WPCM 2 BP Z Courier 10cpi#|x'wx6X@8;X@HP LaserJet IIISi ROOM 5444HPLASIII.PRSx  @Hpj@2<D#[#|r  Њr Bold Courier 10cpiCourier 10cpi (Bold)HPLAS4.PRS 4x  @\\CKM  Њ2XF`K?xxx,wx6X@8;X@?xxx,x `B;X$23  &@K2K;U7$/ Part 61, 64 & 69 /$  ?X< ` ` hhC qpp  )xxX [Before the  ? <@ FEDERAL COMMUNICATIONS COMMISSION xxX FCC 94118  ?<  Washington, D.C. 20554 ă  ?< In the Matter ofhhCqpp) ` ` hhCqpp)  ?<Expanded Interconnection withqpp) CC Docket No. 91141  ?` <Local Telephone Company Facilitiespp) Transport Phase II ` ` ` `  LTHIRD REPORT AND ORDER  ?<Adopted:` ` May 19, 1994hhCq Released:  )May 27, 1994(#(#` `  ?<  ?0< By the Commission:  Commissioner Barrett issuing a statement.  ?<  ?< X(# DTABLE OF CONTENTS  ?<` ` hhCqpp  )xxXParagraph  ?<I.INTRODUCTIONhhCqpp  )xxX 1  ?8<II.BACKGROUNDhhCqpp  )xxX (#(#4  ?<III.REQUIREMENT TO PROVIDE SIGNALLING INFORMATIONxxX (#(#7  ?X<A. NoticehhCqpp  )xxX (#(#7  ? <B. Positions of the Partiespp  )xxX 9  ?<` ` 1. General Benefits and Costs  )xxX (#(#9 ` ` 2. Technical Requirements and Network  ?x<` ` Modificationsqpp  )xxX 14  ?@<` ` 3. BillinghhCqpp  )xxX 20  ? <C. DiscussionhhCqpp  )xxX 24  ?!<IV. COLLOCATIONhhCqpp  )xxX 32  ?(#<V. PRICING ISSUEShhCqpp  )xxX 36  ?$<A. LEC Charges for Signalling Services  )xxX 36  ?%<` ` 1. Notice and Backgroundpp  )xxX (#(#36  ?H&<` ` 2. Positions of the Partiespp  )xxX 37  ?'<` ` 3. DiscussionhhCqpp  )xxX 43  ?'<B. Recovery of Support Flowspp  )xxX 47"'0*((/"Ԍ ?<C. ONA FrameworkhhCqpp  )xxX 51 VI. TARIFFING AND IMPLEMENTATION pp  )xxX 56 VII. LEC PRICING FLEXIBILITY&**//p4499 ??xDD I58  (ԌVIII. OTHER ISSUESh$$**//p4499 ??xDD I65 ` A. Reciprocityh$$**//p4499 ??xDD I65 B. Jurisdictional Measurement and Reporting; ??xDD I67 C. Separations Issues%**//p4499 ??xDD I72 IX.  CONCLUSIONh$$**//p4499 ??xDD I75 X. REGULATORY FLEXIBILITY ACT*//p4499 ??xDD I76 XI. ORDERING CLAUSES h$$**//p4499 ??xDD I77 I. INTRODUCTION `  1.  In this order, we require Tier 1 local exchange carriers (LECs) (except members of the National Exchange Carrier Association (NECA)) to provide to interested third parties, including competitive access providers (CAPs), interexchange carriers, (IXCs), and end users, signalling information necessary to provide tandem switching. These parties will thus, for the first time, be able to carry traffic of multiple IXCs from LEC end offices to their own tandems, switch traffic at that point, and deliver the traffic to the appropriate IXC. `  2.  This measure represents another step in a series of efforts to remove barriers to competition in interstate access services.f5` In previous orders, we have required LECs to provide expanded interconnection for interstate special access and switched transport services. Expanded Interconnection with Local Telephone Company Facilities, Report and Order and Notice of Proposed Rulemaking, 7 FCC Rcd 7369 (1992) (Special Access Expanded Interconnection Order), appeal pending sub nom. Bell Atlantic v. FCC, No. 921619 (D.C. Cir., filed Nov. 25, 1992), recon., 8 FCC Rcd 127 (1992), recon., 8 FCC Rcd 7341 (1993); Expanded Interconnection with Local Telephone Company Facilities, Second Report and Order and Third Notice of Proposed Rulemaking, 8 FCC Rcd 7374 (1993) (Switched Transport Expanded Interconnection Order), appeal pending sub nom. Bell Atlantic v. FCC, No. 931743 (D.C. Cir., filed Nov. 12, 1993). f Our earlier orders opened the door to competition in special access and switched transport transmission services. Interconnectors, however, had to rely on LECs to perform the switching functions necessary to provide switched transport. The steps we now take will enable interconnectors, as well as other parties, to provide tandem switching functions for switched transport services. Thus, these measures will open the door to third parties to provide competitive tandemswitching services. By further reducing barriers to competition in switched access services, our actions will benefit all users of tandem switching, especially small IXCs that tend to rely heavily on tandemswitched transport, who will benefit from more competitively priced tandem switching services. Our actions also x  should promote more efficient use and deployment of the country's telecommunications networks, encourage technological innovation, and exert downward pressure on access charges and longdistance rates, all of which should contribute to economic growth and the creation of new job opportunities. In addition, these measures should increase access to diverse facilities, which could improve network reliability. `  3.  As discussed in more detail below, we require Tier 1 LECs (except NECA members) to provide signalling information necessary for tandem switching from LEC equal access end offices to any interested third party (hereinafter sometimes referred to as "tandem switching providers" or "TSPs").*5` Tier 1 LECs are those with $100 million or more in annual regulated revenues for a sustained period of time. Commission Requirements for Cost Support Material to be Filed with 1990 Annual Access Tariffs, 5 FCC Rcd 1364 (1990).  In end offices in which common channel signalling (CCS or SS7) is available, TSPs shall have the option of receiving signalling information via SS7 or multifrequency (MF) signalling. The provision of this information will be treated as a new service under our price caps regime, and Tier 1 LECs must file tariff amendments to reflect the availability of signalling information from LEC equal access end offices within ninety days of publication of this order in the Federal Register. Based on the record and in light of our prior decisions on pricing flexibility in the Switched Transport Expanded Interconnection Order and in the Transport proceeding,`5` See infra  5864 (pricing flexibility section).` we do not grant LECs additional pricing flexibility in this order. We also find that the transport interconnection charge is sufficient to protect support flows potentially affected by the provision of signalling information. II. BACKGROUND `  `  4.  The Commission has taken several initiatives to increase competition in the longdistance access market. First, in 1992, in the Special Access Expanded Interconnection Order, we required Tier 1 LECs, except NECA pool members, to provide expanded interconnection for interstate special access to all interested parties.a|~5` Special Access Expanded Interconnection Order, 7 FCC Rcd 7369.a In 1993, we adopted the Switched Transport Expanded Interconnection Order, in which we required LECs providing expanded interconnection for special access to provide expanded interconnection for switched transport service as well.,lR5` Switched Transport Expanded Interconnection Order, 8 FCC Rcd 7374. Interstate switched transport connects LEC end offices with IXC points of presence (POPs) for longdistance calling. There are several types of transport services and facilities. "Entrance facilities" are used to transmit traffic between an IXC's POP and the LEC office ' serving that POP, called a serving wire center (SWC). Directtrunked transport facilities are used to transmit traffic between a LEC SWC and end office (or between any two customerdesignated LEC offices) when such traffic requires no tandem switching. Tandemswitched transport facilities are used to transmit traffic between the LEC end office and SWC (or tandem) when such traffic requires tandem switching. Dedicated signalling transport is transport between IXCs' SS7 networks and LEC signalling transfer points (STPs). See Transport Rate Structure and Pricing, Second Report and Order, 9 FCC Rcd 615, 618 n.7 (1994) (Baskets and Bands Order)., In that order, we opened the Ԍopportunity for interconnectors to provide alternative transmission services to LECprovided directtrunked transport and entrance facilities by collocating transmission facilities in LEC end offices, tandems, serving wire centers (SWCs), and certain remote nodes.~|:5` Switched Transport Expanded Interconnection Order, 8 FCC Rcd at 74077409,  5357. ~ As a result of those two actions, interconnectors now are able to provide special access and switched transport transmission services in competition with the LECs. `  5.  Only LECs, however, currently can provide tandem switching functions. Third parties cannot now provide such functions because they generally do not have access to the signalling information necessary to switch and route traffic to IXCs. Thus, virtually all tandemswitched transport currently must be routed through LEC tandems and switched by the LECs at that point; interconnectors can provide only the link between the LEC tandem and the IXC pointofpresence (POP). `  6.   In a Second Notice of Proposed Rulemaking (Notice), which is the subject of this proceeding, we proposed to broaden the scope of our access initiatives to address this limitation.:@ 5` Expanded Interconnection with Local Telephone Company Facilities, Second Notice of Proposed Rulemaking, 7 FCC Rcd 7740, 7747,  40 (Notice). Specifically, we proposed to require LECs to provide other parties access to LEC signalling information to enable such parties to offer tandem switching functions.TB5` Id. We declined to address expanded interconnection for provision of subscriber loops, as well as interoperability of LEC local switches and other parties' switches required for competitive provision of local exchange service. Id. at 7748 n.48. Under this proposal, interconnectors would be able to offer tandemswitched transport, using their own tandems, in competition with the LECs. In addition, third parties, such as IXCs, could obtain economies by aggregating their traffic from end offices on a single direct trunk, routing that traffic to a thirdparty tandem, and switching it at that point. We address this proposal below.   III. REQUIREMENT TO PROVIDE SIGNALLING INFORMATION  A.` Notice  ` 7.  In the Notice, we proposed to require LECs to provide third parties with access to the signalling features and functions within LEC networks necessary to create switched access networks that compete with the LECs.> 25` Id. at 7748,  45.> We tentatively concluded that the public interest benefits of this proposal would be substantial and would outweigh any potential detriments.8 N5` Id. at 7747,  42.8 We noted that the proposal would provide greater service choices for telecommunications users, especially small IXCs, heighten incentives for efficiency, including efficiency in aggregating interexchange traffic, accelerate technological innovation, and lower rates for switched access services.2 d 5` Id. at  41.2 We stated further that our proposal should help ensure that the pricing relationships between tandemswitched and directtrunked transport are based on market realities, which should reduce or perhaps eliminate the need to rely on regulatory safeguards.& Z5` Id.& We also noted that because interconnectors or their customers would pay the transport interconnection charge, our measures should not impose significant additional pressure on support flows reflected in LEC rates. t5` Id. In addition to inviting parties to comment on our proposal, we solicited comments on whether there are other features or functions to which LECs should provide access. We also asked whether there are any relevant differences between the benefits of switched transport interconnection and those arising from our signalling information proposal. Id. at  42 & 46. Ħ We asked for comment on our tentative conclusions and on whether thirdparty access to LEC signalling information would affect public switched network reliability.l 5` In the Notice, we also sought comment on a proposal by the Independent Data Communications Manufacturers Association, Inc. (IDCMA) to allow third parties to collocate customer equipment in LEC offices. Notice, 7 FCC Rcd at 7748,  49. This order does not address the IDCMA proposal; we will address it at a later time.l `  8.  The Notice proposed that third parties receive access to MF and SS7 signalling from both LEC end offices and tandem switches., 5` Id., Although the Notice did not detail how such arrangements would work, we contemplated that TSPs would use either their own collocated facilities or LEC facilities to carry traffic from the LEC   end office to their own tandems. We also contemplated that if a TSP sought interconnection at the LEC tandem, rather than the end office, the LEC would provide tandemswitched transport for the originating traffic from its end office to its tandem. From there, either the interconnector (if collocated) or the LEC (if the TSP were not collocated) would transport the traffic to the TSP tandem. In either case, the TSP would switch the traffic at its tandem and transport it to the appropriate IXC over its own directrouted facilities.  B.` Positions of the Parties `  1.  General Benefits and Costs 69 ` 9.  CAPs, IXCs, and users applaud our proposal to require LECs to provide access to LEC signalling information.d 5` E.g., AT&T Comments at 13; MCI Comments at 23; CompTel Comments at 12; ALTS Comments at 24; MFS Comments at 810; Teleport Comments at 1; Teleport Denver Comments at 45; WilTel Comments at 12; Ad Hoc Comments at 35; IIA Comments at 23; GSA Comments at 24; Prodigy Comments at 14; ITN Reply at 2. A list of parties filing comments and replies is provided in Appendix A.  