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Z:(130Technical Document Style..   23  Ԁ. Z:(131Technical Document Style..   23  Ԁ. ^6 (1321. a. i. (1) (a) (i) 1) a)  23  0..^I (1331. a. i. (1) (a) (i) 1) a)0..  23  0` ..` ^\ (1341. a. i. (1) (a) (i) 1) a)0..0` ..`   23  0 .. ^o (1351. a. i. (1) (a) (i) 1) a)0..0` ..` 0 ..   23  0..^ (1361. a. i. (1) (a) (i) 1) a)0..0` ..` 0 .. 0..  23  0h..h^ (1371. a. i. (1) (a) (i) 1) a)0..0..0..0..0..  23  0..^ (1381. a. i. (1) (a) (i) 1) a)0..0..0..0..0..0..  23  0..J:\POLICY\LECDOM\RECON2\ORDER\INTRBCK.DS ;(2$ M!  XaXXaXXXaC  $3C  $79?EKQYag139I.A.1.a.(1)(a)i)a)($     e T$  XQXXQXXXQC  $$C!XXQԀ  1    ݀TelecommunicationsActof1996,Pub.L.No.104104,110Stat.56(1996Act),codifiedat47U.S.C.  151etseq.Hereinafter,allcitationstothe1996Actwillbetothe1996ActasitiscodifiedintheUnitedStates z Code.The1996ActamendedtheCommunicationsActof1934(CommunicationsAct).(!2T$ M!  XaXXaXXXaC  $3C  wXXaԀ  0    T$  XQXXQXXXQC  $$C!XXQԀ  2    ݀SeePolicyandRulesConcerningtheInterstate,InterexchangeMarketplace;ImplementationofSection254(g)  oftheCommunicationsActof1934,asamended,CCDocketNo.9661,NoticeofProposedRulemaking,11FCC z Rcd7141(1996)(InterexchangeNPRM).SeealsoImplementationoftheNonAccountingSafeguardsofSections D 271and272oftheCommunicationsActof1934,asamended;andRegulatoryTreatmentofLECProvisionofInterexchangeServicesOriginatingintheLEC'sLocalExchangeArea,CCDocketNo.96149,NoticeofProposed ( Rulemaking,11FCCRcd18877(1996)(NonAccountingSafeguardsNPRM).Ouruseoftheterm"longdistance  services"referstointerstate,domesticorinternational,interLATAservicesprovidedbytheBOCinterLATAaffiliates,andinterstate,domesticorinternational,interexchangeservicesprovidedbyindependentLECs,respectively.Seeinfra GTEPAR129  Մ GTEPAR231  .Wealsodefine,forpurposesofthisproceeding,theterms"inregionstate,"  P "interLATAservice,"and"LATA"asthosetermsaredefinedin47U.S.C.271(i)(1),153(21),and153(25),respectively,oftheCommunicationsAct,asamended.SeeLECClassificationOrder,12FCCRcdat15758,2    n.4;BellOperatingCompanyProvisionofOutofRegionInterstate,InterexchangeServices,CCDocketNo.9621, ^   ReportandOrder,11FCCRcd18564,18565,1n.3(1996)(InterimBOCOutofRegionOrder).The (x  CommissionexaminedseparatelyitsregulationofU.S.internationalservicesinInternationalCompetitiveCarrier B  Policies,CCDocketNo.85107,ReportandOrder,102FCC2d812(1985),recon.denied,60Rad.Reg.2d1435   (1986).  T$  XQXXQXXXQC  $$C!XXQԀ  3    ݀RegulatoryTreatmentofLECProvisionofInterexchangeServicesOriginatingintheLEC'sLocalExchange  AreaandPolicyandRulesConcerningtheInterstate,InterexchangeMarketPlace,CCDocketNos.96149,9661, z SecondReportinCCDocketNo.96149andThirdReportandOrderinCCDocketNo.9661,12FCCRcd15756,15802(LECClassificationOrder),OrderonReconsideration,12FCCRcd8730(1997)(LECClassificationOrder ^ onReconsideration),Order,13FCCRcd6427(1998)(LECClassificationPartialStayOrder),furtherrecon. ( pending. F T$  XQXXQXXXQC  $$C!XXQԀ  4    ݀LECClassificationOrderonReconsideration,12FCCRcd8730(1997). @ T$  XQXXQXXXQC  $$C!XXQԀ  5    ݀LECClassificationPartialStayOrder,13FCCRcd6427(1998).  T$  XQXXQXXXQC  $$C!XXQԀ  6    ݀TheBOCs'andindependentLECs'provisionofoutofregion,interstate,domestic,longdistanceservicesis  notsubjecttoseparationrequirements.Seeinfra OUTREGION8  .  T$  XQXXQXXXQC  $$C!XXQԀ  7    ݀AccordingtoanNTCAsurveyansweredbynearly3/4ofitsmembers,139ofthe156NTCAindependent  LECmembersthatprovideinregion,interstate,longdistanceservices,dososolelyonaresalebasis.LetterfromR.ScottReiter,SeniorIndustrySpecialist,NationalTelephoneCooperativeAssociation,toMagalieRomanSalas,Secretary,FederalCommunicationsCommission,Attachment(filedJan.16,1998)(NTCAJan.16exparteletter). @ T$  XQXXQXXXQC  $$C!XXQԀ  8    LECClassificationPartialStayOrder,13FCCRcd6427(1998). # T$  XQXXQXXXQC  $$C!XXQԀ  9    ݀See,e.g.,47U.S.C.154(i).  T$  XQXXQXXXQC  $$C!XXQԀ  10    ݀PolicyandRulesConcerningRatesforCompetitiveCommonCarrierServicesandFacilitiesAuthorizations  Therefor,CCDocketNo.79252,NoticeofInquiryandProposedRulemaking,77FCC2d308(1979);FirstReport z andOrder,85FCC2d1(1980)(CompetitiveCarrierFirstReportandOrder);FurtherNoticeofProposed D Rulemaking,84FCC2d445(1981);SecondFurtherNoticeofProposedRulemaking,FCC82187,47Fed.Reg.17,308(1982);SecondReportandOrder,91FCC2d59(1982)(CompetitiveCarrierSecondReportandOrder); ( OrderonReconsideration,93FCC2d54(1983);ThirdFurtherNoticeofProposedRulemaking,48Fed.Reg.28,292(1983);ThirdReportandOrder,48Fed.Reg.46,791(1983);FourthReportandOrder,95FCC2d554(1983)(CompetitiveCarrierFourthReportandOrder),vacated,AT&Tv.FCC,978F.2d727(D.C.Cir.1992), 6  cert.denied,MCITelecommunicationsCorp.v.AT&T,509U.S.913,113S.Ct.3020(1993);CompetitiveCarrier  P FifthReportandOrder,98FCC2d1191(1984);SixthReportandOrder,99FCC2d1020(1985),vacated,MCI    TelecommunicationsCorp.v.FCC,765F.2d1186(D.C.Cir.1985),affirmed,MCIv.AT&T,512U.S.218,114    S.Ct.2223(1994)(CompetitiveCarrierSixthReportandOrder)(collectivelyreferredtoastheCompetitiveCarrier ^   Proceeding). F T$  XQXXQXXXQC  $$C!XXQԀ  11    ݀See,e.g.,CompetitiveCarrierFirstReportandOrder,85FCC2d1. F T$  XQXXQXXXQC  $$C!XXQԀ  12    ݀See,e.g.,CompetitiveCarrierFirstReportandOrder,85FCC2d1. F T$  XQXXQXXXQC  $$C!XXQԀ  13    ݀See,e.g.,CompetitiveCarrierFirstReportandOrder,85FCC2d1.  T$  XQXXQXXXQC  $$C!XXQԀ  14    ݀CompetitiveCarrierFirstReportandOrder,85FCC2d1;CompetitiveCarrierFourthReportandOrder,95  FCC2d554;CompetitiveCarrierFifthReportandOrder,98FCC2d1191.Seealso47C.F.R. z 63.1(o),(u).  T$  XQXXQXXXQC  $$C!XXQԀ  15    ݀CompetitiveCarrierFourthReportandOrder,95FCC2dat558,78(citing,interalia,A.Areeda&D.  Turner,AntitrustLaw322(1978)andW.M.Landes&R.A.Posner,MarketPowerinAntitrustCases,94Harv.L. z Rev.937(1981)).The1992MergerGuidelinessimilarlydefinemarketpoweras"theabilityprofitablytomaintain D  pricesabovecompetitivelevelsforasignificantperiodoftime."1992DepartmentofJustice/FederalTradeCommissionMergerGuidelines,4TradeReg.Rep.(CCH)13,104at20,570(1992MergerGuidelines). J T$  XQXXQXXXQC  $$C!XXQԀ  16    ݀CompetitiveCarrierFourthReportandOrder,95FCC2dat562,13. ( T$  XQXXQXXXQC  $$C!XXQԀ  17    ݀CompetitiveCarrierFourthReportandOrder,95FCC2dat57580,3138;CompetitiveCarrierFifth  ReportandOrder,98FCC2dat11951200,611;CompetitiveCarrierSixthReportandOrder,99FCC2dat z 1028n.29,12.5THR&OPROHIB U T$  XQXXQXXXQC  $$C!XXQԀ  18    ݀CompetitiveCarrierFourthReportandOrder,95FCC2dat575579,3137. J T$  XQXXQXXXQC  $$C!XXQԀ  19    ݀CompetitiveCarrierFifthReportandOrder,98FCC2dat1198,9. I T$  XQXXQXXXQC  $$C!XXQԀ  20    ݀CompetitiveCarrierFifthReportandOrder,98FCC2dat1198,9. m T$  XQXXQXXXQC  $$C!XXQԀ  21    ݀CompetitiveCarrierFifthReportandOrder,98FCC2dat1198,9.TheCommission'saffiliatetransactions  rulesalsowereappliedtotheLECanditsinterexchangeaffiliate.SeeSeparationofCostsofRegulatedTelephone z ServicefromCostsofNonregulatedActivities,CCDocketNo.86111,ReportandOrder,2FCCRcd1298(1987), D recon.,2FCCRcd6283(1987),furtherrecon.,3FCCRcd6701(1988),aff'dsubnom.SouthwesternBellCorp.v. ^ FCC,896F.2d1378(D.C.Cir.1990);47C.F.R.Parts32and64. I T$  XQXXQXXXQC  $$C!XXQԀ  22    ݀CompetitiveCarrierFifthReportandOrder,98FCC2dat1198,9.  T$  XQXXQXXXQC  $$C!XXQԀ  23    ݀CompetitiveCarrierFifthReportandOrder,98FCC2dat119899,n.23(citingUnitedStatesv.Western  ElectricCo.,552F.Supp.131(D.D.C.1982)(subsequenthistoryomitted)). + T$  XQXXQXXXQC  $$C!XXQԀ  24    ݀SeeJointStatementofManagers,S.Conf.Rep.No.104230,104thCong.,2dSess.Preamble(1996)(Joint  ExplanatoryStatement);seealso47U.S.C.706(a)(encouragingthedeploymentofadvancedtelecommunications z capabilitytoallAmericans).OUTREGION E T$  XQXXQXXXQC  $$C!XXQԀ  25    ݀LECClassificationOrder,12FCCRcdat15768801,1680. ^ T$  XQXXQXXXQC  $$C!XXQԀ  26    ݀LECClassificationOrder,12FCCRcdat1576263,15847,1585455,6,156,17071.  T$  XQXXQXXXQC  $$C!XXQԀ  27    ݀LECClassificationOrder,12FCCRcdat15763,1584757,7,15675.TheCommissionadoptedthesame  regulatorytreatmentoftheBOCinterLATAaffiliates'andindependentLECs'provisionofinregion,internationalservices,asitadoptedfortheirprovisionofinregion,interstate,domestic,interLATAandinregion,interstate,domestic,interexchangeservices,respectively.Id.at1576364,1583840,1586265,8,13842,18892. E T$  XQXXQXXXQC  $$C!XXQԀ  28    ݀SeeLECClassificationOrderonReconsiderationat2;LECClassificationOrder,12FCCRcdat15856,  173.WhiletheCommissionrequired,asclarifiedintheInterimBOCOutofRegionOrder,thatthelongdistance z affiliatebea"separatelegalentity,"itdeclinedtorequirethemorestringentlevelof"structuralseparation"imposedinsection272fortheBOCs'provisionofinregion,interLATAservices.SeeFifthReportandOrder,98FCC2dat ^ 1195,1198n.23.SeealsoBellOperatingCompanyProvisionofOutofRegionInterstate,InterexchangeServices, ( CCDocketNo.9621,ReportandOrder,11FCCRcd18564,1857576(1996)(InterimBOCOutofRegion  Order),recon.pending.  T$  XQXXQXXXQC  $$C!XXQԀ  29    ݀LECClassificationPartialStayOrder,DA98556(rel.Mar.24,1998)(stayingtheApril18,1998deadline  forcomplianceuntil60daysafterthereleaseofthisorderonreconsideration). z J:\POLICY\LECDOM\RECON2\ORDER\III.A2DISCAHARMFULACTIVITY  T$  XQXXQXXXQC  $$C!XXQԀ  30    ݀LECClassificationOrder,12FCCRcdat1586164,184192;seesupra 5THR&O5  . Z T$  XQXXQXXXQC  $$C!XXQԀ  31    ݀LECClassificationOrder,12FCCRcdat15850,15852,1586263,163,167,188. > T$  XQXXQXXXQC  $$C!XXQԀ  32    ݀LECClassificationOrder,12FCCRcdat1584849,159. > T$  XQXXQXXXQC  $$C!XXQԀ  33    ݀LECClassificationOrder,12FCCRcdat1584849,159. ; T$  XQXXQXXXQC  $$C!XXQԀ  34    LECClassificationOrder,12FCCRcdat15849,160.  T$  XQXXQXXXQC  $$C!XXQԀ  35    LECClassificationOrder,12FCCRcdat15849,161.Specifically,absentappropriateregulation,an  independentLECpotentiallycouldraisethepriceofaccesstoallinterexchangecarriers.Thiswouldcausecompetinginregioncarrierseithertoraisetheirretailratestomaintainthesameprofitmarginsortoattempttomaintaintheirmarketsharebynotraisingtheirpricestoreflecttheincreaseinaccesscharges,therebyreducingtheirprofitmargins.Ifthecompetinginregion,interexchangeprovidersraisedtheirpricestorecovertheincreasedaccesscharges,theindependentLECcouldseektoexpanditsmarketsharebynotmatchingthepriceincrease.TheindependentLECalsocouldsetitsinregion,interexchangepricesatorbelowitsaccessprices.TheindependentLEC'sinregioncompetitorsthenwouldbefacedwiththechoiceofreducingtheirretailrates,andtherebyreducingtheirprofitmargins,ormaintainingtheirretailratesatthehigherpriceandrisklosingmarketshare.Id. ; T$  XQXXQXXXQC  $$C!XXQԀ  36    ݀LECClassificationOrder,12FCCRcdat15850,163. ; T$  XQXXQXXXQC  $$C!XXQԀ  37    ݀LECClassificationOrder,12FCCRcdat15850,163. ; T$  XQXXQXXXQC  $$C!XXQԀ  38    ݀LECClassificationOrder,12FCCRcdat15850,163. ; T$  XQXXQXXXQC  $$C!XXQԀ  39    ݀LECClassificationOrder,12FCCRcdat15850,163. { M!  XQXXQXXXQC  $$C  !XXQԀ  40  LECClassificationOrder,12FCCRcdat15850,15860,163,183.Weusetheterm"ruralLEC"toreferto  aLECthatqualifiesasa"ruraltelephonecompany"underthe1996Act.Underthe1996Act,aLECcanqualifyasa"ruraltelephonecompany"basedonitssmallsizeoritslocationinaruralgeographicarea.Inaddition,weusetheterm"midsizedLEC"torefertoanindependentLECwithfewerthan2percentofthenation'ssubscriberlinesthatdoesnotfallwithintheAct'sdefinitionof"ruraltelephonecompany."Section3(37)oftheActdefinestheterm"ruraltelephonecompany."47U.S.C.153(37).Section251(f)(2)allowsindependentLECswithfewerthan2percentofthenation'ssubscriberlinestopetitionastatecommissionforsuspensionormodificationoftherequirementsofsection251(b)and(c).See47U.S.C.251(b),(c),(f)(2).  T$  XQXXQXXXQC  $$C!XXQԀ  41    ݀SeeLECClassificationOrder,12FCCRcdat15851,15854,165,170;seealsoFifthReportandOrder,98  FCC2dat1195,1198n.23.Forexample,the"separatelegalentity"requiredbytheLECClassificationOrder"may z bestaffedbypersonnelofitsaffiliatedexchangecompanies,housedinexistingofficesofitsaffiliatedexchangecompanies,anduseitsaffiliatedexchangecompanies'marketingandotherservices."InterimBOCOutofRegion ^ Order,11FCCRcdat1857576,22.SeealsoLECClassificationOrder,12FCCRcdat15851,165(declining ( torequire"actual'structuralseparation.'").  T$  XQXXQXXXQC  $$C!XXQԀ  42    ݀LECClassificationOrder,12FCCRcdat15851,165(citingInterimBOCOutofRegionOrder,11FCC  Rcdat1857576,22).JOE 5 T$  XQXXQXXXQC  $$C!XXQԀ  43    ݀ATUPetitionat1;USTAPetitionat1;GTEReplyat24.  T$  XQXXQXXXQC  $$C!XXQԀ  44    ݀ALLTELPetitionat23;ITTACommentsat2;NTCAPetitionat2;ALLTELReplyat12.Notethat  ALLTELconfinesitsargumentstomidsizedindependentLECsandNTCAseeksreliefonlyfromtheseparateaffiliaterequirement.  T$  XQXXQXXXQC  $$C!XXQԀ  45    ݀SeeALLTELPetitionat7;NTCAPetitionat4;USTAPetitionat5;seealsoITTACommentsat3,10-11;  ATUReplyat4;NTCAReplyat45. + T$  XQXXQXXXQC  $$C!XXQԀ  46    ݀AT&T,GCI,MCIandTRAopposereconsideration. p T$  XQXXQXXXQC  $$C!XXQԀ  47    ݀SeeAT&TOppositionat2,67;GCIOppositionat24;MCIOppositionat10;seealsoTRACommentsat2.  T$  XQXXQXXXQC  $$C!XXQԀ  48    ݀ATUPetitionat24;USTAPetitionat57.SeealsoALLTELPetitionat810;ITTACommentsat910;  NTCAPetitionat47;ALLTELReplyat5;NTCAReplyat45. ' T$  XQXXQXXXQC  $$C!XXQԀ  49    ݀USTAPetitionat1213;ALLTELReplyat6. F T$  XQXXQXXXQC  $$C!XXQԀ  50    ݀LECClassificationOrder,12FCCRcdat1584757,158175. I T$  XQXXQXXXQC  $$C!XXQԀ  51    ݀Seesupra * HARMFULACTIVITY*10  . F T$  XQXXQXXXQC  $$C!XXQԀ  52    ݀LECClassificationOrder,12FCCRcdat1584757,158175.  T$  XQXXQXXXQC  $$C!XXQԀ  53    ݀LECClassificationOrder,12FCCRcdat15866,196(theCommissionintendstocommenceaproceeding  threeyearsaftertheadoptionoftheLECClassificationOrdertodeterminewhethertheemergenceofcompetition z inthelocalexchangeandexchangeaccessmarketplacejustifiesremovaloftheFifthReportandOrder D requirements). ] T$  XQXXQXXXQC  $$C!XXQԀ  54    ݀47U.S.C.272(a).SeeATUPetitionat34;ITTACommentsat6;USTAPetitionat23.  T$  XQXXQXXXQC  $$C!XXQԀ  55    ݀USTAPetitionat23.SeeLetterfromRepresentativesTauzin,Oxley,Boucher,etal.,totheHonorableReed  E.Hundt,Chairman,FederalCommunicationsCommission(Jun.25,1997)at12. ) T$  XQXXQXXXQC  $$C!XXQԀ  56    ݀See,e.g.,47U.S.C.154(i),201;seealsoAT&TCorp.v.IowaUtilitiesBoard,119S.Ct.721(1999)  (holdingthattheCommissionhasgeneraljurisdictionundersection201(b)oftheCommunicationsActtoimplementthe1996Act'slocalcompetitionprovisions).  T$  XQXXQXXXQC  $$C!XXQԀ  57    ݀LECClassificationOrder,12FCCRcdat1585253,168.SeealsoAT&TOppositionat6;MCIOpposition  at45;TRAOppositionat7. c T$  XQXXQXXXQC  $$C!XXQԀ  58    ݀MCIOppositionat5.SeealsoLECClassificationOrder,12FCCRcdat1585253,168.  T$  XQXXQXXXQC  $$C!XXQԀ  59    ݀47U.S.C.272(f)(3).  