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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 Matters of ) ) Deployment of Wireline Services Offering ) CC Docket No. 98-147 Advanced Telecommunications Capability ) ) and ) ) Implementation of the Local Competition ) CC Docket No. 96-98 Provisions of the ) Telecommunications Act of 1996 ) ) ) THIRD REPORT AND ORDER IN CC DOCKET NO. 98-147 FOURTH REPORT AND ORDER IN CC DOCKET NO. 96-98 Adopted: November 18, 1999 Released: December 9, 1999 Before the Commission: Commissioner Furchtgott-Roth concurring in part, dissenting in part, and issuing a statement. TABLE OF CONTENTS Paragraph I. INTRODUCTION AND OVERVIEW . . . . . . . . . . . . . . . . . . . . . . 1 II. EXECUTIVE SUMMARY. . . . . . .6 III. BACKGROUND . . . . . . . . . .7 A. DSL Technology . . . . . . . . . . . . . . . . . . . . . . . . . . .7 B. History of the Proceeding. . . . . . . . . . . . . . . . . . . . . 10 IV. LINE SHARING . . . . . .13 A. Commission Authority to Require Incumbent LECs to Unbundle the High Frequency Portion of the Loop. . . . . . . . . . . . . . . . . . . . . 15 1. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2. Discussion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 B. Designation of High Frequency Loop Spectrum as an Unbundled Network Element. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 1. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 2. Discussion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 C. Technical Feasibility of Spectrum Unbundling . . . . . . . . . . . 62 1. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 2. Discussion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 D. Operational Issues Associated with the Implementation of Line Sharing. . . . . . . 69 1. Parameters for Line Sharing Deployment. . . . . . . . . . . . . . 69 2. Loop Conditioning . . . . . . . . . . . . . . . . . . . . . . . . 81 3. Digital Loop Carrier Systems. . . . . . . . . . . . . . . . . . . 88 4. Operational Support Systems . . . . . . . . . . . . . . . . . . . 93 E. Economic, Pricing Methodology, and Cost Allocation Issues. . . . .131 1. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . .131 2. Discussion. . . . . . . . . . . . . . . . . . . . . . . . . . . .133 F. Implementation of Unbundling Obligation. . . . . . . . . . . . . .158 1. Effective Date of New Rules . . . . . . . . . . . . . . . . . . .161 2. States' Role in Fostering Local Competition Under Sections 251 and 252. . . . . .162 3. Duty to Negotiate in Good Faith . . . . . . . . . . . . . . . . .169 4. Guidelines for State Arbitration Awards . . . . . . . . . . . . .171 V. SPECTRUM POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . 178 A. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . .178 B. Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . .183 1. Standards-Setting Entities. . . . . . . . . . . . . . . . . . . .183 2. Mechanisms for Demonstrating Spectrum Compatibility . . . . . . .192 3. Conditions for Acceptability of a Loop Technology for Deployment. . . . . . 195 4. Binder Group Management . . . . . . . . . . . . . . . . . . . . .212 VI. OTHER ISSUES . . . . . 221 A. State Authority to Enact Additional Line Sharing Requirements. . . . . .221 1. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . .221 2. Discussion. . . . . . . . . . . . . . . . . . . . . . . . . . . .223 B. Takings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .226 VII. PROCEDURAL MATTERS AND ORDERING CLAUSES . . . . . . . . . . . . . 228 APPENDIX A LIST OF COMMENTERS APPENDIX B FINAL RULES APPENDIX C DIAGRAM OF CENTRAL OFFICE EQUIPMENT CONFIGURATION APPENDIX D REGULATORY FLEXIBILITY ANALYSIS I.INTRODUCTION AND OVERVIEW 1. Among the fundamental goals of the Telecommunications Act of 1996 (1996 Act) is the promotion of innovation, investment, and competition among all participants and for all services in the telecommunications marketplace, including advanced services. The Commission has issued three orders in this proceeding to date, and has issued other decisions intended to promote competition in the advanced services market. In this Third Report and Order we take additional, important steps toward implementing Congress's goals for the deployment of competitive advanced services by instituting line sharing obligations for incumbent LECs, and establishing spectrum management policies and rules. 2. Carriers are increasingly transmitting electronic communications in digital, rather than analog form, and by means of "packet switching." Packet-switched transmission of information promises a revolution in information services, communications services, and entertainment by offering businesses, residential users, schools and libraries, and other end users the ability to access and send large amounts of information quickly, reliably, and at low cost across the street or across the globe. Moreover, for wireline carriers, digital subscriber line technologies are making it possible for ordinary citizens to access various networks, such as the Internet, corporate networks, and governmental networks, at high speeds through the existing copper telephone lines that connect their residences or businesses to the incumbent local exchange carriers' (LEC's) central office. The existing infrastructure is beginning to be used in new ways that make available to average citizens a variety of new services and vast improvements to existing services. The ability of all Americans to access these high-speed, packet-switched networks will spur the growth and development of our nation. 3. Incumbent and competitive LECs are beginning to provide xDSL-based services to customers in major markets nationwide. These xDSL-based services provide high-speed connections between subscribers and packet switched networks, over ordinary copper telephone "loops." Because the advanced services market is still in its developmental stage, robust competition among xDSL providers is just beginning to emerge in many markets. The economic realities of providing advanced services have also caused most xDSL providers to market primarily to large business customers. Nevertheless, both incumbent and competitive carriers appear to have recently begun to make some of the technological investment necessary to compete in the provision of advanced services to residential and small business consumers. 4. In this Order we adopt measures to promote the availability of competitive broadband xDSL- based services, especially to residential and small business customers. We amend our unbundling rules to require incumbent LECs to provide unbundled access to a new network element, the high frequency portion of the local loop. This will enable competitive LECs to compete with incumbent LECs to provide to consumers xDSL-based services through telephone lines that the competitive LECs can share with incumbent LECs. The provision of xDSL-based service by a competitive LEC and voiceband service by an incumbent LEC on the same loop is frequently called "line sharing." In addition, we adopt spectrum management policies and rules to facilitate the competitive deployment of advanced services. 5. The record shows that lack of access to the high frequency portion of the local loop materially diminishes the ability of competitive LECs to provide certain types of advanced services to residential and small business users, delays broad facilities-based market entry, and materially limits the scope and quality of competitor service offerings. The record reveals no evidence of substantial technical, economic, operational, or practical barriers to incumbent LEC line sharing with competitors. We believe that line sharing is vital to the development of competition in the advanced services market, especially for residential and small business consumers. We believe that unbundled access to the high frequency portion of the loop can be implemented rapidly and in an equitable manner that balances the needs of both potential competitors and incumbent LECs. 6. In addition, we adopt rules in this Order that apply to spectrum compatibility and management. These rules will significantly benefit the rapid and efficient deployment of xDSL-based technologies. Specifically, we seek to encourage the voluntary development of industry standards while limiting the ability of any one class of carriers to impose unilateral and potentially anti-competitive spectrum management or compatibility rules on other xDSL providers. We believe that the spectrum policies we adopt in this Order will ensure the compatibility of technologies and minimize the risk of harmful spectrum interference among transmission services. As such, these policies will ensure that American consumers will not face undue delay in receiving the benefits of technological innovation. VII.EXECUTIVE SUMMARY LINE SHARING · Unbundling Analysis. The high frequency portion of the loop meets the statutory definition of a network element and must be unbundled pursuant to sections 251(d)(2) and (c)(3). An incumbent LEC's failure to provide such access impairs the ability of a competitive LEC to offer certain forms of xDSL-based services. The record shows that lack of access would materially raise the cost for competitive LECs to provide advanced services to residential and small business users, delay broad facilities-based market entry, and materially limit the scope and quality of competitor service offerings. Our decision to unbundle the high frequency portion of the loop is consistent with the 1996 Act's goals of rapidly introducing competition and promoting facilities-based entry. This will promote the rapid deployment of advanced services to all Americans as mandated by section 706 of the 1996 Act. · Line Sharing Requirements. · In order to ensure that line sharing does not significantly degrade analog voice service, incumbent LECs must provide unbundled access to the high frequency portion of the loop only to carriers seeking to provide xDSL-based service that meets one of the Commission's criteria regarding the presumption of acceptability for deployment on the same loop as analog voice service. Currently, ADSL is the most widely deployed line sharing technology meeting that presumption. As additional xDSL-based technologies that can co-exist on the same loop as analog voice service are demonstrated to meet that presumption, incumbents must permit requesting carriers to deploy those technologies as well. · Incumbent LECs must provide unbundled access to the high frequency portion of the loop to only a single requesting carrier, for use at the same customer address as the analog voice service provided by the incumbent. · Incumbents are not required to provide unbundled access to the high frequency portion of the loop if they are not currently providing analog voice service to the customer. · Subject to certain obligations, incumbent LECs may maintain control over the loop and splitter equipment and functions. · Loop Conditioning. Incumbent LECs must condition loops to enable requesting carriers to provide acceptable forms of xDSL-based services over the high frequency portion of the loop unless such conditioning would significantly degrade the incumbent's analog voice service. We conclude that it would be unreasonable for incumbents to refuse to condition loops under 18,000 feet. For loops over 18,000 feet, an incumbent LEC must make an affirmative showing to the relevant state commission that such degradation will occur. · Subloops. Incumbent LECs must unbundle the high frequency portion of the loop even where the incumbent LEC's voice customer is served by digital loop carrier (DLC) facilities. · Operational Issues. The record shows that incumbents should be able to resolve operational issues associated with implementation of line sharing, including modifications to operations support systems, within six months. The record shows that incumbents have a number of process alternatives available and we will allow them the flexibility to choose the best and most economically feasible of them. · Timing of Implementation. The rules advanced in this Order will go into effect 30 days from the date of publication in the Federal Register. We encourage parties to amend their interconnection agreements to provide for line sharing as soon as possible. · State Authority. States may, at their discretion, impose additional or modified requirements for access to this unbundled network element, consistent with our national policy framework SPECTRUM MANAGEMENT · Standards-Setting. The charter of the Network Reliability and Interoperability Council (NRIC) will be amended to charge NRIC with advising the Commission on spectrum compatibility and management of xDSL-based and other advanced services. In this capacity, NRIC will receive input from industry standards bodies, such as T1E1.4, and monitor developments within them. The NRIC will report periodically to the Commission and prepare recommendations for it. · Spectrum Compatibility. We decline to adopt a federal rule on specific methods of achieving spectrum compatibility and instead will defer to the conclusions to be reached by industry standards setting bodies on this issue. As a general matter, however, the use of generic power spectral density (PSD) masks and/or a calculation-based approach appears to be the best means to address spectrum compatibility. Taken together, these two mechanisms should protect network integrity while maximizing deployment of new competing technologies. · Presumption of Acceptability for Deployment. We codify as permanent rules the rules we previously adopted on an interim basis that will govern when a loop technology is presumed acceptable for deployment. The circumstances include when the technology: (1) complies with existing industry standards; (2) has been approved by an industry standards body, the Commission, or any state commission; or (3) has been successfully deployed by any carrier without significantly degrading the performance of other services. We rely upon the states to determine whether a particular technology has significantly degraded the performance of other services. · Degradation of Signals. Although we recognize the value of objective criteria to measure significant degradation, we do not have a basis in the record before us to adopt specific, objective criteria. We encourage industry standards bodies to continue addressing this issue. Based on the record before us, we believe that an objective measurement of what constitutes significant degradation should account for reductions in a service's distance (reach) and/or speed (rate), among other factors. Until industry standards bodies adopt an objective standard, carriers must apply the subjective standard we previously enunciated in the Advanced Services First Report and Order, namely, that significant degradation is an action that noticeably impairs a service from a user's perspective. · We reaffirm our conclusions from the Advanced Services First Report and Order regarding resolution of interference disputes. In the event that a LEC demonstrates to the relevant state commission that a deployed technology is significantly degrading the performance of other advanced services or traditional voice band services, the carrier deploying the technology shall discontinue deployment of that technology and migrate its customers to technologies that will not significantly degrade the performance of other services. We now adopt an exception to this rule: where the only service experiencing interference is itself a known disturber, that service shall not prevail against the newly deployed technology. We conclude that analog T1 service is a known disturber. · Interfering Technologies. The only permissible forms of binder group management are the segregation of known disturbers and the use of the spectrum compatibility (interference protection) techniques described above. The states should determine disposition of known interfering technologies. The states may select one or more of several approaches towards disposition of known disturbers, including segregation or sunsetting of known disturbers, consistent with the national policy framework adopted in this Order. VII.BACKGROUND A. DSL Technology 8. The circuit switched public telecommunications network (PSTN), which interconnects virtually every home and business, was designed to provide superior voice telephony. Until recently, carriers did not consider the PSTN's architecture well suited for the provision of interactive video or high-speed data communications. Specifically, the PSTN is predominately "circuit-switched," maintaining an end-to-end channel of communication for the duration of each telephone call. Although this is an efficient technique for transmitting ordinary voice telephony, it is not efficient for transmitting digital information. In addition, carriers did not generally consider the copper "local loop," the telephone wire running the "last mile" to each home, capable of carrying more than a relatively modest stream of information. 