also NorthPoint July 7 Ex Parte at 2. Parties should address how any such measures they propose would affect investment in, and deployment of, advanced  X-services.S - {O-ԍESI July 30 Ex Parte at 56.S  Xb- X` `  f.Effects of Additional Collocation Requirements(#  XK-  X4-150. COLLOEND ` ` Although this NPRM addresses ways in which the Commission can promote the deployment of advanced services, a number of our tentative conclusions and rule proposals relating to collocation may affect existing collocation arrangements. We seek comment on whether (and, if so, to what extent) any of our tentative conclusions or proposals might affect existing negotiated and arbitrated interconnection agreements, existing state  X-requirements, or pending state proceedings.P - {O%-ԍSee ALTS Petition at 38; CIX (CC Docket No. 9878) at 1011; e.spire Comments (CC Docket No. 98 yO&-78) at 10; Intermedia Comments (CC Docket No. 9878) at 7; TRA Comments (CC Docket No. 9878) at 9 ."C,-(-(ZZS"Ԍ -J:\POLICY\706\ORDER\SUBDOCS\COLLO.NOT-  X- -J:\POLICY\706\ORDER\SUBDOCS\LOOPS.NOT-  ` ` 2. Local Loop Requirements  X-  X- ` `  a.Overview  X-  X-151.` ` In the Order above, we grant ALTS' request for a declaratory ruling that incumbent LECs are required to provide xDSL-compatible loops to requesting carriers  X_-pursuant to section 251(c)(3) and our implementing rules.Y_- {O-ԍSee supra  DSLCAP52.Y We are concerned, however, that our existing rules requiring the unbundling of loops do not fully ensure that competitive providers of advanced services have adequate access to the "last mile," which is critical to ensure that a variety of providers are able to offer the full range of advanced services that consumers may demand. Accordingly, in this section, we seek comment on rule changes that we could adopt pursuant to section 251 that would strengthen the ability of new entrants to gain access to xDSLcompatible loops.  X -  X - X` `  b.Background(#  X-  Xy- 152.` ` In the Local Competition Order, the Commission identified the local loop as a  Xd-network element that incumbent LECs must unbundle "at any technically feasible point."dZ- {Oo-ԍLocal Competition Order, 11 FCC Rcd at 1568990,  37779. It defined the local loop to include "twowire and fourwire loops that are conditioned to transmit the digital signals needed to provide services such as ISDN, ADSL, HDSL, and DS1 X-level signals."f- {O-ԍId. at 15691,  380.f To the extent technically feasible, incumbent LECs must "take affirmative steps to condition existing loop facilities to enable requesting carriers to provide services not  X-currently provided over such facilities."~- {O -ԍId. at 15692,  382. The requesting carrier bears the cost of such conditioning. Id.Į For example, if a carrier requests an unbundled loop for the provision of ADSL service, and specifies that it requires a loop free of loading coils, bridged taps, and other electronic impedances, the incumbent must condition the loop to those specifications, subject only to considerations of technical feasibility. The incumbent may not deny such a request on the ground that it does not itself offer advanced services over the loop, or that other advanced services that the competitive LEC does not intend to offer  Xg-could be provided over the loop. As the Commission stated in the Local Competition Order, "section 251(c)(3) does not limit the types of telecommunications services that competitors  X;-may provide over unbundled elements to those offered by the incumbent LEC."c;- {O$-ԍId. at 1569192,  381.c Under our existing rules, incumbent LECs are also required to provide competing carriers with"$D,-(-(ZZ #" nondiscriminatory access to the operations support systems functions for preordering,  X-ordering, and provisioning loops.Z- {Ob-ԍId. at 15766,  523.Z  X-153. RTCAP ` ` The Commission also concluded in the Local Competition Order that it was "technically feasible" to unbundle loops that pass through integrated digital loop carrier systems or similar remote concentration devices, and required incumbent LECs to unbundle  Xx-such loops for competitive LECs.p xZ- {O -ԍId. at 1569293,  38384.p In the Local Competition Order, however, the Commission did not require incumbent LECs to unbundle subloop elements, which would  XL-allow competitors access to the loop at the remote terminal.o!BL- {O -ԍId. at 15696,  391. Subloop elements in a digital loop carrier environment typically include the following components: (1) distribution cable, which typically is a twowire or fourwire copper line that runs from the customer's premises to electronic equipment located at some point between the customer premise and the central office; (2) the feeder/distribution interface or concentration electronics, which generally are housed in underground controlled environmental vaults or aboveground enclosures, and which are used to aggregate distribution cables from individual customers and multiplex them onto a single highcapacity channel; and (3) feeder cable, typically fiberoptic cable that transports the highcapacity signal from the concentration electronics in the field to the incumbent LEC's central office.o Even though the Commission determined that parties commenting on the issue of subloop unbundling had presented no technical impediments to such unbundling, the Commission concluded that subloop  X -unbundling should be addressed by the states "on a casebycase basis at this time."N" - {O-ԍId. at 15696,  391.N The Commission further concluded that it would revisit the issue of subloop unbundling at a later  X -time based on actions taken by states "or other future developments."N# - {O-ԍId. at 15696,  391.N  X - X` `  c.Adoption of National Standards(#  X-  X}-154.` ` We seek comment on the extent to which we should establish additional national rules for local loops pursuant to sections 201 and 251 in order to remove barriers to  XO-entry and speed the deployment of advanced services.$O- {O!-ԍSee ALTS Petition at 1822; MCI July 30 Ex Parte at 24; NTIA July 17 Ex Parte at 1417. Parties should address whether adoption of additional uniform standards would encourage the deployment of advanced services by increasing predictability and certainty, and by facilitating entry by competitors providing advanced services in multiple states. We also ask commenters to address how any local loop requirements they suggest would affect investment in, and deployment of, advanced  X-services.Y%- {O9'-ԍESI July 30 Ex Parte at 56.Y"E>%,-(-(ZZ"Ԍ X-ԙ155.` ` We tentatively conclude that any standards we adopt in this proceeding should serve as minimum requirements and that states should continue to have flexibility to adopt additional requirements that respond to issues specific to that state or region. In the past two years, a number of states have adopted local loop requirements that go beyond the minimum  X-requirements the Commission adopted in the Local Competition proceeding.&- {O-ԍSee, e.g., In Re Petitions by AT&T Communications of the Southern States, Inc., MCI Metro Access Transmission Services, Inc., for Arbitration of Certain Terms and Conditions of a Proposed Agreement with GTE  {O-Florida Inc., Concerning Interconnection and Resale Under the Telecommunications Act of 1996, Docket Nos. 960847TP, 960980TP, Order No. PSC970064FOFTP (Fla. P.S.C. Jan. 17, 1997) (requiring subloop unbundling). With respect to each subsection that follows, we encourage commenters to address whether any state approach to local loops might provide useful guidelines for additional national standards to facilitate deployment of advanced services. We welcome input from the states on each of these issues.  X -156.` ` We note that competitive LECs can pursue remedies for violations of our local  X -loop requirements before the Commission and the appropriate state commissions.' |- {O2-ԍSee supra  ROCKET55 (discussing the Commission's expedited complaint process to resolve competitive issues in an accelerated fashion). We seek  X -comment on any measures we could take to aid enforcement of our local loop requirements.(\ - {Ou-ԍSee, e.g., NorthPoint July 29 Ex Parte at 1, 45 (Commission should ensure that competitors actually  {O?-receive loop and operations support systems parity); CIX July 30 Ex Parte, Att. at 2 (a competitive Internet industry requires swift and effective enforcement of local loop requirements).  X -  X -` `  d.XLoops and Operations Support Systems(#  X- 157. OSSBEG ` ` We seek comment on whether our existing operations support system rules  X{-adequately ensure that competitive LECs have access to necessary information about loops.){ - {O&-ԍSee, e.g., NAS Comments (CC Docket No.9878) at 4; NorthPoint July 29 Ex Parte at 5. We tentatively conclude that incumbent LECs should provide requesting competitive LECs with sufficient detailed information about the loop so that competitive LECs can make an independent determination about whether the loop is capable of supporting the xDSL equipment they intend to install. Thus, competitive LECs would need access to such information as whether the loops pass through remote concentration devices, what, if any, electronics are attached to loops, the condition and location of loops, loop length, the electrical parameters that determine the suitability of loops for various xDSL technologies,  X-and other loop quality issues.* - {O%-ԍSee MCI July 30 Ex Parte at 23; NEXTLINK Comments (CC Docket No. 9878) at 1415; NorthPoint  {O%-July 7 Ex Parte at 8. We tentatively conclude that it is important that competitors have the ability to make their own assessments because the parameters for determining"F*,-(-(ZZp" whether a loop is xDSLcompatible may differ for different technologies. Such parameters  X-may also change as technology evolves.+"- yOb-ԍVarious manufacturers and research and development firms are improving upon and developing new varieties of xDSL technology. Furthermore, these firms may develop new methods to determine whether, and to  {O-what extent, loops are xDSLcompatible. See e.g., http://telecom-info.bellcore.com/site-cgi/ido/index.html; http://www.xdsl.com/. We seek comment on these tentative conclusions and whether other types of information should also be made available. We note that, to the extent that a competitive LEC cannot obtain nondiscriminatory access to operations support systems, competitive LECs can pursue remedies for violations of our requirements before the  X-Commission and the appropriate state commissions.,- {O -ԍSee supra  ROCKET55 (discussing the Commission's expedited complaint process to resolve competitive issues in an accelerated fashion). We seek comment on any additional measures we could take to ensure that competitive LECs receive nondiscriminatory access to  X_-operations support systems.V-Z_ - {O-ԍSee, e.g., CompTel/ALTS July 29 Ex Parte at 3; see also CIX July 30 Ex Parte, Att. at 2 (a competitive Internet industry requires that competitive LECs obtain timely access to conditioned loops and swift and effective enforcement of this requirement).V We tentatively conclude that incumbent LECs must provide competitors with the same access to operations support systems as the incumbent provides to its advanced services affiliate pursuant to its existing obligation to provide nondiscriminatory  X -access to operations support systems.. . - {O-ԍSee supra  AFFILIATEBEG85שAFFILIATEEND117 (discussing advanced services affiliates).  X -158. OSSEND  LOOPSJDO ` ` We also seek comment on the type of information that is currently available to incumbent LECs. Do incumbent LECs currently have a detailed inventory of existing loops? Do incumbent LECs currently have electronic access to such information? If so, is the same quality of access being made available to new entrants? We tentatively conclude that, in order to satisfy the nondiscrimination requirements of the Act, competitive LECs should have access to the same electronic interfaces that are available to incumbent LECs to obtain loop  Xb-information.T/b - {O-ԍSee 47 U.S.C.  251(c)(3).T We also tentatively conclude that, as new information becomes available, incumbent LECs should be required to share such information with new entrants immediately. We seek comment on these tentative conclusions.  X- "GR /,-(-(ZZ "Ԍ X-` `  e.` Loop Spectrum Management(#  X-  X-159.SPECTRUMBEG` ` We seek comment on the way in which we should address loop spectrum issues. In particular, we ask commenters to address any interference that may result from provision of advanced telecommunications capability using different signal formats on copper  X-pairs in the same bundle.p0- {O-ԍSee, e.g., NorthPoint July 7 Ex Parte at 89.p  X_-160.SPECPOWER` ` Twisted copper pairs, used to deliver xDSLbased services and other services, including plain old telephone service, are typically housed within binder groups. Signals from one pair within a binder group can generate noise in other pairs through electromagnetic  X -coupling, commonly termed "crosstalk." Crosstalk can limit service performance.h1 Z- {O% -ԍSee MCI July 30 Ex Parte at 19.h We ask parties to suggest ways to determine when a particular service, technology or piece of equipment causes network interference such that use of the particular service, technology, or  X -piece of equipment should be prohibited.K2 - {Or-ԍSee, e.g., id.K We also ask commenters to suggest ways to distinguish between legitimate claims that particular services, technologies or equipment create spectrum interference and claims raised simply to impede competition. We seek comment on whether the Commission should adopt any industry standards as the basis for  Xy-national spectrum management requirements. 