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Feature Group IP Petition for Forbearance From Section 251 (g) of the Communications Act and Section 51.701(b)(1) and 69.5(b) of the Commission's Rules

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Released: December 31, 1969

Federal Communications Commission

FCC 09-3

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Feature Group IP Petition for Forbearance From
)
WC Docket No. 07-256
Section 251(g) of the Communications Act and
)
Sections 51.701(b)(1) and 69.5(b)
)
of the Commission's Rules
)

MEMORANDUM OPINION AND ORDER

Adopted: January 21, 2009

Released: January 21, 2009

By the Commission: Commissioner McDowell issuing a statement.

I.

INTRODUCTION

1. In this Order, we deny a petition filed by Feature Group IP West LLC, Feature Group IP
Southwest LLC, UTEX Communications Corp., Feature Group IP North LLC, and Feature Group IP
Southeast LLC (Feature Group IP) requesting that the Commission forbear from section 251(g) of the
Communications Act of 1934, as amended (Act), and sections 51.701(b)(1) and 69.5(b) of the
Commission's rules.1 For the reasons set forth below, we deny the petition because it fails to meet the
statutory forbearance criteria.2

II.

BACKGROUND

2. In the 1996 Act,3 Congress sought to foster competition in the local telephone market, while
at the same time ensuring the continued provision of affordable service to all Americans.4 As part of the
1996 Act, Congress adopted section 251(b)(5), which requires that all local exchange carriers (LECs)
"establish reciprocal compensation arrangements for the transport and termination of


1 Feature Group IP Petition for Forbearance Pursuant to 47 U.S.C. 160(c) from Enforcement of 47 U.S.C 251(g),
Rule 51.701(b)(1), and Rule 69.5(b), WC Docket No. 07-256 (filed Oct. 23, 2007) (Feature Group IP Forbearance
Petition). On December 18, 2007, the Commission released a Public Notice establishing a pleading cycle for
comments on the Feature Group IP Forbearance Petition. Pleading Cycle Established for Feature Group IP Petition
for Forbearance from Section 251(g) of the Communications Act and Sections 51.701(b)(1) and 69.5(b) of the
Commission's Rules
, WC Docket No. 07-256, Public Notice, 22 FCC Rcd 21615 (2007). On January 14, 2008, the
Wireline Competition Bureau extended the pleading cycle for comments on the Feature Group IP Forbearance
Petition. Feature Group IP Petition for Forbearance from Section 251(g) of the Communications Act and Sections
51.701(b)(1) and 69.5(b) of the Commission's Rules
, WC Docket No. 07-256, Order, 23 FCC Rcd 346 (WCB 2008).
2 See 47 U.S.C. 160(a).
3 Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) (codified as amended in scattered
sections of 47 U.S.C.) (1996 Act).
4 See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996 and
Interconnection between Local Exchange Carriers and Commercial Mobile Radio Service Providers
, CC Docket
Nos. 96-98, 95-185, First Report and Order, 11 FCC Rcd 15499-507, paras. 1-7 (1996) (subsequent history omitted)
(Local Competition First Report and Order).

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FCC 09-3

telecommunications."5 To ensure the continued enforcement of certain pre-1996 Act access obligations
and restrictions, Congress also enacted a transitional mechanism in section 251(g).6 In the Local
Competition First Report and Order,
the Commission, interpreting section 251(g), concluded that the
reciprocal compensation provisions of section 251(b)(5) "do not apply to the transport or termination of
interstate or intrastate interexchange traffic" and it required LECs to continue to offer interstate and
intrastate access services just as they did prior to the 1996 Act.7 The Commission later characterized
section 251(g) as a "carve-out provision" that "is properly viewed as a limitation on the scope of section
251(b)(5) [of the Act]."8
3. On July 26, 2007, the Commission denied a petition filed by Core Communications, Inc.
(Core) seeking forbearance from rate regulation preserved by section 251(g) of the Act, the rate averaging
and rate integration required by section 254(g) of the Act, and all related implementing rules with respect
to all telecommunications carriers.9 The Commission found that section 251(g) "explicitly contemplates


