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                                                           Before the
               Federal Communications Commission
                     Washington, D.C. 20554



In the Matter of

Promotion of Competitive Networks in Local
Telecommunications Markets

Wireless Communications Association
International, Inc. Petition for Rulemaking to
Amend Section 1.4000 of the Commission's Rules
to Preempt Restrictions on Subscriber Premises
Reception or Transmission Antennas Designed to
Provide Fixed Wireless Services

Implementation of the Local Competition
Provisions in the Telecommunications Act of 1996

Review of Sections 68.104, and 68.213 of 
the Commission's Rules Concerning Connection 
of Simple Inside Wiring to the Telephone Network

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WT Docket No. 99-217









CC Docket No. 96-98


CC Docket No. 88-57



                                   



FIRST REPORT AND ORDER AND FURTHER NOTICE OF PROPOSED RULEMAKING in
WT Docket No. 99-217,  Fifth REPORT AND ORDER AND MEMORANDUM OPINION AND
ORDER in CC Docket No. 96-98, and fourth report and order and MEMORANDUM
            OPINION AND ORDER in CC Docket No. 88-57

   Adopted:  October 12, 2000           Released: October 25, 2000

Comment Date: December 22, 2000

Reply Comment  Date: January 22, 2001

Comments and reply comments to be filed only in WT Docket No. 99-217

By the Commission: Commissioner Furchtgott-Roth dissenting and issuing a statement. 
                       TABLE OF CONTENTS
                                              Paragraph Numbers

I. INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II.                                                             SUMMARY. . . . . . .3
III.                                                            BACKGROUND . . . . . . .10
IV. REPORT AND ORDER / MEMORANDUM OPINION AND ORDER. . . . . . . . . . .14
 A. State of The Market . . . . . . . . . . . . . . . . . . . . . . . . 14
 B. Exclusive Contracts . . . . . . . . . . . . . . . . . . . . . . . . 25
   1. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
   2. Discussion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
 C. Access to Wiring. . . . . . . . . . . . . . . . . . . . . . . . . . 41
   1. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
   2. Discussion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
   3. Single Definition of Inside Wiring. . . . . . . . . . . . . . . . 60
   4. Safety Concerns Regarding the Placement of the Demarcation Point Away from the Building . . . . .62
   5. Prospective Effect of 1997 Demarcation Point Order. . . . . . . . 66
 D. Access to Conduits and Rights-of-Way. . . . . . . . . . . . . . . . 70
   1. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
   2. Discussion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
 E. Areas Under Tenant Control. . . . . . . . . . . . . . . . . . . . . 94
   1. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
   2. Discussion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
V. FURTHER NOTICE OF PROPOSED RULEMAKING . . . . . . . . . . . . . . . 125
 A. Non-discriminatory Access Requirement . . . . . . . . . . . . . . .125
   1. Update on the State of the Market . . . . . . . . . . . . . . . .128
   2. Legal Issues. . . . . . . . . . . . . . . . . . . . . . . . . . .131
   3. Potential Scope of Application. . . . . . . . . . . . . . . . . .151
   4. Potential Implementation Issues . . . . . . . . . . . . . . . . .156
 B. Exclusive Contracts . . . . . . . . . . . . . . . . . . . . . . . .160
   1. Residential Exclusive Contracts . . . . . . . . . . . . . . . . .161
   2. Exclusive Access Provisions in Existing Contracts . . . . . . . .163
 C. Preferential Marketing Agreements and Other Preferential Arrangements . . . . . . .165
 D. Definition of Right-of-Way in MTEs. . . . . . . . . . . . . . . . .169
 E. Extension of Cable Inside Wiring Rules. . . . . . . . . . . . . . .171
VI. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
VII.                                                            Procedural matters . . . . .177
VIII.                                                           Ordering clauses . . . . . .186

APPENDIX A: List of Commenters
APPENDIX B: Final Rules
APPENDIX C:    Final Regulatory Flexibility Analysis
APPENDIX D: Initial Regulatory Flexibility Analysis



     I.   INTRODUCTION
1.     In this item, we further our ongoing efforts under the Telecommunications Act of 1996 to
foster competition in local communications markets by implementing measures to ensure that competing
telecommunications providers are able to provide services to customers in multiple tenant environments
(MTEs).  In the Competitive Networks NPRM, we requested comment on the state of access to MTEs and
on a variety of potential measures to improve such access.  Based on the extensive record compiled in
response to that Notice, we adopt several measures to remove obstacles to competitive access in this
important portion of the telecommunications market.  Specifically, we: (1) prohibit carriers from entering
into contracts that restrict or effectively restrict owners and managers of commercial MTEs from permitting
access by competing carriers; (2) clarify our rules governing control of in-building wiring and facilitate
exercise of building owner options regarding that wiring; (3) conclude that the access mandated by Section
224 of the Communications Act (the "Pole Attachments Act") includes access to conduits or rights-of-way
that are owned or controlled by a utility within MTEs; and (4) conclude that parties with a direct or indirect
ownership or leasehold interest in property, including tenants in MTEs, should have the ability to place
antennas one meter or less in diameter used to receive or transmit any fixed wireless service in areas within
their exclusive use or control, and prohibit most restrictions on their ability to do so. 
2.     We also note that, while these measures will help significantly to advance competition and
customer choice, they may well be insufficient in themselves to secure a full measure of choice for
businesses and individuals located in MTEs.  We recognize that the real estate industry has taken some
positive steps to facilitate tenant choice of telecommunications providers by working towards the
development of best practices and model agreements.  We will closely monitor these industry efforts and,
if such efforts ultimately do not resolve our concerns regarding the ability of premises owners to
unreasonably deny competing telecommunications service providers access to customers in MTEs, we are
prepared to consider taking additional action, including adopting rules to assure that MTE owners offer
competing telecommunications service providers access to their premises.  In order to be prepared to take
further action, if necessary, we request comment in a Further Notice of Proposed Rulemaking on the current
state of the evolving market for the provision of telecommunications services in MTEs.  We also note that
a strong case can be made that we have authority to impose obligations on carriers to ensure
nondiscriminatory access to MTEs.  We seek comment on this legal argument, whether it would be prudent
to exercise such authority, the potential scope of such requirements, and how such requirements could be
implemented, if adopted.  In addition, we seek further comment on several other potential Commission
actions that may be necessary in the event that competition in the MTE market does not develop
sufficiently.
     III. SUMMARY
4.     In the 1996 Act, Congress sought "to provide for a pro-competitive, de-regulatory national
policy framework designed to accelerate rapidly private sector deployment of advanced telecommunications
and information technologies and services to all Americans by opening all telecommunications markets to
competition."  One of the most important goals of the 1996 Act was to bring competition to the
traditionally monopolistic market for local telecommunications services.  In order to bring competition to
this market, Congress contemplated competitive entry by three means   use of a competitor's own facilities,
use of unbundled elements of the incumbent local exchange carrier's (LEC's) network, and resale of the
incumbent's service   and it included provisions to prevent incumbent LECs from blocking competitive
entry by any of these means.  Congress also extended the scope of the Pole Attachments Act to grant access
to telecommunications service providers in addition to cable service providers.
5.     We remain committed to removing obstacles to competitive entry into local telecommunications
markets by any of the avenues contemplated in the 1996 Act.  Nonetheless, we have recognized that the
greatest long-term benefits to consumers will arise out of competition by entities using their own facilities. 
Because facilities-based competitors are less dependent than other new entrants on the incumbents'
networks, they have the greatest ability and incentive to offer innovative technologies and service options
to consumers.  Moreover, facilities-based competition offers the best promise of ultimately creating a
comprehensive system of competitive networks, in which today's incumbent LECs no longer will exert
bottleneck control over essential inputs, but will compete on a more equal basis with their rivals.
6.     One particular benefit that we hope will arise from the growth of facilities-based competition
is increased availability of advanced services.  In the 1996 Act, Congress directed the Commission to
encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to
all Americans.  We have recently found that advanced telecommunications capability is being deployed in
a reasonable and timely fashion, although certain groups of consumers may be particularly vulnerable to
untimely access.  We believe that competitive providers will continue to play a vital role in the growth and
ubiquitous availability of advanced services, both by innovating themselves and by placing competitive
pressure on the incumbents to offer more advanced services at attractive prices.  At the same time, we
expect that the ability to offer advanced capabilities that benefit consumers will be an important factor in
many competitors' marketplace success.
7.     In this item, we take targeted actions to promote the continued deployment of competitive and
advanced telecommunications services and reduce the substantial barriers that remain to deployment of
these services in MTEs, and we request comment on potential additional actions.  The actions we take here
are as follows:  
  ·  First, we forbid telecommunications carriers from entering into contracts to serve commercial properties
  that restrict or effectively restrict the property owner's ability to permit entry by other carriers.  

  ·  Second, in order to reduce competitive carriers' dependence on the incumbent LECs to gain access to
  on-premises wiring, while at the same time recognizing the varied needs of carriers and building
  owners, we establish procedures to facilitate moving the demarcation point to the minimum point of
  entry (MPOE) at the building owner's request, and we require incumbent LECs to timely disclose the
  location of existing demarcation points where they are not located at the MPOE.  

  ·  Third, we determine that under Section 224 of the Communications Act, utilities, including LECs, must
  afford telecommunications carriers and cable service providers reasonable and nondiscriminatory access
  to conduits and rights-of-way located in customer buildings and campuses, to the extent such conduits
  and rights-of-way are owned or controlled by the utility.  

  ·  Fourth, we extend to antennas that receive and transmit telecommunications and other fixed wireless
  signals our existing prohibition of restrictions that impair the installation, maintenance or use of certain
  video antennas on property within the exclusive use or control of the antenna user, where the user has
  a direct or indirect ownership or leasehold interest in the property. 
     
5.     The specific actions that we take in today's Report and Order will reduce the likelihood that
incumbent LECs can obstruct their competitors' access to MTEs, as well as address particular potentially
anticompetitive actions by premises owners and other third parties.  We remain concerned, though, that,
based on the record, unreasonable discrimination among competing telecommunications service providers
by some premises owners remains an obstacle to competition and consumer choice.
6.     We recognize the recent efforts of the real estate industry to develop model contracts and best
practices aimed at improving MTE owners' processing of tenant requests for service from alternative
telecommunications carriers or carrier requests for access to MTEs to serve tenants.  In particular, a
coalition of 11 trade associations representing over 1 million property owners and operators has committed
to a best practices implementation plan including:  (1) adopting a firm policy not to enter into any exclusive
contracts for building access in the future; (2) responding within 30 days to written tenant requests for a
particular telecommunications provider, and accommodating such requests in good faith, where appropriate
space is available and the provider intends to execute an access agreement that is substantially in the form
of a model contract to be developed by the industry; (3) informing tenants of existing alternatives in
buildings that are already served by multiple competitive providers, and encouraging a dialogue with tenants
regarding the advantages of additional providers; (4) incorporating these processing guidelines in new
leases and notices to existing leaseholders; (5) committing to a clearer and more predictable process for
responding to requests from carriers to access the MTE to serve customers, including provision of clear
guidance regarding the MTE owner's policies within 30 days,  where the carrier agrees that its access to the
MTE is conditioned on deploying equipment and/or providing service to tenants by a date certain; (6)
establishing an independent clearinghouse to which interested parties could submit allegations of behavior
that is inconsistent with either the model contracts or "best practices" developed as part of this initiative;
and (7) supporting a periodic, quantitative study of the market for building access, to be conducted under
the auspices of the Commission.  At least 12 building owners who collectively own or operate over 250
million square feet of office space have committed to these best practices. 
7.     We are encouraged by those efforts and will closely monitor their progress.  At the same time,
we are aware of concerns that these voluntary commitments may fall short of protecting tenants' ability to
choose among competing carriers.  Therefore, if such efforts ultimately do not resolve our concerns
regarding the ability of premises owners to discriminate unreasonably among competing
telecommunications service providers, we are prepared to consider taking additional action.  Accordingly,
in a Further Notice of Proposed Rulemaking, we seek comment in several areas: 
  ·  First, we seek to refresh the record on the status of the market for the provision of telecommunications
  services in MTEs in order to evaluate the necessity of a nondiscriminatory access requirement.  

