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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* DA 96-1069 Before the FEDERAL COMMUNICATION COMMISSION Washington, D.C. 20554 In the Matter of ) ) US West Communications, Inc. ) Petition for Computer III Waiver ) ) BellSouth Petition for Waiver of ) Computer III Rules for ) CC Docket No. 90-623 Reverse Search Capability ) ) Southwestern Bell Telephone ) Company Petition for Waiver of ) Computer III Rules for ) Reverse Search Capability ) MEMORANDUM OPINION AND ORDER ON RECONSIDERATION Adopted: July 2, 1996 Released: July 3, 1996 By the Chief, Common Carrier Bureau: I. INTRODUCTION 1. On November 6, 1995, the Common Carrier Bureau (Bureau) granted US West Communications, Inc. (US West) a limited waiver of the Commission's Comparably Efficient Interconnection (CEI) requirements so that US West could offer a reverse-search capability in conjunction with its electronic white pages (EWP) services. Ameritech has filed a petition for limited reconsideration of the US West Waiver Order. Southwestern Bell Telephone Company (SWBT) and BellSouth Telecommunications, Inc. (BellSouth) also have filed petitions for waiver of the Commission's CEI requirements to offer a reverse-search capability in conjunction with their EWP services. We previously granted BellSouth's waiver petition, in part, in order to permit BellSouth to provide reverse-search capabilities solely to the Federal Bureau of Investigation (FBI). 2. In this Order, we deny Ameritech's petition for reconsideration and grant SWBT and BellSouth limited waivers of the Computer III CEI requirements to provide reverse-search capability in conjunction with their EWP services. We condition these waivers on the carriers' compliance with the Commission's Joint Cost Rules, appropriate amendments to the carriers' Cost Allocation Manuals (CAMs), and compliance with the Computer III customer proprietary network information (CPNI) requirements, as amended by the 1996 Act. II. BACKGROUND 3. The Commission's 1980 Computer II regulatory scheme established two categories of communications services: basic and enhanced. The Commission defined basic services as those that provide a "pure transmission capability over a communications path that is virtually transparent in terms of its interaction with customer- supplied information." Enhanced services are defined as services that employ computer processing applications that act on the format, content, code, protocol or similar aspects of a subscriber's transmitted information, and provide the subscriber additional, different, or restructured information, or involve subscriber interaction with stored information. 4. The requirement to file a CEI plan was first established in the Computer III proceeding, when the Commission adopted a regulatory framework through which the BOCs could offer integrated enhanced and basic services, rather than offering them through a separate subsidiary. In October 1994, the U.S. Court of Appeals for the Ninth Circuit remanded portions of the Computer III proceeding to the Commission. During the pendency of the remand, and under the requirements of Computer III and the Interim Waiver Order, BOCs are required to file CEI plans for each proposed enhanced service offering, or receive a waiver of the Commission's CEI requirements, if they wish to offer an enhanced service on an integrated basis and the service is not the subject of a previously-approved CEI plan. BOC CEI plans are required to demonstrate that the BOCs provide interconnection opportunities to other enhanced service providers (ESPs) on an "equal access" basis, thus making basic facilities available on an unbundled and functionally equivalent basis. These CEI plans, combined with our Joint Cost Rules and CAM requirements, are the nonstructural safeguards imposed by the Commission, in lieu of structural separation, to prevent the subsidization of enhanced services from basic services and discrimination against competing ESPs. 5. In November 1995, we granted a waiver of our CEI plan requirements to US West permitting it to offer a reverse-search capability in conjunction with its EWP services. In that order, we determined that US West's reverse-search capability is an enhanced service and is subject to our CEI plan requirements. We concluded that US West's reverse-search capability met two of the three criteria for an enhanced service: (1) it provided additional information (the name and address associated with a telephone number); and (2) it involved subscriber interaction with stored information. We conditioned our approval of US West's waiver request on its compliance with our Joint Cost Rules, CAM requirements, and Computer III CPNI requirements, as amended by the 1996 Act. 6. On April 29, 1996, we granted BellSouth a temporary limited waiver of the Computer III CEI requirements so that BellSouth could provide the reverse-search capability described in its petition to the FBI. The temporary waiver took effect immediately and will expire on September 30, 1996. The temporary waiver is subject to BellSouth's compliance with the Commission's Joint Cost Rules, appropriate amendment of its CAM, and compliance with Computer III CPNI requirements, as