5 47 U.S.C. 251(b)(5); 47 C.F.R. 51.701(c)-(d) (defining transport and termination); see also Local Competition
First Report and Order
, 11 FCC Rcd at 16008-58, paras. 1027-118 (discussing reciprocal compensation obligations
for the transport and termination of telecommunications under section 251(b)(5) of the Act).
6 See 47 U.S.C. 251(g) (providing that "[o]n and after the date of enactment of the Telecommunications Act of
1996, each local exchange carrier, to the extent that it provides wireline services, shall provide exchange access,
information access, and exchange services for such access to interexchange carriers and information service
providers in accordance with the same equal access and non-discriminatory interconnection restrictions and
obligations (including receipt of compensation) that apply to such carrier on the date immediately preceding the date
of enactment of the Telecommunications Act of 1996 under any court order, consent decree, or regulation, order, or
policy of the Commission, until such restrictions and obligations are explicitly superseded by regulations prescribed
by the Commission after such date of enactment"); see also WorldCom v. FCC, 288 F.3d 429, 432-33 (D.C. Cir.
2002) (finding that section 251(g) is a transitional provision designed to keep in place certain restrictions and
obligations, including the existing access charge regime, until such provisions are superseded by Commission
regulations).
7 See Local Competition First Report and Order, 11 FCC Rcd at 16013, para. 1034. In a subsequent order, the
Commission interpreted this provision as a "continuation of the equal access and nondiscrimination provisions of the
[AT&T] Consent Decree until superseded by subsequent regulations of the Commission." Deployment of Wireline
Services Offering Advanced Telecommunications Capability and Advanced Telecommunications Capability
, CC
Docket Nos. 98-147, 98-11, 98-26, 98-32, 98-78, 98-91, Order on Remand, 15 FCC Rcd 385, 407, para. 47 (1999).
The Court of Appeals later held, however, that the pre-existing restrictions and obligations referenced in section
251(g) are not limited to Consent Decree obligations. See WorldCom v. FCC, 288 F.3d at 433.
8 See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996 and
Interconnection between Local Exchange Carriers and Commercial Mobile Radio Service Providers Intercarrier
Compensation for ISP-Bound Traffic
, CC Docket Nos. 96-98, 99-68, Order on Remand and Report and Order, 16
FCC Rcd 9151, 9167, para. 35 (2001) (ISP Remand Order), remanded on other grounds, WorldCom v. FCC, 288
F.3d at 429. Indeed, in defining the scope of the reciprocal compensation pricing rules, section 51.701(b)(1)
specifically excludes "interstate or intrastate exchange access, information access, or exchange services for such
access." 47 C.F.R. 51.701(b)(1). Specifically, the Commission found that Congress "did not intend to interfere"
with the Commission's pre-1996 Act authority with respect to the access charge regime and that Congress
"exempted the services enumerated in section 251(g) from the newly imposed reciprocal compensation requirement
in order to ensure that section 251(b)(5) is not interpreted to override either existing or future regulations prescribed
by the Commission." ISP Remand Order, 16 FCC Rcd at 9167, para. 36 (footnotes omitted).
9 See Petition of Core Communications, Inc. for Forbearance from Sections 251(g) and 254(g) of the
Communications Act and Implementing Rules
, WC Docket No. 06-100, Memorandum Opinion and Order, 22 FCC
Rcd 14118 (2007) (Core Section 251(g)/254(g) Forbearance Order), pet. for review dismissed, Core
Communications, Inc. v. FCC
, 545 F.3d 1 (D.C. Cir. 2008).
2

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FCC 09-3

affirmative Commission action in the form of new regulation" before the access regulation preserved by
section 251(g) could be eliminated or replaced and, as a result, "the section 251(b)(5) reciprocal
compensation regime would not automatically, and by default, govern traffic that was previously subject
to section 251(g)."10 The Commission concluded therefore that forbearance from section 251(g) would
result in no regulation and that the petition failed to meet the statutory forbearance criteria.11
4. On October 23, 2007, Feature Group IP filed a petition asking the Commission to forbear
from applying access charges to "voice-embedded Internet communications."12 Feature Group IP
requests that the Commission "hold that Voice Embedded Internet-based communications, services and
applications that involve or are part of (i) a net change in form; (ii) a change in content; and/or (iii) an
offer of non-adjunct to basic enhanced functionality are enhanced services and, therefore, that the so-
called `ESP Exemption' from access charges still applies."13 Alternatively, Feature Group IP requests
that "the Commission . . . forbear from application of certain express and implied provisions of Section
251(g) of the Communications Act . . . Rule 51.701(b)(1), and, where applicable, Rule 69.5(b)" so that
access charges do not apply to voice-embedded Internet communications.14

III.