9. In the near future, xDSL-based technology and packet-switched networks may account for a large portion of the telecommunications facility. xDSL-based technology permits the transmission of data over the copper loop at significantly higher speeds than can be achieved by current "dial-up" analog data transmission systems and circuit-switched network systems. xDSL transmission systems consist of an xDSL terminating device attached to each end of an unmodified copper wire local loop. Combining xDSL-based technology with packet switching is more efficient than circuit-switched networks for the transmission of packetized data. 10. In circumstances in which the xDSL-equipped line carries both POTS ("plain old telephone service") and data channels, the carrier must separate those two streams when they reach the telephone company's central office. Generally, this is done by two pieces of transmission equipment, a Digital Subscriber Line Access Multiplexer (DSLAM) and a splitter. The DSLAM sends the customer's voice traffic to the public, circuit-switched telephone network and the customer's data traffic (combined with that of other xDSL users) to a packet-switched data network. Once on the packet-switched network, the data traffic is routed to the location selected by the customer, for example, a corporate local area network or an Internet service provider. That location may itself be a gateway to a new packet-switched network or set of networks, like the Internet. A. History of the Proceeding 11. In March 1999, we released the Advanced Services First Report and Order, in which we adopted several measures to promote competition in the advanced services market. Specifically, we strengthened our collocation rules and implemented certain spectrum compatibility rules. In the accompanying Further Notice of Proposed Rulemaking (FNPRM), we solicited comments to guide the further development of spectrum compatibility and management requirements and proposed line sharing requirements to enable competitors to offer advanced services to end-users using the same telephone line the LEC uses to offer voice services. We proposed these measures to enable advanced services providers to develop and deploy more rapidly new technologies and innovative services, benefiting consumers through lower prices and increased product choice. 12. We are aware, however, that US WEST has sought judicial review of the Commission's decision that advanced services, including those utilizing xDSL-based technologies, are either exchange access or telephone exchange services. US WEST further argues that the requirements of section 251(b) and (c) do not apply to its provision of advanced services. We note that the Commission has requested, and has received, a remand from the United States Court of Appeals for the District of Columbia Circuit to address US WEST's argument that the Commission is without statutory authority to require incumbent LECs to provide access to unbundled elements used in the provision of advanced services. We further note that the Commission has received a more complete administrative record on this matter and we intend to fully address US WEST's arguments in the Advanced Services Memorandum Opinion and Order and NPRM remand proceeding. The Commission must address the issues raised by US WEST within 120 days from the date of the D.C. Circuit Court's Order. 13. In remanding back to the agency, the court declined to vacate portions of the Advanced Services Memorandum Opinion and Order and NPRM challenged by US WEST. Accordingly, our decision in that Order that xDSL-based services are "either" telephone exchange service or exchange access service remains in effect during the pendency of the Advanced Services Memorandum Opinion and Order and NPRM remand proceeding. We therefore have the authority to consider whether unbundling the high frequency portion of the loop meets the impairment standard established in the Local Competition Third Report and Order. XIV.LINE SHARING 15. In this section, we adopt a requirement that incumbent LECs unbundle the high frequency portion of the loop to permit competitive LECs to provide xDSL-based services by sharing lines with the incumbent's voiceband services. We find that unbundling this network element is technically feasible, presents no substantial operational issues, is legally justified, and serves the public interest. We also find that line sharing promises to bring broadband access to residential and small business consumers, and conclude that incumbents should be able to provide line sharing within 180 days of release of this Order. Our decisions herein should ensure that residential and small business consumers receive the benefits of competition and innovation promised in the Act. 16. The rules and standards we adopt in this Order build on industry development and technological advances that have occurred in the telecommunications marketplace since the advent of the 1996 Act. Both incumbent LECs and requesting carriers are beginning to deploy innovative technologies to meet the demand for high-speed, high-capacity advanced services. To encourage competition, the market for these services must be conducive to investment and innovation, and responsive to the needs of consumers. The requirements we adopt in this Order for access to the unbundled high frequency portion of the local loop are designed to fulfill these criteria, and to be administratively practical and responsive to business needs. A. Commission Authority to Require Incumbent LECs to Unbundle the High Frequency Portion of the Loop 1. Background 17. In the FNPRM, we tentatively concluded that we have authority to require line sharing and sought comment on that tentative conclusion. Competitive LECs, advocacy organizations, and state and federal agencies generally agree that we have authority to mandate line sharing as an unbundled network element (UNE) pursuant to section 251(d)(2) of the Act. Several commenters also argue that we have authority to mandate line sharing as an interstate special access service under sections 201 and 202 of the Act. Incumbent LECs, however, argue that we lack authority to mandate line sharing either as an UNE or as an interstate special access service. Specifically, these commenters claim that the high frequency portion of the loop cannot be considered a network element, that such consideration is premature, and that, regardless of such consideration, access to that portion of the loop is not necessary for advanced service deployment under section 706 of the 1996 Act. 1. Discussion 18. We conclude that we have authority to require incumbent LECs to provide unbundled access to the high frequency spectrum of a local loop pursuant to our authority to identify a minimum list of network elements that must be unbundled on a nationwide basis. Section 251(c)(3) imposes a duty on all incumbent LECs to provide to competitors access to network elements on an unbundled basis. Section 251(d)(2) provides that, in determining which network elements should be unbundled under section 251(c)(3), the Commission shall consider, "at a minimum, whether -- (A) access to such network elements as are proprietary in nature is necessary; and (B) the failure to provide access to such network element would impair the ability of the telecommunications carrier seeking access to provide the services that it seeks to offer." As discussed below, we conclude that the high frequency portion of the loop is a network element that must be unbundled pursuant to section 251(c)(3) and section 251(d)(2). 19. Line sharing generally describes the ability of two different service providers to offer two services over the same line, with each provider employing different frequencies to transport voice or data over that line. Section 3(29) of the Act defines a network element as "a facility or equipment used in the provision of telecommunications services" including "features, functions, and capabilities, that are provided by means of such facility or equipment." As discussed in detail below, the frequencies above those used for analog voice services on any loop are a capability of that loop. Therefore, those otherwise unused frequencies that can be used for xDSL or other applications meet the definition of a "network element." 20. Specifically, sections 51.307(d) and 51.309(c) of our rules address the requesting carrier's right to loop access. These rules provide, respectively, that an incumbent LEC must provide competitors with "access to the facility or functionality of a requested network element separate from access to the facility or functionality of other network elements." The rules also state that a requesting carrier is "entitled to exclusive use" of an "unbundled network facility." Consequently, although we conclude that to the extent section 251(d) is satisfied requesting carriers may access unbundled loop functionalities, such as non-voiceband transmission frequencies, separate from other loop functions, they are also "entitled," at their option, to exclusive use of the entire unbundled loop facility. 21. Under the interpretation of section 251 that underlies these rules, we conclude that we have authority pursuant to section 251 to require unbundled access to the high frequency spectrum of a local loop so that carriers may use those frequencies to provide xDSL-based services while the incumbent LEC uses the voiceband frequencies for analog voice service. In light of our conclusion below to designate the high frequency spectrum as an unbundled network element, we need not and do not address the arguments of some parties that we have authority to order line sharing as a special access service. A. Designation of High Frequency Loop Spectrum as an Unbundled Network Element 1. Background 22. In the Advanced Services FNPRM, we tentatively concluded that incumbent LECs must provide requesting carriers with access to "the transmission frequencies above that used for analog voice service on any lines that LECs use to provide exchange service." We observed that without line sharing, a competitive LEC's ability to competitively provide advanced services is impaired because the competitive LEC must obtain a new unbundled loop from the incumbent LEC to provide advanced services, while the incumbent LEC can provide advanced services, at little additional expense, by using the existing local exchange service line. We also noted that line sharing would enrich consumer choice by enabling customers to keep their analog voice service with the incumbent local exchange company, while choosing a competitive LEC to provide high-speed digital services over the same line without incurring the additional expense of a second line. 23. Additionally, we sought comment on whether we should more precisely define the network element that would permit shared line access, so that it is clear to all parties what the incumbent must unbundle to satisfy our line sharing requirements. In particular, we asked commenters to evaluate the possibility of setting a specific dividing line between a low frequency channel and a high frequency channel on the loop. We were concerned, however, that doing so would arbitrarily freeze technological development and deny carriers opportunities to use the loop to provision services that use different frequency bands. We tentatively concluded that our line sharing requirements should not mandate a particular technological approach to the use of a line for multiple services. 24. We recently set forth our framework for determining which elements should be unbundled pursuant to sections 251(c)(3) and 251(d)(2). We look first to what is happening in the marketplace to determine whether and to what extent alternatives to the incumbent's facilities are available. In the Local Competition Third Report and Order, we concluded that the incumbent LEC's failure to provide a non-proprietary element "impairs" a requesting carrier if, considering the availability of alternative elements outside the incumbent's network, lack of access to that element materially diminishes the requesting carrier's ability to provide the services it seeks to offer. In determining whether alternative sources of network elements are actually available as a practical, economic, and operational matter, we look at specific factors including cost, ubiquity, quality, timeliness, and operational impediments. 25. In the Local Competition Third Report and Order, we stated that in addition to the "necessary" and "impair" standards set out in section 251(d)(2), the language of section 251(d)(2) and the Supreme Court decision suggest we should consider whether unbundling is consistent with the overall goals of the Act. We thus consider whether creating an unbundling obligation would (1) encourage competitors to rapidly enter the local market to serve the broadest number of consumers; (2) advance the development of facilities-based competition, while encouraging investment and innovation in new technologies and services; (3) reduce regulation where warranted; (4) provide market certainty to facilitate the creation and execution of viable new business plans; and (5) be administratively practical to apply. We refrained, however, from assigning any particular weight to the individual factors, but stated that we would consider the relationship among various factors when determining whether a particular network element should be unbundled. 