******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Southwestern Bell Telephone Company's ) CC Docket Nos. 85-229, Comparably Efficient Interconnection Plan ) 90-623 and 95-20 for Security Service ) ORDER Adopted: May 16, 1997 Released: May 16, 1997 By the Deputy Chief, Common Carrier Bureau: TABLE OF CONTENTS Paragraph I. INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . 1 II. BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . 3 A. CEI Plans. . . . . . . . . . . . . . . . . . . . . . 3 B. The Telecommunications Act of 1996 . . . . . . . . . 7 III. SERVICE DESCRIPTION . . . . . . . . . . . . . . . . . . 9 IV. COMPLIANCE ISSUES. . . . . . . . . . . . . . . . . . . 15 A. Applicability of the 1996 Act's Alarm Monitoring Services Prohibition to SWBT's Proposed Security Service. . . . . . . . 15 1. Positions of the Parties. . . . . . . . . . . 15 2. Discussion. . . . . . . . . . . . . . . . . . . 27 B. CEI Plan Requirements. . . . . . . . . . . . . . . . 44 1. Applicability . . . . . . . . . . . . . . . . . 44 2. Analysis. . . . . . . . . . . . . . . . . . . . 47 C. Other Nonstructural Safeguards . . . . . . . . . . . 66 1. Customer Proprietary Network Information. . . . 67 2. Network Information Disclosure. . . . . . . . . 70 3. Nondiscrimination Reporting . . . . . . . . . . 72 D. Accounting Safeguards. . . . . . . . . . . . . . . . 73 V. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . 74 VI. ORDERING CLAUSES . . . . . . . . . . . . . . . . . . . . 75 I. INTRODUCTION 1. On April 4, 1996, pursuant to the requirements of the Computer III proceeding, Southwestern Bell Telephone Company ("SWBT") filed a comparably efficient interconnection (CEI) plan for its proposed residential Security Service. Under the Computer III regulatory regime, a Bell Operating Company (BOC) is permitted to offer unregulated, enhanced services if it files a CEI plan demonstrating that the underlying regulated basic services are available on an equivalent basis to unaffiliated enhanced service providers (ESPs). A CEI plan must also be filed if a BOC plans to act as a sales agent for an enhanced service provider or otherwise market an enhanced service, even if the BOC will not provide the enhanced service itself. Prior to offering or marketing an enhanced service, a BOC must obtain Commission approval of its CEI plan. 2. The Commission issued a public notice concerning SWBT's CEI Plan on April 26, 1996. The Ameritech Corporation (Ameritech) and the Alarm Industry Communications Committee (AICC) filed comments opposing SWBT's CEI Plan on May 24, 1996. SWBT and Ameritech submitted reply comments on June 7, 1996, and AICC filed a "Motion To Hold In Abeyance" on August 2, 1996. For the reasons discussed below, we approve SWBT's CEI Plan subject to the conditions set forth in this Order. II. BACKGROUND A. CEI Plans 3. The requirement that a CEI plan be filed was first established in the Computer III proceeding, in which the Commission adopted a regulatory framework to govern the provision of integrated enhanced and basic services by the BOCs. Requiring BOCs to file CEI plans was one of the nonstructural safeguards adopted by the Commission, in lieu of structural separation, to prevent cross-subsidization and discrimination. As a first step in implementing the Computer III framework, the Commission permitted the BOCs, which remained subject to various structural separation requirements, to offer individual enhanced services on an integrated basis following approval of service-specific CEI plans. BOCs were required to describe in their CEI plans: (1) the enhanced service or services to be offered; (2) how the underlying basic services would be made available for use by competing ESPs; and (3) how the BOCs would comply with the other nonstructural safeguards imposed by Computer III. 4. The Computer III decision concluded that, in the longer term, with the implementation of Open Network Architecture (ONA), the BOCs should be allowed to provide integrated enhanced services without prior Commission approval of service-specific CEI plans. In a series of orders between 1988 and the end of 1992, the Commission approved the BOC ONA plans that described the unbundled basic services each BOC proposed to provide as ONA services and the terms under which they would be offered. During 1992-1993, the Common Carrier Bureau (Bureau) lifted structural separation requirements for individual BOCs that showed they had implemented all of the ONA services set forth in their ONA plans. 5. In California III, the United States Court of Appeals for the Ninth Circuit determined that, although the Commission had adequately explained its decision to strengthen the protections against cross-subsidization at issue in California I, it had not justified its retreat from its initial position regarding the level of unbundling necessary for eliminating structural separation. The court concluded that the Commission's cost-benefit analysis of its structural separation safeguards was flawed and vacated the BOC Safeguards Order as arbitrary and capricious. In response to the California III decision, the Commission initiated a rulemaking proceeding to review the safeguards for BOC provision of enhanced services. 6. Following the California III decision, the Bureau issued an order allowing the BOCs to continue providing enhanced services and conducting market trials pursuant to CEI plans approved prior to the lifting of structural separation. The Bureau also granted waivers necessary to enable BOCs to continue providing other enhanced services and market trials, provided that the BOCs filed CEI plans or market trial notifications, respectively, within 60 days of the Bureau Interim Waiver Order. The Bureau required the BOCs to file CEI plans or market trial notifications prior to providing any new services or market trials. In addition, the Bureau Interim Waiver Order required the BOCs to continue to comply with the procedures established in approved ONA plans. B. The Telecommunications Act of 1996 7. On February 8, 1996, the "Telecommunications Act of 1996" (1996 Act) became law. Sections 275 and 222 of the 1996 Act are applicable in evaluating SWBT's CEI Plan. Section 275(a) of the Act prohibits BOCs from engaging "in the provision of alarm monitoring services" until February 8, 2001. On March 21, 1997, the Commission adopted an order addressing the alarm monitoring provisions of section 275. Among other things, the Alarm Monitoring Order clarified the definition of alarm monitoring service and discussed the meaning of the word "provision" as used in section 275(a). 8. Section 222 of the Act contains requirements related to the privacy of customer information. The Commission has initiated a proceeding to consider regulations interpreting and specifying in more detail telecommunications carriers' obligations pursuant to section 222. III. SERVICE DESCRIPTION 9. SWBT represents that its proposed "Security Service" will consist of two separate and distinct components. SWBT states that the first component is comprised of customer premise equipment (CPE), which will be sold, installed and serviced by SWBT personnel. This equipment is intended to detect many common types of residential intrusion and emergency situations, sound an audible alarm, and report the condition to an unaffiliated alarm monitoring service provider. SWBT states that an unaffiliated monitoring agency will be responsible for situation assessment and action. 10. The second aspect of SWBT's Security Service involves the monitoring function. SWBT represents that this function will be performed by an unaffiliated entity on whose behalf SWBT will act only as a sales agent. According to SWBT, the typical alarm monitoring scenario involves two phases. The first phase is the transmission of a non-voice message from the residential alarm system to the monitoring center, indicating that an alarm condition exists. This message is transmitted over the public switched telephone network. The second phase involves a voice call placed by personnel at the monitoring center to the police and/or fire departments, and to other persons identified by the customer. SWBT stresses that an unaffiliated entity, not SWBT, will perform the monitoring function. 