  ·  Second, we seek additional comment on the legal argument that we have authority to impose
  requirements on carriers in order to ensure nondiscriminatory MTE access, and on whether we should
  exercise such authority.

  ·  Third, we seek comment on the circumstances under which the benefits would exceed the costs of such 
  requirements, and on how any nondiscriminatory access requirement could be implemented.  

  ·  Fourth, we ask whether today's prohibition on exclusive access contracts in commercial MTEs should
  be extended to residential settings, either in addition to or in lieu of a nondiscriminatory access
  requirement applicable to these premises, and whether we should prohibit carriers from enforcing
  exclusive access provisions in existing contracts in either commercial or residential MTEs. 

  ·  Fifth, we seek comment on whether we should proscribe carriers from entering into contracts that grant
  them preferences other than exclusive access, such as exclusive marketing or landlord bonuses to
  tenants that use their services, in some or all situations.  

  ·  Sixth, we seek additional comment on the definition of "rights-of-way" in MTEs to which a utility must
  allow access under Section 224.

  ·  Finally, we seek additional comment on whether we should extend our cable inside wiring rules to
  facilitate the use of home run wiring by telecommunications service providers where an incumbent
  cable provider no longer has a legal right to maintain its home run wiring in the building. 
     VIII.     BACKGROUND
9.     The Commission has taken many actions both before and since the 1996 Act to remove
obstacles to facilities-based competition in local telecommunications markets.  For example, among other
things, we have implemented Section 251 of the Communications Act, forborne from enforcing statutory
provisions and regulations that could inhibit the ability of new entrants to compete, made additional
spectrum available to competitors using wireless technology, and increased the flexibility of use of
previously allocated spectrum.  These efforts have continued during the past year. 
10.    In the Competitive Networks NPRM, we discussed our thoughts regarding the development of
facilities-based competition generally, and in a companion Notice of Inquiry we sought comment generally
regarding factors that may be impeding the growth of competitive networks and what actions we should take
to ameliorate such impediments.  The principal focus of the NPRM, however, was on promoting
competitive access to MTEs, such as apartment buildings (rental, condominium, or co-op), office buildings,
office parks, shopping centers, and manufactured housing communities.  This important segment of the
market poses special challenges to facilities-based entry.  In order to offer service in an MTE, a facilities-
based competitor must either gain access to existing on-premises wiring or obtain access to conduit and
other suitable areas in order to install its own equipment.  In addition, providers using wireless technology
must obtain access to rooftops or other suitable locations to place their antennas.  Access to these facilities
and areas is typically controlled by the building owner, the incumbent LEC, or both.  Thus, unlike in the
case of a stand-alone residence or commercial enterprise, a competitive facilities-based carrier cannot
supply service simply by dealing with the end user.
11.    Attention to the unique issues and challenges affecting access to MTEs is important because a
substantial proportion of both residential and business customers nationwide are located in such
environments.  Thus, an absence of widespread competition in MTEs would insulate incumbent LECs from
competitive pressures and deny facilities-based competitive carriers the ability to offer their services in a
sizable portion of local markets, thereby jeopardizing full achievement of the benefits of competition. 
Moreover, such a situation would directly undermine the express Congressional goal of bringing
competition and advanced services to "all Americans."  Finally, because MTEs frequently offer a relatively
large revenue opportunity in a limited space, they can be the most efficient environments for many
competitive LECs initially to serve.  Thus, inability to compete in those environments in the short term may
jeopardize the business plans and viability of some potentially powerful competitors that could in the long
term offer ubiquitous competition throughout an incumbent LEC's service area.  Indeed, even if competitive
access is available in some MTEs, competitive carriers may be unable to succeed economically, and thus
offer competitive choices to any customers, without broad access to MTE markets.  For these reasons, we
requested comment in the Competitive Networks NPRM on the practical concerns involved in serving
MTEs, on the state of the market, and on several potential actions that we could take to promote competitive
access.
12.    The Competitive Networks NPRM generated extensive interest among incumbent and
competitive LECs, building owners and managers, electric and gas utilities, cable service providers, local
governments, and others.  We received 438 formal comments and 252 reply comments.  In addition, the
Commission's Local and State Government Advisory Committee (LSGAC) filed two recommendations.
We have also received numerous ex parte filings from parties representing a variety of interests, including
several members of Congress.  Although we do not list these ex parte filings individually, we have
incorporated them in the record and we have fully considered them in reaching the conclusions set forth
herein.
     XIII.     REPORT AND ORDER / MEMORANDUM OPINION AND ORDER
          A.   State of The Market 
14.    Based on the record compiled in response to the Competitive Networks NPRM, we conclude that
meaningful progress has been made in the competitive development of the market for facilities-based
telecommunications services in MTEs, but some obstacles to full competitive choice remain.   We are
concerned that, at least in certain cases, both building owners and incumbent LECs retain the ability and
incentive to discriminate among and impose unreasonable terms on new entrants.  As a result, end users
have likely been forced to pay unnecessarily high rates for local telecommunications services, and have
been denied the benefits of advanced and innovative service options.   At the same time, we are mindful that
there has been progress in the market, and we are hopeful that this trend will continue to yield more
competitive options for increasing numbers of consumers.  Indeed, some recent developments indicate that
this may be the case.
15.    MTEs constitute a substantial portion of both residential and commercial units in the United
States.  An MTE is any contiguous premises under common ownership or control that contains two or more
distinct units occupied by different tenants.  Thus, MTEs include, for example, apartment buildings (rental,
condominium, or co-op), office buildings, office parks, shopping centers, and manufactured housing
communities.  There are over 750,000 office buildings and over one million residential multiple dwelling
units in this nation.  As of 1990, approximately 28 percent of all housing units nationwide were located in
multiple dwelling units, and that percentage is likely growing. 
16.    There is evidence in the record that both wireless and wireline competitive LECs have made
progress in obtaining access to MTEs, especially in commercial markets.  For example, WinStar currently
provides broadband communications services to over 15,000 small and medium-sized business customers
in 31 domestic markets.  Virtually all of these customers are located in MTEs.  Competitive LECs continue
to contract for access to an increasingly large number of commercial buildings.  Indeed, there is evidence
that the availability of alternative providers for local telecommunications services is often a selling point in
leasing negotiations between building owners and prospective tenants and, thus, building owners may have
incentives to enter into agreements with competitive LECs for building access.  Moreover, in response to
the issues raised and developed in this proceeding, some of the leading companies in the real estate industry
have recently made a commitment to the Commission to undertake to develop and promote the use of
sample contracts for building access, as well as "best practices" to facilitate negotiations for building
access.  These best practices will include a firm policy not to enter into exclusive contracts for building
access; procedures and expedited time frames for processing tenant requests for service from a particular
telecommunications provider, where appropriate space is available and the provider intends to substantially
accept a model access agreement; a clearer and more predictable process for responding to requests for
access generated by carriers; establishment of an independent clearinghouse for complaints by tenants, real
estate companies, and service providers; and support for periodic studies of the market under the auspices
of the Commission.   This initiative represents a positive step in the development of the market for building
access.     
17.    Notwithstanding this progress, however, there is also meaningful evidence that competitive
LECs have in many instances encountered unreasonable demands and significant delay in their efforts to
obtain access to buildings.  Competitive LECs complain that they are being impeded by incumbent LECs
and building owners. In some instances, competitive LECs state that they have been denied access to
buildings completely, or have been charged exorbitant rates for access or been subjected to unreasonable
conditions.  And, in others, contract negotiations have reportedly spanned upwards of eighteen months   a
timeframe that is particularly problematic for a service provider in a competitive market.  
18.    Although the record does not contain statistical evidence regarding the prevalence of such
activities, competitive LECs cite to specific incidents of unreasonably restrictive behavior on the part of
incumbent LECs and building owners that, they assert, are hurting competition and consumers.  These
include the MTE in New York City that has been through three different owners since 1998, all of whom
have denied access to a competitive LEC, despite the fact that tenants in the MTE have sent letters to the
owners requesting access for the competitive LEC.  Another incident involves the manager of a large office
building in Florida who has demanded a rooftop access fee of $1,000 per month and a fee of $100 per
month for each in-building hook-up from a competitive LEC. The competitive LEC estimates that this fee
structure would cost it about $300,000 per year to service this one building.  Yet another incident involves
a competitive LEC that has been negotiating for over 18 months with several Boston, Massachusetts MTE
owners who claim that they are still examining the telecommunications issues, while their tenants remain
without choice of telecommunications service providers. 
19.    The record further indicates that incumbent LECs are using their control over on-premises
wiring to frustrate competitive access to multitenant buildings.  Competitive LECs report that they have
encountered difficulties with incumbents when attempting to arrange for interconnection or lease unbundled
network elements.  For example, competitive LECs report that incumbents may fail to timely provide non-
proprietary information in their possession, require the presence of their own technicians to supervise
competitive LEC wiring, and take unreasonable amounts of time in scheduling such visits.  In addition,
competitive LECs contend that incumbent LECs often require network configurations which may be
disadvantageous for competitors.
20.    Building owners argue, however, that competitive LECs have yet to provide service in many of
the buildings to which they have obtained rights of access.  For example, according to one press account,
WinStar has wired 4,000 of the approximately 8,000 buildings for which it has obtained access, while
Teligent has wired 3,000 of the approximately 7,500 buildings for which it has obtained access.  Building
owners argue that these numbers suggest that competitive LECs are not even able to serve the buildings they
have rights to access now, and thus are not constrained by any alleged lack of nondiscriminatory access to
all buildings.  
21.    Economic theory supports the idea that building owners may, at least under some
circumstances, be able to exert market power over telecommunications access.  There is no question that
building owners control access to any individual building.  Whether that control translates into the ability
or incentive to unreasonably restrict access to competitive LECs depends on the circumstances in particular
real estate markets, as well as the time frame one is considering.  For example, over the long term, tenants
may have the ability to neutralize building owners' control by choosing not to occupy buildings that do not
offer attractive telecommunications service options.  The extent to which tenants may have effective choice
in the near term depends on several factors, including the availability of alternative spaces, the typical
length of leases, the costs of relocation, and the relative importance of telecommunications among the
factors a tenant considers when choosing a space.  The extent of tenant power may vary from market to
market, including between residential and commercial tenants as well as in different geographic areas and
market cycles.
22.    A noteworthy development is the emergence of a new type of telecommunications service
provider.  These service providers, often referred to as "building LECs" or "B-LECs," exclusively serve
MTEs.  In many instances, these companies own telecommunications facilities only within the buildings
they serve, and must interconnect with other carriers to transmit signals outside these buildings.  Many of
these ventures have been created by, or with the active participation of, the real estate industry.  Also, some
of the companies partner with major real estate companies in order to serve their buildings.  One such
company, Broadband Office, Inc., has reportedly partnered with 50 major real estate owners across the
country.
23.    We are encouraged by the progress we have seen in the development of the competitive market
for facilities-based telecommunications services.  Competitive LECs have made gains in the overall number
of buildings to which they have access.  In addition, we believe that the recent effort by representatives of
the real estate industry to begin to develop and promote the use of both model contracts and best practices
is a positive step.  At the same time, however, we are concerned that the overall pace of the development of
the market is sluggish.  Based on information in the record, there are over 1.75 million MTEs and, more
than four years after the passage of the 1996 Act, facilities-based competitive LECs have access to only a
small percentage of these locations.  As a result, all too often consumers are left without any choices with
regard to the provision of local telecommunications service.  Indeed, the record demonstrates that there are
at least some circumstances in which building owners have both the ability and incentive to extract
excessive profits from the provision of telecommunications services by unreasonably restricting competitive
LECs' access to their buildings.  While building owners have introduced evidence that tenant mobility
constrains their exercise of market power, and that the maximum amount of revenue a building owner could
obtain from telecommunications is small compared to the revenues that would be put at risk if tenants were
denied the services they want, competitive LECs have provided countervailing evidence suggesting that the
costs of relocation and the length of leases often prevent tenants from exerting their will.  As a result, we
find that the evidence supports the conclusion that, at least in some instances, building owners exercise
market power over telecommunications access.          
24.    In addition to the market power exerted by building owners, we also find that incumbent LECs
possess market power to the extent their facilities are important to the provision of local
telecommunications services in MTEs.  Although competitive LECs are rapidly building customer base and
gaining market share, they still account for less than six percent of local market revenues.  Even within
their relatively small share of the local market, the revenues of competitive LECs come primarily from
special access and local private line services rather than from switched service to end users.  Thus, because
incumbent LECs still serve the vast majority of customers, they continue to control most facilities useful to
the provision of telecommunications service to MTEs that are not controlled by the MTE owners.  In the
absence of effective regulation, they therefore have the ability and incentive to deny reasonable access to
these facilities to competing carriers. 
          A.   Exclusive Contracts
               1.   Background
25.    In the Competitive Networks NPRM, we requested comment on whether we should forbid
telecommunications service providers, under some or all circumstances, from entering into exclusive
contracts with building owners.  Further, we sought comment on whether we have the authority to forbid
common carriers from entering into exclusive contracts with building owners or managers under Section
201 of the Communications Act, which prohibits unjust and unreasonable practices.  In addition, we sought
comment on the appropriate scope of any rule against exclusive contracts, and how such a rule should be
implemented.  We asked commenters to address whether a ban on exclusive contracts would be an effective
means of securing nondiscriminatory access, and whether such a rule should apply to all
telecommunications carriers and contracts or only in some situations, such as unreasonably long contracts
or contracts involving carriers with market power.  Finally, we requested comment on the legal and policy
