NEWSReport No. CC 97-6 COMMON CARRIER ACTION February 7, 1997 COMMISSION IMPLEMENTS TELEMESSAGING AND ELECTRONIC PUBLISHING PROVISIONS OF THE TELECOMMUNICATIONS ACT OF 1996 (CC Docket No. 96-152) The Commission today released an Order that implements the telemessaging and electronic publishing provisions of the Telecommunications Act of 1996 (1996 Act), sections 260 and 274 respectively. Section 260 delineates the conditions under which incumbent local exchange carriers (LECs) may offer telemessaging services. Telemessaging services include such services as voice mail and voice storage and retrieval services. Section 274 permits Bell Operating Companies (BOCs) to provide electronic publishing services only through a "separated affiliate" or an "electronic publishing joint venture" that meets certain separation, nondiscrimination, and joint marketing requirements. Electronic publishing includes the electronic dissemination of information such as news, entertainment, and financial information. The telemessaging and electronic publishing requirements are designed to prohibit anticompetitive discrimination and improper cost allocation while still giving consumers the benefit of competition in the telemessaging and electronic publishing markets. In addition to the Order released today, the Commission released a Further Notice of Proposed Rulemaking (Further Notice) that seeks comment on the meaning of "control" and "financial interest" for the purpose of determining what constitutes BOC provision of electronic publishing services under section 274. The Further Notice also invites parties to comment on how the Commission should resolve certain ambiguities in section 274(b)(3)(B) which requires BOCs and their separated affiliates or electronic publishing joint ventures "to carry out transactions pursuant to written contracts or tariff that are filed with the Commission and made publicly available." (over) - 2 - The following summarizes the major conclusions adopted in the Order: A BOC may provide electronic publishing services through the same entity or affiliate that it provides interLATA information services, interLATA telecommunications services, or manufacturing services under section 272. The BOC or the entity providing both section 272 and electronic publishing services must comply with all of the requirements of those sections, including all the structural and transactional requirements as well as the joint marketing and nondiscrimination requirements of these sections. In addition, a BOC providing electronic publishing and non-electronic publishing services, such as print directory services, through one affiliate must comply with the joint marketing requirements of section 274. While a BOC that disseminates electronic publishing services through the facilities of a competing wireline local exchange carrier or commercial mobile service provider is not subject to the "separated affiliate" or "electronic publishing joint venture" requirements, it may still be subject to the joint marketing prohibition of section 274(c)(1)(B). Section 274(c)(1)(B) states that if a BOC is providing services through an affiliate that is "related to" the provision of electronic publishing, it may not carry out any promotion, marketing, sales, or advertising activities for, or in conjunction with, that affiliate. A BOC may, pursuant to section 274(c)(2)(A) of the Act, provide "referral services" and "market" property, goods, or services related to the provision of electronic publishing by telephone to a customer or potential customer who initiated the call. To the extent a BOC provides such inbound telemarketing or referral services to an affiliated electronic publisher, it must make available such services to all electronic publishers on nondiscriminatory terms. This means that, with regard to inbound telemarketing or referral services provided by a BOC to its affiliated electronic publisher pursuant to a contractual arrangement, the BOC must offer the same service on the same terms, conditions, and prices to non-affiliates as to its affiliate, except to the extent legitimate price differentials may exist. Also, to the extent a BOC provides inbound telemarketing or referral services during the normal course of its telemarketing operations, it must provide such services to all unaffiliated electronic publishers requesting such services on nondiscriminatory terms. Thus, with respect to referral services, a BOC must provide the names of all unaffiliated electronic publishers requesting such services, as well as the names of electronic publishers affiliated with the BOC, in random order to the customer. The nondiscrimination requirement in section 274(d) prohibits the BOCs from providing preferential rates to affiliated electronic publishers, including rates based on volume or term commitments, for network access and interconnections for basic telephone service used in the provision of electronic publishing. The Order concludes that section 274(d) does not prohibit discounts for the provision of such services to an electronic publisher for use in any other activity in which an electronic - 3 - publisher may engage. Moreover, section 274(d) does not require the same price for different services, particularly when those services use different facilities and impose different costs on a BOC. No separate affiliate requirement is established for the provision of telemessaging services since the safeguards in section 260 are sufficient to guard against discriminatory behavior by incumbent LECs in favor of their own telemessaging operations. The July 18, 1996, Notice of Proposed Rulemaking in this proceeding also sought comments on the alarm monitoring provisions in section 275 of the 1996 Act. Those issues will be addressed in a separate order. The Commission's rules implementing sections 274 and 260 go into effect thirty days after publication in the Federal Register. Action by the Commission February 6, 1997 by First Report and Order and Further Notice of Proposed Rulemaking (FCC 97-35). Chairman Hundt, Commissioners Quello, Ness, and Chong. -FCC- News media contact: Rochelle Cohen at (202) 418-0253. Common Carrier Bureau contact: Lisa Sockett at (202) 418-1580.