11. SWBT states that potential Security Service subscribers will be presented two separate contracts. The first contract would govern the relationship between the customer and SWBT, and cover the installation and maintenance of CPE. SWBT states that the second contract, to be presented to the customer by SWBT on behalf of an unaffiliated monitoring service, would set forth the liabilities and obligations of the monitoring service provider to the customer. SWBT states that customers will have the option of purchasing the SWBT Security Service system (i.e., installation of alarm detection CPE only) or SWBT Security Service system packaged with alarm monitoring service provided by an unaffiliated entity. SWBT further represents that, if a customer decides to purchase only the CPE, the customer will be free to contract with an alarm monitoring service provider of their choice, or not to subscribe to any monitoring service at all. 12. SWBT asserts that inquiries regarding its proposed Security Service will be handled by SWBT customer contact center personnel. However, when a customer calls SWBT to inquire about the alarm monitoring service (as opposed to billing or equipment), SWBT states that the customer will be referred to the alarm monitoring service provider. In addition, all associated correspondence and materials (e.g., yard sign, window stickers, etc.) will identify the alarm monitoring service provider. 13. SWBT states that two separate and distinct charges will be displayed on SWBT's bill. First, the alarm monitoring service provider's name will be clearly identified along with its associated charges. Second, a separate charge will also appear on the bill, consisting of SWBT's CPE charge, when applicable. SWBT further states that it will collect customer payments, deduct charges for billing and collection services it provides and deduct any sales commission due, and remit the net balance to the alarm monitoring service provider. 14. SWBT represents that its Security Service will be initially targeted to residential markets, with the possible inclusion of small businesses in the future. In addition, SWBT states that while the availability of its Security Service offering will depend on market demand, it expects that ultimately the service will be available in most major metropolitan areas within SWBT's five-state territory (Arkansas, Kansas, Missouri, Oklahoma and Texas). IV. COMPLIANCE ISSUES A. Applicability of the 1996 Act's Alarm Monitoring Services Prohibition to SWBT's Proposed Security Service 1. Positions of the Parties 15. AICC objects to SWBT's CEI Plan on the grounds that section 275 of the Act prohibits SWBT from engaging in the provision of alarm monitoring services, and the activities proposed by SWBT constitute the provision of such service. AICC states that SWBT's CEI plan is dependent upon the proposition that, as long as it does not directly operate the central station, SWBT may engage in all other aspects of the alarm monitoring business. AICC asserts that this interpretation is inconsistent with the intent of section 275, which must be read to prohibit BOC participation in the alarm monitoring business, not merely as a rule requiring the BOCs to subcontract for the central station functions. Although AICC has "no objection to SWBT being compensated for its billing and collection services," and acknowledges that, pursuant to section 275, SWBT may "provide sales, installation and maintenance of alarm monitoring CPE," AICC asks the Bureau to establish a clear distinction between permissible BOC activities and prohibited alarm monitoring services, and recommends that all participation in the alarm monitoring business be prohibited. 16. Ameritech also argues that the Bureau should reject SWBT's CEI Plan because it would violate section 275 of the Act. Ameritech contends that SWBT's emphasis on the fact that a separate, unaffiliated entity will operate the monitoring system is misplaced. Regardless of who owns the monitoring center, Ameritech argues that the alarm monitoring service described in SWBT's CEI plan is SWBT's service and further notes that SWBT's CEI Plan characterizes the end-to-end security service as "SWBT's Security Service." Although SWBT characterizes its proposed relationship with alarm monitoring providers as one of sales agency, Ameritech believes that the SWBT/alarm monitoring provider relationship appears to be one of contractor-subcontractor (with the alarm monitoring company being the subcontractor). Ameritech submits that SWBT should not be allowed to provide alarm monitoring service through a subcontractor when it cannot do so directly. 17. Relying exclusively on the Bureau's order approving Bell Atlantic's CEI plan for internet access service ("IAS"), SWBT argues on reply that all objections based on section 275 of the Act are outside the scope of this proceeding. SWBT contends that the oppositions filed by Ameritech and AICC, which are based on section 275, are therefore irrelevant to action on its CEI plan. Absent valid substantive objections on the merits of its CEI plan, SWBT concludes that its plan should be approved. 18. SWBT asserts that, even if the Bureau considers the section 275 arguments raised by Ameritech and AICC, its planned Security Service does not violate section 275 because SWBT would not be providing "alarm monitoring services" as defined in the Act. Moreover, SWBT argues that it is acting as a sales agent for the unaffiliated alarm monitoring entity, not as a reseller or contractor as AICC and Ameritech allege. SWBT states that, consistent with the nature of sales agency relationships, purchasers of alarm monitoring services will be made aware of the actual, unaffiliated provider of such services at all times. 19. Following the release of the Alarm Monitoring Order, which addressed section 275 of the Act, SWBT and AICC filed ex parte letters supplementing the record in this proceeding. In a letter dated April 3, 1997, SWBT argues that its proposed service does not constitute the provision of alarm monitoring service pursuant to section 275, as this statutory provision is interpreted in the Alarm Monitoring Order. In particular, SWBT asserts that its proposal satisfies the Alarm Monitoring Order's requirements concerning compensation and nondiscrimination in entering into sales agency relationships. 20. For example, SWBT represents that its alarm monitoring sales agency agreements will be mutually non-exclusive, meaning that the alarm monitoring provider will be free to use other sales agents or distribution channels, and SWBT will be free to enter into sales agency agreements with other alarm monitoring service providers. SWBT also represents that it will consider acting as a sales agent for qualified providers based upon standard business criteria, such as the provider's financial and business stability and reputation, size and scope of operations, geographic monitoring coverage, central alarm monitoring station certification, technical and operational compatibility, future growth capacity, existing/emerging service capability, and compensation arrangements. . . . Once SWBT enters into a sales agency relationship with an alarm monitoring service provider, it will make available to other comparably qualified alarm monitoring service providers the same terms and conditions of the sales agency arrangement on a nondiscriminatory basis. 21. Furthermore, SWBT represents that its compensation "will depend solely upon SWBT's own performance" as a sales agent. SWBT states that "[s]uch compensation will not depend upon a provider's performance in offering the alarm monitoring service, nor will it be based upon the net revenues of an alarm monitoring service provider to which SWBT furnishes sales agency services." SWBT also represents that it "will have no 'financial stake in the commercial success' of any alarm monitoring provider." Finally, SWBT asserts: While the exact compensation terms will be the subject of commercial negotiations between SWBT and an alarm monitoring service provider, they will likely be based on a flat rate, per customer charge, billed either on an up-front, one-time basis or in the form of a monthly recurring charge, taking into account the level (and associated cost) of advertising/marketing that SWBT will be contributing to the agency relationship in any given case, and the volume of new customers produced as a result of SWBT's marketing efforts. 