December 15, 1995

Re: Interconnection Between Local Exchange Carriers and Commercial Mobile Radio Service Providers

This Notice forcefully expresses our intention to promote maximum opportunities for Personal Communications Services ("PCS") to flourish -- as quickly, simply, and fairly as possible.

PCS has the potential to provide much-needed competition to both cellular and wireline local exchange services. Our PCS bandplan and our PCS auctions were important milestones, but they alone cannot bring us to the goal of strong PCS competition. Without effective interconnection arrangements, PCS may never reach its full potential.

PCS and other providers of Commercial Mobile Radio Services ("CMRS") unquestionably should enjoy fair and reasonably priced interconnection to the public switched telephone network. Today, there is a very real danger that wireline local exchange carriers ("LECs") will delay the resolution of interconnection issues or charge too much for interconnection services. Indeed, there are disturbing reports that LECs are not currently complying with our existing requirement for mutual compensation between wireline LECs and cellular carriers.

Fearful of the harm that could result if interconnection needs are not accommodated, CMRS providers have urged us to consider adopting an interim, rough-justice approach that would be available in a matter of months, even as longer-term approaches are further debated and studied. Our Notice tentatively endorses this proposal. This reflects our collective commitment to PCS and other CMRS services, and it should sharpen the focus of the comments we receive.

We tentatively propose adoption of a bill-and-keep regime. Some parties maintain that it is reflective of the underlying economics, excepting perhaps during peak traffic periods. They also assert that bill-and-keep is already a commonplace arrangement for LEC-LEC interconnection. It undoubtedly has the considerable virtue of administrative simplicity.

Even though arguments in favor of bill-and-keep have thus far been largely unrebutted, I remain willing to consider other approaches. After all, a strict regulatory prescription for an interconnection rate of zero represents a stronger exercise of regulatory power than is customary, even for pricing of LEC services. The special circumstances of CMRS-LEC interconnection may well justify such an approach, but I trust that those who believe otherwise will recognize the necessity of tendering concrete alternatives that meet our public interest objectives.

Finally, although we wish to move swiftly, we must not throw caution to the winds. We must proceed in a manner that is consistent with the law and that will be perceived as fair. We must not abridge the LECs' legal or equitable rights, distort marketplace incentives for CMRS providers, or cause prices for other LEC customers to increase. And we must seek to maintain the federal-state cooperation that we have worked so hard to develop in a number of proceedings over the past year. As a practical matter, it may be impossible to distinguish intrastate and interstate traffic in the CMRS-LEC interconnection context, but I still intend to explore ways in which state and federal authorities can work together on these issues.

Overall, I believe this Notice is very much on the right track, and I am pleased to support it.