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October 13, 1998

Separate Statement
Commissioner Susan Ness,
Concurring in Part

Re: Application of BellSouth Corporation et al. for Provision of In-Region, InterLATA Services in Louisiana

I strongly support today's decision. It shows, once again, that the Commission remains committed to enforcing the law as Congress wrote it. We seek to enable Bell company participation in the long distance market, but only after they have first fulfilled their responsibility to open their local markets.

To open the local telephone marketplace, as required by the Telecommunications Act, is proving to be a very complex and difficult challenge. Incumbents must do things that they have never done before, and which are against their short-term self-interest to do. But, upon those Bell companies who meet this challenge, we will not hesitate to bestow the reward of long distance entry, as Congress directed. (Other incumbent telephone companies are also subject to market-opening responsibilities, but their entry into long distance is not conditioned the way it is for the Bell companies.)

The evidence before us reflects both that considerable progress has been made, and that more work remains to be done, to open the local telephone marketplace in Louisiana. I hope that BellSouth will act on the detailed guidance we have provided, and file again only when it has fully addressed all of the problems that have been identified. And I hope that it will not be long before at least one of the Bell companies presents us with a Section 271 application that demonstrates full compliance with all the statutory standards.

Track A Analysis: I respectfully concur in, rather than approve, one portion of the order. It concerns the following question: is Section 271(c)(1)(A) -- often referred to as "Track A" -- fulfilled when facilities-based competitors are providing telephone exchange service "predominantly over their own telephone exchange service facilities" in the aggregate, but are using only resale of incumbent services to serve residential subscribers. Although the majority does not make a determination on this issue (and I am glad it does not), the order strongly hints that the majority would resolve this question in the affirmative. If so, I would disagree.

In particular, I wish to disassociate myself from the two sentences at the beginning of Para. 48. My own view is that Congress intended Track A to be fulfilled only when both residential and business subscribers, as two separate classes, are served by competitive providers of local exchange service whose offerings to each separate class are delivered exclusively or predominantly over a competitor's own telephone exchange service facilities. This is the reading most consistent with the language of the law, and with the legislative history.

The words chosen by Congress indicate a strong desire for facilities-based competition in both the business and residential markets. Of course, colleagues that I respect deeply, as well as the Justice Department, apparently read it differently than I do, so I do not maintain that the language is unambiguous. But the legislative history confirms what I believe to be the most natural reading.

Tracks A and B were added to the statute by the House Commerce Committee, which described facilities-based-competition as "the integral requirement of the checklist, in that it is the tangible affirmation that the local exchange is indeed open to competition."(1) Given the preexisting (i.e., before the Telecommunications Act) presence of facilities-based competition in a number of business markets, the foregoing statement makes no sense unless Track A is read to require facilities-based residential competition as well. This is further shown by the Conference Report's express reliance on the House Report for the belief "that meaningful facilities-based competition is possible, given that cable services are available to more than 95 percent of United States homes."(2) The Conferees went on to observe that "[s]ome of the initial forays of cable companies into the field of local telephony therefore hold the promise of providing the sort of local residential competition that has consistently been contemplated."(3) For these reasons, I believe that we can best effectuate Congress's intentions, and achieve Congress's purposes, by construing Track A to require a showing that residential subscribers are in fact receiving telephone exchange service from a competitive local exchange carrier that is providing service "predominantly over [its] own telephone exchange service facilities."(4)

The Track A issue is not decisional in this case, so there is no need for a full-blown discussion of the legislative text, the statutory structure, legislative history, and congressional purpose of this provision. Nonetheless, I want to mention four considerations that attenuate the difficulties that might be said to result for the Bell companies from my interpretation. First, "unbundled network elements" obtained from the incumbent count as the competitive entrant's "own" facilities,(5) making it easier to establish that facilities-based competition has emerged. Second, when markets are truly open, it is likely that entry -- including facilities-based offerings to the residential market -- will quickly follow. Third, the statute does not require that any particular number (or percentage) of residential consumers be served by facilities-based competition; the legislative history indicates that only "incidental, insignificant" competition should be overlooked.(6) Fourth, concerns that Track A consigns the Bell companies to a form of unending "purgatory" are addressed by the "escape hatches" provided in Track B.(7)

CPNI: On another matter, I want to note my continuing disagreement with the Commission's ruling on the shared use by a Bell operating company and its Section 272 affiliate of "customer proprietary network information," cited in Para. 344. Nonetheless, I treat that ruling as being in effect and do not object to the determination that BellSouth is complying with it.

Finally, I want to express my gratitude toward, and confidence in, the very able staff of the Common Carrier Bureau, which has worked so diligently not only on this order but also on the intense multi-party dialogue that has provided all interested parties with detailed guidance on the measures necessary to satisfy the requirements of Section 271. I deeply respect the expertise and diligence of the public servants who have spent countless hours working through the issues with the incumbents, with the new entrants, and with the Commissioners. I hope and expect that this process will soon produce its intended results.

1. H.R. Rep. No. 104-204, pt. 1, at 77, reprinted in 1996 U.S.C.C.A.N. 10, 42.

2. H.R. Conf. Rep. No. 104-458, at 148 (1996), reprinted in 1996 U.S.C.C.A.N. 124, 160, citing H.R. Rep. No. 104-204, pt. 1, at 77, reprinted in 1996 U.S.C.C.A.N. 10, 42.

3. H.R. Conf. Rep. No. 104-458, at 148 (1996), reprinted in 1996 U.S.C.C.A.N. 124, 160.

4. A full review and persuasive analysis of the relevant legislative history is offered in Tim Sloan's "Creating Better Incentives Through Regulation: Section 271 of the Communications Act of 1934 and the Promotion of Local Exchange Competition," 50 Fed. Comm L.J. 309, 322-355 (1998).

5. Ameritech Michigan Order, 12 FCC Rcd. 20543, 20594-98 (1997).

6. H.R. Rep. No. 104-204, pt. 1, at 77, reprinted in 1996 U.S.C.C.A.N. 10, 42.

7. See 47 U.S.C. 271(c)(1)(B)(i)&(ii).