DISCUSSION

5. Consistent with the Commission's Core Section 251(g)/254(g) Forbearance Order, we find
that the Feature Group IP Forbearance Petition does not meet the statutory criteria necessary for


10 Core Section 251(g)/254(g) Forbearance Order, 22 FCC Rcd at 14126, para. 14.
11 Id. at 14126-28, paras. 14-16.
12 See Feature Group IP Forbearance Petition at 24-31.
13 Feature Group IP Forbearance Petition at 3. Feature Group IP defines "Voice-embedded Internet
communications" as "a particular subset of [voice over Internet Protocol (VoIP)] communications that do not merely
use the Internet Protocol [(IP)] to transmit voice signals undifferentiated from [public switched telephone network
(PSTN)] traffic, but actually uses Internet Protocol to provide voice applications as part of a large Internet
communications experience. . . . We think it is important for policymakers to recognize a qualitative difference
between services that merely use IP technology to provide PSTN-equivalent offerings and services that embed IP-
based voice applications as part of a larger, next-generation Internet communications experience." Id. at 2 n.3. But
see infra
note 35 (citing other definitions Feature Group IP suggests for the services covered by its request).
Although Feature Group IP uses a variety of different terms throughout its petition, for the purposes of this Order,
we use the term "voice-embedded Internet communications" to describe the services that are subject to the instant
request for forbearance. Under the Commission's access charge regime, the so-called "ESP exemption" permits
enhanced service providers (ESPs) to purchase local business access lines from intrastate tariffs as end users, or to
purchase special access connections, and thus avoid paying carrier-to-carrier access charges. See Amendments of
Part 69 of the Commission's Rules Relating to Enhanced Service Providers
, CC Docket No. 87-215, Order, 3 FCC
Rcd 2631, 2635 n.8, 2637 n.53 (1988) (ESP Exemption Order); Access Charge Reform; Price Cap Performance
Review for Local Exchange Carriers; Transport Rate Structure and Pricing; End User Common Line Charges
, CC
Docket Nos. 96-262, 94-1, 91-213, 95-72, First Report and Order, 12 FCC Rcd 15982, 16133-35, paras. 344-48
(1997) (Access Charge Reform Order), aff'd, Southwestern Bell v. FCC, 153 F.3d 523 (8th Cir. 1998); see also MTS
and WATS Market Structure
, CC Docket No. 78-72, Memorandum Opinion and Order, 97 FCC 2d 682, 715, para.
83 (1983) (explaining that ESPs had been paying local business service rates for their interstate access and would
experience rate shock that could affect their viability if full access charges were instead applied); ESP Exemption
Order
, 3 FCC Rcd at 2633, para. 17 ("[T]he imposition of access charges at this time is not appropriate and could
cause such disruption in this industry segment that provision of enhanced services to the public might be
impaired."); Access Charge Reform Order, 12 FCC Rcd at 16133-35, paras. 344-48 ("Maintaining the existing
pricing structure . . . avoids disrupting the still-evolving information services industry.").
14 Feature Group IP Forbearance Petition at 3-4.
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FCC 09-3

forbearance under section 10(a) of the Act.15 The Commission is obligated to forbear under section 10(a)
only if all three elements of the forbearance criteria are satisfied.16 Thus, the Commission "could properly
deny a petition for forbearance if it finds that any one of the three prongs is unsatisfied."17 As discussed
below, we find that the Feature Group IP Forbearance Petition does not meet any of the statutory
forbearance criteria and, accordingly, we deny the petition.
6. For the purposes of conducting our analysis of this petition, we assume, arguendo, that the
foundation of Feature Group IP's petition is valid.18 That is, we assume that section 251(g), the exception
clause in section 51.701(b)(1), and section 69.5(b) of the Commission's rules apply to voice-embedded
Internet communications, with the effect that at least in some circumstances, LECs may receive access
charges.19