22. In response, AICC argues that SWBT's filing lacks sufficient detail to make a determination of "whether SWBT would have a financial stake in the success of its chosen alarm partners." AICC recommends that the Bureau seek additional information from SWBT, and suggests three "measures of reasonableness" by which to evaluate any compensation arrangement proposed by SWBT. Specifically, AICC states that it would be unlikely for SWBT to be able to obtain a financial stake in the success of its alarm monitoring partner if its compensation arrangements are: (1) designed to compensate SWBT for the initial sale and paid as a one time fee, or, if received on a monthly recurring basis, amortized over a 2-3 year period; (2) comparable to the additional cost SWBT actually incurs in advertising and marketing the alarm monitoring provider's services, which, according to AICC, should not exceed 25% of the gross monthly monitoring fee charged to the end user; and (3) consistent with the level of compensation typically paid to sales agents in the alarm monitoring industry, which, according to AICC, is a commission of approximately 15-20 percent, calculated based upon 2-3 years of expected revenues. 23. SWBT disputes AICC's assertion that it has failed to provide enough information with respect to the compensation issue. SWBT argues that: (1) it has already committed to adopt compensation arrangements that are consistent with the Commission's rules; and (2) neither the Act, the Alarm Monitoring Order, nor any other legal or regulatory considerations require the Commission to "engage in detailed rate regulation of sales agency compensation," as would be the case if the Commission adopted AICC's recommendations. 24. In an ex parte letter submitted April 28, 1997, AICC denies that it is seeking rate regulation of SWBT's sales agency relationship; rather, AICC asserts that evaluation of the structure of SWBT's compensation arrangements is critical in determining whether SWBT will have a stake in the commercial success of the alarm monitoring entities for which it provides sales agency services. AICC reiterates its claim that the record in this proceeding is devoid of evidence necessary for the Bureau to make such a determination. 25. AICC argues that there are two key elements in evaluating the compensation structure associated with the marketing alarm monitoring services by SWBT. First, the alarm monitoring service provider must control the contractual relationship with the customer. For example, AICC asserts that the alarm monitoring service provider must be able to: (1) establish, raise or lower the price of the monitoring service without the involvement of its marketing agent; and (2) sell or transfer the customer contract to another alarm monitoring company. AICC also contends that the contract between the alarm monitoring company and the customer must separately identify the total alarm monitoring fee, as distinct from any SWBT charges for CPE installation or maintenance. 26. Second, AICC claims that if the SWBT/alarm monitoring service provider relationship is truly one of sales agency, SWBT will not be able to command a significant premium over other alarm monitoring marketing agents. AICC asserts that industry practice demonstrates that marketing relationships typically generate a 20-25 percent share of monitoring revenues for the sales agent, while resale relationships typically generate a 70-75 percent share of the revenues for the reseller. AICC concludes that, if SWBT commands compensation at reseller levels, it should be presumed to be engaging in resale, which pursuant to the Alarm Monitoring Order is prohibited by section 275 of the Act. Finally, AICC asserts that SWBT intends to rely on precedent established in the context of this alarm monitoring CEI proceeding to circumvent the separate affiliate requirement of section 272 through an exclusive marketing arrangement with its long-distance affiliate. 2. Discussion 27. As a threshold matter, we reject SWBT's claim that objections based on section 275 of the Act are outside the scope of this proceeding. Pursuant to sections 4(i) and 4(j) of the Act, we have broad discretion to order our proceedings in a manner that will best serve the public interest. In the context of this proceeding, we believe that it would be an unwise use of Commission resources to consider whether SWBT's CEI plan is consistent with the Commission's CEI requirements without first determining whether SWBT is statutorily prohibited from providing the proposed service covered by the CEI plan. Given the record in this proceeding, we see no public interest benefits to acting on the CEI plan and addressing the section 275 issues in subsequent enforcement or complaint proceedings. 28. In addition, we reject SWBT's suggestion that our decision in the Bell Atlantic Internet Access CEI Order may be read to mean that all challenges to CEI plans based on provisions of the 1996 Act are inappropriate. The Bureau's determination that arguments concerning sections 251 and 252 of the Act were outside the scope of Bell Atlantic's CEI plan is distinguishable from the circumstances presented by SWBT's proposed CEI plan. Sections 251 and 252 of the Act, at issue in the Bell Atlantic proceeding, impose certain obligations on incumbent LECs in order to facilitate competition in the local exchange marketplace. In the Bell Atlantic internet access CEI proceeding, there was no contention that sections 251 and 252 barred the provision of the internet access service proposed by Bell Atlantic; rather, the question was whether Bell Atlantic had to demonstrate in its CEI plan that it satisfied requirements established in sections 251 and 252. In contrast, commenting parties in this proceeding have alleged that SWBT is barred by section 275 of the Act from providing the service which is the subject of the CEI plan before us. 29. Accordingly, prior to evaluating whether SWBT's CEI Plan meets the Commission's CEI requirements, we will determine whether SWBT's proposed Security Service is prohibited by section 275 of the Act, based on the guidelines established by the Commission in the Alarm Monitoring Order. a. Alarm Monitoring Order 30. In addressing the question of what constitutes the prohibited "provision of alarm monitoring services" for the purposes of section 275, the Commission, in the Alarm Monitoring Order, concluded: [A]n incumbent LEC, including a BOC, is engaged in the 'provision' of alarm monitoring service if it operates the 'remote monitoring center' in connection with the provision of alarm monitoring service to end users. . . . [If] an incumbent LEC is merely providing the CPE and/or the underlying transmission service, it is not engaged in the provision of alarm monitoring service under section 275. 31. The Commission also concluded in the Alarm Monitoring Order that performing billing and collection functions for an alarm monitoring company "does not, in and of itself, constitute the provision of alarm monitoring service under section 275(a)." The Commission reached the same conclusion with respect to BOC participation in sales agency and marketing of alarm monitoring services. In reaching this decision, the Commission explicitly rejected AICC's suggestion that BOCs be flatly prohibited "from entering into arrangements to act as sales agents on behalf of alarm monitoring service providers or to market on behalf of, or in conjunction with, alarm monitoring services providers." Nevertheless, the Commission recognized: [T]here may be certain situations where a BOC is not directly providing alarm monitoring service, but its interests are so intertwined with the interests of an alarm monitoring service provider that the BOC itself may be considered to be 'engaged in the provision' of alarm monitoring . . . . We conclude therefore that we will examine sales agency and marketing arrangements . . . on a case by case basis to determine whether they constitute the 'provision' of alarm monitoring service. 