T$  XQXXQXXXQC  $$C!XXQԀ  60    ݀MCIOppositionat45.SeeMCIv.AT&T,etal.,512U.S.218,228(1994)(findingthatthemostrelevant  timefordeterminingastatute'smeaningiswhenthestatutebecamelaw).  T$  XQXXQXXXQC  $$C!XXQԀ  61    ݀SeeInterimBOCOutofRegionOrder,11FCCRcd18564(1996)(CommissionconcludesthatCongress'  failuretospecifystructuralsafeguardsdoesnotimplythatCommissionlacksauthoritytoimposeFifthReportand z OrdersafeguardsonBOCoutofregionservices).SeealsoLECClassificationOrder,12FCCRcdat1585253, D 168;AmendmentoftheCommission'sRulesToEstablishCompetitiveServiceSafeguardsforLocalExchange ^ CarrierProvisionofCommercialMobileRadioServices;ImplementationofSection601(d)ofthe ( TelecommunicationsActof1996,WTDocketNo.96162,ReportandOrder,12FCCRcd15668,1569799,47  (1997).  T$  XQXXQXXXQC  $$C!XXQԀ  62    ݀USTAPetitionat1415. y T$  XQXXQXXXQC  $$C!XXQԀ  63    ݀Seesupra PROHIB5  ՀforadescriptionoftheFifthReportandOrderrequirements. < T$  XQXXQXXXQC  $$C!XXQԀ  64    ݀LECClassificationOrder,12FCCRcdat15851,165. ^ T$  XQXXQXXXQC  $$C!XXQԀ  65    ݀NonAccountingSafeguardsNPRMat158(seekingcommenton"whethertheexistingCompetitiveCarrier  [FifthReportandOrder]requirementsaresufficientsafeguardstoapplytoindependentLECstoaddressany z potentialcompetitiveconcerns.Commentersproposingtomodifyoraddtotheserequirementsshouldaddresstheextenttowhichthereisapossibilityofimproperlyallocatingcostsorotherdiscriminatoryoranticompetitiveconduct,andifso,specificallyhowtheproposedmodificationoradditionwouldmitigatesuchconduct").  T$  XQXXQXXXQC  $$C!XXQԀ  66    ݀ALLTELPetitionat710;ITTACommentsat911;NTCAPetitionat57;ALLTELReplyat2,89;NTCA  Replyat24.WenotethatALLTELandITTAaskforexemptionfromtheFifthReportandOrderrequirements z forcarrierswithlessthantwopercentofthenation'saccesslinesintheprovisionofinregion,interstate,interexchangeservice.NTCAasksforexemptionforcarriersthatqualifyas"ruraltelephonecompan[ies]"undersection3(37)oftheCommunicationsAct,47U.S.C.153(37).SeeALLTELPetitionat23;ITTACommentsat2; ( NTCAPetitionat2;ALLTELReplyat12. F T$  XQXXQXXXQC  $$C!XXQԀ  67    ݀LECClassificationOrder,12FCCRcdat1585960,180183. H T$  XQXXQXXXQC  $$C!XXQԀ  68    ݀ALLTELReplyat10,referencingaffidavitofDanielSpulberat3233. A T$  XQXXQXXXQC  $$C!XXQԀ  69    ݀LECClassificationOrder,12FCCRcdat15860,183.  T$  XQXXQXXXQC  $$C!XXQԀ  70    ݀NTCAPetitionat78.  T$  XQXXQXXXQC  $$C!XXQԀ  71    ݀NTCAPetitionat78(contendingthat"thesmallsizeofruraltelephonecompanies...exacerbatesthecosts  anddislocationsinherentinseparateentityrequirements").  T$  XQXXQXXXQC  $$C!XXQԀ  72    ݀SeeinfraSectionIII.A.3.b.  T$  XQXXQXXXQC  $$C!XXQԀ  73    ݀Seeinfra * ANALYSISANTICOM*22  ՀforouranalysisofanindependentLECreseller'sdiminishedabilitytoengagein  anticompetitiveactivity. # T$  XQXXQXXXQC  $$C!XXQԀ  74    ݀See,e.g.,MCIOppositionat10. f T$  XQXXQXXXQC  $$C!XXQԀ  75    ݀CompetitiveCarrierSecondReportandOrder,91FCC2d59at6162,5(1982)(emphasisadded). ) M!  XQXXQXXXQC  $$C  !XXQԀ  76  LECClassificationOrder,12FCCRcdat15856,173. ? T$  XQXXQXXXQC  $$C!XXQԀ  77    ݀SeeLECClassificationOrder,12FCCRcdat15856,173.  T$  XQXXQXXXQC  $$C!XXQԀ  78    ݀LECClassificationOrder,12FCCRcdat15854,170;seeInterimBOCOutofRegionOrder,11FCCRcd  at1857576,22;CompetitiveCarrierFifthReportandOrder,98FCC2dat119899,9. ; T$  XQXXQXXXQC  $$C!XXQԀ  79    ݀LECClassificationOrder,12FCCRcdat15856,173. ; T$  XQXXQXXXQC  $$C!XXQԀ  80    ݀NTCAPetitionat45;NTCAReplyat34;USTAReplyat9n.15. / T$  XQXXQXXXQC  $$C!XXQԀ  81    ݀SeeNTCAPetitionat46;NTCAReplyat35. # T$  XQXXQXXXQC  $$C!XXQԀ  82    ݀NTCAPetitionat78;NTCAReplyat6.ANALYSISANTICOMDISCBANTICOM1 O T$  XQXXQXXXQC  $$C!XXQԀ  83    ݀Seeinfra 0&STILLRETAINABILITY024  . ; T$  XQXXQXXXQC  $$C!XXQԀ  84    ݀LECClassificationOrder,12FCCRcdat15849,160. [ T$  XQXXQXXXQC  $$C!XXQԀ  85    ݀ALLTELPetitionat79;ITTACommentsat8;USTAPetitionat5;seeNTCAPetitionat4. . T$  XQXXQXXXQC  $$C!XXQԀ  86    ݀ALLTELPetitionat10;seeNTCAReplyat4.  T$  XQXXQXXXQC  $$C!XXQԀ  87    ݀SeeRulesandPoliciesonForeignParticipationintheU.S.TelecommunicationsMarket;MarketEntryand  RegulationofForeignAffiliatedEntities,IBDocketNos.97142and9522,ReportandOrderandOrderon z Reconsideration,FCC97398,204(rel.Nov.26,1997)(ForeignParticipationOrder);seealsoALLTELPetition D at10. / T$  XQXXQXXXQC  $$C!XXQԀ  88    ݀SeeNTCAPetitionat56;NTCAReplyat23.ANTICOM2STILLRETAINABILITYCOMPLY1 $ T$  XQXXQXXXQC  $$C!XXQԀ  89    ݀MCIOppositionat911;MCIReplyat3.  T$  XQXXQXXXQC  $$C!XXQԀ  90    ݀SeeAT&TOppositionat3,7;MCIOppositionat911;MCIReplyat3;seealsoGCIOppositionat24;TRA  Commentsat48. ; T$  XQXXQXXXQC  $$C!XXQԀ  91    ݀Seesupra ANTICOM122  . 9 T$  XQXXQXXXQC  $$C!XXQԀ  92    ݀Seeinfra 64.190325  .  T$  XQXXQXXXQC  $$C!XXQԀ  93    ݀See47U.S.C.251;seealsoImplementationoftheLocalCompetitionProvisionsintheTelecommunications  Actof1996,CCDocketNo.96-98,FirstReportandOrder,11FCCRcd15499,15808,611(1996)(Local z CompetitionOrder),aff'dinpartandvacatedinpartsubnom.CompetitiveTelecommunicationsAss'nv.FCC,117 D F.3d1068(8thCir.1997);vacatedinpartonreh'g,IowaUtilitiesBd.v.FCC,120F.3d753,furthervacatedinpart ^ subnom.CaliforniaPublicUtilitiesComm'nv.FCC,124F.3d934,writofmandamusissuedsubnom.Iowa ( UtilitiesBd.v.FCC,No.963321(8thCir.Jan.22,1998),petitionforcert.granted,Nos.97-826,97-829,97-830,  97-831,97-1075,97-1087,97-1099,and97-1141(U.S.Jan.26,1998)(collectively,IowaUtils.Bd.),Orderon l  Reconsideration,11FCCRcd13042(1996),SecondOrderonReconsideration,11FCCRcd19738(1996),ThirdOrderonReconsiderationandFurtherNoticeofProposedRulemaking,FCC97295(rel.Aug.18,1997),further  P recon.pending. # T$  XQXXQXXXQC  $$C!XXQԀ  94    ݀MTSandWATSMarketStructurePhaseIII:EstablishmentofPhysicalConnectionsandThroughRoutes  AmongCarriers;EstablishmentofPhysicalConnectionsbyCarrierswithNonCarrierCommunicationsFacilities;PlanningAmongCarriersforProvisionofInterconnectedServices,andinConnectionwithNationalDefenseandEmergencyCommunicationsServices;andRegulationsforandinConnectionwiththeForegoing;CCDocketNo. ^  7872,ReportandOrder,100FCC2d860(1985)(EqualAccessOrder). c T$  XQXXQXXXQC  $$C!XXQԀ  95    ݀See,e.g.,ALLTELPetitionat9;ITTACommentsat9;NTCAPetitionat6;USTAPetitionat4,10.  T$  XQXXQXXXQC  $$C!XXQԀ  96    ݀AnchoragePetitionat12;NTCAPetitionat4;AnchorageReplyat45;NTCAReplyat45;USTAReplyat  8;seeALLTELPetitionat10;USTAPetitionat15.JOINT64.1903  T$  XQXXQXXXQC  $$C!XXQԀ  97    ݀AnchoragePetitionat12;NTCAPetitionat4;AnchorageReplyat45;NTCAReplyat45;USTAReplyat  8;seeALLTELPetitionat10;USTAPetitionat15.  T$  XQXXQXXXQC  $$C!XXQԀ  98    ݀NTCAPetitionat4. P T$  XQXXQXXXQC  $$C!XXQԀ  99    ݀IntheInterimBOCOutofRegionOrder,theCommissionclarifiedthattheCompetitiveCarrierFifthReport  andOrderseparatebooksofaccountrequirement"referstothefactthat,asaseparatelegalentity,theaffiliatemust z maintainitsownbooksofaccountasamatterofcourse."InterimBOCOutofRegionOrder,11FCCRcdat D 1857677,23.TheCommissionstatedthatitsPart32UniformSystemofAccounts,however,"isnotrequiredtobekeptby[such]affiliates."Id.at18576,23n.62.  T$  XQXXQXXXQC  $$C!XXQԀ  100    ݀Otherthanthelimitedpurposesdescribedinsection64.1903,section32.23(c)shallremaininfullforceand  effect.  T$  XQXXQXXXQC  $$C!XXQԀ  101    ݀See47C.F.R.32.27. O T$  XQXXQXXXQC  $$C!XXQԀ  102    ݀LECClassificationOrder,12FCCRcdat15850,1585354,163,169. < T$  XQXXQXXXQC  $$C!XXQԀ  103    ݀LECClassificationOrder,12FCCRcdat15850,163. 2 T$  XQXXQXXXQC  $$C!XXQԀ  104    ݀Seesupra JOE13  .  T$  XQXXQXXXQC  $$C!XXQԀ  105    ݀  AccordingtoanNTCAsurveyansweredbynearly3/4ofitsmembers,139ofthe156NTCAindependent  LECmembersthatprovideinregion,interstate,longdistanceservices,dososolelyonaresalebasis.NTCAJan.16exparteletter.NTCA ] M!  XQXXQXXXQC  $$C  !XXQԀ  106  47C.F.R.1.3.Pursuanttoourexistinggeneralwaiverprocess,theCommissionmayexerciseitsdiscretion  towaiveanyprovisionofitsrulesorordersifgoodcauseisshown.Seeinfranote WAIVERNOTE 126  ;seealsoLECClassification z Order,12FCCRcdat15860,183n.518.TAXPAR1COMPLY2 m T$  XQXXQXXXQC  $$C!XXQԀ  107    ݀SeeNTCAPetitionat8;NTCAReplyat6;PetitionforWaiverofLeacoRuralTelephoneCooperative,Inc.,  CCDocketNos.96149and9661,at5(filedAug.15,1997)(estimatingthateliminationofitstaxexemptstatuswouldresultinadditionalannualcostsof$38,000,or$16permember);seealsoNTCADec.18exparteletter. ' T$  XQXXQXXXQC  $$C!XXQԀ  108    ݀26U.S.C.501(a),501(c)(12)(A). ' T$  XQXXQXXXQC  $$C!XXQԀ  109    ݀AccordingtoNTCA,ifatelephonecooperativeLECestablishesaseparatelegalentitytoprovideinregion,  longdistanceservices,thisentitywouldbetreatedasaforprofitentitywhichwouldlikelyresultinthecooperative'sviolatingthestatutoryrequirementthat85percentormoreofthecooperative'sincomeconsistofamountscollectedfrommembersforthesolepurposeofmeetinglossesandexpenses.Ontheotherhand,aseparatecorporatedivisionestablishedbyatelephonecooperativeLECtoprovideinregion,longdistanceservices,likelywouldbetreatedaspartofthecooperative,andnotasaforprofitentity.SeeLetterfromDavidCosson,Vice  President,Legal&Industry,NationalTelephoneCooperativeAssociation(filedDec.18,1997)(NTCADec.18ex l  parteletter);LetterfromDavidCosson,Kraskin,Lesse&Cosson,L.L.P.(filedJan.11,1999);NTCAPetitionat8; 6  NTCAReplyat6;seealso26U.S.C.501(a),501(c)(12)(A). H T$  XQXXQXXXQC  $$C!XXQԀ  110    ݀SeePetitionforWaiverofLeacoRuralTelephoneCooperative,Inc.,CCDocketNos.96149and9661,at5  (filedAug.15,1997)(estimatingthateliminationofitstaxexemptstatuswouldresultinadditionalannualcostsof$38,000,or$16permember);seealsoNTCADec.18exparteletter. N T$  XQXXQXXXQC  $$C!XXQԀ  111    ݀AccordingtoanNTCAsurveyofnearly3/4ofitsmembers,198of363totalrespondentsfallwithinthe  definitionof"mutualorcooperativetelephonecompany"insection501(c)(12)(A)oftheInternalRevenueCode.Moreover,ofthe97ofsuchcooperativesthatcurrentlyareprovidinginregion,interstate,longdistanceservices,87ofthesecompaniesdosoonaresalebasis.NTCAJan.16exparteletter.Accordingtothissurvey,139ofthe156 ^ NTCAindependentLECmembersthatprovideinregion,interstate,longdistanceservices,dosoonaresalebasis.Id.  WenotethatwecontinuetorequireindependentLECsthatarefacilitiesbasedprovidersofinterstate,interexchangeservicestocomplywiththeFifthReportandOrderseparationrequirements,includingtheseparatelegalentity  P requirement,andthereforesuchLECsthatareorganizedascooperativeslikelywouldnolongerqualifyfortaxexemptstatusundersection501(c)(12)(A),asdiscussedabove.Asageneralmatterweencouragefacilitiesbasedprovisionofinterstate,longdistanceservicesbyindependentLECs,includingLECsorganizedascooperatives.WenonethelessbelievethatweshouldrequireallfacilitiesbasedindependentLECstocomplywiththeFifthReport (x  andOrderrequirements.WefindthatthebenefitsoffullapplicationoftheFifthReportandOrderrequirementsto B  facilitiesbasedindependentLECsorganizedascooperatives,i.e.,increaseddeterrenceofanticompetitiveactivitysuchascostmisallocation,accessdiscrimination,andattemptstoinitiateapricesqueeze,outweightheregulatoryburdens,i.e.,theadditionalcostsassociatedwithformingaseparatelegalentityandlossoftaxexemptstatus. k T$  XQXXQXXXQC  $$C!XXQԀ  112    ݀See WAIVER132  Մ WAIVER233  Հinfra.J:\POLICY\LECDOM\RECON2\ORDER\GTEISS.DSGTEPAR1 $ T$  XQXXQXXXQC  $$C!XXQԀ  113    ݀GTEPetitionat12;GTEReplyat12. O T$  XQXXQXXXQC  $$C!XXQԀ  114    ݀GTEPetitionat2,14;GTEReplyat12.AccordingtoGTE,the"exchangeareas,"orLATAs,established  bytheAT&TandGTEConsentDecreesincludedanumberoflocalexchanges,orlocalcallingareas.SeeUnited z Statesv.WesternElec.Co.,569F.Supp.990,993n.9(D.D.C.1983).  T$  XQXXQXXXQC  $$C!XXQԀ  115    ݀GTEPetitionat1012.  T$  XQXXQXXXQC  $$C!XXQԀ  116    ݀GTEPetitionat12,13.GTEassertsthatitderivesonly0.2%ofitsrevenuesfromsuchservices,andthatif  requiredtoprovidesuchservicesonseparatebasis,itwouldbeforcedtoceaseprovidingtheservicesaltogether.Id. z at12.OtherindependentLECsalsoprovidesuchservices.Seee.g.,CincinnatiBellTelephoneCo.,Interstate, D IntraLATAMessageTelecommunicationsService,TariffFCCNo.40,effectiveJuly1,1995;SprintLocalTelephoneCompanies,Interstate,IntraLATAMessageTelecommunicationsService,TariffFCCNo.1,eff.Mar.20,1997.  T$  XQXXQXXXQC  $$C!XXQԀ  117    ݀See47U.S.C.153(47)(defininglocaltelephoneexchangeserviceas"servicewithinatelephoneexchange,  orwithinaconnectedsystemoftelephoneexchangeswithinthesameexchangearea....").  T$  XQXXQXXXQC  $$C!XXQԀ  118    ݀Wenotethat,althoughweclarifythatGTEandothersimilarlysituatedindependentLECsarenotsubjectto  theLECClassificationOrderseparateaffiliaterequirementsintheprovisionofinregion,interstateservices z betweenlocaltelephoneexchangeswithinanindependentLEC'sexchangearea,suchLECswillcontinuetobesubjecttodominantcarrierregulationfortheseservices. Dominantregulationoftheseservicesisconsistentwith ^ theLECClassificationOrder.TheLECClassificationOrderclassifiedindependentLECsintheprovisionofin ( region,interstate,interexchangeservicesasnondominantafterfindingthat,subjecttotheFifthReportandOrder  separationrequirements,theywouldnotpossessmarketpowersufficienttoraisepricesbyrestrictingtheirown l  outputoftheseservices.TheLECClassificationOrderdidnotmakethisfinding,orevenaddressthisissue,for 6  GTEandothersimilarlysituatedindependentLECsintheprovisionofinregion,interstateservicesbetweenlocaltelephoneexchangeswithinanindependentLEC'sexchangearea.GTEPAR2  T$  XQXXQXXXQC  $$C!XXQԀ  119    ݀USTAPetitionat16.  T$  XQXXQXXXQC  $$C!XXQԀ  120    ݀47U.S.C.153(21)(defininginterLATAserviceas"telecommunicationsbetweenapointlocatedinalocal  accessandtransportareaandapointlocatedoutsidesucharea.").  T$  XQXXQXXXQC  $$C!XXQԀ  121    ݀47U.S.C.153(47)(defining"telephoneexchangeservice"as"servicewithinatelephoneexchange,or  withinaconnectedsystemoftelephoneexchangeswithinthesameexchangearea....").J:\POLICY\LECDOM\RECON2\ORDER\WAIVER.DSWAIVER1 d T$  XQXXQXXXQC  $$C!XXQԀ  122    ݀LECClassificationOrder,12FCCRcdat15856,173;seeid.at15860,183n.518. 6 T$  XQXXQXXXQC  $$C!XXQԀ  123    ݀LECClassificationOrderat15860,183n.518.  