15 See 47 U.S.C. 160(a). We note that Feature Group IP seems to be seeking forbearance only if the Commission
determines that voice-embedded Internet communications are not exempt from access charges or that the ESP
exemption is not maintained. See Feature Group IP Forbearance Petition at 3-4. Thus, Feature Group IP essentially
requests a declaratory ruling from the Commission as a preliminary matter. See Time Warner Telecom et al.
Comments at 3-4 (arguing that Feature Group IP's request is essentially a petition for declaratory ruling). The
Commission has broad discretion in determining whether to respond to a request for declaratory ruling and,
accordingly, because we find that Feature Group IP's petition fails to meet the statutory requirements for
forbearance, we need not address whether such communications are exempt from access charges or whether the ESP
exemption is maintained. See 5 U.S.C. 554(e); 47 C.F.R. 1.2; see also 47 U.S.C. 154(i), (j); Yale Broadcasting
Co. v. FCC
, 478 F.2d 594, 602 (D.C. Cir. 1973) ("An administrative agency should not be compelled to issue a
clarifying statement unless its failure to do so can be shown to be a clear abuse of discretion."), cert denied, 414
U.S. 914 (1973). For similar reasons, we decline to address in the context of this forbearance petition whether the
Commission has exclusive jurisdiction to determine the compensation regime for IP-PSTN and incidental PSTN-
PSTN traffic. See Feature Group IP Forbearance Petition at 65 (asking the Commission to "reaffirm" that this is an
"exclusively interstate matter").
16 See Cellular Telecommunications & Internet Ass'n v. FCC, 330 F.3d 502, 509 (D.C. Cir. 2003) (explaining that
the three prongs of section 10(a) are conjunctive and that the Commission could properly deny a petition for failure
to meet any one prong).
17 Id.
18 See AT&T v. FCC, 452 F.3d 830, 836-37 (D.C. Cir. 2006) ("We hold only that the Commission may not refuse to
consider a petition's merits solely because the petition seeks forbearance from uncertain or hypothetical regulatory
obligations.").
19 Though we make this assumption for purposes of the section 10(a) analysis below, we make no decisions or
findings in this Order concerning the current compensation rules for these types of communications, which are the
subject of a pending rulemaking in the current Intercarrier Compensation proceeding. On November 5, 2008, the
Commission released a Further Notice of Proposed Rulemaking seeking comment on several intercarrier
compensation reform proposals, including proposals that would address the regulatory classification of calls
exchanged between IP-based and circuit-switched networks. See generally High Cost Universal Service Reform;
Federal-State Joint Board on Universal Service; Lifeline and Link Up; Universal Service Contribution
Methodology; Numbering Resource Optimization; Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996; Developing a Unified Intercarrier Compensation Regime; Intercarrier
Compensation for ISP-Bound Traffic; IP-Enabled Services
, CC Docket Nos. 96-45, 99-200, 96-98, 01-92, 99-68,
WC Docket Nos. 05-337, 03-109, 06-122, 04-36, Order on Remand and Report and Order and Further Notice of
Proposed Rulemaking, FCC 08-262 (rel. Nov. 5, 2008).
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FCC 09-3

A.

Enforcement Remains Necessary to Ensure that Charges and Practices Are Just and
Reasonable, and Not Unjustly or Unreasonably Discriminatory