26. In the Local Competition Third Report and Order, we applied the necessary and impair standards and weighed the above factors to establish a list of network elements that must be unbundled on a national basis. In addition, several parties to that proceeding requested that we identify access to the high frequency spectrum of a local loop as a network element that must be unbundled. We declined to address unbundled access to the high frequency spectrum of a local loop in the Local Competition proceeding, however, because the record in the instant proceeding more fully addresses this matter. 1. Discussion 27. As discussed below, we conclude that access to the high frequency spectrum of a local loop meets the statutory definition of a network element and satisfies the requirements of sections 251(d)(2) and (c)(3). It is technically feasible for an incumbent LEC to provide a competitive LEC with access to the high frequency portion of the local loop as an unbundled network element. An incumbent LEC's failure to provide access impairs the ability of a competitive LEC to offer, on a competitive basis, certain forms of xDSL-based service that are capable of line sharing with voice services. The record shows that lack of access to the high frequency portion of the local loop would materially raise competitive LECs' cost of providing xDSL- based service to residential and small business users, delaying broad facilities-based market entry, and materially limiting the scope and quality of competitors' service offerings. Moreover, access to the high frequency portion of the loop encourages the deployment of advanced telecommunications capability to all Americans as mandated by section 706 of the 1996 Act. Because some residential and small business markets may lack the economic characteristics that would support competitive entry in the absence of access to the high frequency spectrum of a local loop, it is clear that spectrum unbundling is crucial for the deployment of broadband services to the mass consumer market. a) Definition 28. We define the high frequency spectrum network element to be the frequency range above the voiceband on a copper loop facility used to carry analog circuit-switched voiceband transmissions. We affirm our tentative conclusion that any rules we adopt should not mandate a particular technological approach to the use of a line for multiple services. As we acknowledged in the Advanced Services First Report and Order and FNRPM, line sharing relies on rapidly evolving technology and our requirement that incumbent LECs provide the high frequency spectrum of a local loop as an unbundled network element should stimulate technological innovation. We seek to ensure that, in the future, carriers are not denied the opportunity to provision services that rely on different frequency bands within the loop. Consequently, we do not set a specific dividing line between the low frequency channel and a high frequency channel on the loop. 29. As we discuss in detail in section IV.D.1.b) below, we support the use of any transmission technology that is presumed acceptable for shared-line deployment with analog voice service according to the criteria already identified in the Advanced Services First Report and Order and NPRM and codified herein. We note that industry standards are constantly evolving, and are supported by carriers that share mutual interest in avoiding service quality degradation. We believe that compliance with the criteria supporting a presumption of technical acceptability that we identify in section V.B.3 of this Order will facilitate the development and deployment of new technologies that utilize the high frequency spectrum of the local loop to provide consumer services, while ensuring the integrity of the PSTN and legacy services. a) Proprietary Concerns Associated with Requiring Access to the High Frequency Spectrum of the Local Loop 30. The record indicates that there are no proprietary concerns associated with unbundled access to the high frequency spectrum of the local loop. No commenters argue that loop spectrum is proprietary under section 251(d)(2)(B). We do not discern any copyright, patent, or trade secrecy implications to unbundled access to the high frequency spectrum UNE. Carriers do not generally rely upon loop spectrum to differentiate themselves from their competitors. Thus, the high frequency spectrum is not proprietary, and we need not analyze requiring access to this unbundled loop spectrum according to the "necessary" standard. We therefore apply the "impair" standard of section 251(d)(2), to determine whether the high frequency portion of the loop is subject to the Act's unbundling obligations. a) Analysis for Unbundled Access to the High Frequency Spectrum of a Local Loop Network Element 31. Applying the standard we announced in the Local Competition Third Report and Order, we conclude that a lack of access to high frequency spectrum of a local loop impairs a competitive carrier's ability to offer certain forms of xDSL-based service. As described below, just as the loop itself remains a facility available only from an incumbent LEC, so too is a competitor seeking to offer certain xDSL-based services impaired if it does not have access to the high frequency spectrum of the local loop available from an incumbent LEC. 32. We recognize that in the Local Competition Third Report and Order, the Commission concluded that cable companies and competitive LECs are actively deploying xDSL-based advanced services. We held there that competitors are not impaired in their ability to provide advanced services to medium and large business users without access to the incumbents' packet switching, a component of xDSL based advanced services. We found that requesting carriers may be impaired in their ability to offer xDSL-based services to residential and small business customers without packet switching capability, but declined to order unbundling of incumbent LEC packet switching capability because of the nascent nature of the advanced services market. However, we also specifically stated that impairment with regard to residential and small business segments may be due "in part, to the cost and delay of obtaining collocation in every central office where the requesting carrer provides service using unbundled loops." Thus, our impairment analysis for packet switching rests in part on the assumption that the impairment results from the intermediate step of getting to the loop, not from use of the loop. Using the loop to get to the customer is fundamental to competition. The issue before us now, whether competitive LECs are impaired without access to the high frequency portion of the loop when they seek to provide various forms of xDSL-based services, is a different question than whether requesting carriers are impaired without access to unbundled packet switching. 33. Section 251 requires incumbent LECs to provide unbundled access to a network element where lack of access impairs the ability of the requesting carrier to provide the services that it seeks to offer. In the Local Competition Third Report and Order, we found that it is appropriate to consider the specific services and customer classes a requesting carrier seeks to serve when considering whether to unbundle a network element. In general, competitive LECs seeking access to the unbundled high frequency portion of the loop only seek to offer voice-compatible xDSL-based services. We thus ask whether such carriers are impaired in their ability to offer such services without access to this network element. 34. As part of this analysis, we need to consider actual market activity. As we stated in the Local Competition Third Report and Order, what is occurring in the marketplace is relevant to our analysis of whether the cost of self-provisioning an element or obtaining it from a third party impairs the ability of a requesting carrier to provide the service it seeks to offer. Looking to the marketplace, we find that most xDSL lines have been deployed to residential or small business consumers, and incumbent LECs provide service on the vast majority of these lines where their xDSL-based service shares the line with their voice service. According to one survey, incumbent LECs have gained a more than 17-1 advantage in deploying voice- compatible xDSL-based services to residential and small business subscribers. In contrast, competitive carriers are generally not providing voice-compatible xDSL-based services to residential and small business consumers. 35. There is no question that incumbent LECs are offering xDSL on the same line as their voice service, and competitive LECs are at a significant disadvantage in offering xDSL-based services over the same line that is used to provide voice service. Incumbent LECs generally deploy forms of xDSL-based services that can coexist with voice service on a single line. This enables incumbent LECs to utilize the full capacity of the copper local loop to efficiently provide both voice and data service to a customer. As discussed below, competitive LECs seeking to deploy xDSL-based service to customers subscribing to the incumbent LEC's voice telephone service cannot deploy their xDSL with the same efficiency or at the same cost. Incumbent LECs currently do not permit competitive LECs to access the high frequency portion of the loop to provide xDSL-based services, even though the incumbent LECs utilize the high frequency portion of the loop to deploy their own services. As discussed below, this situation materially diminishes the competitive LEC's ability to provide the particular type of xDSL-based service that it seeks to offer. 36. In contrast, we conclude that competitors are not impaired where they seek to deploy those versions of xDSL-based services that require a dedicated local loop, such as SDSL or HDSL, because they can procure unbundled loops to deploy such service. We recognize that for larger business users, competitive and incumbent LECs have to date maintained a degree of competitive parity, acquiring similar customer volumes. The larger business market tends to favor robust, high-capacity, symmetrical forms of xDSL, such as SDSL. These types of xDSL are not compatible with voice service provided over the same line in a line sharing arrangement, because they utilize the whole loop frequency spectrum. Thus, both incumbent and competitive LECs must deploy these forms of xDSL over dedicated loops. We believe that the comparable levels of market penetration between incumbent and competitive LECs indicates that competitive LECs are not impaired where they can procure unbundled loops to provide these services. Moreover, the record does not indicate otherwise. 37. As discussed below, we are convinced that line sharing will level the competitive playing field and enable requesting carriers to accelerate the provision of voice-compatible xDSL-based services to residential and small business customers who, to date, have not had the same level of access to competitive broadband services as larger businesses. Therefore, because we expect residential and small business customers to demand voice-compatible xDSL-based services, we find that unbundled access to the high frequency portion of the loop offers the best opportunity to see these nascent markets evolve into competitive markets, just as early indications in the high-capacity offerings to larger business customers suggest that competition will take hold. 38. Alternatives in the Marketplace. When we look to alternatives in the marketplace, we consider whether the competitive LEC can provide voice compatible forms of xDSL by self provisioning its own loop, by purchasing a second loop from the incumbent, by purchasing the first loop as an unbundled network element, or by obtaining the higher frequency portion of the loop from third party sources. We examine each alternative in turn, using the framework developed in the Local Competition Third Report and Order. We conclude that each alternative either is significantly more costly or not available ubiquitously, or both. 39. Self-Provisioning Loops. The record is conclusive that carriers seeking to deploy voice- compatible xDSL-based services cannot self-provision loops. This finding is consistent with our conclusion in the Local Competition Third Report and Order, wherein we found that self- provisioning entire loops is not a viable alternative to the incumbent's unbundled loop because replicating an incumbent's vast and ubiquitous network would be prohibitively expensive and delay competitive entry. 40. Second Loop. There are several reasons why purchasing or self-provisioning a second loop is not possible as a practical, operational or economic matter. First, second loops are not ubiquitously available. Refusing to unbundle the high frequency portion of the loop in this situation forecloses competitive access to the segment of consumers that lack additional copper pairs to their homes or small businesses. Where a customer premises is only addressed by one copper loop, or where end users have exhausted the facilities that serve them by installing multiple phone, modem, and fax lines, end users will have no additional facilities available at their premises which a competitive xDSL service provider could use to provide service. In those situations, competitive xDSL service providers are precluded from providing the services they seek to offer, and consumers are deprived of the benefits of competition. This is particularly a problem in rural areas, where spare copper facilities are less common. Without a requirement that the incumbent LEC must provide competitors with access to the high frequency portion of these loops, only the voice service provider that already controls the entire loop can provide xDSL-based service to that customer. In virtually all cases, this provider will be the incumbent LEC. Thus, lack of access to the high frequency portion of the loop reduces the efficient use of existing loop plant and diminishes the scope of potential customers to whom competitive LECs can market xDSL-based service, thereby limiting the competitive choices available to consumers for whom additional copper loops are not available. In addition, such lack of access can accelerate the depletion of copper loops in entire communities, necessitating inefficient capital expenditures that will increase costs imposed on consumers and competitors alike. Even if there are spare pairs in the "drop" to a home or business, there are not corresponding pairs in the feeder plant connecting the neighborhood to the central office. 