32. The Commission stated that it will take into account a variety of factors in determining whether the interests of a BOC and the interests of an alarm monitoring service provider are "intertwined" such that the BOC will be considered to be providing alarm monitoring service. One factor is "whether the terms and conditions of the sales agency and marketing arrangements are made available to other alarm monitoring companies on a nondiscriminatory basis." Another factor is how the BOC will be compensated for its sales agency and marketing services. The Alarm Monitoring Order states: [I]f a BOC, acting as a sales agent or otherwise marketing the services of a particular alarm monitoring service provider, has a financial stake in the commercial success of that provider, such involvement with the alarm monitoring company may constitute the 'provision' of alarm monitoring service. Such a BOC may be unlawfully providing alarm monitoring if its compensation for marketing such services is based on the net revenues of an alarm monitoring service provider to which the BOC furnishes such marketing services. In that circumstance, a BOC's compensation would not be tied to its performance in marketing the unaffiliated firm's service, but rather would depend on the unaffiliated firm's performance in offering alarm monitoring service. b. Analysis 33. We conclude that under SWBT's proposal, it would not be engaged in the provision of "alarm monitoring service" as defined by section 275 of the Act. Accordingly, we find that the Act's five-year prohibition on BOC provision of "alarm monitoring service" does not bar SWBT's provision of the Security Service as proposed in its CEI plan. In reaching this conclusion, we are guided by the policies established in the Commission's Alarm Monitoring Order, and expressly rely upon the representations made by SWBT in this proceeding. Since this conclusion concerning the applicability of the section 275 prohibition is a predicate for action on SWBT's CEI Plan, our approval of the plan is conditioned on SWBT abiding by the representations made regarding its sales agency arrangements. 34. It is clear from the representations made by SWBT that it does not propose to operate a remote alarm monitoring center, and thus the proposed service cannot be argued to violate section 275 for this reason. Moreover, as the Alarm Monitoring Order made clear, the fact that SWBT proposes to sell, install and maintain CPE, provide billing and collection services, and act as a sales agent for unaffiliated alarm monitoring service providers, "does not, in and of itself, constitute the provision of alarm monitoring service under section 275(a)." While SWBT's proposed activities do not inherently involve the provision of alarm monitoring service, the Alarm Monitoring Order requires a case-by-case examination of sales agency and marketing arrangements between a BOC and an alarm monitoring company. The purpose of this examination is to ensure that the interests of the BOC, and the alarm monitoring provider for which the BOC will act as a sales agent (or for which the BOC will provide marketing services), are not so "intertwined" that the BOC should be deemed to be engaged in the provision of alarm monitoring service in contravention of section 275. 35. We conclude that SWBT's proposed sales agency and marketing relationships will not create an impermissible "intertwining" of interests for purposes of section 275 such that SWBT should be deemed to be engaged in the provision of alarm monitoring. The Alarm Monitoring Order identified two factors to be considered when addressing the question of impermissible "intertwining" of the interests of a BOC and an alarm monitoring service provider on whose behalf the BOC is providing marketing or sales agency services. The first factor is whether the terms and conditions of the sales agency or marketing arrangement will be available to other alarm monitoring companies on a nondiscriminatory basis. SWBT represents that its sales agency and marketing agreements will expressly provide that they are mutually non-exclusive (i.e., either party may enter into other such agreements), and that it will use standard business criteria in determining whether to enter into a sales agency relationship with an alarm monitoring service provider. SWBT states that, once it enters into a sales agency relationship with an alarm monitoring service provider, it will make the same terms and conditions available to other similarly qualified providers on a non- discriminatory basis. No party has objected to, or commented on, this aspect of SWBT's proposal. 36. On May 5, 1997, SWBT filed a "Petition for Reconsideration or Clarification" of the nondiscrimination requirement for sales agency in the Alarm Monitoring Order. SWBT argues that, the Commission need not, and should not, take into account whether the terms and conditions of the [sales agency] arrangement would be made available to other alarm monitoring providers on a nondiscriminatory basis. . . . At the very least, the Commission should clarify that nondiscrimination is not an absolute requirement for an acceptable sales agency relationship. In its reconsideration petition, SWBT represents that it will comply with the commitments regarding nondiscrimination contained in its April 3, 1997 Ex Parte letter addressing its pending CEI plan. In addition, SWBT represents that if the Commission adopts SWBT's suggested modification or clarification to the Alarm Monitoring Order, SWBT "will not modify its sales agency relationship until the Bureau approves an amendment to its CEI Plan." 37. Based on SWBT's representations in this CEI proceeding, and in SWBT's Petition for Reconsideration in the rulemaking docket, we find that its proposed Security Service comports with the Commission's nondiscrimination requirement and does not indicate an impermissible intertwining of interests for purposes of section 275. 38. A second factor to be considered is how the BOC is compensated for its sales agency services. If the BOC has a financial stake in the commercial success of the alarm monitoring provider, the BOC may be deemed to be "providing" alarm monitoring service. In particular, the Commission stated that a BOC "may be unlawfully providing alarm monitoring service if its compensation . . . is based on the net revenues of [the] alarm monitoring service provider . . . . " SWBT represents that any compensation for its performance of sales agency functions "(1) would depend solely upon SWBT's own performance as a sales agent; (2) would not depend upon an alarm monitoring service provider's performance of its services; and (3) would not be based upon the net revenues of an alarm monitoring service provider." Based on these representations, we conclude SWBT has demonstrated that its compensation for sales agency activities will not so intertwine its interests with those of alarm monitoring service providers that SWBT should be considered to be engaged in the provision of alarm monitoring service pursuant to section 275. 