issues and practical implications of either abrogating existing exclusive contracts or allowing them to
remain in force, including any constitutional issues.  We noted that the Nebraska Public Service
Commission has already prohibited exclusive contracts and marketing agreements between
telecommunications companies and property owners, except for contracts and agreements involving
condominiums, cooperatives, and homeowners' associations.
26.    By and large, most commenters on this issue, including both incumbent LECs and competitive
LECs, support a ban on exclusive access contracts.  Commenters argue that exclusive access contracts
remove choice from the consumer and eventually adversely affect service quality, rates, and innovation
since an exclusive carrier lacks the threat of competition within the MTE, thereby removing the incentive
to provide quality service.  AT&T asserts that the Commission should prohibit incumbent LECs from
entering into or enforcing exclusive service agreements with building owners because such agreements
allow the incumbent LECs to "lock up" multiple tenant buildings before competition has had an opportunity
to develop.  A few parties, however, argue that exclusive contracts are necessary under some circumstances
in order for competitive carriers to achieve a sufficient return on their investment in serving a building.  If
exclusive contracts are not permitted, those parties argue, competitive providers simply will not take the risk
of entering many buildings, and tenants of those buildings will experience none of the benefits of
competition at all.  In a recent ex parte filing, Real Access Alliance distinguished between residential and
commercial markets, arguing that exclusive contracts should be forbidden in commercial buildings but
permitted in the residential context.
               1.   Discussion
27.    Based on our review of the record, we will prohibit carriers, in commercial settings, from
entering into contracts that effectively restrict premises owners or their agents from permitting access to
other telecommunications service providers.  The use of exclusive contracts in commercial settings poses
a risk of limiting the choices of tenants in MTEs in purchasing telecommunications services, and of
increasing the prices paid by tenants for telecommunications services.  In addition, the record provides no
evidence that in commercial settings the ability to enter into exclusive contracts would have efficiency
enhancing or pro-competitive effects.  Because the record is inconclusive about the likely competitive
effects of exclusive contracts for the provision of telecommunications services in residential MTEs,
however, we are seeking further information in the Further Notice of Proposed Rulemaking below. 
Moreover, we seek comment in the Further Notice of Proposed Rulemaking on whether we should prohibit
carriers from enforcing exclusive access provisions in existing contracts in either commercial or residential
MTEs.
28.    An exclusive contract between a building owner and a telecommunications service provider can
be viewed as a type of vertical restraint, or restraint affecting firms in two different markets.  The economic
analysis of such vertical controls including, in the extreme, mergers of upstream and downstream
firms is complex. In general, such arrangements can be either beneficial or harmful to the public interest,
depending on the precise environment in which they occur.  Whether a particular restraint in a specific
situation increases or decreases consumer welfare is often a widely debated subject among economic
scholars.  One finding of the economic literature, however, is that vertically related firms may enter into
long term or exclusive contracts that inefficiently deter or foreclose entry to a market and thus harm
consumers.  We believe that exclusive contracts between building owners and telecommunications
providers fit this model.  Building owners and service providers may both find it advantageous to enter into
such arrangements, yet those arrangements may nonetheless be harmful to MTE tenants.  
29.    For incumbent LECs, an exclusive contract may essentially constitute a device to preserve
existing market power.  First, an exclusive contract erects a barrier preventing other telecommunications
firms from offering service to tenants in the building(s) covered by the contract.  Second, where new
entrants face fixed costs or otherwise have costs characterized by increasing returns to scale, the existence
of incumbent LEC exclusive contracts covering some buildings actually would make it more difficult for the
entrants to serve other buildings economically.  Thus, exclusive contracts between incumbent LECs and
building owners may impede the development of competition in the market for local telecommunications
service.   
30.    Although competitive LECs currently hold only a relatively small share of the local
telecommunications market as compared to incumbent LECs, we believe that it is necessary to prohibit both
competitive and incumbent telecommunications service providers from entering into exclusive access
contracts in commercial settings, in order to ensure competitive neutrality in the market. Competitive
providers are growing in this market, and new entrants are actively seeking to win customers, especially
customers in commercial office buildings, that are now served by the incumbent LEC.  In this environment,
applying an exclusive contract prohibition only to the incumbent LEC could distort competitive outcomes
and ill serve end user interests.  Moreover, in the case of competitive LECs, an exclusive contract may
essentially constitute a device to create market power.  That is, such a contract could entrench a competitive
LEC as the sole provider in a building or as one of two providers, along with the incumbent LEC and
foreclose any further competition.  We note that competitive LECs support a ban on exclusive access
contracts for all telecommunications providers, as discussed below. 
31.    An exclusive contract may benefit a building owner when it possesses some market power over
tenants, such as where tenants are already committed to long-term leases and moving costs are prohibitive. 
Where that is the case, building owners may have the ability and incentive to engage in behavior that does
not maximize tenant welfare, including the possible use of exclusive contracts.  The interests of tenants
would not be accounted for in the arrangement between the building owner and the telecommunications
provider.  We find the assumption that building owners may possess such market power reasonable, at least
as a short run matter.  Although a tenant has the apparent option to express dissatisfaction with the building
owner's choice of local telecommunications service provider by moving to a new building, this choice, as
a practical matter, is often not available.  The long duration of commercial leases, spanning from five to
fifteen years, and typically significant relocation costs may preclude or limit the feasibility of relocation (or
the threat of relocation) as a remedy.  In addition, zoning laws, environmental regulations, and similar
constraints can impede the construction of new office space, resulting in persistent shortages in some local
markets and conferring market power on existing owners.
32.    We recognize that economic literature shows there are also circumstances in which exclusive
contracts may be socially efficient and beneficial.  For example, with an exclusive contract, a buyer may be
able to obtain advantageous sales arrangements from sellers of goods or services, the benefit of which is
then passed on to consumers.  In addition, where new, sophisticated services become available, as in
telecommunications today, an exclusive contract may be needed in order to give the service provider the
incentive to spend adequate resources educating and informing potential customers.  We emphasize, though,
that no party in this proceeding has argued that these potential benefits are present in the provision of
telecommunications service in commercial MTEs.  Indeed, the record lacks any evidence of benefits to
competition or consumer welfare from the use of exclusive contracts in commercial settings, and
commenters that would be subject to the prohibition on such contracts support it.  Unlike in the residential
context, parties do not allege that exclusive contracts are necessary to give competitive providers incentives
to provide options to tenants in commercial MTEs.  For example, Real Access Alliance has argued that in
the commercial context, a typical building generates enough revenue to support multiple providers.  Given
the apparent lack of benefits in this context, we find that we should not allow exclusive contracts to restrict
competitive access and consumer choice.  Further, under these circumstances, we see no value in
distinguishing among exclusive access arrangements based on the length of the contract or the market
position of the carrier.
33.    In residential markets, by contrast, we do not have enough information in this record to
determine whether we should forbid exclusive contracts under some or all circumstances.  Some parties
argue that in the residential context, potential revenue streams from any one building are typically not
enough to attract competitive entry without exclusive contracts.  These parties also argue that forbidding
exclusive contracts would undermine our cable inside wiring rules by giving former cable providers rights
to remain in the building.  Other parties argue that we should forbid exclusive contracts without
distinction.  The record as a whole, however, lacks specific relevant information regarding residential
MTEs.  We therefore are requesting further comment on whether to forbid or limit residential exclusive
contracts, as well as on certain other specific issues relating to practices akin to exclusive contracts, in a
Further Notice of Proposed Rulemaking.
34.    In sum, the record before us indicates that exclusive contracts for telecommunications services
in commercial settings hold the potential for limiting tenants' choices, without any countervailing benefits. 
As noted earlier, an exclusive contract has the immediate and direct effect of limiting telecommunications
choices to tenants in an affected building.  Only by incurring the time, resources, and expense of actually
relocating to another building (possibly even breaking a long-term lease) can a tenant obtain the access to
choices we believe was contemplated by the 1996 Telecommunications Act.  We note, however, that we
view the need for a prohibition of exclusive contracts as primarily a temporary one designed to address a
transitional problem.  Two aspects of the current situation should change over time.  First, competition in
the provision of local telephony services will continue to grow, and once competition is well established in
commercial markets, it is unlikely that contracts with building owners that are harmful to tenants would be
sustainable.  Second, over time the market power that building owners may take advantage of today will
diminish, as tenants' existing lease arrangements expire and they are increasingly able to take advantage of
opportunities to relocate to other existing or new office space offering preferable telecommunications
services.
35.    We conclude that we have authority to prohibit telecommunications carriers from entering into
exclusive contracts with commercial building owners or their agents for the provision of service that
necessarily and inseparably includes interstate exchange access service.  We agree with AT&T that
exclusive contracts perpetuate the very "barriers to facilities-based competition" that the 1996 Act was
designed to eliminate.  Similarly, WinStar argues that exclusive access contracts completely contradict the
competitive mandate of the 1996 Act and, therefore, should be banned.  WinStar in particular contends that
the Commission has jurisdiction to adopt rules prohibiting the incumbent LECs from entering into such
arrangements since an exclusive access arrangement would render the Commission's decision to require
incumbent LECs to provide access to in-building wiring as an unbundled network element meaningless.
Given that, in today's marketplace, exclusive contracts for telecommunications service in commercial
settings impede the pro-competitive purposes of the 1996 Act and appear to confer no substantial
countervailing public benefits, we find that a carrier's agreement to such a contract is an unreasonable
practice.  Therefore, these contracts implicate our authority under Section 201(b) of the Act to prohibit
unreasonable practices.
36.    We note that existing exclusive contracts, in addition to new exclusive contracts, may be a
barrier preventing customers from obtaining the benefits of the more competitive access environment
envisioned in the 1996 Act, and that the Commission has previously exercised its authority to modify
provisions of private contracts when necessary to serve the public interest.  We recognize, though, that the
modification of existing exclusive contracts by the Commission would have a significant effect on the
investment interests of those building owners and carriers that have entered into such contracts.  Thus, we
are inclined to proceed cautiously in this area, and seek further comment in the Further Notice of Proposed
Rulemaking on whether we should prohibit carriers from enforcing exclusive access provisions in existing
contracts in either commercial or residential MTEs. 
37.    We emphasize that the prohibition on future exclusive contracts that we adopt today applies to
all common carrier contracts in commercial settings that effectively restrict a building owner or its agent
from providing access to any other telecommunications service provider.  Thus, by "exclusive contract" we
do not mean only a contract that gives the contracting provider the sole right to serve a building.  Rather, we
also proscribe, for instance, a contract with a competitive LEC that could permit access to that party and the
incumbent, but deny access to any other competitor.  Similarly, we forbid any contract that would limit
access to providers using a particular technology.  In addition, we emphasize that contracts between
building owners and local carriers that do not explicitly deny access to competing carriers, but nonetheless
establish such onerous prerequisites to the approval of access that they effectively deny access, are also
prohibited.  Finally, we note that contracts may be oral in nature.  For the reasons discussed above, we find
that all these types of contracts in the commercial context only hold the potential to restrict customer choice,
and not to promote choice and competition.  Thus, all fall within the rule we adopt today.  Parties that allege
that a carrier has entered into a contract in violation of the prohibition we adopt today may file a complaint
with the Commission under Section 208 of the Act.
38.    We recognize that some premises are used for both commercial and residential purposes.  First,
we define "commercial" for purposes of this rule to encompass all non-residential uses, including, for
example, government and non-profit offices.  Second, we address instances where a single premises
includes both commercial and residential uses.  In these cases, a building owner may choose to offer
separate access agreements to the residential and commercial portions of the premises, in which case a
carrier may enter into an exclusive contract to serve the residential area but not the commercial area. 
Where, however, a single access agreement covers the entire premises, we find it most consistent with the
purposes of our rule to determine its status as residential or commercial by predominant use.  Thus, for
example, an apartment building that includes retail or professional establishments on the ground floor would
be considered residential, whereas an office building that includes one or a few residential users would be
considered commercial.  We believe that in most instances the predominantly residential or commercial
character of a property will be clear on the facts.  To the extent there is a question whether a particular
property is predominantly residential or commercial in use, we will decide such disputes on a case-by-case
basis.
39.    We believe that today's action will have little effect, if any, on existing state statutes and
regulations governing exclusive telecommunications contracts.  First, to the extent any state law prohibits
exclusive contracts more broadly than our rule, that prohibition would not conflict with our rule and would
remain enforceable.  Thus, for example, states may continue to forbid exclusive contracts in residential as
well as commercial settings. Second, based on the record, it appears that states which have enacted
exclusive contract regulations either have been more rigorous than our rules or have paralleled the
principles of our regulation in important respects.  Thus, while state regulation that conflicted with our
rules on exclusive contracts would potentially be subject to preemption, we do not believe as a practical
matter this situation will arise very often.  However, to the extent any state's law is alleged to directly
conflict with our rules, we will consider the alleged conflict if necessary on a case-by-case basis.
40.    Also, we note that our rule is not intended to prevent a premises owner from entering into an
exclusive contract when it is acting as a purchaser of telecommunications service on behalf of its affiliated
entities, such as subsidiary units, or employees.  For example, we recognize that certain state governments
develop and administer exclusive contracts for the public agencies or offices under their jurisdiction. 
Similarly, a college or university may enter into an exclusive contract on behalf of its affiliated schools,
departments, faculty, and staff.  Given that the purpose of our prohibition on exclusive contracts is to
ensure consumer choice, it would not be consistent with this purpose to restrict exclusive arrangements with
property owners that are affiliated in this manner with their tenant consumers, and we therefore do not reach
such arrangements.
          A.   Access to Wiring