41. Second, if competitive LECs were to purchase or self-provision a second unbundled loop to provide voice-compatible xDSL-based services, their provisioning of service would be materially more costly, and coincidentally less efficient, than purchasing the unbundled high- frequency portion of the loop. The inability of competing carriers to provide xDSL-based services over the same loop facilities that the incumbents use to provide local exchange service makes the provision of competitive xDSL-based services to customers that want a single line for both voice and data applications -- typically small businesses and mass market residential consumers -- not just marginally more expensive, but so prohibitively expensive that competitive LECs will not be able to provide such services on a sustained economic basis. Accordingly, a requesting carrier providing voice-compatible xDSL-based services is impaired without access to the unbundled high frequency portion of the loop. 42. Specifically, incumbent LECs refuse to permit competitive LECs to deploy xDSL-based service to their customers on the same customer loops through which incumbents provide voice services, although incumbents regularly deploy both services on the same loop. As a result, a competitive LEC providing xDSL to a customer subscribing to an incumbent LEC's voice service must provide a second customer loop for the customer's xDSL service, effectively doubling the line access charges for that customer's voice and xDSL services, and providing a distinct cost advantage to incumbent LEC-provided xDSL products. The record shows that the combined collocation and unbundled loop costs, exclusive of incremental and fixed network, equipment, and overhead costs, incurred by a competitive LEC seeking to deploy xDSL service can exceed 100% of the retail price for the comparable shared-line xDSL that the incumbent offers to the same customer that the competitor is vying for. The record also shows that incumbents charge requesting carriers almost as much or more, on a monthly basis, for an unbundled, conditioned loop, as the incumbent charges its retail customers for xDSL service. This price discrepancy between what an incumbent can charge its customer for its own shared-line xDSL and what a competitor must pay to the incumbent just to gain access to that customer materially diminishes the ability of the competitive carrier to offer voice-compatible xDSL-based services in competition with incumbent LEC. 43. It is not economical for competitive LECs to self-provision or purchase the entire loop as a second line just to obtain access to the high frequency portion of the loop. The record indicates that incumbent LECs generally allocate virtually all loop costs to their voice services, then deploy a voice-compatible xDSL service such as ADSL on the same loop, allocating little or no incremental loop costs to the new resulting service. In contrast, when the competitive LEC procures a second loop, it must pay the incumbent LEC the full price of that unbundled loop as an unbundled network element. The cost of that additional loop often accounts for 30 to 50% of the competitor's total cost of providing service. Thus, the incumbent LEC's voice- compatible xDSL service enjoys substantial cost advantages over a competitive LEC's xDSL offerings. 44. Third, a competitive carrier faces a competitive disadvantage in providing xDSL over a second line when competing against the incumbent's single line offering. The incumbent is able to market its own service to customers as a quick and convenient add-on service, while the competitive carrier must persuade the customer to purchase a second line. For example, Bell Atlantic, BellSouth, and US WEST emphasize in their advertising that consumers can subscribe to their xDSL-based products without incurring the installation and additional monthly expense of acquiring an additional telephone line. In comparison, consumers that desire to obtain xDSL service from competitive LECs must encounter complications and expenses, including the need to arrange for a technician to install service, that do not arise if they procure the exact same service from the incumbent LEC. Providing competitive LECs with access to the high frequency portion of the loop would remove that additional burden from consumers that prefer to obtain xDSL service from competitors. 45. Finally, we disagree with CoreComm that a decision to unbundle the high frequency portion of the loop should be no different than the Commission's analysis of DSLAMs and packet switches, which the Commission decided not to unbundle. CoreComm argues that the same reasons which led the Commission to decline to unbundle packet switching should lead to a Commission decision to refrain from creating a high-frequency portion of the loop UNE. We disagree. Self-provisioning switches is vastly easier, less expensive, less time consuming, less complicated, and less risky than self-provisioning the outside plant that constitutes the ubiquitous loop network. Moreover, when we considered the impairment issue with regard to packet switches in the Local Competition Third Report and Order, we held that the presence of "multiple requesting carriers providing service with their own packet switches is probative of whether they are impaired without access to unbundled packet switching." To follow CoreComm's line of reasoning in the situation before us, we would be looking at whether competitive LECs have self-provisioned loops, or more precisely, have self-provisioned the high frequency portion of the loop in order to provide xDSL-based services. There can be little dispute that requesting carriers have not duplicated the incumbent LEC's ubiquitous loop plant and generally are not providing service with competitive loop facilities. Thus, we disagree with CoreComm that we should consider loops and packet switches as identical and therefore must be treated similarly for unbundling purposes. 46. Purchasing the First Loop. We believe that if competitive LECs were to provide voice service in addition to xDSL-based service, they would be impaired in their ability to provide the data services they seek to offer. First, concluding that competitive LECs should be able to provide voice service on the customer's first line would impose on requesting carriers all of the cost and operational issues associated with providing circuit-switched voice services. To the extent the competitive carrier invests in its own switching facilities, it would face the same cost and operational impairments associated with collocation and the coordinated cutover process that we found in the Local Competition Third Report and Order. Competitive carriers providing voice service would also incur the costs of providing E911 service and number portability. 47. Furthermore, requiring competitive LECs to provide voice services could require large investments in circuit switching network architectures that may have little to do with a requesting carrier's intention to offer advanced data services. Investments in circuit switched networks may only be justified by carriers that have attained sufficient scale and scope economies to justify deploying large-scale circuit switched networks. For other entrants, requiring this investment diverts financial resources and management focus away from competitive LECs' ability to offer advanced services and frustrates a requesting carrier's plan to migrate telecommunication services from circuit switched to packet switched networks. We find that frustrating the development of packet switched networks capable of bringing advanced telecommunications capability to all Americans is wholly inconsistent with the goals of section 706 of the 1996 Act and the deployment of efficient networks. 48. In the Local Competition Third Report and Order, we stated with regard to subloops, if competing carriers that need only a portion of the loop must either pay for the entire loop or forego access to that loop altogether, many consumers will be denied the benefits of competition. That reasoning applies with equal force here. 49. Incumbents argue that competitors have the same competitive options as incumbents, that they are free to provide both analog voice and data services in combination, using unbundled network elements, and that as a result, competitors are not impaired without access to the high frequency portion of the loop. We acknowledge that self-provisioning a circuit-switched network is not the sole means of providing voice service. In particular, requesting carriers could obtain combinations of network elements and use those elements to provide circuit- switched voice service as well data services. This would relieve a competitive carrier from the need to make significant investments in switching technology that may soon become obsolete. 50. We find, however, that despite its ability to purchase transmission facilities from the incumbent to provide voice service, a competitor is still impaired if it must provide analog voice service in order to enter the market for voice-compatible xDSL services. There are additional costs associated with being a provider of voice service than the cost of the circuit switches. In particular, a competitive carrier would need to develop marketing, billing, and customer care infrastructure designed to service the needs of its voice customers. In addition, competitive LECs seeking to enter the traditional voice services market must deploy sales and marketing forces, and invest in creating a recognizable brand. To compete against incumbent LECs that have a long history providing voice services, competitors must overcome the substantial goodwill, experience and market power of the incumbent LECs. These factors make it a considerable challenge for competitive LECs to motivate a consumer to adopt a new local exchange provider that offers much the same service that the consumer already receives from the incumbent LEC. 51. We are confident that competitors can rise to this challenge. At this time however, we find that competitive LECs would be impaired even if they attempted to provide multi-service offerings including voice-compatible xDSL services. In addition, we note that it is likely that competitive market entry would take longer to accomplish because competitors would need to develop all of these additional capabilities. To be sure, competitive LECs may well decide to diversify their offerings at some point in the future. But such action should occur in response to marketplace forces, not regulatory fiat. To conclude otherwise would be to ignore the statutory directive in section 251(d)(2) that requires the Commission to consider whether a requesting carrier is impaired "to provide the services that it seeks to offer." 52. Our unbundling analysis acknowledges that requesting carriers may address the impairment they face in the absence of line sharing by capturing their own efficiencies and offering integrated or innovative product offerings to customers. For example, in the absence of line sharing, requesting carriers could offer multiple services, such as voice and data, over a single loop to capture the additional revenues associated with local and long distance voice services. Alternatively, requesting carriers could offer innovative bundles of services to customers to counter an incumbent LEC who provides voice and data services on a single loop. 53. As discussed above, however, our unbundling analysis favors an analytical approach that considers the totality of the circumstances a requesting carrier will face, rather than a specific business case analysis, to determine whether lack of access to particular network elements materially diminishes a requesting carrier's ability to provide the services it seeks to offer. We do not rely upon the presence of a particular innovative business plan as a response to whether a requesting carrier is impaired because of the variety and difficulty of predicting the success of such a plan. We held in the Local Competition Third Report and Order that "such an approach would require the Commission to make specific assumptions regarding the competitor's business model, including which technology a competitor would choose to deploy, which market a competitor would choose to enter (e.g., business and/or residential), and what services a competitor would choose to offer." We find no evidence in the record to support the conclusion that a requesting carrier's ability to spread the costs of a loop between multiple services fully addresses a requesting carrier's impairment without access to line sharing. Accordingly, we disagree with parties who contend that a requesting carrier can adopt a business plan that requires it to provide voice services to address the impairment associated with the lack of access to line sharing. 54. Nothing in our decision to require incumbent LECs to implement line sharing pursuant to specific rules adversely affects a requesting carrier's ability to provide new services or execute innovative business plans. To the contrary, there is evidence that requesting carriers have premised innovative marketing arrangements upon the presence of a line sharing requirement. Requesting carriers providing only voice compatible xDSL services also propose to offer innovative voice over xDSL services when commercially practicable. By requiring line sharing, requesting carriers are able to begin to build a base of data customers and focus their innovation efforts upon providing packet-switched services which may substitute for traditional voice services over time. We find that requiring incumbent LECs to provide line sharing therefore, does not harm innovation. Conversely, requiring requesting carriers to provide voice services would divert a requesting carrier's resources away from innovative packet-switched services, such as voice over xDSL, that requesting carriers seek to provide. 55. Third Party Sources: Finally, the record also shows that requesting carriers are not presently obtaining the high frequency portion of the loop from third-party sources rather than from an incumbent LEC under the section 251(c) unbundling obligation. At this time, there is no evidence of such alternatives in the record, nor are we aware of competitive LECs that provide analog voice services offering to partner with competitive LECs offering data services to share unbundled loops obtained from incumbent LECs, although such partnerships could develop in the future. CoreComm notes that some competitive LECs are beginning to form alliances with the intention of offering combined data and voice-over-DSL and integrated voice and data transmission packages. We support this type of cooperation, but distinguish voice-over-DSL and other forms of packetized voice transmission from the analog voiceband transmission that is fundamental to the line sharing we consider in this Order. Packet-based voice services are not yet a market substitute for traditional analog voice service. Packet- based services do not provide lifeline services during emergency situations such as power outages and do not generally offer E-911 functionality. As we held in the Local Competition Third Report and Order, our unbundling analysis looks to what is occurring in the marketplace today, not hypothetical business cases. 56. Goals of the Act: Our decision to unbundle the high frequency portion of the loop is consistent with the 1996 Act's goals of rapid introduction of competition and the promotion of facilities-based entry. Moreover, our decision to require spectrum unbundling is consistent with Congress's mandate that the Commission encourage the deployment of advanced telecommunications capability in section 706 of the 1996 Act. We are convinced that line sharing will enable requesting carriers to accelerate the provision of xDSL-based service to residential and small business customers who, to date, have not had the same level access to competitive broadband services as larger businesses. 