3y~- yO-ԍThe T1E1.4 working group of the American National Standards Institute (ANSI) is developing standards  {Op-for xDSL spectrum management. See e.g., Network and Customer Installation Interfaces - Asymmetric Digital Subscriber Line (ADSL) Metallic Interface (ANSI T1.413-1995) (ANSI T1.413 standard presents the electrical characteristics of the ADSL signals appearing at the network interface. The physical interface between the network and the customer installation is also described. The transport medium for the signals is a single twisted-wire pair that supports both Message Telecommunications Service (POTS) and full-duplex (simultaneous two-way) and simplex (from the network to the customer installation) digital services. This interface standard provides the minimal set of requirements for satisfactory transmission between the network and the customer installation. Equipment may be implemented with additional functions and procedures.) ftp://ftp.t1.org/pub/  {O-t1stds/413-95.txt. See also US West Spectrum Management Ex Parte, CC Docket No. 9826, at 7 (filed July 21,  {O|-1998) (U S WEST July 21 Ex Parte); NorthPoint July 7 Ex Parte at 89.  We also seek comment on how any requirements should evolve over time so as to encourage and not stifle innovation. In addition, we seek comment on other approaches to spectrum management that would foster procompetitive use of the loop plant by incumbent LECs and new entrants, while providing necessary network protection.  X-161.` ` If we adopt any national standards on spectrum management, we propose to  X-impose the same spectral requirements on both incumbent LECs and new entrants.i4- {Om&-ԍSee NorthPoint July 7 Ex Parte at 89.i We seek comment on whether and how to grandfather existing technology that does not satisfy"Hv4,-(-(ZZ" any new requirements. For example, we might adopt a "riparian rights" approach, under which new users could not interfere with technology already deployed, and would tolerate interference from the preexisting technology. We seek comment on how we might best administer the grandfathering process.  X-162.SPECTRUMEND` ` We also seek comment on whether two different service providers should be allowed to offer services over the same loop, with each provider utilizing different frequencies to transport voice or data over that loop. xDSL technology, for example, separates a single loop into a POTS channel and a data channel, and can carry both POTS and data traffic over  X1-the loop simultaneously.H5Z1- {O -ԍSee Sprint Comments (CC Docket Nos. 9811, 9826, 9832) at 8; APK Net, Cyber Warrior, Helicon Online, Inforamp, Internet Connect, MTP, and Proaxis Communications Comments (CC Docket Nos. 9811, 9826, 9832) at 1415; US West Comments (CC Docket Nos. 9811, 9832) at 56.H A competitive LEC may want to provide only highspeed data service, without voice service, over an unbundled loop. Should the competitive LEC have the right to put a high frequency signal on the same loop as the incumbent LEC's voice signal? If a competitive LEC takes an entire loop, could the competitive LEC sell the voice channel back to the incumbent LEC or to another carrier? Should the competitive LEC be allowed to lease the loop for data services and resell the voice service of the incumbent LEC? Commenters should address with particularity the advantages and disadvantages of these various possibilities, and what practical considerations would arise in each situation. For example, which entity would manage the frequency division multiplexing equipment if two carriers are offering services over the same loop? We tentatively conclude that any voice product that the incumbent LEC provides to its advanced services affiliate would have to be  X4-made available to competitive LECs on the same terms and conditions.64- {O-ԍSee supra  AFFILIATEBEG85שAFFILIATEEND117 (discussing advanced services affiliates). For example, if the advanced services affiliate leases the loop and resells the incumbent's voice service, the competitive LEC must be allowed to do likewise.  X-  X-` `  f.XUniform Standards for Attachment of Electronic Equipment  X-at the Central Office End of a Loop (#  X-163.` ` To facilitate competition in the local loop, we tentatively conclude that there should be uniform national standards for attachment of electronic equipment (such as modems and multiplexers) at the central office end of a loop by incumbent LECs and new entrants. The requirements would apply to both incumbent LEC and new entrant equipment. The requirements would serve the same role, for the attachment of equipment to the central office  X -end of a loop, as do the Part 68 Connection of Terminal Equipment to the Telephone  X -Network rules for the attachment of customer premises equipment. Currently, each incumbent LEC sets its own requirements for central office equipment, and each has its own processes for certifying equipment before it can be connected to loop plant. This increases new entrants' costs and time to market. A simple set of national requirements would reduce new entrants' costs, speed their time to market, and reduce confusion. We seek comment on"!I|6,-(-(ZZ " the content of these requirements. We also seek comment on whether central office equipment complying with these requirements should be certified, and if so, how.  X-  X-` `  g.XRedefining the Local Loop to Ensure Competitive LEC Access to Loops Capable of Providing Advanced Services(#  X-  Xv-164.LOOPDEFBEG` ` In the Order above, we emphasize that, under our existing rules, incumbent  X_-LECs are required to make xDSLcompatible loops available to competitors.Y7_- {O-ԍSee supra  DSLCAP52.Y We seek comment on whether our current definition of the loop is sufficient to ensure that competitive LECs have access to the loop functionalities they need to offer advanced services, such as xDSLbased services, or whether any refinements to that definition are necessary to ensure that incumbent LECs are providing competitive LECs with loops capable of delivering such  X -advanced services.8" Z- {O-ԍSee, e.g., ALTS Petition at 1617; e.spire Comments (CC Docket No. 9878) at 56 (if competitive LECs are refused permission to interconnect with xDSL equipment, are refused loops with xDSL electronics, and not given access to loops free of loading coils or bridged taps, competitive LECs will effectively be prevented from providing xDSLbased services on a significant number of loops). Commenters should also address whether our current definition is sufficiently flexible and forwardlooking to facilitate deployment of new technologies and new services in the future.  X- X` `  h.Unbundling Loops Passing through Remote Terminals(#  Xy-  Xb-` `  (1)hh,Background  XK-  X4-165. DLCSBEG ` ` xDSLBased Services over Digital Loop Carrier Technology. A traditional copper loop typically runs from the network interface device at the customer's premises to the LEC's central office. Because of voice transmission quality degradation and maintenance challenges associated with long copper loops, along with the economic efficiencies associated with aggregating individual loops, LECs have begun to deploy remote concentration devices.  X-Remote concentration devices, such as digital loop carrier (DLC) systems,]9D- yO-ԍThe use of DLCs varies by telephone company and typically ranges from almost zero to as much as 30 percent of the local loops within a given LEC's local network. A DLC converts analog signals, from many copper loops that terminate at a remote terminal, into digital signals, multiplexes the signals, and transports them, usually over fiber, to the central office. The two traditional DLC systems are universal DLC (UDLC) and integrated DLC (IDLC). UDLC, the older of the two systems, is not directly integrated with the switch, and converts digital signals back to analog at the central office before delivering the signals to the central office switch. IDLC is integrated with the switch and provides a direct, digital interface to a digital central office switch. It is more difficult to unbundle IDLC traffic, because UDLC traffic is demultiplexed before it reaches the central office switch, while IDLC traffic is not. For a more detailed discussion of IDLC and the methods of  {O%-unbundling IDLCdelivered loops, see infra, Appendix C.] are an efficient means of aggregating subscriber traffic on to common transmission facilities, usually fiber, for"J9,-(-(ZZ4" transmission from a remote terminal to the central office, rather than dedicating a separate  X-transmission facility (e.g., a copper loop) for each subscriber's traffic all the way from the customer's premises to the central office.  X-166.` ` Although many local loops are able to support xDSL technology, some are not. For example, xDSL is distance sensitive, and bandwidth for xDSLbased services decreases as  Xx-loop length increases.:x- {O-ԍDifferent variations of xDSL technology have different distance limitations. See "General Introduction to Copper Access Technologies," http://www.adsl.com/general_tutorial.html. In addition, loop equipment such as loading coils;x"- yOK -ԍLOOPELECTRONLECs use loading coils to modify the electrical characteristics of the local loop, allowing better quality voice frequency transmission over extended distances (typically greater than 18,000 feet). In this extended distance scenario, loading coils are placed every 6,000 feet on the line. Loading coils are not compatible with the higher frequency attributes of xDSL transmissions and they must be removed before xDSL-based services can be provisioned. The use of loading coils varies by LEC and typically ranges from virtually zero to as much as 20 percent of the local loops within a given LEC's access network.  and bridged  Xa-taps,X<a- yO-ԍLOOPELECTRONA bridged tap is any portion of a loop that is not in the direct talking path between the central office and the service users' terminating equipment. For example, a bridged tap may be an extension of the circuit beyond the service user's location. In order to provide xDSL, bridged taps generally have to be removed. Incomplete documentation on the physical layout of the network and opening and closing cable splices can make the process of locating and removing bridged taps a time consuming and, therefore, costly process. X whicharedeployed on many local loops, interfere with xDSL transmission. Furthermore, with current xDSL technology, xDSL transmissions can only be supported over continuous copper loops. Thus, in order to provide an xDSLbased service over a loop passing through a remote terminal, the loop must either be reassigned to a physical copper pair connecting the end user's premises to the central office, or the xDSL portion must terminate at the remote terminal, where it can be converted to a format compatible with the  X -digital loop carrier (i.e., through the use of a DSLAM at the remote terminal).  X - ` ` X (2)hh,Discussion (#  X}-167.` ` Unbundling DLCDelivered Loops. As discussed in the Order above, we grant ALTS' request for a declaratory ruling that incumbent LECs are required to provide loops  XO-capable of transporting highspeed digital signals where technically feasible.Y=OJ - {OJ -ԍSee supra  DSLCAP52.Y This requirement includes the obligation to unbundle highspeed datacompatible loops whether or  X!-not a remote concentration device like a digital loop carrier is in place on the loop.g>Z!- {O#-ԍSee supra  RTCAP54, 153; see also NAS Comments (CC Docket No 9878) at 23 (Commission should affirm that incumbent LECs have a duty to provide xDSLequipped loops as an unbundled element when those loops are provisioned through a digital loop carrier or similar remote terminal).g We tentatively conclude that providing an xDSLcompatible loop as an unbundled network element is presumed to be "technically feasible" if the incumbent LEC is capable of providing"K>,-(-(ZZ" xDSLbased services over that loop. Consistent with the procompetitive goals of the Act, we tentatively conclude that the incumbent LEC shall bear the burden of demonstrating that it is not technically feasible to provide requesting carriers with xDSLcompatible loops. We seek comment on these tentative conclusions.  X-168.` ` We note that, to the extent that a competitive LEC cannot obtain nondiscriminatory access to xDSLcompatible loops, competitive LECs can pursue remedies for violations of our requirements before the Commission and the appropriate state  XH-commissions.?H- {O -ԍSee supra  ROCKET55 (discussing the Commission's expedited complaint process to resolve competitive issues in an accelerated fashion). We seek comment on any additional measures we could take to ensure that  X1-competitive LECs receive nondiscriminatory access to access to xDSLcompatible loops.V@Z1"- {O -ԍSee, e.g., CompTel/ALTS July 29 Ex Parte at 3; see also CIX July 30 Ex Parte, Att. at 2 (a competitive Internet industry requires that competitive LECs obtain timely access to conditioned loops and swift and effective enforcement of this requirement).V We tentatively conclude that if the incumbent chooses to offer xDSLbased services through an advanced services affiliate, whatever loops are provided to the affiliate must also be  X -provided to the other entrants.oAZ D- {O-ԍSee supra  AFFILIATEBEG85שAFFILIATEEND117 (discussing advanced services affiliates); see also NorthPoint July 29 Ex Parte at 2 (if the incumbent's advanced services affiliate receives digital loops, competitive LECs should be able to obtain unbundled digital loops).o  X -169.