These parties generally base their support on some or all of the benefits identified in the Notice. MFS and CompTel contend that competitive tandem switching would allow interconnectors to serve lowervolume transport routes economically, to the benefit of small IXCs, their customers, and, according to MFS, residents of rural areas.l5` MFS Comments at 89; CompTel Comments at 2. CompTel, however, asserts that contrary to the suggestion in the Notice, tandem competition is not likely to reach a level to warrant eliminating regulation. CompTel Comments at 3. Accord WilTel Comments at 13 (arguing that tandem competition cannot substitute for Commission regulation). ALTS, on the other hand, claims that once effective competition is fully achieved and pricing relationships among various access services function according to market conditions rather than regulation, there will be less need to rely on artificial safeguards. ALTS Comments at 34. Similarly, ALTS, ITN, and GSA assert that the proposal would extend to a larger, more diverse universe of users the benefits of increased competition, including increased choice, improved technology, and lower rates.UT5` ALTS Comments at 3; ITN Reply at 2; GSA Comments at 23.U ALTS also contends that by enlarging the compass of the market in which competitive service may be offered, conditions conducive to increased investment and new market entry may be established. Citing similar benefits, AT&T asserts that access to LEC signalling information used for call setup functions is indispensable to providing switched transport by interconnectors.0:5` AT&T Comments at 2.0 Likewise, Prodigy maintains that absent  access to signalling data, interconnectors will be "consigned to second class status" and that the proposal is valuable to information service providers like Prodigy with national networks, which can utilize CAPs to concentrate their traffic into local nodes.i:5` Prodigy Comments at 1 & 23 n.3. See also IIA Comments at 2 (asserting that by allowing nonLEC service providers to offer tandemswitching functions, the Commission can facilitate the creation of a "network of networks" in which service providers autonomously control delivery of their products).  i In addition, Ad Hoc, MCI, and ALTS argue that interconnector access to signalling information will yield greater route diversity and network redundancy.[|F5` ALTS Comments at 3; Ad Hoc Comments at 5; MCI Comments at 3. [ Finally, Time Warner claims that access to LEC signalling information will facilitate its development of the world's first commercial "Full Service Network," which it describes as an electronic superhighway with switched, broadband, analog, and digital network platforms capable of supporting a wide range of entertainment, educational and telecommunications services.M*5` According to Time Warner, these Full Service Networks will offer new and innovative video and voice services, as well as basic telecommunications services, such as access services. Time Warner states that, as planned, these networks would provide connectivity with a wide range of content providers, IXCs, enhanced service providers and users. Time Warner asserts that the availability of LEC signalling information would facilitate such connectivity and promote greater diversity and utility of Full Service Network Offerings. Time Warner Comments at 14.M `   10.  LEC positions on the signalling proposal vary. Some generally support it;e|d 5` Ameritech Comments at 12; GTE Comments at 25; Rochester Comments at 2.e some flatly oppose it.|d D5` E.g., Bell Atlantic Reply at 3; U S West Reply at 17 & 13; Pacific Comments at 12, Reply at 117. Others fall somewhere in between.:" 5` E.g., BellSouth Comments at 13, Reply at 1; Southwestern Bell Comments at 14 & 2324, Reply at 16 & 1617. See also USTA Comments at 13 & 15, Reply at 12 & 16. In support, Ameritech argues that interconnector access to carrier signalling information will widen competitive opportunities for alternative providers of switched transport service and thereby create a more comprehensive form of switched transport competition. Ameritech asserts that this measure is consistent with its  comprehensive proposal to unbundle fully its network.:5` Ameritech Comments at 23 & n.3 citing "Petition for Declaratory Ruling and Related Waivers to Establish A New Regulatory Model for the Ameritech Region" (filed March 1, 1993). Rochester delineates the procompetitive benefits of making signalling information available to third parties and states that it may do so prior to a Commission mandate.2:5` Rochester Comments at 23. Subsequent to filing its pleadings, Rochester filed a petition for waiver of various Part 61 and 69 rules in order to implement its "Open Market Plan." This plan is similar in its general intent to the Ameritech petition and is currently pending. See "Rochester Telephone Corp. Petition for Waiver of Part 61 and Part 69 to Implement Open Market Plan" (filed May 19, 1993).  GTE agrees that promoting the availability of competitive tandemswitched services "is a worthwhile goal so long as a reasonable balance is maintained between the costs and benefits" involved./t 5` GTE Comments at 2./ GTE maintains, however, that providing signalling information to interconnectors should not be viewed as a prerequisite for effective market pressure on LEC tandemswitched services. It asserts that a number of close substitutes for such services already exist.lJ 5` GTE Comments at 23. GTE claims, for example, that if a LEC increases the price of tandemswitched transport, an IXC can simply use dedicated transport instead of tandemswitched transport and order direct trunks from either a LEC or an alternative carrier. Id. at 3. GTE also contends that demand for tandemswitched transport will come from larger (rather than smaller) IXCs, which may select tandemswitched transport to carry their traffic that overflows from direct trunks. Id.   `  11.  NYNEX and United urge the Commission to proceed cautiously._ 5` NYNEX Comments at 3 & 1819; United Comments at 37; _ NYNEX proposes various methods by which access to LEC signalling information by interconnectors could be accomplished, while urging us to study carefully the technical limitations of each.@" 5` NYNEX Comments at 3.)* @ United states that it does not object to the concept that LEC signalling may be passed to interconnectors, but maintains that the benefits of competitive tandem switching may not outweigh the costs.6 \ 5` United Comments at 2 & 4.6 United alleges that providing interconnectors signalling information will require potentially expensive switching and billing modifications, which could increase cost to customers and delay call processing.,!5` Id. at 4.,  !Ԍ `   12.  USTA alleges that the technical issues are formidable, demand is lacking, significant investment will be required, and competitors are unwilling to pay for the signalling information."t|5` USTA Reply at 113. USTA claims that "no party in the proceeding has expressed any intention to use and pay for Phase II services." USTA Reply at 8 (emphasis in original). See also Bell Atlantic Comments at 14, Reply at 23; USTA Reply at 78. BellSouth "is in substantial agreement with" USTA's Comments and requests that the Commission proceed as outlined by USTA. BellSouth Comments at 3. For these reasons, USTA encourages the Commission to "move forward only when it can document a clear net benefit that will be equitably available . . . and that will be sufficient in magnitude to offset the costs.".#t5` USTA Reply at 16.. Southwestern Bell opposes the signalling proposal, unless "all of the unlawful and detrimental" aspects of the Special Access and Switched Transport Expanded Interconnection Orders are rectified, LECs are granted sufficient cost recovery and increased pricing flexibility, and certain other requirements are satisfied.?$l5` Southwestern Bell Comments at 14.? `   13.  Bell Atlantic, Pacific, and U S West argue that LECs should not be required to develop and deploy unbundled tandem signalling because the four conditions precedent to offering Basic Service Elements (BSEs) technical feasibility, economic feasibility, expected market demand, and utility have not been satisfied. %  5` Bell Atlantic Reply at 23; Pacific Reply at 310; U S West Reply at 27. Bell Atlantic, however, maintains that the Commission should not impose BSE regulatory requirements on the provision of signalling information.   Noting assertions by WilTel and CompTel that competitive tandems will rarely be deployed, Pacific and U S West argue that the parties have not demonstrated the utility of signalling services, or the demand for those services.&t 5` Pacific Reply at 310; U S West Reply at 27. Pacific also asserts in its Reply that signalling services are not technically feasible and would be extremely costly. As discussed infra, however, Pacific subsequently filed an ex parte letter acknowledging this assertion to be erroneous with respect to signalling information provided from LEC end offices. See infra n.44. Ľ Indeed, U S West characterizes our proposal as a "theoretical exercise" and claims that parties requesting signalling unbundling do so not because they intend to use such information, but rather to provide some kind of "theoretical check" on LEC pricing policies and practices.9' 5` U S West Reply at 16.9 Pacific also claims that the tandem switching proposal would impede broader network efficiency.3(5` Pacific Comments at 1.3   (Ԍ X ` 2. Technical Requirements and Network Modifications(#  `  14.  The record identifies four types of signalling information used to provide switched transport: (1) the Carrier Identification Code (CIC), which identifies the caller's selected IXC; (2) the OZZ, which indicates the specific IXC trunk group that is to carry the call;f)t5` IXCs may use different trunk groups to carry different classes of calls. For example, 0+ calls may be carried on a different trunk group than directdialed domestic calls.  The OZZ digits indicate the call type, and thus the trunk group, onto which a particular call should be routed. See Pacific Comments at A2. f (3) the Automatic Number Identification (ANI), which identifies the billed number; and (4) the Called Number Identification (CNI), which identifies the called telephone number.*tF5` USTA Comments at 4; US West Comments at 910; NYNEX Comments at 5. For terminating traffic, the called telephone number, which the IXC provides, conveys the necessary information to route a call from the IXC to the terminating end office. MFS Comments at 67. The first six digits of the tendigit number identify the end office that serves the called telephone number. Id. Į Currently, LECs transmit ANI and CNI to their access customers on originating Feature Group D trunks from LEC end offices and tandems. They do not, however, transmit the CIC and OZZ codes to third parties because IXCs do not need this information to route and bill calls. Thus, these latter codes are dropped by the LECs from the signalling data stream after trunk selection has taken place. In the case of directtrunked traffic, the CIC and OZZ codes are dropped at the originating end office; in the case of tandemswitched traffic, they are dropped at the tandem. Because the CIC and OZZ codes are needed for tandem switching and are not currently provided to third parties, these data are the focus of this proceeding.r+ 5` MCI argues that "each and every signalling feature and function" used by the LECs must be made available to interconnectors. MCI Comments at 23. According to MCI, these would include, but not be limited to, all protocols relating to the origination, termination, routing, measurement, network administration, and billing of switched traffic. Id. at 3. MCI does not, however, identify these protocols with any greater specificity, and parties do not address the implications of this proposal. Therefore, the record here provides no basis for considering this degree of unbundling.r ` 15.  Most parties agree that it would be relatively easy for LECs to provide third parties with the CIC and OZZ codes from LEC end offices via MF or SS7 signalling. Several commenters claim that only a change in end office routing tables would be necessary.,5` Letter from Dee May, Director Regulatory Issues, NYNEX to Gary Phillips and Linda Haller, FCC (March 22, 1994) (NYNEX Ex Parte) at 1 (arguing that routing table changes would be required to send signalling information from a NYNEX end office to a thirdparty '+ tandem); Letter from Jo Ann Goddard, Director Federal Regulatory Relations, Pacific, to William F. Caton, Acting Secretary, FCC (February 17, 1994) (First Pacific Ex Parte) at 1 (stating that Pacific's April 2, 1993 comments erroneously claimed that software program modifications would be required to transmit signalling from an end office to a CAP tandem; that "Pacific has since determined that no software changes . . . would be required;" and that only switch routing translations would be involved); Letter from Jo Ann Goddard, Director Federal Regulatory Relations, Pacific, to William F. Caton, Acting Secretary, FCC (March 23, 1994) (Second Pacific Ex Parte), Attachment at 1 (arguing that providing signalling from a Pacific end office to a CAP tandem "could be accomplished within a standard software translation interval of fortyfive days"); Letter from Anthony M. Alessi, Director, Federal Relations, Ameritech, to William F. Caton, Acting Secretary, FCC (March 21, 1994) (Ameritech Ex Parte) at 1 (asserting that signalling information that is provided from an Ameritech end office to an Ameritech tandem could be provided to a thirdparty's tandem via a routing change); AT&T Reply at 78 n.15; United Comments at 5. č They  , maintain that LECs would simply have to perform end office translations that have the effect of treating a thirdparty tandem as though it were a LEC tandem.G-" |5` First Pacific Ex Parte at 1 and Second Pacific Ex Parte, Attachment at 1 (arguing that Pacific could pass CIC and OZZ information by making switch routing or software translations); U S West Comments at 1011 (claiming that LECs could send the CIC and OZZ information to an interconnector tandem by "telling" the network that an interconnector tandem is a LEC tandem); GTE Comments at 7 (asserting that signalling information is available regardless of the identity of the owner of the tandem to which the equal access end office sends it); USTA Comments at 5 (contending that LECs may provide the CIC and OZZ by performing end office translations "which have the effect of treating a CAP access tandem as though it were a LEC access tandem");  NYNEX Comments at 11, n.10 (claiming that signalling information could be routed from LEC end office to interconnector tandem by "tricking" end office into believing that interconnector tandem is LEC tandem). Accord MFS Reply at 2 & 5. G Parties addressing the cost of such a change maintain that it would be minimal and equivalent to the cost of conventional routing table changes that LECs make on a regular basis.L.