Re:	Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, Supplemental Order, CC Docket 96-98.

I dissent from the Commission's modification of its Third Report & Order in this docket, in which the Commission broadens the restriction it placed on competing carriers' uses of combinations of unbundled loops and transport network elements. Not only is the order procedurally defective, but also the Commission's use restrictions are without a basis in the statute.

First, I believe that, in issuing this order, the Commission has failed to comply with statutory procedural requirements. An agency may not fundamentally reinterpret a published order or regulation without complying with the Administrative Procedure Act's notice and comment provisions. See 5 U.S.C. § 551. The United States Court of Appeals for the District of Columbia has recognized that, "[w]hen an agency has given its regulation a definitive interpretation, and later significantly revises that interpretation, the agency has in effect amended its rule, something it may not accomplish without notice and comment." See Alaska Professional Hunters Ass'n v. FAA, 177 F. 3d 1030, 1035 (D.C. Cir. 1999) ("Once an agency gives its regulation an interpretation, it can only change that interpretation as it would formally modify the regulation itself: through the process of notice and comment rulemaking."); see also National Whistleblower Center v. Nuclear Regulatory Commission, 1999 WL 1024662, at * 4 (D.C. Cir. Nov. 12, 1999) ("[T]o allow an agency to make a fundamental change in its interpretation of a substantive regulation without notice and comment would undermine those APA requirements.") (quoting Paralyzed Veterans of America v. D.C. Arena, 117 F.3d 579, 586 (D.C. Cir. 1997). In my opinion, it is improper for the Commission to modify its prior position on this issue without first having made the public aware that it was considering changing its order and without first having obtained comment from interested parties.

Second, as I explained when the Commission released the Third Report & Order, the statute simply does not authorize the Commission to limit the uses to which a competing carrier may put an unbundled network element. See Statement of Commissioner Furchtgott-Roth, Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, Third Report and Order, CC Docket 96-98 (concurring in part and dissenting in part). The statute's only requirement is that an unbundled network element be used in "the provision of a telecommunications service." 47 U.S.C. § 251(c)(3). Section 251(c)(3) says nothing more about the uses to which a requesting carrier may put an unbundled network element, and no other provision in the 1996 Act authorizes the Commission to limit the ways in which a requesting carrier may use an incumbent's network elements.⁽¹⁾ Thus, a competitor may use any network element or combination of elements in any way it wishes, subject only to the requirement that the elements be used to provide "a telecommunications service."

The Commission is concerned that, without the restriction, the market for special access services will be undermined, because competitors will be able to offer combinations of network elements as a lower-priced substitute for incumbents' special access services. I believe that there are other ways that the Commission could have addressed this concern consistent with the statute. Since the problem stems from the Commission's rules for access charges, the obvious answer is a prompt revision of those rules, so that incumbent carriers are no longer required to include implicit subsidies in their prices for access services. See Texas Office of Public Utility Counsel v. FCC, 183 F.3d 393, 425 (5th Cir. 1999). Pending a revision of these access charge requirements, the Commission could have implemented a temporary pricing mechanism that prevents new carriers from undercutting incumbent carriers' prices. See Local Competition First Report & Order, 11 FCC Rcd at 15864 [¶ 720] (permitting incumbents, for a limited period of time, to recover a percentage of carrier common line and transport interconnection charges for all interstate minutes traversing the incumbents' local switches for which the interconnecting carriers pay unbundled local switching element charges). Or it could have, in the Third Report & Order, decided against unbundling local transport. What the Commission may not legally do, however, is impose restrictions on the ways in which requesting carriers may use the network elements that they purchase from incumbents.

¹    See Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, CC Docket 96-98, First Report and Order, 11 FCC Rcd 15499, 15679 [¶ 356] (1997) (hereinafter Local Competition First Report and Order).