57. Because line sharing ensures the deployment of xDSL technologies and ensures that consumers will have at least a single choice in xDSL providers, even where only one loop is available, it also benefits the residents of rural areas. For example, because of the increasing constraints on the availability of second, stand-alone loops and the high cost of provisioning data services on such loops, failure to unbundle the high frequency spectrum of the local loop would cause residential and small business customers to forego competitive alternatives or the ability to receive xDSL-based service at all, particularly in rural areas. In instances where only one loop is available, a requesting carrier cannot obtain line sharing, and if the incumbent LEC chooses not to offer xDSL-based services, a consumer will not be able to obtain x-DSL based services. In instances where two loops are available and the incumbent LEC chooses to offer xDSL-based services, absent line sharing, a competitive LEC seeking to offer xDSL-based service would likely encounter a Hobson's choice between providing xDSL-based service at a significantly higher price than the incumbents, or take a significant economic loss in order to compete against the incumbent's price. The incumbent's price, however, is significantly lower because the incumbent deploys its voice-compatible xDSL service at little or no incremental cost by utilizing the same loop that it uses for local exchange service. Should the competitive LEC choose to bypass a rural area because of this situation, rural customers are then afforded only the option of subscribing to the incumbent LEC's xDSL service. It is an important goal of this Commission that competitive providers of xDSL and other broadband services do not bypass rural areas as competition brings more choices to consumers, in terms of price, quality, and types of services. 58. Some commenters argue that unbundling the high frequency portion of the loop will dampen investment by competitive LECs that offer voice services. We do not believe that facilitating competition in xDSL services will necessarily diminish the competitive opportunity in the provision of voice services. Certainly, offering voice service is not a technical prerequisite to the provision of xDSL service on a particular loop. Rather, it is the fact that the incumbent is already providing voice service on a loop that makes the preservation of competitive access to the high frequency portion of that loop so vital. Without line sharing, competitors would face substantial barriers to market entry, such as additional required investment for voiceband equipment and facilities, and the difficulties of competing against an entrenched, market- dominant competitor. Requiring that competitors provide both voice and xDSL services, or none at all, effectively binds together two distinct services that are otherwise technologically and operationally distinct. Such bundling, whether through self-provisioning or through partnerships, will not drive additional investment dollars toward voice, because it does not make voice more lucrative, but will drive investment away from the provision of advanced services, such as xDSL-based services, undermining the Congressional intention articulated in section 706 of the 1996 Act. In addition, without line sharing consumers would need to forego their current voice service provider, virtually always an incumbent LEC, in order to subscribe to a competitive LEC's xDSL service, which robs consumers of market choices. 59. Moreover, the availability of shared-line access will encourage data carriers to continue investing in network facilities such as DSLAMs, interoffice networks, and backbone facilities, and should promote further innovation in xDSL technologies. We conclude that unbundling the high frequency portion of the loop will not deter investment by facilities-based competitive LECs that plan to offer a full range of services to consumers, including both voice and data services. We expect that such carriers will be able to differentiate themselves from competitive LECs offering only data services by offering consumers the benefits of one-stop shopping, or by providing access to superior facilities or technology. In addition, we do not agree that providing competitors with the option to deliver data services will permit incumbent LECs to become entrenched in the provision of voice service. We believe that product integration and technological innovation will, over time, enable competitive LECs continue to compete with incumbents for the provision of a full range of services. 60. We also disagree with US WEST's argument that the Advanced Services FNPRM fails to recognize the Commission's "hands-off treatment of the dominant providers of advanced services cable operators and its heavy regulation of incumbent LECs." US WEST states that the requirement that incumbent LECs unbundle the high frequency loop spectrum network element to permit competitive LECs to provide xDSL services "violates principles of competitive neutrality" in the advanced services market. US WEST contends that, contrary to its treatment of incumbent LECs, the Commission has refrained from imposing any unbundling obligations on cable operators. 61. We note that the Act explicitly makes distinctions based on a common carrier's prior monopoly status. Therefore, US WEST's argument is inapposite to the issue at hand. We have not yet determined whether the provision of Internet access through a cable modem is a cable service, telecommunications service, or information service, and therefore potentially subject to Title VI or Title II of the Communications Act. We have determined, however, that lack of access to the high frequency portion of the incumbent's local loop impairs a competitive carrier's ability to offer advanced services, and that unbundling this network element furthers the goals of the Act. Therefore, we conclude that it is appropriate to unbundle access to the high frequency portion of the local loop, regardless of the regulatory status of cable modem Internet access. 62. While we cannot predict the impact that technological developments will have upon the ongoing need for the line sharing rules that we establish in this Order, our actions at this time need only respond to, and are well justified by, current market, technology, and industry conditions. Given the rapid changes in technology, competition, and the economic conditions of the telecommunications market, however, we expect that the conditions justifying our line sharing requirements will change over time. We therefore expect to reevaluate the applicability of unbundling obligations to the high frequency spectrum of the local loop in the course of our periodic review of the national rules for unbundled network elements. 63. Specifically, we expect to reexamine our national list of network elements that are subject to the unbundling obligations of the Act every three years. As we stated in the Local Competition Third Report and Order, we believe that revisiting our national network element unbundling rules in three years will provide carriers and capital markets the time and regulatory certainty they need to implement business plans. Thus, combining the review of our line sharing rules with our review of our other national rules for unbundled network elements will facilitate a more comprehensive and technologically neutral approach. A. Technical Feasibility of Spectrum Unbundling 1. Background 64. In the Advanced Services FNPRM, based on the record as it existed at that time, we tentatively concluded that line sharing is technically feasible and sought comment on that tentative conclusion. We also observed that incumbent LECs already provide both voice and advanced services though a single line, and may also share lines with other service providers. 1. Discussion 65. We adopt our tentative conclusion that there exists no bona fide issue of technical feasibility with regard to line sharing. In fact, individual LECs commenting in this proceeding no longer dispute whether line sharing can be provided to requesting carriers as a technical matter. It is clear from the record that incumbent LECs already provide both analog voice and high-speed data services over one loop by connecting the local loop facility to their DSLAM to utilize the loop's non-voiceband frequency data transmission capability for their own xDSL services. We conclude that two-carrier line sharing, where the incumbent LEC's analog voice service shares the line with a competitive LEC's data service, can be accomplished in the same manner. 66. The local loop can support transmissions on a wide range of frequencies. Analog voice service occurs on the lower "voiceband" frequency range, at least between 300 Hertz and 3,000 Hertz, and possibly up to 3,400 Hertz depending on equipment and facilities. Some forms of xDSL, such as ADSL use a higher frequency range, generally above 20,000 Hertz, that does not interfere with voiceband transmissions. xDSL services that do not use the voiceband frequency range can "share" a copper loop with voiceband services, such as POTS, without impairing the performance of either service. Therefore, the customer purchasing the xDSL service may continue to receive analog circuit-switched POTS from the incumbent LEC. 67. Most voice telephone customers are connected to the PSTN though a copper local loop circuit that runs from their premises, through the outside loop plant, to the main distribution frame (MDF) in the incumbent LEC's central office. All telecommunications services using the local loop are connected, directly or indirectly to the MDF. For traditional voice service, the customer's loop is "bridged," or cross-connected, at the MDF to a copper wire pair that connects to the incumbent LEC's Class 5 switch. The Class 5 switch passes the voice traffic to and from the circuit-switched network. 68. xDSL service can be added to a local loop that is being used for "traditional" voice service by deploying special equipment at each end of the subscribing customer's local loop. Specifically, passive signal filters, or "splitters," are installed at each end of the customer's loop to accomplish this operation. One splitter is installed at the customer's premises, and another at the central office or remote terminal. A splitter bifurcates the digital and voiceband signals concurrently traversing the local loop, directing the voiceband signals through a pair of copper wires to the Class 5 switch, and directing the digital traffic though another pair of copper wires to a DSLAM attached to the packet-switched network. 69. The record indicates that incumbents that provide their own xDSL services on the same line that they are providing analog voice service are utilizing the single copper pair in the same manner as if the incumbent's voice service shared the line with a competitive carrier's data service. Incumbent LECs have not refuted that the same architecture that an incumbent uses to provide its own shared-line xDSL services is capable of providing shared line access to requesting carriers with minimal modifications. Specifically, after the xDSL traffic has passed though the splitter and into the output copper wire pair, it may be routed to a competitive carrier's DSLAM collocated in the incumbent's central office. We are persuaded that there is essentially no technical difference between sending xDSL traffic to a competitor's DSLAM and to the incumbent's DSLAM. Moreover, as commenters supporting line sharing emphasize, certain types of xDSL, including ADSL, were specifically developed to utilize this sort of architectural arrangement to share loops with voiceband services without degrading the voice service or causing harm to the network. The only technical limitations regarding the implementation of line sharing appear to be that the requesting carrier has collocated a DSLAM at the incumbent's central office, and that the requesting carrier deploy an xDSL technology that is designed not to interfere with voiceband services. 70. Accordingly, we require incumbent LECs to provide access to the high frequency portion of the loop based on the criteria for presumed acceptability for deployment that we establish below. By requiring conformance with this criteria, we ensure that competitive LECs utilize technology that does not interfere with analog voice frequencies. We believe that implementation of line sharing in compliance with the criteria for presumed acceptability for deployment will speed delivery of competitive services without impeding the development of new technologies. Moreover, spectrum unbundling based on this criteria will permit incumbents to implement line sharing promptly because they will be informed of their obligations and requirements with certainty and precision. A. Operational Issues Associated with the Implementation of Line Sharing 1. Parameters for Line Sharing Deployment a) Background 71. In the FNPRM we requested comment on several issues regarding the implementation of line sharing to help us determine exactly how incumbents might provide access to the high frequency loop spectrum network element. These issues include: whether carriers should be allowed to request only the high frequency portion of the local loop; whether carriers should be allowed to request any unused portion of a line; whether different customers should be allowed on the same physical loop; which carrier should manage the multiplexing equipment; and the effect of digital loop carrier (DLC) facilities on xDSL service. a) Discussion 72. As described in detail below, we require incumbent LECs to provide access to this network element to a single requesting carrier, on loops that carry the incumbent's traditional POTS, to the extent that the xDSL technology deployed by the competitive LEC does not interfere with the analog voiceband transmissions. By imposing these limitations, we do not limit the availability of line sharing to any particular technology, but only seek to preserve the analog voice channel from significant degradation. We note that in adopting unbundling requirements based on a presumption of acceptability for deployment, we do not limit the availability of the high frequency portion of the local loop to competitive carriers providing only data services utilizing ADSL technology. Instead, we require that competitive LECs seeking to line share may deploy only xDSL-based services that conform with our criteria supporting a presumption of acceptability for deployment to ensure that that these services will not interfere with analog voice frequencies. 73. Voice-Compatible Forms of xDSL. We require incumbent LECs to provide unbundled access to the high frequency portion of the loop to any carrier that seeks to deploy any version of xDSL that is presumed to be acceptable for shared-line deployment in accordance with our rules. xDSL technologies that meet this presumption include ADSL, as well as Rate- Adaptive DSL and Multiple Virtual Lines (MVL) transmission systems, all of which reserve the voiceband frequency range for non-DSL traffic. Among these, ADSL is the most widely deployed version of xDSL that is currently presumed acceptable for deployment on a shared line. Because line sharing as contemplated by this Order can occur only on lines that carry traditional analog voiceband service, lines that are not used for these services could not be shared. We conclude, therefore, that incumbent LEC arguments that we should not require unbundling of the high frequency portion of the loop because not all forms of xDSL technology are compatible with a line sharing arrangement are misplaced. Our rules ensure that xDSL technologies deployed in line sharing arrangements will not cause substantial interference to simultaneous voiceband services. 