` ` We ask commenters to address the technical issues that may arise when local loops pass through digital loop carriers or similar remote concentration devices. For example, we ask commenters to address the issues of loop quality, analogtodigital translation of signals, electronic equipment attached to loops, loop length, and other issues that arise with remote concentration devices. We ask commenters to address the traffic management issues that may arise when local loops pass through digital loop carrier systems or similar remote concentration devices. We ask commenters to identify and evaluate any concerns that they identify with having the traffic on the digital loop carrier systems managed by the incumbent  X-LEC and to identify feasible alternatives.iBf - {O-ԍSee, e.g., MCI July 30 Ex Parte at 21.i We encourage commenters to identify other technological problems and to propose concrete solutions to those problems. We also ask commenters to address the extent to which next generation digital loop carrier systems and other new technologies will affect the provision of advanced data services over unbundled loops.  X|-170.` ` We ask commenters to propose methods of unbundling loops passing through remote concentration devices that will enable competitive carriers to provide advanced services. We ask commenters to identify and evaluate the benefits and drawbacks of any proposed methods. For example, migrating a DLCdelivered loop to copper plant, although"7L B,-(-(ZZ" generally regarded as the means by which DLCdelivered loops can be made xDSL X-compatible,C- {Ob-ԍSee, e.g., BellSouth Ex Parte, CC Docket Nos. 97208, 97231, 97121, 97131 (filed April 1, 1998). may not always provide an xDSLcompatible loop, because customers served by digital loop carrier may be located far from the central office, and xDSLbased services are distance sensitive. Other methods, such as allowing the competitive LEC to collocate at the remote terminal may pose problems due to space limitations. Other methods may be extraordinarily costly or may require additional research or development before they can be deployed. We ask commenters to evaluate the technical feasibility, legal consequences, and policy ramifications of any proposed unbundling methods. We also ask commenters to consider how any loop requirements we may adopt will affect investment in, and deployment,  X1-of advanced services._D1Z- {O< -ԍESI July 30 Ex Parte at 56._  X -171.` ` We tentatively conclude that the competitive LEC may request any "technically feasible" method of unbundling the DLCdelivered loop, and the incumbent LEC is obligated to provide the particular method requested. We base this tentative conclusion on the premise that each competitive LEC may have its own business strategy and unique reasons for  X -obtaining loop access in a particular manner or at a specific interconnection point.E - yOD-ԍThere currently appear to be three general types of competitive LECs that may request unbundled DLCdelivered loops. Each type of requesting carrier may want or need the DLC loop to be unbundled in a different way. First, certain competitive LECs may want to enter the market through a combination of unbundled network elements, such as the DLCdelivered loop and the unbundled switch (including all features, functions, and capabilities). Second, other competitive LECs that have their own switch may want only the functionality of a loop between the customer and the incumbent LEC's central office switch. Such competitive LECs may want to provide highspeed data access via xDSL technologies and may prefer a copper pair from the central office to the customer, provided a properly qualified, and sufficiently short, copper pair is available. Third, other competitive LECs, seeking to provide highspeed data access via xDSL technologies, may want to access the unbundled loop  {OL-at the remote terminal. Access to the remote terminal implicates the subloop unbundling issues considered infra  yO-at  SUBLOOPBEG173שSUBLOOPEND176. We tentatively conclude that, in the event that the incumbent LEC demonstrates that the unbundling method requested by the competitive LEC is not technically feasible, the competitive LEC may request other unbundling methods. In the event that the incumbent LEC demonstrates that none of the requested methods are technically feasible, the incumbent LEC may offer another unbundling method, provided that the method would provide the  X-competitive LEC with a loop of equal quality and functionality as the incumbent's loop.eFN - {O"-ԍSee 47 C.F.R.  51.307, 51.311, 51.313.e We seek comment on these tentative conclusions.  X-172. DLCSEND ` ` We further tentatively conclude that competitive LECs should not be comparatively disadvantaged by incumbent LECs regarding provisioning of DLCdelivered loops. For example, if the technically feasible solution to provide xDSLbased service to a"MF,-(-(ZZR" customer presently served by a DLCdelivered loop is bypass by additional copper infrastructure, an incumbent LEC (or its advanced services affiliate) should not be able to avail itself of that option while denying or delaying that option to a competitive LEC. Similarly, if the incumbent LEC (or its advanced services affiliate) provides xDSLbased services through the use of a DSLAM at the remote terminal, the competitive LEC must be able to avail itself of that option, either through the use of the incumbent LEC's DSLAM or  Xv-its own DSLAM collocated at the remote terminal.Gv- {O-ԍFor a discussion of competitive LEC access to remote terminals, see infra  SUBLOOPBEG173שSUBLOOPEND176. Accordingly, we tentatively conclude that incumbent LECs must make available, in a nondiscriminatory manner, to competitive LECs the same methods that the incumbent (or its advanced services affiliate) uses itself to provide advanced telecommunications capability such as xDSLbased services. We further tentatively conclude that deployment intervals for provisioning xDSLcompatible loops should be the same for incumbent LECs and competitive LECs, regardless of whether the loop passes  X -through a remote concentration device.sH Z- {O-ԍSee NorthPoint July 7 Ex Parte at 7.s We seek comment on these tentative conclusions. We also ask commenters to address whether we should require incumbent LECs to provision  X -xDSLcompatible loops within a specified interval and, if so, what that interval should be.PI - {O[-ԍSee id.P Again, we tentatively conclude that whatever accommodations are provided to the incumbent's  X-advanced services affiliate must be equally provided to new entrants.JZ~- {O-ԍSee supra  AFFILIATEBEG85שAFFILIATEEND117 (discussing advanced services affiliates); see also NorthPoint July 29 Ex Parte at 2 (if the incumbent's advanced services affiliate is permitted to place its DSLAM in remote terminals, competitive LECs should be permitted to do so as well).  Xb-173.SUBLOOPBEG` ` SubLoop Unbundling and Collocation at the Remote Terminal. We seek comment on whether we need to extend the concept of loop unbundling to subloop elements in order to further the procompetitive goals of the 1996 Act and facilitate deployment of  X-advanced services.K- {On-ԍSee ALTS Petition at 4144; MCI July 30 Ex Parte at 23 (incumbent LECs must provide access to all network elements encompassing distribution plant, remote terminals, and feeder plant; incumbent LECs must  {O-provide collocation options in remote terminals); CIX July 30 Ex Parte, Att. at 2 (a competitive Internet industry requires interconnection at points of aggregation, including remote terminal units of digital loop carrier systems); NAS Comments (CC Docket No. 9878) at 34 (Commission should require incumbent LECs to permit a competitor's xDSL line cards in the incumbent LEC's remote terminals as part of the existing requirement for incumbent LECs to permit carrier collocation at any technically feasible point. This would allow customers served by loops provisioned through remote terminals to have a choice of any carrier, and would also expand consumer choice, if the competitor's xDSL line card has a potentially wider array of xDSL offerings than the incumbent LEC's); WorldCom Comments (CC Docket No. 9878) at 16 (competitive LEC must have choice of either putting its own electronics in the remote terminal or utilizing incumbent's electronics). We ask commenters to address whether it is technically feasible to require incumbent LECs to unbundle subloop elements and provide competitive LECs access to the remote terminal so that competitive LECs can provide advanced services."NK,-(-(ZZ"Ԍ X-ԙ174.` ` We tentatively conclude that incumbent LECs must provide sub-loop unbundling and permit competitive LECs to collocate at remote terminals, unless the incumbent LEC can demonstrate one of the following with respect to the particular remote terminal requested by the competitive LEC: (1) subloop unbundling is not "technically feasible;" or (2) there is insufficient space at the remote terminal to accommodate the requesting carrier. We make this tentative conclusion because the use of subloop elements and access to the remote terminal may be the only means by which competitive LECs can provide xDSLbased services for those endusers whose connection to the central office is currently provided via digital loop carrier systems. If an incumbent deploys digital loop carriers extensively and refuses to allow competitive LECs access at the remote terminal, the incumbent can effectively deny market entry by such competitive LECs and discourage the deployment of advanced telecommunications capability. We further tentatively conclude that it would be an unreasonable practice for an incumbent LEC to deny competitive LECs collocation at the remote terminal on either of these grounds, while allowing its own affiliate to collocate at the remote terminal. We seek comment on these tentative conclusions. In particular, we seek comment on whether such subloop unbundling and remote terminal access are, in fact, necessary in order for competitive LECs to provide high bandwidth services, such as xDSLbased services. We ask commenters to consider whether new technologies, such as next generation digital loop carrier systems, might reduce or eliminate the need for competitive LEC access to subloop elements. As an alternative to requiring subloop unbundling, or if subloop unbundling proves to be technically infeasible or there is insufficient space at the remote terminal, we seek comment on whether the incumbent LEC should be obligated to provide an alternative unbundling method at no greater cost to the competitive LEC. Should the incumbent LEC be obligated to demonstrate that such unbundling method will provide the competitive LEC with a loop of the same quality and functionality as the loop that the competitive LEC would have obtained through access to the subloop element(s)?  X|-175.` ` We also ask commenters to address the use to which competitive LECs would put subloop elements and what specific subloop elements, if any, should be unbundled. We also ask commenters to address the technical issues involved with loops that pass through remote concentration devices, including the ability of competitive providers of advanced services to access the necessary elements of the incumbent LEC networks. Commenters should address the extent to which the incumbent LEC's control over the remote terminal and electronics therein might limit the ability of end users to access a full range of competitive  X-services.L - yOT"-ԍFor example, the xDSL customer premises equipment must have an electronic match at the carrier's remote terminal or other xDSL termination point. An incumbent LEC's installation of a particular manufacturer's DSLAM at a remote terminal might limit the ability of customers using the xDSL customer premises equipment of another manufacturer to utilize the remote terminal DSLAM.  We seek comment on the technical issues of customer premises equipment and central office or remote terminal equipment compatibility, and we ask commenters that perceive problems to propose solutions that would ensure that end users have the widest"!OL,-(-(ZZ " possible access to competitive services. We also ask commenters to address what should be done if more competitive LECs request access to a remote terminal than the remote terminal can accommodate. What would be a fair means of allocating limited space? Should there be a lottery system? Should the space be auctioned? Should the space be made available on a "first come, first served" basis? If we conclude that "first come, first served" is the most appropriate method, how can we ensure that incumbent LECs do not fill up all the available space before competitive LECs have the opportunity to collocate their equipment? We tentatively conclude that an incumbent LEC may not take all the available space in a remote terminal, and then transfer ownership of that equipment in the remote terminal to an advanced services affiliate. We seek comment on this tentative conclusion.  X -176.SUBLOOPEND` ` We seek comment from those with evidence demonstrating or challenging the proposition that subloop unbundling and competitive LEC access to remote terminals may impair network reliability or pose significant technical problems. We seek comment on whether accountability for the network would be lost or compromised if competitive LECs are allowed access to the incumbent LEC's remote terminals or other plant in the field. We seek comment on whether there is a need for operational, administrative, and maintenance procedures for allowing access to the incumbent LEC's plant in the field in order to ensure network quality and reliability. We seek comment on how best to allow such access and ask commenters to propose operational, administrative and maintenance procedures to ensure network quality and reliability in the event that we permit competitive LECs access to incumbent LEC plant in the field. We also seek comment on ways to minimize the cost of providing such access.  