T$  XQXXQXXXQC  $$C!XXQԀ  124    ݀ATUPetitionat7. + T$  XQXXQXXXQC  $$C!XXQԀ  125    ݀GCIOppositionat5;MCIOppositionat1819.WAIVER2  T$  XQXXQXXXQC  $$C!XXQԀ  126    ݀  Section1.3oftheCommission'srulesprovidesthat:  0  Theprovisionsof[ChapterIFederalCommunicationsCommission]maybesuspended,revoked,amended,orwaivedforgoodcauseshown,inwholeorinpart,atanytimebytheCommission,subjecttotheprovisionsoftheAdministrativeProcedureActandtheprovisionsofthischapter.AnyprovisionoftherulesmaybewaivedbytheCommissiononitsownmotionoronpetitionifgoodcausethereforisshown. (#(# 47C.F.R.1.3.Ashowingofgoodcauserequiresthepetitionertodemonstratethatspecialcircumstanceswarrantdeviationfromtherulesororder,andtoshowhowsuchadeviationwouldservethepublicinterest.SeeNortheast  P CellularTelephoneCo.v.FCC,897F.2d1164,1166(D.C.Cir.1990);WAITRadiov.FCC,418F.2d1153,1157    (D.C.Cir.1969).Thepetitionermustclearlydemonstratethatthegeneralruleisnotinthepublicinterestwhenappliedtoitsparticularcaseandthatgrantingthewaiverwillnotunderminethepublicpolicyservedbytherule. ^   SeeWAITRadio,418F.2dat1157.Whereawaiverisfoundtobeinthepublicinterest,itisgenerallyexpectedthat (x  thewaiverwillnotbesobroadastoevisceratetherule.Rather,therequestmustbetailoredtothespecificcontoursofthespecialcircumstances.Seeid.at1158.WAIVERNOTE B T$  XQXXQXXXQC  $$C!XXQԀ  127    ݀See ANTICOM122  Հsupra. M T$  XQXXQXXXQC  $$C!XXQԀ  128    ݀See,e.g.,LocalCompetitionFirstReportandOrder,11FCCRcdat15534,66(decliningtoadoptaspecial  waiverprocessbywhichstatesmayseekwaiversoftheCommission'srulesimplementingsection251oftheAct);AmendmentofPart73,SubpartG,oftheCommission'sRulesRegardingtheEmergencyBroadcastSystem,FO D Dockets91301,91171,SecondReportandOrder,13FCCRcd6353(1997)(decliningtoadoptaspecialpolicybywhichsmallcablesystemsmayseekwaiversfromtherequirementsoftheEmergencyAlertSystem).J:\POLICY\LECDOM\RECON2\ORDER\SUNSETA.DS F T$  XQXXQXXXQC  $$C!XXQԀ  129    ݀LECClassificationOrder,12FCCRcdat1586566,19396.  T$  XQXXQXXXQC  $$C!XXQԀ  130    ݀CompareALLTELPetitionat12andATUPetitionat45(favoringasunsetprovision)withGCIOpposition  at45andMCIOppositionat1718andTRAOppositionat89(opposingasunsetprovision).J:\POLICY\LECDOM\RECON2\ORDER\BOCISS.DS ] T$  XQXXQXXXQC  $$C!XXQԀ  131    ݀LECClassificationOrder,12FCCRcdat15804,1583435,1583839,85,133,139.  T$  XQXXQXXXQC  $$C!XXQԀ  132    ݀RCNandHyperionPetitionat5. M T$  XQXXQXXXQC  $$C!XXQԀ  133    ݀BellAtlanticOppositionat13;SBCOppositionat25;USTAOppositionat28.  T$  XQXXQXXXQC  $$C!XXQԀ  134    ݀LECClassificationOrder,12FCCRcdat15802,1582526,1583435,82,119,133;see47U.S.C.271,  272.  T$  XQXXQXXXQC  $$C!XXQԀ  135    ݀RCNandHyperionPetitionat25.  T$  XQXXQXXXQC  $$C!XXQԀ  136    ݀RCNandHyperionPetitionat25.  T$  XQXXQXXXQC  $$C!XXQԀ  137    ݀RCNandHyperionPetitionat78. A T$  XQXXQXXXQC  $$C!XXQԀ  138    ݀LECClassificationOrder,12FCCRcdat1583435,133.  T$  XQXXQXXXQC  $$C!XXQԀ  139    ݀BellAtlanticOppositionat34;seeUSTAOppositionat5(contendingthatbecausealltheBOCswillbegin  offeringinregion,interLATAserviceswithamarketshareofzero,theCommissionshouldregulatetheBOCaffiliatesasnondominant).  T$  XQXXQXXXQC  $$C!XXQԀ  140    ݀LECClassificationOrder,12FCCRcdat1580608,8890(statingthat,"[f]orexample,advancenotice  periodsfortarifffilingscanstiflepricecompetitionandmarketinginnovationwhenappliedtoacompetitiveindustry").SeeCompetitiveCarrierFirstReportandOrder,85FCC2dat3444,99129;AT&T D ReclassificationOrder,11FCCRcdat3288,27. w T$  XQXXQXXXQC  $$C!XXQԀ  141    ݀LECClassificationOrder,12FCCRcdat1580409,8592.Wenote,aswedidintheLECClassification  Order,thatweretaintheabilitytoimposesomeorallofthedominantcarrierregulationsononeormoreofthe z BOCinterLATAaffiliatesifthisprovesnecessaryinthefuture.Id.at1583435,133.  T$  XQXXQXXXQC  $$C!XXQԀ  142    ݀RCNandHyperionPetitionat3. ; T$  XQXXQXXXQC  $$C!XXQԀ  143    ݀LECClassificationOrder,12FCCRcdat15804,85.  T$  XQXXQXXXQC  $$C!XXQԀ  144    ݀SBCOppositionat5.J:\POLICY\LECDOM\RECON2\ORDER\MKTDEF.DS ! T$  XQXXQXXXQC  $$C!XXQԀ  145    ݀RCNandHyperionPetitionat1011.  T$  XQXXQXXXQC  $$C!XXQԀ  146    ݀ButseeSBCOppositionat2(arguingthattheCommissionshouldrejectRCNandHyperion'spetition"inits  entirety"). A T$  XQXXQXXXQC  $$C!XXQԀ  147    ݀SeeLECClassificationOrder,12FCCRcdat1576162,5.  T$  XQXXQXXXQC  $$C!XXQԀ  148    ݀LECClassificationOrder,12FCCRcdat1577475,27(citingthe1992MergerGuidelinesatp.20,572);  seeLECClassificationOrder,12FCCRcdat15782,1579295,41,6469.AstheCommissionnotedintheLEC z ClassificationOrder,supplysubstitutabilityidentifiesallproductivecapacitythatcanbeusedtoproducea D particulargood,whetheritiscurrentlybeingusedtoproducethatgoodortoproducesomeother,evenunrelated,good.Forexample,ifafactorythatisproducingdeskscouldbeconvertedquicklyandinexpensivelytotheproductionofwheelbarrows,thentheownerofthatfactoryshouldbeconsideredapotentialproducerofwheelbarrows.Thatdoesnotmean,however,thatdesksandwheelbarrowsareinthesamerelevantproductmarket.Demandsubstitutabilityidentifiesalloftheproductsorservicesthatconsumersviewassubstitutesforeachother,inresponsetochangesinprice.Forexample,if,inresponsetoapriceincreasefororangejuice,consumersinsteadpurchaseapplejuice,thenapplejuicewouldbeconsideredademandsubstitutefororangejuice.J:\POLICY\LECDOM\RECON2\ORDER\LEACO.WVR  T$  XQXXQXXXQC  $$C!XXQԀ  149    ݀LeacoRuralTelephoneCooperative,Inc.PetitionforWaiver(filedAug.15,1997)("LeacoPetition"or  "Petition"). 7 T$  XQXXQXXXQC  $$C!XXQԀ  150    ݀Seesupra PROHIB5  .  T$  XQXXQXXXQC  $$C!XXQԀ  151    ݀LeacoPetitionat35.  T$  XQXXQXXXQC  $$C!XXQԀ  152    ݀LeacoPetitionat34.  T$  XQXXQXXXQC  $$C!XXQԀ  153    ݀LeacoPetitionat45.  T$  XQXXQXXXQC  $$C!XXQԀ  154    ݀LeacoPetitionat6.  T$  XQXXQXXXQC  $$C!XXQԀ  155    ݀LeacoPetitionat6.  T$  XQXXQXXXQC  $$C!XXQԀ  156    ݀See,e.g.,LeacoPetitionatAttachment,ProFormaExpenseAnalysis(listingnonrecurringcostof$3,000for  "LegalandIncorporationCost,"andannuallyrecurringcostof$1,000for"BuildingLease").Thereliefwegrantshouldreduceoreliminatethesecosts. ] T$  XQXXQXXXQC  $$C!XXQԀ  157    ݀Seesupra  DISCA9  ,  DISCB22  .  T$  XQXXQXXXQC  $$C!XXQԀ  158    ݀See47C.F.R.1.3.  T$  XQXXQXXXQC  $$C!XXQԀ  159    ݀TheFifthReportandOrderprohibitiononjointlyownedtransmissionandswitchingfacilitiesisnot  applicabletosuchLECsbecause,bydefinition,theydonotownsuchfacilities.Seesupra  JOINT25  . e T$  XQXXQXXXQC  $$C!XXQԀ  160    ݀Seesupra COMPLY124  Մ COMPLY228  .J:\POLICY\LECDOM\RECON2\ORDER\REGFLEX.DS 7 T$  XQXXQXXXQC  $$C!XXQԀ  161    ݀See5U.S.C.604.TheRFA,5U.S.C.601etseq.,hasbeenamendedbytheContractWithAmerica  AdvancementActof1996,Pub.L.No.104121,110Stat.847(1996)(CWAAA).TitleIIoftheCWAAAistheSmallBusinessRegulatoryEnforcementFairnessActof1996(SBREFA). G T$  XQXXQXXXQC  $$C!XXQԀ  162    ݀LECClassificationOrder,12FCCRcdat1587886,214234. D T$  XQXXQXXXQC  $$C!XXQԀ  163    ݀LECClassificationOrder,12FCCRcdat15879,215216. E T$  XQXXQXXXQC  $$C!XXQԀ  164    ݀LECClassificationOrder,12FCCRcdat15879,215216.  T$  XQXXQXXXQC  $$C!XXQԀ  165    ݀Forpurposesofthisorderweadoptthedefinitionof"incumbentLEC"insection251(h)oftheAct.See47  U.S.C.251(h). * T$  XQXXQXXXQC  $$C!XXQԀ  166    ݀See13C.F.R.121.201(SIC4813). 6 T$  XQXXQXXXQC  $$C!XXQԀ  167    ݀SeeMidTexElectricCooperative,Inc.v.FERC,773F.2d327,340343(D.C.Cir.1985)(holdingthat"an  agencymayproperlycertifythatnoregulatoryflexibilityanalysisisnecessarywhenitdeterminesthattherulewillnothaveasignificanteconomicimpactonasubstantialnumberofsmallentitiesthataresubjecttotherequirementsoftherule,"andrejectingSBA'sargumentthattheRFAisintendedtoapplytoallrulesthataffectsmallentities, ^  whetherthesmallentitiesaredirectlyregulatedornot).  T$  XQXXQXXXQC  $$C!XXQԀ  168    ݀See5U.S.C.601(3)(incorporatingbyreferencethedefinitionof"smallbusinessconcern"in15U.S.C.  632).  T$  XQXXQXXXQC  $$C!XXQԀ  169    ݀15U.S.C.632.  T$  XQXXQXXXQC  $$C!XXQԀ  170    ݀13C.F.R.121.201.  T$  XQXXQXXXQC  $$C!XXQԀ  171    ݀FederalCommunicationsCommission,CCB,IndustryAnalysisDivision,CarrierLocator:InterstateService  Providers,Fig.1(TypesofInterstateServiceProviders)(Nov.1997)(InterstateServiceProvidersReport).  T$  XQXXQXXXQC  $$C!XXQԀ  172    ݀47U.S.C.251(h).  T$  XQXXQXXXQC  $$C!XXQԀ  173    ݀See5U.S.C.607.  T$  XQXXQXXXQC  $$C!XXQԀ  174    ݀TRSWorksheet.  T$  XQXXQXXXQC  $$C!XXQԀ  175    ݀WhiletheCommissionhasnotprescribedadefinitionfortheterm"CAP,"thistermgenerallyisnotusedto  refertocompaniesthatprovidelocalexchangeservices.J:\POLICY\LECDOM\RECON2\ORDER\APPENDIX.DSA- B- 3456 ;=CIOU]ekOrderI.A.1.a.(1)(a)i)a)+,-./012 CyParagraph1. a. i. (1) (a) (i) 1) a)I.A.1.a.(1)(a)i)a)#$%&'()* 7w}140Right-Aligned Paragraph NumbersI.A.1.a.(1)(a)i)a) !" =W]ciowAgendaAgenda ItemsI.A.1.a.(1)(a)i)a)  CRight ParRight-Aligned Paragraph NumbersI.A.1.a.(1)(a)i)a)3|j %\  `&Times New RomanX\  P6G;P%\  `&Times New RomanXXj\  P6G;XP) `*Times New RomanTTXXv P7XP)\4 `*Times New RomanTTXu\4 PXP%2A`ArialTTomanTT<2PP\  `*Times New RomanTT[\  PMP*o> `s New RomanTCo> PQP22AArialBoldTTT 2p}wC  `*Times New RomanTTXP P(M$  XaXXaXXXaC  $3C dHP LaserJet 4,,,,,,03#37=CIQYag1.a.i.(1)(a)(i)1)a)^8ס8Indented[1]Left-indented text  2I.3  0..^K8Indented[2]Left-indented text..  2A.3  0` ..` ^^-J8Indented[3]Left-indented text..` ..`   21.3  0 .. ^qQ8Indented[4]Left-indented text..` ..`  ..   2a.3  0..^8Indented[5]Left-indented text..` ..`  .. ..  2(1)3  0h..h^_8Indented[6]Left-indented text..` ..`  .. ..h..h  2(a)3  0..^8Indented[7]Left-indented text..` ..`  .. ..h..h..  2i)3  0..^J8Indented[8]Left-indented text..` ..`  .. ..h..h....  2a)3  0p..pl^ J,29[1]Right-Aligned Paragraph Numbers..  23  Ԁ..0..lq 4,29[2]Right-Aligned Paragraph Numbers..` ..`   23  Ԁ..0` ..` l @,29[3]Right-Aligned Paragraph Numbers..` ..`  ..   23  Ԁ` ..` 0 .. l Q,29[4]Right-Aligned Paragraph Numbers..` ..`  .. ..  23  Ԁ .. 0..l ,29[5]Right-Aligned Paragraph Numbers..` ..`  .. ..h..h  23  Ԁ..0h..hl ,,29[6]Right-Aligned Paragraph Numbers..` ..`  .. ..h..h..  23  Ԁh..h0..l W,29[7]Right-Aligned Paragraph Numbers..` ..`  .. ..h..h....  23  Ԁ..0..l N,29[8]Right-Aligned Paragraph Numbers..` ..`  .. ..h..h....p..p  23  Ԁ..0p..p<:Interrogator23  HPK 4heading 9heading 9  /% @ HPX /        5+ ` hp x (#5  8 ,macromacro  ;1  @ `PX ;O%<6X9`("Courier NewTTO        XXXC&<6X9`(CourierC5+ ` hp x (#5  0PK (APOAPO  /% @ HPX /        5+ ` hp x (#5  P8page numberpage number        \PK :envelope addenvelope address  /% @ HPX /        5+ ` hp x (#5  Z :envelope retenvelope return  /% @ HPX /O%;6X9`("Courier NewTTO        XXXC&<6X9`(CourierC5+ ` hp x (#5  8:/ ,whitewhite       ??      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(1) (a) (i) 1) a)0..0..0..0..0..0..0..  23  0..V  (146Default Paragraph FontXXXWM `*Times New RomanTTW                                                                XXXWM `*Times New RomanTTWL  (147_Equation CaptionXXXWM `*Times New RomanTTW                                                                XXXWM `*Times New RomanTTWL##(148endnote referenceXXXWM `*Times New RomanTTW                                                                XXXWM `*Times New RomanTTWN#(149footnote referenceXXXWM `*Times New RomanTTW                                    WM `*Times New RomanTTWXXXL6Document 8Document 8        L6Document 4Document 4          L6Document 6Document 6        L6Document 5Document 5        L6Document 2Document 2        L6Document 7Document 7        P\K 8Right Par 1Right Par 1  ;1X` hp x (#;        5+ ` hp x (#5  P\K 8Right Par 2Right Par 2  ;1X` hp x (#;        5+ ` hp x (#5   7w}150Right-Aligned Paragraph NumbersI.A.1.a.(1)(a)i)a)7 7151Starts with A. at margin, 1 at first indentI.A.1.a.(1)(a)i)a) AgmsyIndentedLeft-indented textI.A.1.a.(1)(a)i)a);6X9`("Courier NewTT<6X9`(Courier<:Body Text In   XXXS\  `&Times New RomanS   S\  `&Times New RomanS("$ !  'dxd Level 1 Level 2 Level 3 Level 4 Level 5("$ !  ($("$ !  +.,-*C<< c N ))  _   2 ))  _/3QA=x h  p @XEd (#(# G ."  _s  ! V (#X!XQXXQXXXQ           5   .      c&c [DDU D   UA{&U o '  :XQX:XQXXXQC  $$C  @  FederalCommunicationsCommission&&J(#FCC99103   ?H' xdEx?  %\  `&Times New Roman ))  /<QA=x h  p @XEd (#(# 7 ."  s  ! V (#X!=XQX=XQXXXQ           5   .      %\  `&Times New Roman M!  XQXXQXXXQC  $3C  D 9   8QXXdd8_@44+ Beforethe 4 @ FederalCommunicationsCommission@%Washington,D.C.20554   @0)IntheMatterof@0) @   @0)RegulatoryTreatmentofLECProvision@0)   p CCDocketNo.96149   ofInterexchangeServicesOriginatinginthe@0)   LEC'sLocalExchangeArea@0)   @0)and@0) t @0)PolicyandRulesConcerningthe@0)   p CCDocketNo.9661 T Interstate,InterexchangeMarketplace;@0) D @0)LeacoRuralTelephoneCooperative,Inc.@0)   p CCDocketNo.96149 $ PetitionforWaiver@0)   p CCDocketNo.9661  @0)  SECONDORDERONRECONSIDERATIONAND P MEMORANDUMOPINIONANDORDER  @     Adopted: May18,1999 Released: June30,1999     Ӏo[X` hp x (#%'0*,.8135@8:<H?AXoBytheCommission:CommissionersFurchtgottRothandPowellconcurringinpart,dissentinginpartandissuingseparatestatements.@( TABLEOFCONTENTS   d"    `     h      p      x Paragraph "D $ 8   I.INTRODUCTION#`"`"Q(#.l l   #1 $$"& 8   II.BACKGROUND#`"`"Q(#.L L   #3 p&$( 8   III.DISCUSSION#`"`"Q(#.   #9 P(%* 8  0`     A. ` RegulatoryTreatmentofIndependentLECs#`"`"Q(#.>` ` #9 @)&+ 8  0`     B.0` ` ` ClarificationoftheTerm"Interexchange"#."."Q(#.pp?` ` #29 0*', 8  0`     C. ` StreamlinedWaiverProcess#."."Q(#.660` ` #32  +(- 8  0`     D. ` SunsetofSeparationRequirementsforIndependentLECs#."."Q(#.~~L` ` #34 ,). 8  0`     E.0` ` ` ClassificationofBOCInterLATAAffiliates#."."Q(#.44@` ` #35 -*/ 8  0`     F. ` MarketDefinition#."."Q(#.'` ` #39 -+0 Ї8   IV.LEACORURALTELEPHONECOOPERATIVE,INC.PETITIONFORWAIVER#."."Q(#. K  #40  8   V.SUPPLEMENTALFINALREGULATORYFLEXIBILITYANALYSIS#."."Q(#.A  #43  8   VI.ORDERINGCLAUSES#."."Q(#.   #52 p 8   APPENDIXAFinalRules    APPENDIXBListofParties   I.INTRODUCTION B `      2  1  .3   ` FollowingthepassageoftheTelecommunicationsActof1996,   1      ׀theCommission @  initiatedarulemakingtoconsider,amongotherthings,whetheritshouldaltertheregulatoryclassificationoftheBellOperatingCompanies(BOCs)andindependentlocalexchangecarriers(LECs)fortheprovisionofinterstate,longdistanceservices.   2      ׀IntheLEC  ClassificationOrder,V   3      ׀whichwasreleasedonApril18,1997,theCommissionaddressedthese,  aswellasotherissues.IntheLECClassificationOrderonReconsideration,whichwasreleased  onJune27,1997,theCommission,onitsownmotion,mademinormodificationstocorrectandclarifyportionsoftheLECClassificationOrder.   4      ׀FollowingthereleaseoftheLEC  ClassificationOrder,petitionerssoughtreconsiderationofanumberoftheCommission's  conclusionsinthatorder.IntheLECClassificationPartialStayOrder,whichwasreleasedon p March24,1998,theCommonCarrierBureaustayedthedeadlineforcompliancewithcertainrulesintheLECClassificationOrderuntil60daysafterreleaseofthisorderonreconsideration.Z   5       P    2  2  .3   ` Inthissecondorderonreconsideration,wemodifyourconclusionintheLEC 0  ClassificationOrderandallowindependentLECsthatprovideinregion,longdistanceservices  p  solelyonaresalebasistodosothroughaseparatecorporatedivisionratherthanaseparatelegalentity.    