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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Telephone Number Portability ) CC Docket No. 95-116 ) RM 8535 ) THIRD MEMORANDUM OPINION AND ORDER ON RECONSIDERATION Adopted: August 12, 1998 Released: August 13, 1998 By the Commission: I. INTRODUCTION 1. On June 27, 1996, the Commission adopted the First Report and Order and Further Notice of Proposed Rulemaking (First Report and Order) in this docket which implemented the provisions of section 251 of the Communications Act of 1934, as amended, that relate to telephone number portability. Section 251(b)(2) requires all local exchange carriers (LECs) to offer, "to the extent technically feasible, number portability in accordance with requirements prescribed by the Commission." In the First Report and Order, the Commission, among other things, adopted a phased implementation schedule for the deployment of long-term number portability by wireline carriers. In response to numerous petitions for reconsideration or clarification, the Commission modified the number portability implementation schedule in a First Memorandum Opinion and Order on Reconsideration (First Order on Reconsideration) adopted on March 6, 1997. On May 8, 1997, KMC Telecom, Inc. (KMC) filed a petition for reconsideration of the First Order on Reconsideration seeking further modification of the implementation timetable. For the reasons discussed below, we deny KMC's petition and affirm the modified number portability deployment schedule for wireline carriers adopted in the First Order on Reconsideration. II. BACKGROUND 2. In the First Report and Order, the Commission required LECs operating in the 100 largest Metropolitan Statistical Areas (MSAs) to offer long-term number portability pursuant to a phased deployment schedule beginning October 1, 1997 and concluding December 31, 1998. The Commission also allowed competing carriers to submit requests for deployment in areas outside the 100 largest MSAs beginning January 1, 1999 and required LECs to make long-term number portability available within six months of the receipt of such a request. 3. In the First Order on Reconsideration, the Commission found that the initial implementation of number portability technology would require more time than would subsequent deployment occurring after the technology had been thoroughly tested and used in a live environment. Therefore, the Commission extended the deadline for completion of portability deployment by three months for Phase I and also extended the deadline by 45 days for Phase II so that completion of both Phases I and II would not be required on the same day. The Commission found that such a modification would "allow carriers to take appropriate steps to safeguard network reliability." In order to allow LECs to focus their resources on areas within the designated MSAs in which competitors were actually seeking entry, the Commission revised the LECs' deployment obligations and required them to provide number portability only in those switches within the largest 100 MSAs for which a competing carrier specifically requested its provision. The Commission concluded that such a procedure would foster efficient deployment of portability, ensure that LECs could maintain network integrity by giving them time to plan and test portability before widespread deployment, and reduce costs. 4. In the First Order on Reconsideration, the Commission modified its rule that carriers outside of the largest 100 MSAs could file requests for number portability only after deployment has been completed in the 100 largest MSAs. Under the revised rule, carriers may submit portability deployment requests to the LECs at any time. In modifying the implementation obligation of carriers, the Commission refused to adopt the proposal of several petitioners that would have accelerated the time frame within which LECs would be required to fulfill portability requests in markets outside the 100 largest MSAs. Rather, the Commission held that requests for deployment in smaller MSAs occurring on or prior to January 1, 1999 either must be fulfilled within six months of January 1, 1999, or resolved in private agreements for early deployment. In limiting initial deployment to larger MSAs, the Commission weighed the availability of switch software, the burden on carriers serving multiple regions, and the potential need for significant upgrades in smaller markets. The Commission concluded that accelerating deployment schedules in smaller markets might divert limited resources from larger MSAs and thus delay the overall deployment of number portability. 5. The revised implementation schedule leaves to industry and to state commissions the determination of the most efficient means of identifying those switches within the top 100 MSAs in which carriers have expressed interest. The Commission established minimum criteria applicable to "any procedure to identify and request switches for deployment of number portability to ensure that carriers that receive requests for deployment in their switches have adequate time to fulfill the requests." In order to ensure that LECs are not overburdened with demands for number portability, and to provide carrier certainty, the Commission concluded that state commissions may not accelerate the deployment schedule. III. PETITION 6. KMC seeks reconsideration of the revised number portability deployment schedule the Commission adopted in the First Order on Reconsideration with respect to markets outside the 100 largest MSAs. KMC contends