X- X` `  i.Effects of Additional Requirements for Local Loops(#  X-  X-177.` ` We seek comment on whether (and if so, to what extent) any of our tentative conclusions or proposals might affect existing negotiated or arbitrated interconnection  X|-agreements, existing state requirements, or pending state proceedings.M|- {O-ԍSee ALTS Petition at 38; CIX (CC Docket No. 9878) at 1011; e.spire Comments (CC Docket No. 98 yO-78) at 10; Intermedia Comments (CC Docket No. 9878) at 7 ; TRA Comments (CC Docket No. 9878) at 9 . -J:\POLICY\706\ORDER\SUBDOCS\LOOPS.NOT-  XN- -J:\POLICY\706\ORDER\SUBDOCS\251D2.NOT- _ XUD.X` ` Unbundling Obligations Under Section 251(c)(3)(#`  X7-  X -` ` 1. Background  X-178. PARA165X ` ` In the Order, we grant the ALTS petition to the extent that ALTS requests a declaratory ruling that (1) advanced services are telecommunications services, and that the _facilities and equipment used to provide advanced services are network elements subject to" P"M,-(-(ZZ&"  X-the obligations in section 251(c),_N- {Oy-ԍSee supra  ALTSNETELEMS29._ and (2) incumbent LECs are required to unbundle loops  X-capable of transporting high speed digital signals.\OZ- {O-ԍSee supra  ALTSLOOPS27.\  X-179.` ` Sections 251(c)(3) and 251(d)(2) of the Act set forth the standards that the Commission must consider in identifying unbundled network elements that incumbent LECs must make available to competitors. Section 251(c)(3) requires incumbent LECs to provide requesting carriers with "nondiscriminatory access to network elements on an unbundled basis  X_-at any technically feasible point . . . ."P_- {O -ԍ47 U.S.C.  251(c)(3); see Local Competition Order, 11 FCC Rcd at 15640,  278. The Commission noted in the Local Competition  XJ-Order, however, that section 251(d)(2) gave it authority "to refrain from requiring incumbent  X5-LECs to provide all network elements for which it is technically feasible to provide access."nQ5~- {Od-ԍLocal Competition Order, 11 FCC Rcd at 15641,  279.n The Commission further concluded that, to identify unbundled elements, the Commission "shall 'consider, at a minimum,' whether access to proprietary elements is necessary (the 'proprietary standard'), and whether requesting carriers' ability to provide services would be impaired if the desired elements were not provided by an incumbent LEC (the 'impairment  X -standard.')."eR - yO-Ѝ47 U.S.C.  251(d)(2) (emphasis added).e Although section 251(d)(2) provides that the "proprietary standard" and the "impairment standard" serve as "minimum" criteria that the Commission must weigh, the Commission declined, at the time, to adopt any additional criteria under section 251(d)(2) that  X}-might affect incumbent LEC unbundling requirements.nS}- {O-ԍLocal Competition Order, 11 FCC Rcd at 15644,  288.n   XO- ` ` 2. Discussion(#  X8-  X!-180. NPRMUNE ` ` We now seek comment on the specific unbundling requirements we should impose on network elements used by incumbent LECs in the provision of advanced services. Parties should address the specific network elements that incumbent LECs should be required to unbundle pursuant to section 251(c)(3). In particular, parties should address the applicability of section 251(d)(2), namely: (1) the extent to which particular network elements are "proprietary" as that term is used in section 251(d)(2)(a), and (2) the extent to which a carrier would be "impair[ed]," as that term is used in section 251(d)(2)(b), in its ability to offer advanced services without unbundled access to a particular network element.  XR-181.D2` ` We also seek comment on whether there are any additional criteria under section 251(d)(2) that the Commission should consider when identifying those network";Q2 S,-(-(ZZ" elements used to provide advanced services that must be made available pursuant to section 251(c)(3). Parties suggesting additional criteria should address the extent to which consideration of those criteria could lead the Commission to remove certain facilities used to provide advanced services from the unbundling obligations of section 251(c)(3). Parties should also address the extent to which consideration of each criterion will promote the deployment of advanced services.  X_-182.` ` In addition, we seek comment on the attributes of particular network elements that may make unbundling of those elements technically infeasible. For example, we note that it may not be technically feasible to offer unbundled access to individual packet switches. If the functionality offered by a single packet switch in the incumbent's network is not available to a competitor using packet switches of a different manufacturer, we seek comment on whether the unbundling of that packet switch would be "technically infeasible." In addition, we ask commenters how an incumbent LEC's claim of technical infeasibility should be verified, such as whether the lack of a standard network interface, for example, should support such a claim.  Xy-183.` ` We also seek comment on NTIA's proposal that we find section 251(c) to be  Xb-fully implemented on a servicebyservice basis.XTb- {O-ԍNTIA July 17 Ex Parte at 8, n.23.X For example, NTIA suggests that the Commission should determine that section 251(c) is fully implemented with respect to xDSL services only after incumbent LECs "give competitors access to . . . loop facilities capable of  X-supporting DSL services and collocation space on [incumbent] LEC premises."@UZ- {O(-ԍId. at 8.@ Parties commenting on this proposal should address whether it provides an appropriate framework for ensuring compliance with section 251(c) by incumbent LECs.  X-184. PARA168X ` ` In addition, given our objective in this proceeding to encourage deployment of wireline advanced services by all telecommunications carriers, including incumbent LECs, we seek comment in this section on any other specific measures that the Commission should take to provide regulatory relief from the obligations of section 251(c) for incumbent LECs that choose to offer advanced services on an integrated basis. Parties should address the extent to which any measures they propose will give incumbent LECs greater incentive to offer advanced services, promote competition in the advanced services market, and encourage widespread deployment of such services. Parties should also address whether such relief would justify the loss of significant procompetitive benefits that we expect would accompany a separate affiliate approach.  -J:\POLICY\706\ORDER\SUBDOCS\251D2.NOT- "RU,-(-(ZZ)""Ԍ X- /J:\POLICY\706\ORDER\SUBDOCS\RERSALE.ORD/ _ E.` ` Resale Obligations Under Section 251(c)(4)   X-` `  a.` Background (#  X-185.` ` Section 251(c)(4) imposes on incumbent LECs the obligation to offer for resale "any telecommunications service that the carrier provides at retail to subscribers who are not  Xv-_telecommunications carriers."JVv- yO-ԍ47 U.S.C.  251(c)(4).J In the Local Competition Order, the Commission explained that "an incumbent LEC must establish a wholesale rate for each retail service that: (1) meets the statutory definition of a 'telecommunications service'; and (2) is provided at retail to  X3-subscribers who are not 'telecommunications carriers.'"nW3X- {O< -ԍLocal Competition Order, 11 FCC Rcd at 15934,  871.n The Commission emphasized that  X -the resale obligation extends to all such telecommunications services.X - {O-ԍId. at 15930, 15931, 15934,  863, 86566, 871; see, e.g., AT&T Reply Comments (CC Docket Nos. 9811, 9826, 9832) at 11.  X -186.` ` The Commission went on to state, though, that "exchange access services are  X -not subject to the resale requirements of section 251(c)(4)."nY D- {O-ԍLocal Competition Order, 11 FCC Rcd at 15934,  873.n Although "end users do occasionally purchase some access services" such as special access, it reasoned, the "vast  X -majority" of purchases of interstate access service are telecommunications carriers.:Z - {O2-ԍId.: The Commission drew a distinction between telecommunications services "targeted to enduser subscribers," which Congress "clearly intended" to be subject to the resale requirement, and those "predominantly offered to, and taken by " interexchange carriers which are not subject  XO-to the resale requirement.N[Oh - {Oh-ԍId. at 15935,  874.N The Commission concluded that exchange access services, as a class, fell in the latter category, and thus, the Commission concluded, outside the bounds of  X!-section 251(c)(4).:\! - {O-ԍId.:  X- ` `  b.` Discussion (#  X-187. RESALE1 ` ` In the Order, we conclude that an incumbent LEC has the obligation to offer for resale the advanced services that it generally offers to subscribers who are not"S \,-(-(ZZ"  X-telecommunications carriers.^]- {Oy-ԍSee supra  RESALEORDER30.^ We further conclude above that, to the extent advanced services are telephone exchange services, incumbent LECs must offer such services for resale.  X-188.RESALENPRM` ` We now seek comment on the applicability of section 251(c)(4) to advanced services to the extent that such services are exchange access services. We tentatively conclude that such advanced services are fundamentally different from the exchange access  Xv-services that the Commission referenced in the Local Competition Order and concluded were not subject to section 251(c)(4). We expect that advanced services will be offered predominantly to ordinary residential or business users or to Internet service providers. None  X3-of these purchasers are telecommunications carriers.^3Z- {O> -ԍSee Report to Congress on Universal Service at  7382 (Internet service providers are not telecommunications carriers).  X -189. RESALE2 ` ` By its terms, section 251(c)(4) applies to "any telecommunications service that the carrier provides at retail to subscribers who are not telecommunications carriers." Advanced services generally offered by incumbent LECs to subscribers who are not  X -telecommunications carriers meet this statutory test._ - {O%-ԍAs noted above, advanced services are telecommunications services. See supra  TELECOMBEG35שTELECOMEND36. We thus tentatively conclude that these services fall within the core category of retail services that both Congress and the Commission deemed subject to the resale obligation, and the reasoning that led the  X{-Commission in the Local Competition Order to exclude exchange access from the section 251(c)(4) resale obligation does not apply. We tentatively conclude, therefore, that advanced services marketed by incumbent LECs generally to residential or business users or to Internet service providers should be deemed subject to the section 251(c)(4) resale obligation, without  X!-regard to their classification as telephone exchange service or exchange access.`!F- yO-ԍ47 U.S.C.  251(c)(4). To the extent that specific advanced services are marketed primarily to telecommunications carriers, however, they would remain outside the scope of the resale obligation. We seek comment on these tentative conclusions. /J:\POLICY\706\ORDER\SUBDOCS\RERSALE.ORD/ "T`,-(-(ZZ"Ԍ X- ,J:\POLICY\706\ORDER\SUBDOCS\LATA.NOT,  #Xj\  P6G;XP# F.` ` Limited InterLATA Relief  X-` ` 1. Background  X-190.` ` In this section, we seek comment on the scope of section 271(b)(3) of the Act, which permits the BOCs and their affiliates to provide certain "incidental interLATA  Xv-services."Kav- yO-ԍ 47 U.S.C.  271(b)(3).K In addition, section 3(25)(B) of the Act permits the BOCs to modify LATA  X_-boundaries provided that the Commission approves such modifications.Ib_X- yOh -ԍ47 U.S.C.  3(25)(B).I Since the 1996 Act  became law, both the Commission and the Common Carrier Bureau (acting on delegated  X1-authority) have approved a significant number of LATA boundary modifications.c1- {O -ԍSee, e.g., Petitions for Limited Modifications of LATA Boundaries to Provide Expanded Local Calling  {O-Service (ELCS) at Various Locations, CC Docket No. 96159, Memorandum Opinion and Order, 12 FCC Rcd  {O^-10646 (1997) (ELCS MO&O) (granting 23 requests for boundary modifications to permit calls within certain  {O(-extended local calling service areas that straddle LATA boundaries to be treated as intraLATA); see also  {O-Petitions for LATA Association Changes by Independent Telephone Companies, Memorandum Opinion and  {O-Order, CC Docket No. 96158, 12 FCC Rcd 11769 (1997) (Association Order) (granting requests to modify LATA boundaries to switch three independent telephone company exchanges in Texas from one SBC LATA to  {ON-another); Guadalupe Valley Telephone Cooperative Request for LATA Relief Between the Waelder Exchange and  {O-Corpus Christi LATA, Memorandum Opinion and Order, 13 FCC Rcd 4560 (Network Services Div., Com. Car. Bur., 1998). As a general matter, the Commission, within the discretion granted to it under the Act, weighs the need for the proposed modification against the potential harm from anticompetitive BOC activity, and considers whether the proposed modification will have a significant effect on the  X -BOC's incentive to open its local market pursuant to section 271.}d - {O-ԍELECs MO&O at 12 FCC Rcd at 1065757,  23; see also Petition for Declaratory Ruling Regarding  {O-US West Petitions to Consolidate LATAs in Minnesota and Arizona, Order, 12 FCC Rcd 4738 (Com. Car. Bur.  {O-1997) (LATA Modification Order), petition for recon. and application for review or stay pending (determining, in regard to US WEST requests to create single LATAs within each of Arizona and Minnesota, that the Commission could not have, and did not, delegate its authority over LATA boundary changes to the states).