*t5` See Ameritech Ex Parte at 1 (arguing that "[c]hanging the routing of the traffic from Ameritech's tandem to another provider's tandem would be similar to a trunk rearrangement"); NYNEX Ex Parte at 1 (claiming that no new rate elements would be needed). U S West seems to acknowledge that the CIC and OZZ information could be provided to third parties relatively easily, but declines to quantify the costs of doing so. Rather, U S West contends that since there is no evidence of any current need for the information, there is no reason to quantify the costs of providing it. U S West Reply at 11. Other parties assert that providing signalling information to thirdĩparty tandems would be costly, though these parties do not appear to differentiate end office ~'-ԫprovided signalling from tandemprovided signalling. See United Comments at 4. Some parties also cite cost estimates contained in Ameritech's Comments. See GTE Reply at 8; USTA Reply at 1. As indicated above, however, Ameritech itself in a subsequent ex parte contends that endoffice generated signalling information would be similar to a simple trunk rearrangement. Ameritech Ex Parte at 1.L Some  . parties, however, contend, that because industry standards do not contemplate transmission of CIC and OZZ codes over Feature Group D, the proposal would require action by Committee T.1 of the Exchange Carrier Standards Association. MFS argues that since the costs are minor, LECs should be required to provide the CIC and OZZ from end offices within a reasonably short time.,/5` MFS Reply at 2., `  16.  Most parties also agree that providing signalling data at LEC tandems raises more difficult issues.0:5` E.g., NYNEX Comments at 69 & Exhibit 2; Pacific Comments at A2A4; GTE Comments at 810; Southwestern Bell Comments and 2021; USTA Comments at 47; United Comments at 56. They claim that unlike the end office, which transmits CIC and OZZ codes to LEC tandems, LEC tandems need not transmit CIC and OZZ codes to any point inside or outside the LEC network. Consequently, they argue, because LEC tandems have not been equipped with the capability of transmitting these data, this information automatically "drops off" the data stream at the LEC tandem.1 d 5` E.g., NYNEX Comments at 7; United Comments at 56. NYNEX also claims that using either two tandems or a single interconnector tandem, LECs also would have to assign additional CIC codes to IXCs. NYNEX Comments at 8 & 11. According to NYNEX, assignment of multiple codes would be necessary to distinguish between an IXC's traffic to be routed to an interconnector from that to be routed by a LEC. Id. at 8. WilTel notes, however, that IXCs probably will not want to divide their traffic in a single end office between an interconnector and a LEC because dividing IXC traffic would decrease trunking efficiency for IXCs. WilTel Reply at 11. WilTel acknowledges that some IXCs may want to route their traffic to interconnectors and use LEC tandems for overflow, but argues that such a routing arrangement would not require assignment of multiple CICs. Id.ģ LECs generally agree that if they modified their tandem software, they could provide or "regenerate" the CIC and OZZ and transmit it to thirdĩparty tandems. Commenters' cost and timing estimates, however, vary considerably. For example, NYNEX claims that software changes would cost at least $1 million and take a minimum of two years to complete, while Pacific estimates they would cost $1525 million and take two to four years to complete.25` NYNEX Comments at 78; Pacific Comments at A3 to A4. NYNEX bases its estimate on a cost of at least $50,000 per tandem switch, for a total of 23 tandems, and notes that the costs could be much higher. NYNEX Comments at 78. Southwestern Bell  2 estimates that software upgrades and trunk conversion costs would be $12.3 million.325` Letter from William A. Blase, Jr., Director Federal Regulatory, Southwestern Bell Corporation to William F. Caton, Acting Secretary, FCC (April 22, 1994) (Southwestern Bell Ex Parte), Attachment at 23. Southwestern Bell also suggests that additional CIC codes could require replacement of certain switches. Id. at 3. As noted, however, it does not appear that new CIC codes will be necessary. See supra n.48.  @  ` 17.  Some LECs question whether these changes are warranted. They note that interconnectors can already collocate at LEC tandems and route traffic from those tandems to their own tandems provided that they use separate trunk groups for each IXC.F4t5` See, e.g., GTE Comments at 9.F They question whether the drawbacks of using separate trunk groups warrant the costs of changing tandem software. Several LECs also question whether such twotandem architectures are really feasible. They argue that because interconnectors would have to purchase LEC tandemswitched transport in order to receive calls that are routed through a LEC tandem, interconnectors could not offer a viable tandemswitched service using this architecture. In addition, they contend, because calls would have to pass through two tandems, calls would be delayed.95d H5č` NYNEX Comments at 89.9 LECs also note that because interconnectors would have to purchase LEC tandemswitched transport to receive calls from a LEC tandem, this architecture would not increase competition for LEC tandemswitched services. At the same time, LECs acknowledge that interconnectors may require the ability to receive signalling information from LEC tandems in order to provide tandemswitched 800 service.6t 5` E.g., Southwestern Bell Comments at 20; Pacific Comments at A6; GTE Comments at 10; USTA Comments at 6. These LECs note that under the 800 database system, 800 calls originating in end offices that lack SS7 capabilities must be routed to a LEC tandem for IXC identification. Thus, the CIC and OZZ codes for such calls are not generated until after the call has been routed to a LEC tandem. ľ `  18.  In reply, MFS denies that using separate trunks for each IXC is an adequate substitute for switching information. It asserts that while it would primarily rely on signalling information from LEC end offices, the availability of such information from tandems as well "could provide a useful adjunct to other forms of interconnection" to assure its ability to originate and terminate traffic ubiquitously.,7 5` MFS Reply at 4., Nevertheless, acknowledging that these modifications may be more extensive and expensive than end office changes, MFS claims that signalling information should be offered at LEC tandems only upon receipt of a bona fide request, and sufficient  7 time should be allowed for development of the requisite software.485` Id. at 23.4 ALTS maintains that availability of signalling information from LEC tandems would allow interconnectors to route traffic from fewer end offices, and require less construction of links.F9:N5` ALTS Ex Parte. F  ` 19.  A number of parties raise questions about the provision of signalling information via SS7 from LEC end offices and tandems. Several LECs argue that LECs should not be required to provide SS7 interconnection at their end offices and tandems, but rather, at their signalling transfer points (STPs).m:|5` GTE Comments at 1617; Southwestern Bell Comments at 19; USTA Comments at 34. m They argue that only an STP has the capability to examine an SS7 signal to ensure that the signal is from an authorized source and that the SS7 messages conform to appropriate protocols. They assert that SS7 signals that are not subjected to these screening functions are more likely to cause network failures.;:d 5` GTE Comments at 16. See BellSouth Comments at 23 (the Commission should ensure that any measures it adopts "give due regard to the future performance and security of LEC networks). Therefore, they argue, if interconnectors can send messages directly to a LEC end office or tandem, LECs would have to recreate, in effect, their SS7 networks to equip end offices and tandems with the screening capabilities now performed by STPs. This, the LECs argue, would be enormously costly. LECs also argue that because STPs are capable of handling large volumes of traffic, it is more efficient to route SS7 signals through a few centralized STPs, rather than to install STP capabilities in every LEC switching office.0< 5` GTE Comments at 16.0  AT&T asserts that to facilitate use of CCS signalling by interconnectors, such signalling must be made available at LEC STPs. AT&T argues that it would be completely infeasible for interconnectors to build SS7 facilities to each LEC end office and that LECs should therefore be required to make it available at STPs as well as tandems and end offices.0=  5` AT&T Comments at 5.0 In reply, ALTS agrees that interconnectors must have access to LEC STPs, but asserts that LECs should not be permitted "to artificially constrain the locations at which the features and functions are made available."4>D& 5` ALTS Reply at 6 & n.17.4 `  3. Billing `  20.  Some LECs argue that use of interconnector tandems raises issues with respect to LEC billing of originating and  > terminating switched access charges.?|5` These charges include carrier common line, local switching, and if provided by the LEC, tandem switching. LECs explain that originating usage normally is recorded at the originating end office upon receipt by the end office switch of trunk seizure acknowledgment from the IXC.x@t| 5` NYNEX Comments at 11; GTE Comments at 13. In an MF environment, the IXC sends what is commonly termed a "wink" to the originating LEC to confirm its receipt of the call and trigger originating access billing. With SS7 connections, the IXC transmits either an "initial address message" or "exit message" to the LEC, depending on the architecture.x LECs assert that if interconnectors provide tandemswitched transport, originating usage recording should begin when the interconnector's tandem receives the call, rather than when the IXC switch receives the call. They also argue that the interconnector's tandem must be equipped to send a signal to the originating LEC indicating that the call has been received so that originating billing can begin./AH5` Id. / LECs state that unless the interconnector tandem provides this signal, it would be impossible for the originating LEC to bill the appropriate usage sensitive charges.rB|* 5` These charges include the carrier common line charge and the local switching charge. r LECs also claim that where an interconnector purchases LEC transport from a LEC end office to an interconnector's tandem switch, LECs would have to modify their billing procedures to charge that interconnector for the LECprovided transport. They assert that current billing system parameters bill all calls with tandem signalling at tandemswitched transport rates.=C  5` See, e.g., USTA Comments at 5; GTE Comments at 7 n.10; U S West Comments at 11. USTA explains that without a modification, the LEC end office would create a billing record as if the traffic were routed on the LEC's, rather than an interconnector's network, and charge an interconnector tandemswitched interoffice transport and tandemswitching, rather than directtrunked transport. USTA Comments at 5. USTA claims that LEC ability to make requisite modifications and the costs of such adjustments are unknown. Id. = `  21.  Terminating traffic, according to the LECs, poses more difficult billing problems. LECs assert that terminating billing for switched access traffic is recorded in the first LEC facility that receives the traffic which in the case of tandemswitched transport, is the LEC tandem.wD|T5` USTA Comments at 7; NYNEX Comments at 1112 & n.10; Pacific Comments at A7 to A8. w LECs maintain that their end offices cannot record billing information for terminating tandemswitched transport because they have no way of identifying the amount to bill each IXC after the traffic is loaded onto common facilities. They assert that if an D interconnector is deemed the customer of record for terminating usage, this would pose no problems, as the LECs could simply bill the interconnector for all terminating usage.E||5` NYNEX Comments at 12; GTE Comments at 8, 10 & 11; Ameritech Ex Parte at 2. LECs state, though, that if the LEC customer of record is an IXC that uses an interconnector tandem, special arrangements would have to be made. > ? `  22.  LECs indicate that there would be three possible solutions to the terminating billing problem. First, LECs and interconnectors could modify their respective networks so that interconnectors could send and LECs could receive carrier identification information for calls terminating from an interconnector tandem.?F* 5` See Pacific Comments at A7.? Pacific estimates that it would cost $510 million and take three to five years for it to make this modification..G5` Id. at A7.. Second, LECs could bill IXCs based on data recorded at interconnector tandems and provided via usage tapes to LECs.UHd 5` NYNEX Comments at 1314; Pacific Comments at A8; Southwestern Bell Ex Parte Attachment at 3. Southwestern Bell and Pacific claim that this would require significant changes in LEC accounting systems. Southwestern Bell Ex Parte Attachment at 35; Pacific Comments at A8. NYNEX and Pacific argue that if the LECmeasured amount exceeded the interconnectormeasured amount, the LEC should bill the interconnector for the difference. NYNEX Comments at 1314; Southwestern Bell Ex Parte Attachment at 35.  U NYNEX claims that this approach would be satisfactory if the interconnector assumed liability for any discrepancy between LEC billing records and interconnectorprovided tapes.5I 5` NYNEX Comments at 1314.5 Ameritech, however, opposes this approach, claiming that it has been problematic when used in meet point billing situations.AJ\ V5` Ameritech Ex Parte at 2.A Third, some parties suggest that interconnectors could construct dedicated IXC trunks from their tandems to LEC end offices.\K|5` NYNEX Comments at 14; GTE Comments at 11; USTA Comments at 78.\   `   `  23.  