Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Application of BellSouth Corporation, et al.) CC Docket No. 97-208 Pursuant to Section 271 of the ) Communications Act of 1934, as amended,) To Provide In-Region, InterLATA Services) In South Carolina ) ) ) MEMORANDUM OPINION AND ORDER Adopted: December 24, 1997 Released: December 24, 1997 By the Commission: Chairman Kennard and Commissioners Ness, Furchtgott-Roth, and Powell issuing separate statements. TABLE OF CONTENTS Paragraph I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 II. BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 A. Statutory Framework. . . . . . . . . . . . . . . . . . . . 3 B. Overview . . . . . . . . . . . . . . . . . . . . . . . . . 6 III. STATE AND DEPARTMENT OF JUSTICE CONSULTATION . . . . . . . . . . . 29 A. State Review of BOC Compliance with Section 271(c) . . . . 29 B. Department of Justice's Evaluation . . . . . . . . . . . . 33 IV. STANDARD FOR EVALUATING SECTION 271 APPLICATIONS . . . . . . . . . 37 A. Burden of Proof for Section 271 Applications and Compliance with Requirement that Application be Complete When Filed. . . . 37 B. Submission of New Factual Evidence and New Arguments in Reply Comments . . . . . . . . . . . . . . . . . . . . . . . . . 39 V. COMPLIANCE WITH SECTION 271(c)(1)(B) . . . . . . . . . . . . . . . 46 A. Background . . . . . . . . . . . . . . . . . . . . . . . . 46 B. Evidence in the Record . . . . . . . . . . . . . . . . . . 49 C. Discussion . . . . . . . . . . . . . . . . . . . . . . . . 57 1. Section 271(c)(1)(A) . . . . . . . . . . . . . . . 57 2. Section 271(c)(1)(B) . . . . . . . . . . . . . . . 58 a. Summary . . . . . . . . . . . . . . . . . 58 b. Standard for Evaluating Qualifying Requests 59 c. Existence of "Qualifying Requests" in South Carolina 65 VI. CHECKLIST COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . 77 A. "Generally Offering" Each Checklist Item . . . . . . . . . 77 1. Introduction . . . . . . . . . . . . . . . . . . . 77 2. Discussion . . . . . . . . . . . . . . . . . . . . 79 B. Operations Support Systems . . . . . . . . . . . . . . . . 82 1. Introduction . . . . . . . . . . . . . . . . . . . 82 2. Description of BellSouth's Operations Support Systems 90 3. General Approach to Analyzing Operations Support Systems 96 4. Analysis of Ordering and Provisioning Functions. 101 5. Analysis of Pre-Ordering Functions . . . . . . . 147 C. Access to Unbundled Network Elements . . . . . . . . . . 182 1. Summary. . . . . . . . . . . . . . . . . . . . . 182 2. Background . . . . . . . . . . . . . . . . . . . .183 3. Evidence in the Record . . . . . . . . . . . . . .186 4. Discussion . . . . . . . . . . . . . . . . . . . .195 5. Other Concerns . . . . . . . . . . . . . . . . . .210 D. Resale of Contract Service Arrangements. . . . . . . . . .212 1. Background . . . . . . . . . . . . . . . . . . . .212 2. Discussion . . . . . . . . . . . . . . . . . . . .215 E. Nondiscriminatory Access to 911 and E911 Services. . . . .225 VII. JOINT MARKETING. . . . . . . . . . . . . . . . . . . . . . . . . .231 A. Background . . . . . . . . . . . . . . . . . . . . . . . .231 B. Discussion . . . . . . . . . . . . . . . . . . . . . . . .236 VIII. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . .240 IX. ORDERING CLAUSES . . . . . . . . . . . . . . . . . . . . . . . . .241 APPENDIX LIST OF COMMENTERS I. INTRODUCTION 1. On September 30, 1997, BellSouth Corporation, BellSouth Telecommunications, Inc., and BellSouth Long Distance, Inc. (collectively, BellSouth) filed an application for authorization under section 271 of the Communications Act of 1934, as amended, to provide in-region, interLATA services in the State of South Carolina. 2. In this Order, we conclude that BellSouth is not eligible to proceed under section 271(c)(1)(B) and that it has not yet demonstrated that it generally offers each of the items of the competitive checklist set forth in section 271(c)(2)(B). In light of these conclusions, we need not and do not, address the issue of whether BellSouth has demonstrated that the authorization it seeks is consistent with the public interest, convenience, and necessity. II. BACKGROUND A. Statutory Framework 3. The 1996 Act conditions Bell Operating Company (BOC) provision of in- region, interLATA services on compliance with certain provisions of section 271. Under section 271, BOCs must apply to the Federal Communications Commission (Commission) for authorization to provide interLATA services originating in any in-region state. The Commission must issue a written determination approving or denying each application no later than 90 days after receiving such application. In acting on a BOC's application for authority to provide in-region, interLATA services, the Commission must consult with the Attorney General and give substantial weight to the Attorney General's evaluation of the BOC's application. In addition, the Commission must consult with the applicable state commission in order to verify that the BOC has either a state-approved interconnection agreement or a statement of generally available terms and conditions (SGAT) that satisfies the "competitive checklist." 4. Section 271 requires the Commission to make several findings before approving BOC entry. A BOC must show that it satisfies the requirements of either section 271(c)(1)(A), known as "Track A," or section 271(c)(1)(B), known as "Track B." Section 271(c)(1)(B), which we treat as the pertinent section for purposes of this Order, provides that a BOC meets the requirements of Track B if no competing provider has requested the access and interconnection described in section 271(c)(1)(A) before the date that is three months before the BOC's section 271 application is filed. In addition, a statement of the generally available terms and conditions that the BOC offers to provide such access and interconnection must have been approved or permitted to take effect by the applicable State commission under section 252(f). In order to grant a BOC's application, the Commission must also find that the SGAT approved or allowed to take effect by the state under section 252 offers all of the items included in the competitive checklist contained in section 271(c)(2)(B), that the requested authorization will be carried out in accordance with the requirements of section 272, and that the BOC's entry into the in-region interLATA market is "consistent with the public interest, convenience, and necessity." 5. To date, the Commission has considered two BOC applications for the provision of in-region, interLATA services pursuant to section 271 of the Act. Specifically, on June 25, 1997 the Commission denied Southwestern Bell's application to provide in- region, interLATA services in Oklahoma, and on August 19, 1997, the Commission denied the application of Ameritech Michigan to provide in-region, interLATA services in Michigan. These orders interpret various section 271 requirements. B. Overview 6. We conclude in this order that BellSouth has failed to demonstrate that it complies with the competitive checklist contained in section 271 of the Act. We recognize, however, that BellSouth has made progress in opening its local market to competition. BellSouth states that it has invested hundreds of millions of dollars to create an organizational structure to meet the needs of new entrants as they seek to compete in BellSouth's market. BellSouth has also negotiated more than 80 agreements with competing carriers to provide competitive service in South Carolina. Moreover, as was the Department of Justice, we are encouraged by BellSouth's efforts to develop systems that accommodate the needs of smaller competing carriers. We commend BellSouth for the efforts that it has made thus far. 7. The 1996 Act's overriding goal is to open all telecommunications markets to competition and, ultimately, to deregulate these markets. Before the 1996 Act's passage, the BOCs, the local progeny of the once-integrated Bell system, were barred by the terms of the MFJ from entering certain lines of business, including long distance services. The ban on BOC provision of long distance services was based on the MFJ court's determination that such a restriction was "clearly necessary to preserve free competition in the interexchange market." The court found that, if the BOCs were permitted to compete in the interexchange market, they would have "substantial incentives" and opportunity, through their control of local exchange and exchange access facilities and services, to discriminate against their interexchange rivals and to cross-subsidize their interexchange ventures. 8. In this Order, we find that BellSouth is ineligible to proceed under Track B. We find that BellSouth has failed to meet its burden to demonstrate that it has received no qualifying requests for access and interconnection that, if implemented, would satisfy the requirements of section 271(c)(1)(A). We also clarify our standard for evaluating the type of requests for access and interconnection that preclude a BOC from proceeding under section 271(c)(1)(B). In addition, we analyze BellSouth's SGAT for compliance with the competitive checklist, as described below. 9. Through the competitive checklist and the other requirements of section 271, Congress has prescribed the mechanism by which the BOCs may enter the in-region, long distance market. This mechanism replaces the structural approach of the MFJ that prohibited BOCs from participating in that market. Although Congress supplanted the MFJ, it nonetheless acknowledged the principles underlying that approach -- that BOC entry into the long distance market could have significant anticompetitive effects unless the BOCs first open their local markets to competition. Accordingly, Congress set up a framework that requires BOCs to demonstrate that their local markets are open to competition before they are permitted to enter the in-region long distance market. In order to effectuate Congress' intent, we must make certain that the BOCs have opened their local markets and thus allow competition to develop in those markets. 10. Section 251 of the 1996 Act contemplates three paths of entry into the local market -- the construction of new networks, the use of unbundled elements of the incumbent's network, and resale. Section 251(c)(2), for example, imposes on all incumbent local exchange carriers (LECs) the duty to provide for interconnection between the incumbent's network and the new entrant's network. This provision enables customers using a new entrant's facilities to receive and place calls to customers on the incumbent's network. Section 251(c)(3) imposes on all incumbent LECs the duty to provide unbundled network elements, and section 251(c)(4) requires incumbents to offer their retail services to new entrants at discounted rates so that the new entrants can resell those services. Neither section 251 nor our rules implementing that section express a preference for one particular entry strategy. As the Commission concluded, "given the likelihood that entrants will combine or alter entry strategies over time, an attempt to indicate such a preference in our section 251 rules may have unintended and undesirable results." The Commission has established rules that are intended to guarantee that all pro-competitive entry strategies are available. In order to ensure efficient entry, each potential competitor must be able to choose the entry strategy that it believes is most appropriate under the circumstances. 11. These critical, market-opening provisions of section 251 are incorporated into the competitive checklist found in section 271. For example, the competitive checklist requires BOCs to demonstrate that they provide interconnection in accordance with section 251(c)(2). The checklist also requires BOCs to show that they provide access to unbundled network elements in accordance with the requirements of section 251(c)(3), and to demonstrate that they provide resale in accordance with the requirements of section 251(c)(4). Section 271 thus places on this Commission the responsibility to ensure that the requirements of section 251 are met before the BOC is allowed into the in-region, interLATA market. 12. In this Order, we conclude that BellSouth has failed to demonstrate that it satisfies the competitive checklist in section 271, and we therefore must deny its application. Although recognizing that BellSouth has made some progress, we identify a number of significant deficiencies in BellSouth's offering of unbundled network elements and resale services. We have attempted, however, to provide guidance where possible to BellSouth regarding what steps it must take in order to comply with section 271. 13. As a preliminary matter, we emphasize that the standards we apply herein to determine whether BellSouth complies with the competitive checklist are firmly rooted in the Act, in our implementing regulations, and in the standards and guidance the Commission promulgated in the Ameritech Michigan Order. We are thus not in this Order diverging from the requirements of the Act or in any other way establishing impediments to BOC entry into the interLATA market. We note, however, that BellSouth states that it "disagrees" with certain interpretations of checklist requirements suggested in the Commission's Ameritech Michigan Order and that, "in this application BellSouth preserves its positions for resolution by the courts if necessary." As discussed below, we reaffirm, where applicable, the earlier Order. 14. We believe that the deficiencies we identify below in BellSouth's application are ones which we find are likely to frustrate competitors' ability to pursue entry through the use of unbundled network elements or resale, the two methods of entry that promise the most rapid introduction of competition. Specifically, we find that BellSouth has failed to demonstrate that it: (1) offers nondiscriminatory access to its operations support systems; (2) offers nondiscriminatory access to unbundled network elements in a manner that permits competing carriers to combine them; and (3) offers certain retail services at discounted rates as required by the Act. 15. With respect to access to its operations support systems, we conclude that BellSouth has not demonstrated that it is providing nondiscriminatory access to its operations support systems functions, which the Commission has recognized as a prerequisite to the development of meaningful local competition. Incumbent LECs, such as BellSouth, maintain a variety of computer databases and "back-office" systems that are used to provide service to customers. We collectively refer to these computer databases and systems as operations support systems, or OSS. These systems enable the employees of incumbent LECs to formulate customers' orders for telecommunications services, to provide the requested services to their customers, to maintain and repair network facilities, and to render bills. 16. In implementing the local competition provisions of the 1996 Act, the Commission concluded in its August 1996 Local Competition Order that much of the information maintained by the incumbents' operations support systems is critical to the ability of other carriers to compete with incumbent LECs using unbundled network elements or resold services. The Commission concluded that, in order to meet the nondiscriminatory access standard for OSS, an incumbent LEC must provide to competing carriers access to OSS functions for pre-ordering, ordering, provisioning, maintenance and repair, and billing that is equivalent to what it provides itself, its customers or other carriers. This decision was upheld by the Court of Appeals for the Eighth Circuit, which agreed with the Commission that the requirement to provide nondiscriminatory access to OSS is an integral part of the 1996 Act's blueprint for opening local markets to competition. 17. In the Ameritech Michigan Order, the Commission concluded that the duty to provide nondiscriminatory access to OSS functions is embodied in various terms of the competitive checklist in section 271. Without equivalent access to the BOC's OSS, many items required by the checklist, such as resale services, unbundled loops, unbundled local switching, and unbundled local transport would not be available in a timely manner or at an acceptable level of quality. The Commission found that it was necessary to determine whether the access to OSS functions provided by the BOC to competing carriers sufficiently supports each of the three modes of competitive entry strategies established by the Act: interconnection, unbundled network elements, and services offered for resale. In so doing, the Commission sought to ensure that a new entrant's decision to enter the local exchange market in a particular state is based on the new entrant's business considerations, rather than the availability or unavailability of particular OSS functions to support each of the modes of entry. 18. Determining whether a BOC provides nondiscriminatory access to OSS requires the Commission to assess the various components of such access in some detail because these details have clear implications for a new entrant's ability to effectively compete. For example, the details concerning how and when a BOC provides a new entrant information concerning the status of the new entrant's resale order or order for unbundled network elements are critically important. As demonstrated by this case, when one of BellSouth's customers calls a BellSouth representative with questions concerning the status of his or her order for a telecommunications service, BellSouth is generally able to provide such information because it is contained in BellSouth's systems to which its employees have quick and unfettered access. By contrast, when a new entrant seeks to provide service to one of its new customers via resale or unbundled network elements, the new entrant must send its customer's order to BellSouth for processing and, until BellSouth informs the new entrant of the status of that order, either through a confirmation that the order has been processed or through a notice that there is a problem with the order, the new entrant is unable to inform its customer of the status of his or her order. The customer may not understand that the new entrant's inability to provide information on her order may be due to the fact that BellSouth has not returned an order confirmation. To the customer, the new entrant may appear to be a less efficient and responsive service provider than its competitor, BellSouth. Accordingly, it is important that we assess such details of BellSouth's OSS. Our comprehensive review of BellSouth's OSS indicates that it has failed to provide to new entrants information concerning the status of their orders in a timely manner. 19. It is also critical that a new entrant's ability to provide service to its customers in substantially the same time that a BOC can provide service to its customers is not hindered by the BOC's OSS access. Customers will expect similar levels of service from new entrants. If a new entrant cannot provision service in substantially the same time as the incumbent, the customer may decide not to switch carriers. A BOC's failure to timely process a new entrant's order may result in the new entrant losing a potential customer. In order to measure this fundamental gauge of parity, the Commission required in the Ameritech Michigan Order that BOCs submit evidence on the average time it takes for the BOC to provide service to a customer and the average time it takes the new entrant to provide service. We note, as did the Department of Justice, that BellSouth has failed to provide meaningful data on this important yardstick. As discussed in detail below, BellSouth has failed to demonstrate that it offers to competing carriers nondiscriminatory access to all of its OSS functions, as required by the competitive checklist. We emphasize that the deficiencies we identify with regard to BellSouth's OSS affect a competitor's ability to enter via resale as well as through the use of unbundled network elements. Nondiscriminatory access to an incumbent's OSS is just as vital to a competitor seeking to enter via resale as to one using unbundled network elements. 20. We also conclude in this Order that entry in South Carolina through the use of unbundled network elements may be hindered by BellSouth's failure to offer unbundled network elements in a manner that allows new entrants to combine them to provide a telecommunications service. In a recent decision, the Eighth Circuit held that requesting carriers, rather than incumbent LECs, have the duty to combine network elements, even if those elements are already combined by the incumbent LEC. Thus, where a BOC uses a combination of network elements to serve a customer, but then loses that customer to a new entrant that intends to provide service to that customer through the purchase of those network elements, the BOC may physically disassemble the combined elements and require the new entrant to incur the costs of recombining them in order to provide service to the same customer. In reaching this decision, the court noted that the statute requires incumbent LECs "'to provide . . . unbundled network elements in a manner that allows requesting carriers to combine such elements in order to provide such telecommunications service.'" We and the industry are still in the early stages of evaluating the implications of the Eighth Circuit's ruling that, although competing carriers may offer services solely through the use of unbundled network elements, the competing carriers must combine those elements themselves. Various methods of combining elements are being discussed by the industry. 21. Pursuant to the provisions of its SGAT, BellSouth asserts that, as a general rule, competitors must use collocation in order to combine network elements. Regardless of the merits of BellSouth's position that collocation is the primary means by which competitors combine elements, we conclude that BellSouth has not demonstrated in the record before us that it offers or can timely provide this method of combining unbundled network elements. For example, BellSouth's SGAT fails to include any provision committing BellSouth to a time within which it will implement a request for collocation. We find this omission particularly problematic because the record indicates that, in practice, it is taking BellSouth a long time to implement such requests. If competitors must first construct collocation space in each BellSouth central office from which they wish to provide local exchange service by combining network elements, delays in constructing such space will undermine the Act's goal of the rapid introduction of competition through the use of combinations of network elements. As a result of these and other concerns detailed below, we conclude that BellSouth has not met its burden under section 271 of showing that a competing provider can enter a local telecommunications market in South Carolina by acquiring all necessary elements from an incumbent LEC, as required by section 251 and specifically upheld by the Eighth Circuit. 22. We recognize that local competition has not developed in South Carolina and other states as quickly as many had hoped. This has led to significant frustration and concern that the goals of the Act may not be met. We believe that such pronouncements are premature. The process of opening local markets is highly complex and peculiarly requires the current incumbent to share its facilities in ways that require unprecedented degrees of cooperation and coordination. At the same time, we recognize that the Act directs us to grant a section 271 application under Track B if a BOC satisfies the other requirements of section 271, even if no competing provider has sought to enter a particular state's local market -- and we would not hesitate to do so. 23. Our confidence that local competition is possible is bolstered by recent history. In the 1980s, this country saw a fundamental restructuring in the long distance market following the break-up of the Bell system. The subsequent development of competition in that market is very encouraging, although the pace of the growth of competition in that market was much slower than the pace we seek to achieve in opening local markets to competition. In the decade following divestiture of the BOCs, AT&T's share of interstate long distance revenues fell from approximately 90 percent to 55 percent. In order to make such competition possible, it was necessary for the BOCs and other incumbent LECs to offer their customers equal access to all qualified long distance carriers, which required technical modifications to network equipment in thousands of end offices across the country. Such competition also required long distance competitors to build brand recognition and win the trust of customers accustomed to dealing with the Bell system for all of their telecommunications needs. 24. As the Commission discussed in the Ameritech Michigan Order, the development of meaningful local competition requires the telecommunications industry to surmount even more daunting hurdles than were faced in the development of competition in the long distance market. The Commission noted that "[n]ew entrants do not have available a ready, mature market for the resale of local services or for the purchase of unbundled network elements, and the processes for switching customers for local service from the incumbent to the new entrant are novel, complex and still largely untested." Moreover, although the largest interexchange carriers enjoy strong brand identification, many of the smaller entrants do not. As a result, the development of local competition is likely to be a gradual process, which will require substantial effort by both incumbent LECs and their potential competitors over an extended period of time. We are confident that such efforts will bear fruit in the foreseeable future. 25. BellSouth contends that approving its application to provide long distance services in South Carolina will provide an incentive for long distance companies to begin competing in the local market. BellSouth argues that it has opened its local market to competition and that these companies are choosing not to enter the local market for strategic reasons. BellSouth's argument presumes that BellSouth's local markets are already open to competition and that the lack of local competition in South Carolina is due solely to competitors' failure to devote adequate resources in South Carolina. As discussed above, however, we find in this Order that BellSouth has not yet demonstrated that it complies with the competitive checklist, and that such deficiencies may be hindering successful entry in South Carolina on either a resale basis or through the use of unbundled network elements. BellSouth's entry into the long distance market would surely give long distance carriers an added incentive to enter the local market. But even such an incentive would not be enough to overcome the structural obstacles to competition that new entrants face as a result of BellSouth's failure to provide nondiscriminatory access to OSS and to provide competitors a timely and reasonable means to offer telecommunications service by combining unbundled network elements from BellSouth, as Congress mandated. 26. BellSouth also contends that approving its application will benefit South Carolina consumers because they will then enjoy the benefit of packaged long distance and local services. Although grant of this application would allow the major long distance carriers to market jointly local and long distance services in South Carolina, their ability actually to provide those services in competition with BellSouth's own package of service would be hampered by BellSouth's failure to open its local markets in the manner required by section 271. We share the South Carolina Commission's frustration at the lack of local competition in its state and the desire to make more choices available to its citizens, including the ability to purchase bundled local and long distance services. Our concern, however, is that, unless a BOC first satisfies the requirements of section 271 before it is permitted to offer in-region long distance services as well as local services, the BOC could gain an unfair advantage in the provision of bundled local and long distance service. 27. Finally, we are mindful of the fact that the South Carolina Commission has found that BellSouth does comply with the competitive checklist and, as noted, believes that BellSouth's entry into the long distance market in that state is in the public interest. We must respectfully disagree. In giving substantial weight to the Department of Justice's evaluation, as required by Congress, that BellSouth's market is not open to competition, and in conducting our statutorily required independent assessment, we reach a different conclusion. We must also respectfully disagree with the South Carolina Commission's contention that we should not consider any new issues or facts that were not presented in the state commission proceeding. Because it is the Commission's statutory duty to determine whether the requirements of section 271 have been satisfied, the Commission is not limited to considering only the issues and facts that were presented in the state commission proceeding. We find no basis in the statute to justify our refusal to consider all information that is pertinent to our evaluation of an application. On the other hand, we emphasize that parties should make every effort to present their views to the state commission in the first instance, where such views can be adequately addressed by other interested parties and subjected to cross- examination. 28. In sum, we conclude in this Order that BellSouth has not demonstrated that it satisfies the competitive checklist. We believe that these deficiencies pose significant obstacles to the development of local competition in South Carolina. We are encouraged, however, by the progress BellSouth has made and believe it is capable of correcting these deficiencies. We are also hopeful that local competition will continue to grow within the state, particularly with the cooperation of BellSouth. III. STATE AND DEPARTMENT OF JUSTICE CONSULTATION A. State Review of BOC Compliance with Section 271(c) 29. Under section 271(d)(2)(B), the Commission "shall consult with the State commission of any State that is the subject of the application in order to verify the compliance of the Bell operating company with the requirements of subsection (c)." As the Commission stated in the Ameritech Michigan Order, Congress afforded the states this opportunity to present their views regarding the opening of the BOCs' local networks to competition. The Commission further noted that, in order to fulfill this role as effectively as possible, state commissions should conduct proceedings to develop a comprehensive factual record concerning BOC compliance with the requirements of section 271 and the status of local competition. The Commission observed that the Act does not prescribe any standard for Commission consideration of a state commission's verification under section 271(d)(2)(B). The Commission concluded, therefore, that it has discretion in each section 271 proceeding to determine what weight to accord to the state commission's consultation in light of the nature and extent of state proceedings to develop a complete record concerning the applicant's compliance with section 271 and the status of local competition. Therefore, although the Commission will consider carefully state determinations of fact that are supported by a detailed and extensive record, it is the Commission's role to determine whether the factual record supports a conclusion that particular requirements of section 271 have been met. 30. The South Carolina Commission has reviewed BellSouth's compliance with the requirements of section 271 and provided us with its written evaluation. After establishing a docket on March 20, 1997, the South Carolina Commission held a public hearing on July 7- 10, 1997, during which BellSouth and parties opposing BellSouth's entry into the South Carolina long distance market presented testimony and conducted cross-examinations. On July 22, 1997, the parties submitted their proposed orders, and on July 31, 1997, the South Carolina Commission issued the South Carolina Commission Compliance Order, ruling that BellSouth had complied with the requirements of section 271(c). That Order also approved BellSouth's SGAT, with modifications, and concluded that BellSouth had met the competitive checklist, finding that the SGAT makes available to new entrants each of the checklist items. The South Carolina Commission also concluded that BellSouth's entry into the interLATA market would be in the public interest because long distance rates would be lowered, carriers could jointly package local and long distance services to consumers, and competitive providers of local exchange service would be encouraged to enter the local market. That Order did not analyze whether BellSouth had satisfied the requirements of section 271(c)(1)(A) (Track A) or section 271(c)(1)(B) (Track B). The state commission did, however, discuss its views of the state of competition in local telecommunications markets in South Carolina. The commission found that, although the local market in South Carolina was open to competition, no potential competitive carriers were taking any reasonable steps toward providing facilities-based local service for business and residential customers. 31. Following the July 31, 1997, release of the South Carolina Commission Compliance Order, BellSouth filed on August 25, 1997, a proposed revised SGAT to reflect the July 18, 1997, decision of the United States Court of Appeals for the Eighth Circuit on review of the Commission's Local Competition Order. The SGAT approved on July 31, 1997, provided that, if a new entrant combined network elements to produce an existing BellSouth tariffed retail service, the new entrant would be charged the wholesale price for the retail service. The proposed revised SGAT deleted this provision and instead allows competing carriers to use combinations of network elements to provide a telecommunications service that replicates an existing BellSouth retail service if the competing carrier combines those elements itself. The SGAT offers to deliver certain elements to the competing carrier's collocation space for combining. BellSouth also proposed revising the language in the earlier version of the SGAT that offered vertical features, such as call waiting, at the retail price less the applicable wholesale discount. Under the revision, the SGAT now offers vertical features as part of the unbundled local switching functionality. BellSouth also submitted a revised pricing schedule to the SGAT on September 5, 1997, that removed the earlier version's language regarding vertical features and stated instead that no charges would be assessed for vertical features until prices were developed in the South Carolina Commission's pending cost proceeding. The South Carolina Commission approved a later version of the SGAT, incorporating certain of BellSouth's proposed changes (including the ones discussed above), on September 9, 1997, and this revised SGAT was released on September 19, 1997. The September 19, 1997, SGAT is the one that BellSouth relies on here, and it is the one which we review. Unless otherwise expressly noted, all references herein to BellSouth's SGAT refer to the September 19, 1997, revised SGAT. 32. On October 17, 1997, the South Carolina Commission submitted its comments concerning BellSouth's application. The South Carolina Commission reiterated the views expressed in the South Carolina Commission Compliance Order -- that no potential competitive carriers were taking any reasonable steps toward providing facilities-based local service for business and residential customers, that BellSouth had satisfied the competitive checklist requirements, and that BellSouth's interLATA entry would be in the public interest because it would promote both local and long distance competition. We note that the South Carolina Commission has addressed every checklist item and has, as suggested in the Ameritech Michigan Order, included an analysis of the state of local competition in South Carolina. B. Department of Justice's Evaluation 33. Section 271(d)(2)(A) requires the Commission, before making any determination approving or denying a section 271 application, to consult with the Attorney General. Under that section, the Attorney General is entitled to evaluate the application "using any standard the Attorney General considers appropriate," and the Commission is required to "give substantial weight to the Attorney General's evaluation." Section 271(d)(2)(A) specifically provides, however, that "such evaluation shall not have any preclusive effect on any Commission decision." The Commission found in the Ameritech Michigan Order that the Commission is required to give substantial weight not only to the Department of Justice's evaluation of the effect of BOC entry on long distance competition, but also to its evaluation of each of the criteria for BOC entry under section 271(d)(3), including the state of local competition and the applicant's compliance with the competitive checklist, if addressed by the Department of Justice. 34. In its evaluation of BellSouth's application to provide in-region, interLATA service in South Carolina, the Department of Justice focused on certain deficiencies in BellSouth's showing of compliance with the requirements of section 271. First, the Department of Justice concluded that BellSouth has not fully implemented several elements of the competitive checklist, including the requirement that it provide access and interconnection in accordance with the competitive checklist. In particular, the Department of Justice found that BellSouth has failed to demonstrate that it is providing access to unbundled network elements in a manner that allows requesting carriers to combine them. In making this finding, the Department of Justice noted that the South Carolina Commission has not made any specific findings as to this issue. In addition, the Department of Justice found that BellSouth's SGAT is legally insufficient, because it fails to describe whether or how BellSouth will provision unbundled network elements so that competing carriers may combine them to provide telecommunications services. The Department of Justice explained that the SGAT fails to "specify what BellSouth will provide, the method in which it will be provided, or the terms on which it will be provided," and therefore it could not make a finding that BellSouth is offering nondiscriminatory access to unbundled network elements in accordance with the requirements of section 271. 