41.    In this section, we take the following actions regarding the demarcation point that marks the
division between telecommunications network wiring under LEC control and wiring under building
owner/end user control: (1) clarify that the Commission's demarcation point rules, including the revisions
adopted in this section, govern the control of inside wiring and related facilities for purposes of competitive
access, as well as the control of these facilities for purposes of installation and maintenance; (2)  establish
procedures to facilitate the relocation of the demarcation point to the MPOE at the building owner's request
in MTEs; (3) require LECs to disclose the location of the demarcation point where it is not located at the
MPOE; and (4) resolve pending issues in the Commission's demarcation point proceeding in CC Docket 88-
57.  We believe that these actions will facilitate access to telecommunications inside wiring by competitive
providers of local telecommunications services.  In addition, we decline to require a uniform relocation of
the demarcation point to the MPOE for the reasons discussed below.
               1.   Background
42.    In the Competitive Networks NPRM, we requested comment on how our rules governing the
location of the demarcation point between facilities controlled by the local telephone carrier and the
property owner in multiple unit premises impact competitive provider access and whether modification of
those rules is appropriate to promote competitive access.   
43.    At the time the current telecommunications inside wiring rules were established, there existed
essentially no competition in the market for the provision of local telephone services.  In the time since the
enactment of the Telecommunications Act of 1996, many competitive LECs have begun providing services
that were once the exclusive domain of the incumbents.  There is evidence, however, that continued
incumbent control over much of the wiring in some MTEs has hindered the development of facilities-based
competitive LECs as viable competitors by unnecessarily requiring them to deal with their competitors in
order to serve these locations.  On the other hand, other parties argue that building owner control over
inside wiring obstructs the growth of competitors that use unbundled local loops, because they would often
not otherwise need to deal with the building owner.   In addition, some argue that the Commission's rules
create confusion regarding the location of the demarcation point and have permitted demarcation points to
be located at inaccessible places.  
44.    The Commission adopted its demarcation point rules in 1984, in order to foster competition in
the market for installation and maintenance of telecommunications inside wiring   the wiring that connects
customer premises equipment (CPE) to the public switched telephone network (PSTN) and to other CPE. 
The new rules established a "demarcation point" that marks the end of wiring under control of the LEC and
the beginning of wiring under the control of the property owner or subscriber.  Thus, the new rules
permitted telecommunications subscribers and premises owners to assume or assign responsibility for
installation and maintenance of inside wiring, which previously had been managed solely by the LECs
under tariff. 
45.    In 1990, the Commission revised the demarcation point definition to increase the amount of
wiring that may come under the control of the property owner or subscriber.  At the same time, in the case
of MTEs, the Commission sought to make the definition flexible enough to accommodate existing
buildings.  Therefore, in multi-tenant buildings existing as of August 13, 1990, the demarcation point is
determined in accordance with the carrier's reasonable and nondiscriminatory practices.  For new
installations, or major renovations, subsequent to August 13, 1990, the carrier may establish a practice of
placing the demarcation point at the MPOE.  Where the carrier chooses not to do so, the premises owner
may determine the location or locations of the demarcation point.  
46.    In 1997, the Commission again revisited the issue of the demarcation point on reconsideration
of the 1990 Demarcation Point Order and Further NPRM.  The Commission clarified that the relocation
of the demarcation point to the MPOE cannot be undertaken unilaterally by the incumbent LEC without the
property owner's consent, except in the case of major modifications, renovations, or rearrangements.  The
Commission further stated that, for the purposes of Section 68.3, a request for relocation by the property
owner would be considered a major modification or rearrangement of the wiring.  The 1997 Demarcation
Point Order also included a Further Notice of Proposed Rulemaking that requested comment on, among
other issues, proposed modifications to the demarcation point rule.  Two petitions for clarification and reconsideration were
filed in response to issues discussed on reconsideration in the 1997 Demarcation Point Order.   In January, 2000, the
Commission released an order that addressed issues regarding the enhanced wire quality standards raised in
petitions relating to the 1997 Demarcation Point Order.  However, the order deferred consideration of the
remaining demarcation point issues raised in the two petitions for clarification and reconsideration to the
Competitive Networks proceeding.
47.    As noted above, the current inside wiring rules do not specifically contemplate the new and
complex issues involved with competition in the market for local telecommunications services.  To this end,
in the context of promoting competition for the provision of telecommunications service in MTEs, the
Competitive Networks NPRM requested comment on how the Commission's existing rules governing the
location of the demarcation point impact competitive provider access to inside wiring in MTEs.  In
particular, the Competitive Networks NPRM asked commenters to consider whether the Commission should
adopt a uniform demarcation point for purposes of competitive access, either at the MPOE or at some other
point, for all or some class of multiple-unit premises owners.  In addition, the Competitive Networks NPRM
asked commenters to consider whether the person who controls wire and related facilities for purposes of
installation and maintenance must necessarily be the same person who exercises control for purposes of
competitive access, and, if not, whether we should apply different standards for each of these purposes.
48.    The Competitive Networks NPRM also sought comment on the potential treatment of inside
wiring owned or controlled by an incumbent LEC as an unbundled network element under Section 251(c)(3)
of the Communications Act.  In November, 1999, the Commission issued the UNE Remand Order, which
established as an unbundled network element the "inside wire" sub-loop.  That order defined the loop
element as terminating at the demarcation point and required incumbents to make available on an unbundled
basis any portion of the local loop as a subloop element, including that portion between the property line
and the demarcation point.  The UNE Remand Order further required incumbent LECs to allow
interconnection at any accessible terminal, and to establish a single point of interconnection (SPOI) upon a
request from a competitive provider where such a point does not already exist.  
               1.   Discussion
                    a.   Application of Demarcation Point Rules to the Provision of
                    Competitive Telecommunications Service 
49.    As discussed above, the Commission's Part 68 demarcation point rules were designed to enable
the creation of a competitive market in the installation and maintenance of inside wiring, and did not
contemplate the use of that wiring to provide competitive local telecommunications service.  In light of the
developing competition spawned by the 1996 Act, and the subsequent need for competitive providers to
gain access to inside wiring, we will apply our demarcation point rules to facilitate access to inside wiring
for the purpose of providing competitive local telecommunications service.  Thus, we clarify that the
Commission's demarcation point rules, including the revisions adopted below, govern the control of inside
wiring and related facilities for purposes of competitive access, as well as the control of these facilities for
purposes of installation and maintenance. In the sections below, we adopt several revisions to our
demarcation point rules that we believe will foster competition in the local telecommunications market in
MTEs, while maintaining the competitive framework for the installation and maintenance of inside wiring. 
                    a.   Location of the Demarcation Point
50.    A number of commenters contend that uniformly establishing the demarcation point at the
minimum point of entry would promote facilities-based competitive access to MTEs.  As discussed above,
there is evidence in the record that incumbent LECs in many instances are using their control over on-
premises wiring to obstruct or delay competitive access.  Placing the demarcation point at the MPOE would
eliminate the potential for such abuses by permitting competitive carriers to obtain access to inside wire by
dealing solely with the premises owner.  While our unbundling rules adopted in the UNE Remand Order
provide requesting carriers with a right of non-discriminatory access to inside wire owned or controlled by
incumbent LECs, requesting carriers claim they continue to face difficulty gaining access to MTEs due to
incumbent obstruction. Moving the demarcation point, they state, would allow all facilities-based carriers
to interconnect with the inside wiring, which would be controlled by the premises owner, at the same point
and on the same terms. 
51.    The record indicates, however, that establishing the demarcation point at the MPOE would
disadvantage those competitive LECs that rely on leasing unbundled loops, including most DSL providers,
by limiting the availability of the inside wire as part of the loop element.  Currently, where the demarcation
point is at or near the customer's unit, competitive LECs may obtain access to the incumbent LEC's existing
wiring inside the building as part of the unbundled loop (or as a separate subloop element).  Relocation of
the demarcation point to the MPOE, however, would result in a decrease in the amount of wiring within the
building that is available to competitive LECs as part of the loop, which by definition ends at the
demarcation point.  Thus, competitive LECs that rely on unbundled loops would have to negotiate with
both the incumbent LEC and the building owner for each building they seek to serve, thus increasing their
costs significantly.  Those commenters also raise the possibility that certain building owners would refuse
to allow access at all or impose terms which would make the provision of service infeasible.  Moreover,
commenters allege, their problems are exacerbated by the practice of some incumbent LECs of leaving
wires unconnected at the demarcation point, when it is located at the MPOE. This practice not only requires
competitive LECs to incur the expense of dispatching their own technicians to the building, but draws the
attention of the premises owner to the possibility of extracting concessions from carriers for access to the
wiring. 
52.    Further, several commenters argue that uniformly moving the demarcation point would give rise
to legal and practical difficulties, especially in existing buildings.  These arguments are not without merit. 
It is indisputable that the incumbent LECs have made considerable investments over the years in network
facilities, and while much of that investment has likely been depreciated or recouped in the rate base, the
facilities remain of some value to the incumbents.  We agree with GTE that requiring a uniform relocation
in existing buildings would be an enormous undertaking.  
53.    In light of these concerns, we decline to mandate a uniform demarcation point at the MPOE. 
The record shows that although moving the demarcation point to the MPOE would reduce costs and
facilitate deployment for competitive LECs that rely on their own facilities to reach MTEs, it would
increase costs and hinder deployment for carriers that rely on unbundled local loops.  In the absence of
convincing evidence that the benefits to one group of competitors would significantly outweigh the harms
to the other, we find the best course is to continue the leave the choice in the first instance to the building
owner. 
54.    At the same time, we take several actions to clarify the building owner's options and facilitate
its exercise of its options for the benefit of competition.  First, we clarify that in all multiunit premises, the
incumbent carrier must move the demarcation point to the MPOE upon the premises owner's request. 
Section 68.3(b)(2) specifies that in multiunit premises in which inside wiring is installed or subject to a
major modification after August 13, 1990, if the carrier does not elect to place the demarcation point at the
MPOE, the premises owner shall determine the number and location of the demarcation point or points
(e.g., a single point at the MPOE).  In the 1997 Demarcation Point Order, the Commission found that a
multiunit premises owner's request to move the demarcation point to the MPOE constitutes a major
modification for the purposes of Section 68.3(b)(2).  Thus, even in multiunit premises in which the original
wiring was installed prior to August 13, 1990, the premises owner may require the carrier to move the
demarcation point to the MPOE.  We disagree with BellSouth's assertion in its petition for clarification and
reconsideration of the 1997 Demarcation Point that the premises owner should be required to negotiate
changes in the demarcation point location with the carrier serving the building.  We believe that it would
impede the development of facilities-based competition if a carrier could refuse a premises owner's request
to move the demarcation point to the property line in order to prevent the connection of inside wiring to a
competitive carrier.   Thus, we affirm that under Section 68.3 of the Commission's rules, a carrier must
move the demarcation point to the MPOE upon the request of a multiunit premises owner, and we deny
BellSouth's petition.
55.    Second, although we have previously required incumbent LECs to move the demarcation point
to the MPOE at the premises owner's request, we have left the terms of relocation and the procedures for
negotiating those terms up to the parties involved.  The comments of building owners are generally
favorable to these rules giving the owner the right to request a that the demarcation point be placed at the
MPOE.  However, the record indicates that the lack of any guidelines for such terms may provide a
disincentive for the parties to negotiate effectively.  We hold that in order to further competition, a request
by a property owner to relocate the demarcation point to the MPOE must be dealt with in a reasonably
timely and fair manner, so as not to unduly delay or hinder competitive LEC access. We therefore direct
incumbent LECs to conclude negotiations with requesting building owners in good faith and within 45 days
of the initial request.  Building owners may file complaints with the Commission for resolution of
allegations of bad faith bargaining by LECs.  As each situation will vary greatly depending on such
characteristics as the age and complexity of the inside wiring, and any previous agreements and practices,
we find that this approach will facilitate competition, while protecting the valid property interests of the
parties.  These rules will apply as well to competitive LECs where they have installed or have had control
of the inside wiring.  
56.    The record further indicates that uncertainty as to the actual location of the demarcation point
leads to confusion on the part of both building owners and competitive LECs.  This confusion can lead to
additional expense and delay in the provision of service.  Competitive LECs need this information in order
to know with which party to negotiate interconnection to the inside wiring.  The record contains instances
where neither or both the incumbent LEC and building owner claimed ownership of the inside wire, causing
delay in the ability of the competitive LEC to commence service to its customers.  While our current rules
require that incumbent LECs must make the location of the demarcation point available to building owners
upon request by the owner, we are concerned that the information may not be provided in as prompt a
manner as it reasonably should be. The incumbent LECs are generally in the best position to know the
location of the demarcation point, and we believe that they should not be permitted to use their control over
such non-proprietary information in order to frustrate competition. Because excessive delay may impose
unnecessary costs and impede competition, we hold that if an incumbent LEC fails to produce this
information within ten business days of the request, the premises owner may presume the demarcation point
to be located at the MPOE.  The availability of this information will facilitate fair negotiations, and may
even negate the need for any negotiations where, for example, the building owner was unaware that the
demarcation point is already at the MPOE.  We further require that where LECs do not establish a practice
of placing the demarcation point at the MPOE, they fully inform building owners, at the time of installation,
of their options regarding placement.
57.    Finally, we note that where the building owner chooses to locate the demarcation point at the
MPOE, responsibility for installation and maintenance may be contracted out to the incumbent LEC, a
competitive LEC or other third party, but control, including determining terms of access, would lie with the
building owner.  We require that where such duties are contracted to a carrier that is also providing service
to that building, the carrier must deal with other LECs on nondiscriminatory terms.  Similarly, we expect
that those building owners who choose to take control of the inside wiring will exercise that control in a
nondiscriminatory way, consistent with the goals of the Telecommunications Act and the public interest. 