7. The first prong of section 10(a) states that the Commission shall forbear if it determines that
"enforcement of such regulation or provision is not necessary to ensure that the charges, practices,
classifications or regulations by, for, or in connection with that telecommunications carrier or
telecommunications service are just and reasonable, and are not unjustly or unreasonably
discriminatory."20 Feature Group IP asserts that enforcement of section 251(g), the exception clause in
section 51.701(b)(1) and, where applicable, section 69.5(b) of the Commission's rules "is not necessary to
ensure that the charges and practices for the exchange of IP-PSTN and incidental PSTN-PSTN voice-
embedded Internet communications are just, reasonable, and not unjustly or unreasonably discriminatory"
because, in the absence of these provisions, section 251(b)(5) and its implementing rules will govern the
intercarrier compensation for this traffic.21 Feature Group IP further contends that forbearance would not
result in unreasonably discriminatory charges, practices or classifications because the Commission would
be taking a class of traffic that "today generally is not subject to access charges" and treating it "in a
uniform manner consistent with making a transition to a uniform intercarrier compensation regime."22
Finally, Feature Group IP maintains that the difficulties associated with determining the geographic
endpoints of voice-embedded Internet communications support application of "the statutory default of
[s]ection 251(b)(5)."23
8. As the Commission explained in the Core Section 251(g)/254(g) Forbearance Order, section
251(g) preserves pre-1996 Act compensation obligations and restrictions for "exchange access,
information access, and exchange services for such access . . . until such restrictions and obligations are
explicitly superseded by regulations prescribed by the Commission."24 Because section 251(g) explicitly
contemplates affirmative Commission action in the form of new regulation, we find that forbearance from
section 251(g) would not automatically, and by default, mean that section 251(b)(5) would govern traffic
that was previously subject to section 251(g).25 If the Commission were to forbear from the rate
regulation preserved by section 251(g) and the related rules, there would be no rate regulation governing
the exchange of this traffic.26


20 47 U.S.C. 160(a)(1).
21 See Feature Group IP Forbearance Petition at 56-57. More specifically, Feature Group IP contends that the
section 252(d)(2) pricing standards governing the reciprocal compensation regime will ensure that the charges and
practices for the exchange of this traffic will be just and reasonable. Id. at 57; see 47 U.S.C. 252(d)(2).
22 Feature Group IP Forbearance Petition at 59.
23 Id. at 60.
24 47 U.S.C. 251(g) (emphasis added); see Core Section 251(g)/254(g) Forbearance Order, 22 FCC Rcd at 14126,
para. 14.
25 See Competitive Telecom. Ass'n v. FCC, 117 F.3d 1068, 1072-73 (8th Cir. 1997) (finding that section 251(g)
preserves certain rate regimes "until such restrictions and obligations are explicitly superseded by regulations
prescribed by the [Commission]" and "leaves the door open for the promulgation of new rates at some future date"
but that any new rates would not (necessarily) be subject to the standards set forth in section 251 and 252); see also
Core Section 251(g)/254(g) Forbearance Order
, 22 FCC Rcd at 14126, para. 14.
26 See Core Section 251(g)/254(g) Forbearance Order, 22 FCC Rcd at 14126, para. 14. Several parties agree that,
consistent with the Commission's findings in the Core Section 251(g)/254(g) Forbearance Order, forbearance from
section 251(g) would not result in the application of section 251(b)(5) by default. See, e.g., AT&T Comments at 17-
18; CenturyTel Comments at 4-5; NECA et al. Comments at 8; Time Warner Telecom et al. Comments at 4-6;
Verizon Comments at 7; Embarq Reply at 20-21; Letter from Cammie Hughes, Authorized Representative, Texas
(continued....)
5

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FCC 09-3

9. Feature Group IP's claim that forbearance from section 251(g) would result in a different
intercarrier compensation regime by default is the same flawed claim made by Core and denied by the
Commission in the Core Section 251(g)/254(g) Forbearance Order. Feature Group IP attempts to
distinguish that Commission decision from how it believes its request should be resolved. Feature Group
IP maintains that its request is different from Core's because the Feature Group IP Forbearance Petition
involves two LECs exchanging traffic between an ESP (Feature Group IP's customer) and a local
exchange end user.27 Essentially, Feature Group IP attempts to distinguish the Core Section
251(g)/254(g) Forbearance Order
based on the type of providers and the traffic subject to forbearance.28
10. We find that Feature Group IP's request to forbear from section 251(g) cannot be
distinguished from the Core Section 251(g)/254(g) Forbearance Order. Absent affirmative action by the
Commission, forbearance from section 251(g) would result in a regulatory void based on the plain
language of that statutory provision, regardless of what types of carriers or traffic were involved. Due to
the absence of any such rate regulation if forbearance were granted, and the absence of any economic
evidence or analysis in the record by Feature Group IP or any other commenters, we cannot conclude that
enforcement of the rate regulation preserved by section 251(g) and related implementing rules is not
necessary to ensure that charges and practices are just and reasonable, and are not unjustly or
unreasonably discriminatory.29
(Continued from previous page)