} In the Order above, we deny Ameritech's, Bell Atlantic's, and US WEST's requests for largescale changes in LATA boundaries for packetswitched services, because such changes could effectively eviscerate section 271 for those services and circumvent the procompetitive incentives for opening the  Xy-local market to competition.peyF- {Op"-ԍSee supra  PARA8539שPARA8782.p In this section, we seek comment on the criteria we should use in evaluating requests for more targeted LATA boundary changes. We also seek comment on whether there are any other forms of interLATA relief that we should consider. "4Ue,-(-(ZZT"Ԍ X-` ` 2 Discussion  X-191.` ` Incidental InterLATA Services. Section 271(b)(3) permits the BOCs and their  X-affiliates to provide "incidental interLATA services," as defined in section 271(g).Jf- yO4-ԍ47 U.S.C.  271(b)(3).J We seek comment on the scope of this authority as it relates to BOC provision of advanced services. Section 271(g)(2), for example, permits the BOCs to provide "twoway interactive video services or Internet services over dedicated facilities to or for elementary and secondary  X_-schools."Jg_X- yOh -ԍ47 U.S.C.  271(g)(2).J This authority clearly allows the BOCs to provide certain advanced services to or for elementary and secondary schools. We seek comment on whether the ability to provide the other incidental interLATA services defined in section 271(g) affects the BOCs' ability to deploy advanced services on a reasonable and timely basis.  X -192. PARA169 ` ` LATA Boundary Modifications for Elementary and Secondary Schools and  X -Classrooms. We seek comment on whether additional relief beyond the incidental interLATA authority set forth in section 271(g)(2) would help ensure that elementary and secondary  X -schools and classroomshave adequate access to advanced services.hX - yO@-ԍWe note that section 706(a) directs us "to encourage the deployment... of advanced telecommunications capability to... elementary and secondary schools and classrooms...." 47 U.S.C. 157note. We tentatively conclude, for example, that it would be reasonable to approve LATA boundary modifications that allow BOCs to provide advanced services to entire elementary or secondary school districts on an intraLATA basis, when the school districts straddle LATA boundaries. We ask commenters to suggest other types of LATA boundary modifications that would encourage deployment of advanced telecommunications capability to elementary and secondary schools and classrooms. Parties should address, with particularity, the criteria that we should use to evaluate these requests. We seek comment, for example, on whether we should adopt the  X-same criteria used in the expanded local calling service proceedings.di- {O-ԍSee, e.g., ELCS MO&O, 12 FCC Rcd 10646.d Parties should also address whether we should take such actions only to the extent that advanced services are provided by BOC advanced services affiliates, rather than by the BOCs.  X-193.` ` Network Access Points. We seek comment on the criteria that we should use to evaluate LATA boundary modification requests that would allow BOCs to carry packetswitched traffic across current LATA boundaries for the purpose of providing their subscribers with highspeed connections to nearby network access points, which are points of  X7-access to the Internet.tj7- yO&-ԍHarry Newton, Newton's Telecom Dictionary at 477 (14th ed. 1998). t U S WEST contends that many rural areas do not have high"7V* j,-(-(ZZ"ԫ X-capacity network access points.Kk- yOy-ԍU S WEST Petition at 824.K We seek comment on the criteria we should use to determine whether a LATA has highspeed access to the Internet. Commenters should provide empirical data on the number and location of LATAs that do not contain highspeed network access points.  X-194.` ` We tentatively conclude that some modification of LATA boundaries may be necessary to provide subscribers in rural areas with the same type of access to the Internet that other subscribers throughout the nation enjoy. We also tentatively conclude that modification of those boundaries for the purpose of facilitating highspeed access to the Internet would further Congress' goal of ensuring that advanced services are deployed to all  X -Americans.Il X- yO# -ԍ47 U.S.C.  157 note.I Furthermore, we tentatively conclude that such boundary modifications would be consistent with the Common Carrier Bureau's decision that, under certain circumstances, a limited LATA boundary modification for integrated services digital network (ISDN) services is appropriate where such a modification is necessary to accommodate a demonstrated need  X -and would have only a small impact on competition.m$ - {OW-ԍSouthwestern Bell Telephone Company Petition for Limited Modification of LATA Boundaries to Provide  {O!-ISDN at Hearne, Texas, Memorandum Opinion and Order, NSD No. NSDLM9726, DA 98923 (Com. Car. Bur. rel. May 18, 1998) (granting SBC's request for a limited LATA boundary modification for the purpose of providing ISDN services in one LATA through facilities in a different LATA). We seek comment on these tentative conclusions. We also seek comment on whether LATA modifications to facilitate highspeed access to the Internet for rural subscribers would be consistent with the requirement under section 10(d) of the Act that the Commission must ensure that the requirements of section 271  Xb-are fully implemented before a BOC may offer interLATA services.QnZb- {O-ԍSee supraĠ LATA180 ש LATA282 ; LATA Modification Order, 12 FCC Rcd at 4751, 25 (concluding that section 10(d) limits the manner in which the Commission may exercise its sole and exclusive authority to approve the modification of LATA boundaries).Q  X4-195.` ` In addition, we seek comment on the type of documentation that BOCs should submit in order to qualify for such a LATA boundary modification. We note that in a July 23, 1998 petition, Bell Atlantic asks that we modify LATA boundaries for the limited purpose of allowing Bell Atlantic to provide highspeed connections between West Virginia's two LATAs and between West Virginia and the nearest Internet access points located in other  X-states.o$ - yOh#-ԍEmergency Request of Bell AtlanticWest Virginia for Authorization to End West Virginia's Bandwidth  {O0$-Crisis, CC Docket No. 9811 (filed July 23, 1998). See Request by Bell AtlanticWest Virginia for Interim Relief  {O$-Under Section 706, or, in the Alternative, a LATA Boundary Modification Pleading Cycle Established, DA98 yO%-1506, Public Notice (rel. July 28, 1998). We do not act upon this petition at this time. We ask parties to address whether the information in Bell Atlantic's petition is the appropriate type of documentation that a BOC should submit. We also seek comment on"Wo,-(-(ZZp" whether the LATA boundary modification should be withdrawn if a highspeed network access point is established in the LATA or whether it should expire at a certain date. We further seek comment on the competitive impact of permitting LATA boundary modifications in this limited context. Parties should address whether the BOCs are the only carriers likely  X-to serve areas that do not currently contain highspeed network access points.ep- yO-ԍWe note that several parties support the BOCs' Petitions for LATA boundary relief on the ground that the BOCs are in the best position to provide the advanced telecommunications capabilities needed by their  {O-communities. See, e.g., Cheyenne Leads Comments (CC Docket No. 9826) at 1; Laramie Economic Development Corporation Comments (CC Docket No. 9826) at 1; St. George Area Chamber of Commerce Comments (CC Docket No. 9826) at 1; Washington County, Utah, Economic Development Council Comments (CC Docket No. 9826) at 1. e Parties should also address whether we should take such action only to the extent that advanced services are provided by BOC advanced services affiliates, rather than by the BOCs.  XH-196. PARA175 ` ` Additional Targeted InterLATA Relief. We seek comment on whether we have authority to take other actions to facilitate deployment of advanced services and, if so, the criteria we should use in evaluating such requests. For example, we seek comment on the criteria we should use in evaluating requests to permit BOCs and/or BOC affiliates to provide corporate intranet and extranet services or to serve institutions such as universities or health care facilities. Parties should address any safeguards that we should adopt to ensure that these services are provided in a procompetitive manner and that any targeted interLATA relief does not undermine the incentives for opening the local market to competition. Such safeguards may include, but not be limited to, taking such actions only to the extent they are provided by BOC advanced services affiliates, rather than by the BOCs. ,NJ:\POLICY\706\ORDER\SUBDOCS\LATA.NOT,  Xb- 0J:\POLICY\706\ORDER\SUBDOCS\PROCEDUR.ORD0 ,VII. PROCEDURAL MATTERSא X4-lU  X- A.` ` Ex Parte Presentations  X-197.` ` The matter in Docket No. 98147, initiated by the NPRM portion of this item,  X-shall be treated as a "permit-but-disclose" proceeding in accordance with the Commission's ex  X-parte rules.Jq\B- {O-ԍSeeĠAmendment of 47 C.F.R. 1.1200 et seq. Concerning Ex Parte Presentations in Commission  {O-Proceedings, GC Docket No. 9521, Report and Order, 12 FCC Rcd 7348, 7356-57,  27 citing 47 C.F.R.  yOJ -1.1204(b)(1) (1997).J Persons making oral ex parte presentations are reminded that memoranda summarizing the presentations must contain summaries of the substance of the presentations and not merely a listing of the subjects discussed. More than a one or two sentence  X-description of the views and arguments presented is generally required.crf - {O$-ԍSee 47 C.F.R. 1.1206(b)(2), as revised.c Other rules pertaining to oral and written presentations are set forth in Section 1.1206(b) as well.  X;- B.` ` Initial Paperwork Reduction Act Analysis ";X r,-(-(ZZ!"Ԍ X-ԙ198.` ` The NPRM contains either a proposed or modified information collection. As part of its continuing effort to reduce paperwork burdens, we invite the general public and the Office of Management and Budget (OMB) to take this opportunity to comment on the information collections contained in this Notice, as required by the Paperwork Reduction Act of 1995, Public Law No. 10413. Public and agency comments are due at the same time as  X-other comments on this Notice; OMB comments are due 60 days from date of publication of this Notice in the Federal Register. Comments should address: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology.  X - C.` ` Initial Regulatory Flexibility Analysis  X-199.` ` As required by the Regulatory Flexibility Act, see 5 U.S.C.  603, the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the possible impact on small entities of the proposals suggested in this document. The IRFA is set forth as Appendix D. Written public comments are requested with respect to the IRFA. These comments must be filed in accordance with the same filing deadlines for comments on the rest of the NPRM, but they must have a separate and distinct heading, designating the comments as responses to the IRFA. The Office of Public Affairs, Reference Operations Division, will send a copy of this NPRM , including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration, in accordance with the Regulatory Flexibility Act.  X- D.` ` Comment Filing Procedures  Xg-200.` ` The proceeding, Deployment of Wireline Services Offering Advanced Telecommunications Capability, CC Docket No. 98147, is initiated by the NPRM portion of this item. Pursuant to Sections 1.415 and 1.419 of the Commission's rules, 47 C.F.R.  1.415, 1.419, interested parties may file comments on or before September 21, 1998 and reply  X -comments on or before October 13, 1998. All filings should refer only to Deployment of Wireline Services Offering Advanced Telecommunications Capability, CC Docket No. 98147. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS)  X -or by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings, 63 Fed. Reg. 24,121 (1998). Comments filed through the ECFS can be sent as an electronic file  X"-via the Internet to . Generally, only one copy of an electronic submission must be filed. In completing the transmittal screen, commenters should include their full name, Postal Service mailing address, and the applicable docket or rulemaking number, which in this instance is CC Docket No. 98147. Parties may also submit an electronic comment by Internet email. To get filing instructions for email comments, commenters should send an email to ecfs@fcc.gov, and should include the"''Yr,-(-(ZZ%" following words in the body of the message, "get form +" 160, 201, 202, 251254, 271, and 303(r), the Petition filed by the Alliance for Public Technology IS GRANTED to the extent described herein.  ` `  hh,VFEDERAL COMMUNICATIONS COMMISSION ` `  hh,VMagalie Roman Salas ` `  hh,VSecretary 0J:\POLICY\706\ORDER\SUBDOCS\ORDCLAUS.ORD0 " \s,-(-(ZZ "  X- 0J:\POLICY\706\ORDER\SUBDOCS\APPENDIX.ORD0  ] @A-@A APPENDIX A ă l  X- CC Docket Nos. 9811, 9826, 9832 à  X-N Comments l  Xv- Alliance for Public Technology America Online, Inc. American Communications Services, Inc. (ACSI) Ameritech  X -APK Net, Ltd.; Cyber Warrior, Inc.; Helicon OnLine, L.P.; InfoRamp; Internet Connect (#(#Company; MTP, LLC, dba JavaNet; and ProAxis Communications, Inc. Association for Local Telecommunications Services (ALTS) AT&T Corp. Aurora Chamber of Commerce BellSouth Corporation Bismarck/Mandan Development Association Cablevision Lightpath, Inc. Cedar City/Iron County Economic Development Cheyenne Leads Commercial Internet Exchange Association Compaq Computer Corporation Competition Policy Institute Competitive Telecommunications Association (CompTel) Computer & Communications Industry Association Council of Chief State School Officers Covad Communications Company Division of the Ratepayer Advocate, State of New Jersey DSL Access Telecommunications Alliance Economic Strategy Institute Electric Lightwave, Inc. Excel Telecommunications, Inc. Focal Communications Corporation; Hyperion Telecommunications, Inc.; KMC Telecom Inc.; &#&#and McLeodUSA Incorporated Global NAPs, Inc. GTE Service Corporation ICG Telecom Group, Inc. Information Technology Association of America Intermedia Communications Inc. Internet Access Coalition Laramie Economic Development Corporation LCI International Telecom Corp. Level 3 Communications, Inc. MCI Telecommunications Corporation "#']s,-(-(ZZ("ԌMinnesota Department of Public Service Montana Rural Development Partners National Association of the Deaf National Association of Development Organizations National Association of Regulatory Utility Commissioners National Black Chamber of Commerce, et al. Network Access Solutions, Inc. Next Level Communications Omnipoint Communications Inc. Organizations Concerned About Rural Education, American Association of School  X -Administrators, National Association of Secondary School Principals, and National (#(#Association of Partners in Education, Inc. Pennsylvania Public Utility Commission Public Service Commission of Wisconsin and the Indiana Utility Regulatory Commission St. George Area Chamber of Commerce SBC Communications Inc. Sprint Corporation State of Utah House of Representatives Sun Microsystems, Inc. Telecommunications Resellers Association Teleport Communications Group Inc. Transwire Communications, L.L.C. United Homeowners Association, et al. United States Telephone Association University of North Dakota U S WEST, Inc. Utah Rural Development Council Washington County, Utah Economic Development Council WorldCom, Inc. Wyoming State Legislature XCOM Technologies, Inc. XU(#+?Reply Comments l AT&T Corp. Bell Atlantic CAI Wireless Systems, Inc. Cisco Systems, Inc. Commercial Internet Exchange Association Comcast Corporation DSL Access Telecommunications Alliance Economic Strategy Institute Focal Communications Corporation; Hyperion Telecommunications, Inc.; KMC Telecom Inc.; &#&#and McLeodUSA Incorporated"#'^s,-(-(ZZ%"ԌIntermedia Communications Inc. Issue Dynamics, Inc. LCI International Telecom Corp. Level 3 Communications, Inc. MCI Telecommunications Corporation New York Department of Public Service NEXTLINK Communications, Inc. NYSERNet Pennsylvania Public Utility Commission PSINet, Inc. SBC Communications Inc. Sprint Corporation United States Telephone Association U S WEST Communications, Inc. WorldCom, Inc. " _s,-(-(ZZ/ " f5CC Docket No. 9878 ;PComments AT&T Corp. Bell Atlantic BellSouth Corporation Commercial Internet Exchange Association Competitive Telecommunications Association (CompTel) e.spire Communications, Inc. GTE Service Corporation Hyperion Telecommunications, Inc. Independent Telephone & Telecommunications Alliance Intermedia Communications Inc. KMC Telecom Inc. LCI International Telecom Corp. Level 3 Communications, Inc. MCI Telecommunications Corporation Network Access Solutions, Inc. New York Department of Public Service NEXTLINK Communications, Inc. SBC Communications Inc. Sprint Corporation Telecommunications Resellers Association Teleport Communications Group Inc. United States Telephone Association U S WEST, Inc. WorldCom, Inc. +?Reply Comments Association for Local Telecommunications Services (ALTS) AT&T Corp. GTE Service Corporation KMC Telecom Inc. LCI International Telecom Corp. Level 3 Communications, Inc. MCI Telecommunications Corporation NEXTLINK Communications, Inc. SBC Communications Inc. Teleport Communications Group Inc. United States Telephone Association "Q%`s,-(-(ZZ $" f5CC Docket No. 9891 ;PComments Allegiance Telecom, Inc. AT&T Corp. and Teleport Communications Group Inc. BellSouth Corporation Campaign for Telecommunications Access Coalition Representing Internet Service Providers Commercial Internet Exchange Association Competitive Telecommunications Association (CompTel) Covad Communications Company DSL Access Telecommunications Alliance e.spire Communications, Inc. GTE Service Corporation Hyperion Telecommunications, Inc. ICG Telecom Group, Inc. Intermedia Communications Inc. KMC Telecom Inc. LCI International Telecom Corp. McCollough and Associates, P. C. MCI Telecommunications Corporation Sprint Corporation Telecommunications Resellers Association United States Telephone Association WorldCom, Inc. +?Reply Comments Allegiance Telecom, Inc. AT&T Corp. and Teleport Communications Group Inc. Comcast Corporation KMC Telecom Inc. MCI Telecommunications Corporation New York Department of Public Service SBC Communications Inc. "!as,-(-(ZZ " hTRM9244 ;PComments Alliance for Public Technology Association for Local Telecommunications Services (ALTS) AT&T Corp. Commercial Internet Exchange Association Janet Poley, et al. Keep America Connected! LCI International Telecom Corp. MCI Telecommunications Corporation National Association of the Deaf Sprint Corporation +?Reply Comments Alliance for Public Technology AT&T Corp. BellSouth Corporation Competitive Telecommunications Association (CompTel) MCI Telecommunications Corporation National Association of Community Action Agencies Next Level Communications SBC Communications Inc. Sprint Corporation TransWire Communications, L.L.C. United States Telephone Association Worldcom, Inc. 0J:\POLICY\706\ORDER\SUBDOCS\APPENDIX.ORD0 "Nbs,-(-(ZZ"  X- +J:\POLICY\706\ORDER\SUBDOCS\DLC.APP+   @A-C-@A APPENDIX C ă  X-  X- Digital Loop Carrier Systems ă  X-212.` ` Digital loop carriers (DLCs) digitally encode and multiplex subscriber loop  Xv-channels into DS15tXv- yO-ԍA DS1 is the 1.544 Mbps firstlevel signal in the digital transmission hierarchy. Traditionally, 24 64kbps DS0 channels have been multiplexed up to the 1.544 Mbps DS1 rate, with each DS0 channel carrying the digital representation of an analog voice channel.5 signals (or higher) for more efficient transmission or extended range than traditionally allowed for by copper loops. With DLC, analog signals, carried from the customer's premises to a remote terminal, are converted to digital signals, multiplexed with other signals and transported, generally over fiber, to the LEC central office. The two traditional digital loop carrier systems are universal digital loop carrier (UDLC) and integrated digital loop carrier (IDLC). UDLC, the older version of DLC technology is not directly integrated into the switch, and the digital signals must be routed through a central office terminal and converted back to analog signals before reaching the central office switch. Accordingly, UDLC technology is capable of interfacing with any analog or digital central office switch. In contrast, IDLC eliminates the need to perform this digitaltoanalog signal conversion and the demultiplexing of loop circuits before the signals reach the switch, because IDLC technology establishes a direct, digital interface to a digital central office switch. IDLC technology can operate only with a digital switch.  X4-213.` ` DLC technology provides significant economies. By concentrating loops in the field and sending digitized signals to the central office over fiber strands, incumbent LECs reduce loop costs and improve the performance and quality of the loop. Terminating loops at the DLC remote terminal reduces the effective length of the copper line, generally improving the quality and reliability of the service. Another benefit of DLC is that individual signals can be multiplexed into a higher speed DS1 format for transmission to a central office over a single fiber optic or 4-wire circuit. While the remote terminal architecture solves many problems for POTS, it makes provisioning of xDSL-based services more complicated. For example, xDSLbased services require that a clean copper pair connect the customer premises to the DSLAM. The transmission facility between the remote terminal and the central office in a DLC environment, however, is typically fiber. As a result, xDSLbased services generally cannot be deployed unless the remote terminal is equipped with a DSLAM or the loop is migrated to copper. +J:\POLICY\706\ORDER\SUBDOCS\DLC.APP+ "ct,-(-(ZZT$"  X- ,J:\POLICY\706\ORDER\SUBDOCS\IRFA.NOT,   @C-D-@A APPENDIX D l  X- INITIAL REGULATORY FLEXIBILITY ANALYSIS ă  X-214.` ` As required by the Regulatory Flexibility Act (RFA),uZ- {O-#]\  PC/P#эSee 5 U.S.C.  603. The RFA, see 5 U.S.C.  601 et. seq.#]\  PC/P#, has been amended by the Contract With America Advancement Act of 1996, Pub. L. No. 104121, 110 Stat. 847 (1996) (CWAAA). Title II of the  yO-CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).#x6X@KbX@# the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities by the policies and rules proposed in this Notice of  X_-Proposed Rulemaking (NPRM).rv( _- yO -ԍThe NPRM is in the matter of Petition of Bell Atlantic Corporation For Relief from Barriers to  yO -Deployment of Advanced Telecommunications Services, CC Docket No. 9811; Petition of U S West Communications, Inc. For Relief from Barriers to Deployment of Advanced Telecommunications Services, CC Docket No. 9826; Petition of Ameritech Corporation to Remove Barriers to Investment in Advanced Telecommunications Technology, CC Docket No. 9832; Petition of the Alliance for Public Technology Requesting Issuance of Notice of Inquiry and Notice of Proposed Rulemaking to Implement Section 706 of the 1996 Telecommunications Act, RM9244, Petition of the Association for Local Telecommunications Services (ALTS) for a Declaratory Ruling Establishing Conditions Necessary to Promote Deployment of Advanced Telecommunications Capability Under Section 706 of the Telecommunications Act of 1996, CC Docket No. 9878; Southwestern Bell Telephone Company, Pacific Bell, and Nevada Bell Petition for Relief from Regulation Pursuant to Section 706 of the Telecommunications Act of 1996 and 47 U.S.C.  160 for ADSL Infrastructure and Service, CC Docket No.9891; Deployment of Wireline Services Offering Advanced Telecommunications Capability Pursuant to Section 706(a) of the Telecommunications Act of 1996, CC Docket No. 98XX.r Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for  X1-submitting comments in this proceeding. The Commission will send a copy of the NPRM, including the IRFA, to the Chief Counsel for Advocacy of the Small Business  X -Administration.Qw - {O-ԍSee 5 U.S.C.  603(a). Q In addition, the NPRM and IRFA (or summaries thereof) will be published  X -in the Federal Register.Ex l- {O -ԍSee id. E   X - I. Need for and Objectives of this NPRM   X-215.` ` In this NPRM, we propose an optional alternative pathway for incumbent LECs that would allow separate affiliates to provide advanced services free from incumbent LEC regulation. In particular, if an incumbent LEC chooses to offer advanced services through an affiliate that is truly separate from the incumbent, that affiliate would not be deemed an incumbent LEC and therefore would not be subject to incumbent LEC regulation, including the obligations under section 251(c). On the other hand, if the advanced services affiliate derives an unfair advantage from its relationship with the incumbent, that affiliate should be viewed as stepping into the shoes of the incumbent LEC and would be subject to all the"dx,-(-(ZZ" requirements that Congress established for incumbent LECs. We propose in this NPRM specific structural separation and nondiscrimination requirements that need to be in place in order for an affiliate to be deemed a nonincumbent LEC, and thus not subject to section 251(c). We also offer guidance on various factors that the Commission should consider in determining when an advanced services affiliate would be an "assign" of the incumbent LEC, and, therefore, subject to the obligations of section 251(c).  X_-216.` ` In this NPRM, we also propose additional rule changes that would apply whether or not incumbent LECs choose to establish a separate affiliate to provide advanced services. We propose rules to ensure that all entities seeking to offer advanced services have adequate access to collocation and loops, which is critical to promote competition in the marketplace for advanced services. We then seek comment on ways to modify the section 251(c) unbundling requirements, once companies are in compliance with the rule changes we propose regarding collocation and access to loops. Finally, we seek comment on measures that would provide BOCs with targeted interLATA relief to ensure that all consumers, even those in rural areas, are able to reap the benefits of advanced telecommunications capability.  Xy- II.Legal Basis  XK-217.` ` The legal basis for any action that may be taken pursuant to the NPRM is  X4-contained in sections 14, 10, 201, 202, 251254, 271, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.  151154, 160, 201, 202, 251254, 271, and 303(r).   X- III.XDescription and Estimate of the Number of Small Entities to which the  X-Proposals, if Adopted, Would Apply   X- 218.` ` The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposals in this NPRM,  X|-if adopted.y|- {O-#]\  PC/P#эSee 47 U.S.C.  603(b)(3). The RFA generally defines the term "small entity " as having the same meaning as the terms "small business," "small organization," and "small governmental  XN-jurisdiction."zNZ- {OY-#]\  PC/P#эSee 47 U.S.C.  601(6). In addition, the term "small business" has the same meaning as the term  X7-"small business concern" under the Small Business Act.g{7- yO!