6      ׀TherecordindicatesthatthisgroupincludesmostofthesmallandmidsizedLECsthat P  currentlyprovideinregion,longdistanceservices.!H   7      ׀Wealsoclarifythemeaningoftheterm @  "interexchange"toavoidanypossibilityofunnecessaryapplicationoftheCommission'sseparateaffiliaterequirements.Inaddition,weaffirmourdecisionrelaxingregulationoftheBOCs'section272interLATAaffiliates,i.e.,byclassifyingtheseaffiliatesasnondominantforinregion,longdistanceservices.Wealsoaddressseveralothermiscellaneousissuesraisedinthereconsiderationpetitions.ConsistentwiththeLECClassificationPartialStayOrderandthe  reliefwegrantinthisorderonreconsideration,anyindependentLECthatwasprovidinglongdistanceservicesonanintegratedbasisthroughtheuseorcontrolofitsownfacilitiesmustformaseparateaffiliatetoprovidesuchserviceswithin60daysofthereleaseofthisorderonreconsideration."8    8      ׀Finally,weactontheLeacoRuralTelephoneCooperative,Inc.(Leaco) ` PetitionforWaiveroftheLECClassificationOrderrequirements. P    II.BACKGROUND  0      2  3  .3   ` UnderTitleIIoftheCommunicationsAct,theCommissiontraditionallyhas ` appliedavarietyofregulationstocarriersinordertoprotectcustomersagainstunjust, unreasonable,anddiscriminatoryrates.IntheCompetitiveCarrierProceeding,whichwas @ conductedbetween1979and1985,theCommissionunderitsbroadrulemakingauthority#   9         examinedhowtheseregulationsshouldberevisedtoaccommodateandpromoteincreasingcompetitionintelecommunicationsmarkets.$Z   10      ׀TheCommissionfoundthattheseregulations,  whichhadappliedtoallcarriersunderTitleII,wereunnecessaryforcarriersthatweresubjecttocompetitionandthereforelackedsufficientmarketpowertoengageinanticompetitiveactivity.%d    11      ׀ p TheCommission,moreover,determinedthatsuchregulationsevenwereharmfultocompetitionandconsumersbecausetheyimpairedmarketefficiencyandburdenedcarrierswithadministrativecosts.&   12      ׀TheCommissionthereforesoughttodistinguishcarriersfor& b whichthe @  costsoftraditionaltarifffilingandfacilitiesauthorizationregulationsclearlyexceededthebenefits.'   13      ׀'b4$  p    2  4  .3   ` Accordingly,theCommissionestablishedaregulatoryframeworktodistinguish P  betweencarriersthattheCommissiondeterminedhavemarketpower,whichareclassifiedasdominant,andthosethatdonothavemarketpower,whichareclassifiedasnondominant.(   14      ׀It 0  alsodefined"marketpower"alternativelyas"theabilitytoraisepricesbyrestrictingoutput"andas"theabilitytoraiseandmaintainpriceabovethecompetitivelevelwithoutdrivingawaysomanycustomersastomaketheincreaseunprofitable.")@   15      ׀TheCommissionrecognizedthatin  ordertoassesswhetheracarrierpossessesmarketpower,therelevantproductandgeographicmarketsfirstmustbedefined.*$   16      ׀TheCommissionrelaxeditstarifffilingandfacilities  authorizationrequirementsfornondominantdomesticcarriersandfocuseditsregulatoryeffortsonconstrainingtheabilityofdominantcarrierstoexercisemarketpower.+   17      ׀    2  5  .3   , 0 `  - IntheCompetitiveCarrierFourthReportandOrder,theCommission` ` (#` (# determinedthatinterexchangecarriersaffiliatedwithindependentLECsshouldberegulatedasnondominantinterexchangecarriers..   18      ׀IntheCompetitiveCarrierFifthReportandOrder,the @  Commissionclarifiedthatan"affiliate"ofanindependentLECis"acarrierthatisowned(inwholeorinpart)orcontrolledby,orundercommonownership(inwholeorinpart)orcontrolwith,anexchangetelephonecompany."/n    19      ׀TheCommissionfurtherclarifiedthat,inorderto `  qualifyfornondominanttreatment,theaffiliateprovidinginterstate,interexchangeservicesmust:(1)maintainseparatebooksofaccount;(2)notjointlyowntransmissionorswitchingfacilitieswithitsaffiliatedexchangetelephonecompany;and(3)acquireanyservicesfromitsaffiliatedexchangetelephonecompanyattariffedrates,terms,andconditions.0    20      ׀The   Commissionnotedthat"[a]naffiliatequalifyingfornondominanttreatmentisnotnecessarilystructurallyseparatedfromanexchangetelephonecompanyinthesenseorderedintheSecond  ComputerInquiry...."1    21      ׀TheCommissionaddedthatanyinterstate,interexchangeservices  offereddirectlybyanindependentLEC(ratherthanthroughaseparateaffiliate)orthroughanaffiliatethatdidnotsatisfythespecifiedconditionswouldbesubjecttodominantcarrierregulation.2L   22       p   2  6  .3  Ԁ0 ` IntheCompetitiveCarrierFifthReportandOrder,theCommissionalsoP` (#` (# addressedthepossibleentryoftheBOCsintointerstate,interLATAservicesinthefuture:TheBOCscurrentlyarebarredbythe[MFJ]fromprovidinginterLATAservices....Ifthisbarisliftedinthefuture,wewouldregulatetheBOCs'interstate,interLATAservicesasdominantuntilwedeterminedwhatdegreeofseparation,ifany,wouldbenecessaryfortheBOCsortheiraffiliatestoqualifyfornondominantregulation.3   23      ׀ P    2  7  .3  Ԁ ` The1996ActbecamelawonFebruary8,1996.Theintentofthe1996Actis"to 0  provideforaprocompetitive,deregulatorynationalpolicyframeworkdesignedtoacceleraterapidlyprivatesectordeploymentofadvancedtelecommunicationsandinformationtechnologiesandservicestoallAmericansbyopeningalltelecommunicationsmarketstocompetition."4$   24      ׀ P  Underthe1996Act,aBOCispermittedtoprovideinterLATAservicesoriginatinginaninregionstateonlyifitdemonstratestotheCommissionthatithassatisfiedthemarketopeningrequirementsofsection271andthatitwillprovidetheseservicesthroughanaffiliatethatcomplieswiththestructuralseparationandnondiscriminationrequirementsinsection272.  2  8  .3  Ԁ `  5 IntheLECClassificationOrder,theCommissionmodifieditsregulatory  treatmentoftheprovisionofdomestic,interstate,interexchange,andinternationalservicesbytheBOCsandindependentLECs.Asapreliminarymatter,theCommissionreviseditsproductandgeographicmarketdefinitionsinaccordancewiththe1992MergerGuidelines.6J   25      ׀The p CommissionalsodeterminedthatdominantcarrierregulationshouldbeimposedonBOCinterLATAaffiliatesonlyiftheyhavethetypeofmarketpowerthatgivesthemtheabilityprofitablytoraiseandsustainpricesofinregion,interstate,domestic,interLATAservicesabovecompetitivelevelsbyrestrictingoutput.Thatisbecausedominantcarrierregulationdoesnotsufficientlyhelptopreventothertypesofharmfulanticompetitiveactivitysuchascostmisallocation,accessdiscrimination,andattemptstoengageinapricesqueeze,thataBOCcanengageinbyvirtueofitscontrolofbottleneckfacilities.7   26      ׀TheCommissionnextdetermined P that,inlightoftheseparationandotherrequirementsofsections271and272oftheAct,andotherexistingCommissionrules,theBOCinterLATAaffiliateslackedsuchabilityandthereforeshouldbeclassifiedasnondominant.Similarly,theCommissionfoundthatindependentLECsshouldbeclassifiedasnondominantbecausetheydonothavetheabilityprofitablytoraiseandsustainpricesofinregion,interstate,domestic,interexchangeservicesbyrestrictingoutput,but "  thatsuchLECsshouldberequiredtoprovidetheseservicessubjecttotheCompetitiveCarrier  FifthReportandOrderseparationrequirementsinordertopreventanddetectcostmisallocation,  accessdiscrimination,andpricesqueeze.8   27      ׀TheCommissionrequiredanyindependentLECthat  wasprovidinginterexchangeserviceonanintegratedbasissubjecttodominantcarrierregulationtocomplywiththeFifthReportandOrderrequirementsbyApril18,1998,oneyearfromthe p dateofreleaseoftheLECClassificationOrder.9   28      ׀OnMarch24,1998,theCommonCarrier `  BureaustayedtheApril18,1998deadlineinordertoresolve,priortothedeadlineforcompliance,theissuesaddressedinthisorderonreconsideration.:    29       @  D;D @(  III.DISCUSSION EԈ  A.  RegulatoryTreatmentofIndependentLECs E    1. ` Introduction    2  9  .3   <  ` Onreconsideration,weconcludethatindependentLECsthatprovideinregion,  longdistanceservicessolelyonaresalebasisshouldbepermittedtoprovidesuchservicesthroughaseparatecorporatedivision,ratherthanaseparatecorporateaffiliate,subjecttotheremainingFifthReportandOrderrequirements,asmodifiedbytheLECClassificationOrder. h Asdiscussedbelow,wenowdeterminethatsuchindependentLECshavelessincentiveandabilitytoengageinanticompetitiveconductandwouldfaceadditional,unintendedburdensifrequiredtoprovidelongdistanceservicethroughaseparatecorporateaffiliate.AffirmingtheconclusionintheLECClassificationOrder,wedeclinetoexemptruralandmidsized P( independentLECsfromtheseparateaffiliaterequirementbasedpurelyontheirsizeorstatusasruralcarriers.Additionally,wedeclinetoexemptallindependentLECsfromtheFifthReport 0  andOrderseparationrequirementsasrequestedbyanumberofindependentLECs.Indoingso,  ! asdiscussedbelow,weaffirmtheconclusionintheLECClassificationOrderthatindependent " LECsthatprovideinregion,longdistanceservicesthroughtheirownlongdistancefacilitieshavegreaterincentivetoengageinanticompetitiveconductand,ingeneral,donotfaceadditionalburdensincomplyingwiththeseparateaffiliaterequirement.  2. ` Background  p   2   10  .3   `  = IntheLECClassificationOrder,theCommissionrequiredallincumbent P  independentLECsthatprovideinregion,interstate,longdistanceservicesandinregion,internationalservices,todosothroughaseparatelongdistanceaffiliatethatsatisfiestheCompetitiveCarrierFifthReportandOrderrequirements.>   30      ׀TheCommissiondeterminedthat  p  anindependentLEC'scontroloflocalbottleneckfacilitiesgivesittheabilityandincentive,inprovidinginregion,longdistanceservices,toengageincostmisallocation,unlawfuldiscrimination,orapricesqueeze.?Z   31      ׀Costmisallocationisaconcernbecauseit"mayallowthe @  independentLECtorecovercostsincurredbyitsaffiliateinprovidinginregion,interexchangeservicesfromsubscriberstotheindependentLEC'slocalexchangeandexchangeaccessservices."@   32      ׀Suchactioncandistortpricesignalsinthosemarketsandmaygivetheaffiliatean  unfairadvantageoveritscompetitors.A~   33      ׀AnindependentLECalsopotentiallycoulddiscriminate  againstitsinterexchangeaffiliate'scompetitorsbyprovidingthemwithpoorerqualityinterconnectionorunnecessarilydelayacompetitors'requesttoconnecttotheindependentLEC'snetwork,thusimpairingcompetition.B   34      ׀AnindependentLEC'sabilitytoexertaprice  squeezeisaconcernbecauseitmayunfairlypermitanindependentLECtogainadditionalmarketshare.C   35       `   2   11  .3   ` TheCommissionfurtherdeterminedthattheCompetitiveCarrierFifthReport @ andOrderseparationrequirementsarenecessarytohelppreventanddetectanticompetitive 0 conduct.TheCommissionfoundthattheseparatebooksofaccountrequirementisnecessarytotraceanddocumentimproperallocationsofcostsorassetsbetweenaLECanditslongdistanceaffiliate,aswellasdiscriminatoryconduct.D   36      ׀TheCommissionalsofoundthattheprohibitionon  jointlyownedfacilitieswillreducetheriskofimpropercostallocationsofcommonfacilitiesbetweentheindependentLECanditslongdistanceaffiliate.EZ   37      ׀Theprohibitiononjointlyowned p facilitiesalsohelpstodeteranydiscriminationinaccesstotheLEC'stransmissionandswitchingfacilitiesbyrequiringtheaffiliatestofollowthesameproceduresascompetinginterexchangecarrierstoobtainaccesstothosefacilities.F   38      ׀TheCommissionalsofoundthattherequirement @  thatservicesbetakenattariffedrates,oronthesamebasisasrequestingcarriersthathavenegotiatedinterconnectionagreementspursuanttosection251,helpstopreventaLECfromdiscriminatinginfavorofitslongdistanceaffiliate,andreducestheriskofapricesqueezetotheextentthatanaffiliate'slongdistancepricesarerequiredtoexceedtheircostsfortariffedservices.G~   39      ׀ @    2   12  .3   ` Decliningtoexempt"rural"or"midsized"independentLECsfromtheseparation   requirements,theCommissionconcludedthatthesizeorruralstatusofanindependentLECdoesnotaffectitsabilityandincentivetoengageinanticompetitivebehavior,andthatruralormidsizedLECswouldnotbeadverselyaffectedbycompliancewiththeFifthReportandOrder  separationrequirements.H   40      ׀AlthoughtheCommissionrequiredthelongdistanceaffiliatetobea  "separatelegalentity,"itdeclinedtorequirethemorestringentlevelof"structuralseparation"imposedbysection272fortheBOCs'provisionofinregion,interLATAservices.I(   41      ׀The p CommissionfoundthatthelevelofseparationimposedbytheFifthReportandOrder ` requirementswould"addresscostshiftinganddiscrimination,but[did]notappeartobeoverlyburdensome."J   42          3. ` Discussion     2   13  .3   `  K ATU,GTEandUSTArequestthattheCommissionreconsideritsdecisionto `  imposetheFifthReportandOrderseparationrequirements,includingtheseparateaffiliate P  requirement,onallindependentLECs.L$   43      ׀Alternatively,intheirpetitionsforreconsideration, @  ALLTEL,ITTA,andNTCAasktheCommissiontoexemptruralandmidsizedindependentLECsfromtheFifthReportandOrderrequirements,includingtheseparateaffiliate  p  requirement.M   44      ׀Inaddition,severalpetitionersarguethatindependentLECsthatprovidein `  region,interstate,longdistanceservicessolelyonaresalebasisshouldbegrantedrelieffromtheFifthReportandOrderrequirementsbecausetheserequirementsimposesubstantialunnecessary @  costsonsuchindependentLECsandresultinfewerregulatorybenefitsthanforindependentLECsthatprovidefacilitiesbasedlongdistanceservices.N   45      ׀Severalpartiesoppose   reconsiderationoftheseissues.O8    46      ׀Specifically,AT&T,GCI,andMCIargueinoppositionthatthe  CommissionshouldaffirmitsfindingintheLECClassificationOrderthatallindependentLECs  havetheabilityandincentivetoengageinanticompetitiveactivitybyvirtueoftheirbottleneckcontroloverthelocalexchangeandexchangeaccessmarkets.P    47           ` a.0 ApplicationoftheFifthReportandOrderRequirementstoAll p IndependentLECs ` (# (#   2   14  .3   ` PetitionersseekingrelieffromtheFifthReportandOrderrequirementsforall @ independentLECs,oralternativelyforruralandmidsizedindependentLECs,raiseanumberofargumentsthattheCommissionpreviouslyrejectedintheLECClassificationOrder.Various  p  petitionersarguethatindependentLECslacktheabilityandincentivetoengageincost ` misallocation,unlawfuldiscrimination,orapricesqueezeagainstrivalinterexchangecarriers.Q   48      ׀   Petitionersargue,forinstance,thattheeliminationofbarrierstoentryinthe1996Act,thepresenceofmultiple,large,longdistancecompetitors,orthelackofallegationsofanticompetitivebehaviorbyindependentLECsintherecordofthisproceeding,demonstratethatindependentLECslacktheabilityandincentivetoengageinanticompetitiveconductagainstrivalinterexchangecarriers.R$   49      ׀TheCommissionwasnotpersuadedbysuchargumentsatthetime `  ofthedecisionintheLECClassificationOrder.S   50      ׀Asdescribedabove,inthatorderthe P  CommissionfoundthatindependentLECscanengageinsuchactivityandcausesubstantialharmtoconsumersandcompetition,byvirtueoftheircontrolofbottleneckfacilities.TH   51      ׀ 0  Therefore,werejectpetitioners'argumentsforthesamereasonsstatedinthatorder.U   52      ׀Wefind,  p  instead,astheCommissionstatedintheLECClassificationOrder,thatonlytheemergenceof `  competitioninthelocalexchangeandexchangeaccessmarketswilleliminateindependentLECs'abilityandincentivetoengageinanticompetitiveactivity.Vl    53       @    2  15  .3   ` SomepetitionersarguethatallindependentLECsshouldbefreefromtheFifth   ReportandOrderrequirementsbecausetheCommunicationsActdoesnotgivetheCommission  authoritytoimposeseparationrequirementsfortheprovisionofservicesotherthanthoseprovidedbytheBOCslistedinsection272(a)oftheAct.W\    54      ׀USTAassertsthatthisviewpointis  confirmedbyaletterfromseveralMembersofCongresstotheCommission,assertingthattheseparateaffiliaterequirementforindependentLECscontravenesCongressionalintent.X   55      ׀We  acknowledgethattheexistenceofsection272isnotwhollyirrelevanttoourassessmentofwhatsafeguardsmustbeimposedonincumbentindependentLECstodiscourageanticompetitivebehavior.Nevertheless,weconclude,consistentwiththeCommission'sfindingsintheLEC P ClassificationOrder,thattheimpositionbyCongressofseparateaffiliaterequirementsonthe @ BOCs'provisionofinregion,longdistanceservicesdoesnotforeclosetheCommission'sconsideration,underitsbroadrulemakingauthority,Y   56      ׀ofwhether,andwhich,separation  requirementsmaybeappropriateforindependentLECs.Z   57      ׀Moreover,section601(c)(1)ofthe  1996ActprovidesthattheCommissionisnottopresumethatCongressintendedtosupersedeanyofitsregulationsunlessexpresslysoprovided,[J   58      ׀andsection272(f)(3)statesthatthe p CommissionmaintainsauthoritytoimposesafeguardsunderothersectionsoftheAct.