amended by the 1996 Act. III. DISCUSSION A. Ameritech's Reconsideration Petition 7. Ameritech's Petition. Ameritech seeks reconsideration of the Bureau's determination that US West's reverse-search capability is an enhanced service. It urges the Bureau to find that the reverse-search capability is an adjunct to basic service because it facilitates the use of traditional telephone service and merely involves the provision of normal telephone company record information to subscribers. Ameritech claims that the US West Waiver Order adopted an overly narrow interpretation of the Commission's test for an adjunct to basic service. It asserts that the fact that the reverse-search capability may be used for purposes other than placing telephone calls does not require a finding that the capability is an enhanced service, because this feature also can be used in connection with traditional telephone service. Finally, Ameritech asserts that the reverse search capability should be classified as an adjunct to basic service because the information provided through this capability is similar to that provided through a calling name delivery service, which the Commission has found to be an adjunct to basic service. 8. Comments. BellSouth supports Ameritech's claim that the NATA Centrex Order does not require that an adjunct to basic service be both necessary for placing telephone calls and incapable of being used for any other purpose. BellSouth also contends that the reverse- search capability need not always be used immediately prior to placement of a call to be classified as an adjunct to basic service. It asserts that a number of services previously determined to be adjunct to basic do not contemplate placement of a telephone call as the immediate next step, citing traffic management studies as one example. Finally, BellSouth contends that the Bureau should limit its determination in the US West Waiver Order to US West's provision of a reverse-search capability. BellSouth urges the Bureau to consider BellSouth's and Ameritech's existing offerings of "manual" customer name and address search services when determining whether the reverse-search capability is an enhanced service. 9. US West does not oppose Ameritech's request for reconsideration as long as its ability to offer reverse-search remains unaffected. US West, however, does not seek reversal of the Bureau's determination that US West's reverse-search capability constitutes an enhanced service. US West disagrees with Ameritech's conclusion that reverse-search must be classified as an adjunct to basic service because the Commission already has classified calling name delivery services as adjunct to basic. US West argues that the determination of whether a reverse-search capability is enhanced or adjunct to basic depends on the particular facts in question. 10. CompuServe Incorporated (CompuServe) opposes Ameritech's petition on the ground that it only restates arguments raised by BOCs in response to US West's initial petition for waiver. CompuServe asserts that the purpose of a reverse-search capability is not to facilitate the placement of telephone calls as required by the NATA Centrex Order, but is to assist customers in deciding whether to place telephone calls. 11. Discussion. We hereby affirm our decision that US West's reverse-search capability is an enhanced service. We, therefore, dismiss Ameritech's petition for limited reconsideration. 12. Enhanced services are unregulated services that employ computer processing applications that: (1) act on the format, content, code, protocol, or similar aspects of a subscriber's transmitted information; or (2) provide the subscriber additional, different, or restructured information; or (3) involve subscriber interaction with stored information. In the NATA Centrex Order, the Commission held that, notwithstanding this three-pronged test for enhanced services, carriers may use some of the processing and storage capabilities within their networks to offer optional tariffed features as "adjunct to basic" services, if the services: (1) are intended to facilitate the use of traditional telephone service; and (2) do not alter the fundamental character of telephone service. Moreover, the Commission concluded that services that are adjunct to basic should be directly related to the provision of telephone services. For example, the provision of access to a database for purposes other than to obtain the information necessary to place a call will generally be found to be an enhanced service. The presumption regarding such services, therefore, is that they are enhanced unless they are shown to be otherwise. 13. In the US West Waiver Order, we concluded that because US West's EWP reverse-search capability met two of the three criteria for an enhanced service, the new service should be classified as an enhanced service. Specifically, we found that the reverse-search service provides additional information (the name and address associated with a telephone number) to subscribers and involves subscriber interaction with stored information. No party opposes our determination that US West's reverse-search capability satisfies two of the Computer III tests for an enhanced service. Significantly, US West does not seek reversal of our determination that its reverse-search capability is an enhanced service. 