MFS strongly favors the second approach, though it opposes assuming liability for any discrepancy in LEC and interconnector records.hL| 5` MFS Comments at 1620, Reply at 58. See also ALTS Reply at 4.h MFS argues that interconnectors and LECs should be considered "cocarriers" of switched access service and should follow the same "wellestablished" procedures governing the LdL billing and division of revenues that apply when an end office operated by one LEC is "homed" to a tandem operated by another LEC.NM5` MFS Comments at 1620, Reply at 58. N MFS suggests that as cocarriers, both interconnectors and LECs would be required to comply with such "meetpoint" billing procedures, unless the interconnector chooses not to be treated as a cocarrier, in which case the interconnector would be billed by the LEC as the LEC customer.'NtN5` Id. ' MFS also argues that requiring interconnectors to construct direct trunks from their tandems to LEC end offices would defeat the purpose of this proceeding, which is to enable interconnectors to provide tandemswitched service in lieu of direct trunks.4O5` MFS Reply at 56 & n.4.4  C.` Discussion  `  24.  We now affirm our tentative conclusion that broader interconnection requirements to facilitate access competition are in the public interest. In accordance with this finding, we require Tier 1 LECs (except NECA pool members) to provide signalling information from equal access end offices so that third parties may install their own tandems to provide tandemswitching services. Third parties may collocate at LEC end offices and provide their own tandemswitched transport between those end offices and their tandems, or they may purchase LEC transport to their tandems. We do not require LECs to provide signalling information for tandem switching from their tandems since we find that the record does not support the establishment of such a requirement at this time. `  25.  We conclude that the availability to third parties of signalling information needed for tandem switching could provide significant public benefits. It would facilitate broader access competition by enabling interconnectors to offer competitive interstate tandemswitching and transport services. In addition, it would increase opportunities for small IXCs to gain economies of scale by sharing directrouted transport facilities and providing their own tandemswitching. As we stated in the Notice, broader access competition should exert downward pressure on tandemswitched transport rates, while fostering more efficient provisioning of these services by new competitors and LECs. Competition also should encourage innovation and investment in new technologies and could offer increased network reliability through route diversity and redundancy. IXCs would benefit from greater competition in the tandemswitched service market. Small IXCs would especially benefit because they tend to rely more heavily on tandemswitched transport than larger IXCs. In addition, by promoting competition in tandemswitched transport services and facilitating the use of directtrunked transport by small IXCs, these measures should help ensure more rational costbased pricing relationships between LEC directtrunked and tandemswitching transport services, thereby lessening the need for regulatory controls $"ZOԌand fostering more efficient use of these services. All of these benefits should contribute to economic growth by enabling IXCs to use more efficient transport arrangements, by fostering better, more reliable, and more rationally priced access services, as well as by creating new market opportunities for interconnectors. `  26.  We also conclude that LECs can make signalling information available from their end offices at very little cost. Indeed, the record indicates that the costs to LECs of providing such information from end offices may well be de minimis, involving only a simple change in the end office routing table. While a few LECs baldly assert that the costs of providing signalling could be significant, these LECs do not substantiate their allegations with cost estimates or data.^P 5` As noted supra, n.46, while some LECs cite cost estimates submitted by Ameritech in its Comments, Ameritech subsequently clarified that these costs would not have to be incurred in order to transmit signalling information from an end office to an interconnector tandem. Ameritech Ex Parte at 1. ^ Nor do they distinguish between endĩoffice generated and tandemĩgenerated signalling information. Moreover, no party has shown that the necessary modifications to LEC billing systems would be unreasonably costly or burdensome, or that the asserted need to change industry standards to accommodate the passage of CIC and OZZ codes over Feature Group D represents a significant barrier to the implementation of this proposal. On the contrary, we believe that any such measures could be accomplished without undue burden or cost. `  27.  Nor are we persuaded that competitive tandem switching services would require assignment of CICs to IXCs. NYNEX's assertion that multiple CICs would be required assumes that IXCs would be able to specify different routing for different calls originating at the same end office. Thus, NYNEX assumes, for example, that IXCs would seek to route certain calls to an interconnector tandem and others to a POP or a LEC tandem. NYNEX argues that the IXC would need additional CICs to reflect the additional routing options available to it. The record fails to indicate, however, that any entity would actually seek to offer or use that kind of routing dynamic. Even without additional CIC assignments, IXCs would be able to designate a primary route and an overflow route for their traffic, thereby securing the benefits of both route and carrier diversity. Moreover, IXCs could vary routing between a LEC and third party tandem on an endĩofficebyendoffice basis or, perhaps, based on OZZ codes thereby designating one as primary for a particular type of traffic and another for a different type of traffic. No IXC indicates that these options are insufficient, at least for now. Therefore, no additional CIC code assignments would have to be made to accommodate competitive tandemswitched networks. `  28.  U S West and others assert that third parties do not really want signalling information and that IXCs do not really want to use competitivelyprovided tandemswitching services. The record belies U S West's contention. The vast majority of parties, including IXCs, CAPs, users, and some LECs argue that unbundled signalling $"FP information would allow development of alternatives to LEC tandemswitched transport services and they urge us to make such information available.AQ|5` See supra  910.A Moreover, even if the measures we now take do not produce an immediate change in the access market, we think they will be beneficial in the longterm. By eliminating barriers to competition in the provision of tandemswitched services, we will be paving the way to a more competitive access market in the future. RtN5` Moreover, the availability of signalling information to third parties could, in itself and even without actual entry into the market by competitive tandemswitching providers, subject LEC pricing to some additional competitive pressures.  Since the costs of providing signalling information from equal access end offices are so small, these benefits are well worth the costs.vS5` Our conclusion that LECs should be required to offer signalling information from equal access end offices is not based on application of the test that governs LEC BSE offerings since signalling information is not a BSE (see infra  54). Nevertheless, our conclusion is based on the same type of cost/benefit considerations.v `  29.  On the other hand, it appears that providing signalling information from LEC tandems would require software upgrades to those tandems.ET 5` See supra  17. %*E In addition, the record indicates that tandemprovided signalling may be of less utility to TSPs than end officeprovided signalling.BUd  5` See supra  18. B While MFS and ALTS claim generally that tandemprovided signalling could provide a useful adjunct to other forms of interconnection, they do not explain with any specificity how they could use such an architecture, or how a twotandem architecture could actually be competitively viable, either from a service quality or pricing standpoint. Therefore, based on the current record, we do not require LECs to provide this service at this time.  `  30.  We clarify that in proposing access to LEC signalling information from LEC end offices and tandems, we did not intend to require LECs to reconfigure their SS7 networks. Thus, we hold that LECs may provide endofficegenerated signalling information through STPs, and they may require TSPs that are terminating traffic to transmit signalling information to LEC end offices through LEC STPs. We recognize that STPs perform important network screening functions; we do not require LECs to decentralize those functions by deploying them in every switch. Moreover, the record does not indicate that TSPs would seek to interconnect via SS7 at end offices, rather than at STPs. Rather, as AT&T and others point out, it would be far more efficient for them to interconnect at STPs.  < UԌ `  31.  Finally, with respect to billing of terminating traffic, we believe that, consistent with our earlier expanded interconnection measures, the customer of record of the terminating LEC should be billed by the terminating LEC for services provided by that LEC. If the TSP is the customer of record, the LEC should bill the TSP directly. If the TSP's customer is the customer of record, then the TSP must provide the LEC with billing tapes so that the LEC may properly count and bill access minutes. We reject the suggestion of some LECs that all discrepancies between TSPprovided billing tapes and LEC billing records should be resolved in favor of the LECs. We believe that TSPs and LECs can and should establish fair and reasonable procedures to resolve billing discrepancies.UV *5` We do not base our decision that LECs must, in some instances, accept billing tapes from TSPs on MFS' cocarrier model. We are requiring LECs to make signalling information available to any third party, not just providers of competitive tandemswitched transport services. Thus, as noted, small IXCs may use signalling information as a way to aggregate their traffic on directtrunked transport facilities purchased from a LEC so that they can enjoy the same scale economies as larger IXCs. In that situation, the IXC ordering the signalling and transport would be a reseller or aggregator, not a cocarrier. Indeed, if the meetpoint billing model advanced by MFS applied, TSPs would not be able to purchase directtrunked transport from a LEC, since LEC tandemswitched transport rates to the "meetpoint" would apply.U IV. COLLOCATION ` 32.   Notice. In the Notice, we tentatively concluded that collocation of competitors' switches in LEC central offices is neither necessary nor desirable to promote facilitiesbased competition for switched access services.FW\ 6 5` Notice, 7 FCC Rcd at 7748,  47.F We also tentatively concluded that interconnectors should not be entitled to place in the central office, or designate for their use, other types of switchrelated equipment, such as that used for call recording and traffic measurement.&X 5` Id.& We noted that while interconnector transmission equipment must be located in LEC central offices to terminate interconnector circuits, interconnectors could readily connect their transmission facilities to switches and related equipment located on their own premises. We also stated that we expected that interconnectors would prefer to locate their switches on their own premises. Finally, we noted that unlike transmission equipment, switching facilities can occupy a substantial amount of floor space, and as a result, mandated collocation could contribute greatly to space exhaustion.&YDB5` Id.&   YԌ  `  33.  Positions of the Parties. The vast majority of parties support our tentative conclusion not to require collocation of interconnector switches or switchrelated equipment in LEC offices.hZ|5` E.g., Ameritech Comments at 14; MFS Comments at 1314; MCI Comments at 34; GSA Comments at 4; Southwestern Bell Comments at 12; U S West Comments at 57; USTA Comments at 11; Rochester Comments at 3; NYNEX Comments at 16; Bell Atlantic Comments at 12; Pacific Comments at 1214; United Comments at 3; GTE Comments at 1920.h They argue that the collocation of switching equipment offers no technical advantages because the location of switches does not affect the quality or cost of switching services.[:F5` E.g., Ameritech Comments at 1415; NYNEX Comments at 16; United Comments at 8; Southwestern Bell Comments at 1213; U S West Comments at 67. Most commenters also agree that switches take up much more floor space than transmission equipment and, as noted in the Notice, that collocation of switching equipment could thus greatly accelerate the exhaustion of available floor space.l\|H5` E.g., MCI Comments at 34; Ameritech Comments at 14; USTA Comments at 12.l They argue that any reasonably sized switch would take up at least several hundred square feet.>]l 5` See, e.g., Ameritech Comments at 14. U S West asserts that its tandem switches occupy no less than 900 square feet and as much as 3900 square feet. U S West Comments at 7. See also MFS Comments at 14 (acknowledging Commission's floor space concerns).> Pacific adds that collocation could also require upgrades to heating, ventilation, and air conditioning systems.4^L5` Pacific Comments at 14.4 MFS acknowledges that it would strongly prefer to locate its switching equipment on its own premises because switches generally require much more constant and careful monitoring and supervision than transmission equipment. It states, however, that its position is premised on the Commission's adoption of adequate nondiscrimination safeguards to assure that interconnectors are not disadvantaged because of their inability to collocate switching equipment. Specifically, MFS requests that LECs not be permitted to manipulate rate structure or levels, or impose any technical criteria that confer an advantage due to the location of their tandem switches._5` MFS Comments at 14. See also ALTS Comments at 910 (agreeing that collocation is not necessary if Commission recognizes need for continued oversight to protect against discrimination by LECs). Finally, U S West argues that we lack authority to order collocation of switching equipment.4`T5` U S West Comments at 6.4 `  !34.   