39. We reject AICC's request that SWBT be required to submit information further detailing its possible compensation arrangements and decline to withhold approval of SWBT's CEI plan based on AICC's contentions concerning the compensation arrangements. In sum, we decline to limit the level of SWBT's compensation for its sales agency and marketing services based on the record in this proceeding. For example, AICC asserts that it is industry practice for entities marketing alarm monitoring services to receive a "20-25 percent share of monitoring revenues," while resellers of alarm monitoring services receive "70-75 percent of the revenue." AICC therefore argues that the Commission should presume that SWBT is engaged in the resale of alarm monitoring services (which is prohibited by section 275, as indicated in the Alarm Monitoring Order) if it obtains compensation at reseller levels. While we are mindful that extraordinarily high levels of compensation may raise questions concerning the relationship between the BOC and an alarm monitoring service provider, AICC has not demonstrated that a BOC's compensation for sales agency or marketing services should be subject to any specific cap. In fact, there may be legitimate business reasons, such as more efficient marketing operations, that would justify compensation that differs from current industry standards. Moreover, AICC has not shown that the compensation levels that it cites for sales agency are relevant when, in addition to acting as a sales agent, SWBT will be providing and maintaining alarm CPE as well as providing billing and collection. If the services provided by SWBT differ from those of other parties, one would expect compensation levels to differ as well. 40. Moreover, we see little risk that the BOCs will be able to extract excessive compensation for their sales agency and marketing services. As noted by SWBT, the exact terms and conditions of SWBT's compensation will be negotiated with unaffiliated alarm monitoring providers on an arms-length basis. Sales agency and marketing services provided by parties other than SWBT are readily available to alarm monitoring service providers, and our CEI requirements protect against the potential for discrimination by SWBT. 41. We also reject AICC and Ameritech's other claims that SWBT's relationship with the unaffiliated monitoring entity is not one of sales agency. AICC and Ameritech argue that, for all practical purposes, SWBT would be reselling or subcontracting the alarm monitoring function rather than acting as a sales agent. In particular, AICC asserts that, unless the relationship between the alarm monitoring company and its end user customer is unencumbered by SWBT's role as a marketing agent, SWBT must be considered a reseller rather than a sales agent. We agree with AICC that as a sales or marketing agent for an alarm monitoring service provider, SWBT may not "own" or exercise direct control over the terms of the subscriber contract. This includes, inter alia, the right to set, raise or lower monitoring charges and the right to transfer or sell the contract to a third party. 42. Consistent with the foregoing, we find that SWBT would be acting as a sales agent based on its representations that, inter alia: (1) the terms and conditions for the provision of the monitoring functions will be set forth in a separate contract between the subscriber and the unaffiliated monitoring entity; (2) SWBT will not set the price for monitoring services or rebrand the service as SWBT service; (3) all calls or questions relating to the monitoring functions will be directed to the unaffiliated monitoring company; and (4) the unaffiliated monitoring company will be clearly identified on all bills issued by SWBT, and all associated correspondence and materials will also identify the monitoring entity. In addition, we rely on SWBT's representation that: In no event . . . will SWBT have the unlimited right to control the customer account during the efficacy of the prohibition contained in Section 275. The non-affiliated alarm monitoring service provider will have complete customer control subject to the service contract between it and the alarm monitoring service customer. 43. Finally, we find AICC's concern that SWBT will rely on precedent established in the alarm monitoring context to circumvent the separate affiliate requirement of section 272 through an exclusive marketing arrangement with its long-distance affiliate to be speculative at best. Conjecture about SWBT's future compliance with the requirements in section 272 do not constitute grounds for withholding approval of SWBT's CEI Plan. We also dismiss as moot AICC's request that the Commission hold SWBT's CEI Plan in abeyance until completion of the Commission's Alarm Monitoring rulemaking proceeding. As discussed above, the Commission adopted a Second Report and Order in the Alarm Monitoring proceeding on March 21, 1997, and our decision herein relies on the policies set forth in that Order. B. CEI Plan Requirements 1. Applicability 44. We agree with SWBT that the Commission's rules require approval of a CEI plan before a BOC may market an enhanced service. While CEI plan approval is not necessary for a BOC to provide CPE or billing and collection in connection with enhanced services, CEI plan approval is required when a BOC seeks to act as a sales agent or otherwise market an enhanced service. While this situation has arisen most frequently in the context of BOC marketing for affiliated enhanced service providers, we believe that the requirements for CEI plan approval provide significant public interest benefits in the case of marketing or sales agency for unaffiliated entities as well. In particular, application of the CEI requirements and other non-structural safeguards protect against the possibility of discrimination in favor of the entity for which the BOC is acting as a sales agent or providing marketing services. 45. The Commission's CEI requirements give other ESPs equal and efficient access to those basic services that the BOCs use to provide their own enhanced services. In most cases, BOCs filing CEI plans are seeking to offer enhanced services themselves without a separate subsidiary. Here, SWBT proposes to act as a sales agent for unaffiliated alarm monitoring service providers, but will not provide alarm monitoring itself. Despite this, in its CEI plan, SWBT has typically worded its CEI commitments as if it were providing an enhanced service itself rather than acting as a sales agent and marketing an enhanced service provided by a third party. In this context, we will generally apply the CEI criteria to require that, in the provision of basic underlying services, SWBT treat alarm monitoring service providers for which it acts as a sales agent or performs marketing no more favorably than alarm monitoring service providers for which it is not acting as a sales agent or performing marketing. 46. As previously indicated, CEI plans for the marketing of enhanced services usually involve BOC marketing on behalf of an affiliated ESP, and a number of SWBT's CEI representations and commitments use language that is consistent with this. However, based on the record before us, it is clear that the alarm monitoring service providers for which SWBT proposes to provide sales agency and marketing services would not be affiliated with SWBT. Thus, to the extent that certain of SWBT's representations with respect to its CEI commitments do not reflect the fact that SWBT is providing sales agency and marketing services for unaffiliated alarm monitoring service providers, as opposed to providing alarm monitoring services itself or through an affiliate, we interpret SWBT's representations in a manner that reflects a marketing and sales agency relationship with an unaffiliated entity. Other representations which do not appear to require clarification are accepted as stated. We approve the individual aspects of the plan predicated on these interpretations. The provision of sales agency and marketing services by SWBT pursuant to this plan will be deemed to constitute acceptance of our interpretations of SWBT's CEI representations, and SWBT will be required to comply with these representations as we have interpreted them. 2. Analysis 47. The Commission, in its Computer III proceeding, established nine specific CEI requirements, which are discussed below. SWBT has described in its submissions how it will satisfy each of these nine requirements. We review below SWBT's CEI plan with respect to each of these requirements. a. Unbundling of Basic Services 48. The unbundling requirement obligates the carrier to unbundle, and associate with a specific rate element in the tariff, the basic services and basic service functions that underlie the enhanced service offering provided or marketed by the carrier. Nonproprietary information used by the carrier providing or marketing the unbundled basic service must be made available as part of CEI. In addition, the carrier must include in its unbundled offerings any options in the provision of such basic services or functions available to itself or to the entity for which it is acting as a sales agent or providing marketing services. 