74. Incumbent Remains the Voice Carrier. Incumbents are not required to provide unbundled access to carriers seeking just the data portion of an otherwise unoccupied loop (often referred to as a "dry loop.") As stated previously, line sharing contemplates that the incumbent LEC continues to provide POTS services on the lower frequencies while another carrier provides data services on higher frequencies. The record does not support extending line sharing requirements to loops that do not meet the prerequisite condition that an incumbent LEC be providing voiceband service on that loop for a competitive LEC to obtain access to the high frequency portion. Accordingly, we conclude that incumbent LECs must make available to competitive carriers only the high frequency portion of the loop network element on loops on which the incumbent LEC is also providing analog voice service (often referred to as a "wet loop"). We note that in the event that the customer terminates its incumbent LEC provided voice service, for whatever reason, the competitive data LEC is required to purchase the full stand-alone loop network element if it wishes to continue providing xDSL service. Similarly, incumbent carriers are not required to provide line sharing to requesting carriers that are purchasing a combination of network elements known as the platform. In that circumstance, the incumbent no longer is the voice provider to the customer. 75. GTE requests that we clarify that an incumbent carrier can disconnect a shared line if a customer does not pay its local voice telephone bill. If the incumbent carrier has disconnected the customer's voice service in compliance with applicable federal, state and local law, then there is no longer an incumbent voiceband service with which the competitive LEC can share the loop. The same holds true if the customer voluntarily cancels incumbent LEC provided voiceband services on the shared loop. In those situations, in order to continue to provide data services to that customer, the competitive LEC must purchase the entire unbundled loop and must pay the incumbent LEC the forward looking cost for that unbundled network element. We would find it unacceptable, and potentially discriminatory under section 201 or a violation of section 251 obligations, however, for the incumbent to cause or require any interruption of the competitive LEC's service in order to execute such a loop access status change. 76. Single Requesting Carrier, One Customer Per Loop. We agree with both incumbent and competitive LECs that the unbundling obligations should be defined to permit only a single competitor to share the line with the incumbent. The record indicates significant support for two-carrier line sharing arrangements, with an incumbent LEC providing analog, circuit- switched voice service and a competitive LEC providing data service. It is clear from the record that the complexities involved with implementing line sharing dramatically increase where more than two service providers share a single loop. We believe that serving multiple customers would be very costly, time consuming, and would lead to complex operational difficulties. Moreover, the record does not sufficiently support the establishment of multiple customer line sharing requirements. 77. While we recognize that technology exists that will support more than two services on a single copper loop, we do not believe that requiring LECs to contemplate and accommodate more complex, but unlikely, multi-carrier or multi-service line sharing arrangements will benefit the public interest at this time. Indeed, the record does not support the need for multiple customer or multiple service line sharing. Thus, we have tailored our line sharing rules to avoid needlessly burdening the industry with requirements that far exceed the needs stated by the parties. Our intent in requiring incumbent LECs to provide unbundled access to the high frequency loop spectrum is to facilitate the deployment of advanced services to customers that seek both a data and a voice service on a single line. These customers typically are residential and small business customers. We believe that defining the unbundling obligation as described in this section will further that goal without imposing unreasonably burdensome, unnecessary, or excessive requirements upon incumbent LECs. 78. Control of the Loop and Splitter Functionality. We conclude that, subject to certain obligations, incumbent LECs may maintain control over the loop and splitter equipment and functions. In fact, both the incumbents and the competitive LECs agree that subject to certain obligations, the incumbent LEC may maintain control over the loop and the splitter functionality if desired. Incumbent LECs and competitive LECs both argue reasonably for the right to control the splitter and to choose to isolate the splitter or incorporate it into the DSLAM. Incumbent LECs are concerned that passing incumbent LEC voiceband traffic through competitive LEC facilities could lead to voiceband service degradation. Competitive LECs have similar concerns with regard to xDSL service degradation caused by the incumbent LEC. Competitive LECs are amenable, however, to incumbent LEC ownership and control over the splitter, but they are concerned that the incumbent LEC's ownership and control of the splitter will permit the incumbent LEC to limit the competitive LEC's ability to deploy competitive services. 79. We find that an incumbent LEC seeking to maintain control of the splitter must promptly accommodate, in response to a competitive LEC request to do so, any line sharing technology that meets the deployment criteria established in this proceeding. Specifically, we expect that in response to such a request, the incumbent LEC will not delay its actions to procure the necessary equipment, and will inform the requesting carrier of what action it takes, and when the equipment can be installed. We also expect that it should take no longer to obtain and install such equipment in response to a competitive LEC's request than it would take the incumbent to procure and install the same equipment for itself. Any failure to make this accommodation in a reasonably prompt manner would constitute a violation of the incumbent LEC's section 251 unbundling obligations. 80. As described by NorthPoint, the passive splitter called for in the T1E1.413 ADSL standard directs the voice and data traffic to the appropriate transmission equipment and is available from an array of vendors. These splitters are generally located at or adjacent to the main distribution frame (MDF) at an incumbent's central office. That configuration permits the incumbent to easily control the local loop and the splitter functions and reduces the possibility of signal attenuation. Allowing the incumbents to maintain control over the loop and the splitter addresses concerns that the competitive LEC might be able to use its control over the splitter to degrade the incumbent LEC's voice signal or to disconnect the customer without regard for the customer's voice service. This decision also addresses the incumbent's concern that the competitive LEC would be able to violate the privacy of an end user's voice communications when the end user's loop goes through a competitive LEC DSLAM. 81. If a state commission finds that an incumbent has unreasonably refused to accommodate the competitive LEC's preferred technology or requested equipment upgrades in a prompt fashion, the state commission may authorize the competitive LEC to purchase and collocate its own splitter, whether or not incorporated into the DSLAM. The incumbent LEC would then receive the voiceband signal by connecting to the competitive LEC's collocated splitter. Alternatively, the state commission may authorize the competitive LEC to purchase a splitter that complies with the deployment standards we adopt in this Order, and transfer that splitter to the incumbent. Where the competitive LEC obtains some degree of control over the splitter, the state commission should ensure that the integrity of the incumbent LEC's voice transmission's passing through the competitive LEC's equipment and do not interfere with the performance of the incumbent LEC's central office and network equipment. 82. Line Sharing Does Not Impede Incumbent LECs' Ability to Manage the Loop Plant. We are not persuaded by incumbent LEC claims that they would be unable to manage properly their loop plant if required to provide unbundled access to the high frequency portion of the loop. When an incumbent LEC upgrades its loop plant from copper to fiber, the incumbent LEC rarely removes the existing copper, but instead lays the fiber along the existing copper routes. We believe that this practice allows the incumbent LEC to upgrade its plant by laying fiber, while allowing the competitive LEC to retain access to copper loops, including line-shared loops, they are currently leasing from the incumbents to offer xDSL-based services to end- users. We do not intend, however, to prevent incumbent LECs from constructing new facilities or decommissioning old facilities. We note that the incumbent LEC is not restrained, in the course of normal loop plant maintenance and improvement activities, from migrating customers from copper to fiber loop facilities. Where such activity takes place, however, the competitor may be required to forego access to only the high frequency portion of the loop serving that customer, and may have to obtain access to the entire unbundled copper loop or find another alternative to maintain service. We expect that incumbent and competitive LECs will be able to resolve these issues in the course of section 252 arbitration and negotiation proceedings. We also note that the Commission has previously defined the specific rights and responsibilities of each party in similar situations. Moreover, the retail xDSL service currently being offered by the incumbents themselves requires the same loop plant that CLECs require to offer shared line xDSL. Accordingly, we believe that the spectrum unbundling requirements we establish in this Order will not infringe the incumbents' ability to rearrange or replace their loop plant in an equitable and pro-competitive manner. 1. Loop Conditioning a) Background 83. In the Advanced Services FNPRM, we tentatively concluded that, although there might be circumstances where loop conditioning activities such as the removal of loading coils and repeaters to enable the transmission of high frequency, non-voiceband signals would diminish voice service quality, such situations are isolated and can be remedied. We tentatively concluded, therefore, that loop conditioning should not interfere with the incumbent LEC's general obligation to share the line with requesting carriers. We also tentatively concluded that when an incumbent LEC can demonstrate to the state commission that digital loop conditioning would interfere with the analog voice service of the line, line sharing should not be considered technically feasible on that particular line, and line sharing obligations would not apply. Finally, we tentatively concluded that incumbent LECs would be required to perform other types of loop conditioning activities, such as removing bridge taps and cleaning up splices, that would not interfere with analog voiceband transmissions. 84. In the Local Competition Third Report and Order we clarified that incumbent LECs are required to condition loops to enable requesting carriers to offer advanced services, wherever a competitor requests, even if the incumbent LEC itself is not offering xDSL services to the customer on that loop. We explained that a conditioned loop describes a copper loop from which bridge taps, low-pass filters, range extenders, and similar devices that carriers use to improve voice transmission capability have been removed. We found that because competitors cannot access all of the loop's native "features, functions, and capabilities" unless it has been stripped of all accreted devices, loop conditioning falls within the definition of the loop network element. Moreover, we concluded that although loops of 18,000 feet or shorter normally should not require voice-transmission enhancing devices, these devices are sometimes present on such loops and the incumbent LEC should be able to charge for conditioning such loops. a) Discussion 85. We conclude that, except in specific circumstances, incumbent LECs must condition loops to enable requesting carriers to provide xDSL-based services on the same loops the incumbent is providing analog voice service, regardless of loop length. We emphasize that shared line xDSL service deployed according to national standards will not impair voice services. The record indicates that the presence of loading coils, bridge taps, and other voiceband transmission enhancing equipment on a particular loop generally precludes the deployment of xDSL either on a stand-alone basis or in conjunction with voice service to the customer served by that loop. Commenters attest, however, that it is rare, particularly on loops that extend less than 18,000 feet from the central office, that such equipment is required to enhance voice transmission, or that the removal of such equipment will have an negative effect on voiceband services. In these instances, consistent with our conclusion in the Local Competition Third Report and Order, we require incumbent LECs to provide loops with all their capabilities intact whenever the competitive carrier requests access to the high frequency portion of the loop, even if the incumbent itself is not offering xDSL-based services to the customer on that loop. Specifically, the incumbent LEC is required to remove bridge taps, filters, range extenders, and similar devices where a competitive carrier requests unbundled access to the high frequency portion of the local loop. 86. Until recently, lines over 18,000 feet were not considered amenable to xDSL transmission. Commenters state, however, that these very long length loops are now compatible with certain xDSL transmission technologies, and represent an opportunity for further xDSL product development. Thus, we require incumbent LECs to condition loops of any length for which competing carriers have requested line sharing, unless conditioning of that loop will significantly degrade the incumbent's voice service as described below. We believe that this requirement is technology-neutral and supports the further development and deployment of xDSL-based services. 87. We conclude, however, that if conditioning a particular loop for shared-line xDSL will significantly degrade that customer's analog voice service, incumbent LECs are not required to condition that loop for shared-line xDSL. We recognize that in certain circumstances network architecture may necessitate the use of equipment such as loading coils on a particular line, and that the removal of that equipment would cause degradation of the voiceband already on that line. In such cases, we do not require the incumbent LEC to modify its network architecture in a way that will significantly degrade a customer's existing voiceband service. 