Ad Hoc, on the other hand, favors mandatory collocation. Ad Hoc argues that only collocation can approximate the ` terms and conditions on which the LECs interconnect their own tandem circuits and that collocation reduces LEC opportunities for "strategic manipulation." It argues, further, that because the Commission has ordered collocation for transmission equipment, a different rule for switching equipment will require "linedrawing exercises that will create ongoing controversies, waste the Commission's scarce resources, and ultimately confuse the marketplace." Rather than perpetuate such linedrawing exercises, it states, the Commission should move towards a system of "mutual openness."6a5` Ad Hoc Comments at 1516.6  ` "35.  Discussion. We now affirm our tentative conclusion that physical collocation of switching equipment should not be required. Virtually every commenter that addressed this issue supported our tentative conclusion and the reasoning behind it. Thus, they agree that there is no competitive or technical benefit to locating switching equipment in LEC offices; that switching equipment is too large and too heavy to be collocated in LEC space; and that interconnectors would prefer to place their switching equipment on their own premises for monitoring purposes. The arguments offered in support of mandatory collocation are not convincing. No one has shown why the linedrawing process between switching and transmission equipment would be unmanageable or that collocation is necessary to ensure fair and nondiscriminatory treatment of interconnectors by LECs.  Indeed, our tariffing and general nondiscrimination requirements should provide sufficient protection against unfair or unreasonably discriminatory LEC rates and practices. V. PRICING ISSUES  A.` LEC Charges for Signalling Services   `  1. Notice and Background ` #36.  In the Notice, we sought comment on whether LECs should price signalling information according to the new services test.Fb<N5` Notice, 7 FCC Rcd at 7748,  50.F We also proposed that LECs not be allowed to use the net revenue test to justify new signalling service charges.'c5` Id. '  ` 2. Positions of the Parties  ` $37.  The majority of commenters favor the new services test.Hd2nZ5` E.g., MCI Comments at 45; GSA Comments at 45, Reply at 67; ALTS Comments at 1112; Ad Hoc Comments at 1617; ITN Reply at 34; U S West Comments at 14; United Reply at 45; Rochester Reply at 7. See also Pacific Reply at 1719 & n.44 (arguing that LECs should be 'c able to recover their expense and investment, including reasonable overhead). MCI supports the new services test for setting initial rates for signalling and requests that interested parties have access to all LEC models used to justify their rates. MCI Comments at 45 & n.9. MCI states, however, that eventually, the rates for all LEC services must be based upon total service long run incremental costs and developed on a functional basis. Id. at 45. H On the other hand, Teleport, Teleport Denver, and Time Warner nd oppose it, arguing that signalling services should be priced based on incremental cost.et5` Teleport Comments at 3; Teleport Denver Comments at 35; Time Warner Comments at 5. For example, Teleport Denver argues that interconnectors have no choice but to buy LEC bottleneck facilities, and therefore, should not be "saddled" with the LECs' own inefficiencies, and that signalling should be based on the LEC's actual costs. Teleport Denver Comments at 35.  Southwestern Bell also appears to oppose the new services test, claiming that uniform overhead loadings are not likely to be consistent with marketplace realities._f|: 5` Southwestern Bell Reply at 1112 & n.28, citing MCI Comments at 4._ `  %38.  The parties differ on whether there should be a new rate element for signalling information. NYNEX contends that "no new rate elements would need to be created" for LEC endoffice provisioning of signalling data.gB5` NYNEX Ex Parte at 1. Given this statement, presumably NYNEX's earlier argument that LECs should recover their costs through a new rate element relates to tandemprovided signalling. See NYNEX Comments at 78, Reply at 6.  Similarly, Ameritech argues that providing signalling data from the end office to an interconnector tandem would be similar to a trunk rearrangement.h|l5` Ameritech Ex Parte at 1. Ameritech, however, does not specifically oppose establishment of a new rate element.Ğ GTE favors establishing a new rate element, arguing that even if signalling services can be based on existing network capabilities, the customers that choose to purchase those services should pay for the LEC costs incurred in developing and testing them and in making the necessary billing and ordering system changes.@i" F5` GTE Comments at 17, Reply at 1011.@ Similarly, United asserts that LECs will incur costs in modifying their billing systems to bill interconnectors properly for LECprovided transport between LEC end offices and interconnector tandems, and that they should recover those costs from interconnectors on a per call basis.6j5` United Comments at 2 & 7.6 Pacific suggests that signalling services be offered through additional optional expanded interconnection rate elements for interconnectors that are collocated, and as optional rate Rj elements on LEC transport services for those that are not collocated.k|5` Pacific Comments at 89, Reply at 3233. See also Second Pacific Ex Parte, Attachment at 2. Ę U S West also suggests establishing a separate signalling charge.5l 5` U S West Comments at 14.5 `  `  &39.  MCI requests that we create a separate service category for signalling services and apply the same pricing constraints as those required for the tandemswitched transport service category.1m5` MCI Comments at 56.1 MCI argues that a separate category is necessary to prevent LECs from raising rates for signalling services and reducing tandemswitched transport rates, while staying within the limits of the banding constraints.&n5` Id.& Pacific and Rochester oppose MCI's request.ho|5` Pacific Reply at 5152; Rochester Reply at 78, citing MCI Comments at 56.h Pacific contends that it would impede the price cap goal of allowing LECs to adjust rates according to demand; Rochester argues that the price cap rules are sufficient to constrain alleged anticompetitive pricing without creation of additional service categories.Lp 5` Pacific Reply at 5152; Rochester Reply at 78.L  `  ` '40.  MFS argues that rather than establishing new rate elements for signalling information needed for tandemswitching and treating interconnectors as resellers of LEC services, the Commission should treat interconnectors as "cocarriers" of switched access service.Aqh 5` MFS Comments at 1620, Reply at 68.A Under this paradigm, MFS argues, LECs would recover the costs of providing signalling information from either: (1) the local switching charge; or (2) a new rate element applied to all switched access minutes that use tandem signalling.vrT 5` MFS Comments at 20. MFS also asserts that a separate rate element for tandem signalling would not be appropriate if the same end office equipment performs signalling for both directtrunked and tandemswitched transport. In that case, MFS asserts costs should be recovered through the local switching charge. Id. at 20 n.18.v Rochester supports "cocarrier" status of interconnectors, viewing it like Commission treatment of cellular carriers and adjacent LECs.4sl5` Rochester Reply at 4. 4 Rochester claims that MFS merely seeks recognition that it is not only a LEC competitor, but also a joint service provider.&tL5` Id.& LxtԌ `  (41.  Most LECs, USTA, and AT&T oppose MFS' cocarrier model, including its pricing proposals. Some LECs argue that they must treat all of their customers alike and cannot practicably distinguish among customers based on the kinds of services those customers offer to others.ou|5` See, e.g., Ameritech Reply at 2; USTA Reply at 1012; GTE Reply at 13.o Pacific argues that even if such distinctions could be made, they may not be appropriate.1v 5` Pacific Reply at 25.1 Some parties also dispute MFS' assertion that interconnectors should be viewed in the same light as a LEC that provides joint service with another LEC or as a cellular carrier that interconnects with a LEC network. They argue that neighboring LECs that provide joint service do so in order to transmit calls between separate franchise areas and do not compete in offering access service to the same locations, as do LECs and interconnectors.Jw*5` Pacific Reply at 2124; United Reply at 67. J Similarly, Pacific argues that cellular providers, unlike interconnectors, target a separate market of mobile customers who cannot be served in their automobiles by LEC landline services.1xd 5` Pacific Reply at 25.1 `  )42.  Several parties strongly object to MFS' suggestion that the costs of providing signalling information to interconnectors should be borne by all switched access customers or all tandemswitched access customers. They argue that MFS is seeking a "free ride" and that its proposal is inconsistent with FCC policies dictating that the costs of providing a service should be paid by the users of that service.[y|5` Bell Atlantic Reply at 45; NYNEX Reply at 8; GTE Reply at 11.[ `  3. Discussion  `  *43.  We now conclude that LEC provision of CIC and OZZ data to TSPs from LEC end offices will constitute a new service under our price caps regime, which covers all Tier 1 LECs. New services "add to the range of options already available to customers." z 5` The LEC Price Cap Order defines new services by stating that "as long as the preexisting service is still offered, and the range of alternatives available to consumers is increased, we will classify the service as new." Policy and Rules Concerning Rates for Dominant Carriers, Second Report and Order, 5 FCC Rcd 6786, 6824 (1990), modified on reconsideration (Rates for Dominant Carriers Reconsideration), 6 FCC Rcd 2637 (1991), further modified, 6 FCC Rcd 4524 (1991).  While LECs currently transmit CIC and OZZ codes to their own access tandems, they do not provide this information to their customers. Therefore, these Dz data "add to the range of options" of LEC customers and hence represent a new service.I{5` While LECs appear to be able to provide this new service without implementing new technology, the need or absence of need for new technology does not dictate the categorization of the service under price caps. See Provision of Access for 800 Service, Second Report and Order, 8 FCC Rcd 907, 911 (1993) (rejecting claims that basic 800 data base service should be classified as a new service because it requires implementation of new technology). Rather, this factor affects the costs and thus the price that LECs may charge for a new service.I `  +44.  LECs will be required to make a costbased showing under the price caps new services test.|2>5` See Amendments of Part 69 of the Commission's Rules Relating to the Creation of Access Charge Subelements for Open Network Architecture, Policy and Rules Concerning Rates for Dominant Carriers, Report and Order & Order on Further Reconsideration & Supplemental Notice of Proposed Rulemaking, 6 FCC Rcd 4524, 45284531,  2444 (1991), Memorandum Opinion & Order on Second Further Reconsideration, 7 FCC Rcd 5235 (1992).  This showing will enable us to ensure that signalling services are reasonably priced. We will not use the net revenue test in reviewing LEC tariff filings.Q}t85` This is consistent with our decision to eliminate the net revenue test for new service offerings under price caps. See Amendments of Part 69 of the Commission's Rules Relating to the Creation of Access Charge Subelements for Open Network Architecture, 7 FCC Rcd 5235, 5237,  12 (1992).Q That test is unnecessary, both because of our requirement that LECs submit cost support for new services, and because LECs clearly lack incentives to underprice signalling services provided to competitive tandemswitching providers. `  ,45.  We conclude further that LECs must establish new rate elements for CIC and OZZ signalling data as a separate service category within the trunking basket. This category will be subject to an upper pricing band of 2%. Because LECs have no incentive to price signalling services at predatory levels, we see no need for a lower band and therefore do not impose one. We agree with MCI that these measures are necessary to prevent LECs from offsetting increases in the price of signalling information provided to TSPs with price reductions in the LECs' own tandemswitched transport rates.  `  -46.  We reject MFS' pricing proposals. First, for the reasons discussed previously, we do not believe that the cocarrier model advanced by MFS aptly defines the LEC/TSP relationship.?~5` See supra n.86. ? Second, the MFS pricing proposals are not necessarily consistent with a cocarrier model. For example, even though we have stated that L<~ cellular service providers are like cocarriers,:5` See The Need to Promote Competition and Efficient Use of Spectrum for Radio Common Carrier Services, 2 FCC Rcd 2910, 2916 (1987). we have never held that cellular interconnection charges should be imposed on all LEC customers or on all cellular users, rather than on the providers taking interconnection. Thus, a cocarrier model does not necessarily dictate that the costs unique to providing a joint service should always be directly imposed on the LEC's customers or on all customers of the service in question. Yet this is precisely the result that MFS seeks. Third, we do not believe that the specific cost recovery mechanism advocated by MFS is appropriate. Whereas MFS would have all purchasers of switched transport or tandemswitched transport bear the costs of making signalling information available to TSPs, we believe that TSPs should pay for such costs. This is consistent with the Commission's longheld view that costs should be paid by the cost causer.  B. Recovery of Support Flows ` .47.  