\   59      ׀Wealso `  agreewithMCIthattheletterfromcertainMembersofCongresscitedbypetitionersdoesnotconstitutepersuasivelegislativehistoryinsupportofitsposition,giventhattheletterwasgeneratedafterpassageoftheAct.]n    60      ׀Consequently,weconcludehere,consistentwiththe 0  Commission'spastdecisions,thatwehavetheauthoritytoimposeseparateaffiliaterequirementsforservicesandcarriersotherthanthoselistedinsection272.^    61       `    2  16  .3   ` Finally,werejectUSTA'sargumentthattheseparatelegalentityrequirementin @  theLECClassificationOrderisanunwarranteddeparturefrompreviousCommissionpolicyand 0  wasnotproposedintheNonAccountingSafeguardsNPRMthatprecipitatedtheLEC   ClassificationOrder._   62      ׀Infact,theseparatelegalentityrequirementisnotan"unwarranted  departure"frompreviousCommissionpolicy,butmerelyaclarification,madeintheInterim   BOCOutofRegionOrder,thattheFifthReportandOrderprohibitiononjointownership`   63      ׀only  madesenseintandemwithaseparatelegalentityrequirement.a   64      ׀Totheextentthattheseparate   legalentityrequirementarguablyconstitutesanewrequirement,theNonAccountingSafeguards  NPRMprovidedadequatenoticeinseekingcommentonwhethertheFifthReportandOrder  requirementsweresufficient.bZ   65      ׀    2  17  .3   ` WealsodeclinetoexemptruralandmidsizedindependentLECsfromtheFifth `  ReportandOrderrequirements.WerejecttheargumentsofALLTEL,ITTA,andNTCAthat P  ruralandmidsizedindependentLECshavelessincentiveandabilitythanlargerLECstoengageincostmisallocation,unlawfuldiscrimination,orapricesqueezeagainstrivalinterexchangecarriers,c   66      ׀forthesamereasonsgivenintheLECClassificationOrder.d    67      ׀Wefindthatthese  p  petitionersraisenonewargumentsonreconsiderationthattheCommissiondidnotalreadyconsiderandrejectintheLECClassificationOrderproceeding.Inaddition,wearenot P  persuadedbyALLTEL'sunsupportedassertionthatthepotentialforcompetitioninthelocalexchangemarkethasreducedtheactualabilityofsmallLECstoleveragetheirmonopolypowerinananticompetitivemanner.e*   68      ׀AstheCommissionconcludedintheLECClassificationOrder,   webelievethatanindependentLEC'scontroloflongdistancefacilities,notitssizeorstatusasaruralcarrier,providesagreaterincentivetoengageincostmisallocationandanticompetitiveconductsuchasaccessdiscrimination.f   69      ׀Therefore,wedeclinetograntrelieftoruralandmid  sizedindependentLECsbasedpurelyontheirsizeorstatusasaruralcarrier.  2  18  .3   ` WerecognizethatevidenceinthecurrentrecordindicatesthattheFifthReport p andOrderrequirementsmayhaveadisparateimpactonruralandmidsizedindependent ` LECs.gN   70      ׀Forexample,anumberofpetitionerspresentevidencesuggestingthatthecostsof P compliancewiththeseparatelegalentityrequirementmaybemoreburdensomeforasmallerindependentLECduetolegalandadministrativeexpensesassociatedwithcreatingandmaintainingaseparatelegalentitytoprovidelongdistanceservices.h   71      ׀Althoughwedeclineto  grantrelieftoruralandmidsizedindependentLECsbasedpurelyontheirsizeorstatusasruralcarriers,webelievethatthelimitedexemptionwegrantinthisorderfromtheseparatelegalentityrequirement,asdiscussedbelow,shouldsufficientlyaddressthemostsignificantconcernsexpressedintherecordbysuchLECs.i$   72       P     ` b.0 RelieffromtheSeparateLegalEntityRequirementforIndependent 0  LECsProvidingInRegion,LongDistanceServicesSolelyonaResaleBasis `  (# (#   2  19  .3   ` Forpurposesofthisorder,wedefine"independentLECresellers"asindependent @  LECsthatprovideinregion,longdistanceservicesusingnointerexchangeswitchingortransmissionfacilitiesorcapabilityoftheLEC'sown.OurdefinitionofindependentLECresellersexcludesfromreliefindependentLECsthatusetheirownswitchingortransmissionfacilitiesorcapability,whetherownedbytheLECorleasedfromanIXCorotherentity,toprovideinregion,interstate,interexchangeservices.ThatisbecausewebelievesuchLECswouldbeabletoengageinanticompetitivebehavioragainstcompetingIXCsbyprovidingsuperiorinterexchangeswitchingortransmissionservicestotheirowninterexchangeoperations.j   73      ׀OurdefinitionincludesbothindependentLECsthatpurchaseforresalefroman p interexchangecarrierendtoendinterexchangeservices,includingoriginatingandterminatingaccessservices,andindependentLECsthatpurchaseforresalefromaninterexchangecarrieronlyinterexchangetransportservicesbecausetheindependentLEC,ineithercase,wouldnotuseitsownswitchingortransmissionfacilitiesorcapabilitytoprovideinterexchangeservices.k   74      ׀Our 0 definitionofindependentLECresellersexcludescarriersthatuseeitherswitchingortransmissionfacilitiesorcapabilityandthereforeismorenarrowinscopethantheCommission'sdefinitionof"resellersofbasicservice"intheCompetitiveCarrierSecondReportandOrder.In P thatorder,theCommissiondefined"resellersofbasicservice"as"thosecarrierswhodonotownanytransmissionfacilitiesbutratherobtainbasiccommunicationservicesfromunderlying 0 carriersforresalepurposes."l   75      ׀WedeclinetoadopttheCompetitiveCarrierSecondReportand   Orderdefinitionofresellersforpurposesofthisorder,becausewebelievethatitwouldresultin ! grantingrelieftocarriersthat,becausetheyusetheirownswitchingfacilitiesorcapabilitytoprovideinterexchangeservices,haveasubstantialabilityandincentivetoengageinanticompetitivebehavioragainstotherIXCs.  2  20  .3   ` Incontrasttothelackofnewevidencesubmittedbypartiesseekingrelieffrom p theFifthReportandOrderrequirementsforallindependentLECsorallruralandmidsized `  independentLECs,variouspetitionerspresentnewevidencethatindicatesthatcompliancewiththeseparatelegalentityrequirementwouldimposeadditionalburdensonindependentLECsthatprovideinregion,longdistanceservicessolelyonaresalebasis,i.e.,"independentLECresellers."Notably,theissueoftheapplicationofthisrequirement,particularlytoresellers,wasnotspecificallyraisedbycommentersintherecordtheCommissionconsideredbeforeissuingtheLECClassificationOrder.Basedonthatrecord,theCommissionfoundthatnearlyall P  independentLECsthatprovidedlongdistanceservicesdidsothroughaCompetitiveCarrier @  FifthReportandOrderseparateaffiliateandthatonlythreeindependentLECsprovidedlong 0  distanceservicesonanintegratedbasissubjecttodominantcarrierregulation.m   76      ׀Asaresult,the   CommissionconcludedthatitsdecisionintheLECClassificationOrderwouldrequirefew  independentLECstochangethemannerinwhichtheywereprovidinginregion,longdistanceservices.nZ   77      ׀    2  21  .3   ` IntheLECClassificationOrder,theCommissionsoughttobalancecarefullyits  objectiveofaddressingthepotentialforanticompetitiveconductbyindependentLECsagainstthepossibleburdensthoseregulationsmightimposeonthesecarriers.o   78      ׀TheCommissionalso ` recognizedthatcomplyingwiththeseparationrequirementsgenerallyismoreburdensomefor P carriersthatarealreadyprovidinglongdistanceservicesonanintegratedbasisthanforcarriersthathavenotyetbegunprovidingsuchservices.pH   79      ׀Onreconsideration,USTAandNTCApresent 0 newevidenceindicatingthatmanyoftheirmembershavebeenprovidinglongdistanceservicesthroughaseparatedivision,ratherthanaseparatelegalentity.q   80      ׀Inparticular,NTCAassertsthat ` itsmembershadpreviouslybelievedthattheFifthReportandOrderallowedindependentLECs P toprovidelongdistanceservicesthroughaseparatedivision,particularlyiftheyprovidesuchservicesonaresalebasis.rl    81      ׀ThenewevidencesubmittedinthisrecordindicatesthattheLEC 0 ClassificationOrderwouldrequireasignificantnumberofindependentLECstoalter   substantiallytheirexistinglongdistanceoperations.Forinstance,NTCAstatesthattheseparatelegalentityrequirementwouldimposeadditionallegal,accounting,andadministrativecosts,andadditionalcomplicationsregardingcompensation,benefits,andpersonnelrecruitment,onindependentLECsthatcurrentlyprovidelongdistanceservicesthroughaseparatecorporatedivision.s   82      ׀WethereforeconcludethatthisnewevidenceshiftsthebalanceoftheCommission's p analysis.  2  22  .3   `  t  u  v WeconcludethatindependentLECsthatprovidelongdistanceservicessolelyon P  aresalebasiscanbeexemptedfromtheseparatelegalentityrequirement,andinsteadberequiredtoprovidetheseservicesthroughaseparatecorporatedivision,withoutsubstantiallyharmingourabilitytoaddresspotentialanticompetitiveconduct.ThereasonisthatindependentLECsthatprovidelongdistanceservicessolelyonaresalebasisarelesslikelytoengageinanticompetitiveactivitysuchasaccessdiscriminationandcostmisallocationthanfacilitiesbasedindependentLECprovidersofsuchservices,eventhough,asdiscussedbelow,theyretaintheabilitytoengageinsomeanticompetitiveactivity.wZ   83      ׀ Forexample,webelievethatindependentLEClong 0  distanceresellersareunlikelytoprovide"poorerqualityinterconnectionor[impose]unnecessarydelays"x   84      ׀whenconnectingtheunderlyinginterexchangecarriertotheindependentLEC's  networkbecausesuchdiscriminationwouldharmtheabilityofboththeunderlyinginterexchangecarrierandtheLECtoprovideinterstate,longdistanceservices.y~   85      ׀Moreover,  independentLECresellersmayhavelessincentivetodiscriminateamongcompetinginterexchangecarriersbecausetheymaybeuncertainwhethersuchdiscriminationwouldjustpushcustomerstootherinterexchangecarriersasopposedtotheirownlongdistanceservices.WealsoagreewithALLTELthatindependentLECresellersarelesslikelytoattempttoallocatecostsimproperlythanLECsthatprovidefacilitiesbasedlongdistanceservices.z   86      ׀Thisis P because,aswehavenotedinotherproceedings,thewholesaleratesofresoldlongdistanceservicesaremorereadilyvisibletoauditorsthantheunderlyingtransmissioncostsofafacilitiesbasedcarrier,forwhichtheCommissionandcarriersdonothavepreciseinformation.{   87      ׀  p   2  23  .3   ` Finally,webelievethatourmodificationoftheseparatelegalentityrequirement P forindependentLECsthatprovidelongdistanceservicesolelyonaresalebasiswillfacilitate @ entryofmoreindependentLECsintothelongdistancemarket.WebelievethatresaleisanessentialfacilitatorofcompetitioninthelongdistanceindustrybecauseitallowsindependentLECsandotherproviderstoenterthemarketimmediately,andtoaddtheirownfacilitieswhenitbecomesefficienttodoso.NTCAassertsthat,inmanyruralareas,thelocalindependentLECisthesoleproviderofinterexchangeservice,typicallythroughresale,incompetitionwiththelargeinterexchangecarriers.|   88      ׀ `    2  24  .3   `  }  ~   MCIassertsthatindependentLECresellersmayfailtoimputeproperlythecost @  ofaccessintheirlongdistancerates,ormayhavetheirlocalexchangeandaccessoperationsperformfunctionsfortheirinterexchangeoperations,suchasmarketing,thatarenotfullyreimbursed.Z   89      ׀AlthoughweagreewithAT&TandMCIthatindependentLECresellersofthe `  typedescribedabovewillretainsomeincentiveandabilitytoengageinanticompetitiveconduct,   90      ׀inlightofourfindingsabove,H   91      ׀wedonotfindthesecontentionstobeapersuasive @  basisforretainingwhattherecordnowindicatesisaburdensomeseparatelegalentityrequirementforsuchLECs.WearesatisfiedthattheconcernsraisedbythesecommentersaresufficientlyaddressedbyourcontinuedimpositionoftheremainingFifthReportandOrder  requirementsontheseindependentLECresellers.   92      ׀Inaddition,otherexistingsafeguards,such  asthenondiscriminationprovisionsofsection251oftheActandtheLocalCompetitionOrderl    93        andEqualAccessOrder,   94      ׀andtheCommission'sauthoritytoimposeforfeituresandother  sanctionsandtograntdamagesandinjunctivereliefpursuanttosections4(i),503,and206209oftheAct,willhelppreventanticompetitiveconductbyindependentLECresellers.Z   95          2  25  .3   ` Consequently,weagreewithcommentersthatassertthatindependentLECsthat  provideinregion,interstate,longdistanceservicesonaresalebasisthroughaseparatecorporatedivision,ratherthanaseparatelegalentity,shouldstillbesubjecttotheremainingFifthReport `  andOrderrequirementssetforthinsection64.1903(a)oftheCommission'srules.   96      ׀    Independent P  LECsthatreselllongdistanceservicethroughaseparatedivisionmustthereforecontinuetokeepseparatebooksofaccount,andobtainservicesattariffedratesoronthesamebasisasrequestingcarriersthathavenegotiatedinterconnectionagreementspursuanttosection251.H   97      ׀TheFifth  p  ReportandOrderprohibitiononjointlyownedtransmissionandswitchingfacilitiesisnot `  applicabletosuchLECsbecause,bydefinition,theydonotownsuchfacilities.   98      ׀ P    2  26  .3   ` Inmaintainingtherequirementforseparatebooksofaccount,weadheretothe 0  principlesarticulatedintheInterimBOCOutofRegionOrderconcerningtheseparatebooksof   accountrequirementforaseparatelegalentity.6    99      ׀Specifically,althoughtheseparatedivision  mustmaintainitsownbooksofaccount,itneednotmaintainthesebooksofaccountinaccordancewiththeCommission'sPart32UniformSystemofAccountsrules.TherequirementthatindependentLECsthatreselllongdistanceservicethroughaseparatedivisionmustmaintainseparatebooksofaccountsupersedessection32.23(c)oftheCommission'srules,whichsetsforththeaccountingrequirementsfornonregulatedactivitiesinvolvingthecommonorjointuseofassetsandresourcesbycarriersintheirprovisionofregulatedandnonregulatedproductsandservices.   100      ׀TohelpensurethattheregulatedoperationsoftheindependentLECdonot P improperlysubsidizeitsinterexchangeoperations,werequirethatalltransactionsbetweenthe @ regulatedtelephoneoperationsandthelongdistancedivisioncomplywiththeCommission'saffiliatetransactionsrules.   