35. Second, the Department of Justice concluded that BellSouth's operations support systems are deficient. Specifically, the Department of Justice found that BellSouth had not demonstrated that the current interfaces for pre-ordering and ordering functions will allow for effective competition. The Department of Justice concluded that, because of the limited capacity of BellSouth's systems, the performance problems new entrants are experiencing will become more serious as they begin to order unbundled network elements or resale services in larger amounts. The Department of Justice also found that BellSouth's failure to institute all of the necessary OSS performance measures "prevents a determination that BellSouth is currently in compliance with checklist requirements or that compliance can be assured in the future." 36. Finally, the Department of Justice concluded that granting BellSouth's application would not be in the public interest, because local markets in South Carolina are not irreversibly open to competition. In making this finding, the Department of Justice explained that it considered whether all three entry paths contemplated by the 1996 Act -- facilities-based entry involving construction of new networks, the use of unbundled network elements, and resale of the BOC's services -- are fully and irreversibly open to competitive entry to serve both business and residential consumers. It examined first the extent of actual local competition, and then whether significant barriers continue to impede the growth of competition and whether benchmarks to prevent backsliding have been established. In concluding that the South Carolina local market is not fully and irreversibly open to competition, the Department of Justice found that substantial barriers to resale competition and competition using unbundled network elements remain. Among the concerns expressed by the Department of Justice was that BellSouth had not demonstrated that current or future prices for unbundled elements would permit efficient entry or effective competition, noting in particular the uncertainty of future prices. Moreover, the Department of Justice found that BellSouth had failed to demonstrate that the local market would remain open to competition because it had not instituted performance measurements needed to ensure consistent performance in the delivery of service to new entrants. The Department of Justice also rejected BellSouth's estimates of the competitive benefits that would result from BellSouth's entry into the market at this time. Specifically, the Department of Justice found that BellSouth significantly overvalued the benefits of BellSouth's entry into the long distance market and undervalued the benefits to be gained from opening BellSouth's local markets to competition. IV. STANDARD FOR EVALUATING SECTION 271 APPLICATIONS A. Burden of Proof for Section 271 Applications and Compliance with Requirement that Application be Complete When Filed 37. Section 271 places on the applicant the burden of proving that all of the requirements for authorization to provide in-region, interLATA services are satisfied. In the Ameritech Michigan Order, the Commission determined that the ultimate burden of proof with respect to factual issues remains at all times with the BOC, even if no party opposes the BOC's application. In the first instance, a BOC must present a prima facie case in its application that all of the requirements of section 271 have been satisfied. Once the applicant has made such a showing, opponents of the BOC's entry must, as a practical matter, produce evidence and arguments necessary to show that the application does not satisfy the requirements of section 271, or risk a ruling in the BOC's favor. Nevertheless, the BOC applicant retains at all times the ultimate burden of proof that its application is sufficient. The Commission also concluded that, with respect to assessing evidence proffered by a BOC applicant, the "preponderance of the evidence" standard is the appropriate standard for evaluating a BOC section 271 application. The Commission further concluded that, "if the Department of Justice concludes that a BOC has not satisfied the requirements of sections 271 and 272, a BOC must submit more convincing evidence than that proffered by the Department of Justice in order to satisfy its burden of proof." 38. In the Ameritech Michigan Order, the Commission also required that an application be complete when filed. The Commission concluded that, when a BOC presents factual evidence and arguments in support of its application for in-region, interLATA entry, such evidence must be clearly described and arguments must be clearly stated in its legal brief with appropriate references to supporting affidavits. The Commission stressed that an applicant may not, at any time during the pendency of its application, supplement its application by submitting new factual evidence that is not directly responsive to arguments raised by parties commenting on its application. This prohibition applies to the submission, on reply, of factual evidence gathered after the initial filing that is not responsive to the oppositions filed. Moreover, under no circumstance is a BOC permitted to counter any arguments made in the comments with new factual evidence post-dating the filing of those comments. The Commission warned that, if a BOC applicant chooses to submit such evidence, the Commission reserves the discretion either to restart the 90-day clock, or to accord the new evidence no weight. The Commission further found that a BOC's promises of future performance to address particular concerns raised by commenters have no probative value in demonstrating its present compliance with the requirements of section 271. When a BOC files its application, it must demonstrate that it already is in full compliance with the requirements of section 271. B. Submission of New Factual Evidence and New Arguments in Reply Comments 39. Under the Commission's revised procedures for section 271 proceedings, "[t]he applicant's and third parties' reply comments may not raise new arguments or include new data that are not directly responsive to arguments other participants have raised, nor may the replies merely repeat arguments made by that party in the application or initial comments." In addition, "[a]n applicant may submit new factual evidence in its reply if the sole purpose of that evidence is to rebut arguments made, or facts submitted, by commenters, provided the evidence covers only the period placed in dispute by commenters, and in no event post-dates the filing of the relevant comments." In the Ameritech Michigan Order, the Commission determined that it would accord no weight to new factual evidence submitted in the reply comments that does not directly respond to arguments or evidence raised by other parties. 40. In this proceeding, BellSouth filed on December 4, 1997, a motion to strike portions of several parties' reply comments, because BellSouth contends that these reply comments contain new arguments and evidence that could have been presented in initial comments and that "do not answer any comments filed by other parties." Several parties filed responses to BellSouth's Motion to Strike Reply Comments that argue, in general, that their reply comments were proper under our rules governing 271 applications, because their reply comments directly respond to arguments and evidence raised by other parties in their initial comments. In addition, AT&T, in an ex parte letter filed on December 8, 1997, argues that the Commission should give no weight to specific new evidence and arguments contained in BellSouth's reply comments and accompanying affidavits that should have been included in the application or that post-date the application but are not directly responsive to another party's comments. On December 19, 1997, BellSouth filed a motion to strike AT&T's December 8 Ex Parte letter, because BellSouth argues that the letter did not have the correct caption to be considered an ex parte letter and was not served on BellSouth as required of motions to strike. 41. One party cited by BellSouth in its Motion to Strike Reply Comments, Intermedia, submits evidence in its reply comments that concerns activity after October 20, 1997, the date on which comments were due. In particular, Intermedia submits evidence that BellSouth has failed to acknowledge receipt of a number of Intermedia's orders in a timely manner during the later part of October and early November. Those portions of Intermedia's factual evidence that post-date the filing of comments are not directly responsive to an argument raised in the comments, because the activity cited by Intermedia occurred after the comments were filed. The Commission determined in the Ameritech Michigan Order that "[b]ecause parties are required to file comments within 20 days after a BOC files its section 271 application, commenters will not have placed at issue facts which post-date day 20 of the application. For this reason, under no circumstance is a BOC permitted to counter any arguments with new factual evidence post-dating the filing of comments." This same rule applies with equal force to other participants in the proceeding. Because some of the evidence submitted by Intermedia post-dates the filing of comments, and is therefore not responsive to an argument raised in those comments, we strike the evidence in the reply comments to the extent that the evidence concerns activity that occurred after October 20, 1997. 42. We do not, however, grant BellSouth's Motion to Strike Reply Comments with respect to other portions of reply comments that BellSouth cites. These other reply comments do not concern factual evidence of activity that occurred after the filing of comments. Instead, they include arguments or evidence of activity that occurred prior to the comment filing date. Consistent with the Ameritech Michigan Order, we consider reply comments only to the extent they are directly responsive to other parties' comments and the evidence submitted covers only the period placed in dispute by commenters. Accordingly, we exercise our discretion in determining whether to accord new factual evidence and arguments that are made on reply any weight, and therefore, we do not strike from the record the portions of reply comments that BellSouth cites in its motion, with the exception of the Intermedia evidence discussed above. 43. Moreover, we disagree with BellSouth that the entire reply comments of CPI and NCTA should be struck, because those parties did not file initial comments. Under our procedures governing BOC applications, a party may file a reply comment to any comment made by any other participant. Parties may not, however, withhold evidence until the reply comments in an attempt to shield the evidence from attack. Thus, although we do not strike these parties' reply comments, we give no weight to evidence and arguments that are not directly responsive to arguments made by other parties in their comments. 44. With respect to AT&T's ex parte letter arguing that the Commission should give no weight to new factual evidence and arguments made by BellSouth in its reply comments, we note that BellSouth submits evidence in its reply comments that post-dates the October 20 comment filing date. Because we do not have a motion before us to strike this evidence, however, we do not do so. Nevertheless, consistent with our procedures governing section 271 applications, we give no weight to new evidence that is not directly responsive to another commenter's arguments and that does not cover the period placed in dispute by commenters. Because we do not strike BellSouth's reply comments and because, irrespective of AT&T's letter, we determine whether to accord new evidence any weight in accordance with our procedures governing section 271 applications, we deny BellSouth's Motion to Strike AT&T's Letter. 45. As the Commission stated in the Ameritech Michigan Order, these procedures governing section 271 applications are necessary in light of the 90-day statutory time deadlines. During the 90-day review period, the Commission has neither the time nor the resources to evaluate a record that is constantly evolving. Moreover, when new information is filed in the reply comments, other parties do not have the same opportunity to comment on the accuracy of the information that they would have if the evidence were raised in an earlier filing. We therefore require the BOC's application to be complete on the day it is filed. We also expect other parties in the proceeding to submit arguments and evidence supporting or opposing the BOC's application in their comments, rather than withholding such information until the reply comments are filed. V. COMPLIANCE WITH SECTION 271(c)(1)(B) A. Background 46. In the SBC Oklahoma Order, the Commission described the circumstances under which a BOC is permitted to file under section 271(c)(1)(B) and when a BOC is foreclosed from proceeding under section 271(c)(1)(B). In particular, the Commission held that a BOC may not pursue in-region, interLATA entry under section 271(c)(1)(B) if that BOC has received a "qualifying request" for access and interconnection. For purposes of section 271(c)(1)(B), the Commission defined a "qualifying request" as a request for negotiation to obtain access and interconnection that, if implemented, would satisfy the requirements of section 271(c)(1)(A). The Commission further concluded that the "request for access and interconnection must be from an unaffiliated competing provider that seeks to provide the type of telephone exchange service described in section 271(c)(1)(A)," and that the term "competing provider" includes both potential and actual competing providers. Moreover, in order for the request to be timely, and therefore foreclose Track B, it must be made at least three months before the BOC's section 271 application is filed. 47. The Commission also noted that pursuant to section 271(c)(1)(B), a BOC, shall be considered not to have received any request for access and interconnection if the State commission of such State certifies that the only provider or providers making such a request have (i) failed to negotiate in good faith as required by section 252, or (ii) violated the terms of an agreement approved under section 252 by the provider's failure to comply, within a reasonable period of time, with the implementation schedule contained in such agreement. As the Commission explained in the SBC Oklahoma Order, these exceptions are designed to ensure that, after a request for access and interconnection, Track B would become available to the BOC if facilities-based competition does not emerge because the potential competitor fails either to bargain in good faith or to implement its interconnection agreement according to a negotiated or arbitrated schedule. 48. The Commission also recognized that in some circumstances there may be a basis for revisiting its decision that, because there has been a qualifying request, Track B is foreclosed in a particular state. The Commission found that if, following a determination that Track B is foreclosed, a BOC refiles its section 271 application, the Commission may reevaluate whether a BOC is entitled to proceed under Track B "in the event relevant facts demonstrate that none of its potential competitors is taking reasonable steps toward implementing its request in a fashion that will satisfy section 271(c)(1)(A)." By adopting such a standard, the Commission intended to ensure that potential competitors will not be permitted "to delay indefinitely BOC entry by failing to provide the type of telephone exchange service described in Track A." B. Evidence in the Record 49. In its application, BellSouth submits that it is eligible to apply for in-region, interLATA authorization in South Carolina pursuant to Track B on the grounds that it has an approved SGAT and, through no fault of BellSouth, no potential competitors are taking reasonable steps toward providing facilities-based service to residential and business customers. 50. BellSouth states that it has executed interconnection and/or resale agreements with 83 different telecommunications carriers in South Carolina, and the South Carolina Commission has approved 67 of these agreements. In addition, BellSouth contends that it has "actively invited entry" by competing LECs by offering interconnection and network access through its SGAT. BellSouth further submits that, despite its efforts, no competing LEC has "made any significant, timely effort to provide the sort of facilities-based competition" intended by the 1996 Act. 51. According to BellSouth, because information held by its competitors may demonstrate that BellSouth has satisfied the requirements of section 271(c)(1)(A), the Commission, during the pendency of its review of BellSouth's section 271 application, should conduct an inquiry into the status of local competition in South Carolina and require commenters to give "specific details regarding their telephone exchange service operations." BellSouth contends that, if the evidence in the record reveals the existence of a competing provider of the type of telephone exchange service described in section 271(c)(1)(A), then it is eligible to proceed under section 271(c)(1)(A) and section 271(c)(1)(B). BellSouth further maintains that, "[i]f the evidence shows that a [competing LEC] has begun supplementing facilities-based service to business customers with resale of BellSouth's residential service in South Carolina, BellSouth would be eligible for interLATA relief under both Track A and Track B." 52. BellSouth asserts that a BOC is eligible to proceed under Track B unless a potential facilities-based competitor has made a timely request for interconnection and access from BellSouth in South Carolina that, if implemented, will lead to the type of telephone exchange service described in section 271(c)(1)(A) and is taking reasonable steps toward implementing that request in a fashion that satisfies the requirements of section 271(c)(1)(A). Moreover, according to BellSouth, in deciding whether requesting carriers are taking reasonable steps toward providing facilities-based service to residential and business customers, the Commission may only consider the state of local competition as of three months before the date a BOC's application for in-region, interLATA authorization was filed, or in this case, before June 30, 1997. BellSouth maintains that "Congress established this cut-off date to 'ensure' the [BOCs'] ability to file Track B applications when facilities- based competition is not developing despite an open market." BellSouth concludes that, because no potential competitors are taking reasonable steps to satisfy the requirements of section 271(c)(1)(A), it is eligible to proceed under Track B. 53. In evaluating BellSouth's compliance with the requirements of section 271(c), the South Carolina Commission maintains that it considered the business plans "of those companies seeking to provide local dialtone service in South Carolina." Based upon this information, the South Carolina Commission found that "none of BellSouth's potential competitors are taking reasonable steps toward implementing any business plan for facilities- based local service." The South Carolina Commission further maintains that it is unaware of any actual facilities-based service to residential and business customers in South Carolina. 54. Opponents of BellSouth's application assert that BellSouth has received "qualifying requests" for access and interconnection for the type of telephone exchange service described in section 271(c)(1)(A) and that BellSouth, therefore, is foreclosed from proceeding under Track B. Similarly, the South Carolina Consumer Advocate maintains that BellSouth should not be allowed to proceed under Track B because several carriers have taken steps to provide local service and that these steps have been reasonable in light of the uncertainties caused by the lack of "permanent rates" for interconnection and unbundled network elements. Although AT&T contends that "BellSouth's non-compliance with its checklist obligations is so pervasive and damaging to local competition" in South Carolina that there is no need for the Commission to consider whether BellSouth may proceed under section 271(c)(1)(B), it asserts that if the Commission does reach the issue it should find that AT&T has made qualifying request that forecloses Track B. Ameritech and U S WEST, in contrast, agree with BellSouth's contention that its application may proceed under Track B on the basis that no competing provider is taking reasonable steps to provide facilities-based residential and business telephone exchange service in South Carolina. 55. ALTS, MCI, and WorldCom dispute BellSouth's assertion that the Commission may not consider any reasonable steps taken after June 30, 1997, in its analysis of whether a potential competitor has made a qualifying request. Rather, these commenters assert that the Commission may consider all the available evidence, including events occurring before and after June 30, 1997, in deciding whether any potential competitors are taking reasonable steps to provide facilities-based service to residential and business customers in South Carolina. U S WEST, on the other hand, concurs with BellSouth's contention that, in deciding whether requesting carriers are reasonably proceeding toward facilities-based service to residential and business customers, the Commission must look only to the state of local competition as of three months before BellSouth's section 271 application was filed. 56. As to BellSouth's eligibility to proceed under Track A, the Department of Justice contends that there is no evidence in BellSouth's application or elsewhere in the record that BellSouth is providing access and interconnection to an operational competing provider of the type of telephone exchange service described in section 271(c)(1)(A). Moreover, the Department of Justice maintains that the record available at the time of its evaluation did not contain sufficient evidence of whether BellSouth had received a qualifying request. The Department of Justice asserts, therefore, that it is unable to determine BellSouth's eligibility to proceed under Track B. The Department of Justice does submit, however, that a conclusion that a BOC had received a qualifying request would not be warranted unless the requesting carrier intends to provide the type of telephone exchange service described in section 271(c)(1)(A) "within a specified and reasonable time frame." C. Discussion 1. Section 271(c)(1)(A) 57. BellSouth has failed to demonstrate that it is providing access and interconnection to an unaffiliated, facilities-based competing provider of telephone exchange service to residential and business subscribers. Although, on reply, BellSouth contends that MCI's "provision" of telephone exchange service on a test basis, at no charge, to the homes of 19 MCI employees, qualifies MCI as a competing provider under section 271(c)(1)(A), the Commission has expressly rejected the view that such a trial offering is sufficient for these purposes. In the SBC Oklahoma Order, the Commission concluded that the terms "subscribers" and "telephone exchange service," as used in section 271(c)(1)(A), require that the persons receiving the service pay a fee. Moreover, the Commission held that "for the purposes of section 271(c)(1)(A), the competing provider must actually be in the market, and, therefore, beyond the testing phase." Consistent with the precedent established in the SBC Oklahoma Order, we find that MCI is not an operational competing provider of the type of telephone exchange service described in section 271(c)(1)(A). We, therefore, conclude that BellSouth has not satisfied the requirements of section 271(c)(1)(A). In reaching this conclusion, we decline BellSouth's invitation to conduct an inquiry into the status of local competition in South Carolina in order to determine whether competing carriers are, in fact, providing the type of service described in section 271(c)(1)(A). As the Commission found in the Ameritech Michigan Order, "the ultimate burden of proof with respect to factual issues remains at all times with the BOC." 2. Section 271(c)(1)(B) a. Summary 58. For the reasons set forth below, we find that BellSouth is ineligible to proceed under Track B because it has failed to meet its burden of demonstrating that it has received no requests for access and interconnection that, if implemented, would satisfy the requirements of section 271(c)(1)(A). As an initial matter, we clarify our standard for evaluating qualifying requests and the role of reasonable steps in our evaluation. b. Standard for Evaluating Qualifying Requests 59. Section 271(c)(1)(B) provides that a "[BOC] meets the requirements of [section 271(c)(1)(B)] if . . . no such provider has requested the access and interconnection described in [section 271(c)(1)(A)] before the date which is 3 months before the date the company makes its application under [section 271(d)(1)]." Once the Commission has found that a request for access and interconnection was made more than three months prior to the filing of a section 271 application, it must next determine whether such request is for the type of access and interconnection described in section 271(c)(1)(A), i.e., a qualifying request. 60. Because, however, it may not be apparent from the face of a request whether it is qualifying, the Commission may be required to engage in a predictive judgment to determine whether the request, if implemented, will lead to the type of telephone exchange service described in section 271(c)(1)(A). In determining whether a request for access to unbundled network elements and interconnection is a qualifying request, therefore, the Commission will consider various types of evidence in the record that may inform its determination. For example, the Commission could consider, among other things, preliminary discussions and correspondence between the BOC and the requesting carrier that may pre-date or post-date a specific request. The Commission would also attach particular weight to any negotiated or arbitrated agreement between the BOC and the requesting carrier. Thus, if a potential competitor makes a request for access and interconnection and the competitor subsequently negotiates an interconnection agreement that provides facilities for the requesting carrier to serve residential and business customers, that interconnection agreement could be considered probative evidence that the request for access and interconnection was, in fact, a qualifying request. 61. BellSouth claims that the Commission held in the SBC Oklahoma Order that a qualifying request will not foreclose Track B unless a carrier takes "reasonable steps" toward implementing that request. The Commission's statement concerning the relevance of "reasonable steps" taken by a requesting carrier toward the provision of the type of telephone exchange service described in section 271(c)(1)(A), however, was made in a different context. In that decision, the Commission found that SBC had received qualifying requests for access and interconnection that foreclosed SBC from proceeding under Track B. Since SBC also failed to demonstrate that its application satisfied the requirements of section 271(c)(1)(A), the Commission denied its application for in-region, interLATA authority. The Commission observed, however, that its finding regarding SBC's receipt of qualifying requests, which foreclosed Track B, was not immutable. Specifically, the Commission held out the possibility that, when SBC files a new application for Oklahoma, SBC might be able to show that the carriers that had submitted qualifying requests at the time of its initial application have not taken "reasonable steps" toward reducing those requests to agreements or otherwise have not progressed toward the provision of the type of telephone exchange service described in section 271(c)(1)(A). Thus, in the event relevant facts demonstrate that no requesting carrier has taken reasonable steps to implement a request for access and interconnection in the intervening period between an initial and subsequent section 271 application, the Commission stated that it may "reevaluate whether [the BOC] is entitled to proceed under Track B." 62. In this case, BellSouth contends that the Commission should consider whether a requesting carrier has taken "reasonable steps" toward implementing its request for access and interconnection in a fashion that will satisfy the requirements of section 271(c)(1)(A) in determining whether the BOC is foreclosed from proceeding under Track B. To the extent BellSouth argues that certain reasonable steps are required before a request for access and interconnection can foreclose Track B, we disagree. Rather, we find that a request can be qualifying by its terms and need not be accompanied by reasonable steps. 63. In the SBC Oklahoma Order, the Commission indicated that, in assessing whether there has been a request for access and interconnection that would foreclose Track B, the Commission would have to engage in a difficult predictive judgment regarding whether the request will lead to the type of telephone exchange service described in subsection 271(c)(1)(A). The Commission has now engaged in this difficult predictive judgment on two occasions, namely, the SBC Oklahoma Order and the instant one. The Commission, and the parties, have devoted enormous resources to informing and making this judgment, notwithstanding the fact that section 271(c)(1)(A) and section 271(c)(1)(B) are essentially threshold questions that we must consider before assessing whether the BOC has satisfied the items of the competitive checklist and the other requirements of section 271(d)(3). The Commission developed the "qualifying request" framework in the SBC Oklahoma Order as a method of giving effect to the language in section 271(c)(1)(B) specifying that Track B is foreclosed as soon as there is a "request" for the type of telephone exchange service described in section 271(c)(1)(A), rather than foreclosing Track B only if the request or requests for interconnection are made by carriers that are already predominately facilities-based and already serving residential and business customers. In addition, the Commission developed the "reasonable steps" framework so that new entrants would not be able to preclude BOC entry indefinitely by making a qualifying request for access and interconnection and then not completing the work necessary to provide the type of telephone exchange service described in section 271(c)(1)(A). 64. Upon further reflection, we observe that there may be other more efficient ways of assessing requests for access and interconnection for purposes of Track B, while preventing new entrants from relying on bare requests to preclude BOC entry. Notwithstanding the Commission's dicta in the SBC Oklahoma Order concerning "reasonable steps," the statute expressly empowers state commissions to nullify the foreclosure of Track B that occurs when a timely, qualifying request has been made in two situations. Specifically, a BOC will not be deemed to have received a qualifying request if the applicable state commission "certifies that the only provider or providers making such a request have (i) failed to negotiate in good faith . . . or (ii) violated the terms or an agreement . . . by the provider's failure to comply, within a reasonable period of time, with the implementation schedule contained in such agreement." With respect to the latter exception, we note that nothing in the Commission's rules precludes incumbent LECs, including BOCs, from negotiating, or states from imposing in arbitration, schedules for the implementation of the terms and conditions by the parties to the agreement. For instance, section 252(c)(3) provides that in "resolving by arbitration under [section 252 (b)] any open issues and imposing conditions upon the parties to the agreement, a State commission shall . . . provide a schedule for implementation of the terms and conditions by the parties to the agreement." We would be prepared to give such certifications conclusive effect so long as they are consistent with the statute. We intend to offer more specific guidance as to the scope and form of such certifications in a future proceeding. c. Existence of "Qualifying Requests" in South Carolina 65. As noted above, Track B is available to BellSouth if no potential facilities- based provider of the type of telephone exchange service described in section 271(c)(1)(A) requested access and interconnection to BellSouth's network prior to June 30, 1997. In its application, BellSouth submits that, as of September 19, 1997, it had signed local exchange interconnection and/or resale agreements with eighty-three different telecommunications carriers in South Carolina. BellSouth maintains that twenty-six of these carriers indicated in their interconnection negotiations that they may provide "competitive local exchange services in whole or in part over their facility-based networks." Moreover, BellSouth asserts that these twenty-six carriers signed interconnection agreements that include "terms and conditions for local exchange interconnection and the unbundling of [BellSouth] network elements." BellSouth further states that nine of these carriers, ACSI, AT&T, DeltaCom, FiberSouth, Hart Communications, Intermedia, KMC, MCI and US LEC, have received, or in the process of receiving, certification from the South Carolina Commission to provide local exchange services in South Carolina. Notably, BellSouth identifies three carriers, ACSI, DeltaCom, and Time Warner, as having "sufficient distribution facilities currently in place to support the general delivery of facility-based local exchange services." BellSouth does not claim that any of these twenty-six requests, which have resulted in signed interconnection agreements, were made after the commencement of the three-month window. We find, therefore, that each of these requests was made "before the date which is 3 months before" BellSouth filed its section 271 application, and, therefore, falls within the statutory period in which a request can preclude a Track B application. 66. As the Commission held in the SBC Oklahoma Order, in order to satisfy the requirements of section 271(c)(1)(B), BellSouth must demonstrate that none of the timely requests for access and interconnection it has received are qualifying requests. Instead of presenting evidence to support such a finding, BellSouth asserts that it is entitled to proceed under Track B because no requesting carrier is taking "reasonable steps" to provide the type of telephone exchange service described in section 271(c)(1)(A) to residential and business subscribers. In support of this contention, BellSouth provides detailed information on three carriers with "self-provided" facilities in South Carolina that have signed interconnection agreements. BellSouth, however, provides little or no information on the other twenty-three carriers with signed interconnection agreements or the carriers that have made timely requests for access and interconnection but have not yet obtained interconnection agreements. In addition, BellSouth dismisses the requests of major interexchange carriers, such as AT&T, MCI, and Sprint by simply asserting that "the general lack of commitment demonstrated by these potential facility-based providers in serving the local exchange market has led [BellSouth] to discount any possibility of their facility-based entry in South Carolina in the foreseeable future." 67. We find that BellSouth has failed to substantiate its contention that it has not received a qualifying request. Generalized assertions that no potential competitors are taking "reasonable steps" are insufficient to allow a BOC to proceed under Track B. Specifically, BellSouth does not discuss in any detail the remaining twenty-three requesting carriers with signed interconnection agreements or the other carriers that have made timely requests but are still in the process of negotiation. We conclude, therefore, that BellSouth has not satisfied its burden of demonstrating that it is eligible to proceed under Track B. Because we do not rely on actions taken by any requesting carrier after June 30, 1997, in reaching this conclusion, we find that the application of BellSouth's proposed "three-month" rule would have no practical impact on the instant proceeding. We need not, therefore, address it here. 68. Before turning to the competitive checklist issues, we review AT&T's experience in South Carolina. Although AT&T formally requested access and interconnection in June 1996, we find it relevant that AT&T first expressed its intention to serve residential and business customers in BellSouth's region through a combination of BellSouth's network elements soon after the passage of the 1996 Act. For example, on February 29, 1996, AT&T requested approval from the South Carolina Commission to offer local exchange services throughout South Carolina. Shortly thereafter, in March 1996, AT&T began informally to negotiate an interconnection agreement with BellSouth. During these preliminary negotiations, on March 28, 1996, AT&T informed BellSouth of its intent to use unbundled network elements, including combinations of network elements, to provide "all the network capabilities and functions needed to offer residential and business customers a wide array of basic exchange services." According to AT&T, this statement "confirmed and amplified [its] intention to serve residential and business customers throughout [BellSouth's] region using unbundled network elements, resale, and interconnection." In November 1996, when it was unable to reach a negotiated interconnection agreement with BellSouth, AT&T requested arbitration before the South Carolina Commission pursuant to section 252. 