58.    We anticipate that the measures described above will substantially reduce the potential for
incumbent LECs to obstruct competitive access to MTEs.  These changes will facilitate building owners'
exercise of their option to relocate the demarcation point in existing buildings, and prevent incumbent LECs
from abusing their control over information regarding the location of the demarcation point.  Moreover, we
emphasize that to the extent incumbent LECs continue to exercise control over on-premises wiring, they
must afford access to that wiring as a UNE at forward-looking prices.  In light of all these safeguards, we
believe it is not necessary or prudent at this time to mandate a uniform move of the demarcation point to the
MPOE.  Moreover, we believe that it is unnecessary at this time to provide further guidance on legal or
technical feasibility issues related to subloop unbundling. 
                    a.   Remaining Issues in CC Docket No. 88-57
59.    As discussed above, several parties filed petitions for reconsideration of the 1997 Demarcation
Point Order.  Those petitions that did not relate to the demarcation point and control over access were
resolved earlier this year.  However, we determined at that time to defer resolution of those petitions
related to the demarcation point, as well as certain issues on which we sought further comment in the 1997
Demarcation Point Order pending our action in this proceeding.
               1.   Single Definition of Inside Wiring
60.    In the 1990 Demarcation Point Order and Further NPRM, the Commission stated that the
demarcation point definition applied to both simple and complex wiring installations.  In response, several
petitions were filed asserting that the Commission did not comply with Section 5 of the Administrative
Procedures Act (APA) because it provided insufficient notice indicating that a change in complex wiring
rules was being considered.  In the 1997 Demarcation Point Order, the Commission found that its revision
of the demarcation point definition was proper under the APA because it was a "logical outgrowth" of the
proceeding.  Noting petitioners' concerns about the Commission's decision to apply the revised demarcation
point definition to complex wiring, however, the Commission inquired further into this issue in the 1997
Demarcation Point Order.  Specifically, the Commission requested comment on its proposition that the
single demarcation point definition, as revised, avoids the confusion that could result from separate
demarcation point definitions for simple and complex wiring, encourages placement of the demarcation
point at the MPOE for new multiunit installations, and "foster[s] competition in the inside wiring
installation and maintenance markets."
61.    We agree with commenters that support a single definition of the demarcation point, as it
applies to both simple and complex wiring.  We developed and have maintained a single demarcation point
definition for both simple and complex inside wiring installations because it is simple, and consistent, and
promotes consumer control over inside wiring by restricting the extent of network wiring on the customer's
premises, yet is flexible enough to respond to the demands of complex, multiunit inside wiring facilities
design.  We agree with commenters that changing the definition at this time would needlessly risk
disruption and confusion, and is not supported by the record.  Consequently, we affirm the decision in the
1997 Demarcation Point Order maintaining the same demarcation point definition for both simple and
complex wiring.
               1.   Safety Concerns Regarding the Placement of the Demarcation Point Away
               from the Building
62.    In the 1997 Demarcation Point Order, the Commission declined to modify the demarcation
point definition to prohibit placement of the demarcation point away from the building.  Some petitioners
in that proceeding had expressed concern that locating the demarcation point a substantial distance from the
building in which telephone wire is located could raise safety concerns.  Noting that the National Electrical
Code (NEC) requires the placement of surge protection at or near the building, these petitioners concluded
that if a network protector is placed by the carrier at a demarcation point near the property line, and that
demarcation point is a significant distance from the building, a second network protector should be installed
where the wire enters the building.  The petitioners further opined that improper "coordination" between
these two network protectors could pose a danger to telephone company personnel, customers, or private
property.  Finally, the petitioners requested that the Commission modify its rules to prohibit location of the
demarcation point away from a building, or clarify that the NEC precludes such placement.
63.    In the 1997 Demarcation Point Order, the Commission responded to the petitioners by noting
that building owners are generally responsible for safety standards and similar concerns relating to their
property and equipment and that the record did not bear evidence of specific difficulties or problems
relating to improper protector "coordination."  Nonetheless, the Commission requested additional comment
on whether it should continue to allow the demarcation point and network protector to be located away from
the building, at the property line.  The Commission also requested that commenters discuss, in the light of
actual experiences, whether the presence and coordination of the second protector differs from other safety
matters for which property owners are normally responsible.  Finally, the Commission solicited comments
on the need to require carriers to inform building owners of the need for a second protector and protector
coordination for demarcation points and network protectors that are located at the property line.
64.    All commenters on this issue in CC Docket 88-57 agree that the current demarcation point
definition is reasonable and should not be modified to prohibit location of the demarcation point at the
MPOE.  Commenters specifically mention that the current demarcation point definition is logical, is
practical, affords customers and telephone companies needed flexibility, avoids needless disruption of
current practices, and supports facilities-based competition.  While acknowledging the possibility of safety
concerns, commenters agree that there is no record of "significant safety problems" and advise that it would
be "unnecessary and inappropriate" to obligate carriers to notify customers of the possible need for network
protector coordination.  Commenters also agree that, where the demarcation point and the protector are
located away from the building, building owners have the responsibility to ensure that the building is
protected, just as building owners generally bear a variety of obligations and responsibilities regarding
safety standards and protection of their property.
65.    We find that permitting carriers to locate the demarcation point at or near the property line
promotes a competitive telecommunications marketplace.  We believe it would impede the development of
facilities-based competition if a carrier could refuse a premises owner's request to move the demarcation
point to the property line in order to prevent the connection of inside wiring to a competitive carrier. We
further note the absence of reports that property owners are experiencing problems, or evidence that
problems are likely to arise in relation to locating the demarcation point at the property line.  Thus, we see
no justification for imposing a requirement compelling carriers to inform property owners of the potential
for problems, and we refrain from doing so.  
               1.   Prospective Effect of 1997 Demarcation Point Order
66.    The Commission's rules state that the demarcation point for multiunit structures is to be
determined "in accordance with the local carrier's reasonable and non-discriminatory standard operating
practices."  In the 1997 Demarcation Point Order the Commission clarified that the standard operating
practices to which Section 68.3(b)(1) refers are those practices in effect on August 13, 1990.  Thus the rule
does not authorize changing the demarcation point for an existing building to the minimum point of entry,
except pursuant to Section 68.3(b)(2), i.e., if the building owner makes major additions, modifications, or
rearrangements in existing wiring.  Bell Atlantic/NYNEX requests that the Commission give its clarification
in the 1997 Demarcation Point Order only prospective effect so that buildings in which the demarcation
point were improperly moved after Section 68.3(b)(1) was adopted, but before the rules were clarified in the
1997 Demarcation Point Order, would not be affected.  Alternatively, Bell Atlantic/NYNEX asks the
Commission to reconsider this portion of the 1997 Demarcation Point Order to give the proposed
interpretation only prospective effect. 
67.    In the 1990 Demarcation Point Order and Further NPRM  the Commission adopted rules to
ensure that the demarcation point would not be located a significant distance from where wiring enters the
customer's premises.  In the 1997 Demarcation Point Order, the Commission clarified that it did not intend
in the 1990 Demarcation Point Order and Further NPRM to permit carriers automatically to relocate
demarcation points in multiunit buildings.  According to Bell Atlantic, some carriers interpreted the rules
promulgated in the 1990 Demarcation Point Order and Further NPRM to permit relocation of the
demarcation point to the minimum point of entry, so long as that relocation was approved by the applicable
state commission.  Accordingly, Bell Atlantic filed tariffs with state commissions, and in five jurisdictions,
the state public utility commissions permitted Bell Atlantic to locate the demarcation point for all multiunit
buildings at the MPOE.  
68.    Although Bell Atlantic does not challenge the demarcation point location rules as clarified by
the Commission in the 1997 Demarcation Point Order, it pleads that it was not unreasonable for it and other
carriers to have adopted a different interpretation in 1990.  Bell Atlantic claims that it would be impossible
now, seven years after the fact, for it to "unscramble the egg" and attempt to restore the demarcation points
to the original 1990 locations in multiunit buildings in the five affected jurisdictions.  Bell Atlantic also
reports that the wiring in question has been fully amortized, control and maintenance of the wiring has been
turned over to the building owners, and that those owners have likely modified, rearranged, or added to it. 
Bell Atlantic claims to have no way of knowing whether any such rearrangements or modifications were
made, or which were "major," so as to take the building out of the pre-1990 category.  Bell Atlantic states
that it would be unreasonable to hold it responsible for maintaining wiring that building owners have
controlled and maintained, properly or not, for several years.  Furthermore, Bell Atlantic argues that moving
demarcation points to the MPOE conforms to Commission policy.  Finally, Bell Atlantic argues that it
should not be penalized for actions taken in good faith and consistent with the Commission's substantive
policy, even if those actions are inconsistent with the rule as clarified seven years after it was promulgated.
69.    We grant Bell Atlantic's request, and clarify that the statement in paragraph 26 of the 1997
Demarcation Point Order was intended to have only prospective effect, and does not require carriers to
reestablish demarcation points moved under Section 68.3(b)(1) before clarification in the 1997 Demarcation
Point Order.  Although our policy supports deference to building owners' choice of location for demarcation
points, we recognize the difficulty of determining which demarcation point locations were improperly
moved, and note the state public utilities commission approval of the policies under which the demarcation
points were moved, indicating that the public interest had been adequately considered before the relocation
activity took place.  Thus, we find that the public interest will be better served by clarifying that our
statement in paragraph 26 of the 1997 Demarcation Point Order, regarding moving the demarcation point
to the MPOE, was intended to have only prospective effect.  Reversing the relocations and moving the
demarcation point away from the MPOE appears unjustified, would contradict the Commission's policy of
supporting location of the demarcation at or near the MPOE, and would be difficult to implement.  Finally,
there is no indication that granting Bell Atlantic's request will undermine the Commission's support for a
competitive telecommunications market and facilities-based competition. 
          A.   Access to Conduits and Rights-of-Way
               1.   Background
70.    Section 224 of the Communications Act provides that "[a] utility shall provide a cable
television system or any telecommunications carrier with nondiscriminatory access to any pole, duct,
conduit, or right-of-way owned or controlled by it."  Congress enacted the original version of Section 224
in 1978 to ensure that utilities' control over poles and rights-of-way did not create a bottleneck that would
stifle the growth of cable television systems that use poles and rights-of-way.  Congress sought to prohibit
utilities from engaging in "unfair pole attachments practices . . . and to minimize the effect of unjust or
unreasonable pole attachments practices on the wider development of cable television service to the
public."  In 1978, the Commission implemented the original Section 224 by issuing rules governing pole
attachments issues and establishing a basic formula for cable pole attachments rates.  These rules have been
reconsidered, amended and clarified by subsequent Commission orders.  
71.    The 1996 Act amended Section 224 in important respects.  While previously the protections of
Section 224 had applied only to cable operators, the 1996 Act extended those protections to
telecommunications carriers as well.  Further, the 1996 Act gave cable operators and telecommunications
carriers a mandatory right of access to utility poles, in addition to maintaining a scheme to assure that the
rates, terms and conditions governing such attachments are just and reasonable.  Thus, in passing the 1996