Notice and Background. In the Transport Order, we instituted an interconnection charge to be paid by all interstate access customers that interconnect with the LEC switched access network, including IXCs and competitive access providers.:5` Transport Rate Structure and Pricing, Report and Order and Further Notice of Proposed Rulemaking, 7 FCC Rcd 7006, 70387040,  6164 (1992).  The interconnection charge was created at the time we adopted the interim rate structure as a residual charge to make the transport rate structure revenue neutral. The initial transport interconnection charge was computed as the difference between the revenue generated by rates for transport before the interim rate structure was implemented and the revenues from facilitiesbased transport rate elements under the interim rate structure.:L5` Transport Order, 7 FCC Rcd at 7038,  61. See also Transport Rate Structure and Pricing, Order and Further Notice of Proposed Rulemaking, 6 FCC Rcd 5341, 5347,  28 (1991). In the Notice, we tentatively concluded that there was no need to develop an additional charge to recover support flows associated with tandem switching because the interconnection charge already includes such support flows.F 5` Notice, 7 FCC Rcd at 7748,  51.F ` /48.  Positions of the Parties. Several commenters, including interconnectors and some LECs, assert that there is no need to establish an additional charge to recover support flows associated with tandem switching.:<T 5` Teleport Comments at 3; MFS Comments at 21; MCI Comments at 5, Reply at 89; Teleport Denver Comments at 5; Ad Hoc Comments at 17; ALTS Comments at 1213; NYNEX Comments at 1819; Rochester Reply at 8 ' n.22. Rochester asserts, however, that to the extent that existing separations and cost allocation rules create uneconomic distortions in exchange carriers' pricing, the Commission should take corrective action. Rochester Reply at 8 n.22. MCI and MFS argue that the transport < interconnection charge more than adequately protects any LEC subsidy flows.~|5` MFS Comments at 21; MCI Comments at 5, Reply at 89. Accord Teleport Denver Comments at 5.~ According to MFS, the interconnection charge will not only recover revenues sufficient to preserve subsidies, but will recoup various LEC capital and operating costs that should be captured through costbased charges for specific services.05` MFS Comments at 21.0 Further contribution, MFS maintains, would be unreasonably discriminatory, anticompetitive, and unnecessary.-tR5` Id. at 21.- NYNEX states that a contribution charge is not necessary because, for an interim period, the local transport interconnection charge will recover support flows associated with switched transport, including tandem switching.5 5` NYNEX Comments at 1819.5 U S West states, however, that if the Commission maintains the interim rate structure restrictions on LEC tandemswitching pricing, it should consider establishing a contribution charge for interconnectors.5^ 5` U S West Comments at 16.5 `  049.  Southwestern Bell contends that new competition in the tandemswitched and switched transport markets will reduce LEC revenues from those services and create upward pressure on the prices for other LEC services, including basic local service rates.L 5` Southwestern Bell Comments at 6, Reply at 89. L Therefore, it claims, the interconnection charge will not be sufficient to preserve universal service, as MFS and ALTS allege, unless LECs are able to alter their rates based on market conditions.2j5` Southwestern Bell Reply at 89 & 1315. Ad Hoc and ALTS ask that the interconnection charge be removed or reduced. Ad Hoc Comments at 17; ALTS Comments at 1213. Pacific opposes these requests, arguing that the charge is necessary for LECs to recoup required costs, such as the costs of complying with universal service obligations, and costs that have been overallocated to competitive services based on regulated accounting requirements. Pacific Reply at 35. ` 150.  Discussion. It appears from the record that there is no need for additional support mechanisms in conjunction with adoption of this order. The transport interconnection charge is sufficient to protect support flows potentially affected by our decision here.  LdԌ  C. ONA Framework `  `  251.  Notice. In the Notice, we also asked parties to comment on whether signalling functions should be treated as Basic Service Elements (BSEs) within the Open Network Architecture (ONA) framework.G5` Notice, 7 FCC Rcd at 7748,  46. G `  `  352.  Positions of the Parties. Several commenters argue that signalling should not be treated as a BSE.:N5` E.g., Ameritech Reply at 12; GTE Comments at 1719, Reply at 1416; NYNEX Comments at 15; Southwestern Bell Comments at 2122; BellSouth Reply at 56; USTA Comments at 10; AT&T Comments at 67. Their reasons vary. Most of the LECs, USTA, AT&T, and GSA claim that the ONA framework is inappropriate for signalling.:lP5` GTE Comments at 1719, Reply at 1416; NYNEX Comments at 15; Southwestern Bell Comments at 2122; BellSouth Reply at 56; USTA Comments at 10; AT&T Comments at 67; GSA Reply at 67. As NYNEX states: X X` ONA is a regulatory initiative to help the growth of unregulated enhanced services, while ensuring equal and nondiscriminatory access to basic network services for all enhanced services market participants. . . . ONA . . . was simply not designed for application to the regulated basic services market.{|\ R_` NYNEX Comments at 15. See also Ad Hoc Comments at 78; GTE Reply at 1415. {x` Some commenters also assert that subjecting signalling to ONA would have only limited utility because ONA only applies to the BOCs.J '` GTE Comments at 1819; USTA Comments at 10; AT&T Comments at 6 n.6. The Commission recently extended ONA application to GTE as well. Application of Open Network Architecture and Nondiscrimination Safeguards to GTE Corporation, Report and Order, FCC No. 9458 (released April 4, 1994). J GTE argues that the other LECs may not have the technical ability to both unbundle a signalling service offering and also obtain the usage data required to bill for that service.|'` GTE Comments at 19. See also USTA Comments at 10 (arguing that BSE requirement for nonONA carriers would be onerous). Some LECs argue that because signalling is necessary to provide switched access, it is illogical to unbundle it and treat it as an option that a customer could choose not LX to purchase.'` GTE Comments at 17, Reply at 15; Southwestern Bell Comments at 2122. The only choice a customer would have, according to GTE, is different signalling options (e.g., separate prices for MF and SS7 signalling). AT&T and Ameritech claim that it does not make sense to require an interconnector that will provide its own transport to purchase a BSA in order to obtain signalling information, since transport is a BSA.B:'` AT&T Comments at 67; Ameritech Reply at 2. Ameritech notes that the "Ameritech Customers First Plan" proposes full unbundling of its network, including the local loop. Ameritech Reply at 2. This unbundling, Ameritech argues, will reduce the number of services that a LEC customer or competitor might have to take in conjunction with signalling. Accordingly, Ameritech claims that it would be counterproductive to place signalling into a model such as ONA that contemplates provision of other network elements. Id.B `  453.  In contrast, Pacific and Teleport Denver favor BSE treatment of signalling information.St@ '` Pacific Reply at 3031; Teleport Denver Comments at 5.S Pacific maintains that some type of BSA would be technically required for a LEC to deliver signalling information to an interconnector: collocated interconnectors would need a "'short BSA'" (e.g., cross connect), while noncollocated interconnectors might purchase a dedicated access service BSA.4* '` Pacific Reply at 3031.4 Finally, although Ad Hoc argues that signalling generally should be treated within the ONA framework, it urges us to avoid the failings of ONA.5 L'` Ad Hoc Comments at 710.5 `  554.  Discussion. We conclude that unbundled CIC and OZZ data are not BSEs as defined in our ONA orders and that there is no public policy reason to treat them equivalently. BSEs are "optional unbundled features . . . that an ESP may require or find useful in configuring an enhanced service."p|'` Filing and Review of Open Network Architecture Plans, 4 FCC Rcd 1, 36 (1988).p There has been no showing that the CIC and OZZ data that are the subject of this order will be used by ESPs to provide enhanced services. Rather, these data will be used by TSPs to provide basic network services. Thus, these data do not fall within our definition of a BSE. `  655.  Nor has any party convinced us that it would be in the public interest to treat CIC and OZZ codes as BSEs. While some parties argue that the fourpart test that LECs use in determining whether to offer an ESPrequested BSE should apply, we have relied on similar considerations in assessing the relative costs and benefits of  LECprovided signalling information. Moreover, the "flagging" requirements associated with BSEs, under which BOCs must identify BSEs that they intend to use themselves, are irrelevant: there is no dispute that LECs use CIC and OZZ data for tandemswitched transport service. Finally, there would be no added benefit from a pricing standpoint in treating CIC and OZZ data as BSEs, since we have already held that the new services test applies to their initial rates. VI. TARIFFING AND IMPLEMENTATION ` 756.  Positions of the Parties. Few parties commented on the tariffing aspects of our proposal. MFS argues that LECs should be required to provide the CIC and OZZ from end offices within a reasonably short time., '` MFS Reply at 2., Ameritech and U S West contend that they would be willing to provide signalling at end offices upon bona fide  request, assuming that the requisite modifications were feasible, and that interconnectors would pay for them.: N'` Ameritech Comments at 68; U S West Reply at 6. See also Rochester Comments at 23 (stating that it may make signalling features available in advance of any Commission requirement to do so). `   ` 857.  Discussion. We require Tier 1 LECs (except NECA members) to file tariffs, with requisite cost support, for the provision of CIC and OZZ codes within ninety days of publication of this order in the Federal Register, to be effective on fortyfive days' notice. As discussed above, the record in this proceeding shows that LECs can provide CIC and OZZ codes to third parties from equal access end offices simply by modifying their end office routing tables, without purchasing new end office software and without making other costly and timeconsuming modifications. Under the circumstances, there is no reason why the LECs cannot tariff this offering for all of their equal access end offices within ninety days of publication of this order in the Federal Register.  VII. LEC PRICING FLEXIBILITY ` 958.  Notice and Background. In the Notice, we proposed to increase LEC pricing flexibility in conjunction with our Phase I proposal for expanded interconnection for switched transport services. We also asked for comment on whether we should give LECs additional pricing flexibility as part of our proposal to require LECs to provide signalling information to third parties.K4P'` Notice, 7 FCC Rcd at 77487749,  52.K `  :59.  In the Switched Transport Expanded Interconnection Order, we granted Tier 1 LECs additional flexibility in pricing their n switched transport services.~|'` Switched Transport Expanded Interconnection Order, 8 FCC Rcd at 74227436,  87120.~ We concluded that the price cap rules did not sufficiently enable LECs to respond to access competition because: (1) the study areawide rate averaging requirement forced LECs to price above cost in the hightraffic, lowercost areas where competition was most likely to develop; and (2) LECs were prohibited from offering any volume or term discounts in their transport rates, even if those discounts were costjustified.4t '` Id. at 74237424.4 We decided to proceed in stages to remove restrictions on LEC transport pricing flexibility. We authorized zone density pricing of LEC entrance facilities, directtrunked and tandemswitched transport, and dedicated signalling transport when expanded interconnection for switched access is operational in a study area.D*'` Id. at 7424. Under density zone pricing, LECs may effect some geographic deaveraging of their access rates. The same density zones apply for switched transport and special access expanded interconnection. Special Access Expanded Interconnection Order, 7 FCC Rcd at 74517458,  172186. Switched Transport Expanded Interconnection Order, 8 FCC Rcd at 7426 & n.229,  98. In the Baskets and Bands Order, we incorporated the density zone pricing subcategories into the existing zone subcategories within the existing DS3 and DS1 special access subcategories, except for when a LEC implements density zone pricing for transport in a different tariff year than it implemented density zone pricing for special access. Baskets and Bands Order at  2425.D We also permitted LECs to offer volume and term discounts on entrance and interoffice facilities when they meet one of two conditions.b B'` Id. at 74327436,  113120. These conditions are: (1) 100 DS1 equivalent switched transport crossconnects have been taken in the "zone 1" offices in the study area; or (2) an average of 25 DS1equivalent switched transport crossconnects per zone 1 office have been taken. Id. at 74347435,  118.b In the Transport proceeding, we granted LECs additional pricing flexibility, changing our rules to enable access customers to order directtrunked transport between LEC tandems and SWCs.: '` Transport Rate Structure and Pricing, First Memorandum Opinion and Order on Reconsideration, 8 FCC Rcd 5370, 5372 (1993) (First Transport Reconsideration). ` ;60.  Comments. Because comments and replies in this Phase were filed prior to the adoption of the Switched Transport Expanded Interconnection Order and the First Transport Reconsideration, the parties largely focus on the matters at issue in those proceedings. Generally, LECs, with support from GSA, argue strenuously for more T  pricing flexibility. T'` E.g., BellSouth Comments at 12, Reply at 3; USTA Comments at 23; Southwestern Bell Comments at 612, Reply at 8; Bell Atlantic Comments at 14, Reply at 4; Pacific Comments at 911, Pacific Reply at 5051; NYNEX Comments at 19; U S West Comments at 1718, Reply at 12; GSA Comments at 56.  