69. On March 10, 1997, the South Carolina Commission issued its ruling on the arbitration. The arbitrated interconnection agreement, which became effective on June 2, 1997, provides in pertinent part: AT&T may purchase unbundled Network Elements for the purpose of combining Network Elements, whether those elements are its own or are purchased from BellSouth, in any manner that it chooses to provide service. If Network Elements are rebundled to produce an existing tariffed retail service, the appropriate price to be charged to AT&T by BellSouth is the wholesale price (discounted retail price). We note that this provision of the arbitrated agreement is in violation of the Commission's rules (promulgated in August 1996 and, subsequently, affirmed by the Eighth Circuit in July 1997) that a competing carrier may provide local exchange services solely through the use of network elements and may obtain these elements at cost-based rates. We also note that it is not apparent from this language whether AT&T can require BellSouth to combine the elements or whether BellSouth will disconnect already combined elements and require AT&T to recombine them. Until the Eighth Circuit issued its decision on rehearing on October 14, 1997, the Commission's rules barred BellSouth from separating elements already combined in its network. 70. Although the Eighth Circuit Rehearing Order held that incumbent LECs have no duty to do the actual combining of network elements themselves, it did not alter the right of competing carriers to provide a telecommunications service solely through the use of unbundled network elements at cost-based rates. Notwithstanding this right, if AT&T sought to combine the elements itself and thereby provide a service that replicates an existing retail service, an entry strategy specifically ratified by the Eighth Circuit, it is precluded from doing so at cost-based rates under its arbitrated interconnection agreement. Moreover, AT&T cites a letter from BellSouth dated September 12, 1997, in which BellSouth states that "when AT&T orders a combination of network elements or orders individual network elements that, when combined, duplicate a retail service provided by BellSouth, BellSouth will treat, for purposes of billing and provisioning, that order as one for resale." 71. It appears, therefore, that if AT&T seeks to provide service to residential and business customers solely through the use of unbundled network elements -- which would qualify as the type of telephone exchange service described in section 271(c)(1)(A) -- AT&T would either have to renegotiate its interconnection agreement with BellSouth or replace its agreement with the terms of BellSouth's revised SGAT, which now allows a competing carrier to use combinations of network elements, at cost-based rates, when a carrier combines the elements itself to provide a service that duplicates an existing BellSouth tariffed service. Thus, AT&T is faced with the choice of either starting the negotiation process all over again, and further delaying its entry into the local market, or losing all the benefits of its arbitrated agreement by accepting the terms of the SGAT. We note that even if AT&T could surmount this hurdle and obtain the right to purchase combinations of network elements at cost-based rates, we conclude in this Order that BellSouth has not demonstrated that it can provide nondiscriminatory access to unbundled network elements in a manner that allows competing carriers to combine them to provide a telecommunications service. 72. AT&T states that it has "attempted repeatedly to get BellSouth executives to change this [recombination] policy or at a minimum put it aside so that [both AT&T and BellSouth] could move forward with implementation details." AT&T also maintains that, in those states in BellSouth's region where combinations of network elements were available at cost-based prices, AT&T has sought to implement its request, for example, by testing the provision of unbundled network element combinations. AT&T argues, however, that BellSouth has resisted these efforts. BellSouth responds that it is willing to engage in such implementation efforts, but BellSouth does not dispute that, in these states, AT&T is making such efforts. 73. Because of these circumstances, AT&T contends that BellSouth has hindered its ability to begin providing local exchange services in South Carolina. More specifically, AT&T submits that BellSouth has refused to allow AT&T to pursue its entry strategy of providing local service through combinations of unbundled network elements. AT&T states that "had BellSouth responded constructively to AT&T's request for [unbundled network element]-based entry under the law as applicable throughout the relevant time period, AT&T would have been able to provide 'the type of telephone exchange service described in section 271(c)(1)(A).'" 74. On reply, AT&T reiterates that it has sought from the outset of its negotiations with BellSouth the ability to provide local service to business and residential customers with a combination of BellSouth's network elements. It also asserts that "if unbundled network elements were truly available on nondiscriminatory terms and conditions and priced at cost as the Act requires -- AT&T would rely upon unbundled network elements, in conjunction with its own facilities, to serve at least the majority of its residential and business customers . . . service that this Commission would deem to be predominantly facilities-based to both residential and business customers." AT&T maintains, however, that it is not in a position to say when it will provide such unbundled network element-based service in South Carolina given the"'great uncertainty' concerning whether and when BellSouth will make unbundled network elements available to AT&T at cost-based rates." 75. It is evident from the circumstances presented in this proceeding that AT&T has made significant efforts to advance its entry strategy in South Carolina but its efforts have been hindered. In particular, although the Eighth Circuit upheld the Commission's rule that, pursuant to the Act, unbundled network elements must be made available, individually and in combination at cost-based rates, and the Commission has held that unbundled network element entry is sufficient to satisfy the requirements of section 271(c)(1)(A), AT&T has been unable to provide local service in South Carolina through the use of unbundled network elements. More specifically, even under AT&T's arbitrated interconnection agreement, AT&T was, and still is, precluded from offering local exchange service through a combination of unbundled network elements unless AT&T agrees to pay for that combination of elements at the rate applicable to resold services, instead of the cost-based rates applicable to the purchase of network elements. 76. Although we deny BellSouth's application on the grounds that it has failed to satisfy the requirements of section 271(c)(1), we proceed to evaluate BellSouth's application under the "generally offering" standard set forth in section 271(c)(2)(A)(i)(II) and also deny BellSouth's application on the grounds that it has failed to generally offer each of the competitive checklist items in section 271(c)(2)(B). VI. CHECKLIST COMPLIANCE A. "Generally Offering" Each Checklist Item 1. Introduction 77. To demonstrate checklist compliance under Track B, the BOC must show that it "generally offers" each checklist item pursuant to an SGAT. Pursuant to section 271(c)(1)(B), a BOC meets the requirements for authorization to provide in-region interLATA service if it "generally offers to provide such access and interconnection [as described in section 271(c)(1)(A)]" pursuant to a statement of general terms and conditions approved or allowed to take effect by a state commission. Under section 271(d)(3)(A)(ii), the Commission shall not approve a request for in-region, interLATA service unless the BOC demonstrates that, "with respect to access and interconnection generally offered pursuant to [an SGAT], such statement offers all of the items included in the competitive checklist . . . ." Thus, before examining BellSouth's showing on specific checklist items, we first must address what it means to "generally offer[ ]" to provide a checklist item under section 271(c)(2)(B). We conclude that a BOC "generally offers" to provide a checklist item if it makes that item available as a legal and practical matter, as discussed below. 78. As explained below, this conclusion is consistent with the standard set forth in the Ameritech Michigan Order for checklist items that have not been requested. In the Ameritech Michigan Order, the Commission addressed the meaning of "providing access and interconnection" pursuant to the competitive checklist as required under sections 271(c)(2)(A) and 271(d)(3)(A)(i) (i.e., for Track A). Under these provisions, the BOC must show that it "is providing access and interconnection" and that it "has fully implemented the competitive checklist." The Commission concluded that "a BOC 'provides' a checklist item if it actually furnishes the item at rates and on terms and conditions that comply with the Act." Alternatively, the Commission concluded that, where no competitor is actually using the item, the BOC must show that it makes the checklist item available "as both a legal and practical matter." To be "providing" a checklist item, "a BOC must have a concrete and specific legal obligation to furnish the item upon request pursuant to state-approved interconnection agreements that set forth prices and other terms and conditions for each checklist item." In addition, the BOC must demonstrate that it is "presently ready to furnish each checklist item in the quantities that competitors may reasonably demand and at an acceptable level of quality." Evidence of actual commercial usage of a checklist item is most probative, but a BOC may also submit evidence such as carrier-to-carrier testing, independent third party testing, and internal testing to demonstrate its ability to provide a checklist item. 2. Discussion 79. Although parties that address the issue use somewhat different terminology to define "generally offer," parties seem to agree that to "generally offer" is consistent with a requirement to "make available." BellSouth asserts that it is "generally offering" the items in its SGAT because it "stands ready to furnish each item in the quantities that competitors may reasonably demand and at a level of quality that enables competitors to provide service on par with BellSouth's." It contends that the checklist items in the SGAT are "ready and waiting." Before the South Carolina Commission, BellSouth contended that "generally offering" means "that when a competitor requests a checklist item, BellSouth will provide it within a reasonable period of time, in parity with the services provided for our own retail customers and in accordance with all applicable rules and regulations." BellSouth argues that evidence of actual commercial usage and testing in other states demonstrates its ability to furnish checklist items upon request. Similarly, the South Carolina Commission uses various phrases to define "generally offers," including "make available," "generally available," and "functionally available." The South Carolina Commission concluded that, although approval of the SGAT does not require BellSouth to show that it is actually providing each checklist item, BellSouth has established that it has actually provided each item somewhere within its nine-state region. 80. The Department of Justice employs the standard the Commission adopted in the Ameritech Michigan Order, asserting that, "[u]nder Track B, as well as under Track A, an applicant is required to show that each checklist item is available both as a legal matter and as a practical matter." The Department of Justice contends that the phrase "statement of generally available terms" indicates that "checklist items must be generally offered to all interested carriers, be generally available, and be offered at concrete terms." According to the Department of Justice, a "mere paper promise to provide a checklist item, or an invitation to negotiate, would not be a sufficient basis for the Commission to conclude that a BOC 'is generally offering' all checklist items." Similarly, AT&T argues that a BOC must demonstrate that it is "able to actually provision" each checklist item. MCI contends similarly that BellSouth must demonstrate that it could provide each item "in the real world." According to MCI, an "offer" must be more than just a recitation of the Act's requirements; it must include reasonable and nondiscriminatory terms and conditions as well as a reliable implementation procedure. 81. We conclude that the phrase "generally offers to provide such access and interconnection" requires a BOC to make the checklist item available as both a legal and practical matter. The term "offer" is commonly understood to mean "make available." The statute contemplates that, in a Track B application, a carrier may file even though no request has been made for any checklist item. Under Track B, the BOC must offer checklist items on terms such that a competitor may obtain these items if and when the competitor actually enters the local market. Thus, the standard for a Track B application is that the BOC must have a concrete and specific legal obligation to furnish the item upon request pursuant to its SGAT. Moreover, the BOC must demonstrate that it is presently prepared to furnish each checklist item in the quantities that competitors may reasonably demand and at an acceptable level of quality. The Commission must make a predictive judgment to determine whether a BOC is actually able to furnish the checklist item upon demand, and thus whether the item is legally and practically available. Where the BOC uses identical processes and systems for ordering and for furnishing items in a multistate region, evidence that a BOC actually is or is not capable of furnishing the item in another state would be probative of that BOC's ability to make the checklist item available as both a legal and practical matter in the state that is the subject of the application. Alternatively, a carrier could demonstrate that an item is practically available through carrier-to-carrier testing, third-party testing, or internal testing. This is consistent with the Commission's conclusion, which we reaffirm, in the Ameritech Michigan Order for a Track A application that, where no party has actually requested an item, the Commission would consider whether the item is available as both a legal and practical matter. For the reasons described below, we find that BellSouth does not "generally offer[ ] to provide" certain of the checklist items. B. Operations Support Systems 1. Introduction 82. As discussed above, Congress requires incumbent LECs to share their networks with new entrants to hasten the development of competition in the local exchange market. In order for a new entrant practically to have access to an incumbent LEC's network, the Commission has required, since adoption of the Local Competition Order in August 1996, that incumbent LECs offer nondiscriminatory access to the systems, information, and personnel that support those network elements or services. These systems, databases, and personnel collectively are commonly referred to as operations support systems, or OSS. The Commission has consistently found that nondiscriminatory access to the functions of operations support systems is integral to the ability of competing carriers to enter the local exchange market and compete with the incumbent LEC. To compete effectively in the local exchange market, new entrants must be able to provide service to their customers at a quality level that matches the service provided by the incumbent LEC. A competing carrier that lacks access to operations support systems equivalent to those the incumbent LEC provides to itself, its affiliates or its customers, "will be severely disadvantaged, if not precluded altogether, from fairly competing." 83. As the Commission decided in the Ameritech Michigan Order, section 271 requires the Commission to review the BOC's offer of access to operations support systems functions and to verify that a section 271 applicant is meeting its obligation to offer nondiscriminatory access to OSS functions. As the Commission determined in the Local Competition Order, the provision of access to OSS functions falls squarely within an incumbent LEC's duty under section 251(c)(3) to provide unbundled network elements under terms and conditions that are nondiscriminatory and just and reasonable, and its duty under section 251(c)(4) to offer resale services without imposing any limitations or conditions that are discriminatory or unreasonable. Thus, as the Commission concluded in the Ameritech Michigan Order, "[b]ecause the duty to provide access to network elements under section 251(c)(3) and the duty to provide resale services under section 251(c)(4) include the duty to provide nondiscriminatory access to OSS functions, an examination of a BOC's OSS performance is necessary to evaluate compliance with section 271(c)(2)(B)(ii) and (xiv)." 84. Moreover, the duty to provide nondiscriminatory access to OSS functions is embodied in other terms of the competitive checklist as well. As discussed above, the duty to "offer" items under the checklist requires a BOC to make the item available as both a legal and practical matter, at rates and on terms and conditions that comply with the Act. Thus, as the Commission stated in the Ameritech Michigan Order, in order for a BOC to be able to demonstrate that it is offering the items enumerated in the checklist (e.g., unbundled loops, unbundled local switching, and unbundled local transport), it must demonstrate, inter alia, that it is offering nondiscriminatory access to the systems, information, and personnel that support those elements or services. An examination of a BOC's OSS performance is therefore integral to our determination whether a BOC is offering all of the items contained in the competitive checklist. 85. Although not expressly stated in the Ameritech Michigan Order, we conclude that an additional reason that we must undertake a review of the BOC's offer of access to OSS functions is that, as determined in the Local Competition Order, "operations support systems and the information they contain fall squarely within the definition of 'network element.'" The Eighth Circuit affirmed the Commission's determination that operations support systems are network elements that must be provided pursuant to section 251(c)(3) of the Act. Section 271(c)(2)(B)(ii), item (ii) of the competitive checklist, expressly requires a BOC to offer "nondiscriminatory access to network elements in accordance with the requirements of sections 251(c)(3) and 252(d)(1)." Therefore, our section 271 review necessarily requires us to determine whether BellSouth offers nondiscriminatory access to OSS functions. 86. BellSouth claims that it is providing nondiscriminatory access to its operations support systems, stating that "[competing LECs] are able to perform traditional OSS functions such as pre-ordering, ordering, provisioning, maintenance and repair, and billing 'in substantially the same time and manner' as BellSouth." In response, numerous parties argue that BellSouth has failed to satisfy various aspects of the requirement that it provide nondiscriminatory access to its operations support systems, raising issues with respect to each of the categories of OSS functions: pre-ordering, ordering, provisioning, repair and maintenance, and billing. 87. As discussed below, we conclude that BellSouth has failed to demonstrate that it offers to competing carriers nondiscriminatory access to OSS functions, as required by the competitive checklist. First, we outline the general approach to analyzing the adequacy of a BOC's operations support systems that the Commission adopted in the Ameritech Michigan Order. Second, we briefly describe BellSouth's operations support systems. Third, we analyze the evidence concerning competing carriers' access to OSS functions for resale services and unbundled network elements. 88. Based on the evidence in the record, we conclude that BellSouth has not demonstrated that the access to certain OSS functions that it provides to competing carriers for pre-ordering, ordering, and provisioning of resale services and pre-ordering of unbundled network elements is equivalent to the access it provides to itself. Although not a basis for our decision, we also address certain other concerns raised in the record concerning OSS access for ordering and provisioning of unbundled network elements. Given our finding that BellSouth fails to provide nondiscriminatory access to certain critical OSS functions for pre- ordering, ordering, and provisioning, we need not decide in this Order whether BellSouth complies with its obligation to provide nondiscriminatory access to every OSS function. Accordingly, as in the Ameritech Michigan Order, given the statutory 90-day time deadline, we include here a discussion of only certain issues raised in the context of this application and do not make any conclusions with respect to other OSS functions not addressed in this decision. Nonetheless, to provide guidance for future applications, we highlight a number of other OSS-related issues that we do not reach as a decisional basis, but which raise concerns. We note that some of the issues we discuss in this section have already been addressed by the Commission in the Ameritech Michigan Order. 89. We recognize that BellSouth has devoted substantial resources to deploying systems that allow competing carriers to access OSS functions. Nevertheless, to compete effectively in the local exchange market, new entrants must be able to provide telecommunications services to their customers at a quality level that matches the service provided by the incumbent LEC. For example, if new entrants are unable to process orders as quickly and accurately as the incumbent, they may have difficulty marketing their services to end-users. Each of the issues that we discuss below as a basis for our decision has a significant impact on a new entrant's ability to serve its customers. Moreover, the impact of these deficiencies is magnified when they are viewed collectively. Given these deficiencies, from an end-user's perspective, interactions with a new entrant will take longer and be more prone to errors than interactions with BellSouth, through no fault of the new entrant. As a result, the new entrant's reputation may suffer, even though problems that customers encounter with the new entrant are due to the type of access to OSS functions that BellSouth offers. 2. Description of BellSouth's Operations Support Systems 90. BellSouth has established two Local Carrier Service Centers (LCSCs), one in Atlanta, Georgia, and one in Birmingham, Alabama, that serve as the central contact points with BellSouth for new entrants for pre-ordering, ordering, and provisioning of resale services and network elements. Each new entrant is assigned to one LCSC to handle its needs for the entire BellSouth region. Thus, for example, a new entrant assigned to the Birmingham LCSC would interact with that LCSC for services it provides to customers in South Carolina, Florida, Georgia, or any other state in BellSouth's region. The LCSC will accept facsimile, telephone, or mail requests from those new entrants that do not want to implement one of the electronic interfaces for pre-ordering, ordering, and provisioning discussed below. The LCSC also handles manual processing of orders for services not supported by the electronic interfaces. In addition, if there is an error in the processing of an order, the LCSC either manually processes the order or notifies the new entrant of the error. Moreover, each new entrant is assigned a customer support manager at the LCSC who acts as a single point of contact for any "operational issues that are not satisfactorily resolved by the normal center process." 91. Pre-ordering generally includes those activities that a carrier undertakes with a customer to gather and confirm the information necessary to place an order. BellSouth provides an electronic interface, the Local Exchange Navigation System (LENS), for pre- ordering of both resale services and unbundled network elements. LENS is a proprietary terminal-type interface that allows a competing carrier to use a browser software program to retrieve information from a BellSouth server on a real-time basis. Competing carriers can connect to LENS through dedicated local area network (LAN-to-LAN) connections, through dial-up connections, or through the public Internet. LENS has two modes, an "inquiry" mode and a "firm order" mode. The inquiry mode provides pre-ordering information and allows a competing carrier to access only those pre-ordering functions that the carrier needs. The firm order mode requires a competing carrier to perform each pre-ordering function in sequence, as if placing an order. LENS also has some ordering functionality when used in the firm order mode, but, as discussed below, BellSouth relies on another interface as its primary ordering interface to meet the OSS requirements of section 271. 92. Ordering includes the exchange of information necessary for a competing carrier to order services and products from the BOC. Provisioning includes those activities necessary to install services and products to the competing carrier and its customers as well as the exchange of information necessary to inform competing carriers on the status of that work. BellSouth provides an electronic interface utilizing the Electronic Data Interchange (EDI) protocol to meet its obligation to provide nondiscriminatory access to requesting telecommunications carriers for ordering and provisioning of resold services. The EDI protocol enables BellSouth both to receive resale orders electronically from competing carriers and to transmit information to competing carriers concerning the status of their orders. BellSouth has deployed two versions of EDI, one that it jointly developed with AT&T, and a second one that it generally offers to other new entrants. In addition, BellSouth offers a software package called PC-EDI that enables competing carriers to use the EDI interface without the use of their own operations support systems. For the ordering and provisioning of unbundled network elements, BellSouth accepts orders for loops, interim number portability and switching through its EDI interface, and for other network elements, such as transport, through its EXACT interface. BellSouth's EXACT interface is also used by interexchange carriers to order access services from BellSouth. 93. BellSouth uses several systems to process competing carriers' orders received through the EDI interface, including the local exchange ordering (LEO) system, the local exchange service order generator (LESOG) system, and the Service Order Control System (SOCS). Orders are initially reviewed by the LEO system for correctness and completeness. Orders supported by mechanized processing are then sent to the LESOG system which translates the EDI order into a format that can be accepted by the SOCS system. The SOCS system then generates a valid service order that it sends to the appropriate BellSouth legacy systems, and creates a firm order confirmation (FOC) notice that is sent to competing carriers via the EDI interface. If one of these systems encounters an error in the processing of a competing carrier's order, the order is sent to BellSouth's local carrier service center (LCSC) for manual processing. As noted above, the LCSC will either correct the order and resubmit it for completion, or manually return an error notice to the ordering carrier. Finally, when an order is completed, the SOCS system creates an order completion notice that is sent to the ordering carrier via the EDI interface. 94. As indicated above, BellSouth also provides ordering functionality through its LENS interface when LENS is used in the firm order mode. BellSouth, however, states that it does not rely on the LENS interface to provide competing carriers with nondiscriminatory access to ordering functions. BellSouth states that "LENS was designed primarily as a pre-ordering tool for [competing carriers] and is not intended to support all large-scale ordering functions." BellSouth acknowledges that LENS ordering functionality is limited to a subset of the order types and activity types provided by the EDI interface. We therefore do not evaluate the adequacy of the LENS interface in making our determination as to whether BellSouth provides nondiscriminatory access to ordering and provisioning functions. 95. For its retail operations, BellSouth uses two interfaces, the Regional Negotiation System (RNS) and Direct Order Entry (DOE), both of which provide pre-ordering and ordering functions on an integrated basis. RNS, which is currently used for most residential services, is a newer system with "English-language and point-and-click capabilities." For business services and certain residential services that are not yet supported by RNS, BellSouth still uses DOE, an older system that relies on special codes and function keys. 3. General Approach to Analyzing Operations Support Systems 96. In the Ameritech Michigan Order, the Commission discussed the approach it would take to review whether a BOC was providing competing carriers with nondiscriminatory access to operations support systems. As in the Ameritech Michigan Order, we undertake a two-part inquiry in making this evaluation. First, we evaluate "whether the BOC has deployed the necessary systems and personnel to provide sufficient access to each of the necessary OSS functions and whether the BOC is adequately assisting competing carriers to understand how to implement and use all of the OSS functions available to them." Second, we "determine whether the OSS functions that the BOC has deployed are operationally ready, as a practical matter." Under this second part of the inquiry, we examine performance measurements and other evidence of commercial readiness. 97. The Commission concluded in the Ameritech Michigan Order that the most probative evidence that OSS functions are operationally ready is actual commercial usage. We recognize, however, that the Ameritech Michigan Order involved the review of an application filed under Track A, whereas we are reviewing BellSouth's application under Track B. Nevertheless, this inquiry into the operational readiness of the OSS functions still applies to a Track B application, because we must determine whether the checklist requirement that access to OSS functions is available, as a legal and practical matter, has been satisfied. In this case, because BellSouth's operations support systems are essentially the same throughout the region, we review the commercial usage of BellSouth's operations support systems in other states as part of the assessment of whether BellSouth is "generally offering" nondiscriminatory access to OSS functions. BellSouth invites such review by submitting data on commercial usage throughout its region to demonstrate compliance with the OSS requirements. The Commission also determined in the Ameritech Michigan Order that it would consider carrier-to-carrier testing, independent third-party testing, and internal testing, in the absence of commercial usage, to demonstrate commercial readiness. 98. For those OSS functions that are analogous to OSS functions that a BOC provides to itself -- including pre-ordering, ordering and provisioning for resale services -- a BOC must offer access to competing carriers equivalent to the access the BOC provides itself. Thus, for example, for those functions that the BOC itself accesses electronically, the BOC must offer electronic access for competing carriers. In addition, access to OSS functions must be offered such that competing carriers are able to perform OSS functions in "substantially the same time and manner" as the BOC. Moreover, for those OSS functions that have no retail analogue, such as ordering and provisioning of unbundled network elements, a BOC must offer access sufficient to allow an efficient competitor a meaningful opportunity to compete. 99. In sum, we reaffirm the finding in the Local Competition Order that "nondiscriminatory access to these support system functions . . . is vital to creating opportunities for meaningful competition." Moreover, in reviewing similar functions in the Ameritech Michigan Order, the Commission concluded that "these requirements with respect to access to OSS functions are readily achievable," because the BOC need only demonstrate that it is offering "the same access to competing carriers that it already provides to itself." 100. Furthermore, we note that any determinations regarding BellSouth's provision of nondiscriminatory access to OSS functions made by state commissions in the BellSouth region may be relevant to our inquiry in this application. As noted above, BellSouth's operations support systems are essentially the same throughout the region and BellSouth submitted data in the record in this proceeding on usage throughout its region to demonstrate compliance with the requirements of section 271. Thus, as the Department of Justice points out in its evaluation, determinations with respect to this single region-wide system may, as a practical matter, affect states throughout a BOC's entire region. With respect to BellSouth's region-wide operations support systems, the South Carolina Commission determined that BellSouth's "electronic interfaces provide access to [BellSouth's] operational support systems for pre-ordering, ordering, maintenance and repair, and billing that is substantially the same as, and in many cases better than, that which it provides to [BellSouth's] retail customers." BellSouth also cites a determination from the Louisiana Commission and a proposed order of the North Carolina Commission's public staff, both of which found that BellSouth's provision of access to OSS functions satisfies the requirements of section 271. Other parties cite determinations from the Alabama, Florida, and Georgia commissions that, upon review of the very same functions, have concluded that BellSouth's operations support systems are deficient. Because evidence gathered by other state commissions in the region is probative of BellSouth's offer of access to OSS functions in South Carolina, and because any determination we make in this proceeding regarding BellSouth's operations support systems will have an impact on other states in the region, we conclude that we may take into account any evidence gathered by these other state commissions in their evaluation of BellSouth's region-wide systems. 4. Analysis of Ordering and Provisioning Functions 101. For the reasons set forth below, we conclude that BellSouth has failed to demonstrate that it is providing nondiscriminatory access to OSS functions for the ordering and provisioning of resale services. As described above, BellSouth provides competing carriers access to an EDI interface to provide nondiscriminatory access for ordering and provisioning of resold services. BellSouth states that it has been capable of implementing an EDI interface with any requesting carrier since December 1996. Competing carriers, however, had only recently begun to use EDI for ordering at the time of BellSouth's application. For example, evidence in the record indicates that AT&T has used EDI to transmit orders since June 1997. At the time of its application, BellSouth states that an additional four carriers were using the PC-EDI software to transmit commercial resale orders through the EDI interface. In addition, MCI states that it is currently testing BellSouth's EDI interface to transmit orders from MCI's own OSS. In August, the most recent month for which data is available, BellSouth received, on a region-wide basis, 6715 orders through its EDI interface. 102. In the Ameritech Michigan Order, the Commission concluded that, because the ordering and provisioning of resale services by a competing carrier is analogous to the ordering and provisioning of a BOC's retail services by the BOC to its own customers, a BOC must provide to competing carriers access to OSS functions equivalent to the access provided to its retail operations. In that order the Commission agreed with the Department of Justice that "[p]roviding resale services in substantially the same time as analogous retail services is probably the most fundamental parity requirement in Section 251." The Commission further concluded that a BOC's submission of data showing the average installation intervals for the provision of both its retail and resale services is fundamental to a demonstration of nondiscriminatory access to OSS functions. 