-#]\  PC/P#э47 U.S.C.  601(3) (incorporating by reference the definition of "small business concern" in 15 U.S.C. 632). Pursuant to the RFA, the statutory definition of a small business applies "unless an agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition(s) in the Federal Register." 5 U.S.C.  601(3).g A small business concern is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation;" e{,-(-(ZZz" and (3) satisfies any additional criteria established by the Small Business Administration  X-(SBA). |- yOb-#]\  PC/P#эSmall Business Act, 15 U.S.C.  632 (1996).  X-219.` ` Below, we further describe and estimate the number of small entities that may affected by the proposals in this NPRM, if adopted.  Xv- 220.` ` The most reliable source of information regarding the total numbers of certain common carrier and related providers nationwide, as well as the numbers of commercial wireless entities, appears to be data the Commission publishes annually in its  X1-Telecommunications Industry Revenue report, regarding the Telecommunications Relay  X -Service (TRS).?} X- yO% -#]\  PC/P#эFCC, Telecommunications Industry Revenue: TRS Fund Worksheet Data, Figure 2 (Number of Carriers  {O -Paying Into the TRS Fund by Type of Carrier) (Nov. 1997) (Telecommunications Industry Revenue). ? According to data in the most recent report, there are 3,459 interstate  X -carriers.i~ - {Oh-#]\  PC/P#эId. i These carriers include, inter alia, local exchange carriers (LECs), wireline carriers  X -and service providers, interexchange carriers, competitive access providers, operator service  X -providers, pay telephone operators , providers of telephone toll service, providers of telephone exchange service, and resellers.  X-221.` ` The SBA has defined establishments engaged in providing "Telephone Communications, Except Radiotelephone" to be small businesses when they have no more  Xf-than 1,500 employees.$fD- {O[-#]\  PC/P#э13 C.F.R. 121.201, SIC codes 4812 and 4813. See Executive Office of the President, Office of  {O%-Management and Budget, Standard Industrial Classification Manual (1987).$ Below, we discuss the total estimated number of telephone companies and small businesses in this category, and we then attempt to refine further those estimates.  X -222. ` ` Although some affected incumbent LEC may have 1,500 or fewer employees, we do not believe that such entities should be considered small entities within the meaning of the RFA because they are either dominant in their field of operations or are not independently owned and operated, and therefore by definition not "small entities" or "small business concerns" under the RFA. Accordingly, our use of the terms "small entities" and "small businesses" does not encompass small incumbent LECs. Out of an abundance of caution, however, for regulatory flexibility analysis purposes, we will separately consider small incumbent LECs within this analysis and use the term "small incumbent LECs" to refer to any  XR-incumbent LECs that arguably might be defined by the SBA as "small business concerns."R\R- {O%-#]\  PC/P#эSee 13 C.F.R. 121.201, SIC code 4813. Since the time of the Commission's 1996 decision,  {Mm&-Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, First Report and  {O5'-Order, 11 FCC Rcd 15499, 1614445 (1996), 61 FR 45476 (August 29, 1996), the Commission has consistently"5',-(-(V'" addressed in its regulatory flexibility analyses the impact of its rules on such incumbent LECs.R"RfX,-(-(ZZ"Ԍ X-ԙ223.` ` Local Exchange Carriers. Neither the Commission nor the SBA has developed a definition for small LECs. The closest applicable definition under the SBA rules is for  X-telephone communications companies other than radiotelephone (wireless) companies.X- {O-#]\  PC/P##]\  PC/P#эId.  X-According to the most recent Telecommunications Industry Revenue data, 1,371 carriers  X-reported that they were engaged in the provision of local exchange services.- {OA -#]\  PC/P#эTelecommunications Industry Revenue, Figure 2. We do not have data specifying the number of these carriers that are either dominant in their field of operations, are not independently owned and operated, or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of LECs that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that fewer than 1,371 providers of local exchange service are small entities or small incumbent LECs that may be affected by the proposed rules, if adopted.  X -224.` ` Competitive LECs. Neither the Commission nor SBA has developed a definition of small entities specifically applicable to providers of competitive LECs. The closest applicable definition under the SBA rules is for telephone communications companies except radiotelephone (wireless) companies. The most reliable source of information regarding the number of competitive LECs nationwide is the data that we collect annually in  X{-connection with the TRS Worksheet. According the most recent Telecommunications Industry  Xf-Revenue data, 109 companies reported that they were engaged in the provision of either competitive local exchange service or competitive access service, which are placed together in  X:-the data.::|- {Og-ԍId.: We do not have information on the number of carriers that are not independently owned and operated, nor have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of competitive LECs that would qualify as small business concerns under the SBA definition. Consequently, we estimate that there are fewer than 109 small competitive LECs or competitive access providers.  X- "g,-(-(ZZS"Ԍ X- IV.XDescription of Projected Reporting, Recordkeeping and Other Compliance  X-Requirements   X-225.` ` The collocation and loops sections of the NPRM include proposed reporting requirements. With regard to collocation, the NPRM tentatively concludes that incumbent LECs should be required to list all equipment approved for use in a central office. The NPRM also tentatively concludes that, upon request from a competitive LEC, an incumbent LEC should submit to the requesting competitor a report indicating the incumbent LEC's available collocation space. The NPRM indicates that this report should: (1) specify the amount of collocation space available at each requested premises, the number of collocators, and any modifications in the use of the space since the last report; and (2) include measures that the incumbent LEC is taking to make additional space available for collocation. With regard to loops, the NPRM tentatively concludes that incumbent LECs should be required to share information about loops with new entrants.  X - V.XSteps Taken to Minimize Significant Economic Impact on Small Entities and Significant Alternatives Considered   Xb- 226.` ` The proposals in this NPRM seek to ensure that competing carriers, including small entity carriers, obtain access to inputs necessary to the provision of advanced services. The proposals seek to encourage the deployment of advanced services to all Americans, including those in remote, rural areas. To gather relevant information from all interested parties, including small business entities, the NPRM seeks comment on a wide array of issues and asks that commenters suggest alternatives to our proposals. We tentatively conclude that our proposals in the NPRM would impose minimum burdens on small entities. We seek comment on these proposals and the impact they may have on small entities.  X- VI.XFederal Rules that May Duplicate, Overlap, or Conflict with the Proposals  X|-in the NPRM   XN-227.` ` None. , J:\POLICY\706\ORDER\SUBDOCS\IRFA.NOT, "Nh,-(-(ZZ"   @D-@  R-* #Xm2PG; jXP# August 6, 1998 Ð(#l  X< # 2PG; zP#Separate Statement of  X< Commissioner Susan Ness # Xm2PG; jXP# l  R-lU Re: Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, CC Docket No. 98146; Deployment of Wireline Services Offering Advanced  R\ -Telecommunications Capability, CC Docket No. 98147. In Section 706(a) of the Telecommunications Act, Congress directed the FCC to "encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans." This provision of the law is an explicit direction to anticipate and prepare for the future. Fulfilling the hopes and needs of citizens in the 21st Century will require widespread availability of much greater bandwidth than has traditionally been available through "plain old telephone service." Today we begin the task of ascertaining the progress of, and prospects for, deployment of broadband capabilities throughout this country. We must ensure that highbandwidth services roll out as quickly as the technology and the economics allow. Progress must not be impeded by inadequate competition or excessive regulation. I hope to learn in this proceeding what we can do not only to promote the deployment of advanced telecommunications capability but also to facilitate consumer  R-choice among broadband service suppliers. Although we have several pending petitions filed by incumbent telephone companies or their wouldbe competitors, we need to take a broader view. In the deployment of advanced telecommunications capability, multiple industry sectors can play a role. Our notice of inquiry properly recognizes the multiplicity of potential bandwidth suppliers ILECs, CLECs, cable, wireless, and satellite companies, digital broadcasters, etc. The notice asks questions that will permit us to understand better how each industry sector can participate effectively in the bandwidth race, what advantages and disadvantages the various participants bring to the contest, and which barrierreducing and competitionpromoting steps the Commission can and should take. It also explores what special measures may be needed to meet the special needs of rural areas or to serve elementary and secondary schools and classrooms. I will welcome the development of a full record on these issues. In our companion order and notice of proposed rulemaking, we demonstrate that we are prepared to do more than just ask questions. On certain issues, we have already developed a considerable record, as a result of various pending petitions, and"N(i,))ZZ)" this enables us to render certain threshold decisions and to tender several concrete proposals. As I see it, the key issue we address today is whether advanced telecommunications capability is subject to the competitive framework so carefully established by Congress in Sections 251 and 271 of the Communications Act. The answer is yes. I don't believe that Congress wrote detailed amendments to the Communications Act only to address voice, but not data, services. To the contrary, I believe a forwardlooking and increasingly Internetsavvy Congress crafted a framework to promote competition and deregulation throughout all telecommunications markets as we enter a new chronological and technological millennium.   The Telecommunications Act is rooted in a strong belief in the power of competition, and in a recognition that the networks constructed over the past century by the incumbent LECs need to be "opened up" to enable competitive entry. What I like most about this order and notice of proposed rulemaking is that it both (1) requires incumbent LECs to open their networks in ways that allow multiple providers  Ry-to offer highbandwidth services and (2) provides a path for ILEC affiliates who are willing to compete on their merits, rather than on the basis of affiliation, to avoid regulation to the same degree as do their competitors. The goal is to expedite full and fair competition between a multiplicity of bandwidth providers, including ILEC affiliates, and thereby speed the availability of highquality, reasonably priced, advanced telecommunications capability throughout the nation. "j,-(-(ZZ"  X- XX   # Xj\  P6G;XP#` `  hh,VppAugust 6, 1998  А X-l l wSEPARATE STATEMENT OF lUT COMMISSIONER MICHAEL K. POWELL lU  Vv- Re:XMemorandum Opinion and Order and Notice of Proposed Rulemaking, Deployment of Wireline Services Offering Advanced Telecommunications Capability et al. (CC Docket  XH-Nos. 98147 et al.).(#  V -Re:XNotice of Inquiry, Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the  X -Telecommunications Act of 1996 (CC Docket No. 98146).(# In this combined statement, I write separately to explain the bases upon which I  X-support this Order/NPRM and Notice of Inquiry.  Xh-I am very pleased to support the Order/NPRM. First, I think the item evidences our  XS-desire to devise ways that all interested firms can participate in the deployment of advanced services even incumbents that possess market power in certain communications markets. Make no mistake: as a strong proponent of vigorous antitrust enforcement, I believe that government must continue and intensify its efforts to contain and ameliorate the negative effects of such market power where warranted. We should, in particular, be sensitive to the power such companies have over truly essential facilities. We should not fail, however, to recognize that these companies also may be wellpositioned to provide services of enormous value to consumers. Simply put, we cannot relegate BOCs or other big companies to the sidelines in the data services "race" unless we are prepared to deny the economy and consumers of the benefits of these companies' expertise and capital.  XX-Second, and relatedly, I applaud the Order/NPRM for what it signals. In particular, it signals that the Commission is willing to allow incumbent LECs to provide some services through a separate affiliate on a relatively unencumbered basis, subject primarily to our enforcement mechanisms. I am committed, personally and firmly, to ensuring that this alternative, "deregulatory pathway" is available to the extent permitted under the law.  