49. SWBT represents that local exchange service is the primary underlying basic service that will be used to provide SWBT Security Service. SWBT also states that, at present, local exchange service is offered on an unbundled basis (i.e., separately from SWBT's Security Service) under tariffs in all five states currently served by SWBT. Consequently, SWBT asserts that this basic service will be available to end users of SWBT's Security Service and to end users of unaffiliated competing vendors on an unbundled basis, at the same rates, and under the same terms and conditions, through state tariffs in effect in all jurisdictions currently served by SWBT. SWBT represents that any interLATA services required as part of SWBT's Security Service will be obtained by end users without any SWBT involvement. Finally, SWBT represents that any additional intraLATA basic services used to support SWBT's Security Service will be added to the CEI plan by way of an amendment prior to their use by SWBT. 50. In the context of this CEI plan, we interpret SWBT's representations to mean, inter alia, that the basic service underlying the provision of alarm monitoring service by entities for which SWBT provides sales agency or marketing will be available on an unbundled basis to all other alarm monitoring service providers and end users on an unbundled basis at the same rates, terms, and conditions through state tariffs in all jurisdictions served by SWBT. SWBT represents that any interLATA services used in conjunction with the alarm monitoring services for which SWBT acts as a sales agent or provides marketing will be obtained by customers without any SWBT involvement. No party has objected to, or commented on, this aspect of SWBT's CEI Plan. Based on our interpretation of SWBT's representations, we find that its CEI Plan comports with the Commission's unbundling requirement. We note, however, that SWBT will have to obtain approval of a plan amendment (as opposed simply to filing an amendment as its representation implies) before it may provide sales agency or marketing services to alarm monitoring service providers using any underlying basic services other than local exchange service. b. Interface Functionality 51. The interface functionality requirement obligates the carrier to "make available standardized hardware and software interfaces that are able to support transmission, switching, and signaling functions identical to those utilized in the enhanced service provided by the carrier," or for which the carrier acts as a sales agent. 52. SWBT represents that "[a]ll SWBT Security Service providers, including SWBT, will connect their facilities to SWBT's network through existing standard line-side and trunk-side network interfaces which have already been made available to the public" in compliance with the Commission's network disclosure rules. SWBT further represents that no special interfaces, signaling, abbreviated dialing, or other unique capabilities will be provided by SWBT to end users, or to other providers in support of the enhanced offerings described in its plan. If such access arrangements are to be made available to SWBT's Security Service, SWBT represents that such arrangements will be made available to other ESPs at the same time, in the same jurisdictions and on the same terms and conditions. Finally, SWBT represents that it will provide advance notification to ESPs of new interfaces, and will provide prior notification (including "make/buy" disclosure) required by the Commission's network disclosure rules. 53. In the context of this CEI plan, we interpret SWBT's representations to mean, inter alia, that: (1) all alarm monitoring service providers may connect their facilities to SWBT's network through existing standard line-side and trunk-side network interfaces, which have already been made available to the public in compliance with the Commission's network disclosure rules; (2) no special interfaces, signaling, abbreviated dialing or other unique capabilities will be provided by SWBT to any end users or any alarm monitoring service providers in support of alarm monitoring services; (3) in the event that special interfaces, signaling, abbreviated dialing or other unique capabilities are provided by SWBT to alarm monitoring service providers for which SWBT provides sales agency or marketing, SWBT will make such arrangements available to all other alarm monitoring service providers at the same time, in the same jurisdictions, and on the same terms and conditions; and (4) SWBT will provide advance notification to all alarm monitoring service providers of new interfaces as required by the Commission's network disclosure rules. No party has objected to, or commented on, this aspect of SWBT's CEI Plan. Based on our interpretation of SWBT's representations, we find that its CEI Plan comports with the Commission's interface functionality requirements. c. Resale 54. The resale requirement established in Computer III obligates a carrier's enhanced service operations or the entity for which it acts as a sales agent or provides marketing to take the basic services used in its enhanced service offerings at the carrier's unbundled tariffed rates as a means of preventing improper cost-shifting to regulated operations and anti-competitive pricing in unregulated markets. 55. SWBT represents that its proposed Security Service will be provided by obtaining underlying basic services at tariffed rates, and that the resulting enhanced service will be provided on a nonregulated basis. In the context of this CEI plan, we interpret SWBT's representations to mean, inter alia, that all alarm monitoring service providers for which SWBT provides marketing or acts as a sales agent will take the basic services underlying their alarm monitoring services at tariffed rates. No party has objected to, or commented on, this aspect of SWBT's CEI Plan. Based on our interpretation of SWBT's representations, we find that its CEI Plan comports with the Commission's resale requirement. d. Technical Characteristics 56. This requirement obligates a carrier to provide basic services with technical characteristics that are equal to the technical characteristics the carrier uses for its own enhanced services or the enhanced services for which it provides marketing or sales agency services. 57. SWBT represents that interconnection between its proposed Security Service and the underlying basic services will be achieved through existing, published standard network interfaces identical to those provided under existing local exchange tariffs and the technical references noted in those tariffs. Therefore, according to SWBT, the technical characteristics of the underlying interfaces that will be used by SWBT to provide these enhanced services will also be the same as those available to nonaffiliated competitors who wish to use them in providing their own security service. In the context of this CEI plan, we interpret SWBT's representations to mean, inter alia, that SWBT will provide all alarm monitoring service providers with underlying basic local exchange services that have technical characteristics that are equal to the technical characteristics of those services provided to an alarm monitoring service provider for which SWBT provides marketing or sales agency services. No party has objected to, or commented on, this aspect of SWBT's CEI Plan. Based on our interpretation of SWBT's representations, we find that its CEI Plan comports with the Commission's technical characteristics requirement. e. Installation, Maintenance, and Repair 58. This requirement ensures that the periods for installation, maintenance, and repair of the basic services and facilities in a CEI offering are the same as those the carrier provides to its own enhanced service operations or the enhanced service operations of an entity on whose behalf a BOC is providing sales agency or marketing services. Carriers must also satisfy reporting and other requirements showing that they have met this requirement. 