103. Applying the standards adopted in the Ameritech Michigan Order, we find that BellSouth has failed to demonstrate that it is providing nondiscriminatory access to OSS functions for the ordering and provisioning of resale services. There is convincing evidence in the record that BellSouth's OSS functions for the ordering and provisioning of resale services contain significant deficiencies. Competing carriers using the EDI interface to order resale services are experiencing a high order rejection rate that has decreased significantly BellSouth's ability to process competing carriers' orders without additional human intervention. In addition, BellSouth has not provided to competing carriers information on the status of their orders in a timely manner. As discussed more fully below, we find that these deficiencies are significant and prevent competing carriers from providing service to their customers at parity with BellSouth's retail operations. Indeed, the inadequate performance of the EDI interface has led one carrier, LCI, to stop using it and return to submitting orders manually. Moreover, these significant deficiencies are occurring with a relatively small volume of orders for resale of simple POTS services. We are therefore concerned that the problems with BellSouth's EDI interface will only increase as more competing carriers enter the market, and the number and complexity of services ordered by those carriers increases. a. Order Rejections 104. It is critical to a competing carrier providing service by reselling the BOC's services that the competing carrier have its orders processed through the BOC's systems in substantially the same time and manner as the BOC's retail operations. Without such equivalent access, the competing carrier will be unable to provide service to its customers in a manner that is competitive with the BOC. Therefore, the BOC is obligated to demonstrate that it is offering competing carriers the ability to order services for resale on a nondiscriminatory basis. When BellSouth representatives place an order, the overwhelming majority of those orders automatically flow through BellSouth's ordering systems and databases. In fact, according to the Department of Justice, 97 percent of BellSouth's residential orders and 81 percent of its business orders are processed without additional human intervention once the order is submitted by the BellSouth service representative. 105. As discussed above, BellSouth states that it has similarly mechanized the order processing for most of the services competing carriers can electronically order through the EDI interface. That is, a competing carrier service representative can send an order for service through the BOC's ordering systems without the need for BOC service representatives to intervene in the ordering process. The evidence in the record demonstrates that, in actual practice, the majority of orders submitted by competing carriers via the EDI interface do not mechanically flow through BellSouth's systems. Instead, these orders are rejected by BellSouth's systems and then require human intervention from BellSouth representatives for resolution. BellSouth's data demonstrate that, in July 1997, 75 percent of the orders submitted by competing carriers via the EDI interface were rejected due to errors; that is, only 25 percent flowed through BellSouth's systems without the need for human intervention. In August 1997, 60 percent of the orders were rejected. Evidence in the record suggests that, for example, AT&T and MCI must submit orders an average of 1.7 times before acceptance by BellSouth's systems, adding significant delay to the ordering process. The high number of order rejections is of particular concern because they are occurring for resale orders for simple POTS services, which should be among the easiest orders to submit and process. We would expect BellSouth to process orders for simple POTS services in substantially the same and time and manner (i.e., an equivalent level of mechanized processing) as it does for itself. Moreover, the data show that these high rejection rates apply to all of the carriers using the EDI interface. Therefore, the number of orders from competing carriers that BellSouth is successfully processing on a mechanized basis is, in fact, quite low. 106. In addition, the impact of the high order rejection rate is compounded because BellSouth does not notify competing carriers electronically that an order has been rejected. Instead, BellSouth personnel either send an error notice via facsimile to the competing carrier, or they undertake to resolve the problem and resubmit the order for continued processing. This error notice process, as discussed below, causes significant delays and hinders new entrants' ability to compete effectively. 107. We believe that this substantial disparity between the flow-through rates of BellSouth's orders and those of competing carriers, on its face, demonstrates a lack of parity. In the Ameritech Michigan Order, the Commission found a direct correlation between mechanized order processing and the BOC's ability to provide competing carriers with nondiscriminatory access to OSS functions. The Commission stated that, "[b]ecause it is virtually impossible for orders that are processed manually to be completed in the same time as orders that flow through electronically, it is difficult to see how equivalent access could exist when [the BOC] processes a significant number of orders from competing carriers manually." The Commission also noted that, "although there may be limited instances in which it is appropriate for [the BOC] to intervene manually in the processing stage so that orders are processed correctly into the legacy systems, excessive reliance on this type of manual processing, especially for routine transactions, impedes [the BOC's] ability to provide equivalent access to these fundamental OSS functions." We find that the low percentage of order flow through for competing carriers' resale orders not only is evidence that BellSouth's ordering systems are not working as advertised by BellSouth, but also is a substantial factor in BellSouth's inability to provide order status notices and to provision resale services on a timely basis, as described below. 108. BellSouth claims that, after adjusting for errors caused by new entrants in submitting orders, the flow-through rates for new entrant orders would be equivalent to the flow-through rates for BellSouth's own retail operations. The record does not, however, support these claims. BellSouth states that its analysis of competing carriers' orders shows that, in July 1997, competing carriers caused 50 percent of the total errors, and, in August 1997, 87 percent of the total errors. AT&T argues, however, that BellSouth does not explain how it determined which errors were caused by the actions of competing carriers as opposed to BellSouth systems. We agree. Other than alleging that most of these errors were caused by competing carriers' actions, BellSouth does not provide credible evidence or explanation to substantiate its conclusions regarding the causes of order errors. As a point of contrast, in its application to provide in-region, interLATA services in Michigan, Ameritech did provide such information. BellSouth states that its conclusion that the high error rates are due to competing carriers' mistakes is the result of its SOER analysis, a term which is not defined elsewhere in its application. Without further evidence from BellSouth as to the cause of errors, we cannot accept BellSouth's assertion that competing carriers' errors are the primary reason for BellSouth's significant order rejection rate. 109. The evidence in the record in fact suggests that the significant number of order rejections cannot be attributed solely to new entrants. We note that every competing carrier attempting to use BellSouth's EDI interface is experiencing high order error rates. Indeed, if we assume that BellSouth's analysis of the order rejection rate is correct, it shows that competing carriers' error rates actually increased from July to August. Moreover, BellSouth appears to acknowledge that some of the errors are attributable to its systems. It asserts that actions it took to correct nine categories of "internally caused error conditions" were responsible for the reduction of the order rejection rate from July to August. 110. Even if we were to assume that the high error rates were caused primarily by competing carriers' mistakes, we still could not conclude that BellSouth has met its burden of demonstrating that it is providing nondiscriminatory access. Because BellSouth has not provided information explaining the causes of order errors, as discussed above, we cannot make a judgment regarding how many of the errors assigned by BellSouth to the actions of competing carriers result from BellSouth's failure to provide information, such as business rules, concerning how BellSouth's internal systems process orders. As discussed in the Ameritech Michigan Order, business rules refer to the protocols that a BOC uses to ensure uniformity in the format of orders. Commenters contend that errors are caused because carriers were not properly informed of BellSouth's business rules. The Department of Justice concurs and asserts that BellSouth is not "adequately assisting competing carriers to understand how to implement and use all of the OSS functions available to them." Both the Department of Justice and competing carriers specifically cite BellSouth's failure to provide sufficient information concerning BellSouth's "internal editing and data formatting requirements" necessary for competing carriers' orders to be successfully processed through both BellSouth's interface and its internal systems. 111. It is, of course, critical that BellSouth provide to competing carriers BellSouth's business rules concerning how its internal systems and databases process an order submitted via the EDI interface so that competing carriers can take affirmative steps to reduce potential errors. The Commission previously has concluded that BOCs have an affirmative obligation to provide such information and support to competing carriers "with all of the information necessary to format and process their electronic requests so that these requests flow through the interfaces, the transmission links, and into the legacy systems as quickly and efficiently as possible." Such information must include all internal business rules, and ordering codes used by a BOC that competing carriers need to place orders through the system efficiently. We find that the evidence reasonably supports a conclusion that some of the competing carriers' errors were caused by BellSouth's failure to provide business rules and other pertinent information. 112. We also find that the lack of integration between BellSouth's interfaces for pre-ordering and ordering functions has contributed to competing carriers' error rates. This lack of integration requires new entrants manually to re-enter data obtained from the pre-ordering interface into the ordering interface, a process that reasonably can be expected to contribute to errors committed by new entrants. In contrast, the design of BellSouth's internal systems helps to minimize such errors for its retail operations. As discussed below in the pre-ordering section, we find that BellSouth has not provided the information that would allow a new entrant to integrate BellSouth's pre-ordering and ordering interfaces. We further find that BellSouth's manual return of order rejection notices has contributed to competing carriers' error rates. BellSouth's manual process for returning order rejection notices requires new entrants to manually enter error information from the faxed notice into the EDI interface. BellSouth's failure to integrate order rejection notices into the EDI interface also can be reasonably expected to contribute to errors committed by new entrants. 113. Another contributing factor to competing carriers' error rates is that the PC- EDI software BellSouth provides to competing carriers does not provide adequate capability to check for errors before the order is submitted to BellSouth. Such error correction capabilities would allow competing carriers to reduce order errors by correcting errors before submitting orders to BellSouth. In contrast, BellSouth's retail systems include such error check capabilities. LCI also contends that BellSouth has not provided adequate training necessary to use the PC-EDI software properly. As a result of these and other problems with PC-EDI, LCI states that it has stopped using it and returned to submitting orders manually. 114. In sum, we find that BellSouth has not adequately explained or supported its contention that the errors of competing carriers are the cause of its EDI interface's high rejection rate. Instead, the record evidence supports a finding that the high error rates are due, to a significant degree, to BellSouth's failure to meet its obligation to provide competing carriers with information and support concerning the effective use of the EDI interface. We also find that deficiencies in BellSouth's OSS access, such as the lack of integration between the pre-ordering and ordering functions, are contributing to competing carriers' high error rates. We find that the high rejection rate of BellSouth's EDI interface precludes competing carriers from obtaining nondiscriminatory access to ordering and provisioning functions. At the very least, these high rejection rates are evidence that the systems BellSouth has deployed still require considerable improvement before they may be used in a manner that provides nondiscriminatory access to competing carriers. Also, as explained below, the high rejection rate is of major concern because BellSouth has failed to implement a timely and effective means to notify competing carriers of problems with their orders. b. BellSouth does not provide order status notices to competing carriers in substantially the same time and manner as it does for itself. 115. It is critical to a competing carrier's ability to compete through the use of resale services that it receive information concerning the status of its customers' orders in substantially the same time and manner as the BOC provides such information to its retail operations. In the Ameritech Michigan Order, the Commission noted the importance of order status notices because they "allow competing carriers to monitor the status of their resale orders and to track the orders both for their customers and their own records." Competing carriers using resale to provide service to customers would be significantly disadvantaged if they were unable to provide their customers with such basic information concerning their telephone service. For example, because BellSouth does not confirm the date when the service ordered by the competing carrier will be installed until the delivery of the firm order confirmation (FOC) notice to the competing carrier, the competing carrier depends upon timely delivery of such notice in order to inform its customers of the time of service installation. This information becomes even more critical if the customer needs to coordinate the installation of service with other activities, such as a move to a new location. Similarly, if BellSouth does not provide timely notice to the competing carrier that service can no longer be provided on the assigned due date, the competing carrier will not be able to make alternate arrangements with its customer. If the competing carrier is never informed by BellSouth of changes to the due date, the customer will be likely to blame the competing carrier for the failure to install service on time, even if the competing carrier is completely without fault. 116. Evidence in the record indicates that BellSouth is not providing order status notices to competing carriers in substantially the same time and manner that it provides them to itself. We find that, in particular, BellSouth is not providing order rejection notices, FOC notices, and order jeopardy notices in substantially the same time and manner as it does for its own retail services. (1) Order Error and Rejection Notices 117. Timely delivery of order rejection notices has a direct impact on a new entrant's ability to serve its customers, because new entrants cannot correct errors and resubmit orders until they are notified of their rejection by BellSouth. Instead of sending order rejection notices via its EDI interface, rejected orders are reviewed for errors by a BellSouth LCSC employee, and a written error rejection notice is then sent back to the new entrant via facsimile. New entrants contend that, in comparison, BellSouth provides electronic notification of order errors to its retail operations. 118. The evidence in the record suggests two particular problems with BellSouth's manual notification process. First, the evidence indicates that BellSouth does not provide competing carriers with the notices in a timely manner. AT&T submits data for August 1997 that show BellSouth provided AT&T with order rejection notices within one hour of order submission only six percent of the time. BellSouth, on the other hand, has supplied us with no comparative data indicating how long it takes BellSouth to receive the equivalent of an error notice for its own orders. However, there is evidence that BellSouth's retail operations, depending on where the error occurs in its systems, receive the equivalent of an error notice between a few seconds to thirty minutes after entering an order. In the Ameritech Michigan Order, the Commission stressed that, if the BOC performs an analogous activity for its retail operations, it needs to provide comparative information in its application to demonstrate its compliance with the nondiscriminatory standard in the Act. Because BellSouth has not provided us information on how long it takes its own representatives to receive notices of errors, we cannot determine from this record what the appropriate time would be for BellSouth's provision of order rejection notices to competing carriers to demonstrate parity. We are concerned, however, that BellSouth has consistently failed to meet the standard identified in its interconnection agreement with AT&T. We expect, BellSouth, therefore, to submit appropriate comparative data on the timeliness of error rejection notices to support any future claims that it is providing nondiscriminatory access to OSS functions. 119. Second, competing carriers argue that BellSouth's failure to return error notices via the EDI interface creates additional delay in the ordering process, and that the error notices competitive carriers do receive are insufficient and inconsistent, often requiring further clarification from BellSouth. Competing carriers argue that the return of order rejection notices outside of the EDI interface creates additional delay in the ordering process due to their need to monitor facsimile machines, and route order rejection notices to appropriate personnel. Competing carriers also contend that, because BellSouth's order rejection notices do not contain codes clearly identifying the nature of errors, competing carriers suffer from additional delays and errors caused by their need to interpret the order rejection notice. 120. We conclude that BellSouth's manual provision of order rejection notices to competing carriers via facsimile is not equivalent access to that which BellSouth provides its retail operations. BellSouth provides the equivalent of order rejection notices to its retail operations through electronic ordering interfaces. If a BOC provides itself with an electronic interface as a means to obtain access to a particular OSS function, it must provide "equivalent electronic access for competing carriers." Compared to a BOC's use of an electronic interface, competing carriers using a manual process, such as facsimile-based ordering, are at a significant disadvantage. Manual processes, as discussed above, are generally less timely and more prone to errors than electronic interfaces. 121. BellSouth, however, contends that it did not include error notices in its EDI interface because the current version of the EDI standard which was approved by the OBF did not include specifications for transmission of error notices. In its application, BellSouth states that it plans to provide error messages through the EDI interface when it implements the next version of the EDI standard in the first quarter of 1998. In response, competing carriers assert that they have requested electronic notification of error messages from BellSouth, and that they proposed several alternative methods of providing such messages through the EDI interface. AT&T states that BellSouth, in their interconnection agreement, had agreed to provide AT&T with electronic notification of rejection notices by March 31, 1997. We therefore reject any contention by BellSouth that it was not obligated to provide electronic error notification because of a lack of industry standards. We have previously rejected arguments that a lack of industry standards excuses an incumbent LEC from meeting its obligation to provide nondiscriminatory access to OSS functions. Nor do we believe that there is any technical obstacle to providing electronic error notification. We note that at least one other BOC, Ameritech, does provide electronic notification of error messages through an EDI interface. (2) Firm Order Confirmation Notices 122. We also find that BellSouth is not providing firm order confirmation (FOC) notices on a timely basis. BellSouth states that a FOC notice is sent to competing carriers over the EDI interface when an order has been accepted by BellSouth's SOCS system. In the Ameritech Michigan Order, the Commission concluded that the retail analogue of a FOC notice occurs when an order placed by the BOC's retail operations is recognized as valid by its internal OSS. The Commission concluded that the BOC needs to provide FOC notices to competing carriers in substantially the same time that its retail operations receive the retail analogue. The timely return of a FOC notice or an order rejection notice (discussed above) is critical to competing carriers, because the failure to receive either notice in a timely manner prevents competing carriers from providing the same level of service and information to their customers that the BOC can provide to its retail customers. As the Commission stated in the Ameritech Michigan Order, "as long as a competing carrier has not received a FOC, the competing carrier, as well as the customer, is unaware of the status of its order." Moreover, the FOC notice also performs the critical function of confirming the due date for installation. As noted in the pre-ordering discussion below, the ability of new entrants to obtain due dates over the LENS pre-ordering system with any degree of confidence is highly constrained. Thus, the first opportunity competing carriers may have to inform their customers of the due date is when the FOC notice is returned. Delays in the return of the FOC notice therefore delay a new entrant's ability to inform its customers when service will begin. 123. BellSouth's application does not provide data on the timeliness of its delivery of FOC notices to competing carriers, or how long it takes to provide the equivalent information to its retail operations. In the Ameritech Michigan Order, the Commission directed Ameritech to provide such information in subsequent applications. BellSouth states that it intends to measure the time to deliver FOC notices to competing carriers, but that such data were not available when it filed its application. AT&T contends, however, that BellSouth had already provided AT&T with data on delivery of FOC notices for the month of August, and that BellSouth should have provided such data in its application. BellSouth does not dispute that it provided such data to AT&T and not to us, but claims instead that data on the delivery of FOC notices in the aggregate are meaningless, given the different performance standards for the return of FOC notices in individual interconnection agreements. 124. Evidence submitted by AT&T shows that, for 38 percent of the orders it submitted in August, BellSouth took longer than 24 hours to return a FOC notice, the time that BellSouth agreed to in its interconnection agreement with AT&T. AT&T argues that BellSouth's actual performance is probably worse than demonstrated by these statistics because BellSouth did not include information on those orders BellSouth processed manually. As we noted above, the vast majority of orders to date have required manual intervention by BellSouth to complete order processing. LCI states that it received only ten percent of its FOC notices from BellSouth within 24 hours of submitting an order, and that on average it has taken seven days from submission of an order to receive a FOC notice. Intermedia contends that BellSouth has consistently missed its commitment to provide a FOC notice within 48 hours of order submission. Intermedia states that it never received a FOC notice for 37 percent of the orders it submitted to BellSouth between August 9 and October 7, 1997. 125. We conclude that, because BellSouth has failed to provide data comparing its delivery of FOC notices to competing carriers with how long it takes BellSouth's retail operations to receive the equivalent of a FOC notice for its own orders, BellSouth has not provided any evidence to demonstrate that it is providing nondiscriminatory access. In the Ameritech Michigan Order, the Commission specifically requested that BOCs provide information on how long it takes them to provide the equivalent of a FOC notice to their retail operations. BellSouth has simply failed to provide any data on its performance of this activity. We are also not persuaded by BellSouth's arguments that it should not provide data on its delivery of FOC notices to competing carriers because it has agreed to different performance intervals in its interconnection agreements. We find that BellSouth should present the data and then it may make such arguments to explain or clarify why aggregate data may not be useful given differing performance intervals in its interconnection agreements. In addition to providing aggregate data, BellSouth may also disaggregate its data to account for the impact of different performance intervals in its interconnection agreements. Regardless of the targets agreed to in its interconnection agreements, in order to obtain section 271 authorization, BellSouth must demonstrate that it meets its obligations to provide competing carriers with nondiscriminatory access to OSS functions, including the provision of order status notices such as FOC notices. 126. We reiterate that, for a BOC to demonstrate compliance with the nondiscriminatory standard of the Act, it must provide data for both its provision of FOC notices to competing carriers and the time it takes its retail operation to receive the equivalent of a FOC notice. Moreover, we conclude, based on the evidence submitted by AT&T, LCI, and Intermedia, evidence which is not refuted by BellSouth, that BellSouth is not providing competing carriers FOC notices on a timely basis. 127. In its reply comments, BellSouth asserts that, after receiving a properly formatted order, it generally provides a firm order confirmation within 24 hours. As evidence, BellSouth states on reply that, for the week ending October 19, 1997, BellSouth provided to ACSI 68 percent of its FOC notices within 24 hours, and for the week ending October 12, 1997, BellSouth provided to Sprint 86 percent of its FOC notices within 24 hours. BellSouth contends that competing carriers that are not receiving FOC notices within 24 hours are not formatting their orders correctly. 128. We are not persuaded by this new evidence. First, BellSouth's evidence presents data concerning BellSouth activity after the date of its application, and indeed, to some extent, post-dates the time that comments were filed. Evidence that concerns BellSouth's post-application performance is not demonstrative of its performance at the time of the application. Therefore, we will give this evidence no weight. Second, even if we were to consider the evidence, we would not find these data to be persuasive. Instead of providing evidence of BellSouth's performance for all carriers, BellSouth provides only a selected week's data on its performance for two carriers. Moreover, the evidence in the record indicates that neither Sprint nor ACSI is using the EDI interface upon which BellSouth relies to provide ordering functions on a nondiscriminatory basis. BellSouth provides no evidence to refute the information provided by AT&T, LCI, and Intermedia. Furthermore, we are troubled by BellSouth's assertion that its performance for ACSI is in compliance with the nondiscrimination requirement of the Act, given that BellSouth missed its own 24 hour standard in approximately one third of the cases. Finally, we are not convinced, as BellSouth asserts, that competing carrier errors are directly responsible for BellSouth's failure to provide timely FOC notices. Competing carrier orders that are truly in error should receive timely order rejection notices, not untimely FOC notices. Further, as discussed above, we find that BellSouth has not provided evidence or explanation to support its contention that most errors in the ordering process are caused by new entrants. To the extent that such errors cause orders to drop to manual processing and in turn delay the return of a FOC notice to the competing carrier, it is unacceptable for BellSouth to place all of the responsibility for such delays on the competing carrier. 129. Finally, we are concerned that BellSouth has not included orders that require manual processing in its data on the return of FOC notices to competing carriers. It is those orders that are processed manually that are the most susceptible to delays and errors due to human intervention. We would expect BellSouth, in a future application, to submit comparative data for FOC notices, including data for those orders manually processed, that support its claim to provide nondiscriminatory access to OSS functions. (3) Order Jeopardy Notices 130. After a competing carrier has received a FOC notice with a committed due date for the installation of a customer's service, it is critical that the BOC provide the competing carrier with timely notice if the BOC, for any reason, can no longer meet that due date. These notices are called order jeopardy notices. The failure to meet scheduled due dates is likely to have a significant competitive impact on new entrants' ability to compete, regardless of whether the delay is actually caused by the BOC. To the extent that the BOC does not provide timely order jeopardy notices to the competing carrier, the impact of missed due dates will be compounded by the inability of the competing carrier proactively to inform its customer and reschedule the time for service installation. 131. Evidence in the record shows that BellSouth is not providing order jeopardy notices to competing carriers when the due date cannot be met because of delays caused by BellSouth. We understand that BellSouth separates order jeopardy notices into those that are caused by competing carriers or their customers, and those that are caused by BellSouth itself. BellSouth provides competing carriers with notice of those order jeopardies caused by the competing carrier or its customer, but not for delays caused by BellSouth. When BellSouth cannot meet a committed due date, it is critical that the competing carrier be informed in a timely manner so that it can contact its customer in order to schedule another due date. We therefore find that, because BellSouth fails to provide order jeopardy notices for those delays caused by BellSouth, it is not providing competing carriers with nondiscriminatory access to OSS functions. c. Need to Provide Actual Installation Intervals 132. Our requirement that a BOC demonstrate that it is providing nondiscriminatory access to the various systems that comprise OSS serves to ensure that a competing carrier can provide service to its customers, using the BOC's resold service, in substantially the same time and manner that the BOC provides to its own retail customers. This concern is driven by the fact that the competing carrier's ability to provide timely service to its end user customers is, in large measure, dependent on the ability of the BOC to process competing carriers' orders for resale in a timely manner. Therefore, a critical measure of parity is whether the time required for a competing carrier's customer to receive service is substantially the same as the amount of time for a BOC to provide retail service to a customer. In the Ameritech Michigan Order, the Commission concluded that a BOC's submission of data showing average installation intervals for both resale and retail services is fundamental to demonstrating nondiscriminatory access to OSS functions. The Commission stated that such data are direct evidence of whether a BOC takes substantially the same time to complete installations for new entrants as it does for its own retail operations, which is integral to the concept of equivalent access. 133. To demonstrate parity in its provision of resale services, BellSouth initially provided two performance measurements. The first measure, the "percentage of provisioning appointments met," shows how often BellSouth meets the due dates it has assigned to itself and how often BellSouth meets the due dates it has assigned to new entrants. The second measure, labeled "service order intervals," shows the average length of the due date assigned by BellSouth's SOCS system to both BellSouth's retail orders and new entrants' resale orders. 134. We conclude that these measures are not sufficient to demonstrate parity. First, both measures only begin their analysis once an order has cleared BellSouth's SOCS systems. By beginning the interval at the time the order clears BellSouth's SOCS system, rather then when the order is first submitted, these measures fail to capture the delays in order processing time caused by the high order rejection rates discussed above. In addition, BellSouth's measures do not provide information on the time it takes BellSouth actually to install service. Rather, they simply measure whether assigned due dates have been met. They may thus mask discriminatory treatment of competing carriers' orders. As explained by the Department of Justice: Fundamentally, a report that shows the side of the line on which an order falls, either met or missed, does not reveal where it is in the range. As to provisioning appointments met, if all CLEC customers receive service on the due date while all BellSouth retail customers receive service in half the scheduled time, then a report of provisioning appointments met will show parity of performance, not revealing the discriminatory difference in performance between BellSouth and the CLEC. Likewise, as to provisioning appointments missed, if all BellSouth retail customers receive service after one additional day while all CLEC customers receive service after five additional days, then a report of provisioning appointments met will again show parity of performance and fail to reveal the discriminatory difference. We agree with the Department of Justice and therefore conclude that the measurements provided by BellSouth can mask discriminatory conduct, because they do not permit a direct comparison to BellSouth's retail performance. The Commission noted similar concerns with the measurements Ameritech submitted in its section 271 application for Michigan. Although we believe that BellSouth's current measurements do provide some useful information, without data that meaningfully compares the average installation intervals for BellSouth's resale and retail services, we are unable to conclude that BellSouth is providing access to OSS functions on a nondiscriminatory basis. 135. In the Ameritech Michigan Order, the Commission clearly stated that a section 271 application, as originally filed, must include all of the factual evidence on which the applicant would have the Commission rely in making its findings. Nonetheless, on reply, BellSouth, for the first time, proposes another performance measure. This measure shows data on the average interval from "issue date to completion date." Specifically, the measurement tracks the average interval from the time that BellSouth's SOCS system accepts the competing carrier's order as valid (i.e., it is not rejected) to the time of actual completion of service installation by BellSouth. The data provided by BellSouth for this measure concern activity that occurred after the date of BellSouth's application. We find that BellSouth's submission of information concerning average installation intervals in its reply comments to be procedurally and substantively inadequate. First, BellSouth's presentation of new evidence on reply does not provide commenters a fair opportunity for review. Moreover, the data concern BellSouth activity after the date it filed its application. Under our procedures governing section 271 applications, a BOC may provide information that post- dates the filing of its application if the information is necessary to respond directly to arguments or factual information submitted by commenters. The Department of Justice and other parties that commented on BellSouth's failure to provide data showing actual installation intervals, however, did not do so in a manner that raised issues with BellSouth's performance after the date of its application. In fact, it is specifically BellSouth's performance at the time of its application that is at issue. Therefore we will give this evidence no weight. 136. Even if we were to consider BellSouth's evidence, it would not be persuasive. Although BellSouth's data may in fact measure the time between the "issue date" and the "completion date," that is, when service is actually installed, this interval is still an inadequate measure. This is because, like the measurement originally submitted by BellSouth, it only measures the interval from when the order clears BellSouth's systems rather than when the order was originally submitted by the competing carrier. Thus, BellSouth's measurement, like the measurements it provided in its initial application, does not capture the time, if any, that elapses between when a new entrant first sends an order to BellSouth, and when that order is accepted as valid by BellSouth's SOCS system. As explained above, the evidence demonstrates that there are significant delays in BellSouth's processing of orders. By measuring the interval from a point in time where BellSouth has already completed its processing of the order, BellSouth's measurement fails to capture the delays in order processing that are a central problem with its OSS functions. Therefore, BellSouth measurements may vastly understate the difference between when a BellSouth representative submits a retail order and BellSouth actually provides the service, as compared to when a competing carrier representative initially submits a resale order and service is provided. 