X- As I have noted on many occasions, communications policy historically has emphasized prospective, prophylactic regulation. Yet such regulation tends to stifle  X"-innovation and impede the beneficial operation of market forces. We should look to performance measurement and vigorous enforcement, more often than prospective regulation, as a means to protect the public against certain identifiable harms. This approach will avoid hindering companies from improving their existing offerings and entering new markets that lie outside their traditional regulatory boundaries, and will usher in a more effective and efficient regulatory process. "(k,))ZZ&"ԌThe separate affiliate approach, if carefully implemented, offers the prospect of allowing us to police potential anticompetitive conduct more easily. As such, I believe this approach takes the Commission another step away from the traditional regulatory model toward one that is more consistent with a rapidly evolving competitive marketplace. I applaud the Common Carrier Bureau and my colleagues for taking this important, deregulatory step with respect to encouraging the development of competition in advanced services.  XH-Third, I believe the separate affiliate pathway will serve as a good example of how the Commission can promote congruence between our policy goals and private firms' selfinterest. There is an unfortunate tendency in communications policy to rely on polices that depend for their implementation upon a company or an industry acting against its selfinterest. This reliance is entirely misplaced. Firms are economic actors, not moral beings. Indeed, the  X -market depends for its effectiveness on firms pursuing their economic selfinterest. We must accept these premises and craft policies consistent with them. I am committed to pursuing the idea of a separate affiliate pathway because I believe it constitutes an important move in this  X-direction. As the Order/NPRM notes, the requirement that an incumbent treat its advanced services affiliate only as well as it treats its competitors should give the incumbent a greater incentive to improve its processes and provide unbundled elements and collocation space as quickly and cheaply as possible to all competitors. I should add that I am very cognizant of some of the fears expressed regarding the separate affiliate approach, particularly fears about the continued soundness of universal service support and new entrants' fears that allowing incumbents to use separate affiliates will somehow allow incumbent LECs to leverage their dominance in the local telephone market to control the market for advanced services. These fears are not unfounded. With respect to universal service, however, I would point out that it is my understanding that an incumbent's advanced services affiliate would have the same obligation to contribute to universal service as any other telecommunications carrier. With respect to new entrants' fears, I would urge us to consider the alternative to establishing a separate affiliate pathway. The dynamism and demand in the advanced services market is such that incumbents that do not provide these services through separate affiliates will surely do so on a highly integrated basis. If that happens, our ability to enforce interconnection, unbundling and other requirements with respect to advanced services will be as difficult and, I fear, as uphill a battle, as our enforcement of these requirements for traditional circuitswitched services. Thus, I submit that even if the separate affiliate approach may involve risks which I am committed to addressing the alternative may not put us in any better position to promote competition in advanced services.  X#-I also support the adoption of this Notice of Inquiry. Encouraging deployment of advanced telecommunications services promises both to challenge our conventional understanding of technology within the existing statutory and regulatory framework and to usher in exciting new communications capabilities for average Americans. The trick is getting from here to there; that is, we must overcome the various technological, legal and"''l,-(-(ZZ%" economic impediments to deployment in order to let consumers and organizations appreciate fully the possibilities advanced communications services offer. Indeed, section 706 requires not only that these services be deployed, but that the Commission and each state Commission encourage such deployment on a reasonable and timely basis to all Americans. Moreover, we must do so consistent with the deregulatory, market emphasis of the Act.  Xv-I invite parties commenting on the Notice to help us conduct a thorough review of where we have been, where we are, and where we need to be in order to encourage the deployment of advanced services. I hope that, in using this information, we will be sensitive to the fact that requiring certain firms to provide access to their facilities or services to other firms or even to end users may have some negative consequences. In particular, I think we should search for ways to promote innovation and competition in the provision of "last mile" transmission to homes and businesses. While mandating access is a useful tool and can bring about shortterm gains in retail competition, it also may undermine incentives for developing new ways to circumvent the power of incumbents over distribution.  X-Both the Order/NPRM and the Notice of Inquiry offer evidence that the Commission understands that neither competition nor innovation is the product of the wellmeaning regulatory policies we adopt, even if our policies create the appearance of competition in the shortterm; rather, competition and innovation are the result of selfinterested actors struggling in the marketplace to provide consumers with new and better products and services. I firmly believe that our policies should continue to take account of this fact. I believe we also must focus more on the longerterm future in carrying out Congress' instruction that we encourage the deployment of advanced communications. I wish to underscore my personal commitment to following this instruction at the same time we seek to promote the deregulatory and procompetitive goals of the Act. I praise the Bureau's efforts, as well as those of my colleagues, on this critical and challenging subject. And I look forward to working with everyone at the Commission, in the States and in Congress to help make our effort to encourage the deployment of advanced communications a success. ";m,-(-(ZZ?"   ` `  hh,Vpp  August 6, 1998  `<V #|\  P6G;#P# Statement of Commissioner Gloria Tristani #Xj\  P6G;XP#ѐlU  V-Re:XIn the Matter of Deployment of Wireline Services Offering Advanced Telecommunications Capability, Memorandum Opinion and Order and Notice of  Vi-Proposed Rulemaking, CC Docket No. 98147(# I support today's action to provide incentives for all wireline carriers to deploy high bandwidth services more quickly than they would otherwise. That is what Congress directed us to do in section 706, and I hope the proceedings we open today will allow us to fulfill this obligation expeditiously. I wish to indicate my preliminary support for the basic idea of separate affiliates as a way for incumbent LECs to provide high speed data service with minimal regulation. The separate affiliate model would properly align incentives for incumbent LECs to take procompetitive, proconsumer, actions in the area of advanced services. I am well aware that separate affiliates impose costs on incumbent LECs, and that absent those costs, incumbent LECs could be more efficient providers of advanced data service. But at what price to competition? If we have learned one lesson in the 30 months since the Act passed, it is that procompetitive regulations work best when incumbents have an incentive to make them work. Using separate affiliates would encourage incumbent LECs to improve their ordering and provisioning methods for competitors because their affiliates won't tap into the lucrative high bandwidth market unless they can obtain critical inputs to its product, such as efficient collocation and DSLcapable loops, in a timely and efficient fashion. In return, incumbent LECs' affiliates would be freed of the unbundling obligations for data equipment that will apply if DSL service is provided on an integrated basis. Section 706 makes states and the FCC partners in encouraging carriers to deploy advanced telecommunications capabilities. It is clear that states will play a major role in this effort, just as Congress intended. The FCC can do its part by establishing, in close consultation with states, a procompetitive framework for data services that will bring consumers the bandwidth services they want. State commissions, in turn, set the rates competitors pay for DSLcapable loops and collocation. Without fair and efficient access to these building blocks, DSL service will remain a niche service rather than a mass market phenomenon. In the coming months, the FCC will do its best to write effective loop and collocation rules. After that, it will be up to state commissions to make high bandwidth services a reality for their citizens. Since the rapid deployment of advanced services will be greatly affected by both federal and state policies, it is important that the Commission work closely with state"-(n,))ZZ&"  X-commissions in designing an advanced services framework that serves our needs and their needs. My recent participation in NARUC's summer meeting afforded me the opportunity to hear first hand the views of state commissioners. What I learned is that state commissions have not had a full opportunity to evaluate the idea of separate affiliates and to advise us of their views. Our decision to adopt only a tentative framework for separate affiliates reflects this Commission's desire to work cooperatively with state commissions in this critical area of communications policy. In response to the NPRM adopted today, I expect state commissions will furnish us with valuable advice and guidance. I hope the specific proposals in the NPRM will encourage focused discussion on the key issues surrounding separate affiliates and allow us to move forward expeditiously with final rules. The Order portion of today's item rejects Bell Company requests for wholesale waivers of section 271. I believe that is the correct decision as a matter of policy. Some say the elegant design of section 271 has been weakened because increased competition has made the long distance market less attractive than it once was for Bell Companies, and hence, no longer a sufficient incentive to comply with Congress's plan for local competition. Assuming for the moment that is true, it may well be that the booming market for data communications, including interLATA connections, will pick up where standard long distance has left off. If that is correct, this Commission's denial of wholesale LATA relief is entirely consistent with Congress's vision for section 271. That does not mean all LATA relief for Bell Companies should be off the table. At least in the near term, Bell Companies may well be the most likely supplier of advanced services in parts of their territories. I think there are potentially significant actions we could take regarding LATA modifications for Bell Companies to reach underserved parts of their territories. Targeted LATA modifications could allow Bell Companies to configure their data networks in ways that makes advanced service feasible in areas that otherwise would be ignored by the free market. I also wish to register my particular interest in two matters related to separate affiliates for data services. The first is my interest in seeing that Internet service providers unaffiliated with incumbent LECs can compete fairly in the world of DSLdelivered Internet access service with ISPs affiliated with incumbent LECs. An incumbent LEC's data affiliate presumably has an incentive to favor its affiliated ISP over unaffiliated ISPs. I will be particularly interested in parties' views on whether the creation of advanced services affiliates is truly a risk to the highspeed Internet access market, or whether this danger is too speculative for immediate Commission action. The second issue is collocation space at incumbent LECs' remote terminals. Collocation of all types is a threshold issue for competitors to provide DSL service. No collocation means no competition. And with collocation space apparently quite limited not only in many central offices but also in remote terminals, I will be particularly interested in learning how we can level the playing field regarding access to collocation space. It is":&o,-(-(ZZ$" important to me that, beginning today, there be no opportunity for incumbent LECs to foreclose DSL competition in certain areas by gaming the collocation process. Finally, I would acknowledge the efforts of the incumbent and competitive local carriers in pressing their case at the FCC. They understood better than us that telecommunications technology was advancing at light speed, and that our regulations needed to better accommodate carriers' needs in responding to the explosive demand for high speed data communications. Rather than waiting for the FCC to open its inquiry under section 706, the carriers sought faster resolution of their concerns through petitions relating to sections 251 and 271 of the 1996 Act. Today's actions by the Commission moves us closer to policies that reflect what consumers are demanding and what carriers want to provide. ` `  hh,V# # #