59. SWBT represents that its internal methods for installing, maintaining, and repairing all of its basic services are sufficiently mechanized to prevent discrimination against any given customer or type of customer. In the context of this CEI plan, we interpret SWBT's representations to mean, inter alia, that the periods for installation, maintenance, and repair of underlying basic services will be the same for alarm monitoring service providers for which SWBT acts as a sales agent or provides marketing services and alarm monitoring service providers for which SWBT does not perform such services. No party has objected to, or commented on, this aspect of SWBT's CEI Plan. Based on our interpretation of SWBT's representations, we find that its CEI Plan comports with the Commission's technical characteristics requirement. f. End-User Access 60. This requirement obligates the carrier to provide to all end users the same abbreviated dialing and signaling capabilities that are needed to activate or obtain access to enhanced services that use the carrier's facilities. This requirement provides end users equal opportunities to obtain access to basic facilities through derived channels, whether the end user utilizes the enhanced service offering of the carrier or of a competing provider. 61. SWBT represents that end users will access SWBT's Security Service via the same tariffed services that end users can use to access the competing services of other ESPs. SWBT further represents that no abbreviated dialing or signaling arrangements nor any special derived channel access arrangements are uniquely associated with SWBT's Security Service offering. In the context of this CEI plan, we interpret SWBT's representations to mean, inter alia, that: (1) all end users accessing the alarm monitoring services for which SWBT provides sales agency or marketing services will use the same tariffed services that end users can use to access all other alarm monitoring services; and (2) no abbreviated dialing or signaling arrangements or any special derived channel access arrangements will be uniquely available to end users that are customers of alarm monitoring service providers for which SWBT provides marketing or sales agency services. No party has objected to, or commented on, this aspect of SWBT's CEI Plan. Based on our interpretation of SWBT's representations, we find that its CEI Plan comports with the Commission's end-user access requirement. g. CEI Availability 62. This requirement obligates a carrier providing or marketing a CEI offering to make that CEI offering available and fully operational on the date that the carrier offers or begins to market the corresponding enhanced service to the public. The requirement also obligates the carrier to provide a reasonable time prior to that date when prospective users of the CEI offering can use the CEI facilities and services for purposes of testing their enhanced service offerings. Past decisions also have referred to this as the 90-day notice requirement. 63. SWBT represents that the underlying basic services it will utilize in the provision of its Security Service are currently offered under tariff in all jurisdictions served by SWBT, and therefore, the underlying services will be made available to any ESP on the same terms and conditions. SWBT further represents that, in jurisdictions where access arrangements are not currently available, SWBT will make testing capability available to ESPs at the same time that such capability is available to itself. In the context of this CEI plan, we interpret SWBT's representations to mean, inter alia, that: (1) all underlying basic service used by alarm monitoring service providers for which SWBT will provide sales agency or marketing services are currently available under tariff to any alarm monitoring service provider in all jurisdictions served by SWBT; and (2) where access arrangements are not currently available, SWBT will make testing capability available to alarm monitoring service providers for which it does not act as a sales agent or provide marketing services, at the same time it makes testing capability available to alarm monitoring providers for which it does act as a sales agent or provides marketing. No party has objected to, or commented on, this aspect of SWBT's CEI Plan. Based on our interpretation of SWBT's representations, we find that its CEI Plan comports with the Commission's CEI availability requirement. h. Minimization of Transport Costs 64. This requirement obligates carriers providing or marketing enhanced services to provide other ESPs (including ESPs whose services the carrier is not marketing) with interconnection facilities that minimize transport costs. SWBT represents that interconnection to all facilities used to provide the underlying basic services supporting its Security Service will be offered under tariff, and will therefore be made available at the same rates, and on the same terms and conditions, to both affiliated and nonaffiliated providers of SWBT Security Service. SWBT further represents that, as other configurations and serving arrangements are requested by end users and/or become technically feasible, SWBT will work in good faith with customers to develop and implements new techniques which minimize transport costs. Finally, SWBT represents that the unaffiliated entity on whose behalf SWBT will act as sales agent will own and operate all alarm monitoring equipment on its own premises, not on SWBT premises. In the context of this CEI plan, we interpret SWBT's representations to mean, inter alia, that interconnection to all facilities used to provide the underlying basic services supporting the alarm monitoring service offered by entities for which SWBT provides sales agency or marketing services will be available to all other alarm monitoring service providers under tariff at the same rates, terms, and conditions. No party has objected to, or commented on, this aspect of SWBT's CEI Plan. Based on our interpretation of SWBT's representations, we find that its CEI Plan comports with the Commission's minimization of transport costs requirement. i. Recipients of CEI 65. This requirement prohibits a BOC from restricting the availability of the CEI offering it is providing or marketing to any particular class of customer or enhanced service competitor. SWBT represents that the availability of the underlying basic services required for its Security Service will not be limited to any class of customer or service provider. SWBT states that all such services are available on a tariffed basis and will be accessible by all users for any lawful purpose. SWBT further represents that, if any new arrangements are to be made available for SWBT's Security Service, they will be made available to other home security service providers at the same time, in the same jurisdictions and on the same terms and conditions, and the Commission and the industry will be notified of such arrangements. In the context of this CEI plan, we interpret SWBT's representations to mean, inter alia, that: (1) the underlying basic services used by alarm monitoring service providers for which SWBT provides sales agency or marketing services will not be limited to any class of customer or service provider and such services will be accessible by all users for any lawful purpose; and (2) SWBT will make available to all alarm monitoring service providers, at the same time, in the same jurisdictions and on the same terms and conditions, any new arrangements made available to alarm monitoring service providers for which SWBT provides sales agency or marketing services. No party has objected to, or commented on, this aspect of SWBT's CEI Plan. Based on our interpretation of SWBT's representations, we find that SWBT has proposed to provide service to CEI recipients in compliance with the Commission's requirements. C. Other Nonstructural Safeguards 66. In addition to the CEI requirements established in Computer III, a BOC proposing to provide enhanced services on a structurally integrated basis must comply with requirements regarding the use of CPNI, disclosure of network information, and nondiscrimination reporting. As in the case of the CEI requirements, there are certain instances in which SWBT's representations concerning compliance with the nonstructural safeguards use