137. We believe that a far more meaningful measure of parity is one that measures the interval from when BellSouth first receives an order to when service is installed. From a customer's perspective, what is important is the average length of time it takes from when the customer first contacts the carrier for service to when that service is provided. From a customer's perspective this period of time is a crucial point of comparison between the incumbent's performance and the competing carrier's performance. The most competitively significant performance measures are those that describe the "end-to-end quality of service from the customer's viewpoint." If the customer calls BellSouth on day one and receives service on day five, for example, the customer will expect comparable performance from the competing carrier. The customer is not likely to care if a competing carrier's inability to provide service within a comparable time is not the competing carrier's fault but rather is due to the incumbent LEC's delays in processing the competing carrier's order. Ideally then, one would want a measurement of the time between a customer's initial contact with a carrier and the installation of service. It would not be practical, however, for BellSouth to ascertain when a competing carrier is first contacted by a customer. A reasonable surrogate for when a customer first contacts a competing carrier would be when the competing carrier first submits an order to BellSouth, i.e., when the competing carrier's order first crosses the OSS interface used for ordering. The end of the interval should be when service is actually installed. Thus, we conclude that the most meaningful average installation interval measure would be the average interval from when BellSouth first receives an order from a competing carrier to when BellSouth provisions the service for that order. This can then be compared with the average time from when BellSouth's own service representatives first submit an order for service to when BellSouth completes provision of the service for its retail customers. Such a measure would expose any delays in the processing of orders. We expect BellSouth to provide such a measure in future applications. 138. We recognize that the length of the average installation interval provided for resale and retail orders can be influenced by such variables as the mix and complexity of services ordered by the competing carrier and the possibility that the competing carrier's customers may not choose to receive service on the first date available for service installation. In the Ameritech Michigan Order, the Commission concluded that these issues did not justify the withholding of information on average installation intervals by the BOC, but rather went to the weight the Commission should attach to the information. The Commission concluded that the BOC could provide information to explain such variables and how they might affect the measurement. The Commission further explained that: [The BOC] can and should exclude from its data those customers who requested due dates beyond the first available due date. In addition, [the BOC] can and should disaggregate its data to account for the impact different types of services may have on the average installation interval. Moreover, [the BOC] is free to use data on due dates not met to explain any inconsistencies between the average installation intervals for itself and other carriers. For example, if a particular competing carrier consistently requests a standard, longer interval for completion of all of its orders, rather than the first available installation date, such data may explain that any differences in the average installation intervals between [the BOC] and the other carrier are not due to discriminatory conduct on the part of [the BOC]. 139. We also expect BellSouth to provide data that will permit us to determine the average interval from when BellSouth first receives an order to when BellSouth sends an order completion notice to the competing carrier. There should not be a material difference in time between the actual installation of service and the competing carrier's receipt of an order completion notice. As we explained above, the receipt of order status notices, including order completion notices, is critical to a competing carrier's ability to monitor orders for resale service both for its own records and in order to provide information to its end user customers. The receipt of the order completion notice is particularly important because it provides the competing carrier with notice that it has begun providing service to its new customer. Therefore, in addition, we expect BellSouth to provide information that shows it is providing competing carriers with timely receipt of order completion notices. 140. For the reasons discussed above, we find that BellSouth's performance measures do not provide sufficient evidence for us to determine whether it is providing nondiscriminatory access to the ordering and provisioning of resale services. d. OSS Functions for Ordering and Provisioning of Unbundled Network Elements 141. We do not base our decision on BellSouth's OSS functions for ordering and provisioning of unbundled network elements, although we have a number of concerns relating to these OSS functions. Because competing carriers have used BellSouth's EDI ordering interface primarily for the ordering and provisioning of resale services, we focus our discussion in this section on the OSS functions associated with the ordering and provisioning of resale services. We emphasize, however, that BellSouth must also be able to demonstrate that it is offering nondiscriminatory access to OSS functions so as to enable competing carriers to submit orders for and obtain unbundled network elements in a timely manner. A section 271 applicant must demonstrate that the OSS functions that it has deployed adequately support each of the modes of entry envisioned by the Act: interconnection, use of unbundled network elements, and resale. A BOC therefore does not meet its obligations under section 271 of the Act until it demonstrates that its OSS functions for ordering and provisioning of unbundled network elements, as well as for resale, comply with the nondiscrimination requirements of the Act. For those OSS functions that have no retail analogue, such as ordering and provisioning of unbundled network elements, a BOC must demonstrate that the access it provides to competing carriers offers an efficient competitor a meaningful opportunity to compete. 142. As noted above, competing carriers have primarily used BellSouth's EDI interface for the ordering and provisioning of resale services. At the time of its application, BellSouth stated that no competing carriers were submitting orders for unbundled network elements through the EDI interface, although several carriers indicated their interest in using EDI. As competing carriers transition to using EDI, BellSouth's preferred ordering interface, we are concerned that competing carriers may face the same problems with the EDI interface that carriers have experienced with orders for resale. These problems include high rejection rates and untimely order status notices. We will examine carefully, in future applications, any allegations of similar problems with orders for unbundled network elements. 143. We are also concerned about the level of manual processing involved in the ordering and provisioning of unbundled network elements. BellSouth states that competing carriers can use the EDI interface to place an order for a loop, port (switching), interim number portability (INP), and a loop combined with INP. At the time BellSouth filed its application, orders placed through the EDI interface for these elements were processed manually by the LCSC. Several carriers contend that BellSouth's reliance on manual processing for these orders causes a significant increase in the time necessary to process these orders and can lead to errors. Competing carriers also assert that the LCSCs do not have adequate resources to process orders manually and support the provisioning of unbundled network elements. 144. BellSouth contends that it implemented mechanized order processing for the four types of unbundled network elements described above on October 6, 1997. Although we commend BellSouth for taking steps to improve the efficiency of its systems, we note that implementation of mechanized processing of orders for these unbundled network elements was instituted after the date BellSouth filed its application. We expect that, in any future application, BellSouth will provide a detailed explanation of the actions it has undertaken, as of the date of filing, to transition to an automated process, and will demonstrate that it is able to process orders for and provision unbundled network elements in a timely and accurate manner at both current and projected levels of demand from competing carriers. 145. An additional concern is whether BellSouth has deployed the necessary OSS functions to allow competing carriers to order unbundled network elements in a manner that allows them to be combined. As part of its duty to offer nondiscriminatory access to unbundled network elements, BellSouth must demonstrate that it offers such elements in a manner that allows new entrants to combine them to provide a telecommunications service. As the Commission stated in the Ameritech Michigan Order, deploying the necessary OSS functions that allow competing carriers to order unbundled network elements is critical to provisioning those network elements. 146. BellSouth states that, although it will generally deliver unbundled network elements to a new entrant's collocation space, it will continue to offer certain elements in combination, because, as BellSouth notes, some of these elements technically cannot be separated. BellSouth, however, submits no evidence of its ability to provide OSS functions that support the ordering and provisioning of these combinations of network elements. Indeed, BellSouth states in its affidavits that: The changes BellSouth would have to make to our electronic interfaces to accommodate [unbundled network element (UNE)] combinations would include modifying them to accept a new UNE order type, and substantial inventory and billing changes, which would be required to allow the systems to provision UNE combinations as resale (since they replicate resale services), but inventory and bill them as UNEs. BellSouth further indicates that it has not yet undertaken development of OSS that could process orders for combinations of network elements. In addition, we are troubled by allegations in the record with respect to BellSouth's ability to coordinate orders for separate unbundled network elements so that a carrier may combine them. We expect that, in future applications, BellSouth will submit evidence to demonstrate that both individual network elements and those elements that BellSouth offers in combination can be ordered and provisioned in an efficient, accurate, and timely manner, and that its operations support systems are designed to accommodate both current and projected demand for unbundled network elements and combinations of unbundled network elements. 5. Analysis of Pre-Ordering Functions 147. The Commission's rules define pre-ordering and ordering collectively as "the exchange of information between telecommunications carriers about current or proposed customer products and services or unbundled network elements or some combination thereof." Pre-ordering generally includes those activities that a carrier undertakes with a customer to gather and confirm the information necessary to formulate an accurate order for that customer. As several parties point out, new entrants need access to information about an incumbent's network and the availability of products, services, and features to interact with their customers and obtain the information needed to place an order for the services the customer desires. BellSouth states that it provides the following functions as part of its pre-ordering: "(1) street address validation; (2) telephone number information; (3) services and features information; (4) due date information; and (5) customer service record information." 148. The Commission determined in the Ameritech Michigan Order that the OSS functions for pre-ordering of resale services are analogous to the pre-ordering of a BOC's retail services. As a result, the Commission concluded that BOCs must provide to competing carriers access to OSS functions for pre-ordering of resale services equivalent to the access provided to their retail operations in terms of quality, accuracy, and timeliness. Because new entrants providing service through unbundled network elements need access to much of the same pre-ordering information and functions as a carrier providing service through resale, BOCs must also provide access to OSS functions for pre-ordering of unbundled network elements that is equivalent to the access provided to their retail operations. 149. As discussed above, BellSouth currently provides access to pre-ordering functions through its LENS interface. BellSouth states that LENS "is an interactive system that allows the CLEC direct, real-time access to BellSouth's pre-ordering OSSs." BellSouth further contends that it "is 'providing nondiscriminatory access to all OSS [pre-ordering] functions, as required by the Act.'" 150. Commenters generally assert that BellSouth's provision of access to its OSS functions for pre-ordering is not equivalent to the OSS access it provides to itself. Several commenters claim that the fundamental defect with BellSouth's operations support systems for pre-ordering is that, unlike a machine-to-machine interface, LENS allows new entrants to access information, but does not allow them to transfer information electronically to their operations support systems or to BellSouth's EDI interface for ordering. As a result, new entrants must take an extra step between the pre-ordering and ordering processes that BellSouth does not face in the case of its own retail operation, thereby increasing the likelihood of errors and delay for new entrants but not for BellSouth's retail operation. Commenters also dispute BellSouth's assessment that it provides substantially equivalent access to particular pre-ordering functions, and that BellSouth's pre-ordering interface is operationally ready. 151. As discussed below, we conclude that BellSouth does not offer nondiscriminatory access to OSS functions, because: (1) BellSouth has prevented competing carriers from connecting LENS electronically to their operations support systems and to the EDI ordering interface, and (2) BellSouth does not provide equivalent access to due dates for service installation. These deficiencies in BellSouth's offer of access to OSS functions place competitors at a significant disadvantage. We further address, but do not resolve as a decisional ground for denying BellSouth's application, concerns raised in the record about certain other OSS functions for pre-ordering. In particular, we address access to telephone numbers and allegations in the record that certain functions require a competing carrier to take additional steps to obtain the same information as BellSouth's retail representatives. We do not base our decision on these issues, because there is inadequate evidence in the record for us to assess the impact on competing carriers of the differences between LENS and the pre-ordering systems used by BellSouth's retail operations. All of the foregoing issues concern the first part of our inquiry, whether the BOC has deployed the necessary systems and interfaces to provide sufficient access to each of the necessary OSS functions. We are also concerned, however, about the operational readiness of BellSouth's OSS functions for pre-ordering, the second part of our inquiry. We therefore highlight several issues relating to the operational readiness of BellSouth's pre-ordering interface, although we do not base our decision on these issues, because there is inadequate evidence in the record for us to determine the extent of these operational readiness problems. a. Lack of Equivalent Access in General 152. As discussed above, BellSouth's pre-ordering interface for new entrants, LENS, is a proprietary terminal-type interface that uses a browser software program to retrieve information from a BellSouth server. Several carriers, both large and small, and the Department of Justice contend that, unlike a machine-to-machine interface, competing carriers are unable to connect LENS electronically to their operations support systems or to the separate EDI ordering interface. Instead, they contend that competing carriers must copy the information from the LENS screen and manually reenter it into their operations support systems and into the EDI ordering interface, which leads to increased costs, delays, and human errors. As a result, these parties claim that LENS places competing carriers at a significant competitive disadvantage. Moreover, several of these parties argue that BellSouth has impeded the efforts of new entrants that have sought to use alternative methods that would enable them to connect LENS to their systems. 153. BellSouth, on the other hand, contends that "pre-ordering interactions with a CLEC using LENS are indistinguishable from pre-ordering interactions with BellSouth, regardless of whether LENS meets the definition of a machine to machine interface." BellSouth further claims that, for a carrier that uses LENS for pre-ordering and EDI for ordering, "the integration of pre-ordering and ordering data is the responsibility of the CLEC." In particular, BellSouth claims that competing carriers can use the following methods to connect LENS electronically to their operations support systems to avoid manually reentering data obtained from LENS: (1) use of Common Gateway Interface (CGI); or (2) development of a software program to extract the data underlying each LENS screen, a process some parties refer to as "HTML parsing." As a third method to avoid the need to retype data, BellSouth contends that competing carriers could "cut and paste" the information from LENS "into any other computer application that supports 'cut and paste,' including Microsoft Windows." This latter process is similar to cutting and pasting text from one document into another. 154. We note that, whereas the South Carolina Commission did not expressly address this issue in its Compliance Order, the Florida Commission recently found the lack of integration to be a significant flaw in BellSouth's OSS functions for pre-ordering, because LENS requires manual handling of data, while BellSouth's retail systems, RNS and DOE, fully integrate the pre-ordering and ordering functions. The public staff of the North Carolina Commission, in its proposed order, did not consider this lack of integration to be significant, stating that "[a]ll that the [competing carriers] have to do is to electronically copy LENS information and electronically paste it into their EDI and EXACT interfaces -- a task no more complex than cutting data from one computer data screen and pasting it to another." 155. For the reasons discussed below, we conclude that the evidence in the record indicates BellSouth has impeded competing carriers' efforts to connect LENS electronically to their operations support systems and to the EDI ordering interface by not providing competing carriers with the necessary technical specifications and by modifying the types of data provided through the LENS interface. Thus, we conclude that, unlike BellSouth's retail operation which uses an integrated pre-ordering/ordering interface, competing carriers cannot readily connect electronically the LENS interface to either their operations support systems or to BellSouth's EDI interface for ordering, notwithstanding their desire to do so. We therefore conclude that LENS does not provide competing carriers with equivalent access to OSS functions for pre-ordering. 156. We further find that this lack of parity has a significant impact on a new entrant's ability to compete effectively in the local exchange market and to serve its customers in a timely and efficient manner. Because, as BellSouth states, "there is no strict delineation between pre-ordering and ordering, as many 'pre-ordering' activities generally occur in the context of actually negotiating a service order," an integrated pre- ordering/ordering system is much more efficient. Without such an integrated system, a new entrant is forced to enter information manually to use the EDI interface for ordering and to import the data into its operations support systems. Entering information manually can lead to significant delays while the customer is on the line, assuming that a carrier wants to complete the order while speaking to the customer. Moreover, whether a carrier completes the order while the customer is on the line, as BellSouth's customer service representatives generally do, or enters the information at a later time, such manual entry of data requires a greater amount of time than BellSouth's retail operation requires. As a result, the need to reenter information may limit a new entrant's ability to process a high volume of orders and would require a new entrant to expend a greater amount of resources than BellSouth to conduct the same number of pre-ordering transactions. 157. Such manual entry of data also could lead to increased errors in entering information when placing an order. As discussed above, BellSouth's systems are rejecting the vast majority of orders submitted by competing carriers. Although BellSouth claims that these high rejection rates are due to mistakes made by competing carriers, we conclude above that BellSouth's actions have contributed to such errors. It is reasonable to assume that this manual entry of information is a contributing factor to the high error rate, as a number of parties contend. Accordingly, competitors' access to BellSouth's pre-ordering operations support systems is more conducive to errors than is the case for BellSouth's retail operations. When new entrants' customer service representatives make errors because of reentering information, the orders are rejected, and there is an unnecessary delay in processing those orders. As a result, customers may conclude that the new entrant does not match the quality of BellSouth's service, even though the problem stems from the access to OSS functions that BellSouth offers. 158. Moreover, this lack of a machine-to-machine interface prevents a carrier from developing its own customized interface that its customer service representatives could use on a nation-wide basis. As a result, new entrants that seek to enter other BOC markets would need to train their staff on BellSouth's proprietary system and also on systems used in other regions of the country. 159. For these reasons, we conclude that BellSouth's pre-ordering interface, in conjunction with BellSouth impeding competing carriers' efforts to connect electronically their systems and the EDI ordering interface to LENS, significantly restricts competing carriers' ability to market their services. To compete effectively in the local exchange market, new entrants must be able to perform services and interact with their customers as quickly and efficiently as BellSouth. The evidence demonstrates, however, that the operations support systems BellSouth offers will result in competing carriers' interactions with end-users taking longer and being more prone to errors than are BellSouth's interactions. We therefore find that BellSouth has not demonstrated that it offers equivalent access to OSS functions for pre-ordering of resale services. 160. In reaching our conclusion that BellSouth does not provide equivalent access to OSS functions for pre-ordering, we examine the record evidence regarding each of the methods suggested by BellSouth for connecting electronically the LENS interface with a competing carrier's operations support systems. BellSouth first contends that new entrants could use CGI to connect their operations support systems to LENS. To use CGI, a competing carrier would need detailed technical specifications of BellSouth's interface. In the Ameritech Michigan Order, the Commission determined that a BOC has an obligation "to provide competing carriers with the specifications necessary to instruct competing carriers on how to modify or design their systems in a manner that will enable them to communicate with the BOC's legacy systems and any interfaces utilized by the BOC for such access." 161. Based on the record evidence, we conclude that BellSouth has not met its obligation to provide updated and complete CGI specifications. In its reply comments and in testimony, BellSouth acknowledges that it has not provided updated and complete specifications. BellSouth claims, however, that it has not provided such specifications, because competing carriers have not sought to use CGI. The record evidence, however, demonstrates that competing carriers have expressed and continue to express an interest in using CGI to connect electronically their operations support systems to the LENS interface. MCI's comments attach letters that it sent to BellSouth on May 16, June 4, June 26, and September 5 requesting the technical specifications for LENS. MCI also submits BellSouth's response from July 8, 1997, in which BellSouth states that it is providing the technical specifications that MCI requested beginning on May 16, but that the document "had not been updated to match the current LENS application." In that July 8 letter, BellSouth further states that it will work "to provide [MCI] an updated copy as soon as it is available." Thus, contrary to BellSouth's unsupported allegation, the record evidence indicates that at least one carrier, MCI, has been requesting CGI specifications, but that BellSouth has not met its obligation to provide the complete, detailed, and updated specifications that new entrants need to use CGI to connect electronically their operations support systems to BellSouth's interface. 162. As for BellSouth's second proposed method for electronically connecting LENS to a new entrant's operations support systems -- development of a software program that utilizes the information underlying each LENS presentation screen -- we find convincing evidence in the record that use of this method would not provide equivalent access to OSS functions for pre-ordering. Under this alternative, a carrier would need to deploy software to extract the information from each LENS screen as the data are presented. Evidence in the record indicates that this method does not enable a new entrant to deploy an integrated pre- ordering and ordering interface that is equivalent to the integrated interface used in BellSouth's retail operation. As MCI points out, and BellSouth acknowledges, this method would require a competing carrier to proceed through each of the LENS presentation screens, just as a person using the system would, rather than being able to use the data independently of the BellSouth screens as with CGI. Given this limitation, a competing carrier would only be able to download information from LENS one screen at a time, thereby resulting in a slower, less efficient process to connect LENS to the competing carrier's operations support systems than would be available through either CGI or a machine-to-machine interface. In contrast, BellSouth's retail operation does not face this limitation, because its pre-ordering and ordering are already fully integrated. This slower, less efficient process puts new entrants at a competitive disadvantage, because it can lead to delays while the customer is on the line and may limit a new entrant's ability to process a high volume of orders. 163. Moreover, evidence in the record indicates that BellSouth has made changes to LENS that would impede the ability of a carrier to develop and use a software program to extract the data underlying each LENS screen. The record indicates that BellSouth has made significant changes to LENS since it became operationally ready in April 1997, and that BellSouth plans to continue to make design changes to the interface, "because the business is changing and there will be new functionality that needs to be added and the interface is going to need to evolve." BellSouth claims that these changes are improvements that make it easier for a new entrant to use LENS to obtain pre-ordering information. We recognize that development of OSS functions is not a static process, and we encourage BellSouth to continue to make improvements to its operations support systems. Nevertheless, because this method requires a competing carrier to develop a software program that would automatically separate the data from the computer code presented on each LENS screen, and then transfer each data field to the appropriate field in another system, any significant change in the way the data is presented can have a substantial impact on a software program's ability to extract the data correctly. Thus, a carrier that develops a software program to extract the information from each LENS screen would have to expend additional resources each time BellSouth makes a significant change in order to update the program to accommodate those changes. We note that changes in the presentation of data in LENS would not have such a significant impact on the use of CGI, because CGI allows a competing carrier to use the data "independently of the LENS presentation screens." 164. In sum, we conclude that BellSouth's second suggested method of connecting a new entrant's operations support systems or the EDI ordering system to the LENS interface, using software to extract the information provided through each LENS presentation screen, does not provide access to OSS functions for pre-ordering that is equivalent to BellSouth's integrated pre-ordering/ordering interface for its retail operation. In addition, developing such a software program appears infeasible for new entrants given the design changes that BellSouth has made and plans to make to the interface. We further note that a number of parties also contend that BellSouth has not kept them adequately informed of changes to its OSS functions. BellSouth disputes such claims, stating that it regularly informs competing carriers of modifications in advance. We need not reach this issue in this Order, but we reiterate that a BOC has an obligation "to provide competing carriers with the specifications necessary to instruct competing carriers on how to modify or design their systems in a manner that will enable them to communicate with the BOC's legacy systems and any interfaces utilized by the BOC for such access." 165. As a third option, BellSouth suggests that competing carriers could "cut and paste" the information from LENS into another interface. We conclude that this suggested method would also not provide competing carriers with equivalent access to OSS functions for pre-ordering. This method does not allow new entrants to transfer information electronically to their operations support systems or to BellSouth's EDI ordering interface. Rather, a requesting carrier must highlight separate fields of data that appear on different LENS screens, copy each field, and then transfer each field of data to another interface. As a result, we agree with the Department of Justice, the Florida Commission, and several carriers that this cutting and pasting process leads to increased delays and the risk of human error in transferring the data. 166. For the foregoing reasons, we conclude that new entrants using LENS cannot readily transfer information electronically from LENS to their operations support systems and deploy an integrated pre-ordering and ordering system. In contrast, BellSouth's retail operation uses an integrated pre-ordering and ordering interface. Given that BellSouth has chosen not to deploy a machine-to-machine interface for competing carriers and has impeded the efforts of competing carriers to pursue other methods of connecting LENS electronically to their operations support systems and to the EDI interface, we conclude that BellSouth has failed to deploy a system that offers to competing carriers equivalent access to OSS functions for pre-ordering. As discussed above, this lack of parity in the access to OSS functions offered by BellSouth places new entrants at a significant disadvantage, because this deficiency leads to increased costs, delays, and human errors. As a result, a new entrant, through no fault of its own, may be unable to provide service to its customers at a quality level that matches the service provided by BellSouth. We note that BellSouth plans to deploy a machine-to-machine interface for pre-ordering in the near future. Because a machine-to- machine interface allows competing carriers to transfer information electronically to their operations support systems, we expect that successful deployment of this interface will go a long way toward alleviating the problems discussed above. b. Lack of Equivalent Access to Due Dates 167. In addition to the general lack of parity between LENS and the interfaces used by BellSouth's retail operations, we agree with a number of carriers, the Department of Justice, and the Florida Commission that BellSouth does not offer to competing carriers nondiscriminatory access to due dates. A due date is the date on which the order is scheduled to be completed. In particular, we find that BellSouth does not offer equivalent access to competing carriers, because new entrants, unlike BellSouth's retail operations, cannot be confident that the due date that the new entrants promise their customers based on the information obtained from LENS will be the actual due date that BellSouth assigns to the order. In addition, although we do not base our decision on this issue, we are concerned about allegations in the record that the method of calculating due dates in LENS is discriminatory, whether LENS is used in the inquiry mode or the firm order mode. 168. Based on the evidence in the record, we conclude that BellSouth does not offer nondiscriminatory access to due dates. New entrants do not obtain actual due dates from LENS during the pre-ordering stage. Instead, the actual, firm due date is assigned once BellSouth processes the order through SOCS. A new entrant therefore will not be informed of the actual due date until it receives a firm order confirmation (FOC) from BellSouth. BellSouth states that this same process is used for its retail operations, i.e., it does not provide actual due dates for its service representatives until the order is processed through SOCS. This fact, however, does not lead to parity in the access to due dates, because, as explained above, competing carriers are experiencing significant delays in the processing of their orders. As a result of these delays, by the time competing carriers' EDI orders are processed, the relevant central office and work center may no longer be accepting orders for the day the new entrant promised its customer. New entrants therefore cannot be confident that the due date actually provided after the order is processed will be the same date that the new entrants promised their customers at the pre-ordering stage based on the information obtained from LENS. In contrast, BellSouth's retail service representatives can be confident of the due dates they quote customers at the pre-ordering stage, because BellSouth does not experience the same delays in processing orders that competing carriers currently experience. BellSouth could ameliorate this pre-ordering problem by correcting the deficiencies in its ordering systems and by providing equivalent access to OSS functions through its current systems. We therefore do not suggest that BellSouth must modify its pre- ordering systems to meet the requirement that it offer nondiscriminatory access to due dates. We only conclude that BellSouth's pre-ordering system for providing access to due dates, at the present time, does not offer equivalent access to competing carriers. 169. We view these inequities in obtaining due dates to be a significant deficiency of BellSouth's OSS functions for pre-ordering. A new entrant using LENS for pre-ordering and EDI for ordering cannot provide its customers a due date during the original customer contact with the same level of confidence and accuracy as BellSouth's retail representatives can during an initial customer contact. A new entrant may also be unable to respond to a customer's special scheduling needs while the customer is on the line with the new entrant. At the same time, BellSouth can be confident that it is providing its retail customers with an accurate due date for installing service. Because the ability to provide accurate due date information to a customer is significant from an end-user's perspective, interactions with new entrants will differ in a meaningful manner from interactions with BellSouth. To the customer, the new entrant may appear to be a less efficient and responsive service provider than its competitor, BellSouth, because the new entrant is unable to provide accurate due date information, while BellSouth is able to provide such information. The customer may not understand that the new entrant's inability to provide such information is due to the access that BellSouth provides to OSS functions. We therefore conclude that, at the present time, BellSouth does not deploy systems that provide equivalent access to due dates. 170. Having decided that BellSouth does not offer nondiscriminatory access to due dates, we need not decide whether the method of calculating due dates in LENS is discriminatory, as several parties contend. Nonetheless, although we do not base our decision on this issue, we discuss the issue to highlight our concerns and provide guidance for future applications. 