T They ask specifically for authority to offer volume and term discounts and to implement density zone pricing.|F'` See, e.g., Ameritech Comments at 9; Rochester Comments at 9; BellSouth Reply at 3; and GTE Reply at 5. Some also ask for permission to provide services under individually negotiated contracts with access customers.R:'` See Ameritech Comments at 9; GSA Comments at 6.R U S West, NYNEX, and Pacific seek permission to price the link between their access tandems and SWCs on a flatrated, rather than usage, basis.`| '` U S West Comments at 17; NYNEX Comments at 19; Pacific Reply at 38.` Some LECs also express support for an access reform proposal advanced by USTA in Phase I of this proceeding, under which four new price cap baskets would be created and the degree of regulation of each would be tailored to the competitiveness of the market area._|T '` USTA Comments at 3; BellSouth Comments at 23; GTE Comments at 23._ Several LECs argue that the pricing flexibility measures proposed in the Notice do not go far enough. These LECs state that they must have the same pricing flexibility enjoyed by their competitors if there is to be fair competition in the marketplace and if customers are to obtain the benefits of competition.|d '` See, e.g., Southwestern Bell Comments at 811; Bell Atlantic Comments at 1; Pacific Reply at 4344; and Rochester Reply at 89. Some object, in particular, to the pricing bands for service categories, arguing that such bands diminish the benefits of density zone pricing by limiting total price reductions within a service category.\| '` Southwestern Bell Comments at 89; Ameritech Comments at 1314.\ `  <61.  CAPs, users, and IXCs oppose granting LECs additional pricing flexibility in conjunction with tandem signalling at this time.2 '` Ad Hoc Comments at 1821; ALTS Comments at 13, Reply at 1215; CompTel Comments at 24, Reply at 46; MFS Comments at 2123, Reply at 811; Teleport Comments at 3; Time Warner Comments at 4; WilTel Comments at 7. WilTel notes that it already has supported LEC pricing flexibility for interoffice transport rates, including density zone pricing and term discounts, provided that benchmarking is in place. WilTel Comments at 7. These parties argue that potential competition is not ! equivalent to actual competition, and that even after expanded interconnection arrangements are available, it will take time for interconnectors to be an effective competitive force to discipline LEC pricing.:'` E.g., ALTS Reply at 13; MFS Reply at 2123. Teleport asserts that LECs should not be able to request immediate pricing flexibility and at the same time argue that it will take several years to implement tandem interconnection. Teleport Reply at 5. They argue that if LECs are provided additional pricing flexibility before sufficient actual competition in the provision of tandem signalling develops, LECs could use pricing flexibility to control the market.6t'` Ad Hoc Comments at 1819.6  Ad Hoc proposes that LECs be granted pricing flexibility when there is "actual competition" and proposes a "good actor" test as a framework for determining its existence.!'` Id. at 2021. The "good actor" test, according to Ad Hoc, is generally met when: (1) the FCC has established a policy or program; (2) LECs have taken certain necessary steps to fulfill that policy or program; and (3) the success of the policy is manifested in the marketplace. Id.  Ad Hoc also argues that additional pricing flexibility not be granted until the Commission has gained further experience with special access and siwtched transport expanded interconnection. Id. ! ALTS and MFS argue that the Commission can determine whether additional pricing flexibility is necessary after competitive switched access networks are actually operating, based on empirical and verifiable data.L* '` ALTS Reply at 14; MFS Comments at 23. Pacific argues that if the Commission were to review market data to determine whether to grant LECs pricing flexibility, we should consider the entire access services market and require information from interconnectors in addition to LECs. Pacific Reply at 5253.L  `  =62.  CompTel and WilTel also argue that LECs have competitive advantages in the provision of tandemswitched transport because LECs can enjoy economies from combining access, local, and intraLATA toll traffic on their interoffice facilities.H D'` CompTel Reply at 5; WilTel Comments at 45.H Teleport claims that the interim transport rate structure gives the LECs a competitive advantage, since they need only recover 20% of tandem costs from users of LEC tandem services (compared to 100% that interconnectors will have to recover), and are permitted to measure mileage based on airline miles (while interconnectors will have to measure it based on actual miles).6T'` Teleport Reply at 5 n.10.6 ` >63.  Discussion. We do not here grant LECs additional pricing flexibility but will continue to examine these issues in a broader context in future consideration of pending access reform L"P petitions. We have already addressed virtually all of the specific proposals suggested by LECs in the Switched Transport Expanded Interconnection Order and the First Transport Reconsideration. Thus, LECs may offer density zone pricing and volume and term discounts under certain conditions. In addition, they may price transport between their tandems and SWCs on a flatrate basis. We considered and rejected in the Switched Transport Expanded Interconnection Order various other requests for flexibility. For example, the Commission rejected the suggestion that LECs receive the same pricing flexibility as their competitors, noting that giving LECs too much flexibility could stifle competitive entry and harm customers of less competitive services. The Commission also declined to eliminate service category pricing bands, stating that these bands serve important public policy goals.w| '` Switched Transport Expanded Interconnection Order, 8 FCC Rcd at 74307431,  109.w No party has shown that providing signalling information to TSPs warrants a different outcome. Nor has any party set forth any other specific pricing flexibility request related to providing signalling information. Finally, no party has demonstrated that the availability of signalling warrants authorization of LEC contract tariffs. The Commission has limited contract carriage to services found to be "substantially competitive."o '` The Commission has authorized AT&T to offer some of its longdistance services pursuant to individually negotiated contracts. But even AT&T, which faces competition for all or virtually all of its services, may include in its contracts only those services the Commission has found to be substantially competitive. Thus, for example, AT&T may not include residential services in its contracts, even though there are a number of competitive residential service offerings. See Competition in the Interstate Interexchange Marketplace, Report and Order, 6 FCC Rcd 5880 (1991). o While the measures we now take should permit alternatives to LEC tandemswitched access services to develop, we cannot conclude that these services are now subject to substantial competition. `  `  ?64.  For these reasons, we do not grant LECs additional pricing flexibility in conjunction with our decision to make tandem signalling information available. This decision is not intended, however, to prejudge broader questions regarding the possible need for access charge reform.l: '` Several petitions regarding access reform are pending at the Commission. See, e.g., "Customers First: Ameritech's Advanced Universal Access Plan" (filed March 1, 1993); "NARUC Petition for Notice of Inquiry Addressing Access Issues" (filed June 25, 1993); "USTA Petition for Reform of the Interstate Access Rules," RM 8356 (filed September 17, 1993); "NYNEX Transition Plan to Preserve Universal Service In A Competitive Environment" (filed December 15, 1993). See also Price Cap Performance Review for Local Exchange Carriers, CC Docket 941, Notice of Proposed Rulemaking, 9 FCC Rcd 1687, 170506 (1994) (noting that we expect that in the process of ~' reviewing LEC performance under price caps, we will develop data and information relevant to fashioning a workable plan for revising the baseline price cap model as competition develops). Indeed, by opening the door to greater # competition in the provision of tandemswitched services, we are continuing the process of removing barriers to the development of a more competitive access market in which CAPs and other entities can participate. VIII. OTHER ISSUES  A. Reciprocity  ` @65.  Positions of the Parties.   Teleport Denver and Pacific ask that any obligations that the Commission imposes on LECs with respect to providing signalling information also be imposed on interconnectors. They argue that reciprocal interconnection will promote efficient network design by allowing all service providers, including LECs, to purchase services from the most economical vendor, and thereby avoid duplication of facilities.v|" '` Teleport Denver Comments at 4; Second Pacific Ex Parte Attachment at 1.v Ameritech requests reciprocity so that if, in the future, it wanted to provide tandemsignalling for customers served by competitors' switches, it could do so.7\ '` Ameritech Comments at 45.7 GSA agrees with Ameritech, arguing that interconnectors should be required to provide LECs with the same type of information that LECs provide to interconnectors.,'` GSA Reply at 4., Rochester asserts that reciprocity would be beneficial to development of the "'network of networks,'" because it will enable all providers to choose how best to configure their networks to offer consumers the full benefits of expanded interconnection, and will foster mutual recognition of the value of interconnection arrangements.t '` Rochester Reply at 56. See also Ad Hoc Comments at 1516 (arguing that the Commission should move toward a system of "mutual openness," in which "interconnections and connectivity are available equally"). Rochester states that it will not condition the offering of its Open Market Plan on the Commission's adoption of reciprocity. Id. at 5 n.14. `  A66.  Discussion. We decline to impose reciprocal signalling obligations on interconnectors at this time. First, requests for reciprocal obligations are beyond the scope of this proceeding. The Notice proposed that LECs provide signalling information to third parties. We did not propose to impose reciprocal requirements on these third parties, and we decline to broaden this proceeding to consider such requirements here. Second, LEC requests for reciprocity seem to assume that only CAPs will purchase signalling <$V information. As noted, this information must be made available to any interested party, including IXCs. LECs requesting reciprocity fail to address the implications of their proposal with respect to these other types of TSPs. Third, except in the few instances where CAPs have end offices, tandem switching providers simply do not have the signalling information to provide to the LECs, and the LECs have not demonstrated specific, present needs for such information. Furthermore, we note that TSPs do not possess market power. For example, we have previously declined to impose reciprocal obligations on interconnectors, noting, inter alia, that CAPs and other interconnectors do not control bottleneck facilities.|l'` See Switched Transport Expanded Interconnection Order, 8 FCC Rcd at 7402,  44.  B.` Jurisdictional Measurement and Reporting  ` B67.  Notice and Background. In the Phase I Notice, we stated that LECs and interconnectors are likely to provide both intrastate and interstate services using the same facilities.K '` Notice, 7 FCC Rcd at 77467747,  39.K We also noted that LECs generally will be unable to determine the jurisdictional nature of terminating traffic.&\ '` Id.& Additionally, we stated that because LECs generally apply different access charges for interstate and intrastate traffic, it might be necessary to impose some jurisdictional reporting requirements on interconnectors.&'` Id.& Thereafter, in the Phase I Order, we required the customer of record to provide percentage of interstate use (PIU) reports to the LEC.w|'` Switched Transport Expanded Interconnection Order, 7 FCC Rcd at 74427443,  137.w We found that the switched access customer is in the best position to provide information on the jurisdictional nature of minutes of use.& '` Id.& In that order, we also decided that where an end user is the switched access customer, the IXC providing service to that end user must report the PIU.&h '` Id.& `  C68.  In the Phase II Notice, we tentatively concluded that interconnectors or their customers should be required to measure the jurisdictional nature of their traffic, and report it to the LECs.F '` Notice, 7 FCC Rcd at 7749,  53.F  %t We sought comment on whether interconnectors or their IXC customers should be responsible for reporting this information.&'` Id.&  ` D69.  