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      Before the
             Federal Communications Commission
                   Washington, D.C. 20554
 
                              
 In the Matter of                  )
 Implementation of the            )        CC Docket No. 96-98
 Local Competition Provisions      )
 of the Telecommunications Act of 1996         )
                              
 
                     SUPPLEMENTAL ORDER
   
Adopted:      November 24, 1999                          Released:    November 24, 1999
By the Commission: Commissioner Furchtgott-Roth dissenting and issuing a statement.
                         I.INTRODUCTION
1.  On September 15, 1999, we adopted the Third Report and Order and Fourth Further Notice of Proposed
Rulemaking in this docket responding to the Supreme Court's January 1999 decision that directed us to reevaluate
the unbundling obligations of section 251 of the Telecommunications Act of 1996.  (1996 Act).  We hereby modify
that Order with regard to the use of unbundled network elements to provide exchange access services. 

2.  We conclude that, until resolution of our Fourth FNPRM, which will occur on or before June 30, 2000,
interexchange carriers (IXCs) may not convert special access services to combinations of unbundled loops and
transport network elements, whether or not the IXCs self-provide entrance facilities (or obtain them from third
parties).  This constraint does not apply if an IXC uses combinations of unbundled network elements to provide a
significant amount of local exchange service, in addition to exchange access service, to a particular customer.

                          II.DISCUSSION
3.  In the Third Report and Order and Fourth FNPRM, we concluded that we would address in the Fourth
FNPRM whether there were any legal or policy ramifications of applying our unbundling rules in a way that could
"cause a significant reduction of the incumbent LECs' special access revenues prior to full implementation of access
charge and universal service reform."  We also concluded, in paragraph 486, that any requesting carrier is entitled
to obtain existing combinations of loops and transport between the end user and the incumbent LEC's serving wire
center on an unrestricted basis at unbundled network element prices, and that a carrier that is collocated in a serving
wire center is free to order combinations of loops and dedicated transport to that serving wire center as unbundled
network elements as a substitute for the incumbent LECs' regulated special access services.  

     4.   Since the release of the Third Report and Order and Fourth FNPRM, several
incumbent LECs have claimed that we did not sufficiently preserve the special access issue in the
Fourth FNPRM.  Specifically, they contend that paragraph 486 allows collocated IXCs that self-
provision entrance facilities (or obtain them from third parties) to convert the remaining portions of
their special access circuits to unbundled network elements, even though the IXCs are not using the
facilities to provide local exchange service.  They contend that this would have significant effects in the
competitive local exchange market as had been asserted previously to the Commission by BellSouth. 
We intended to compile a complete record in the Fourth FNPRM prior to determining whether IXCs
may employ unbundled network elements solely to provide exchange access service.  Accordingly, in
order to preserve this issue in the Fourth FNPRM as we intended, we modify our conclusion in
paragraph 486 to now allow incumbent LECs to constrain the use of combinations of unbundled loops
and transport network elements as a substitute for special access service subject to the requirements in
this Order.  We also modify our conclusion in paragraph 489 to the extent that it limited our concerns
to entrance facilities.  We now conclude that, until resolution of our Fourth FNPRM, which will occur
on or before June 30, 2000, IXCs may not convert special access services to combinations of
unbundled loops and transport network elements, whether or not the IXCs self-provide entrance
facilities (or obtain them from third parties).  This will give us sufficient time to issue an order
addressing the Fourth FNPRM.

     5.   This constraint does not apply if an IXC uses combinations of unbundled loop and
transport network elements to provide a significant amount of local exchange service, in addition to
exchange access service, to a particular customer.  It therefore does not affect the ability of
competitive LECs to use combinations of loops and transport (referred to as the enhanced extended
link) to provide local exchange service.  It also does not affect the ability of competitive LECs that are
collocated and have self-provided transport (or obtained it from third parties), but are purchasing
unbundled loops, to provide exchange access service.  As we stated in paragraph 487 of the Third
Report and Order and Fourth FNPRM, such a competitive carrier is entitled to purchase unbundled
loops in order to provide advanced services (e.g., interstate special access xDSL service).  Finally, the
constraint will have no effect on competitive LECs using long distance switches to provide local
exchange service.

     6.   We also expand the scope of the Fourth FNPRM to seek comment on whether there is
any basis in the statute or our rules under which incumbent LECs could decline to provide
combinations of loops and transport network elements at unbundled network element prices.  We also
seek comment on the argument that the "just and reasonable" terms of section 251(c) or section 251(g)
permit the Commission to establish a usage restriction on combinations of unbundled loops and
transport network elements.  Parties should also address whether there is any other statutory basis for
limiting an incumbent LEC's obligation to provide combinations of loops and transport facilities as
unbundled network elements.  As we stated in the Third Report and Order and Fourth FNPRM, in
light of the fact that it is not clear that the 1996 Act permits any restrictions to be placed on the use of
unbundled network elements, we particularly urge parties to consider and address what long term
solutions may be necessary to avoid adverse effects on any special access revenues that support
universal service.
     7.   This temporary constraint on the use of combinations of unbundled loops and transport
network elements to provide exchange access service is consistent with the Commission's finding in the
Local Competition First Report and Order, that we may, where necessary, establish a temporary
transitional mechanism to help complete all of the steps toward the pro-competitive goals of 1996 Act,
including the full implementation of a competitively-neutral system to fund universal service and a
completed transition to cost-based access charges.  We believe that this short-term constraint will
avoid disturbing the status quo while we consider the legal and economic implication of allowing
carriers to substitute combinations of unbundled loops and transport network elements for the
incumbent LECs' special access services.  As we did in the Local Competition First Report and Order,
we emphasize that this constraint will apply only as an interim measure.  

            III.FINAL REGULATORY FLEXIBILITY ANALYSIS
     8.   In the Third Report and Order and Fourth FNPRM, we conducted a Final Regulatory Flexibility
Analysis, as required by section 603 of the Regulatory Flexibility Act, 5 U.S.C.  603.  The changes we adopt in this
Order do not affect that analysis.

                       IV.ORDERING CLAUSES
     9.   Accordingly, IT IS ORDERED that pursuant to authority contained in sections 1, 3, 4,
201-205, 251, 256, 271, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 153, 154, 201-205, 251, 252, 256, 271, 303(r), the Commission amends paragraph 486, 489, and
494-96 in the Third Report and Order and Fourth FNPRM to be consistent with the discussion set out
above.  Thus, the constraint on the use of unbundled network elements as a substitute for special
access service and the scope of the corresponding inquiry in the Fourth FNPRM are not limited to
entrance facilities, but instead include combinations of unbundled loops and transport network
elements.  This constraint does not apply if an IXC uses combinations of unbundled network elements
to provide a significant amount of local exchange service, in addition to exchange access service, to a
particular customer.


                    FEDERAL COMMUNICATIONS COMMISSION


             Magalie Roman Salas
             Secretary