171. It is undisputed that LENS does not provide calculated due dates when used in the inquiry mode for pre-ordering. Instead, the inquiry mode of LENS provides carriers with a calendar showing the days that the applicable central office and work center are open and for which BellSouth is still accepting work orders, and a table of projected intervals for different types of services. In addition, the projected service intervals provided to competing carriers by LENS assume that a technician needs to visit the premises to perform the installation. Thus, LENS in this mode requires a competing carrier to determine whether a premises visit is required and to calculate a due date manually. In contrast, BellSouth's retail service representatives are provided with next-available due dates that are automatically calculated based on the services on a particular order, the work that must be performed, and the availability of the work force for the area. 172. Although BellSouth does not contest this apparent lack of parity in access to calculated due dates when LENS is used in the inquiry mode, BellSouth responds that competing carriers can obtain calculated due dates in the same manner as BellSouth representatives simply by using LENS in the firm order mode, rather than in the inquiry mode. A number of competing carriers contend to the contrary, arguing that the use of this mode for pre-ordering leads to several problems. The firm order mode, in contrast to the inquiry mode, requires a carrier to proceed through every pre-ordering function, screen after screen, as if the carrier were placing an order. Thus, a carrier that only needed to access certain pre-ordering functions would need to proceed through unnecessary screens and input additional information, thereby requiring a greater number of steps and amount of time to complete the transaction with the customer on the line. Instead of then placing the order, however, a carrier using LENS in the firm order mode for pre-ordering and then EDI for ordering, as BellSouth suggests, would need to cancel the LENS order and then reenter all of the information into the EDI ordering interface. At least one new entrant states the extra steps required to use the firm order mode are so burdensome that it uses the inquiry mode, even though that eliminates its ability to obtain calculated due dates. We note that BellSouth's retail operation does not face these same problems, because its pre-ordering and ordering functions are integrated. We do not base our decision on this issue, however, because there is inadequate evidence in the record for us to assess the impact on a competing carrier of having to go through these extra steps. Thus, we are unable to determine whether a competing carrier can access the same OSS functions in substantially the same time and manner as BellSouth's retail representatives when the competing carrier is using the firm order mode. Nevertheless, because it is reasonable to assume that these extra steps have some impact on competing carriers, we will examine similar allegations carefully in future section 271 applications. 173. Finally, we are concerned about evidence in the record suggesting that the due date calculation provided in the firm order mode of LENS is not accurate for some order types. MCI submits a letter it received from BellSouth dated September 2, in which BellSouth states: In addition to providing the installation calendar, LENS provides an alternative due date function in the firm order mode. . . . CLECs issuing LENS orders for conversions "as specified" and new installations should be aware that the LENS firm order due date function may not always be calculating the correct due date for those order types for some locations. . . . We will notify you promptly of the results of our evaluation. MCI claims that it has not received any further notification. BellSouth claims that it corrected a problem with its appointment calendars in early September and has not experienced any problems since then. Because BellSouth appears to have taken steps to correct the problem with its appointment calendars, we do not base our decision on this issue. We will examine carefully in future applications any allegations that this problem continues to exist, because it would indicate that competing carriers are unable to rely on the dates provided by LENS when used in the firm order mode. c. Other Concerns (1) Parity of Particular Functions 174. Beyond access to due dates, parties raise factual issues on the record regarding BellSouth's provision of access to other OSS functions. We are concerned by allegations that differences between LENS and BellSouth's retail interfaces mean that a significantly greater amount of time is required to use LENS to access and review the same pre-ordering information. For example, MCI claims, and the Florida Commission found that if a customer wants to order a specific product or service, or choose a specific interexchange carrier, the new entrant must scroll through a lengthy list of available products and services and a random listing of numerous interexchange carriers to find one. In contrast, MCI contends that BellSouth's retail interfaces allow its customer service representatives to find quickly a specific product or service, or an interexchange carrier, simply by typing in the first few letters of the name. BellSouth responds that the interface its retail operations use for pre- ordering and ordering for business customers requires carriers to scroll through interexchange carriers, but does not indicate whether its newer interface for residential customers requires carriers to scroll through the list of interexchange carriers, or whether either system requires carriers to scroll through a list of services and features. 175. In addition, the Department of Justice and several carriers contend, and the Florida Commission found, that a competing carrier using LENS in the inquiry mode must validate a customer's address prior to accessing each pre-ordering function. Parties argue that they may need to validate an address four times in order to complete pre-ordering transactions for one customer in the inquiry mode. In contrast, these parties contend that BellSouth's retail service representatives need only validate an address one time. As a result, the Department of Justice contends that this process, "for no apparent reason, can nearly double the number of steps [for a new entrant] to accomplish the same result." The Department of Justice, echoing other parties, further states that "it will take [new entrants] substantially longer to reach the same result." BellSouth responds that a new entrant could avoid the need to revalidate an address by using LENS in the firm order mode. 176. We do not determine the merits of these allegations at this time, because the record does not contain adequate evidence for us to quantify the impact of these differences between LENS and BellSouth's retail interfaces on competing carriers. Nevertheless, we will examine carefully any allegations that pre-ordering functions for competing carriers using LENS is a slower, less efficient process than using BellSouth's retail interfaces. If further evidence comes to light showing that competing carriers are unable to perform OSS functions in substantially the same time and manner as BellSouth's retail operation due to the need to perform a greater number of steps, we would find LENS deficient. At the same time, we would expect BellSouth to present evidence to demonstrate that any differences in the interfaces do not have a significant impact on a competing carrier's access to OSS functions. We are especially troubled by these allegations, because a slower, less efficient interface would not provide equivalent access to OSS functions. Such an interface could limit a new entrant's ability to process orders as quickly as BellSouth and may therefore impede the new entrant's ability to engage in an aggressive marketing campaign. As a result, a less efficient interface may have a significant impact on a new entrant's ability to compete effectively in the local exchange market. (2) Access to Telephone Numbers 177. We next address complaints in the record that BellSouth does not provide nondiscriminatory access to OSS functions for pre-ordering, because BellSouth restricts new entrants' access to telephone numbers. BellSouth acknowledges that it limits the quantity of telephone numbers that a competing carrier can reserve in a central office to 100 numbers or 5 percent of the numbers available in that central office, whichever is less. BellSouth does not impose such a restriction on its retail operation. 178. The Department of Justice and AT&T contend that this practice of restricting access to telephone numbers may place a burden on a new entrant's ability to handle a large volume of orders in a particular area or to conduct marketing campaigns, because a new entrant may reach the limit and be unable to reserve numbers for additional customers. BellSouth responds that this limit on numbers only applies to numbers reserved in the inquiry mode of LENS, and then only until the order is actually placed. Thus, BellSouth contends that a new entrant can avoid this limit altogether by using the firm order mode of LENS for pre-ordering. Moreover, although BellSouth claims that it implemented this practice "as a means to administer the finite pool of numbers for the benefit of all," BellSouth has expressed its willingness to remove this limit. 179. We are troubled by the impact that this limitation may have on competing carriers. A carrier that wants to market its services in a particular area or conduct a large marketing campaign may face a situation where it is no longer able to reserve numbers through LENS, at least when used in the inquiry mode. The impact of this restriction on access to telephone numbers is aggravated because BellSouth removes a telephone number from the list of reserved numbers only when it processes the order through SOCS. Given the delays in processing orders submitted through EDI, as discussed above, a significant period of time after the new entrant submits the order may pass before the number is taken off the list of reserved numbers. Nevertheless, we need not reach this contested factual issue of when a number counts against this limit, given BellSouth's statements that it would remove this limit. If, however, BellSouth does not remove this limit, we will examine carefully any complaints about access to telephone numbers in future BellSouth applications. We further note that BellSouth imposed this decision in its role as interim number administrator, and that this issue should be resolved, in any event, following the transition to a neutral permanent number administrator. (3) Operational Readiness 180. We are also concerned about the operational readiness of BellSouth's OSS functions for pre-ordering. A number of carriers, both large and small, contend that LENS regularly "locks up," requiring them to log off, log back on, and restart the transaction with the customer. BellSouth claims that it has not found any general problems with LENS and that it responded quickly to resolve one problem faced by AT&T. Because such problems with the system can directly and negatively affect a carrier's interaction with its customers, we expect BellSouth to respond expeditiously to such complaints whenever they arise. Moreover, as the number of transactions in the region increase, we would be concerned if these incidents increased. 181. Several parties also raise general concerns about the capacity of BellSouth's interface for pre-ordering. The evidence in the record indicates that BellSouth designed LENS to handle 15,000 pre-ordering transactions per day for the nine-state BellSouth region. We are concerned that, as more carriers enter the local market and provide service to a greater number of customers, the number of pre-ordering transactions could rapidly exceed the capacity of LENS. BellSouth claims that it has relied on forecasts from competing carriers to ensure that it has adequate capacity. We encourage BellSouth to continue working with competing carriers to ensure that LENS has adequate capacity to handle current, and reasonably foreseeable, demand volumes. C. Access to Unbundled Network Elements 1. Summary 182. Section 271(c)(2)(B)(ii) of the Act, item (ii) of the competitive checklist, requires a section 271 applicant to show that it offers "[n]ondiscriminatory access to network elements in accordance with the requirements of sections 251(c)(3) and 252(d)(1)." Section 251(c)(3) in turn establishes an incumbent LEC's "duty to provide, to any requesting telecommunications carrier for the provision of a telecommunications service, nondiscriminatory access to network elements on an unbundled basis at any technically feasible point on rates, terms, and conditions that are just, reasonable, and nondiscriminatory in accordance with the terms and conditions of the agreement and the requirements of [section 251] . . . and section 252." Section 251(c)(3) further provides that an incumbent LEC "shall provide such unbundled elements in a manner that allows requesting carriers to combine such elements in order to provide such telecommunications service." Based on our review of the record on this issue, we conclude that BellSouth does not meet this checklist item because BellSouth has not demonstrated that it can make available as a legal and practical matter access to unbundled network elements in a manner that allows competing carriers to combine them. In particular, BellSouth has failed to demonstrate that it can provide access to such elements through the one method that it has identified for such access -- collocation. We emphasize that our review of collocation as the means of access to unbundled network elements for the purpose of combining is predicated on BellSouth's position that this is the primary method that it will make available to new entrants. 2. Background 183. In the Local Competition Order, the Commission ruled that new entrants may provide telecommunications service wholly through the use of unbundled network elements purchased from incumbent LECs. The Eighth Circuit agreed. In its July 18, 1997 opinion, the Court wrote: "we believe that the plain language of subsection 251(c)(3) indicates that a requesting carrier may achieve the capability to provide telecommunications services completely through access to the unbundled elements of an incumbent LEC's network." The court also ruled, however, that the Act does not require incumbent LECs to combine the network elements that new entrants purchase, and vacated the Commission's rules requiring incumbent LECs to combine elements. In a subsequent ruling on rehearing, decided on October 14, 1997, the court vacated the Commission's rule that had barred incumbent LECs from separating network elements that were already combined in their network. The Court reiterated that incumbent LECs must offer unbundled network elements in a manner that allows new entrants to combine them to provide a finished telecommunications service. 184. In the Local Competition Order, the Commission identified the methods by which new entrants may obtain access to unbundled network elements. It concluded that "any requesting carrier may choose any particular method of technically feasible . . . access to unbundled network elements," including physical or virtual collocation. The Commission noted that physical and virtual collocation were the only methods of access to unbundled network elements "specifically addressed in section 251." This finding was reflected in our rules which provide that technically feasible methods of obtaining interconnection or access to unbundled network elements include, but are not limited to, physical and virtual collocation at the premises of an incumbent LEC. The Commission has previously defined physical collocation as an offering that enables a requesting carrier to locate its own transmission equipment in a segregated portion of the LEC's central office. The requesting carrier must typically pay for the construction of a collocation cage to house the equipment in the LEC's central office. The other carrier pays the LEC for the use of that central office space, and may enter the central office to install, maintain, and repair the equipment. The Commission has previously defined virtual collocation as an offering in which the LEC owns or leases, and exercises exclusive physical control over, the transmission equipment located in the central office that terminates the requesting carrier's circuits. The LEC dedicates this equipment to the exclusive use of the requesting carrier, and provides installation, maintenance, and repair services. 185. When BellSouth filed its application on September 30, 1997, the United States Court of Appeals for the Eighth Circuit had not yet issued its ruling on rehearing that invalidated the Commission's rule that incumbent LECs could not separate already combined elements and require new entrants to recombine them. Nonetheless, BellSouth's SGAT provides that new entrants must combine all network elements, even those already combined in the incumbent LEC's network. The SGAT's provisions relating to the terms and conditions by which BellSouth will provide unbundled network elements to new entrants in a manner that allows new entrants to combine them is found in section II(F) of the SGAT. It provides in full: F. CLEC-Combined Network Elements 1. CLEC Combination of Network Elements. CLECs may combine BellSouth network elements in any manner to provide telecommunications services. BellSouth will physically deliver unbundled network elements where reasonably possible, e.g., unbundled loops to CLEC collocation spaces, as part of the network element offering at no additional charge. Additional services desired by CLECs to assist in their combining or operating BellSouth unbundled elements are available as negotiated. 2. Software Modifications. Software modifications, e.g., switch translations, necessary for the proper functioning of CLEC-combined BellSouth unbundled network elements are provided as part of the network element offering at no additional charge. Additional software modifications requested by CLECs for new features or services may be obtained through the bona fide request process. The terms and conditions contained in the SGAT concerning collocation are found in section II(B)(6). The SGAT's collocation offering states in full: Collocation. Collocation allows CLECs to place equipment in BellSouth facilities. Physical and virtual collocation are available for interconnection and access to unbundled network elements as described in Section II. BellSouth will provide physical collocation for CLEC equipment unless BellSouth demonstrates to the [state] Commission that physical collocation is not practical for technical reasons or space limitations. Detailed guidelines for collocation are contained in BellSouth's Handbook for Collocation. Attachment A to the SGAT also provides interim rates for physical and virtual collocation. For one rate category, the space preparation fee for physical collocation, the schedule does not include any rates but rather provides that this fee will be subject to negotiation on an individual case basis. 3. Evidence in the Record 186. To satisfy its obligation to provide unbundled network elements to new entrants in a manner that allows them to be combined, BellSouth offers only the terms and conditions of section II.F. of the SGAT, i.e., that BellSouth will physically deliver certain elements, including the loop, to "CLEC collocation spaces" at no additional charge and undertake necessary software changes at no additional charge. Any other arrangement would be subject to negotiation. The record supplied by BellSouth with its initial application provides no further information. 187. The South Carolina Commission found that BellSouth had met checklist item (ii), concluding that the SGAT "provides CLECs with nondiscriminatory access to network elements in accordance with the requirements of the Act." The Department of Justice contends, however, that the South Carolina Commission did not address the specific issue of whether BellSouth is offering unbundled network elements in a manner that allows them to be combined. According to the Department of Justice, at the time the South Carolina Commission Compliance Order was issued, the SGAT did not permit competitors to combine network elements to provide finished services. Thus, there was no basis for presenting evidence in the state proceeding concerning the manner in which BellSouth would provide separated network elements so that new entrants could combine them, or whether BellSouth had the practical ability to do so. After the Eighth Circuit held in its July 18, 1997, decision that unbundled network elements must be provided in a manner that allows requesting carriers to combine such elements, the South Carolina Commission, without additional hearings, approved a revised SGAT (which forms the basis of this application) in an order that contains no discussion or specific findings that the SGAT's provisions would allow requesting carriers to combine network elements in a reasonable and nondiscriminatory manner. BellSouth counters that the South Carolina Commission granted parties an additional opportunity to comment after the Eighth Circuit's July 18, 1997 ruling, and approved the revised SGAT after considering the information provided by opposing parties in their written submissions. 188. In their comments, several parties and the Department of Justice maintain that BellSouth's SGAT fails to state adequately the terms and conditions by which BellSouth will make available unbundled network elements in a manner that allows new entrants to combine them, and has failed to demonstrate that it was operationally capable of providing elements in this manner. They thus argue that the Commission should find that BellSouth fails checklist item (ii). More specifically, the Department of Justice finds that the SGAT is legally insufficient, because it does not adequately "specify what BellSouth will provide, the method in which it will be provided, or the terms on which it will be provided, and therefore there is no basis" for a finding that BellSouth is offering nondiscriminatory access as the checklist requires. It also notes that the SGAT does not "even specify what combinations of network elements it proposes to separate and require the CLEC to combine, a defect that will make it exceedingly difficult for a CLEC to plan for the use of such elements." The Department of Justice finds that the SGAT's lack of "critical details" requires that much will be left for future negotiation, which is inconsistent with the Department of Justice's view that the SGAT must offer "specific and legally binding commitments." The Department of Justice also concludes that BellSouth had not demonstrated that it possesses the technical capability to provide unbundled network elements in a way that allows new entrants to combine them. The Department of Justice concludes by noting the importance of unbundled network elements as an entry strategy and the competitive consequences of BellSouth requiring new entrants to establish collocation facilities and thus incur "substantial cost and delay . . to use combinations of elements." 189. In its reply, BellSouth provides further information on the manner by which it intends to provide unbundled network elements and identifies certain elements which it will continue to offer in combination and not separate and require new entrants to combine. BellSouth also makes clear that it will not allow new entrants supervised physical access to BellSouth's central office equipment and facilities in order to reconnect network elements directly, arguing that such access would pose serious risks to the network. Instead, BellSouth argues that the Act "indicates that an incumbent LEC will provide access to its unbundled network elements at a dedicated collocation space located at the premises of the incumbent LEC." BellSouth argues that section 251(c)(6) is the Act's only statutory authorization for entry by new entrants onto the premises of an incumbent LEC for purposes of combining elements, and that, lacking any other statutory authority, the Commission may not require further access by new entrants to the central office or other facilities of incumbent LEC. BellSouth further notes that, under the Act, if an incumbent LEC shows that physical collocation is not practical for technical reasons or space limitations, the incumbent LEC may instead offer virtual collocation. 190. BellSouth states that it will provide new entrants access to unbundled network elements primarily through physical collocation. BellSouth more specifically describes the manner in which it will make unbundled network elements available to collocation space: CLECs can obtain access to and combine unbundled network elements, for example unbundled local switching and unbundled loops, through the use of a collocation arrangement. Such combining of unbundled network elements by the CLEC may also include equipment or facilities which the CLEC provides for itself. BellSouth will extend unbundled network elements to a CLEC's physical collocation arrangement and will terminate those unbundled network elements in such a way as to allow the CLEC to provide any cross connections or other required wiring within the collocation arrangement in order to effect the combination. As mentioned above, a CLEC might combine individual unbundled network elements such as an unbundled loop with an unbundled switch port. Both the loop and the switch port are normally terminated on the Main Distributing Frame (MDF) within the BellSouth central office. Upon request of the CLEC, BellSouth will wire the loop from the MDF to the CLEC's collocation arrangement. The CLEC may then combine any unbundled loop it has acquired from BellSouth with any unbundled switch port it has acquired from BellSouth, subject to the technical parameters of the loop and the port. By technical parameters I refer to the characteristics and functionality provided by given unbundled network elements. For example, a two-wire analog unbundled loop will normally be combined with a two-wire unbundled switch port. The CLEC is responsible for making any necessary cross connections within the physical collocation arrangement. Other UNEs which the CLEC acquires from BellSouth may be combined by the CLEC in like manner. 191. In its reply, BellSouth also for the first time identifies those elements that it will offer in combination, i.e., that it will not separate and require incumbent LECs to recombine. As BellSouth notes, some of these elements technically cannot be separated. According to an affidavit filed by BellSouth, it will provide the following element combinations and will coordinate orders for them: loop and cross connect, port and cross connect, port and cross connect and common transport, loop distribution and network interface device (NID), port and vertical features, loops with loop concentration, port and common transport, loops and local number portability (LNP). BellSouth also represents that: "[i]n states where the loop and NID are priced separately, a loop and NID combination and loop, NID, cross connect combination will be offered. The price for each of these combinations is the sum of the individual element prices." 192. BellSouth denies the Department of Justice's argument that the SGAT insufficiently describes the terms and conditions by which BellSouth will provide unbundled network elements for combination. It contends that "[t]here are no different methods or terms for the provision of UNEs when a new entrant uses the UNEs individually or combines them with other UNEs or its own facilities." Thus, according to BellSouth, the SGAT does describe the terms and conditions of its unbundled network element offering. BellSouth further states that "[i]f a UNE can be physically separated, BellSouth will deliver it on a separated basis. If a UNE cannot be physically separated, access will be provided in the same manner as for use on an uncombined basis." 193. Because BellSouth relies on collocation as the primary means by which new entrants can combine unbundled network elements, and collocation is the only means explicitly identified in the SGAT, we also review the SGAT's provisions relating to collocation. The SGAT's collocation terms and conditions were quoted above and essentially repeat the statutory language found in section 251(c)(6). In addition, the SGAT refers to "[d]etailed guidelines for collocation [that] are contained in BellSouth's Handbook for Collocation." The Handbook for Collocation (Collocation Handbook) to which the SGAT refers contains general information regarding the terms and conditions, ordering, provisioning and maintenance of BellSouth's physical collocation offering. The Collocation Handbook in turn refers to a Master Collocation Agreement (Master Agreement) for the "actual Terms and Conditions for BellSouth's Physical Collocation offering." This Master Agreement is a model for a new entrant to use to negotiate a region-wide collocation agreement with BellSouth, a necessary step before BellSouth will implement a collocation request. Neither the Collocation Handbook (although referenced in the SGAT), nor the Master Agreement, is included among the attachments to the SGAT. In addition, the Master Agreement was not submitted to the South Carolina Commission for review. 194. BellSouth states that its ability to provide collocation to competing carriers is evidenced by the fact that, as of the date of the application, there were 14 physical collocation arrangements in place in BellSouth's region, and 86 in progress, including one in South Carolina. BellSouth also claims that, as of August 31, 1997, there were 145 virtual collocation arrangements across BellSouth's region, including five in South Carolina, and 43 in progress, of which one was in South Carolina. The South Carolina Commission concluded that BellSouth has demonstrated its ability to provide collocation. The South Carolina Commission also found that BellSouth's witnesses testified in the state proceeding that BellSouth has technical service descriptions and procedures in place for the ordering, provisioning, and maintenance of its collocation services. We note that BellSouth has made no claim, and there is no evidence in the record, that any of the current physical collocation arrangements, or those in progress, are for the purpose of permitting new entrants to combine unbundled network elements as contemplated in section II(F)(1) of the SGAT. 4. Discussion 195. The use of unbundled network elements, as well as the use of combinations of unbundled network elements, is an important entry strategy into the local telecommunications market. In the 1996 Act, Congress sought to hasten the development of competition in local telecommunications markets by including provisions to ensure that new entrants would be able to choose among three entry strategies -- construction of new facilities, the use of unbundled elements of an incumbent's network, and resale. Congress included the second entry strategy because it recognized that many new entrants will not have constructed local networks when they enter the market. As a result, the ability of new entrants to use unbundled network elements, as well as combinations of unbundled network elements, is integral to achieving Congress' objective of promoting competition in the local telecommunications market. In particular, a new entrant using unbundled network elements has the incentive and ability to package and market services in ways that differ from the BOCs' existing service offerings in order to compete in the local telecommunications market. In contrast, carriers reselling an incumbent LEC's services are limited to offering the same services that the incumbent offers at retail. Moreover, competing providers may combine unbundled network elements with facilities they construct to provide a wide array of competitive choices. 196. To achieve its objective of ensuring that new entrants would have access to unbundled network elements, as well as the ability to combine such elements, Congress adopted section 251(c)(3). Congress further required the Commission to verify that a section 271 applicant is meeting its obligation to offer nondiscriminatory access to unbundled network elements prior to granting in-region, interLATA authorization to the applicant. Because the use of unbundled network elements, as well as the use of combinations of unbundled network elements, is an important entry strategy into the local telecommunications market, we emphasize the importance of ensuring that BOC applicants comply with the requirement that they provide nondiscriminatory access to network elements in a manner that allows competing providers to combine such network elements. 197. After reviewing the evidence in the record, we conclude that BellSouth has failed to demonstrate that it provides nondiscriminatory access to network elements in accordance with section 251(c)(3) of the Act, and therefore fails to meet item (ii) of the competitive checklist. Pursuant to section 251(c)(3), BellSouth must offer unbundled network elements to new entrants in a manner that allows new entrants to combine them to provide a telecommunications service. We recognize that we and the industry are still in the early stages of evaluating the implications of the Eighth Circuit's ruling that, although competing carriers may offer services solely through the use of unbundled network elements, the competing carriers must combine those elements themselves. Various methods of combining elements are being discussed by the industry. In this Order, we focus only on the one method of recombining that BellSouth offers in this application -- collocation -- and conclude that BellSouth has not demonstrated that new entrants may obtain and recombine network elements pursuant to its collocation offering. We find that the SGAT is deficient because it fails to include definite terms and conditions for recombining network elements. As noted above, the SGAT's provisions relating to the terms and conditions by which BellSouth will provide unbundled network elements to new entrants in a manner that allows new entrants to combine them consists of two brief paragraphs that lack crucial details such as which elements will be separated and which will be provided in combination, and how and at what cost. Because the SGAT does not adequately specify what BellSouth will provide, the method in which it will be provided, or the terms upon which it will be provided, there is no basis for a finding that BellSouth is offering nondiscriminatory access as the checklist requires. The SGAT provides nothing more than an offer to negotiate many of the terms of combining network elements. An offering composed of vague terms that merely form the starting point for negotiation over the specific details undercuts the rationale for the SGAT. As stated by the South Carolina Commission, the SGAT "can provide the proper vehicle for CLECs to use to enter the local market quickly without having to negotiate an interconnection agreement with an incumbent LEC. The Statement may be particularly useful to smaller carriers that wish to do business with the incumbent LEC without becoming involved with formal negotiations." That BellSouth provided additional details on recombining network elements in its reply does not alter our conclusion that the SGAT is too indefinite. These additional details are not binding on BellSouth. BellSouth's reply, therefore, does not correct the problem -- that the SGAT's terms are too vague and therefore legally insufficient. 198. Even after assessing the additional information concerning BellSouth's offering contained in its reply, we conclude that BellSouth has not demonstrated that it can practically and legally make available unbundled network elements in a manner that allows new entrants to combine them. For the reasons stated below, we conclude that BellSouth has not demonstrated that it offers in its SGAT, or can timely provide in actual practice, collocation as the means for new entrants to combine unbundled network elements consistent with the requirements of the Act. 199. We do not reach in this Order the question of whether or not BellSouth's proposed method of permitting competing providers to rebundle unbundled network elements, assuming the problems with its provision of collocation identified above were resolved, would be consistent with sections 251(c)(3) and 252(d)(2), or whether other methods of recombining must be offered. We note in this regard that the Eighth Circuit has ruled that "a requesting carrier may achieve the capability to provide telecommunications services completely through access to the unbundled elements of an incumbent LEC's network." The court further concluded that a competing carrier is not required "to own or control some portion of a telecommunications network before being able to purchase unbundled elements." Finally, the court found that, because the incumbent LECs objected to the Commission's rule that the incumbent LECs must combine network elements, the incumbent LECs "would rather allow entrants access to their networks than have to rebundle the unbundled elements for [the competing carriers]." As we noted above, we are still evaluating the implications of these rulings and whether they may compel a result that would require methods other than or in addition to collocation for combining network elements. 200. Although collocation is not a separate checklist item, BellSouth has identified collocation as the primary means by which it provides nondiscriminatory access to unbundled network elements in a manner that allows new entrants to combine them as required by the Act. Our assessment of BellSouth's claim to have satisfied this statutory requirement thus necessarily involves an assessment of whether BellSouth makes available collocation for this purpose as a legal and practical matter -- e.g., whether it offers collocation on concrete terms and conditions. In this regard, we believe collocation is analogous to access to OSS functions in that it is essential to the provision of unbundled network elements. This is particularly the case where the BOC relies on collocation as the means by which network elements that have been physically separated may be recombined. 