101      ׀AstheCommissionrecognizedintheLECClassificationOrder,  theseparatebooksofaccountrequirementisnecessarytoenabletheCommission,shouldtheneedarise,todocumenttransactionsbetweenaLEC'slocalexchangeanditslongdistanceoperations,andtodeterminewhetheranincumbentLEChasengagedindiscriminatoryconduct.Z   102      ׀Therequirementthatservicesbeobtainedundertarifforonthesamebasisassection `  251negotiatedinterconnectionagreementsmakesitmoredifficultforLECstodiscriminateinfavorofitslongdistanceoperationsand"reducessomewhattheriskofapricesqueeze"totheextentthattheresellerLECs'longdistanceprices"mustexceedtheircostsfortariffedservices."   103      ׀  p    2  27  .3   ` WebelievethattheexemptionfromtheseparateaffiliaterequirementoftheFifth P  ReportandOrdergrantedtoresellerindependentLECsshouldproviderelieftomanyruraland @  midsizedindependentLECs.RuralandmidsizedindependentLECsthatownnointerexchangefacilitieswillnotberequiredtoestablishandmaintainaseparateaffiliatetoprovideinregion,longdistanceservicesonaresalebasis.Instead,thesecarriersmayprovidesuchservicesthroughaseparatedivisionofthelocalexchangecompany.~   104      ׀Thecurrentrecordsuggeststhat  mostruralLECsandmanymidsizedLECswillqualifyforthisexemption.   105      ׀Additionally,we  notethatanyruralormidsizedindependentLECsthatdonotqualifyfortheresellerexemptionmaypetitiontheCommissionforwaiveroftheseparatelegalentityrequirement,aswellastheotherFifthReportandOrderrequirements.6    106       p   2  28  .3     `   WealsobelievethatthereliefgrantedtoindependentLEClongdistanceresellers P shouldaddressspecificconcernsexpressedintherecordregardingtheadverseimpactoftheFifthReportandOrderseparatelegalentityrequirementonindependentLECsthatareorganized 0 ascooperativetelephonecompanies.AnunintendedconsequenceoftheseparatelegalentityrequirementisthatsuchindependentLECsmaylosetheirstatusasexemptfromFederalincometaxes,resultinginadditionalcoststomembersanddeterringsuchLECsfromprovidinglong P distanceservices.   107      ׀Section501oftheInternalRevenueCodeexempts"mutualorcooperative  telephonecompanies"fromFederalincometaxationaslongas"85percentormoreofthe[cooperative's]incomeconsistsofamountscollectedfrommembersforthesolepurposeofmeetinglossesandexpenses."   108      ׀NopartydisputesNTCA'scontentionthatrevenuesreceivedby  anindependentLEC'slongdistanceaffiliatebyvirtueoftheaffiliate'sstatusasaprofitmaking"separatelegalentity"   109      ׀areconsiderednonmemberincomeandaccordinglymaydeprivethe `  LECoftaxexemptstatusundersection501(c)(12)(A).b    110      ׀Webelievethatmostindependent P  LECsthatareorganizedascooperativeswillfallwithinthescopeofthereliefthatwegranttodaytoresellers.   111      ׀Wenoteagain,however,thatindependentLECs,includingtelephone 0  cooperatives,thatdonotqualifyforthereliefwegranttodaytoresellersmayseekawaiverof  p  theFifthReportandOrderseparateaffiliaterequirement.   112        ;DtED 0   (#(#   B.0  ClarificationoftheTerm"Interexchange" h (#(#    2  29  .3   `   Asnotedpreviously,theLECClassificationOrderappliesseparateaffiliate pH  requirementstoanindependentLEC'sprovisionofinregion,interstate,domestic,interexchangeservices.GTErequeststhattheCommissionclarifythemeaningoftheterm"interexchange"asitisusedintheLECClassificationOrder.Z   113      ׀Inparticular,GTEasksthattheCommission @   clarifythattheterm"interexchange"asappliedtoanindependentLEChasequivalentmeaningto"interLATA"asappliedtoaBOC.   114      ׀GTEassertsthat,whiletheLECClassificationOrder   clearlyrequiresindependentLECstoprovideinregion,interstate,tollservicesbetweenexchangeareasthroughaseparateaffiliate,theCommissionshouldclarifythatindependentLECsareallowedtoprovideinregion,interstate,tollservicesbetweenlocalexchangeswithin  anexchangeareaonanintegratedbasis.   115      ׀GTEcontendsthat,absentclarification,theterm  "interexchange"couldbeincorrectlyinterpretedtorefertoservicesprovidedbetweenthevarioussmaller"localtelephoneexchanges"thatmakeupanindependentLEC's"exchangearea."GTEisconcernedthatsuchanincorrectinterpretationwouldmaketheCommission'sseparateaffiliaterequirementsapplicabletothesmallamountofinregion,interstateservicesthatGTEprovidesbetweenlocaltelephoneexchangeswithintheGTEexchangearea.   116      ׀Nootherpartiesopposeor h evenaddresstheseissuesraisedbyGTE.̀0  2  30  .3  Ԁ ` ToensurethattheLECClassificationOrderisinterpretedproperly,weclarify`8(#(# thatouruseoftheterm"interexchange"intheLECClassificationOrderdoesnotreferto P( servicesbetweenlocaltelephoneexchangeswithintheindependentLEC'sexchangearea,but insteadreferstoservicesbetweenapointlocatedinanindependentLEC'sexchangeareaanda 0  pointlocatedoutsidesucharea.   117      ׀Theseparateaffiliaterequirementsonlyapplytoindependent   LECsintheprovisionofinregion,interstate,"interexchange"services(i.e.,servicesbetweenanindependentLEC'sexchangeareaandapointlocatedoutsidesucharea).WethereforeclarifythatanindependentLECthatprovidesinregion,interstateservicesbetweenlocaltelephoneexchangeswithinitsexchangeareamaydosoonanintegratedbasis.$   118      ׀   p   2  31  .3  0 `   USTArequestsmoregenerallythattheCommissionclarifythatthetermsP ` (#` (# "interexchange"and"interLATA"arenotusedinterchangeablyintheLECClassification @  Order.    119      ׀AlthoughwebelievethattheterminologyintheLECClassificationOrderis 0  consistentwiththe1996ActandtheCompetitiveCarrierProceeding,wegrantUSTA'srequest  p  andclarifythatuseoftheterm"interLATA"intheLECClassificationOrderrefersto `  telecommunicationsprovidedbyaBOCbetweenapointlocatedinaBOCLATAandapointlocatedoutsidesucharea,b    120      ׀andthatuseoftheterm"interexchange"intheLECClassification @  OrderreferstotelecommunicationsprovidedbyanindependentLECbetweenapointlocatedin 0  anindependentLECexchangeareaandapointlocatedoutsidesucharea.   121      ׀   DD  C.  StreamlinedWaiverProcess qԀ     2  32  .3   `   TheCommissiondeterminedintheLECClassificationOrderthat,underspecial h circumstances,anindependentLECcouldpetitionforawaiverofoneormoreoftheFifth X ReportandOrderrequirementspursuanttosection1.3oftheCommission'srules.   122      ׀The pH CommissionnotedthatsuchanindependentLECwouldfaceaheavyburdenindemonstrating `8 theneedforsuchawaiver.   123      ׀ATUrequeststhattheCommissionadoptastreamlinedprocedure  forwaivingtheFifthReportandOrderrequirements,inordertoaccommodatethedifferentrates  atwhichlocalcompetitionwilldevelopthroughoutthenationandtorelieveindividualindependentLECsfromunnecessaryregulationsthatwillimpedetheirabilitytocompeteeffectivelywhileprovidingnosignificantprotectionstoratepayers.Z   124      ׀GCIandMCIoppose p ATU'sproposal,andarguethatthecurrentwaiverproceduressetforthintheCommission'srulesareadequatetomeettheneedsofindependentLECs.   125       P    2   33  .3   `   WedeclinetoadoptATU'sproposal.Wefindthattheexistinggeneralwaiver 0  processsetforthinsection1.3ofourrulesisanadequatemeansforindependentLECstoseekrelieffromoneormoreoftheFifthReportandOrderrequirements.~   126      ׀Wenotethattheaction `  wetakeaboveinexemptingresellerindependentLECsfromtheseparatelegalentityrequirementwilllikelyresultinfewerpotentialwaiverapplicants.SuchLECswouldhavebeenamongthoseLECsbestabletoqualifyforawaiverbecauseoftheirlessenedabilitytoengageinanticompetitiveactivity.   127      ׀Wealsonotethatourdecisiontorelyonourexistingwaiver   provisionsratherthantoadoptaspecialwaiverprocessisconsistentwithrecentCommissionprecedentinothercontexts.   128        DZD  D.  SunsetofSeparationRequirementsforIndependentLECs Ԁ  x    2!  34  .3   ` IntheLECClassificationOrder,theCommissionstateditsintentionto X  commenceaproceedingthreeyearsfromthedatethattheLECClassificationOrderwasadopted pH  todeterminewhetherthedevelopmentofcompetitioninthelocalexchangeandexchangeaccessmarketsjustifiesremovaloftheFifthReportandOrderrequirementsappliedtoindependent P (  LECs,butdeclinedtoadoptanautomaticsunsetprovisionforthoserequirements.   129      ׀Partieson @   reconsiderationraisenonewargumentsornewfactsthattheCommissiondidnotfullyconsiderintheLECClassificationOrder.Z   130      ׀WethereforerejectATU'sandALLTEL'spetitionsfora   sunsetprovisionforindependentLECs.DD  E.0  ClassificationofBOCInterLATAAffiliates P(#(#    2"  35  .3   ` IntheLECClassificationOrder,theCommissionconcludedthatBOC 0 interLATAaffiliatesshouldbeclassifiedasnondominantintheprovisionofinregion,longdistanceservices.   131      ׀RCNandHyperionrequestthattheCommissionreconsiderthis   decision,reclassifytheBOCinterLATAaffiliatesasdominant,andcontinuetoclassifyaBOCinterLATAaffiliateasdominantuntilitdemonstratesthatitshouldbeclassifiedasnondominant.H   132      ׀BellAtlantic,SBC,andUSTAopposethisrequest.   133      ׀Onreconsideration,we # affirmourdecisiontoclassifytheBOCinterLATAaffiliatesasnondominantintheprovisionofinregion,longdistanceservicesbecausetheBOCinterLATAaffiliateswillnot,inlightofthestatutoryandregulatorysafeguardsdiscussedintheLECClassificationOrder,havetheability, P& uponentryorsoonthereafter,toraisethepriceofinregion,longdistanceservicesbyrestrictingtheirownoutputofthoseservices.l    134      ׀WefindthatRCNandHyperionpresentnonewevidence 0( topersuadeustoreversetheCommission'sconclusionthatdominantcarrierregulationisdesignedtopreventacarrierfromraisingpricesbyrestrictingitsownoutputofservices.  2#  36  .3   ` RCNandHyperionarguethattheCommissionshouldclassifyaBOCinterLATA P#, affiliateasnondominantonlyafterathoroughexaminationoftheimpactthatanindividualBOC @$- interLATAaffiliate'sentrywillhaveinitsowninregionmarket.   135      ׀RCNandHyperionsuggest  thattheCommission'sanalysisintheLECClassificationOrderwasnotsufficientlytailoredto  takeintoaccountfactsspecifictoeachindividualBOCinterLATAaffiliate'smarket.Z   136      ׀RCN  andHyperionalsoarguethattheBOCinterLATAaffiliateshouldbeartheburdenofproofindemonstratingthatitdoesnothavemarketpowerintheprovisionofinregion,interLATAservices.   137       `    2$  37  .3   ` WerejecttheseargumentsandaffirmtheCommission'sfindingintheLEC @  ClassificationOrderthattheBOCinterLATAaffiliatesshouldbeclassifiedasnondominantin 0  theprovisionoftheseservices,becausetheywillnot,inlightofthestatutoryandregulatorysafeguardsdiscussedintheorder,havetheabilitytoraisepricesbyrestrictingtheirownoutputuponentryintotheirinregionlongdistancemarket,orsoonthereafter.~   138      ׀WeagreewithBell P  Atlanticthataregionbyregiondeterminationofmarketpower,withtheburdenontheBOCinterLATAaffiliatetoprovenondominance,wouldhinderadditionalcompetitioninthelongdistancemarketandimposeunnecessarycostsontheCommissionandconsumers.   139      ׀Asnotedin   theLECClassificationOrder,theCommissionhaslongrecognizedthatregulationsassociated  withdominantcarrierclassificationcandampencompetitionwhenappliedtoacompetitiveindustry.6    140      ׀Asaresult,webelievethatdominantcarrierregulationshouldbeimposedonly  wheretheregulatorybenefitsoutweightheburdens.WeaffirmourfindingintheLEC  ClassificationOrderthattheburdensofdominantcarrierregulationoutweighthebenefitsinthis  instance.&   141      ׀WeemphasizethattheclassificationoftheBOCinterLATAaffiliatesasnon p dominantappliesonlytoBOCinterLATAaffiliatesthathavesatisfiedtherequirementsofsections271and272andtheotherregulatoryrequirementsrelieduponintheLECClassification P Order. @ Ї  2%  38  .3   ` WealsorejectRCNandHyperion'sargumentthatinevaluatingwhetherto  classifyBOCinterLATAaffiliatesasdominant,weshouldconsidertheimpactoftheaffiliate'sentryonsmallinterexchangecarriersandcompetitiveLECs.   142      ׀Petitionershavepresentedno  newevidencetopersuadeustoreversethefindingintheLECClassificationOrderthatthe  questionofwhetheracarriershouldberegulatedasdominantdependssolelyuponwhetherthecarrierhastheabilitytoraisepricesbyrestrictingitsownoutputofservices.Z   143      ׀Weagreewith `  SBCthatourgoalinclassifyingcarriersasdominantornondominantisto"protectcompetition P  intherelevantmarket,notparticularcompetitors."   144       @  D~D  F.  MarketDefinition P      2&  39  .3   ` Onreconsideration,RCNandHyperionrequestthatweclarifythattherevised  productandgeographicmarketdefinitionsadoptedbytheCommissionintheLECClassification  Orderreflecttheapproachofthe1992MergerGuidelines.~   145      ׀Nootherpartyspecifically  respondstoRCNandHyperion'spetition.   146      ׀AswenotedintheLECClassificationOrder,the  Commission'srevisedproductandmarketdefinitionsareconsistentwiththeapproachtakeninthe1992MergerGuidelines.l    147      ׀Specifically,theCommissionreviseditsproductandgeographic  marketdefinitionstobebased"solelyondemandsubstitutabilityconsiderations"andconcludedthat"supplysubstitutabilityshouldnotbeusedtodefinerelevantmarkets,butrathershouldbeusedtodeterminewhichprovidersarecurrentlyserving,orpotentiallycouldbeserving,arelevantmarketonlyafterthatmarkethasbeenidentified."    148       pH D8D `%  @  IV.LEACORURALTELEPHONECOOPERATIVE,INC.PETITIONFORWAIVER !Ԉ     2'  40  .3   ` ThereliefwegranttoresellerindependentLECsmoots,inpart,thepetitionfor  waiveroftheCompetitiveCarrierFifthReportandOrderseparationrequirementsfiledby  Leaco.   149      ׀UndertheFifthReportandOrderrequirements,Leacowouldberequiredtoprovide p inregion,interstate,domestic,longdistanceservicesandinregion,internationalservices `  throughaseparateaffiliatethatisaseparatelegalentity,andsuchaffiliatemust:(1)maintainseparatebooksofaccount;(2)notjointlyowntransmissionorswitchingfacilities;and(3)acquireanyservicesattariffedrates,terms,andconditions.$   150      ׀Leacoassertsthat,asasmall, 0  rural,telephonecooperativethatprovidesinregion,longdistanceservicesolelyonaresalebasis,thecostsofestablishingaseparatelegalentityinordertoentertheinregion,longdistancemarketwillconstituteanundueburdenbecauseLeaco'sabilitytoengageinanticompetitivebehaviorisconstrainedbyexistingregulationsanditsstatusasareseller.   151      ׀Inthisregard,Leaco @  claimsthatitwillincuraonetimecostof$42,000duringthefirstyearofentry,andannualcostsofnearly$21,000peryear,inordertoestablishandmaintainaseparatelegalentitytoprovideinregion,longdistanceservicesinaccordancewiththerequirementssetforthintheLEC  ClassificationOrder.H   152      ׀Moreover,asa"mutualorcooperativetelephonecompany"withinthe  meaningofsection501(c)(3)oftheInternalRevenueCode,Leacoclaimsthatlossofitstaxexemptstatuswouldimposecostsof$38,000annually.   153      ׀Leacoestimatesthatthetotalcosts  willamounttoover$33permemberthefirstyear,and$25permembereachsucceedingyear.LeacoassertsthatthesecostsconstituteanundueburdenbecausetheFifthReportandOrder p requirementsarenotnecessarytopreventLeacofromengaginginanticompetitiveconduct,giventheexistenceoftheCommission'sPart64rulesandNewMexicoCommissionregulationoflocalexchangeandexchangeaccessservices.l    154      ׀Leacoalsoassertsthat,asaresellerindependent @ LEC,"anyfavorableaccesstreatmentaffordedtoLeaco'sunderlyingfacilitiesbasedcarrierwouldhavetobemadeavailabletoallotherinterexchangecarriers."    