14. We remain unpersuaded that the primary purpose of US West's EWP reverse-search service is to facilitate the placement of telephone calls. In the NATA Centrex Order, the Commission distinguished between directory assistance (an adjunct to basic service) and AT&T's "Dial-it" service ("clearly ... outside the scope of basic service") by stating that: The only significant difference between Dial-it and directory assistance is that the latter service provides only that information about another subscriber's telephone number which is necessary to allow use of the network to place a call to that other subscriber. While US West's reverse-search service enables customers to avoid calling a number without knowing the name and address of the called party, the customer already possesses the telephone number that is needed to place the call. The additional information gained through the reverse-search capability -- the name and address -- is not necessary to make the call. Therefore, we conclude that the reverse-search capability is not an adjunct to basic service because it provides information in addition to that necessary to use the network to place a call (e.g., the other subscriber's telephone number). 15. We also find unpersuasive Ameritech's argument that the reverse-search service is analogous to calling name delivery service. In the Caller ID proceeding, the Commission concluded that, for Caller ID service only, calling name delivery is an adjunct to basic service because it "merely provides normal telephone company record information to help the called party customer identify the calling party before answering the call." Once a customer subscribes to the service, the caller's name is displayed coincident with the receipt of a telephone call. Calling name delivery does not require the subscriber to interact with a data base. In contrast, US West's reverse-search capability requires a subscriber to use a computer connected to the public switched network to obtain access to a data base containing the name and address associated with a telephone number and involves both additional information and subscriber interaction with stored information. Moreover, this additional information is obtained from the data base after the call has been completed. Accordingly, we find that US West's reverse-search capability does not fit within the narrow exception established in the Caller ID proceeding. We, therefore, reaffirm our conclusion that US West's reverse-search capability is an enhanced service. 16. BellSouth claims that the Commission has classified traffic management studies as adjunct to basic services notwithstanding that such studies do not contemplate the placement of a telephone call. Consequently, BellSouth contends that reverse-search services should not be required to satisfy that criterion. We disagree because the relationship between the reverse-search capability and traditional telephone service is significantly more tenuous. In the NATA Centrex Order, the Commission indicated that traffic management studies are an adjunct to basic service because they are "directly related to management of the customer's telephone service." According to BellSouth and Ameritech, the relationship between reverse-search and traditional telephone services is the former's alleged ability to facilitate the placement of a second telephone call. As we have stated, this relationship is too tenuous for us to conclude that the reverse-search capability is an adjunct to basic service. 17. Finally,Ameritech's and BellSouth's existing name and address search services are not relevant to our decision in this proceeding. Our determination in the US West Waiver Order applies to US West's provision of reverse-search capability. To the extent that Ameritech, BellSouth, or others offer a reverse-search capability that is functionally different from US West's offering, we will consider the significance of those differences in the context of proceedings directly applicable to those carriers. B. SWBT's and BellSouth's Waiver Petitions 18. SWBT and BellSouth (jointly "Petitioners") request waivers that would allow them to offer reverse-search capabilities on an integrated basis with their EWP services because technological constraints will not allow them to offer the service economically on an equal access basis, in accordance with our CEI requirements. DirectoryNet, Inc. (DirectoryNet) submitted late-filed comments supporting BellSouth's petition. No party opposes the petitions. 19. Currently, Petitioners offer EWP services as tariffed basic services. These services allow customers to request the phone number of a telephone subscriber via a personal computer and modem. Customers may perform only one search at a time, and may search by name only. Petitioners propose offering the reverse-search service by changing the functions of the current EWP service and allowing customers to directly interact with the database currently used for the EWP. Petitioners' reverse-search capabilities are functionally identical -- i.e., they would allow customers to retrieve subscriber name and address information by providing a telephone number through a computer interface with Petitioners' EWP databases, but would not allow customers to retrieve a subscriber name or telephone number by providing only an address. 