that switch vendors may have the capacity to support number portability deployment in smaller markets now that LECs are required to implement number portability only in those switches within the 100 largest MSAs where a competitor requests its provision. KMC further asserted that by November 1, 1997, one month after the deadline for competitive LECs to request portability in MSAs in the first three phases of the implementation schedule, vendors should know if they are capable of converting more switches than the implementation schedule requires LECs to convert. Such excess vendor capacity, KMC maintains, should be used to implement portability outside the largest 100 MSAs. Specifically, KMC proposes that, beginning November 1, 1997, LECs be required to provide number portability in any MSA outside the largest 100 within six months of the receipt of a competitor's request, unless the LEC obtains a statement from a switch vendor that it does not have capacity to fulfill the request. Pursuant to KMC's proposal, a LEC would need to submit such a vendor statement to the Commission in order to obtain a waiver of the implementation obligation. IV. DISCUSSION 7. As an initial matter, we reject the procedural objections of commenters that KMC's petition simply repeats arguments advanced in its prior petition for reconsideration. Although the instant petition, like KMC's prior petition, asks the Commission to accelerate the implementation of number portability outside the top 100 MSAs, the instant petition is based on the Commission's modification of the implementation obligations in the First Order on Reconsideration. In this respect, the First Order on Reconsideration "modifie[d] rules adopted by the original order," and is, "to the extent of such modification, subject to reconsideration in the same manner as the original order." We therefore find that KMC's petition, which asserts that the Commission's modification of LEC implementation obligations created the potential for excess vendor capacity, should not be dismissed as repetitious. 8. Although we do not dismiss KMC's petition on procedural grounds, we deny it on substantive grounds. The focus of KMC's petition is the excess vendor capacity that it anticipates will result from the revised implementation schedule. Although KMC correctly states that the Commission in the First Report and Order took into account the ability of switch vendors to fulfill portability implementation requests, KMC erroneously claims that vendor capacity was "the Commission's primary consideration in establishing the deployment schedule." Available switch capacity was only one of the bases for the Commission's decision to implement number portability more slowly outside the 100 largest MSAs. For example, in the First Order on Reconsideration, the Commission found that confining initial deployment to the 100 largest MSAs recognized "the burden on carriers serving multiple regions and the fact that more significant upgrades may be necessary for carriers operating in smaller areas." The Commission also recognized that beginning implementation in larger markets serves to "ensure that number portability will be made available in those regions where competing service providers are likely to offer alternative services." We are not persuaded on the basis of this record that the potential existence of excess vendor capacity outweighs these considerations that led the Commission to focus initially on bringing local number portability to larger markets. 9. We further find, as the Commission did in the First Order on Reconsideration, that KMC has not shown that "the necessary software, hardware, and other resources will be available earlier in areas originally scheduled for later deployment, or will be available in quantities sufficient to support deployment in additional areas, particularly in areas outside the largest 100 MSAs." The deployment of number portability in the top 100 MSAs is a major undertaking that will require LECs to commit a large amount of resources in order to ensure its successful completion. For example, U S WEST notes that it may be necessary to upgrade tandem and operator services switches and E911 systems in the specified geographic area, modify operations support systems and service control points, and add signaling links and additional trunks. To the extent that LECs are required to allocate resources to smaller markets while at the same time fulfilling their obligation to deploy number portability in the larger markets, efficient deployment of number portability may be jeopardized because resources would need to be deployed in multiple potentially distant geographic areas simultaneously. We also note, in response to MCI's contention that LECs should be required to offer portability in MSAs adjacent to those within the 100 largest MSAs, that the resource demands on the LEC may be just as high in such MSAs. As U S WEST asserts, "consideration of whether one or two more offices in smaller MSAs can be added to a Phase because one or two offices were not requested by LECs in the top 100 MSAs is a more complex network planning and deployment question than whether the local switch vendor has one or two open slots for loading software in end-offices' switches." Given these concerns, the Commission previously found that phased implementation, beginning with requested switches in the largest 100 MSAs, is the most effective way of balancing the need for efficient number portability deployment with the availability of LEC resources. KMC offers no response to these arguments; indeed, KMC acknowledges that "in some cases the need to perform network upgrades or modifications may preclude a LEC from meeting [a] deadline, despite the availability of the necessary vendor software." 