201. We do not believe BellSouth or the South Carolina Commission would dispute our conclusion that collocation is an essential prerequisite to checklist compliance for certain checklist items. In demonstrating compliance with checklist item (i), interconnection, for example, BellSouth describes its collocation offering for that purpose and seeks to demonstrate that it makes collocation practically available for interconnection purposes. The South Carolina Commission assesses BellSouth's collocation offering in the context of access to network elements. It thus appears that both BellSouth and the South Carolina Commission recognize that BellSouth must show that collocation is available in order to demonstrate that it offers interconnection or access to unbundled network elements consistent with competitive checklist items (i) and (ii). 202. Having determined that BellSouth must demonstrate that it can make available collocation in order to show compliance with the competitive checklist, we assess BellSouth's collocation offering for the purpose of allowing new entrants to combine network elements. We conclude that BellSouth has failed to demonstrate that it can provision physical collocation in a timely manner that permits new entrants to combine unbundled network elements to provide telecommunications services. BellSouth's SGAT does not commit BellSouth to any particular interval for entertaining and implementing requests for collocation. Moreover, BellSouth provides no evidence in the record concerning its actual physical collocation installation intervals. At most, it presents testimony concerning its "anticipated" implementation interval of two to four months. BellSouth's failure to include a commitment in its SGAT for installation intervals for physical collocation, coupled with the evidence in the record concerning the length of time it is taking to install physical collocation, creates concern that there may be unreasonable delays in providing collocation space. Because all carriers must apparently now use collocation in order to provide telecommunications service through a combination of BellSouth's unbundled network elements, or at least for combining the loop and the switch, unreasonable delays in provisioning collocation space create a formidable entry barrier. We concur with the Department of Justice that the substantial delays of establishing collocation facilities for new entrants wishing to use combinations of elements would impede competitive entry. 203. Our concern with BellSouth's failure to commit in the SGAT to provisioning collocation within a definite interval is heightened by BellSouth's failure to demonstrate that it is in fact offering collocation in a timely manner. BellSouth does not provide any information to counter reports from other sources indicating that BellSouth is not meeting even its non-binding projected implementation interval of two to four months. These reports include findings by the Florida Commission that BellSouth has repeatedly failed to meet the three month timeframe required by its interconnection agreements and by the Florida Commission for implementing collocation arrangements. Another report comes from DeltaCom, a carrier that is seeking to obtain physical collocation from BellSouth in South Carolina. DeltaCom submits an affidavit in this proceeding outlining its experience in obtaining collocation from BellSouth. It states that it took six months to negotiate a region- wide collocation agreement with BellSouth, the necessary first step to obtain any collocation arrangement from BellSouth. Pursuant to that agreement, once DeltaCom makes a request for collocation, BellSouth has two months to consider that request. DeltaCom states that BellSouth then takes five to eleven months to implement the request, based on DeltaCom's region-wide BellSouth experience. Although we do not make any ruling here on what constitutes a reasonable timeframe for implementing collocation, the evidence creates a concern that there may be significant delays as new entrants wait for collocation space to be constructed, and BellSouth has submitted nothing to allay this concern. This potential delay may hinder the "rapid" introduction of competition through the use of unbundled network elements contemplated by Congress and noted by the Eighth Circuit. 204. Several commenters have also raised concerns that, if new entrants must construct physical collocation cages in BellSouth central offices in order to combine elements, then they will incur, unnecessarily, higher costs to obtain unbundled network elements. Although we do not reach here the question of whether a requirement that physical collocation per se imposes unreasonable costs, we do find that BellSouth has failed to provide sufficient information on whether its physical collocation costs, as contained in the SGAT, are "just, reasonable, and nondiscriminatory." We find BellSouth's SGAT deficient because its collocation rates do not include any rates for the space preparation fee. That component of cost is left to further negotiation on an individual case basis. The absence of any space preparation rates creates uncertainty for new entrants and requires further negotiation, undermining the premise of an SGAT, which is to contain sufficiently specific terms and conditions such that checklist items are generally offered and available to all interested carriers at concrete terms, rather than left largely to future negotiation. We note the contrast with BellSouth's previous Expanded Interconnection Physical Collocation tariff filing. In that tariff filing, BellSouth identified the charges and the costs for each physical collocation rate element, including rate elements associated with space preparation, so that the Commission could evaluate the charges for each rate element. That tariff filing left no costs open to future negotiation. Accordingly, it is possible for BellSouth to offer generally available terms and conditions, that require no further negotiation, for facilities that appear comparable to those BellSouth would require for combining unbundled network elements. 205. Quite apart from concerns relating to the timeliness of implementing physical collocation arrangements, we find that BellSouth has failed to demonstrate that it can timely deliver unbundled network elements to such spaces, once completed, for combining, or that the provision of those combined elements will be at an acceptable level of quality. As discussed above, a BOC is generally offering a checklist item in its SGAT if that item is both legally and practically available. We held in the Ameritech Michigan Order that, in determining availability of a checklist item, evidence of actual commercial usage of that item is most probative, but a BOC may also submit evidence such as carrier-to-carrier testing, independent third party testing, and internal testing to demonstrate its ability to provide a checklist item. BellSouth has made no showing that there is actual commercial usage of physical collocation anywhere in its region for the purpose of recombining unbundled network elements. Although BellSouth claims experience in providing physical collocation, it makes no showing that any of the existing collocation arrangements are or can be used to combine unbundled network elements as contemplated in section II(F)(1) of the SGAT. BellSouth has also made no showing that it has performed any testing of physical collocation for the purpose of recombining network elements. Nor does the record indicate that BellSouth has tested its ability to accept orders for various elements and coordinate those orders in a way that would provide unbundled network elements for combination by new entrants in collocation space. Although BellSouth argues that there should be no difference between running an unbundled loop to a collocation space to be attached to a new entrant's equipment for transmission to a new entrant's switch and running a loop and a switch port to the same space for combining, BellSouth has provided no evidence to substantiate this allegation. 206. We thus conclude, based on our review of the record on this issue, that BellSouth has failed to demonstrate that it can make available, as a legal and practical matter, access to unbundled network elements in a manner that allows competing carriers to combine them through the one method that it has identified for such access -- collocation. As discussed above, BellSouth has not demonstrated that it can provision physical collocation in a timely manner, or that a new entrant can utilize unbundled network elements delivered to its collocation space at an acceptable level of quality. Moreover, the SGAT's collocation offering fails to state with sufficient specificity the terms and conditions under which new entrants can obtain collocation. Therefore, we find BellSouth does not meet its requirement to provide nondiscriminatory access to unbundled network elements pursuant to the competitive checklist. 207. We are also concerned that BellSouth's application is ambiguous as to whether it makes available virtual collocation for the purpose of combining network elements, but we do not base our decision on this ground. Although the SGAT provides that "[p]hysical and virtual collocation are available for . . . access to unbundled network elements as described in Section II," it is unclear from the record whether BellSouth will offer carriers a choice of either physical or virtual collocation in the first instance, or whether virtual collocation would be available, if at all, only if there is no more space for physical collocation. We are thus concerned that the SGAT could be read to not offer virtual collocation as a choice in the first instance, which would be inconsistent with the Commission's rules as set forth in the Local Competition Order. The Commission concluded in the Local Competition Order that new entrants have a choice of method for access to unbundled network elements, and that this choice must include (though is not limited to) either physical or virtual collocation. Therefore, new entrants must be able to choose virtual collocation as a method of combining network elements, regardless of whether physical collocation is practically available. We note, moreover, that new entrants should have the option of virtual collocation because it may be a less costly, time-consuming, and burdensome method of access to unbundled network elements. 208. Even assuming that BellSouth offers virtual collocation as an option for combining network elements, we are still concerned that BellSouth has not provided any details by which we could determine that its virtual collocation offering actually permits nondiscriminatory access to unbundled network elements in a manner that allows new entrants to combine them. BellSouth provides no information about how virtual collocation would be provided for this purpose. Evidence from the Florida Commission's section 271 proceeding indicates that BellSouth at least had considered the possibility of using virtual collocation for this purpose. The Florida Commission, however, also noted that BellSouth had failed to provide sufficient information regarding its virtual collocation offering in that state. The Florida Commission stated: [b]y definition, virtual collocation requires that only BellSouth personnel have access to the [new entrant's] collocation space. Thus, only BellSouth can actually perform the functions at the collocation that are necessary to establish and provide service to [a new entrant's] customers. . . . BellSouth has indicated that it will only negotiate with [new entrants] pursuant to its Bona Fide Request (BFR) process in an attempt to establish so-called "glue" charges, which are charges for combining UNEs at virtual collocations. BellSouth witness Scheye stated that BellSouth will not commit to providing the combining activity. We are thus concerned that BellSouth has also failed to provide sufficient information on whether it will provide virtual collocation in a manner that permits new entrants to combine unbundled network elements. 209. Finally, we wish to emphasize that BellSouth provided no information on the record on the details concerning this immensely important issue regarding the recombination of unbundled network elements until the reply stage of comments. Although we do not find BellSouth's showing with respect to this issue to be deficient because of the failure to include necessary information with its initial application, we believe it is important to reemphasize the Commission's repeated admonition that section 271 applications must be complete when submitted. Submitting information on reply affords the Department of Justice no opportunity to assess the offering before it submits its evaluation -- an evaluation to which the Act requires us to give substantial weight. In addition, other interested parties and this Commission have little time to assess the information provided. This is not a situation where an applicant is simply providing information on reply to respond to comments. BellSouth must make a prima facie showing in its application that it meets each checklist item. As the Department of Justice found, BellSouth's application did not meet this requirement. It cannot correct its initial failure to provide sufficient proof to make out a prima facie case by providing that information on reply and claiming it should be considered responsive to criticism that it failed to provide the information in the first place. 5. Other Concerns 210. We are troubled by allegations that BellSouth is not charging cost-based rates for unbundled network elements that, when combined, can be used to offer a service equivalent to a BellSouth retail service. LCI's comments contain a letter from BellSouth dated October 7, 1997, that states: "In all states, when LCI orders individual network elements that, when combined by LCI, duplicate a retail service provided by BellSouth, BellSouth will treat, for purposes of billing and provisioning, that order as one for resale." On the other hand, in its application, BellSouth states that it "permits CLECs to recombine [unbundled network elements] on an end-to-end (or any other basis) thereby creating the equivalent of one of BellSouth's retail services or a different service of their own." 211. Although we do not base our decision on this issue, we are concerned about this letter from BellSouth that was sent to a competing carrier a week after BellSouth filed its application. We emphasize that BellSouth is obligated to charge cost-based rates for unbundled network elements, even if they replicate a BellSouth service when combined. As discussed above, the Commission concluded in the Local Competition Order that section 251(c)(3) does not require a new entrant to construct local exchange facilities before it can use unbundled network elements to provide a telecommunications service. The Eighth Circuit in Iowa Utilities Board also held that "under section 251(c)(3) a requesting carrier is entitled to gain access to all of the unbundled elements that, when combined by the requesting carrier, are sufficient to enable the requesting carrier to provide telecommunications services." Because the use of unbundled network elements, as well as the use of combinations of unbundled network elements, is an important entry strategy into the local telecommunications market, we will examine carefully any similar allegations in future applications. D. Resale of Contract Service Arrangements 1. Background 212. Section 271(c)(2)(B)(xiv) of the competitive checklist requires that telecommunications services be "available for resale in accordance with the requirements of sections 251(c)(4) and 252(d)(3)." Section 251(c)(4), in turn, imposes upon incumbent LECs the duty "to offer for resale at wholesale rates any telecommunications service that the carrier provides at retail to subscribers who are not telecommunications carriers; and . . . not to prohibit, and not to impose unreasonable or discriminatory conditions or limitations on, the resale of such telecommunications service. . . ." The Commission concluded in the Local Competition Order that resale restrictions are "presumptively unreasonable." The Commission also explicitly held that services offered through customer-specific contract service arrangements (CSAs) are "telecommunications services" subject to the wholesale discount resale requirement of section 251(c)(4)(A): Section 251(c)(4) provides that incumbent LECs must offer for resale at wholesale rates "any telecommunications service" that the carrier provides at retail to noncarrier subscribers. This language makes no exception for promotional or discounted offerings, including contract and other customer- specific offerings. We therefore conclude that no basis exists for creating a general exemption from the wholesale requirement for all promotional or discount service offerings made by incumbent LECs. CSAs are contractual agreements made between a carrier and a specific, typically high- volume, customer, tailored to that customer's individual needs. CSAs may include volume and term arrangements, special service arrangements, customized telecommunications service agreements, and master service agreements. 213. The Commission's rules on resale restrictions provide that, "[e]xcept as provided in  51.613 of this part, an incumbent LEC shall not impose restrictions on the resale by a requesting carrier of telecommunications services offered by the incumbent LEC." Rule 51.613 provides in pertinent part that, "[w]ith respect to any restrictions on resale not permitted under paragraph (a), an incumbent LEC may impose a restriction only if it proves to the state commission that the restriction is reasonable and nondiscriminatory." The Eighth Circuit specifically held that determinations on resale restrictions are within the Commission's jurisdiction and upheld our resale restriction rules as a reasonable interpretation of the 1996 Act's terms. 214. BellSouth states clearly that it will not make CSAs available at a wholesale discount. BellSouth's SGAT provides that "BellSouth's contract service arrangements are available for resale only at the same rates, terms and conditions offered to BellSouth end users." 2. Discussion 215. We find that BellSouth fails to comply with item fourteen of the competitive checklist by refusing to offer CSAs at a wholesale discount. Moreover, based on evidence presented in the record, we are concerned that BellSouth's failure to offer CSAs for resale at a discount impedes competition for its large-volume customers and thus impairs the use of resale as a vehicle for competitors to enter BellSouth's market. 216. There is no dispute that, pursuant to the terms of the SGAT, BellSouth refuses to resell CSAs at a discount. Nor is there any dispute that CSAs constitute a retail service. The issue, therefore, is whether BellSouth's refusal to offer this particular retail service at a wholesale rate constitutes a "reasonable and nondiscriminatory" restriction. In this regard, BellSouth states that the SGAT "offers CLECs wholesale rates for any services that BellSouth offers to its retail customers, with the exception of those excluded from resale requirements in accordance with the Commission's rules and the orders of the [South Carolina Commission] . . . includ[ing] . . . contract service arrangements (which are available for resale at the same rates, terms and conditions offered to BellSouth's end user customers)." BellSouth provides no explanation in its Brief in Support of its refusal to offer CSAs at wholesale rates, nor any rationale for considering the refusal reasonable or nondiscriminatory. BellSouth's supporting affidavits note that the South Carolina Commission concluded in the AT&T Arbitration Order that "the wholesale discount would not be applied to CSAs." In the AT&T Arbitration Order, the South Carolina Commission stated that CSA's "should not receive a further discount below the contract service arrangement rate." The state commission justified this conclusion by arguing that "CSAs are designed to respond to specific competitive challenges on a customer-by-customer basis. As BellSouth argued, the contract price for these services has already been discounted from the tariffed rate in order to meet competition." 217. By offering CSAs only at their original rates, terms and conditions, BellSouth has created a general exemption from the wholesale requirement for CSAs. The Local Competition Order, however, made clear that the language of section 251(c)(4) "makes no exception for promotional or discounted offerings, including contract and other customer- specific offerings" and that, therefore, "no basis exists for creating a general exemption from the wholesale requirement for all promotional or discount service offerings made by incumbent LECs." BellSouth's justification for the general exemption is that the South Carolina Commission ruled in the AT&T Arbitration Order that the wholesale discount need not be applied to CSAs because they are already discounted. In the Local Competition proceeding, however, incumbent LECs raised the same argument with respect to volume discounts -- that the wholesale rate obligation should not apply to high volume rate offerings because they are already discounted. The Commission specifically considered and rejected this argument in the Local Competition Order, concluding that any service sold to end users is a retail service, and thus is subject to the wholesale discount requirement, even if it is already priced at a discount off the price of another retail service. Thus the only justification that BellSouth offered in its application for the SGAT's general exemption for CSAs is one which this Commission has specifically rejected. 218. The Commission's rules require a BOC to prove to the state commission that a resale restriction is reasonable for section 251 purposes. The rule does not contemplate, however, that a state commission can create a general exemption of all CSAs from the Act's requirement that retail offerings be available for resale at a discount from the retail price. Indeed, the Local Competition Order specifically found that the Act does not permit a general exemption from the wholesale requirement for promotional or discounted offerings, including CSAs. In adopting section 51.613(b) of the Commission's rules, the Commission explained that 51.613(b) was intended to and grants state commissions the authority only to approve "narrowly-tailored" resale restrictions that an incumbent LEC proves to a state commission are reasonable and nondiscriminatory. To interpret the rule to allow states to create a general exemption from the wholesale requirement for all CSAs would run contrary to the Act. Thus, BellSouth's general restriction on the provision of CSAs at wholesale rates is unlawful. 219. Following BellSouth's application, and AT&T's and LCI's motion to dismiss in part on CSA grounds, the South Carolina Commission, in their comments, and BellSouth in its reply, have provided further justifications for the CSA restriction. BellSouth and the South Carolina Commission contend, for example, that the South Carolina Commission's approval of the CSA exemption is a local pricing matter within the South Carolina Commission's intrastate jurisdiction. This contention is erroneous. The Commission's conclusions in the Local Competition Order regarding the scope of the resale requirement as it applies to promotions and discounts, including CSAs, was upheld by the Eighth Circuit. In upholding the Commission's determination, the court stated that the Commission's rules requiring the resale of promotions and discounts concern the "overall scope of the incumbent LECs' resale obligation" rather than "the specific methodology for state commissions to use in determining the actual wholesale rates." Additionally, in establishing BellSouth's exemption from offering CSAs to resellers at wholesale rates, the South Carolina Commission analyzed the matter as a resale restriction rather than as a pricing issue. BellSouth's own arguments concerning the resale of CSAs similarly analyze the issue as a resale restriction. Allowing incumbent LECs to set the wholesale discount for services that must be resold at a discount of zero would wholly invalidate such a wholesale pricing obligation. Moreover, there is no evidence in the record that the South Carolina Commission conducted an analysis to determine that the appropriate discount for CSAs should be zero. 220. The South Carolina Commission also contends that its policy with respect to pricing for CSAs is the only reasonable way to implement the Act's resale provisions. The South Carolina Commission states that BellSouth does not bear ordinary marketing costs for CSAs because they are individually negotiated arrangements, and that therefore the 14.8 percent resale discount applicable to BellSouth's generally available retail offerings would greatly overstate the costs avoided by BellSouth. Moreover, the South Carolina Commission contends that it would be impossible to determine on a case-by-case basis what discount is necessary to account for BellSouth's potential cost savings with respect to a particular CSA. We do not believe, however, that such a process would be necessary. Because similar marketing, billing, and other costs would be avoided for all CSAs, we believe that it would be feasible, and sufficiently accurate, to calculate a single discount rate that would apply to all CSAs. A single discount rate based on the costs avoidable through offering CSAs at wholesale could be applied easily and would ensure that BellSouth was made no worse off by the resale of its services. AT&T states that neither BellSouth nor the South Carolina Commission has provided any analysis to show that the 14.8 percent discount rate would overstate the avoided costs of CSAs, and in fact no such analysis appears in the record presented to us. 221. BellSouth also argues in reply that, if it were to be required to offer CSAs to resellers at a wholesale discount, it would lose customers and their contribution to total cost recovery. This, according to BellSouth, would affect its ability to meet the goal of "maximizing access by low-income consumers to telecommunications services." We find unpersuasive BellSouth's claims regarding contribution loss resulting from wholesale-priced resale-based competition. Claims of lost contributions to high-cost subsidies do not justify an exception from either the resale requirements or the requirement to offer unbundled network elements of sections 251 and 271. 222. AT&T and LCI have also raised the issue of cancellation penalties that may apply when a new entrant seeks to resell the CSA contract. They contend that such penalties have the effect of "insulat[ing] substantial portions of the market from resale competition." There is insufficient evidence in the record concerning the exact nature of the cancellation or transfer penalties BellSouth is charging, or seeks to include in its CSAs during negotiations with potential customers, for us to conclude at this time that such fees create an unreasonable condition or limitation on resale of the service. We are sensitive that CSAs represent agreements that provide both the LEC and the CSA customer with various benefits. Because, depending on the nature of these fees, their imposition creates additional costs for a CSA customer that seeks service from a reseller, they may have the effect of insulating portions of the market from competition through resale. We, therefore, would want to review such fees and request that BOCs provide information justifying the level of cancellation or transfer fees in future applications. 223. We conclude by reemphasizing the important policy concerns that make restrictions on resale undesirable. BellSouth's CSA restriction may have significant competitive effects. Resale is one of the three mechanisms Congress developed for entry into the BOCs' monopoly market. BellSouth's restriction on CSAs may have the effect of impeding this entry vehicle. The Commission found in the Local Competition Order that: the ability of incumbent LECs to impose resale restrictions and conditions is likely to be evidence of market power and may reflect an attempt by incumbent LECs to preserve their market position. In a competitive market, an individual seller (an incumbent LEC) would not be able to impose significant restrictions and conditions on buyers because such buyers turn to other sellers. Recognizing that incumbent LECs possess market power, Congress prohibited unreasonable restrictions and conditions on resale. 224. The Commission also concluded that the presumption against resale restrictions is necessary specifically for promotional or discounted offerings, such as CSAs, because otherwise incumbent LECs could "avoid the statutory resale obligation by shifting their customers to nonstandard offerings, thereby eviscerating the resale provisions of the 1996 Act." The evidence in the record suggests that these concerns are realized in South Carolina. AT&T and LCI claim that BellSouth has already filed more than twice as many CSAs in 1997 (141) as it did in 1996 (66), thus insulating a substantial portion of its market from resale competition. AT&T further claims that BellSouth's revenues from existing CSA contracts will amount to over $300 million over the next three to five years. BellSouth thus appears to be attempting to avoid its statutory resale obligation by shifting its customers to CSAs. By foreclosing resale of CSAs, BellSouth can prevent resellers from competing for large-volume customers, thus hindering local exchange competition in South Carolina. E. Nondiscriminatory Access to 911 and E911 Services 225. Section 271(c)(2)(B)(vii)(I) of the competitive checklist requires BellSouth to offer "nondiscriminatory access to . . . 911 and E911 services." The Commission concluded in the Ameritech Michigan Order that "section 271 requires a BOC to provide competitors access to its 911 and E911 services in the same manner that a BOC obtains such access, i.e., at parity." In particular, the Commission found that a BOC "must maintain the 911 database entries for competing LECs with the same accuracy and reliability that it maintains the database entries for its own customers." The Commission further found that, for facilities-based carriers, "nondiscriminatory access to 911 and E911 services includes the provision of unbundled access to [a BOC's] 911 database and 911 interconnection, including the provision of dedicated trunks from the requesting carrier's switching facilities to the 911 control office." 226. BellSouth's offer of access to 911 and E911 services is contained in section VII.A of the SGAT. This section provides in full: A. Access to 911/E911. BellSouth provides CLECs equal access to 911/E911 service and for CLECs to provide customer numbers and address information to 911 providers on the following terms: 1. 911/E911 Service. Basic 911 and Enhanced 911 provide callers access to the applicable emergency services bureau by dialing a three- digit universal telephone number. 2. Equal Access. A CLEC's customers will be able to dial and reach emergency services bureaus providing 911/E911 service in the same manner as BellSouth customers. 3. Basic 911 Service Provisioning. For basic 911 service, BellSouth will provide to a CLEC a list consisting of each municipality that subscribes to Basic 911 service. The list will also provide, if known, the E911 conversion date for each municipality and, for network routing purposes, a ten-digit directory number representing the appropriate emergency answering position for each municipality subscribing to 911. The CLEC will be required to arrange to accept 911 calls from its end users in municipalities that subscribe to Basic 911 service and translate the 911 call to the appropriate 10-digit directory number as stated on the list provided by BellSouth. The CLEC will be required to route that call to BellSouth at the appropriate tandem or end office. When a municipality converts to E911 service, the CLEC will be required to discontinue the Basic 911 procedures and begin using E911 procedures. 4. E911 Service Provisioning. For E911 service, a CLEC will be required to install a minimum of two dedicated trunks originating from the CLEC's serving wire center and terminating to the appropriate E911 tandem. The dedicated trunks shall be, at a minimum, DS-0 level trunks configured either as a 2- wire analog interface or as part of a digital (1.544 Mb/s) interface. Either configuration shall use CAMA-type signaling with multifrequency ("MF') pulsing that will deliver automatic number identification ("ANI") with the voice portion of the call. If the user interface is digital, MF pulses, as well as other AC signals, shall be encoded per the u-255 Law convention. The CLEC will be required to provide BellSouth daily updates to the E911 database. A CLEC will be required to forward 911 calls to the appropriate E911 tandem, along with ANI, based upon the current E911 end office to tandem homing arrangement as provided by BellSouth. If the E911 tandem trunks are not available, the CLEC will be required to route the call to a designated 7-digit local number residing in the appropriate Public Service Answering Point ("PSAP"). This call will be transported over BellSouth's interoffice network and will not carry the ANI of the calling party. 5. Rates. Charges for 911/E911 service are borne by the municipality purchasing the service. BellSouth will impose no charge on CLECs beyond applicable charges for BellSouth trunking arrangements. 6. Detailed Practices and Procedures. The detailed practices and procedures contained in the E911 Local Exchange Carrier Guide For Facility-Based Providers determine the appropriate practices and procedures for BellSouth and CLECs to follow in providing 911/E911 services. 227. BellSouth claims that its SGAT offers to customers of competing LECs "access to the type of 911 service selected by the governmental body of the area in which they reside in a manner identical to the 911 service supplied to BellSouth's own customers." BellSouth also states that it has provided facilities-based competing carriers with 211 trunks for E911 services in its region, including 4 trunks in South Carolina, and that "it routinely monitors call blockage on E911 trunk groups and, in coordination with the CLEC, takes corrective action using the same trunk serving procedures for E911 trunk groups from CLEC switches as for E911 trunk groups from BellSouth switches." Moreover, BellSouth asserts that it has instituted procedures to maintain the 911 database entries for competing LECs with the same accuracy and reliability that it maintains the database entries for its own customers. The South Carolina Commission found that BellSouth meets this checklist requirement. 228. MCI contends that BellSouth "does not adequately set forth in its SGAT the procedures that it will use to provide 911/E911 . . . services as required by the Act," although MCI does not specify what is lacking in BellSouth's SGAT. We disagree with MCI. Rather, we conclude that BellSouth's SGAT, on its face, offers sufficient detail to make a prima facie case that BellSouth has satisfied this part of the checklist. BellSouth has pled facts and provided appropriate supporting evidence which, if true, are sufficient to establish that it offers nondiscriminatory access to 911 and E911 services. 229. As the Commission stated in the Ameritech Michigan Order, once the applicant has made a prima facie showing that it complies with a checklist item, "opponents of the BOC's entry must, as a practical matter, produce evidence and arguments necessary to show that the application does not satisfy the requirements of section 271, or risk a ruling in the BOC's favor." No commenter has alleged that BellSouth is not currently populating and maintaining the 911 database for competitors' customers with the same accuracy and reliability as for its own customers. Nor has any commenter contended that BellSouth is not providing equivalent access to the 911 database or to dedicated trunks. 230. We note that BellSouth states that "any errors found in the data supplied by CLECs are faxed back to the CLEC along with the error code." We addressed above, in our discussion of BellSouth's offer of access to OSS functions, our concerns that notifying competing carriers of errors via fax could lead to significant delays. We would be concerned if this manual notification process leads to untimely notification or to problems with the accuracy and the integrity of the 911 database, and would reevaluate our conclusion herein should such evidence be presented in future applications. With respect to 911 and E911 services, however, no party contends that the fact that BellSouth notifies competing carriers via facsimile about errors has led to a lack of parity or problems such as incorrect end-user information being sent to emergency personnel. We therefore find, based on the record before us in this application, that BellSouth has met its burden to demonstrate that it offers nondiscriminatory access to 911 and E911 services and complies with this part of checklist item (vii). VII. JOINT MARKETING A. Background 231. Section 271(d)(3)(B) prohibits the Commission from approving a BOC's application for in-region, interLATA authorization unless it finds that "the requested authorization will be carried out in accordance with the requirements of section 272." Section 272(g) allows BOCs and their affiliates to joint market their services, with certain restrictions. In adopting rules implementing this section with respect to inbound telemarketing in the Non-Accounting Safeguards proceeding, the Commission sought to balance the BOCs' continuing equal access obligations pursuant to section 251(g) with their right under section 272(g) to market and sell the services of their section 272 affiliates. The Commission concluded that, pursuant to section 251(g), BOCs must continue to inform new local exchange customers of their right to select the interLATA carrier of their choice and take the customer's order for the interLATA carrier the customer selects. Specifically, the BOCs must provide any customer who orders new local exchange service with the names and, if requested, the telephone numbers of all of the carriers offering interexchange services in its service area. The Commission found that, as part of this requirement, a BOC must ensure that the names of the interexchange carriers are provided in random order. The Commission further concluded that this "continuing obligation to advise new customers of other interLATA options is not incompatible with the BOCs' right to market and sell the services of their section 272 affiliates under section 272(g)." Thus, the Commission found that "a BOC may market its affiliate's interLATA services to inbound callers, provided that the BOC also informs such customers of their right to select the interLATA carrier of their choice." 