Statewide Telephone Cooperative, Inc., WC Docket No. 07-256, at 1 (filed Jan. 12, 2009); Letter from Mary Albert,
General Counsel, COMPTEL et al., to Marlene H. Dortch, Secretary, FCC, CC Docket No.01-92, WC Docket Nos.
04-36, 07-256, 08-8, at 3-4 (filed Jan. 8, 2009). Further, forbearance from the exception clause in rule 51.701(b)(1)
would not change this result as that language merely implements the requirements of section 251(g). Compare 47
U.S.C. 251(g) (preserving pre-1996 Act compensation obligations and restrictions for "exchange access,
information access, and exchange services for such access"), with 47 C.F.R. 51.701(b)(1) (excluding "interstate or
intrastate exchange access, information access, or exchange services for such access" from the reciprocal
compensation regime). This is not the first time the Commission has denied forbearance when a grant would not
have brought the petitioner the relief it sought. See Fones4All Corp. Petition for Expedited Forbearance Under 47
U.S.C. 160(c) and Section 1.53 from Application of Rule 51.319(d) to Competitive Local Exchange Carriers Using
Unbundled Local Switching to Provide Single Line Residential Service to End Users Eligible for State or Federal
Lifeline Service
, WC Docket No. 05-261, Memorandum Opinion and Order, 21 FCC Rcd 11125 (2006) (Fones4All
Forbearance Order
) (concluding that forbearance as requested would not give the petitioner the relief it sought and
therefore denying the petition), pet. for review denied, Fones4All Corp. v. FCC, 2008 WL 5220266 (9th Cir. 2008);
Iowa Telecom Petition for Forbearance Under 47 U.S.C. 160(c) from the Universal Service High-Cost Loop
Support Mechanism
, WC Docket No. 05-337, Order, 22 FCC Rcd 15801 (2007) (finding that the requested relief
would not give Iowa Telecom the relief it seeks); see also AT&T Comments at 18.
27 Feature Group IP Reply at 28-29.
28 Id. at 29.
29 The Commission previously has denied section 10 forbearance petitions for lack of sufficient evidence. See
Petition of OrbitCom, Inc. for Forbearance from CLEC Access Charge Rules
, WC Docket No. 08-162, 23 FCC Rcd
13187 (2008) (denying a forbearance petition for "fail[ure] to address in any manner the statutory criteria for a grant
of forbearance or to provide any showing that those criteria are met by its request"); see also AT&T Corp. v. FCC,
236 F.3d 729, 731 (D.C. Cir. 2001) (affirming the Commission's decision to reject market share data submitted in
support of a forbearance petition because the carrier failed to provide the underlying raw data on which its
conclusions were based, making its findings unverifiable, but remanding the Commission's decision for failure to
consider other evidence in record); Petition of Qwest Corporation for Forbearance Pursuant to 47 U.S.C. 160(c)
in the Omaha Metropolitan Statistical Area
, WC Docket No. 04-223, Memorandum Opinion and Order, 20 FCC
Rcd 19415, 19438, para. 50 (2005) (summarily denying request for forbearance from dominant carrier regulation of
enterprise services due to a lack of serving area-wide information in the relevant geographic market), aff'd on other
grounds
, Qwest Corp. v. FCC, 482 F.3d 471 (D.C. Cir. 2007); Petitions of Qwest Corporation for Forbearance
(continued....)
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B.

Enforcement Remains Necessary for the Protection of Consumers and Forbearance
Would Not Be in the Public Interest

11. The second and third prongs of section 10(a) state that the Commission shall forbear if
"enforcement of such regulation or provision is not necessary for the protection of consumers"30 and if
"forbearance from applying such provision or regulation is consistent with the public interest." 31 Feature
Group IP contends that enforcement of section 251(g), the exception clause in section 51.701(b)(1) and,
where applicable, section 69.5(b) of the Commission's rules is not necessary to protect consumers
because the record fails to show that exclusion of these communications from the access charge regime
would adversely affect consumers via end-user rate increases or rate discrepancies between urban and
rural areas.32 Feature Group IP also argues that forbearance from application of switched access charges
to "IP-PSTN and incidental PSTN-PSTN Voice-embedded IP communications," and "making a clear
statement that the exchange of such traffic will be governed by [s]ection 251(b)(5)," would serve the
public interest for a number of reasons.33
12. We are unable, on this record, to conclude that enforcement of section 251(g), the exception
clause in section 51.701(b)(1) and, where applicable, section 69.5(b) of the Commission's rules is not
necessary to protect consumers and that forbearance from these provisions is consistent with the public
interest. Significantly, Feature Group IP provides no evidence to support its claims, and no economic
analysis of the impact of granting its petition is in the record.34 Moreover, the Commission is unable to
determine with reasonable precision the potential impact the requested forbearance would have on
(Continued from previous page)