Act, Congress intended to ensure that utilities' control over poles, ducts, conduits, and rights-of-way did not
create a bottleneck for the delivery of telecommunications services. 
72.    As amended by the 1996 Act, Section 224 defines a utility as one "who is a local exchange
carrier or an electric, gas, water, steam, or other public utility and who owns or controls poles, ducts,
conduits, or rights-of-way used, in whole or in part, for wire communications."  Section 224, however,
specifically excludes incumbent LECs from the definition of telecommunications carriers with rights as pole
attachers.  Because, for purposes of Section 224, an incumbent LEC is a utility but is not a
telecommunications carrier, an incumbent LEC must grant other telecommunications carriers and cable
operators access to its poles, ducts, conduits, and rights-of-way, even though the incumbent LEC has no
rights under Section 224 with respect to the facilities of other utilities.  This is consistent with Congress'
intent that Section 224 promote competition by ensuring the availability of access to new
telecommunications entrants. 
73.    Under the pole attachments provisions of the 1996 Act, we have been able to act effectively to
promote the development of competition in local telecommunications markets.  In the Local Competition
First Report and Order, we established a program for nondiscriminatory access to utilities' poles, ducts,
conduits and rights-of-way, consistent with our obligation to institute a fair, efficient and expeditious
regulatory regime for determining just and reasonable attachments rates, terms and conditions with a
minimum of administrative costs.  We further held that the scope of a utility's ownership or control of an
easement or right-of-way is a matter of state law, and determined that the access obligations of Section
224(f) apply when, as a matter of state law, the utility owns or controls the right-of-way to the extent
necessary to permit such access.  In the Local Competition Pole Attachments Reconsideration Order, we
reiterated that the principle of nondiscrimination established by Section 224(f)(1) requires a utility to take
all reasonable steps to expand capacity to accommodate requests for attachments just as it would expand
capacity to meet its own needs.  We concluded, however, that a utility is not required to exercise its powers
of eminent domain, if any, on behalf of third parties in order to expand its existing rights-of-way.
74.    In the Local Competition First Report and Order, we also held that Section 224 does not
mandate that a utility make space available on the roof of its corporate offices for the installation of a
telecommunications carrier's transmission tower, although access of this nature might be mandated pursuant
to a request for interconnection or for access to unbundled network elements under Section 251(c)(6). 
WinStar petitioned for clarification or reconsideration of this holding, requesting a ruling that a LEC must
allow telecommunications carriers access pursuant to Section 224 to rooftop facilities and related riser
conduits that the LEC owns or controls.  
75.    Based on the record compiled in response to the WinStar Petition, we tentatively concluded in
the Competitive Networks NPRM that Section 224 includes a right of access to conduits, ducts, and rights-
of-way in MTEs.  We therefore proposed in the NPRM that, under Section 224, utilities must permit access
to rooftops, conduits, and similar rights-of-way that they "own or control" in MTEs, and we requested
comment on issues relating to the implementation of this requirement, including the circumstances under
which utility ownership or control might be found to exist. At the same time, we tentatively reaffirmed our
conclusion that Section 224 does not confer a general right of access to utility property, but we tentatively
concluded that Section 224 does confer a right of access where a utility uses property that it owns in the
manner of a right-of-way as part of its distribution network.   
               1.   Discussion
76.    Based on the record before us and our analysis of the statute, we conclude that the Section
224(f)(1) right of access to poles, ducts, conduits, and rights-of-way that a utility owns or controls is not
limited by location or by how the utility's ownership or control was granted.  Thus, to the extent a utility
owns or controls poles, ducts, conduits, or rights-of-way within an MTE, the utility may not exercise its
control in a manner inconsistent with Section 224 to impede competitive access.  At the same time, we note
that Section 224 applies only to utilities, and was not intended to override whatever authority or control an
MTE owner might otherwise retain under the terms of its agreements and state law.  We interpret the term
"rights-of-way" in the context of buildings to include, at a minimum, defined areas such as ducts or conduits
that are being used or have been specifically identified for use as part of the utility's transportation and
distribution network.  We also clarify that a utility's ability voluntarily to provide access to an area and
obtain compensation for doing so is a prerequisite to utility ownership or control under Section 224. 
Finally, we address several issues relating to the implementation of Section 224, including a determination
that states do not have to recertify their regulation of pole attachments rates in response to today's decision. 
Based on these conclusions, we grant the WinStar Petition for Reconsideration of the Local Competition
First Report and Order to the extent discussed herein, and we otherwise deny that petition.
                    a.   Scope of areas covered.
77.    Initially, we note that access to on-premises conduits and similar rights-of-way is important to
the development of telecommunications competition in MTEs.  The record compiled in response to the
Competitive Networks NPRM  indicates that competitive LECs often need access to in-building ducts,
conduits, and rights-of-way used by incumbent LECs and other utilities in order to expand their networks to
serve the building.  To the extent that a new entrant is unable or does not desire to use the existing in-
building wiring, it must obtain access to building conduit in order to install its own cables and wires. 
Moreover, even if a competitive LEC utilizes existing wiring for some of its in-building distribution, it may
need access to conduits and rights-of-way in order to reach that wiring.  For example, a provider using
wireless technology, in addition to needing a rooftop or similar location to place its antenna, must have
access to conduit in order to connect its antenna to the building system.
78.    To the extent that poles, ducts, conduits, and rights-of-way in MTEs are controlled by
incumbent LECs, the incumbent LECs would have an incentive in the absence of regulation to deny access
to their competitors.  Section 251(c) of the Act requires incumbent LECs to grant other carriers access to
their facilities under just, reasonable, and nondiscriminatory rates, terms, and conditions under many
circumstances.  Nothing in Section 251(c), however, appears to address the situation where a building
owner has granted a carrier access in order to serve customers in that building, but an incumbent LEC or
other utility refuses to allow its competitor reasonable and nondiscriminatory access to conduits or similar
pathways that the utility owns or controls.  An incumbent LEC's power to deny competitors access to in-
building conduits thus could impose a serious impediment to telecommunications choices for affected MTE
residents.  Our consideration of the effect of Section 224 within MTEs is intended to address this situation.
79.    In the Competitive Networks NPRM, we tentatively concluded that the plain meaning of Section
224(f)(1) includes a right of access to ducts, conduits, and rights-of-way owned or controlled by a utility
that are located in MTEs.  In particular, we tentatively concluded that the definition of "right-of-way" as
including a publicly or privately granted right to place telecommunications distribution facilities on public
or private premises is consistent with the common usage of the term, and we sought comment on this
analysis.  We also tentatively concluded more specifically that in-building conduit, such as riser conduit,
used by a utility and owned or controlled by that utility falls within the scope of Section 224(f)(1) as either
"conduit" or a "right-of-way."  Competitive LECs generally agree with these tentative conclusions.  They
state that by not qualifying the terms "right-of-way" or "conduit" in the statute, Congress intended to give
a broad scope to the terms such that they encompass rights of access to conduits on private property as well
as public rights-of-way.  Incumbent LECs and premises owners generally disagree with our tentative
conclusions and argue for a narrow interpretation of "right-of-way."  For example, Bell Atlantic argues that
Section 224 was intended to provide cable companies access to structures in public rights-of-way, rather
than structures on private property, and therefore does not apply within buildings.  Cincinnati Bell contends
that the legislative history of Section 224 suggests that the intended meaning of "conduit" is "underground
reinforced passages."  Real Access Alliance argues that rights-of-way do not exist inside buildings, but
rather that building access rights take the form of leases, licenses, and easements.
80.    We conclude that the obligations of utilities under Section 224 encompass in-building facilities,
such as riser conduits, that are owned or controlled by a utility.  This interpretation is consistent with the
plain meaning of Section 224(f)(1), which requires "non-discriminatory access to any pole, duct, conduit,
or right-of-way owned or controlled" by a utility, without qualification.  Our interpretation of Section 224
is also consistent with industry practice, in which the terms duct and conduit are used to refer to a variety
of enclosed tubes and pathways, regardless of whether they are located underground or aboveground. 
Indeed, as AT&T points out, the commonly used term "riser conduit" itself demonstrates that conduit is not
generally understood to refer only to underground facilities.  Moreover, we recently amended Section
1.1402(i) of our Rules in another proceeding to clarify that "conduits" are not limited to underground
facilities. 
81.    In the Competitive Networks NPRM, we noted that the 1977 Pole Attachments Act Senate
Report described duct or conduit systems as consisting of underground facilities.  We conclude that this
legislative history does not circumscribe our authority to apply Section 224 to in-building ducts, conduits,
or rights-of-way.  The text of the statute, as well as the legislative history relating to its amendment in 1996,
in no way limits the terms duct or conduit to underground facilities.  Moreover, even where there may be
"contrary indications in the statute's legislative history," we are not required to "resort to legislative history
to cloud a statutory text that is clear."  This is especially true where, as here, the statute is unambiguous on
its face.
82.    We also conclude that "rights-of-way" in buildings means, at a minimum, defined pathways that
are being used or have been specifically identified for use as part of a utility's transmission and distribution
network.  The Real Access Alliance argues that there are no "rights-of-way" in buildings, but that utilities'
building access rights take the form of leases, licenses, and easements.  We note, however, that the term
"right-of-way" can have a variety of meanings, including, for example, the equivalent of an easement.  As
commenters point out, the arrangements under which utilities have obtained and retain access to buildings,
as well as the nomenclature used to describe those arrangements and the attendant rights and
responsibilities, vary from building to building and from state to state.  We believe, consistent with
Congressional intent to ensure that utilities do not exercise their control over structures and areas to which
providers seek access in a manner that impedes telecommunications competition or cable service, that a
"right-of-way" should be read to include, at a minimum, any defined pathway in an MTE that a utility is
actually using or has specifically identified for its future use, regardless of how its right of access is
denominated by the parties or under state law.  We do not believe that state concerns with definitions of
property interests, including public rights-of-way, will be harmed or affected by the nomenclature we use
here solely with reference to Section 224.  We therefore conclude that the nature of a right of access, and
not the nomenclature applied, governs for these purposes.  Consistent with Congressional intent to ensure
that utilities do not exercise their control over structures and areas to which providers seek access in a
manner that impedes telecommunications competition or cable service, we conclude that a right-of-way
exists within the meaning of Section 224, at a minimum, where (1) a pathway is actually used or has been
specifically designated for use by a utility as part of its transmission and distribution network and (2) the
boundaries of that pathway are clearly defined, either by written specification or by an unambiguous
physical demarcation.  In the Further Notice of Proposed Rulemaking, we request comment on other
situations in which an in-building right-of-way may be established.
83.    We further conclude that a "right-of-way" under Section 224 includes property owned by a
utility that the utility uses in the manner of a right-of-way as part of its transmission or distribution network. 
We tentatively concluded in the Competitive Networks NPRM that Section 224 does not encompass a
general right of access to utility property.  No party has advanced any arguments against this proposition,
and we therefore reaffirm our earlier conclusion on this record.  Thus, for example, the roof of a utility's
corporate office is not, in and of itself, subject to access under Section 224.  We also tentatively concluded,
however, that "Section 224 encompasses a utility's obligation to provide cable television systems and
telecommunications service providers with access to property that it owns which it uses as part of its
distribution network."  GTE argues that the traditional definition of right-of-way and the underlying