232. In the Ameritech Michigan Order, the Commission held that Ameritech's proposed inbound telemarketing script would violate the equal access requirements of section 251(g). In that proceeding, Ameritech stated that, on an inbound call, Ameritech's service representative would inform the customer: You have a choice of companies, including Ameritech Long Distance, for long distance service. Would you like me to read from a list of other available long distance companies or do you know which company you would like? If the customer chose a particular long distance company at this point, the order would be processed accordingly. If the customer requested a listing or telephone numbers of other available companies, the service representative would read from the entire list and ask the customer for its choice of long distance carrier. The Commission in the Ameritech Michigan Order held that, "[m]entioning only Ameritech Long Distance unless the customer affirmatively requests the names of other interexchange carriers is inconsistent on its face with our requirement that a BOC must provide the names of interexchange carriers in random order." The Commission stated that such a practice would allow Ameritech Long Distance to gain an unfair advantage over other interexchange carriers. The Commission relied upon the Non-Accounting Safeguards Order to conclude that, pursuant to the BOC's obligation to provide nondiscriminatory treatment under section 251(g), a BOC must provide, in random order, the names and, if requested, the telephone numbers of all available interexchange carriers. 233. In the section 271 application before us, BellSouth urges the Commission to approve its proposed telemarketing script, under which the BellSouth service representative would inform the customer that there are numerous choices for long distance providers, offer to read a list of all available interexchange carriers in random order, and recommend BellSouth's long distance affiliate. BellSouth proffers as an example of its telemarketing script: You have many companies to choose from to provide your long distance service. I can read from a list the companies available for selection, however, I'd like to recommend BellSouth Long Distance. BellSouth asserts that these company names will be read in random order if the customer requests that they be read. According to BellSouth, based on the customer's response, the order will be completed with the appropriate long distance carrier as requested. 234. BellSouth and Ameritech argue that such a script is acceptable under the Non- Accounting Safeguards Order, which, they claim, struck a balance between a BOC's continuing equal access obligations pursuant to section 251(g) and the right of a BOC and its affiliate to market services jointly under section 272(g). These parties claim that the Ameritech Michigan Order is inconsistent with the Non-Accounting Safeguards Order because the Ameritech Michigan Order nullifies the second part of that balance -- the BOC's statutory joint marketing right. BellSouth and Ameritech also argue that requiring a BOC to recite a list of every available interexchange carrier even when the customer has made up her mind would be so burdensome and annoying to customers that it would effectively prevent the BOC from joint marketing on inbound calls. BellSouth and Ameritech further contend that prohibiting their proposed scripts would raise First Amendment concerns. 235. AT&T, on the other hand, urges us to continue to reject telemarketing scripts such as Ameritech's or BellSouth's. AT&T asserts that the Ameritech Michigan Order is consistent with section 272(g)(2), which forbids identifying only one interexchange carrier during inbound calls, and the Non-Accounting Safeguards Order, which made clear that marketing must be consistent with the equal access requirements of 251(g). TRA claims that BellSouth's admission that it does not intend to comply with Ameritech Michigan Order's conclusion shows that, even before attaining section 271 authority, BellSouth will not follow the Commission's section 272 rules with which it disagrees. B. Discussion 236. We take this opportunity to address the issue of whether BellSouth's proposed inbound telemarketing script is consistent with the requirements of the statute. We do not require applicants to submit proposed marketing scripts as a precondition for section 271 approval, nor do we expect to review revised marketing scripts on an ongoing basis once section 271 authorization is granted. Applicants are free to tell us how they intend to joint market, although we do not require them to do so. Our intention in addressing this issue here is to establish a safe harbor, so that the BOCs will have some guidance on what we view as consistent with sections 251(g) and 272. We emphasize that we are not concluding here that any other scripts are per se lawful or unlawful. We conclude that BellSouth's script is acceptable, and, under the analysis set forth below, we would also find that the script filed by Ameritech in its section 271 application for Michigan would be acceptable, should it file a new application. 237. We conclude that BellSouth's telemarketing script as proffered in the record is in fact consistent with the requirements of sections 251(g) and 272(g), as discussed in the Non-Accounting Safeguards Order. We agree with BellSouth and Ameritech that a BOC, during an inbound telephone call, should be allowed to recommend its own long distance affiliate, as long as it contemporaneously states that other carriers also provide long distance service and offers to read a list of all available interexchange carriers in random order. In the Non-Accounting Safeguards Order, the Commission stated that the BOCs' existing obligation to provide any customer who orders new local exchange service with the names and, if requested, the telephone numbers of all of the carriers offering interexchange services in its service area in random order was not incompatible with the BOCs' right to joint market. The Commission concluded that a BOC could market its affiliate's long distance services to inbound callers as long as the BOC also informed those customers of their right to select the interexchange carrier of their choice and provided the names and numbers of all interexchange carriers in random order. Thus, the Non-Accounting Safeguards Order sought to balance a BOC's continuing equal access obligations pursuant to section 251(g) with the right of a BOC and its affiliate to market services jointly under section 272(g). 238. In considering the issue of whether BellSouth's marketing script meets the requirements of sections 251(g) and 272(g), we find that the Commission's decision in the Ameritech Michigan Order placed too much weight on the equal access obligations, and too little weight on the BOCs' right to jointly market local and long distance services. We note that the equal access obligations requiring BOCs to provide the names and telephone numbers of interexchange carriers in random order were written at a time when BOCs could not provide (and therefore could not market) long distance service. Now that BOCs, upon authorization to provide in-region, interLATA services, are permitted under the Act to market their services jointly, we must harmonize the existing equal access requirements with their right under the Act to engage in joint marketing. 239. We thus conclude that, even if a BOC's inbound marketing script markets the services of its long distance affiliate, the script is acceptable as long as the BOC contemporaneously fulfills the equal access requirements described in the Non-Accounting Safeguards Order -- i.e., offers to read, in random order, the names and, if requested, the telephone numbers of all available interexchange carriers. In fact, the Non-Accounting Safeguards Order cited with approval a proposal submitted by NYNEX in that rulemaking docket similar to the BellSouth script, in which NYNEX would first inform the customer that he or she had a choice of carriers including the BOC's long distance affiliate, then offer to read a random list of interexchange carriers if the carrier did not at that point choose an interexchange carrier. As BellSouth and Ameritech point out, section 272(g) confers upon BOCs authority to market and sell services of their long distance affiliates, and does not contain any exception for inbound calls or calls from new customers. We therefore conclude that BOCs are permitted under the statute to market their long distance affiliates' services during inbound calls. We further conclude that section 272(g) allows a BOC to mention its affiliate apart from including that affiliate on a random list of available interexchange carriers. VIII. CONCLUSION 240. For the reasons discussed above, we deny BellSouth's application for authorization under section 271 of the Act to provide in-region, interLATA services in the state of South Carolina. We conclude that BellSouth is not eligible to proceed under Track B. BellSouth also has not demonstrated that it generally offers each of the items of the competitive checklist in section 271(c)(2)(B) as required by the Act. In particular, BellSouth has not demonstrated that it generally offers adequate operational support systems, nondiscriminatory access to unbundled network elements, and contract service arrangements at a wholesale discount. We find that BellSouth has demonstrated compliance with checklist item (vii)(I), nondiscriminatory access to 911 and E911 services. Except as otherwise provided herein, we make no findings with respect to BellSouth's compliance with other checklist items or other parts of section 271. Finally, we conclude that BellSouth's inbound telemarketing script is consistent with the Act. IX. ORDERING CLAUSES 241. Accordingly, IT IS ORDERED that, pursuant to sections 4(i), 4(j), and 271 of the Communications Act, as amended, 47 U.S.C.  154(i), 154(j), 271, BellSouth Corporation's application to provide in-region interLATA service in the State of South Carolina filed on September 30, 1997, IS DENIED. 242. IT IS FURTHER ORDERED that the motion to dismiss filed by AT&T and LCI on October 1, 1997, IS DENIED. 243.. IT IS FURTHER ORDERED that the motion to strike filed by BellSouth on December 4, 1997, IS GRANTED in part and DENIED in part, as described herein. 244. IT IS FURTHER ORDERED that the motion to strike filed by BellSouth on December 19, 1997, IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary APPENDIX BellSouth Corporation's 271 Application for Service in South Carolina CC Docket No. 97-208 List of Commenters 1. Alliance for Public Technology 2. American Communications Services, Inc. (ACSI) 3. Ad Hoc Coalition of Telecommunications Manufacturing Companies and Corporate Telecommunications Service Managers 4. Ameritech 5. Association for Local Telecommunications Services (ALTS) 6. American Council on Education and National Association of College and University Business Officers 7. AT&T Corp. 8. Bell Atlantic 9. BellSouth Corporation 10. Competition Policy Institute 11. Competitive Telecommunications Association (CompTel) 12. Consumer Federation of America 13. GenCorp., The Gleason Works, Norfolk Southern Corp., PNC Bank, Zurn Industries, Inc. 14. Hyperion Telecommunications, Inc. 15. Independent Payphone Service Providers for Consumer Choice 16. Intermedia Communications, Inc. 17. Institute for Educational Leadership, Inc. (The) 18. Keep America Connected! 19. KMC Telecom Inc. 20. Latin Women and Supporters 21. LCI International Telecom Corp. 22. Low Tech Designs, Inc. 23. Management Education Alliance 24. MCI Telecommunications Corporation 25. National Association of Black Accountants, Inc. 26. National Association of Commissions for Women 27. National Association of Development Organizations 28. National Association of Partners in Education, Inc. 29. National Business League 30. National Cable Television Association 31. National Hispanic Council on Aging 32. National Trust for the Development of African American Men, Inc. (The) 33. Organizations Concerned About Rural Education 34. Paging and Narrowband PCS Alliance of the Personal Communications Industry Association 35. Pilgrim Telephone, Inc. 36. South Carolina Cable Television Association 37. South Carolina Consumer Advocate Philip S. Porter 38. South Carolina Public Service Commission 39. Sprint Communications Company L.P. 40. Teleport Communications Group, Inc. (TCG) 41. Telecommunications Resellers Association (TRA) 42. Triangle Coalition for Science and Technology Education 43. United Homeowners Association 44. United Senior Health Cooperative 45. U S WEST, Inc. 46. Vanguard Cellular Systems, Inc. 47. WorldCom, Inc. 48. Letters from officials, businesses and citizens of South Carolina SEPARATE STATEMENT OF CHAIRMAN WILLIAM E. KENNARD Re: Application of BellSouth Corporation et al. Pursuant to Section 271 of the Communications Act of 1934, as amended, to Provide In-Region, InterLATA Services in South Carolina (CC Docket No. 97-208). BellSouth has made significant progress towards opening the market for local telephone service in South Carolina, as is demonstrated in its application to provide in-region interLATA service and by the record in this proceeding. In addition to beginning to build a solid foundation for local competition, BellSouth has helped this Commission analyze the conditions that Congress specified must be met before we have the authority to grant an application under section 271 of the Communications Act. I look forward to even greater cooperation between the Commission and BellSouth and the other Bell operating companies (BOCs), as we jointly endeavor to hasten BOC entry into in-region long distance service. As I have previously stated, by working together before a section 271 application is filed, the Commission and BOC staffs, as well as state representatives, the Department of Justice, and other interested parties, can seek to eliminate uncertainties and resolve potential disputes that otherwise could interfere with a BOC's attempt to satisfy the requirements of section 271. Commission staff have begun to initiate such discussions with various BOCs and other parties. I am committed to seeing that this dialogue continues and grows in an open process, and I am committed to the goal of creating and expanding choice and value for consumers in local and long distance telephone service. I look forward to the Commission being able to declare a local market open. Congress has created the framework that the Commission must follow in evaluating applications filed under section 271. It is imperative that we implement that framework in a way that promotes competition and is faithful to the letter of the statute. Although our duty in this regard compels us to deny the BellSouth application before us, I believe that BellSouth's efforts have moved us much closer to the day when a BOC will have satisfied the conditions for entry into in-region long distance service. That day is fast approaching. Separate Statement of Commissioner Susan Ness Re: Application of BellSouth Corporation, et al. Pursuant to Section 271 of the Communications Act of 1934, as amended, To Provide In-Region, InterLATA Services in South Carolina Although framed as a denial of an application, today's order in truth sends a positive message: the newly reconstituted Commission is committed to enforcing the law as Congress wrote it, so that consumers in all telecommunications markets can enjoy the benefits of competition. The thousands of pages of pleadings and the detailed debates over arcane statutory provisions must not obscure the simple legislative bargain that governs Bell company entry into long distance. Once Bell companies fulfill their responsibilities to eliminate barriers to entry in the local marketplace, the barrier to their entry into the long distance market will in turn be removed. Today's order eliminates all doubt that the new Commission will enforce that sequence. At the heart of the Telecommunications Act is Congress's recognition that new entrants in the formerly monopolized local exchange market cannot be expected to spend the many billions of dollars necessary to build ubiquitous, fully redundant local networks. Under the statute, the incumbent providers must make available their network facilities, elements, and services under conditions that allow for genuine competition. When these statutory requirements are satisfied in any given State, the Bell company will be allowed to provide long distance service originating in that State. The current record clearly demonstrates that, while progress has been made, BellSouth has not yet fulfilled its market-opening responsibilities in South Carolina. New entrants currently do not have nondiscriminatory access to the local facilities and services essential to compete effectively with the incumbent carrier. New entrants' orders are not processed as reliably and efficiently as those submitted by BellSouth itself. Terms and conditions for collocation of competitors' facilities have not yet been fully specified, much less implemented. BellSouth has asserted its right to physically disassemble the piece-parts of its network when they are sought by a competitor, but it has not yet specified how it will meet its corresponding obligation to permit its competitors to reassemble those piece-parts themselves. Cost-based prices for network elements, collocation, and transport and termination have yet to be established. No one can reasonably expect new entrants to invest their resources -- and risk their reputations -- to entice consumers to subscibe to their services unless they can count on the incumbents' cooperation in effectuating a seamless transfer of service and, thereafter, in reliably delivering all promised network elements, facilities, and services. In sum, BellSouth's unfulfilled responsibilities unfortunately leave us no alternative but to deny the application. Getting to Yes I have long promoted competition in all sectors of the telecommunications marketplace, and I firmly believe that the long distance restriction should be eliminated as soon as possible, consistent with the statute. I agree with BellSouth and with the South Carolina Commission that the American consumer will benefit from intensified competition in the long distance market, and I look forward to the day when I can cast my vote to approve a Section 271 application. To this end, this Commission stands ready to work cooperatively with any Bell company that is truly committed to fulfilling its part of the statutory bargain. At the request of the Bell operating companies, we laid out a "road map" in the Ameritech Michigan order, offering substantial guidance on how the Bell companies can secure Section 271 approval. Today's order provides additional guidance. Our experience with Section 271 applications is now sufficient that we can and should formulate a new "getting to yes" strategy. The state commissions, Justice Department, and the FCC should collaborate constructively with the Bell companies and their would-be competitors to identify those market-opening tasks that remain unfinished and to devise practical means for successfully completing them. Such a pro-active approach may well lead more quickly to mutually satisfactory resolutions than post hoc review of measures that have already been implemented. I strongly encourage the Bell companies -- and their competitors - - to accept this invitation. Perspective on Pricing Our order today does not address the issue of pricing -- whether the prices BellSouth charges to new entrants for unbundled network elements, transport and termination, and collocation are based on cost, as the statute requires. Pricing matters are not decisional in this case, and the state commission has not finished its own work on this critical matter. While we do not address the sticky issue of pricing in our order today, I nonetheless write separately to elaborate on the principles guiding my decisions in this area. First, the rulings by the U.S. Court of Appeals for the Eighth Circuit clearly are the law of the land today. The pricing provisions of our Interconnection Order have been voided. Thus, in arbitrating any open issues brought to them for resolution, the state commissions have the responsibility to follow the Telecommunications Act and make their own decisions on pricing, subject to review in the federal district courts and then the courts of appeal. The overwhelming majority of states appear to be using forward-looking economic cost principles -- a very positive development for competition. In any event, the 8th Circuit ruling makes it clear that these decisions are for the state commissions to make when called upon to arbitrate interconnection disputes. Second, I do not read the 8th Circuit's rulings as curtailing the FCC's role in determinations on Bell company applications to offer long distance services. Just as the Court found that interconnection arbitrations are assigned by Section 252 to the states, determinations of checklist compliance and the public interest are expressly assigned by Section 271 to the FCC. This Commission is required to "consult" with the states on the requirements of the competitive checklist and is required to give "substantial weight" to the views of the Attorney General, but specific determinations of compliance with the checklist, conformity with Section 272, and the public interest are the responsibility of the FCC. Given that Congress enjoined the FCC from giving "any preclusive effect" even to the views of the Attorney General, I can find no statutory basis for treating the determinations of state commissions -- whether on pricing or on any other checklist items -- as dispositive for Section 271 purposes. Nor can I see how we might give the Attorney General's views "substantial weight" if a state commission's contrary opinion on any subject is to be deemed definitive. It has been suggested that it is disrespectful of the 8th Circuit for us to evaluate pricing matters in the Section 271 context. I do not agree. It certainly would not be my intention to disregard an order of the Court. If I thought the 8th Circuit had foreclosed us from considering whether unbundled network element prices are based on cost (as the checklist requires) or are consistent with promoting efficient entry in the local telephone marketplace (as we might consider in making a public interest determination), then, of course, I would abide by both the spirit and effect of that order. But I do not believe that the 8th Circuit's ruling was intended to have such a sweeping effect and do not assume that the Court meant to so circumscribe our decisionmaking under Section 271. Congress's directive that our Section 271 determinations are reviewable only by the U.S. Court of Appeals for the District of Columbia Circuit reinforces this conclusion. Third, I believe that there is a workable solution that both state and federal officials can agree upon. Some states are uncomfortable with the FCC determining for purposes of Section 271 that forward-looking cost-based pricing is essential for competition, even though the state commissions are completely free to develop their own pricing methodology for purposes of Section 252. Similarly, this Commission would not be comfortable approving a Section 271 application if the prices for unbundled network elements, transport and termination, and collocation are set so as to discourage efficient competitive entry in the local market. The Justice Department has proposed an approach that may bridge the differing state and federal perspectives. Specifically, the Department advocates that the FCC examine, in a Section 271 application, whether the prices are based on a "reasoned application of an appropriate methodology," a flexible formulation set forth in the Department's submission in this docket. A number of leading state commissioners have responded favorably to this approach. While I cannot speak for my colleagues, I, for one, am prepared to endorse it. The circumstances of an adjudicatory proceeding involving a single party's application that must be resolved within a 90-day deadline do not permit negotiation and consensus-building involving five FCC commissioners and dozens of state commissions. But this middle-ground solution holds great promise. Moreover, resolution of our jurisdictional controversies may be advanced by (1) the widespread substantive agreement, both throughout the states and internationally, on the importance of using forward-looking economic costs; and (2) the prospects for a collaborative, multi-jurisdictional, getting-to-yes process for addressing Section 271 issues. I note that the South Carolina commission has acknowledged that the current prices in BellSouth's statement of generally available terms are not the product of any particular methodology -- thus, it would be difficult to conclude that the prices are based on any articulable notion of what the statute means by "cost." But the state commission plans to resolve interconnection pricing issues in the near future, so there is no reason to assume that any current problems with interconnection prices will not be cured before BellSouth files its next application for South Carolina. Hastening the Arrival of Local Competition The Telecommunications Act is based on the premise that entrepreneurial companies are willing to compete if barriers that have previously stood in their way are removed. Experience in South Carolina bears this out. Although the biggest cities and biggest potential customers are elsewhere, scores of companies have expressed an interest in entering the local market in South Carolina: over eighty had signed interconnection agreements at the time of BellSouth's application, and dozens more requests for interconnection were pending. I cannot believe that these companies have explicitly or tacitly agreed to hold back their efforts to penetrate the market, in the shared hope that doing so will foreclose BellSouth from entering the long distance market. A far more probable explanation for the nascent state of competition is that opening the local market is proving to be an immensely complicated process and that, despite the progress BellSouth has made to date in implementing its responsibilities under Section 251, a great deal more remains to be accomplished. If all parties work together in a spirit of cooperation, we can achieve for the consumer the benefits of robust local and long distance competition. I hope that we will see continued progress in the new year, such that we will be able to "get to yes" -- to conclude that BellSouth has fulfilled its responsibilities fully and can in turn properly be authorized to bring additional competition to the long distance market. SEPARATE STATEMENT OF COMMISSIONER HAROLD FURCHTGOTT-ROTH Re: Application of BellSouth Corporation et al. Pursuant to Section 271 of the Communications Act of 1934, as amended, to Provide In-Region, InterLATA Services in South Carolina (CC Docket 97-208). It is Christmas Eve in Washington, DC. The FCC issues an Order. Lawyers, accountants, and others who battle the regulatory wars of Section 271 have Christmas stockings filled with goodies. It has been a good year for those who earn a living through the industry of telecommunications regulation. But has it been a good year for the People of South Carolina? What will Santa leave in their stockings? This Order today should not be narrowly about regulation, or even narrowly about BellSouth. It should be about the People of South Carolina and what will be good for them. The People of South Carolina, like all Americans, are not experts in federal regulation. They do want lower prices, and they do not want the federal government to get in the way of lower prices. Generally, competition leads to lower prices; too much regulation does not. There are dozens of local telephone companies in South Carolina. Today, there is facilities-based local competition for none of them, but there are hope and promise for such competition in the BellSouth region. With this local competition, are the hope and promise of lower prices. Today, hundreds of long-distance carriers offer service in South Carolina. All local telephone companies in South Carolina, except one, can also offer long distance services. That one exception is BellSouth, and with this Order, there are hope and promise that it too may one day offer long distance service in South Carolina. In the Order released today, the Commission concludes that BellSouth has not yet met the statutory requirements that would enable to provide long distance service to the citizens of South carolina. We recognize, however, that BellSouth has invested millions of dollars to try to create an organizational structure that will foster competition. For nearly two years, BellSouth has worked to develop new operational service support systems consistent with regulations -- hundreds of millions of dollars annually throughout the BellSouth region. The Commission explicitly commends BellSouth for its efforts and the progress that it has made in opening its local market to competition. It should come as no surprise that BellSouth has made and continues to make such efforts. Throughout the proceedings, many South Carolinians have repeated the theme that BellSouth is a "good corporate citizen" in South Carolina. It supports local schools. It supports civic organizations. It involves itself with the life of the community. By Statute, being a good corporate citizen is not a specific regulatory factor to consider under Section 271. It provides, however, hope and promise that competition will come to South Carolina, and that is the real Christmas present for the State. SEPARATE STATEMENT OF COMMISSIONER MICHAEL K. POWELL Re: Application of BellSouth Corporation et al. Pursuant to Section 271 of the Communications Act of 1934, as amended, to Provide In-Region, InterLATA Services in South Carolina (CC Docket No. 97-208). In denying BellSouth's bid to enter the long distance market in South Carolina, we recognize that the company has taken some significant steps in meeting the prerequisites for entry established by Congress under section 271. BellSouth's application is deficient in certain important areas, such that we cannot approve it in its present form. Nevertheless, these deficiencies can be corrected, and I encourage BellSouth to double its efforts to find workable and creative approaches that will enable it to satisfy the Act's requirements, which are designed to offer would-be local competitors a fighting chance to compete. I hope BellSouth accepts this challenge and returns to us with a more viable application that will lead to residents of South Carolina having an expanded number of choices for their local and long distance providers. I believe BellSouth can get there, but I caution that newspaper advertisements and letter writing campaigns will not remedy the deficiencies we have identified in this order. If BellSouth (or any applicant) is to be successful in future applications, it must understand the ground rules. Moreover, it must have some confidence that if it takes further steps to allow competitors to win away its customers, the company will be rewarded in kind with the right to compete in the long distance market. We must always endeavor to place the seeds of section 271 success in the hands of the BOC applicants. With respect to the present application, we have attempted to offer clear guidance in a number of areas. Nonetheless, we could have done much more if we had had the time and resources to work more cooperatively with BellSouth to reach agreement on many of the checklist items, rather than having to retreat into the bowels of the Commission to slog through a 33,000 page application. Section 271 review is inefficient if it results in an applicant having to file two and three times just to obtain a clear picture of what it is doing right and what it is doing wrong. I believe we must do more or adopt a new approach to this process if we hope to provide the clarity that BOCs and new entrants need to open up local markets. Accordingly, I want to commend my colleagues for attempting with me to clarify our interpretation of Track B, as well as for applying the competitive checklist to BellSouth's application, despite the fact that we found Track B unavailable to BellSouth. I believe that both BOCs and entrants need as much direction as we can possibly provide. In the past, there has been an inclination to fight the section 271 battle at the Track A/B "shore." Such an approach wastes time and resources, detracts from the thoroughness of our checklist analysis and clouds the guidance that incumbents and competitors alike desperately need. While I acknowledge that our interpretation of section 271 is an evolving one, I believe that our efforts in this order to flesh out the circumstances in which Track B and certain checklist items are or are not satisfied constitute a step in the right direction. In addition, I believe the Commission, the BOCs and potential competitors must do much more to offer workable solutions to the vexing problems that are impeding the arrival of local competition. The proper standards and benchmarks for OSS is one such area. How to ensure the viable use of unbundled network elements (UNEs) in light of current legal precedent is another. Consider our own treatment of UNEs in the present application. We note, correctly, that a BOC must offer UNEs in a manner that allows them to be recombined by the new entrant. In this order, however, we fault BellSouth's collocation proposal, but offer no possible solution of our own. Rather, we (like the Department of Justice) reject the application on the grounds that the BOC failed to satisfy its burden of proving that it has met the checklist. I do not question that the BOC does and should bear the burden of proof, but I believe we could do much more to help develop and implement a workable, collaborative framework for promoting compliance with section 271, rather than relying on burdens of proof and other adjudicative devices to dispense with these applications. In this regard, let me say more about the UNE problem. In its recent Rehearing Order, the Eighth Circuit held that new entrants, rather than incumbents, must rebundle network elements. By its holding, the court undermined an intellectual construct. Notwithstanding the Eighth Circuit's interpretation, the network elements that the Commission has held must be "unbundled" are not actually tangible, physical elements that can be unplugged and replugged as easily as an electric cord from a wall socket. With the exception, perhaps, of loops and ports, the "unbundling" of network elements is not a physical process but a cost allocation fiction. Most UNE's -- though representing discrete functional capabilities that one can offer and charge for separately -- cannot in any real sense be dissociated from the software and hardware that control their operation. Thus, it seems ridiculous to suggest that incumbent LECs can physically unbundle most network elements, or that a new entrant can actually pick up those elements and recombine them, be it in a collocation cage or elsewhere. The Commission and the various parties should stop perpetuating this myth. The UNE problem is arguably just a math problem that we should proactively address. That is, in the current environment, we should be dedicating our efforts toward crafting a method for allocating costs for UNEs that simulates the fiction of unbundling and rebundling, rather than spending time pretending that there are actually ways to take these elements apart, hand them to an entrant, and have that entrant put them back together like pieces in a Lego play set. In short, pending further review of the Eighth Circuit decisions, I believe we should invite proposals whereby a BOC would voluntarily recombine elements for a modest charge -- a "glue charge." While we await further guidance from the courts, I would encourage both BOCs and new entrants to participate actively in finding a glue charge structure or other UNE framework that they can live with, lest we find ourselves playing "catch up" in the event the courts do not reinstate our previous rulings. Finally, I respect the genuinely held view of some that the statute confers independent jurisdiction on the Commission to establish pricing rules. I merely note that such an interpretation is not universally shared among the Commissioners. In particular, some of us question whether such an interpretation of section 271 is consistent with the Eighth Circuit's prior holdings regarding the states' ratemaking authority. I feel no need, however, to debate this legal point here. This interpretation has been challenged and is squarely presented in the mandamus action presently before the Eighth Circuit. Oral argument in that proceeding is scheduled for later next month. The Court itself will undoubtedly shed light on this important question.