88. We will require that the incumbent refusing a competitive carrier's request to condition a loop make an affirmative showing to the relevant state commission that conditioning the specific loop in question will significantly degrade voiceband services. The incumbent LEC must also show that there is no adjacent or alternative loop available that can be conditioned or to which the customer's service can be moved to enable line sharing. We believe an incumbent LEC will rarely, if ever, be able to demonstrate a valid basis for refusing to condition a loop under 18,000 feet. In addition, if an incumbent LEC claims that a loop cannot be conditioned without degrading the voiceband service, the incumbent LEC cannot then or subsequently condition that loop and provide xDSL service itself without first making available to any requesting carrier the high frequency portion of the newly-conditioned loop. We strongly support state commission actions to deter incumbent LECs from misusing these measures for anti-competitive purposes. 89. Finally, consistent with our conclusion in the Local Competition Third Report and Order, we conclude that incumbent LECs should be able to charge for conditioning loops when competitors request the high frequency portion of the loop. The conditioning charges for shared lines, however, should never exceed the charges incumbent LECs are permitted to recover for similar conditioning on stand-alone loops for xDSL services. Accordingly, we conclude that if the incumbent LEC seeks compensation from the requesting carrier for line conditioning activities, or such activity will cause substantial loop provisioning delays, the requesting carrier has the option of refusing, in whole, or in part, to have the line conditioned. A requesting carrier refusing some or all aspects of line conditioning will not, however, lose its right of access to the high frequency portion of the loop. 1. Digital Loop Carrier Systems a) Background 90. In the Advanced Services FNPRM, we noted that in some circumstances advanced services cannot share a line with analog voice service, and sought additional comment to inform us of those situations. Some commenters argue that many rural areas are served by digital loop carrier (DLC) systems, and competitive LECs will not be able to provision xDSL services through DLC systems. 91. In the Local Competition Third Report and Order, we found that lack of access to subloop elements would preclude competitors from offering some broadband services to a significant market segment. Accordingly, we concluded that incumbent LECs must provide unbundled access to subloops, wherever technically feasible. In that order, we defined subloops as portions of the loop that can be accessed at terminals in the incumbent's outside plant. An accessible terminal is a point in the loop where technicians can access the wire or fiber within a cable without removing a splice case to reach the wire or fiber within. 92. In the Local Competition Third Report and Order, we specifically noted that requesting carriers are functionally precluded from deploying xDSL services where incumbent carriers have deployed DLC systems unless the requesting carrier can otherwise obtain access to the customer's copper loop before the traffic is multiplexed at the incumbent's remote terminal. We also observed that competitors seeking to offer services using xDSL technology need to access the copper wire portion of the loop and, moreover, that most currently available xDSL technologies require that the location of the DSLAM be within 18,000 feet of the customer. In both of these situations, a requesting carrier needs access to unbundled subloops to provide service to its customers. a) Discussion 93. We conclude that incumbents must provide unbundled access to the high frequency portion of the loop at the remote terminal as well as the central office. Our subloop unbundling rules and presumptions allow requesting carriers to access copper wire relatively close to the subscriber, which is critical for a competitive carrier to offer services using xDSL technology over the high frequency network element. For the same reasons, we conclude that incumbent LECs are required to unbundle the high frequency portion of the local loop even where the incumbent LEC's voice customer is served by DLC facilities. 94. We note, however, that the functionality required to accomplish line sharing on DLC systems may not be available by the effective date of our spectrum unbundling rules. We, therefore, apply the same rebuttable presumption that we established in the Local Competition Third Report and Order, that for carriers requesting unbundled access to the high frequency portion of the loop, the subloop can be unbundled at any accessible terminal in the outside loop plant. Where the parties are unable to forge an agreement to facilitate line sharing where the customer is served by a loop passing through a DLC, the incumbent carrier bears the burden of demonstrating to the relevant state commission, in the course of a section 252 proceeding, that it is not technically feasible to unbundle the subloop to provide access to the high frequency portion of the loop. 1. Operational Support Systems a) Background 95. In the Advanced Services FNPRM, we asked commenters to provide additional feedback on operational concerns associated with line sharing. In particular, we asked to what extent LEC operations support systems (OSS) need to be modified in order to permit competitors to have access to the high frequency portion of the loop. We also asked who would be responsible for matters such as line testing, maintenance and repair, and how would incumbent and competitive LECs allocate customer service responsibilities. 96. In response, incumbent LECs state that to provide unbundled access to the high frequency portion of the loop, they will have to undertake extensive OSS modifications to provide service ordering, provisioning, and billing functions for the network element. They also state that they will need to undertake significant OSS modifications in order to provide electronic interfaces to requesting carriers that seek access to this network element. The incumbent LECs also state that these OSS changes will be exorbitantly expensive, complicated, and time- consuming. Moreover, incumbent LECs claim that the provision of unbundled access to the high frequency portion of the loop will complicate customer service functions, including line testing, maintenance and repair. 97. Competitive LECs, however, respond that the incumbent LECs can implement quick and relatively inexpensive temporary arrangements and workarounds to permit the provision of unbundled access to the high frequency portion of the loop to requesting carriers within weeks of adoption of an order mandating provision of this unbundled network element. Moreover, the competitive LECs argue that automated OSS changes would not be unreasonably expensive or difficult to implement. Competitive LECs also argue that many of these OSS and customer service modifications are already required to facilitate the incumbents' own xDSL-based services and for the provision of unbundled network elements pursuant to the Local Competition Third Report and Order. a) Discussion 98. We conclude that incumbent LECs have the capability to accommodate the provisioning of the high frequency portion of the loop as a network element. Where incumbent LECs provide shared-loop xDSL services to their voice customers, either through their own subsidiaries or in cooperation with an unaffiliated ISP, the incumbent must resolve many of the same problems that they claim stand in the way of providing competitors with access to the high frequency portion of the loop. We therefore conclude that incumbent LEC arguments that operational issues will take at least 12 months to resolve sufficiently to provide unbundled access to the high frequency portion of the loop are significantly overstated. 99. Current Incumbent LEC OSSs. Incumbent LECs carry out pre-ordering, ordering, service provisioning, billing, and repair and maintenance functions using a set of OSSs that share a common baseline functionality, although each company's legacy systems vary from one another. As described below, these OSSs already support the xDSL-based services currently offered by incumbent LECs, and will be affected by the provision of unbundled access to the high frequency portion of the loop network element. 100. Incumbent LECs use both electronic and manual processes to provide unbundled network elements today, including local loops. These electronic interfaces may include electronic exchange of data (EDI) gateways that incumbents use to receive orders from requesting carriers, and graphical user interfaces (GUIs) for the receipt of orders individually input by requesting carriers. Requesting carriers may also submit orders by fax that the incumbent's personnel manually enter in to the incumbent's OSS. 101. Service Ordering. We conclude that the type of effort required for incumbent LECs to establish appropriate line sharing ordering practices is incremental in nature, and does not require a major development initiative. Incumbent LECs already accommodate orders for the advanced services, such as ADSL, that they deploy on lines shared with their own voice services. There are substantial operational similarities between the line sharing situation involving a competitive and an incumbent LEC, and the deployment of shared line xDSL provided by an incumbent LEC or an ISP. The OSS capabilities required for incumbent LEC provision of shared-line xDSL services are substantially similar to the OSS capabilities required for competitive LEC provision of shared-line xDSL services, and could be easily adapted to support unbundled access to the high frequency portion of the loop network element. 102. We are not persuaded by arguments that a new ordering standard would have to be adopted by the Order and Billing Forum (OBF) before line sharing could be implemented. The record shows that while changes to the existing fields on the UNE order form/electronic order formats may appropriately involve the OBF for coordination and standardization, incumbents already have made interim modifications to accommodate their own ADSL products. Incumbent LECs argue, however, that competitive LECs will not be satisfied with such workarounds, and will require that automated OSS interfaces must become available immediately. We note that the specific temporary arrangements and workarounds we discuss in this section were largely identified and analyzed by a group of competitive LECs. Consequently, we see no reason to assume that these competitive LECs would complain if incumbent LECs quickly implement these workarounds in a manner that affords the competitors nondiscriminatory access to the high frequency portion of the loop on a reasonable and timely basis. Thus, we conclude that the interim arrangements that the incumbents use for themselves can be extended to competitive carriers as well. 103. A key ordering system function is establishing the records necessary for customer service, trouble management, billing, and inventory functions. For the purposes of our analysis, we observe that the incumbent LECs already use two circuit or service numbers to track their own shared-line xDSL services: (1) the existing telephone number to identify the voice service; and (2) a circuit number to identify the xDSL service sharing the line. Based on the record before us, we conclude that incumbent LECs can extend this practice to accommodate two-carrier shared line access to the high frequency portion of the loop network element. Specifically, incumbent LECs can identify a line shared with a competitive LEC by cross- referencing a circuit number with the POTS telephone number. Possible methods for establishing this cross-reference include embedding the telephone number in the incumbent- assigned circuit number or the customer-assigned circuit number, adding it as a cross- reference to the existing account number, making a notation in the remarks field, or by establishing a new field and field identifier (FID). An incumbent LEC could create two internal orders from a competitive LEC's order for access to the high frequency portion of the local loop submitted using the incumbent's UNE ordering process. In that case, one order would be used to establish the requesting carrier's access to the high frequency loop spectrum, and the other would be a record-type order to add line sharing indicators to the customer's analog voice service account and records. This system resembles those used for "from" and "to" orders to accommodate customers that change their address but want to retain the same telephone number, as well as the system that incumbents employ to respond to a customer's change to a competitive local service provider. 104. Provisioning. As previously discussed, we do not in this Order require incumbents to provide access to the high frequency portion of the loop for multiple competitive carriers. Incumbent LECs do not dispute that additional functionality to provision a second service on a line does not require a massive redesign of the incumbent's inventory system. The record shows that incumbents will use much the same inventory functionality to inventory unbundled access to the high frequency portion of the loop whether for the purposes of providing access to that network element to their competitors, or for themselves. Otherwise, incumbents would have to undertake substantial rebuilds to accommodate their own shared-line xDSL service offerings. 105. Incumbent LECs OSSs already perform inventory and assignment of individual cable and pair loops, digital added main lines (DAMLs), integrated services digital network (ISDN), and xDSL lines. These involve inventorying multiple services on a single loop and are substantially similar functions to those necessary for line sharing. We are persuaded by the record that the capabilities already exist in the Loop Facilities and Assignment Control System (LFACS) to inventory and assign two services on one loop, and that with minor modifications, incumbent LECs can easily use existing capabilities to inventory services on a shared line. 106. Competitive LECs with collocation arrangements are assigned terminations on the incumbent LEC's MDF to terminate the tie cables running to splitters or to the DSLAMs within the collocation space. Incumbent LECs inventory and assign MDF locations using an OSS. When a competitive LEC orders a new UNE loop, it specifies the MDF termination on which the incumbent LEC should deliver the UNE loop. Incumbent LECs generally use one of two methods to cable the splitters connected to loops. The first approach is to cable the high frequency band directly to the DSLAM, and the second is to cable it to another MDF location (or to an intermediate distribution frame (IDF) location,) and then on to the DSLAM. 