Pursuant to 47 U.S.C. 160(c) in the Denver, Minneapolis-St. Paul, Phoenix, and Seattle Metropolitan Statistical
Areas
, WC Docket No. 07-97, Memorandum Opinion and Order, 23 FCC Rcd 11729 (2008), pet. for review pending,
No. 08-1257 (D.C. Cir. filed July 29, 2008). Indeed, the Commission's duty to support its decisions with reasoned
explanation generally requires that its factual determinations be based on evidence. See Fox Television Stations, Inc.
v. FCC
, 489 F.3d 444, 460 nn.10-11 (2d Cir. 2007).
30 47 U.S.C. 160(a)(2).
31 47 U.S.C. 160(a)(3). In making its public interest determination, the Commission must consider whether
forbearance from enforcing the provision or regulation will promote competitive market conditions, including the
extent to which forbearance will enhance competition among providers of telecommunications services. 47 U.S.C.
160(b).
32 See Feature Group IP Forbearance Petition at 61. Feature Group IP asserts that, although there has been some
migration away from PSTN communications, such migration is "unlikely to have a significant impact on PSTN
revenues in the near term." Id. at 62. Further, Feature Group IP maintains that any arguments that forbearance
would disrupt implicit support flows must fail because the Commission already subjects some IP-based services to
universal service obligations and because the 1996 Act requires that any implicit subsidies be made explicit. Id. at
62-63 (citing 47 U.S.C. 254(e)). Although not directly relevant to satisfying the second prong of the statutory
criteria, Feature Group IP also argues that forbearance would benefit consumers through increased deployment of
voice-embedded Internet communications. Id. at 61-62.
33 See Feature Group IP Forbearance Petition at 49. Specifically, Feature Group IP contends that forbearance would
reduce regulatory uncertainty and associated costs. Id. at 50-53. Similarly, Feature Group IP contends that lack of
forbearance will result in legal and market uncertainty. See id. at 41-45, 47. Feature Group IP further argues that
forbearance would provide the regulatory certainty necessary to spur investment in advanced services and promote
innovation. Id. at 49-50, 53-55. Moreover, Feature Group IP asserts that forbearance would create greater
efficiencies through a uniform reciprocal compensation regime. Id. at 49, 55. Finally, Feature Group IP states that
forbearance would "reestablish U.S. preeminence" in the high-tech communications industry. Id. at 49-50, 55-56.
34 See supra note 29; see also Fones4All Forbearance Order, 21 FCC Rcd at 11132, para. 14 (denying forbearance
when "Petitioner has not offered any basis to show that granting forbearance is in the public interest").
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consumers because the petition is unclear as to what traffic would be covered by any decision here.35
Even if the Commission could determine the exact scope of the forbearance requested, however, the
additional uncertainty created by the regulatory void that would result from forbearance here would be
detrimental to consumers. Feature Group IP's arguments that forbearance would be in the public interest
are all premised on the assumption that forbearance from section 251(g) would result in this traffic being
governed by the section 251(b)(5) reciprocal compensation regime.36 As discussed above, the requested
forbearance would not have this result. Rather, contrary to Feature Group IP's assumption, forbearance
would result in a regulatory void.37 Thus, forbearance would not create any regulatory certainty, nor
would it reduce the costs associated with disputes over the appropriate regulatory treatment of this traffic.
Moreover, the uncertainty of a regulatory void may harm network investment, including in rural areas.
Because forbearance would not provide the regulatory certainty described by Feature Group IP, we also
reject arguments that grant of the petition would promote innovation, competition, or U.S. preeminence in
the high-tech communications field. Forbearance also would not create greater efficiencies because it
would not result in a uniform reciprocal compensation regime, as Feature Group IP contends.
Accordingly, we cannot find that the requested forbearance is consistent with the public interest.
13. For these reasons, we find that the Feature Group IP Forbearance Petition fails to meet the
statutory criteria necessary for forbearance. 38

IV.