purpose of Section 224 require that property owned by a utility in fee simple absolute can never be subject
to Section 224.  We disagree, and find that our tentative conclusion is consistent with both the language
and purpose of Section 224.  We believe our tentative conclusion is consistent with the use of the term
"right-of-way" to denote not only the right to pass over the land of another, but also the land itself.  We
also believe this definition is consistent with the inclusion in Section 224 of rights-of-way that a utility
"owns" as well as "controls." We agree with AT&T that the test for determining when a utility is using its
own property in a manner equivalent to a right-of-way should "be broad enough to encompass the wide
range of activities that constitute use of property in a manner equivalent to a right-of-way."  Thus, where
a utility uses its own property in connection with its transmission or distribution network in a manner that
would trigger the obligations of Section 224 if it had obtained a right-of-way from a private landowner, we
conclude that it should be considered to own or control a right-of-way within the meaning of Section 224.
84.    The National League of Cities has expressed concern that application of Section 224 within
buildings may preempt implementation or enforcement of state safety-related codes.  We emphasize that
our actions taken today are not intended to preempt, or impede, in any way the implementation or
enforcement of state safety-related codes.  We also note that under Section 224(f)(2) utilities may impose
conditions on access to transmission facilities, if necessary for reasons of safety or reliability.
                    a.   Ownership or control.
85.    In order for a right of access to be triggered under Section 224, the property to which access is
sought not only must be a utility pole, duct, conduit, or right-of-way, but it must be "owned or controlled"
by the utility.  In this regard, we have previously held that "[t]he scope of a utility's ownership or control
of an easement or right-of-way is a matter of state law."  Specifically, "the access obligations of Section
224(f) apply when, as a matter of state law, the utility owns or controls the right-of-way to the extent
necessary to permit such access."  In the NPRM, we asked whether we should federally define the
circumstances under which utility ownership or control exists, or whether we should continue to defer to the
rights created under state law.  Ameritech believes that the Commission should refrain from interpreting
when utility ownership or control exists and continue to defer to state law.  The Real Access Alliance
argues that the Commission must continue to defer to state law because any attempt to alter the property
rights of either utilities or property owners would amount to an unconstitutional taking in violation of the
Fifth Amendment.  AT&T argues that Commission guidance is necessary in determining the existence and
scope of ownership or control in particular circumstances, such as where a utility has secured building
access rights through a private agreement with a property owner.  WinStar argues that federal law should
govern in this matter in order to ensure a national policy for access to rights-of-way.  WinStar states that
it has suffered in states that have not taken action to promote building access, often because building owners
with a national presence penalize carriers in states without building access laws for access gained in states
that have such laws.   
86.    In the Local Competition First Report and Order, we considered arguments that certain private
consent agreements, when interpreted under the applicable state property laws, deprive the utilities of the
ownership or control that triggers their obligation to accommodate a request for access.  Some commenters
in that proceeding argued that under such circumstances, Section 224 does not provide a right of access. 
Other commenters argued that the statute does not draw distinctions between situations where a private
consent agreement exists and situations where one does not exist, and thus provides access regardless of the
terms of an agreement or state law.  We concluded that the scope of utility ownership or control is a matter
of state law.  Thus, obligations apply when, as a matter of state law, the utility owns or controls the right-of-
way to the extent necessary to permit such access.   
87.    We conclude that our analysis in the Local Competition First Report and Order remains valid,
and applies to ducts, conduits, and rights-of-way in buildings as well as to those in other locations. We
therefore reject arguments that we should define utility access to a building as in itself establishing utility
control over conduits or rights-of-way or establish presumptions in this regard.  We emphasize that the right
of access granted under Section 224 lies only against utilities, and that Section 224 is not intended to
override whatever authority or control MTE owners may otherwise retain under state law.  We therefore
conclude that, consistent with the purposes of Section 224, utility ownership or control of rights-of-way and
other covered facilities exists only if the utility could voluntarily provide access to a third party and would
be entitled to compensation for doing so.  As the Real Access Alliance points out, the forms of access
arrangements between utilities and building owners, and the resulting rights and responsibilities of each
party, can vary greatly depending on the means by which access was originally achieved and on state law. 
Thus, state law determines whether, and the extent to which, utility ownership or control of a right-of-way
exists in any factual situation within the meaning of Section 224.
88.    We note that existing utility rights-of-way in MTEs, whether created by force of law, by written
agreement between the parties, or by tacit consent, generally originated in an era of monopoly utility
service.  Thus, the purpose behind these rights of access was to ensure that end users could receive service
from the single entity capable of providing, or legally authorized to provide, such service.  The parties that
established the terms of these rights of access would rarely, if ever, have considered the effect their actions
might have on hypothetical future competition.  Section 224 addresses the ability of utilities to act
anticompetitively with respect to telecommunications competitors as a result of these developments.  Our
concerns about anticompetitive exclusion by building owners are addressed elsewhere in this item.
89.    This approach avoids any constitutional concerns that may arise under the Fifth Amendment. 
Because we interpret Section 224 to apply only against utilities, there is no taking from premises owners. 
The only taking under Section 224 is from utilities, who are deprived of the power to exclude others from
conduits or rights-of-way to the extent of their ownership or control.  This taking, however, is compensated
under statute and our rules, and thus is fully consistent with constitutional requirements.   We note that the
extent of a utility's ownership or control of a duct, conduit, or right-of way under state law must be resolved
prior to a complaint being filed with the Commission regarding whether the rates, terms or conditions of
access are reasonable. 
90.    This approach also will not affect the operation of our rules governing the disposition of cable
inside wiring.  Section 76.804(a) of our rules sets forth the procedures for disposition of "home run wiring"
owned by a multichannel video programming distributor (MVPD) in a multiple dwelling unit (MDU) when
the MVPD "does not . . . have a legally enforceable right to remain on the premises against the wishes of the
MDU owner."  As explained above, Section 224 grants a right of access only to the extent a utility owns or
controls poles, ducts, conduits, or rights-of-way.  It does not grant a legally enforceable right to remain on
the premises against the wishes of the MDU owner.  Therefore, it does not interfere with the disposition of
cable home run wiring under our rules.
                    a.   Implementation issues.
91.    Section 224 not only requires utilities to provide nondiscriminatory access to poles, ducts,
conduits, and rights-of-way, but mandates that they do so at rates, terms and conditions that are just and
reasonable.  Section 224 further specifies principles for determining whether a rate is just and reasonable
in the context both of cable providers' and telecommunications carriers' attachments, all of which are based
on the utility's costs in connection with the pole, duct, conduit, or right-of-way.  In order to implement
these provisions, we have promulgated formulas to determine just and reasonable rates for access to poles,
ducts, and conduits.  These formulas do not appear to be directly transferable to the inside the building
context and the parties to this proceeding have not suggested how they might be adjusted for use here. 
Therefore, to the extent the existing formulas do not apply, we will determine reasonable and just
compensation consistent with the statute and Fifth Amendment on a case-by-case basis.  We will consider
initiating a rulemaking proceeding to establish rate formulas for in-building attachments in the future if it
proves necessary or efficient to do so.  We anticipate, however, that in most instances the existing rules will
encourage the parties to agree to reasonable rates through negotiation.  
92.    Section 224 further provides that the Commission has no jurisdiction with respect to rates,
terms, and conditions, or access to poles, ducts, conduits, and rights-of-way for pole attachments in
instances where a state has certified to the Commission that it regulates such matters.  Consistent with the
statute, 19 states have made such certification to the Commission.  In those states that do not regulate such
matters, we will continue to apply the formula presumptions outlined in the Telecommunications Pole
Attachments Pricing Report and Order and the Cable Pole Attachments Pricing Report and Order.
93.    Several commenters argue that we should require states to recertify that they are regulating pole
attachments within buildings, and that we should look behind state certifications to ensure that they are in
fact regulating consistent with Section 224.  Consistent with our past practice in similar circumstances, we
decline to do so.  Rather, we will continue to apply our existing regime of presumptions and burden of proof
regarding certification.  We emphasize, moreover, that federal regulation of access, rates, terms, or
conditions for pole attachments is preempted only to the extent a state is actually regulating attachments. 
Should a state fail to resolve a complaint within specified time limits, the Commission's rules provide that
we assume jurisdiction over the complaint.
          A.   Areas Under Tenant Control
               1.   Background
94.    Section 1.4000 of our rules prohibits, with limited exceptions, any state or local law or
regulation, private covenant, contract provision, lease provision, homeowners' association rule, or similar
restriction that impairs the installation, maintenance, or use of certain antennas designed to receive video
programming services on property within the exclusive use or control of the antenna user where the user has
a direct or indirect ownership or leasehold interest in the property.  We adopted Section 1.4000 pursuant
to Section 303 of the Communications Act as directed by Section 207 of the 1996 Act, which applies to the
placement of over-the-air reception devices (OTARDs) in order to receive television broadcast signals,
direct broadcast satellite services, and multichannel multipoint distribution services.  In May, 1999, the
Wireless Communications Association International, Inc. (WCA) filed a Petition for Rulemaking asking us
to extend the principles embodied in Section 1.4000 to the placement of antennas used for any fixed
wireless service.  In the Competitive Networks NPRM, we requested comment on whether we should adopt
rules similar to those adopted in the video context that would protect the ability to place similar antennas to
transmit and receive telecommunications signals and other fixed wireless signals that are not covered by
Section 207.
95.    As currently constituted, Section 1.4000 prohibits restrictions that impair the installation,
maintenance or use of:  (1) any antenna designed to receive direct broadcast satellite service, including
direct-to-home satellite services, that is one meter or less in diameter or is located in Alaska; (2) any antenna
designed to receive video programming services via multipoint distribution services, including multichannel
multipoint distribution services, instructional television fixed services, and local multipoint distribution
services, and that is one meter or less in diameter; (3) any antenna designed to receive television broadcast
signals; or (4) any mast supporting an antenna receiving any video programming described in the Section. 
For the purposes of Section 1.4000, a law, regulation, or restriction impairs installation, maintenance, or use
of an antenna if it:  unreasonably delays or prevents installation, maintenance, or use; unreasonably
increases the cost of installation, maintenance, or use; or precludes reception of an acceptable quality signal. 
Section 1.4000 also sets forth principles governing fees or costs that may be imposed for placement of
covered antennas and enforcement of covered regulations.  Restrictions that would otherwise be forbidden
are permitted if they are necessary for certain safety or historic preservation purposes, are no more
burdensome than necessary to achieve their purpose, and meet certain other conditions set forth in the rule. 
Finally, Section 1.4000 includes provisions for waiver and declaratory ruling proceedings.
96.    Many parties support an extension of the principles of the OTARD rules to include all fixed
wireless devices.  For example, PCIA contends that extending the antenna exemption rule to include all
fixed wireless devices is essential to the Commission meeting its obligation to promote the deployment of
advanced telecommunications capability under Section 706(a) of the 1996 Act.  On the other hand, Real
Access Alliance argues that, in extending the OTARD rules to leased property, the Commission has already
exceeded its authority and violated the Fifth Amendment.  Real Access Alliance contends that further