107. The second approach facilitates easy customer moves and changes as well as changes in the customer's service providers and services. In this situation, the splitter has three connections to the MDF one to terminate the loop, a second to terminate the voiceband signal and a third to terminate the high frequency loop spectrum. Incumbent LEC OSSs such as the Computer System for Mainframe Operations (COSMOS) and SWITCH can be used to track these connections. Competitive LECs claim that these OSSs could also be used to further cross-reference competitive LEC-owned DSLAM equipment to splitters. 108. We find that, in light of the apparent availability of OSS modifications that will satisfy incumbent LEC inventory needs, there is no justification to withhold requesting carrier's access to the high frequency portion of the loop while OSS modifications are implemented to allow carriers to order line sharing through electronic interfaces. We expect that incumbent LECs may decide to develop new OSSs to accommodate their inventory needs as their product and service offerings increase, or to seek increased OSS efficiency. We find, however, that further incumbent LEC OSS development is not likely to be solely driven by unbundling requirements. Consequently, we urge the state commissions not to permit incumbent LECs to delay the availability of access to the high frequency portion of the loop while they implement automated OSS solutions, nor will we permit incumbent LECs to attribute an unreasonable portion of their OSS development costs to our spectrum unbundling requirements. We expressly make no judgment, however, that such non-automated measures would constitute nondiscriminatory access to OSS interfaces for the purposes of section 271 of the Act. 109. We expect that incumbent LECs will work with competitive LECs on an ongoing basis to design, implement, and maintain efficient and effective OSS interfaces that will support ongoing line sharing requirements. Specifically, we expect that incumbent LECs will implement ordering and provisioning mechanisms and interfaces that provide competitive LECs with the ability to obtain access to the high frequency portion of the loop in the same ordering and provisioning time intervals that the incumbent provides for its own xDSL-based service. We note that a failure to implement OSS modifications within the time frame we contemplate in this Order could be grounds for finding that a BOC is not providing nondiscriminatory access to unbundled network elements under section 271 of the Act. 110. Billing. We also are not persuaded by the incumbent LECs' arguments that implementation of line sharing would require a major overhaul of their billing systems. We believe, based on the evidence in the record regarding the range of capabilities present in the incumbent LECs' billing systems, there is likely to be little, if any, billing system impact resulting from the provision of unbundled access to the high frequency portion of the loop. Indeed, incumbent LECs have already implemented changes to their billing systems to bill customers for their own xDSL-based services. The incumbent LECs' expanded billing capabilities include the ability to provide billing services for not only their own customers, but also on behalf of other service providers. Thus, we conclude that the billing system modifications necessary to support unbundled access to the high frequency loop spectrum network element are relatively minor compared to the "major overhauls" alluded to by US WEST. 111. Maintenance, Repair, and Testing. We conclude that current industry methods and procedures for customer service, line maintenance, and service quality assurance can largely accommodate the demands of line sharing between competitive LECs and incumbent LECs. Loop plant maintenance is largely a function of adequate testing, repair, and customer service activities. In the following discussion, we examine each of these functions and find that the incumbent's concerns regarding testing, maintenance, and repair are mitigated by the availability of adequate methods and procedures for problem resolution. We also find that, in general, both incumbents and competitors have a significant interest in ensuring that the local loop plant remains fully functional and in good repair. We believe that cooperation and communication among incumbent and competitive LECs are the keys to preserving the vitality of the PSTN and the successful deployment of line sharing. 112. Incumbents contend that testing the metallic loop for one service on a shared line with traditional test systems will cause a temporary disruption and possibly lead to more serious problems with the other services sharing that line. In addition, the potential for service disruption is highest during installation, maintenance and repair activities relating to any service sharing the loop with other services, regardless of whether one or both of the services sharing the loop is provided by the incumbent LEC. Thus, commenters express a legitimate concern with regard to the establishment of equitable and nondiscriminatory testing access rights and responsibilities among service providers sharing a loop that will enable each carrier to perform testing without disturbing the other carrier's service. 113. Loop Testing. Both incumbent and competitive LECs perform tests to support installation, repair, and maintenance processes. Incumbent LECs generally perform automated mechanized loop tests (MLTs) to diagnose loop performance for the lower, voiceband frequencies. Competitive LECs perform similar tests to ascertain the transmission performance of UNE loops when they order a second line to provide xDSL-based services. To perform loop tests, incumbent LECs generally gain access to the line through the voice switch at the central office. Competitive LECs, however, generally access the line at test points near their DSLAMs, which are usually located in the collocation space at the end office. 114. Competitive LECs state that there are two major loop testing issues that arise with shared line access to the unbundled high frequency portion of the loop. First, the customer must be informed that testing on one of their services will impact the other service sharing the customer's line. We are persuaded that either the incumbent or competitive LEC's customer service operations can provide sufficient customer education on this issue. Competitive LECs note that bringing the customer into the coordination process avoids the potential for conflicts and customer confusion. Doing so would require only minor modifications to existing customer care processes and procedures. 115. The second loop testing issue, however, is more complex. Specifically, both the incumbent and competitive LEC must have access to the shared loop facility for testing, maintenance, and repair activities. Assuming that the competitive LEC owns the DSLAM and installs it in its collocation space in the incumbent LEC end office or remote terminal, a splitter is required to isolate and direct the voice service to the incumbent LEC voice switch and the xDSL service to the competitive LEC's DSLAM. This splitter will likely be installed between the MDF and the other central office equipment. In this configuration, the incumbent LEC retains testing access to the outside part of the loop through the voice switch. The competitive LEC, however, can only access the high frequency portion of the loop at its DSLAM. This precludes the competitive LEC from engaging in certain important types of loop testing that require the competitive LEC to access the loop's whole frequency range. The ability to perform this type of loop testing is important for installation, maintenance, and repair activities in both shared and non-shared line situations. 116. Competitive LECs state that they have invested in automated industry-standard testing capabilities to support their xDSL OSSs, and that these testing capabilities are comparable to those used by incumbent LECs offering their own xDSL-based services. Competitive LECs argue that their access to the voiceband frequency must meet three minimum requirements to facilitate their access to the high frequency portion of the loop. First, competitive LECs claim that they require physical access on the loop side of the splitter for comprehensive loop testing. In addition, competitive LECs argue that such access should be of a type that is suitable for integration into their OSS applications. Finally, competitive LECs state that they require testing access at any incumbent LEC end office where competitive LECs collocate and/or access the high frequency portion of the loop. 117. Competitive LECs state that physical testing access will enable competitive LEC OSSs to access the loop for testing purposes as required. Competitive LECs also note that regardless of the ability of competitors to access the loop for testing, the incumbent LEC retains its access via the voice switch or via the testing access point at the splitter. The competitive LECs suggest that, assuming the splitter is controlled by the incumbent LEC and located between the MDF and the other central office equipment, there are several possible ways to provide testing access to the local loop. First, the incumbent LEC could provide physical test access points to the competitive LEC at the splitter through a cross-connection to the competitor's collocation space. Competitive LECs note that this option is efficient for both the competitive and incumbent LEC because each service provider retains direct loop access and uses its own OSS. 118. The competitive LECs also suggest that their OSS could interface directly with an incumbent LEC OSS through a standardized interface designed to provide physical access for testing purposes. Competitive LECs claim that this interface can be created though the creative use of a test access server that could be shared by multiple competitive LECs while providing appropriate security controls. This testing server could be owned, controlled, and maintained by either the incumbent LEC or the competitive LECs. 119. Finally, competitive LECs state that they could submit testing requests to the incumbent LEC for processing by the incumbent LEC. We do not support this practice, as it is less efficient from the perspective of the requesting carrier, and creates an opportunity for discriminatory incumbent LEC activity, such as the imposition of artificial delays and requirements for unnecessary and costly manual intervention by either the competitive LEC or incumbent LEC. 120. Based on the record before us, we agree with the competitive LECs that a relatively low level of incumbent LEC effort is required to ensure that competitive LECs have access to appropriate loop testing access points. Thus, we require that incumbent LECs must provide requesting carriers with access to the loop facility for testing, maintenance, and repair activities. We require that, at a minimum, incumbents must provide requesting carriers with loop access either through a cross-connection at the competitor's collocation space, or through a standardized interface designed for to provide physical access for testing purposes. Such access must be provided in a reasonable and nondiscriminatory manner. An incumbent seeking to utilize an alternative physical access methodology may request approval to do so from the state commission, but must show that the proposed alternative method is reasonable, nondiscriminatory, and will not disadvantage a requesting carrier's ability to perform loop or service testing, maintenance, or repair. We stress that incumbents may not use their control over loop testing access points and mechanisms for anti-competitive or discriminatory purposes, and that we will remain attentive and ready to respond to any reported anti- competitive incidents relating to competitive LEC access to loop testing mechanisms. 121. Customer Service, Troubleshooting, and Repair. The incumbent LECs raise a number of general concerns relating to the customer service, troubleshooting, and repair impact of providing access to the high frequency portion of the loop to competitive LECs. In particular, BellSouth states that it is uncertain how ownership will be established for trouble isolation and maintenance of the individual services sharing a line. Bell Atlantic and SBC indicate that there may be significant operational problems, potentially leading to "finger-pointing" in which each organization asserts that the problem is due to the actions of the other organization." Bell Atlantic also argues that "cross-firm testing" of xDSL and voice services and the possibility of "finger-pointing" between the incumbent LEC and competitive LEC are potential sources of disagreement and customer confusion. SBC indicates that trouble resolution and testing will become more complicated, because incumbent LECs may lack testing equipment or training to test all of the technologies that competitive LECs may deploy. 122. U S WEST states that it would need to redesign its repair and maintenance systems because its current systems do not allow two providers to service a single facility. US WEST also indicates that service providers "would need to develop new processes to avoid the issuance of two repair tickets for a single problem." Although we recognize that the carriers will have to address these service and maintenance issues, we note that incumbent LECs have successfully deployed cooperative arrangements with ISPs, such as America On Line (AOL), that implicate many of the same issues that arise with competitive LEC line sharing arrangements. Bell Atlantic argues, however, that line sharing between and incumbent and competitive LEC is substantially different from the incumbent's retail ADSL services, as well as their unbundled network element-related OSSs. As illustrated in the preceding discussion, we recognize that existing OSSs will have to be modified to support the provision of access to the high frequency portion of the local loop. The record indicates, however, that these modifications will build upon existing incumbent LEC OSSs and practices. As more fully discussed below, the record also indicates that incumbent LECs can implement these modifications within a period of months. 123. Under some incumbent LEC tariffs for bulk xDSL service sold to ISPs, ISPs purchase the incumbent's xDSL. In those arrangements, the ISP, not the incumbent LEC, provides a high- speed Internet service package that includes xDSL service. These arrangements require that the incumbent LEC's OSS be able to recognize and administer the provision of multiple services on a single local loop. Competitive LECs also state that in a typical non-line sharing situation, the competitive LEC or its ISP partner is responsible for customer service when an xDSL customer served by a competitive LEC using a UNE loop from the incumbent LEC experiences a service difficulty. If the competitive LEC or ISP determines that there is a problem on the UNE loop, the competitive LEC opens a trouble ticket with the incumbent LEC and the two (or three in the case of an ISP) entities cooperate to restore the end user's loop and advanced service. 124. We conclude that the same would be true where the incumbent provides the high frequency portion of the loop as an unbundled network element because, just as the ISP is the competitive LEC's customer, the competitive LEC is the incumbent LEC's customer, and the end