language that is more suited to circumstances in which SWBT would be providing alarm monitoring service itself rather than acting as a sales agent or providing marketing services for others. To the extent that SWBT's representations with respect to these nonstructural safeguards do not reflect the fact that SWBT is providing sales agency and marketing services for unaffiliated alarm monitoring service providers, we interpret SWBT's representations in a manner that reflects SWBT's sales agency and marketing role and approve the individual aspects of the plan predicated on these interpretations. We interpret only those representations that do not appear to be worded to reflect SWBT's provision of sales agency and marketing. Other representations which do not appear to require clarification are accepted as stated. The provision of sales agency and marketing services by SWBT pursuant to this plan will be deemed to constitute acceptance of our interpretations of SWBT's representations, and SWBT will be required to comply with these representations as we have interpreted them. 1. Customer Proprietary Network Information 67. Under our Computer III requirements, SWBT is required to describe the procedures it intends to establish to comply with the Commission's CPNI safeguards. In addition, we note that section 222 of the 1996 Act contains CPNI requirements. Although the requirements of section 222 became effective immediately upon enactment, the Commission has initiated a proceeding to consider regulations interpreting and specifying in more detail a telecommunications carrier's obligations under this provision. The Commission has concluded that its existing CPNI regulations remain in effect, pending completion of the CPNI rulemaking, to the extent they do not conflict with section 222. Moreover, section 275(d) of the 1996 Act prohibits LECs from recording or using in any fashion "the occurrence or contents of calls received by providers of alarm monitoring services for the purposes of marketing such services on behalf of such LECs, or any other entity." 68. SWBT represents that it will continue to abide by the Commission's existing rules and requirements regarding the use of CPNI in all respects. It is SWBT's position that, as long as it remains in full compliance with the Commission's existing rules governing the use of CPNI for enhanced service or CPE purposes, it will be in compliance with the CPNI provisions of the 1996 Act. SWBT represents that, in any event, it plans to obtain customer approval for use of its CPNI to sell SWBT Security Service during each telephone conversation between a SWBT sales representative and a prospective customer of the service. 69. AICC asks the Bureau to require SWBT to amend its CEI plan to demonstrate how it would comply with the CPNI provisions of section 222 and 275(d) of the Act. SWBT states that contrary to AICC's concern, there is no need for SWBT to amend its CEI plan with respect to its use of CPNI. SWBT states on reply that it intends to comply with the Act and the Commission's rules implementing these sections in all respects. Based on SWBT's representation that it will comply with all pre-existing CPNI rules, and with sections 222 and 275(d) of the Act and any regulations adopted by the Commission pursuant to these sections, we find SWBT's CEI Plan comports with the Commission's CPNI requirements. 2. Network Information Disclosure 70. SWBT is also required to disclose to the enhanced services industry information about network changes and new network services that affect the interconnection of enhanced services with the network. SWBT must make that disclosure at the "make/buy" point, that is, when SWBT decides whether to make or to procure from an unaffiliated entity any product whose design affects or relies on the network interface. SWBT must provide that information to members of the enhanced services industry that sign a nondisclosure agreement, within 30 days after the execution of such nondisclosure agreement. SWBT also must publicly disclose technical information about a new or modified network service twelve months before that service is introduced. If a BOC is able to introduce the service within twelve months of the make/buy point, however, it may make public disclosure at the make/buy point. It may not, however, introduce the service earlier than six months after the public disclosure. BOCs need not describe network disclosure procedures in their CEI plans, because they are obligated to obey those rules. 71. SWBT states that the interconnection between its proposed enhanced services and the underlying basic services will be achieved through existing, previously published standard network interfaces. Consequently, SWBT represents that no changes to existing network interface specifications or publication of any new interfaces are required. In the context of this CEI plan, we interpret SWBT's representations to mean, inter alia, that interconnection between the alarm monitoring service providers for which SWBT provides sales agency and marketing services and the underlying basic services these alarm monitoring service providers use will be achieved through existing, previously published standard network interfaces. Insofar as SWBT changes any existing network interfaces specifications or uses new interface specifications for basic underlying services, it must comply fully with our network disclosure rules, including any changes in these requirements. No party has objected to, or commented on, this aspect of SWBT's CEI Plan. Based on our interpretation of SWBT's representations, we approve this aspect of SWBT's CEI Plan. 3. Nondiscrimination Reporting 72. BOCs are required to file quarterly nondiscrimination reports with respect to their basic services, thereby ensuring that they provide the access promised in their CEI plans. SWBT represents that it will continue to abide by the Commission's existing nondiscrimination reporting rules. No party has objected to, or commented on, this aspect of SWBT's CEI Plan. Based on SWBT's representations, we find that its CEI Plan comports with the Commission's nondiscrimination reporting requirements. D. Accounting Safeguards 73. The BOCs must adhere to certain accounting procedures to protect ratepayers from bearing misallocated costs. This system consists of five principal elements: (1) the establishment of effective accounting rules, in accordance with the Commission's Part 32 Uniform System of Accounts requirements, and cost allocation standards; (2) the filing of cost allocation manuals reflecting the accounting rules and cost allocation standards adopted by the BOC; (3) mandatory audits of carrier cost allocations by independent auditors, who must state affirmatively whether the audited carrier's allocations comply with its cost allocation manual; (4) the establishment of detailed reporting requirements and the development of an automated system to store and analyze the data; and (5) the performance of on-site audits by Commission staff. SWBT must comply with these accounting safeguards. V. CONCLUSION 74. We conclude that SWBT's CEI Plan complies with the Commission's Computer III requirements. If SWBT offers new enhanced services not described in this CEI plan, or if SWBT uses additional, underlying basic services, it must file a CEI plan amendment. Accordingly, in this Order, we approve SWBT's CEI Plan for Security Service, as described herein. VI. ORDERING CLAUSES 75. IT IS HEREBY ORDERED that, pursuant to Sections 1, 4(i) and 4(j), 201, 202, 203, 205, 218, 222, and 275 of the Communications Act of 1934, as amended, 47 U.S.C. sections 1, 4(i) and 4(j), 201, 202, 203, 205, 218, 222, and 275, and authority delegated thereunder pursuant to Sections 0.91, 0.291 of the Commission's rules, 47 C.F.R. sections 0.91, 0.291, SWBT's Comparably Efficient Interconnection Plan for Security Service is hereby APPROVED, subject to the requirements and conditions discussed herein. 76. It is FURTHER ORDERED that the Motion to Hold In Abeyance, filed by the Alarm Industry Communications Committee, is DISMISSED as moot. Federal Communications Commission A. Richard Metzger, Jr. Deputy Chief, Common Carrier Bureau