extending the rules to include new services such as telecommunications services would compound the
violation.  Real Access Alliance argues that the statutory language of Section 207 "refers explicitly to video
programming, and to three types of antennas used primarily (and at the time of the enactment of the law,
solely) to deliver video services."  Real Access Alliance concludes that the statutory language is very clear
and cannot possibly be construed to permit the Commission to go any further than it already has, under any
circumstances.
               1.   Discussion
                    a.   Extension of OTARD Rules
97.    We conclude that we should extend the OTARD rules by amending Section 1.4000 to include
customer-end antennas used for transmitting or receiving fixed wireless signals, as well as multichannel
video programming signals that are currently covered by the rules.  For the purpose of the OTARD rules,
"fixed wireless signals" are any commercial non-broadcast communications signals transmitted via wireless
technology to and/or from a fixed customer location.  As discussed above, Congress intended in the 1996
Act to promote telecommunications competition and the deployment of advanced telecommunications
capability.  Indeed, Congress included several provisions to limit restrictions on the deployment of
facilities used for these purposes.  To the extent a restriction unreasonably limits a customer's ability to
place antennas to receive telecommunications or other services, whether imposed by government,
homeowner associations, building owners, or other third parties, that restriction impedes the development
of advanced, competitive services.  In the OTARD First Report and Order, the Commission determined that
restrictions on the placement of antennas one meter in diameter or smaller unreasonably limit a video
programming customer while restrictions on larger C-band reception antennas might be reasonable.  We
find that the same types of restrictions on the same types of antennas unreasonably restrict deployment
regardless of the services provided.
98.    Moreover, distinguishing in the protection afforded based on the services provided through an
antenna produces irrational results.  Precisely the same antennas may be used for video services,
telecommunications, and internet access.  Indeed, sometimes a single company offers different packages of
services using the same type of antennas.  Under our current rules, a customer ordering a
telecommunications/video package would enjoy protection that a customer ordering a telecommunications-
only package from the same company using the same antenna would not.  Thus, we conclude that the
current rules potentially distort markets by creating incentives to include video programming service in
many service offerings even if it is not efficient or desired by the consumer.
99.    In extending the OTARD rules to encompass fixed wireless devices, we mean to include all
customer-end antennas and supporting structures of the physical type currently covered by the rule,
regardless of the nature of the services provided through the antenna (i.e., voice, data, or video).  Similarly,
the amended rules apply both to satellite and terrestrial services.  In addition, the rules apply to antennas
that transmit and receive signals, only transmit signals, or only receive signals.  We make clear, however,
that the protection of Section 1.4000 applies only to antennas at the customer end of a wireless transmission,
i.e., to antennas placed at a customer location for the purpose of providing fixed wireless service (including
satellite service) to one or more customers at that location.  We do not intend these rules to cover hub or
relay antennas used to transmit signals to and/or receive signals from multiple customer locations.
100.   We emphasize that the restrictions we adopt today are limited by the expressed limitations
of Section 1.4000.  Thus, our extension of the OTARD rules applies only to areas within the exclusive use
or control of the antenna user and in which the antenna user has a direct or indirect ownership or leasehold
interest.  Similarly, the extension of the rules applies only to antennas one meter or less in diameter or
diagonal measurement, or larger antennas located in Alaska used to receive satellite service, and to masts
used to support such antennas.  In addition, the exceptions permitting certain restrictions for safety and
historic preservation purposes continue to apply.
                    a.   Legal Authority
101.   One of the principal goals of the 1996 Act was "to promote competition and reduce
regulation in order to secure lower prices and higher quality services for American telecommunications
consumers and encourage the rapid deployment of new telecommunications technologies."  As noted
above, these objectives are effectively hindered by restricting OTARD protections to devices that receive
video programming services.  Federal courts have long established that the Commission has the authority to
promulgate regulations to effectuate the goals and accompanying provisions of the Act in the absence of
explicit regulatory authority, if the regulations are reasonably ancillary to existing Commission statutory
authority.  Thus, in light of our finding that the existing OTARD regulatory regime effectively hinders one
of the principal goals of the 1996 Act, and because Commission action is reasonably ancillary to several
explicit statutory provisions, we conclude that the Commission has the statutory authority to extend the
OTARD protections to antennas used to transmit or receive fixed wireless signals.  We also conclude that
preemption of state and local regulation created by the extension of OTARD protections is justified in these
circumstances.  Finally, we find that Section 332(c)(7) of the Act, which addresses regulation of "personal
wireless service facilities," does not apply to customer-end antennas. 
102.   Section 1 of the Act provides that the Commission was created "for the purpose of
regulating interstate and foreign commerce in communications by wire and radio so as to make available,
so far as possible, to all people of the United States, . . . a rapid, efficient, Nation-wide, and world-wide,
wire and radio communications service with adequate facilities at reasonable charges[.] . . . "  Section 1
also directs the Commission to "execute and enforce the provisions of [the] Act."  In promulgating the
extension of OTARD protections to antennas used for the transmission or reception of fixed wireless
signals, the Commission is furthering the express objectives of Section 1 of the Act because, as noted above,
we are facilitating efficient deployment of competitive communications services.
103.   Moreover, we believe that Section 706 of the 1996 Act, which addresses advanced
telecommunications incentives, also supports our extension of the OTARD principles.  Section 706 directs
the Commission to "encourage the deployment on a reasonable and timely basis of advanced
telecommunications capability to all Americans . . . by utilizing, in a manner consistent with the public
interest, convenience, and necessity . . . measures that promote competition in the local telecommunications
market, and other regulating methods that remove barriers to infrastructure investment."  We believe that
the extension of OTARD protections to antennas used for the transmission or reception of fixed wireless
signals will foster the deployment of advanced telecommunications services.
104.   Our action also is necessary to further the consumer protection purposes of Sections 201(b),
202(a), and 205(a) of the Act.  These statutory provisions are intended to ensure that the rates, terms, and
conditions for the provision of common carrier service are just, fair, and reasonable, and that there is no
unjust or unreasonable discrimination in the provision of such service.   Further, Section 201(b) grants us
express authority to "prescribe such rules and regulations as may be necessary in the public interest to carry
out the provisions of th[e] Act."  To the extent devices used for multichannel video programming services
are protected from unreasonable restrictions under the OTARD rules and the same devices when used only
for fixed wireless services are not, consumers who want only fixed wireless service may inexorably be
forced to pay unjust and unreasonable charges in connection with unwanted video programming.  Thus, if
we failed to extend the OTARD principles, we would effectively undermine the policies against
unreasonable charges and discriminatory policies that are codified in Sections 201(b), 202(a), and 205(a).
105.   Because our extension of the OTARD rules is necessary to realize these statutory goals,
Sections 303(r) and 4(i) provide the basis for our exercise of ancillary jurisdiction.  Section 303 prescribes
the general powers of the Commission with respect to radio transmissions.  Specifically, it authorizes us to
"[m]ake such rules . . . as may be necessary to carry out the provisions of this the Act." Section 4(i)
provides that "[t]he Commission may perform any and all acts, make such rules and regulations, and issue
such orders, not inconsistent with this Act, as may be necessary in the execution of its functions."  Federal
courts have consistently recognized that these provisions give the Commission broad authority to take
actions that are not specifically encompassed within any statutory provision but that are reasonably
necessary to advance the purposes of the Act.  
106.   Indeed, when Congress enacted Section 207, it recognized that Section 303 is a source of
authority to promulgate regulations like the ones that we are adopting today.  Section 207 directs the
Commission to promulgate regulations prohibiting restrictions affecting devices used to receive the
specified video programming services "pursuant to Section 303 of the Communications Act."  This
statutory language reflects Congress' recognition that, pursuant to Section 303, the Commission has always
possessed authority to promulgate rules addressing OTARDs.  Section 207 required us to promulgate rules
within 180 days after enactment, effectively removing our discretion on both the timing and the
determination of the need for such regulation.  Although Section 207 directed us to take action in the
context of devices designed to receive the named services, nothing in Section 207 precludes us from
exercising our power under Section 303 and other provisions to protect the placement of similar antennas
that receive or transmit other signals.  Indeed, to the extent our action today applies to state and local
governments, we previously imposed similar limits on state and local regulation of the placement of
antennas both before and subsequent to the 1996 Act.  We therefore conclude that the scope of the Section
207 directive to exercise our authority under Section 303 does not limit our independent exercise of the
same authority under Section 303 and other provisions in a broader context and, in fact, affirmatively
supports our use of Section 303 to extend the OTARD rules to fixed wireless devices.
107.   As applied to restrictions imposed by state and local governments, our extension of the
OTARD rules also falls well within the bounds of established preemption principles.  The Commission may
preempt state law when, among other reasons, it "stands as an obstacle to the accomplishment and execution
of the full objectives of Congress."  Moreover, "[p]re-emption may result not only from action taken by
Congress itself; a federal agency acting within the scope of its congressionally delegated authority may pre-
empt state regulation."  In addition, to the extent our regulation affects both interstate and intrastate
services, preemption may be upheld "where it [is] not possible to separate the interstate and the intrastate
components" of the regulation.  As discussed above, state or local regulations that unreasonably restrict a
customer's ability to place antennas used for the transmission or reception of fixed wireless signals impede
the full achievement of important federal objectives, including the promotion of telecommunications
competition and customer choice and the ubiquitous deployment of advanced telecommunications
capability.  Moreover, it is infeasible to use different antennas for interstate and foreign communications
than for intrastate communications.  Because fixed wireless antennas are used in interstate and foreign
communications and their use in such communications is inseverable from their intrastate use, regulation
of such antennas that is reasonably necessary to advance the purposes of the Act falls within the
Commission's authority.  Our action is therefore fully consistent with the preemption principles set forth in
Louisiana PSC.  
108.   Several local government organizations argue that an extension of the Commission's
OTARD rules to restrict state and local government regulation of customer-end antennas used for
transmitting or receiving telecommunications signals would violate Section 332(c)(7) of the Act. 
Specifically, they argue that these antennas are "personal wireless service facilities" within the meaning of
Section 332(c)(7), and that Section 332(c)(7) forbids the Commission from limiting state and local
government regulation of such antennas except on the basis of RF emissions safety.  In contrast, WCA
argues that Section 332(c)(7) only applies to hub site antennas, and not to customer-end antennas.
109.   We believe that, in the context of Section 332(c)(7), the term "personal wireless service
facilities" is best read not to include customer-end antennas.  The Section defines "personal wireless service
facilities" as facilities "for the provision of personal wireless services."  Although the term taken by itself
could be read to include customer-end facilities, a narrower reading which limits the term to a facility that
"provides" the service, i.e., the carrier hub site, is not only reasonable, but also, as discussed below, better
reflects the statutory provisions and goals of the 1996 Act in general and those of Section 332(c)(7) in
particular.  Thus, we find that Section 332(c)(7) does not prevent the Commission from restricting state and
local government regulation of these antennas.  We note, though, that nothing in this decision affects the
well-established rights of state and local governments under Section 332(c)(7) to regulate the placement,
construction, and modificat