155        p   2(  41  .3   ` WefindthatthereliefwegrantgenerallytoindependentLECsthatprovidein P region,longdistanceservicessolelyonaresalebasis,rendersmootpartofLeaco'srequestfor @ reliefandresolvesmanyoftheconcernsraisedinitspetition.Asaresultofouractiontoday,ifLeacoprovidesinterexchangeserviceonaresalebasis,Leacomayprovidesuchservicesthroughaseparatecorporatedivisionratherthanaseparatelegalentity.OuractionshouldeliminateallofthecoststhatLeacostateditwouldincurwiththelossofitsFederaltaxexemptstatus,andatleastsomeofthecoststoestablishandmaintainanaffiliatethatisaseparatelegalentity.   156      ׀Our p actionalsoaddressesLeaco'sclaimthatitsstatusasaresellerindependentLECdiminishesitsabilitytoengageinanticompetitiveconduct.   157      ׀ P    2)  42  .3   ` AsfortheremainderofLeaco'spetition,wedeclinetowaivetheremainingFifth 0  ReportandOrderrequirementsbecausewefindthatLeacohasfailedtoshowspecial  p  circumstancesnecessarytomeetthegoodcausestandardforawaiver.   158      ׀Undertheremaining `  requirements,Leacoanditsseparatecorporatedivisionmustmaintainseparatebooksofaccountandacquireanyservicesattariffedrates,terms,andconditions.WeconcludedinourorderonreconsiderationabovethatindependentLECsthatreselllongdistanceservicesthroughaseparatedivisionmustcontinuetokeepseparatebooksofaccountandobtainservicesattariffedratesoronthesamebasisasrequestingcarriersthathavenegotiatedinterconnectionagreementspursuanttosection251oftheAct.   159      ׀Wefoundthattheserequirementsarenecessarytoaidinthe  preventionanddetectionofanticompetitiveconduct,andthatcompliancecostswouldnotconstituteanundueburden.n    160      ׀Leacohasnotshownthatuniquefactsandcircumstances  distinguishitssituationfromthatofotherindependentLECsthatreselllongdistanceservices.Specifically,LeacohascitednocostsorburdensthatitwouldincurincomplyingwiththeremainingFifthReportandOrderrequirements,thatwedidnottakeintoconsiderationinour ` costbenefitanalysis.Simplystated,Leacoseeksrelieffromthenormal,contemplatedfunctioningoftherulessetforthaboveinourorderonreconsideration.Leaco'srequestthusfailstomeettherequirementofspecialcircumstancessetforthinsection1.3oftheCommission'srules,andwedenytheremainderofLeaco'spetitionforwaiver.Dn!D   V.SUPPLEMENTALFINALREGULATORYFLEXIBILITYANALYSIS ;  $     2*  43  .3   ` AsrequiredbytheRegulatoryFlexibilityAct(RFA),   161      ׀theCommissionissueda   FinalRegulatoryFlexibilityAnalysis(FRFA)intheLECClassificationOrder,inwhichit  certifiedthattherulesadoptedinthatorderwouldnothaveasignificantimpactonasubstantialnumberofsmallentities.Noneofthepetitionsforreconsiderationfiledinthisproceedingspecificallyaddresses,orseeksreconsiderationof,thatFRFA.ThispresentSupplementalFRFAaddressesthepotentialeffectonsmallentitiesoftherulesweadoptinthisorder.ThisSupplementalFRFAincorporatesandaddstoourFRFAintheLECClassificationOrder.   162      ׀ P    2+  44  .3   ` NeedforandObjectivesofthisReportandOrderandtheRegulationsAdopted 0  Herein.Theneedforandobjectivesoftherulesadoptedinthisorderonreconsiderationarethe  p  sameasthosediscussedintheLECClassificationOrder'sFRFA.   163      ׀Ingeneral,theregulations `  adoptedintheLECClassificationOrderareintendedtopromoteincreasedcompetitioninthe P  interexchangemarket.Inthisorderonreconsideration,weclarifytheLECClassificationOrder @  andgrantordenypetitionsfiledforreconsiderationinordertofurtherthesameneedsandobjectives.   164           2,  45  .3   ` DescriptionandEstimatesoftheNumberofSmallEntitiesAffectedbythisReport  andOrder.InthisFRFA,weconsidertheimpactofthisorderontwocategoriesofentities,  "smallincumbentLECs"and"smallnonincumbentLECs."Consistentwithourpriorpractice,weshallcontinuetoexcludesmallincumbentLECsfromthedefinitionofasmallentityforthepurposeofthisFRFA.Accordingly,ouruseoftheterms"smallentities"and"smallbusinesses"doesnotencompass"smallincumbentLECs."Weusetheterm"smallincumbentLECs"torefertoanyincumbentLECs   165      ׀thatarguablymightbedefinedbySBAas"smallbusiness P concerns."    166      ׀Weinclude"smallnonincumbentLECs"inouranalysis,eventhoughwebelieve @ thatwearenotrequiredtodoso.    167      ׀ 0 Ї  2-  46  .3   ` TheRFAdefinesa"smallbusiness"tobethesameasa"smallbusinessconcern"  undertheSmallBusinessAct,15U.S.C.632,unlesstheCommissionhasdevelopedoneormoredefinitionsthatareappropriatetoitsactivities.Z   168      ׀UndertheSmallBusinessAct,a"small  businessconcern"isonethat:(1)isindependentlyownedandoperated;(2)isnotdominantinitsfieldofoperation;and(3)meetsanyadditionalcriteriaestablishedbytheSBA.   169      ׀SBAhas p definedasmallbusinessforStandardIndustrialClassification(SIC)category4813(TelephoneCommunications,ExceptRadiotelephone)tobeasmallentitywhenithasfewerthan1,500employees.H   170      ׀ @    2.  47  .3   ` IncumbentLECs.SBAhasnotdevelopedadefinitionofsmallincumbentLECs.  p  TheclosestapplicabledefinitionunderSBArulesisfortelephonecommunicationscompaniesotherthanradiotelephone(wireless)companies.ThemostreliablesourceofinformationregardingthenumberofLECsnationwideofwhichweareawareappearstobethedatathatwecollectannuallyinconnectionwiththeTelecommunicationsRelayService(TRS).Accordingtoourmostrecentdata,1,376companiesreportedthattheywereengagedintheprovisionoflocalexchangeservices.   171      ׀Althoughitseemscertainthatsomeofthesecarriersarenotindependently  ownedandoperated,orhavemorethan1,500employees,weareunableatthistimetoestimatewithgreaterprecisionthenumberofLECsthatwouldqualifyassmallbusinessconcernsunderSBA'sdefinition.Consequently,weestimatethattherearefewerthan1,376smallincumbentLECsthatmaybeaffectedbythedecisionsandregulationsadoptedinthisorderonreconsideration.  2/  48  .3   ` NonIncumbentLECs.SBAhasnotdevelopedadefinitionofsmallnon P incumbentLECs.Forpurposesofthisorder,wedefinethecategoryof"smallnonincumbentLECs"toincludesmallentitiesprovidinglocalexchangeservicesthatdonotfallwithinthestatutorydefinitioninsection251(h),includingpotentialLECs,LECswhichhaveenteredthemarketsincethe1996Actwaspassed,andLECsthatwerenotmembersoftheexchangecarrier associationpursuanttosection69.601(b)oftheCommission'sregulations.6    172      ׀Webelieveitis P impracticabletoestimatethenumberofsmallentitiesinthiscategory.   173      ׀Webelieveitis   impossibletoestimatethenumberofentitieswhichmayenterthelocalexchangemarketinthenearfuture.Nonetheless,wewillestimatethenumberofsmallentitiesinasubgroupofthecategoryof"smallnonincumbentLECs."Accordingtoourmostrecentdata,119companiesidentifythemselvesinthecategory"CompetitiveAccessProviders(CAPs)&CompetitiveLECs(CLECs)."Z   174      ׀ACLECisaprovideroflocalexchangeserviceswhichdoesnotfallwithinthe `  definitionof"incumbentLEC"insection251(h).AlthoughitseemscertainthatsomeofthecarriersinthiscategoryareCAPs,   175      ׀arenotindependentlyownedandoperated,orhavemore @  than1,500employees,weareunableatthistimetoestimatewithgreaterprecisionthenumberofnonincumbentLECsthatwouldqualifyassmallbusinessconcernsunderSBA'sdefinition.  20  49  .3   ` SummaryAnalysisoftheProjectedReporting,Recordkeeping,andOther P  ComplianceRequirements.Inthisorderonreconsideration,weconcludethatindependentLECs @  thatareinregion,longdistanceresellersarepermittedtoprovidesuchservicesthroughaseparatedivisionratherthanaseparatelegalentity,subjecttotheFifthReportandOrder   requirements,asmodifiedbytheLECClassificationOrder.Nopartytothisproceeding  suggeststhatpermittingindependentLECstoprovidelongdistanceresalethroughaseparatedivisionwouldaffectsmallentitiesorsmallincumbentLECs.Wedeterminethatcompliancewiththeseparatedivisionrequirement,ratherthanaseparatelegalentityrequirement,mayrequiresmallincumbentLECstouseaccounting,economic,technical,legal,andclericalskills.  21  50  .3   ` StepsTakenToMinimizeEconomicImpactonSmallEntitiesandSmall ` IncumbentLECs,andAlternativesConsidered.Webelievethatthemodificationoftheseparate P legalentityrequirementwillfacilitateentryofindependentLECsintothelongdistancemarket.WebelievethatresaleisanessentialfacilitatorofcompetitioninthelongdistanceindustrybecauseitallowsindependentLECs,someofwhichmaybesmallentities,andotherproviderstoenterthemarketimmediately,andaddtheirownfacilitieswhenitbecomesefficienttodoso.ThemodificationoftheseparatelegalentityrequirementforindependentLEClongdistanceresellersseemslikelytobenefitindependentLECs,someofwhichmaybesmallentities,byhelpingtoreducethecostofentryandofprovidingservice.Werejectalternativestoexemptall 0 independentLECs,orsmallandruralindependentLECs,fromtheseparatelegalentity   requirement,forthereasonsstatedinSectionIIIofthisorderonreconsideration.  22  51  .3   ` ReporttoCongress.TheCommissionshallsendacopyofthisFRFA,alongwith #! thisorderonreconsideration,inareporttoCongresspursuanttotheSBREFA,5U.S.C.801(a)(1)(A).AcopyofthisanalysiswillalsobeprovidedtotheChiefCounselfor % # AdvocacyoftheSmallBusinessAdministration,andwillbepublishedintheFederalRegister.   VI.ORDERINGCLAUSES c      23  52  .3   ` Accordingly,ITISORDEREDthatpursuanttosections1,2,4,201,202,220, p 251,271,272and303(r)oftheCommunicationsActof1934,asamended,47U.S.C.151,152,154,201,202,220,251,271,272,and303(r),theORDERONRECONSIDERATIONisherebyADOPTED,andtherequirementscontainedhereinshallbeeffective30daysafterpublicationofasummarythereofintheFederalRegister.TheamendmenttotheUniformSystemofAccountsforTelecommunicationsCompanies,Part32oftheCommission'srules,shallbeeffectivesixmonthsafterpublicationintheFederalRegister,althoughaffectedpartiesmayelecttoimplementthesechangesuponadoption.ThecollectionofinformationcontainedhereiniscontingentuponapprovalbytheOfficeofManagementandBudget.  24  53  .3   ` ITISFURTHERORDEREDthatPart64,SubpartQoftheCommission'srules,   47C.F.R.64Q,isAMENDEDassetforthinAppendixBhereto.  25  54  .3   ` ITISFURTHERORDEREDthatthepetitionsforreconsiderationare  GRANTEDinpart,asdescribedherein,andotherwiseareDENIED.  26  55  .3   ` ITISFURTHERORDEREDthattheLeacoRuralTelephoneCooperative,Inc. p PetitionforWaiverisRENDEREDMOOTinpart,asdescribedherein,andtheremainderisDENIED.  27  56  .3   ` ITISFURTHERORDEREDthattheCommission'sOfficeofPublicAffairs, 0 ReferenceOperationsDivision,shallsendacopyofthisorderonreconsideration,includingtheFinalRegulatoryFlexibilityAnalysis,totheChiefCounselforAdvocacyoftheSmallBusinessAdministration.0  0` (#(#0 ` (#` (#0 (# (#0h(#(#FEDERALCOMMUNICATIONSCOMMISSION h(#h(# 0  0` (#(#0 ` (#` (#0 (# (#0h(#(#MagalieRomanSalas h(#h(# 0  0` (#(#0 ` (#` (#0 (# (#0h(#(#SecretaryD;D $h$*h(#h(# !@+  APPENDIXA RnԈ   @ CorrectedVersionPart64,SubpartTofTitle47oftheCodeofFederalRegulations     PART64MISCELLANEOUSRULESRELATINGTOCOMMONCARRIERS `      SubpartTSeparateAffiliateRequirementsForIncumbentIndependentLocalExchangeCarriersThatProvideInRegion,InterstateDomesticInterexchangeServicesOrInRegionInternationalInterexchangeServices   Sec.  P   64.1901 `  Basisandpurpose.  @   64.1902 `  Termsanddefinitions.  0   64.1903  `  Obligationsofallincumbentindependentlocalexchangecarriers .     SubpartTSeparateAffiliateRequirementsForIncumbentIndependentLocalExchange  CarriersThatProvideInRegion,InterstateDomesticInterexchangeServicesOrInRegionInternationalInterexchangeServices   64.1901 ` Basisandpurpose. p    (a) ` Basis. TheserulesareissuedpursuanttotheCommunicationsActof1934,as P amended.  (b) ` Purpose.Thepurposeoftheserulesistoregulatetheprovisionofinregion,  p interstate,domestic,interexchangeservicesandinregioninternationalinterexchangeservicesbyincumbentindependentlocalexchangecarriers. 64.1902 ` Termsanddefinitions.  0   Termsusedinthisparthavethefollowingmeanings:  BooksofAccount.Booksofaccountrefertothefinancialaccountingsystemacompany #! usestorecord,inmonetaryterms,thebasictransactionsofacompany.Thesebooksofaccountreflectthecompany'sassets,liabilities,andequity,andtherevenuesandexpensesfromoperations.Eachcompanyhasitsownseparatebooksofaccount.  IncumbentIndependentLocalExchangeCarrier(IncumbentIndependentLEC).The P(#& termincumbentindependentlocalexchangecarriermeans,withrespecttoanarea,theindependentlocalexchangecarrierthat:o[X` hp x (#%'0*,.8135@8:<H?AXo0  0` (#(#(1) OnFebruary8,1996,providedtelephoneexchangeserviceinsucharea;and +p&)` (#` (# uXX` hp x (#%'0*,.8135@8:<H?AX Xu  0 ` (2) (i)OnFebruary8,1996,wasdeemedtobeamemberoftheexchangecarrier ,`'* associationpursuantto69.601(b)ofthistitle;or ` (#` (# 0  0` (#(# (ii)Isapersonorentitythat,onorafterFebruary8,1996,becameasuccessororassignofamemberdescribedinparagraph(2)(i)ofthissection. ` (#` (# TheCommissionmayalso,byrule,treatanindependentlocalexchangecarrierasanincumbentindependentlocalexchangecarrierpursuanttosection251(h)(2)oftheCommunicationsActof1934,asamended.  IndependentLocalExchangeCarrier(IndependentLEC).Independentlocalexchange @  carriersarelocalexchangecarriers,includingGTE,otherthantheBOCs.  IndependentLocalExchangeCarrierAffiliate(IndependentLECAffiliate).An `  independentlocalexchangecarrieraffiliateisacarrierthatisowned(inwholeorinpart)orcontrolledby,orundercommonownership(inwholeorinpart)orcontrolwith,anindependentlocalexchangecarrier. h  0    InRegionService.Inregionservicemeanstelecommunicationsserviceoriginatinginan  independentlocalexchangecarrier'slocalserviceareasor800service,privatelineservice,ortheirequivalentsthat:0  0` (#(#(1) TerminateintheindependentLEC'slocalexchangeareas;and` (#` (#   0 ` (2) Allowthecalledpartytodeterminetheinterexchangecarrier,evenifthe  serviceoriginatesoutsidetheindependentLEC'slocalexchangeareas. ` (#` (#   LocalExchangeCarrier.Thetermlocalexchangecarriermeansanypersonthatis P engagedintheprovisionoftelephoneexchangeserviceorexchangeaccess.Suchtermdoesnotincludeapersoninsofarassuchpersonisengagedintheprovisionofacommercialmobileserviceundersection332(c),excepttotheextentthattheCommissionfindsthatsuchserviceshouldbeincludedinthedefinitionofthatterm. 