20. Petitioners maintain that these reverse-search services should be classified as adjuncts to basic service. Both, however, have indicated that they will provide these capabilities as enhanced services in compliance with the requirements imposed in the US West Waiver Order. 21. Petitioners assert that, to provide a service that would comply with the CEI requirements, they would be required to create a separate interface with their existing databases that could be used by ESPs. Both carriers contend that competing directory service providers do not require interconnection with their databases to provide a reverse-search capability and represent that several companies already offer this service. SWBT indicates that offering a stand-alone reverse- search capability would not be economical because it would require one to two years to develop and would cost between $500,000 and $1,000,000. BellSouth similarly states that it would take one to two years and would cost between $900,000 and $950,000 to develop a reverse-search capability that would meet the CEI equal access requirements. BellSouth indicates that it could not justify offering this service as a stand-alone service, and that it will not offer this service if it cannot do so on an integrated basis. 22. Discussion. We conclude that Petitioners' reverse-search capabilities offered in conjunction with their EWP services constitute enhanced services. We conclude that the reverse-search capabilities, as described by Petitioners, are functionally the same as those offered by US West. In fact, Petitioners implicitly acknowledge that their reverse- search capabilities are identical to those of US West by requesting identical regulatory treatment of those capabilities. Consistent with our determination in the US West Waiver Order and in paragraphs 11-17 above, we conclude that Petitioners' reverse-search capabilities employ computer processing applications that provide subscribers with additional information (the name and address associated with a telephone number), involve subscriber interaction with stored information and are not intended primarily to facilitate traditional telecommunications service. We therefore find that Petitioners' EWP reverse-search services are enhanced services. 23. The Commission may grant waivers of its rules or orders "if good cause therefor is shown." A showing of good cause requires the petitioner to demonstrate special circumstances that warrant deviation from the rules or orders, and to show how such deviation would serve the public interest. The applicant must clearly demonstrate that the general rule is not in the public interest when applied to its particular case, and that the grant of the waiver will not undermine the public policy served by the rule. 24. We conclude that Petitioners have established the requisite good cause for granting limited waivers of the Computer III CEI requirements. Accordingly, we grant Petitioners waivers to provide reverse-search services throughout their territories. Significantly, no party opposed granting Petitioners CEI waivers. Moreover, the record indicates that competition already exists in the directory services market in areas where BellSouth and SWBT offer service and that competing providers of these services currently offer reverse-search capabilities as part of their offerings. Thus, the record shows that access to Petitioners' offerings is not necessary to allow other companies to provide competing reverse-search capabilities. In addition, no party has challenged Petitioners' assertions that compliance with the Commission's CEI requirements would delay introduction of their proposed services for several years and cause them to incur costs that would make the offerings uneconomic. Finally, Petitioners' compliance with our Joint Cost Rules will protect against unlawful cross-subsidization. 25. We are persuaded that the application of our CEI requirements to Petitioners' provision of reverse-search capability is not in the public interest in this case because compliance with our requirements is not necessary to allow competing providers to offer this service. We conclude that Petitioners have established good cause for granting the requested waiver. We limit this waiver to the reverse- search capability as described in their petitions. We condition our grant of this waiver on Petitioners' compliance with the Commission's Joint Cost Rules and CAM requirements, and the Computer III CPNI requirements, as amended by the 1996 Act. V. ORDERING CLAUSES 26. IT IS HEREBY ORDERED that Ameritech's Petition for Limited Reconsideration IS DENIED. 27. IT IS FURTHER ORDERED that SWBT's and BellSouth's petitions for a waiver of the Computer III CEI requirements for the EWP reverse-search capability IS GRANTED subject to the conditions and requirements established herein. 28. IT IS FURTHER ORDERED that DirectoryNet's Late Filed Comments ARE ACCEPTED. FEDERAL COMMUNICATIONS COMMISSION Regina M. Keeney Chief, Common Carrier Bureau