Positions of the Parties. The majority of commenters argue that the PIU should be reported by the customer of record, i.e., the party that purchases access from the LEC.N'` E.g., Ameritech Comments at 4 & 17; NYNEX Comments at 2021; GTE Comments at 11 n.15 & 2122, Reply at 1920; U S West Comments at 1819; USTA Comments at 89, Reply at 15; Southwestern Bell Comments at 23; BellSouth Reply at 6; MCI Comments at 7; Ad Hoc Comments at 21; ALTS Reply at 16. U S West and USTA assert that there are no unique jurisdictional reporting issues regarding provision of signalling to interconnector tandems, while NARUC suggests that our PIU proposal appears to be consistent with the current reporting system. U S West Comments at 1819; USTA Comments at 89; NARUC Comments at 6. NARUC criticizes the current PIU reporting system, arguing that it allows customers to control their jurisdictional costs without verification. NARUC Comments at 67. Similarly, Ad Hoc supports continuation of the current PIU reporting system only until it can be replaced by an alternative system and recommends adoption of a "revenue transfer mechanism" that could be based on caps, indexing, and dollar targets. Ad Hoc Comments at 21. U S West argues that Ad Hoc's proposal is beyond the scope of this proceeding. U S West Reply at 1112. Parties differ on which party should be the customer of record. MCI claims that the customer of record should be the CAP or IXC,/20'` MCI Comments at 7./ while Ameritech argues that it would probably be the CAP.6'` Ameritech Comments at 17.6 GTE maintains that the interconnector must report the PIU for terminating traffic because LECs would not be able to identify the appropriate IXC;:l<'` GTE Reply at 20. GTE contends that for this reason, the customer of record for interconnection must be the same as the customer of record for switched access. Id.; GTE Comments at 22. United contends that, when technically feasible, the interconnector should report the PIU.0>'` United Reply at 9. 0 ALTS, on the other hand, argues that either the IXC or end user would likely be the customer of record,k '` ALTS Comments at 1415. See also ALTS Reply at 15ĩ16.k while Time Warner contends that generally IXCs should report the PIU.7d J'` Time Warner Reply at 910.7 ALTS contends that the CAP would be functioning as a LEC cocarrier, not as a customer of access services, and that the entity that orders and pays & for LEC terminating access should bear responsibility for reporting the jurisdictional nature of its traffic.D'` ALTS Comments at 1415, Reply at 1516.D Like ALTS, MFS argues that interconnectors are carriers. In contrast to ALTS, however, MFS, asserts that interconnectors should be required to record traffic that is capable of being recorded. MFS states that IXCs should be required to provide jurisdictional data for traffic that cannot be recorded and that interconnectors and LECs should divide responsibility for jurisdictional measurement and should exchange information, as do LECs participating in meetpoint switched access arrangements.0N'` MFS Comments at 24.0 Prodigy requests that we exempt information service providers from the PIU reporting requirement. U S West objects to this request, arguing that PIU reports are essential and no party should be exempted from the requirement to provide them.L'` Prodigy Comments at 3; U S West Reply at 1112.L `  E70.  The DC PSC contends that CAP or IXC estimates of interstate use are likely to be biased.]" Z'` DC PSC Comments at 12 and attached Phase I Comments at 3.] It argues further that measurement is possible with SS7 technology and requests that we require "as a condition of expanded interconnection, that all CAPs implement SS7 technology and that the CAPs' SS7 facilities be interconnected with those of the LECs."&'` Id.& Finally, Rochester maintains that the Commission should establish strict PIU reporting and auditing requirements.5f'` Rochester Comments at 4.5  ` F71.  Discussion. Most parties agree that the customer of record should be responsible for reporting the PIU factor for terminating traffic when the LEC cannot itself measure jurisdiction. This is consistent with existing reporting arrangements that have worked satisfactorily. If the customer of record is a TSP, it shall be the responsibility of that TSP to compile PIU reports based on data from those to whom it provides tandemswitching. If the customer of record is an IXC or other purchaser of access, that entity shall continue to provide PIU reports directly to the LEC providing terminating access. C. Separations Issues `  G72.  Notice.  The Notice asked parties to discuss whether our proposal for competitive provision of tandem switched transport v'  service raises separations issues that should be referred to a Joint Board.F'` Notice, 7 FCC Rcd at 7749,  53.F ` H73.  Positions of the Parties. NARUC states that switched access restructuring, including the proposed competitive provision of tandemswitched transport, will have "immediate and direct effects on state regulation and, potentially, rates in rural and high cost areas."12N'` NARUC Comments at 5.1 It argues that at a minimum, the Commission should require the Joint Board to address all the potential effects of interstate access restructure and pricing policies on state regulation and rates in high cost areas.&l'` Id.& NYNEX recommends that the Commission, with the assistance of the Joint Board, conduct a comprehensive review of policy issues surrounding increased access competition, access rate structure, capital recovery and other related matters prior to any review of current separations rules and procedures.d Z'` NYNEX Comments at 2021. ALTS, however, urges that any reference of separations issues to a Joint Board not delay delivery of the benefits of increased competition in the local access market. ALTS Comments at 15. The DC PSC argues that the LECs' loss of interstate revenue from increased competition in the access market will shift unused investment to intrastate jurisdictions, and raise intrastate costs.|  '` DC PSC Comments at 2: ("Intrastate ratepayers should not be required to pay for FCC decisions regarding interstate traffic").  It recommends that prior to an increase in state rates, the Commission and the Joint Board should consider whether any changes should be made to reduce this impact. The DC PSC also suggests that a floor be established for usage percentage based on preexpanded interconnection usage to protect intrastate ratepayers if LEC interstate traffic decreases as a result of competition.4^ '` DC PSC Comments at 23.4 NARUC also argues for Joint Board referral of PIU measurement and verification procedures.1 '` NARUC Comments at 7.1 ` I74.  Discussion.  We do not believe that the signalling information requirement raises separations issues that should be referred to a Joint Board. The record does not show that providing signalling information will raise any significant issues beyond those already referred to the Joint Board in the Switched Transport Expanded Interconnection Order.|j'` Switched Transport Expanded Interconnection Order, 8 FCC Rcd at 74467448,  147151. As noted, the costs associated with LEC ( provision of CIC and OZZ codes from equal access end offices should be minimal. Therefore, we do not believe that these costs or the revenues derived from providing signalling information requires Joint Board consideration. The Notice stated that we did not intend to refer to the Joint Board broader separations issues, such as those raised by the DC PSC, NARUC, and Rochester. We found and continue to believe that these matters would be more properly addressed in the context of a comprehensive separations review proceeding. IX. CONCLUSION `  J75.  In this order, we take another step in our ongoing effort to promote competition in the interstate access market. We require Tier 1 LECs (except NECA members) to provide signalling information from equal access end offices to interested parties. This measure will allow third parties to provide tandem switching and thereby promote development of alternatives to LECprovided tandemswitched transport services. CAPs may develop their own tandemswitching networks; other TSPs may use tandemswitching to achieve scale economies attending the aggregation of traffic. By promoting access to diverse facilities and providers, our action should permit more efficient use and deployment of interstate access services, increase network reliability and redundancy, encourage innovation, and exert downward pressure on access charges and longdistance rates. These benefits should, in turn, contribute to economic growth and the creation of new job opportunities. X. REGULATORY FLEXIBILITY ACT `  K76.  In the Notice, we certified that the proposed rule changes would not have a significant economic impact on a substantial number of small business entities, as defined by  601(3) of the Regulatory Flexibility Act.F` Notice, 7 FCC Rcd at 7749,  57.F We also stated that to the extent that a PIU reporting requirement would apply to small entities, it would not have a significant economic impact on a substantial number of small business entities. No commenting party disagreed with our analysis. The Secretary shall send a copy of this Report and Order, including the certification, to the Chief Counsel for Advocacy of the Small Business Administration in accordance with  605(b) of the Regulatory Flexibility Act, Pub. L. No. 96354, 94 Stat. 1164, 5 U.S.C.  601 et seq. XI. ORDERING CLAUSES h$ `  L77.  Accordingly, it is ORDERED, pursuant to authority contained in Sections 1, 4(i), 201205, and 214(d) of the Communications Act of 1934, as amended, 47 U.S.C.  151(i), 154, 201205, and 214(d), that Parts 61, 64 & 69 of the Commission's rules, 47 C.F.R.  61, 64 & 69, are AMENDED as set forth in Appendix B hereto.  ^$)NԌ `  M78.  IT IS FURTHER ORDERED that the policies, rules, and requirements set forth herein ARE ADOPTED, effective 80 days after publication of this order in the Federal Register. `  N79.  IT IS FURTHER ORDERED that the Tier 1 LECs subject to this order shall file tariff amendments as specified herein within ninety days of publication of this order in the Federal Register, to be effective on fortyfive days' notice.  `  h$$*FEDERAL COMMUNICATIONS COMMISSION `  h$$*William F. Caton `  h$$*Acting Secretary " * ' APPENDIX A $CC Docket 91141 &April 2, 1993 (Comments 1.  Ad Hoc Telecommunications Users Committee (Ad Hoc) 2.  Association for Local Telecommunications Service (ALTS) 3.  AT&T 4.  Ameritech Operating Companies (Ameritech) 5.  Bell Atlantic Telephone Companies (Bell Atlantic) 6.  BellSouth Telecommunications, Inc. (BellSouth) 7.  Competitive Telecommunications Association (CompTel) 8.  District of Columbia Public Service Commission (DC PSC) 9.  General Services Administration (GSA) 10.  GTE Service Corporation (GTE) 11.  Independent Data Communications Manufacturers Association J(#N (IDCMA) 12.  Information Industry Association (IIA) 13.  MCI Communications Corporation (MCI) 14.  MFS Communications Co., Inc. (MFS) 15.  National Telephone Cooperative Association (NTCA) 16.  National Association of Regulatory Utility Commissioners (NARUC) 17.  NYNEX Telephone Companies (NYNEX) 18.  Pacific and Nevada Bell (Pacific) 19.  Prodigy Services Company (Prodigy) 20.  Rochester Telephone Corporation (Rochester) 21.  Southwestern Bell Telephone Co. (Southwestern Bell) 22.  Teleport Communications Group (Teleport) 23.  Teleport Denver Limited (TDL) 24.  Time Warner Telecommunications (Time Warner) 25.  United States Telephone Association (USTA) 26.  United Telephone Companies (United) 27.  U S West Communications, Inc. (U S West) 28.  WilTel, Inc. (WilTel)  v+ $CC Docket 91141 %April 30, 1993 %Reply Comments 1. Allnet Communications Services, Inc. (Allnet) 2. Ameritech 3. Anchorage Telephone Utility (Anchorage) 4. ALTS 5. AT&T 6. Bell Atlantic 7. BellSouth 8. CompTel 9. GSA 10. GTE 11. IDCMA 12. Independent Telecommunications Network, Inc. (ITN) 13. MCI 14. MFS 15. NTCA 16. NYNEX 17. Pacific 18. Rochester 19. Southwestern Bell 20. Teleport 21. Time Warner 22. USTA 23. United 24. U S West 25. WilTel  D, ' APPENDIX B ă &Rule Changes AMENDMENTS TO THE CODE OF FEDERAL REGULATIONS PART 61 TARIFFS 1. The authority citation for Part 61 continues to read as follows: AUTHORITY: Sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154. Interpret or apply sec. 203, 48 Stat. 1070; 47 U.S.C. 203. 2. Section 61.42 is amended by adding paragraph (e)(2)(vii) to read as follows:  61.42 Price cap baskets and service categories. * * * * * (e) (2) * * *  `  (vii) Signalling for tandem switching, as described in  69.129 of this chapter. 3. Section 61.47 is amended by adding paragraph (g)(5) as follows:  61.47 Adjustments to the SBI; pricing bands. * * * * * (g) (5) The upper pricing band for the "Signalling for tandem switching" service category shall limit the upward pricing flexibility for this service category, as reflected in its SBI, to two percent, relative to the percentage change in the PCI for the trunking basket, measured from the levels in effect on the last day of the preceding tariff year. There shall be no lower pricing band for this service category. PART 64 MISCELLANEOUS RULES RELATING TO COMMON CARRIERS Part 64 of Title 47 of the Code of Federal Regulations is amended as follows: 1.  The authority citation for Part 64 continues to read as follows: AUTHORITY: Section 4, 48 Stat. 1066, as amended; 47 U.S.C. 154, unless otherwise noted. Interpret or apply secs. 201, 218, 225, 48 Stat. 1070, as amended, 1077; 47 U.S.C. 201, 218, 225, unless otherwise noted.  &-Ԍ 2. Section 64.1401 is amended by adding paragraph (i) to read as follows: * * * * * (i) The local exchange carriers specified in paragraph (a) of this section shall offer signalling for tandem switching, as defined in  69.2 (vv) of this chapter, at central offices that are classified as equal office end offices or serving wire centers, or at signal transfer points if such information is offered via common channel signalling. PART 69 ACCESS CHARGES Part 69 of Title 47, Code of Federal Regulations, is amended as follows: 1. The authority citation for Part 69 continues to read as follows: AUTHORITY: Secs. 4, 201, 202, 203, 205, 218, 403, 48 Stat. 1066, 1070, 1072, 1077, 1094, as amended, 47 U.S.C. 154, 201, 202, 203, 205, 218, 403. 2. Section 69.2 is amended by adding paragraph (vv) to read as follows:  69.2 Definitions. * * * * *  (vv) "Signalling for tandem switching" means the carrier identification code (CIC) and the OZZ code, or equivalent information needed to perform tandem switching functions. The CIC identifies the interexchange carrier and the OZZ identifies the interexchange carrier trunk to which traffic should be routed. 3. Section 69 of is amended by adding section 69.129, to read as follows:  69.129 Signalling for tandem switching. `  A charge that is expressed in dollars and cents shall be assessed upon the purchasing entity by a local telephone company for provision of signalling for tandem switching.