EFFECTIVE DATE

14. Consistent with section 10 of the Act and our rules, the Commission's forbearance decision
shall be effective on January 21, 2009.39 The time for appeal shall run from the release date of this
Order.40


35 Compare Feature Group IP Forbearance Petition at 2 n.3 (comparing "Voice embedded Internet communications"
with "IP-based communications"), with id. at 10-11 (attempting to describe the category of traffic for which it seeks
forbearance), with id. at 25-27 (providing an expanded description of the traffic covered by the petition), with id. at
65 (referring to both "Voice-embedded IP communications" and "voice-embedded IP applications").
36 First, Feature Group IP contends that forbearance would reduce regulatory uncertainty and associated costs. Id. at
50-53. Similarly, Feature Group IP contends that lack of forbearance will result in legal and market uncertainty.
See id. at 41-45, 47. Second, Feature Group IP argues that forbearance would provide the regulatory certainty
necessary to spur investment in advanced services and promote innovation. Id. at 49-50, 53-55. Third, Feature
Group IP asserts that forbearance would create greater efficiencies through a uniform reciprocal compensation
regime. Id. at 49, 55. Finally, Feature Group IP states that forbearance would "reestablish U.S. preeminence" in the
high-tech communications industry. Id. at 49-50, 55-56
37 See supra paras. 8-10. For this reason, forbearance would not provide answers to the numerous questions and
disputes listed by Feature Group IP. See Feature Group IP Forbearance Petition at 51-52.
38 Because we conclude that the Feature Group IP Forbearance Petition fails to meet the statutory criteria necessary
for forbearance, we need not address additional matters raised by Feature Group IP unrelated to the forbearance
requested including interconnection disputes, policies, and principles. See Feature Group IP Reply at 41-52; Feature
Group IP's Intercarrier Compensation Reply Comments in Response to FNPRM in CC Docket No. 01-92 and
Written Ex Parte in WC Docket No. 07-256, CC Docket No. 01-92, WC Docket No. 07-256, at ii-iii, 3-4 (filed Dec.
22, 2008).
39 47 U.S.C. 160(c) (deeming the petition granted as of the forbearance deadline if the Commission does not deny
the petition within the time period specified in the statute); 47 C.F.R. 1.103(a).
40 47 C.F.R. 1.4, 1.13.
8

Federal Communications Commission

FCC 09-3

V.

ORDERING CLAUSES

15. Accordingly, IT IS ORDERED, pursuant to section 10(c) of the Communications Act of
1934, as amended, 47 U.S.C. 160(c), that the petition for forbearance of Feature Group IP West LLC,
Feature Group IP Southwest LLC, UTEX Communications Corp., Feature Group IP North LLC, and
Feature Group IP Southeast LLC IS DENIED as set forth herein.
16. IT IS FURTHER ORDERED, pursuant to section 10 of the Communications Act of 1934, as
amended, 47 U.S.C. 160, and section 1.103(a) of the Commission's rules, 47 C.F.R. 1.103(a), that the
Commission's forbearance decision SHALL BE EFFECTIVE on January 21, 2009. Pursuant to sections
1.4 and 1.13 of the Commission's rules, 47 C.F.R. 1.4, 1.13, the time for appeal shall run from the
release date of this Order.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
9

Federal Communications Commission

FCC 09-3

STATEMENT OF

COMMISSIONER ROBERT M. McDOWELL

RE: Feature Group IP Petition for Forbearance From Section 251(g) of the Communications Act and
Sections 51.701(b)(1) and 69.5(b) of the Commission's Rules, WC Docket 07-256.

It is clear that granting the forbearance petitioners have requested would not give petitioners the
relief sought, but instead would create a regulatory void and significant uncertainty. In the absence of any
evidence or economic analysis in the record that would allow us to determine that enforcement of our
regulations is unnecessary, I find that the petition fails to meet the statutory criteria required for
forbearance under Section 10. The petition must, therefore, be denied.
10

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