10. We note that in modifying the implementation schedule to allow more time for the initial rollout of number portability, the Commission emphasized that it considers "network reliability to be of paramount importance." We continue to believe that network reliability is of the utmost importance and find that the current implementation schedule, by allowing LECs to focus on the larger MSAs for the initial phases of implementation, provides LECs certainty as to the Commission's requirements and ensures that resources will not be spread so thinly as to jeopardize number portability deployment and network reliability. It would be inconsistent with these important considerations for the Commission to accelerate the schedule for smaller markets so early in the implementation process. 11. We also find that KMC's proposal, by placing burdensome filing requirements on LECs and switch vendors, is an inefficient way to determine where network capabilities should be deployed. Requiring LECs first to obtain a statement from switch vendors that they do not have capacity to handle portability requests in smaller MSAs, and then to use that statement to obtain a waiver from the Commission, would create an administrative problem for LECs as they respond to number portability requests in compliance with the deployment schedule, and could be administratively burdensome for the Commission as well. In addition, such a waiver procedure could disrupt the continued orderly and efficient deployment of number portability in areas already scheduled for deployment by diverting resources to smaller MSAs before deployment in requested switches within the 100 largest MSAs is complete. The Commission rejected a similar waiver- type proposal in the First Order on Reconsideration after concluding that "a waiver procedure would create a period of uncertainty for both the incumbent LEC and the competitive LEC as to whether portability would actually be deployed in that switch." We therefore decline to adopt a proposal that could place administrative hurdles in the way of efficient number portability implementation. 12. Moreover, KMC has failed to produce any evidence to support its contention that excess vendor capacity will in fact be available. KMC offers only its conclusory assertion that by November 1, 1997, "it should be apparent whether the initial requests for number portability within the top 100 MSAs are running at a level that leaves the vendors with unused capacity." In response to KMC's assertion, U S WEST submitted evidence that competitors in its service area will request portability deployment in most of U S WEST's switches in the first three phases of deployment. KMC offers nothing to counter this evidence that U S WEST will be occupied in converting most of its switches under the present implementation schedule. KMC's argument also ignores the fact that the deadline for requesting number portability in 55 of the 100 largest MSAs is not until after November 1, 1997, and LECs will not yet know to what extent their resources and the resources of vendors will be needed to meet forthcoming number portability implementation requests. Moreover, the Commission has not been presented with any evidence in this proceeding subsequent to November 1, 1997 that suggests that excess vendor capacity is in fact now available. We decline to modify our rules based on KMC's speculative assertion that excess vendor capacity may become available. 13. Finally, we affirm the Commission's determination that any arrangements for early deployment in smaller MSAs should be left to private agreements. Such agreements could specify that a carrier will not request that certain switches be deployed according to the Commission's schedule if the LEC from which deployment is requested agrees to deploy other number portability-capable switches outside the 100 largest MSAs at an earlier date than the deadlines in the Commission's schedule. As USTA points out, KMC does not allege that it has encountered any problem with this flexible approach. Should carriers agree to "swap" the implementation deadlines for specific MSAs or switches within MSAs, they can jointly file specific waivers to do so. Given the numerous factors that influenced the development of the phased implementation schedule, we conclude, as did the Commission in the First Order on Reconsideration, that permitting private agreements among LECs is preferable to a wholesale modification of the implementation system for wireline carriers. V. CONCLUSION 14. For the reasons stated above, we deny KMC's petition for reconsideration and affirm the revised implementation schedule for wireline carriers adopted by the Commission as set forth in the First Order on Reconsideration. VI. ORDERING CLAUSES 15. Accordingly, IT IS HEREBY ORDERED that, pursuant to Sections 1, 4(i) and (j), 201-205, 218, and 251 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i) and (j), 201-205, 218, and 251, KMC's Petition for Reconsideration IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary APPENDIX Petition for Reconsideration (filed 5/8/97): KMC Telecom, Inc. [KMC] Oppositions to Petition for Reconsideration (filed 5/11/97): Ameritech Bell Atlantic and NYNEX [Bell Atlantic/NYNEX] United States Telephone Association [USTA] U S WEST, Inc. [U S WEST] Reply (filed 5/23/97): KMC