64.1903  ` Obligationsofallincumbentindependentlocalexchangecarriers . @ 0  (a) ` Exceptasprovidedinparagraph(c)ofthissection,anincumbentindependent   LECprovidinginregion,interstate,interexchangeservicesorinregioninternationalinterexchangeservicesshallprovidesuchservicesthroughanaffiliatethatsatisfiesthefollowingrequirements: (#(# 0  0` (#(#(1) Theaffiliateshallmaintainseparatebooksofaccountfromitsaffiliated % # exchangecompanies.NothinginthissectionrequirestheaffiliatetomaintainseparatebooksofaccountthatcomplywithPart32ofthistitle; ` (#` (# 0  0` (#(#(2) Theaffiliateshallnotjointlyowntransmissionorswitchingfacilitieswithits @)$' affiliatedexchangecompanies.Nothinginthissectionprohibitsanaffiliatefromsharingpersonnelorotherresourcesorassetswithanaffiliatedexchangecompany;and,`'*` (#` (# Ї0  0` (#(#(3) Theaffiliateshallacquireanyservicesfromitsaffiliatedexchange  companiesforwhichtheaffiliatedexchangecompaniesarerequiredtofileatariffattariffedrates,terms,andconditions.Nothinginthissectionshallprohibittheaffiliatefromacquiringanyunbundlednetworkelementsorexchangeservicesfortheprovisionofatelecommunicationsservicefromitsaffiliatedexchangecompanies,subjecttothesametermsandconditionsasprovidedinanagreementapprovedundersection252oftheCommunicationsActof1934,asamended. ` (#` (# 0  (b) ` Exceptasprovidedinsubparagraph(1)ofthisparagraph,theaffiliaterequiredin 0  paragraph(a)ofthissectionshallbeaseparatelegalentityfromitsaffiliatedexchangecompanies.Theaffiliatemaybestaffedbypersonnelofitsaffiliatedexchangecompanies,housedinexistingofficesofitsaffiliatedexchangecompanies,anduseitsaffiliatedexchangecompanies'marketingandotherservices,subjecttoparagraph(a)(3)ofthissection. (#(# 0  0` (#(#(1) ForanincumbentindependentLECthatprovidesinregion,interstate  domesticinterexchangeservicesorinregioninternationalinterexchangeservicesusingnointerexchangeswitchingortransmissionfacilitiesorcapabilityoftheLEC'sown(i.e.,"independentLECreseller,")theaffiliaterequiredinparagraph(a)ofthissectionmaybeaseparatecorporatedivisionofsuchincumbentindependentLEC.AllotherprovisionsofthisSubpartapplicabletoanindependentLECaffiliateshallcontinuetoapply,asapplicable,tosuchseparatecorporatedivision. ` (#` (# 0  (c) ` AnincumbentindependentLECthatisprovidinginregion,interstate,domestic 0 interexchangeservicesorinregioninternationalinterexchangeservicespriortoApril18,1997,butisnotprovidingsuchservicesthroughanaffiliatethatsatisfiesparagraph(a)ofthissectionasofApril18,1997,shallcomplywiththerequirementsofthissectionnolaterthanAugust30,_1999. @(#(#  @+  APPENDIXB ɏԈ  @)LISTOFPARTIES    ListofPetitioners  `  _ALLTEL_ԀCommunications,Inc.(_ALLTEL_)AnchorageTelephoneUtility(_ATU_)_GTE_NationalTelephoneCooperativeAssociation(_NTCA_)_RCN_ԀTelecomServices,Inc.,andHyperionTelecommunications,Inc.(_RCN_ԀandHyperion)UnitedStatesTelephoneAssociation(_USTA_) ListofPartiesFilingOppositionsandComments   AT&TCorp.(AT&T)BellAtlanticLongDistanceCarriers(BellAtlantic)GeneralCommunication,Inc.(GCI)IndependentTelephoneandTelecommunicationsAlliance(_ITTA_)MCITelecommunicationsCorp.(MCI)_SBC_ԀCommunicationsInc.(_SBC_)TelecommunicationsResellersAssociation(_TRA_)_USTA_ ListofPartiesFilingReplyOppositionsandComments  P _ALLTEL__ATU__GTE_MCI_NTCA__RCN_ԀandHyperion_USTA_Dm  p&$(  r      `   h   CONSOLIDATEDSEPARATESTATEMENTOF  COMMISSIONERHAROLD_FURCHTGOTT_-ROTH   Re:0  PetitionforForbearanceoftheIndependentTelephone&TelecommunicationsAlliance; `  RegulatoryTreatmentof_LEC_ԀProvisionof_Interexchange_ԀServicesOriginatinginthe_LEC_'sLocalExchangeArea (#(#   IsupporttheseitemstotheextentthattheyprovidethereliefrequestedbytheIndependentTelephone&TelecommunicationsAlliances(_ITTA_)petition.Iobject,however,totheextentthattheregulatoryreliefrequestedisdeniedorsomelesserregulatoryreliefisprovided.Moreover,IquestiontheoverallapproachthattheCommissionhastakentothisforbearancepetition.  Istartwiththepresumptionthatthe_ITTA_Ԁpetitionhasbeen"deemedgranted"infullbecauseoftheCommission'sfailureeither(_i_)todenythepetitionwithinoneyearafterreceivingit,or(ii)tomakeanexplicitfindingthata90dayextensionwasnecessarytomeetthestatutoryrequirements.Section10oftheCommunicationsActisveryclear:"TheCommissionmayextendtheinitialoneyearperiodbyanadditional90daysiftheCommissionfindsthatanextensionisnecessarytomeettherequirementsofsubsection(a)."Thestatuteisthusspecificthatitisthe"Commission"whichmustgrantanyextensionandmustdosouponafindingthattheextensionisnecessarytomeetthepurposesofsection10(a).Idonotbelievethatthebureau,actingonitsownmotionandwithoutevenpriorconsultationwiththe"Commission,"canacttoextendthisstatutorytimeframe.Idonotbelievethatthe90dayextensioncanbeeffectivelyusedbythebureauwithoutevenbriefingtheCommissiononthemeritsoftheunderlyingpetition,determiningwhetherornotthereareanynewornovelquestionsoffact,laworpolicy,andreceivingsomesignalfromamajorityofthe"Commission"thatanextensionoftimeiswarrantedundertheseparticularcircumstances.  Inaddition,IdisagreewithseveralaspectsoftheapproachthattheCommissionhastakentothisforbearancepetition.Inseveralinstances,theCommissiondeterminesthat_ITTA_Ԁhasnotmetthecriteriaforforbearancetotheextentthatthepetitionrequestsreliefbeyondthatwhichisgrantedinacontemporaneous_rulemaking_Ԁproceeding.Seee.g.,PetitionforForbearanceofthe #! IndependentTelephone&TelecommunicationsAlliance,ThirdMemorandumOpinionandOrderin_AAD_ԀFileNo.9843,atpara.10(denyingrelieftotheextentthatpetition"extendsbeyondthereliefgrantedinthe_LEC_ԀClassificationSecondOrderonReconsideration.")See p&!$ also,PetitionforForbearanceoftheIndependentTelephone&TelecommunicationsAlliance, `'"% SixthMemorandumOpinionandOrderin_AAD_ԀFileNo.9843,atpara.2("Althoughwedonotgrantforbearancefromourrulesregardingapplicationsforspecialpermissionatthistime,weareconsideringwhether,andhow,weshouldmodifysomeofourrulesthatnecessitateapplicationsforspecialpermissionaspartofourongoingbiennialreview_rulemaking_Ԁandexpecttomakeafinaldecisiononthebasisofthatmorecompleterecordinthenearfuture.").IamtroubledthattheCommissionhasdecidedtoprovidesomelesserformofregulatoryreliefthanthatwhichwasrequesteddoingsoinaseparate_rulemaking_ԀwheretheCommissionhasmorediscretionand -@),  thenhasusedthatproceedingaspartofthejustificationfordenyingfullregulatoryforbearanceasrequested.Inotherwords,theCommissionhasdeterminedthatthesimplestmethodofdealingwiththesepetitionsistodenytheforbearancereliefatissuewhileatthesametimeprovidinglesserreliefinaseparate_rulemaking_Ԁproceeding.Butthatisnottheprocessthestatuterequires.Moreover,undersuchanapproach,theCommissionisabletoavoidthedifficultquestionofwhy,whenconsideringthesamefacts,particularregulatoryreliefisappropriateandotherregulatoryreliefwouldcontravenethestatute.Suchdistinctionswouldfrequentlybedifficulttojustifyastheforbearancecriteriafocusongeneralstandardse.g."protectionofconsumers,"or"inthepublicinterest."IobjecttotheCommission'sattempttoavoidtheobjectiverigorofthesection10forbearancetestbyprovidingregulatoryreliefinseparateproceedingswheretheCommissionhasmorediscretion.  Inaddition,thisapproachlendsitselftoeliminatingonesetofrequirementsandatthesametimeadoptingnewalbeitlesserregulatoryrestrictionsthatwouldnotbejustifiedundersection10alone.Seee.g.,BiennialRegulatoryreviewofAccountingandCostAllocation   Requirements,PetitionforForbearanceoftheIndependentTelephone&TelecommunicationsAlliance,FourthMemorandumOpinionandOrderin_AAD_ԀFileNo.9843,atpar.25(reinterpreting_ITTA_ԀpetitionasnotaskingtoforbearfromClassAaccountingaltogetherbut"[_e]ssentially_Ԁ...askingustochangeourrules,nottoforbearfromapplyingthecurrentrules.").Whilesection10providesthattheCommissionmaybeabletoforbear"inwholeorinpart"fromaparticularprovisionorregulation,seesection10(c),itdoesnotprovidetheCommissionwith p anyauthoritytoadoptnewregulationsortoimposeseparateconditionsinthecontextofa ` forbearancepetition.Section10'sprimaryemphasisisonderegulation,andIwillnotsupportthisprovision,oranyoftheproceedingsrequiredbyasection10petition,beingusedasanopportunitytoauthorizenewregulatoryrestrictionsorconditions.IfearthatthistypeofexpansivereadingoftheCommission'sauthorityundertheAct'sforbearanceprovisionswillleadtheCommissionastrayfromitsclearstatutorydutiesandlimitations.    Finally,asIhavestatedpreviously,IamconcernedthattheCommissionisplacingtoohighaburdenonthepartiesrequestingforbearancerelief.IbelievethattheSection10forbearanceschemerequirestheCommissiontojustifycontinuedregulationinlightofthecompetitiveconditionsinthemarketplace.TheCommissioncannotmeettheirstatutoryobligationsbysimplyshiftingtheburdentopetitionerstojustifyforbearance.    `     ,`'* Ї    X0 G   N14 <DL!T$X hXN XXa  #}}dd  w . & %XXQSEPARATESTATEMENTOFCOMMISSIONERMICHAELK.POWELL # w#1#XQX %&۳#    XaX .XaXXa X H+ ` hp x X hXHRe:  PetitionforForbearanceoftheIndependentTelephoneand l TelecommunicationsAlliance(_AAD_ԀFileNo.9843),andrelatedproceedings(CC \ DocketNo.9711,CCDocketNo.9881,CCDocketNo.96150,CCDocketNo.98117,_WT_ԀDocketNo.96162,CCDocketNo.96149,CCDocketNo.9661) XE+ ` hp x ` XE7  7ӷ B+ ` hp x XB   IampleasedtojoinmycolleaguesingrantingsomeoftheregulatoryreliefrequestedintheforbearancepetitionfiledbytheIndependentTelephoneandTelecommunicationsAlliance(_ITTA_)onbehalfofmidsizedlocalexchangecarriers.AlthoughIconcurintheresultsofmostoftheseitems(especiallywhereregulatoryreliefisgranted),Iam,however,compelledtodissentinparttothreeofthedecisions,andIcontinuetobeconcernedabouttheCommissionshandlingandanalysisofforbearancerequestsundersection10oftheCommunicationsAct.7ӷ݌̌     Inthesevariousitems(someconcernotherongoing_rulemaking_Ԁproceedings),weaddressnineregulatoryrequirementsfromwhich_ITTA_,onbehalfofmidsized_LECs_,requestedforbearance.WeadoptedsevendifferentOrdersinresponsetothepetition(andotherpetitionsornotices).InlookingattheseOrdersasapackageandindividually,whilesomereliefisgranted,Icontinuetobeconcernedthat,whereforbearanceisdenied,thesepetitionsarenotbeingtreatedinamannerfullyconsistentwiththeintentandspiritofsection10oftheAct.WhileIconcurwiththeoutcomeofmostoftheseitemssinceIbelievewearereachingthecorrectresultIdocontinuetoquestion(alonglinessimilartothoseIhaveexpressedelsewhere)ourmeansandmethodsforhandlingforbearancepetitions.   L   Imustrespectfullydissent,however,fromthecontinuedapplicationofseparateaffiliaterequirementsfortheprovisionofinregion_interexchange_Ԁservicesandcommercialmobileradioservices(_CMRS_)bymidsized_LECs_.Myreasonsaretwofold.First,Icontinuetobeuneasywiththedegreetowhichrelianceonthisandsimilarregulatorydevicesisbasedonspeculationabout_anticompetitive_Ԁbehavior.Ifullyunderstandthatanyanalysisaboutpotentiallyharmfulfutureconductentailssomeassessmentoflikelyconduct.Historically,theagencyhasstewardedthebasicprincipleofnondiscrimination,resultinginregulatoryprotectionsagainstcost_misallocation_Ԁand_anticompetitive_Ԁbehaviorflowingfromcontrolofa"bottleneck"facility.Ourprecedents,suchasseparateaffiliaterequirements,wererightlypremisedontheexistenceofatruemonopolist(sanctionedbythestate)andtheassociatedrisks.Inthatenvironment,notonlydidtheincumbenthavemonopolypower,therewasnoprospectofcompetitionnoranywatchfulpresentorfuturecompetitors.Thesesafeguardsweredesignedtoprotectconsumersfromthepotentialilleffectsofsuchaccumulatedpower.    +\&) 1( 120 1          Ibelieve,however,thatmuchhaschanged.Themovementtowardacompetitiveenvironmentmeansthatwemusttakeintofullerconsiderationthenecessity,viability,andthepotentiallydistortingcompetitiveconsequencesofoldfamiliarregulatorydevices.Thus,totheextentwemustspeculateaboutpotentialharm(tocompetitionandconsumers)wemust,too,factorinmorefullythepotentialdiscipliningeffectsofbothrealcompetitionandpotentialcompetition.Iseeacontinuedtendencytoinvoketheancientmantra"toprotectagainstdiscriminatorythisorthat"asglibjustificationforcontinuedregulatoryconstraints.Ibelievewemustworkharderandpressmoreheavilyonthetraditionalrationales.Idonotbelievewedidsointhiscase.Moreover,todosowilltaketimeandresources,whichwedonothavewhenforbearancepetitionsarepresentedfordeliberationwithonlyasecondortwoleftonthestatutoryshotclock,aswasthecasehere.   0    MysecondconcernrestswiththeextentthattheCommissionexpressesatendencytojustifycertainregulatoryrestrictionsinthenameofpromotingoradvancingcompetition.Thatalone,ofcourse,maybeworthy,butwearenotfreetodosoinamannerthatinvolvesintermediatejudgementsthatdifferfromthosereachedbyCongress.Letmeexplainmorefully.     (  XQXXXQXQXXXQ  (  Priortothe1996Act,IbelievebothJudgeGreeneandtheFCCdidseektocreate p limitedcompetitivemarketsoutofthemonopolyproviderscontroland,concomitantly,imposesafeguardsdesignedtokeepthemonopolistfromthwartingfledglingcompetitorsaswellasensuringthatcoreregulatorygoalswerenotcompromisedbysuchcompetitiveforays.Thesecompetitiveexcursionswerelimitedandusuallymerelyincrementalvoyagesintocompetitiveservicemarkets.But,wemustberemindedthatthefundamentalparadigmremainedregulationandcentralcontroloverthemostprizedservices.ThekeypointisthatJudgeGreeneandtheCommissionhadafairlywidebirthtodeveloptheconditionsoftheirmarketopeningefforts.(݌̌  XQXXXQXQXXXQ   t  0   tThe1996Act,however,alteredtheparadigmandstructuredthebasictermsofcompetition.Competitiveservicesweretobecometherule,andregulatedservicesthelimitedexceptions.Byitsact,Congresscraftedacomprehensivecompetitivemodel,designedspecificallytosupplantthe_MFJ_.Inweavingthisfabric,Congressmadeanumberofsignificantjudgements.Theonemostrelevanthereisthatitconcludedthat,ratherthanrestrictthe_ILECs_Ԁtoregulatedwholesaleservice,itallowed_ILECs_Ԁtocompeteattheretaillevelaswell.Thisjudgementmayproveunwiseorunworkable,butitistheonethatCongresschose.  t P(#&   tCongresswasnotoblivioustothechallengesorperilsofallowingthe_ILECs_Ԁtocompete,however,inlongdistanceandotherserviceswhiletheystillcontrolledmanyofthenecessaryfacilitiesandinputsthatothercompetitorswouldneed.Itaddressedthisproblembycraftinganaccessandinterconnectionregime(sections251and252)thatplaceduniquedutiesandobligationson_ILECs._ԀInaddition,Congressrecognizedthatdifferentclassesof_LECs_Ԁrequireddifferentlevelsofsafeguardsandincentives.Bell -@), OperatingCompanies(_BOCs_),andtheyalone,aresubjecttosections271and272._ILECs_havemoredutiesandobligationsthan_CLECs_,andsoon.Thus,whetheronelikesitornot,Congresssubstantiallyaddressedthedangersof bottleneckcontroland  discriminatoryincentivesintheAct.  t p   tAsaconsequence,Ibelieve,theCommissionisnotasfree(asitperhapswaspriortotheAct)tostewardatransitiontoacompetitionregimedifferentthanthatoftheonechosenbyCongress.Specifically,asitrelatestothequestionofseparateaffiliates,wemustbecarefulnottoimposeregulatoryrequirementsthatinpracticaleffectamounttowholesale/retailseparations,whereCongressintendednone.(Inotethatincontrasttothecarrierspetitioninghere,_BOCs_Ԁareexpresslysubjecttoseparateaffiliatesforsomeservices).Forthisreason,Iamuncomfortablewiththeanalysisprofferedtosupportcontinuedseparateaffiliaterequirements.Wecite bottlenecksand incentivesinwhatsubtly(thoughperhapsunintentionally)seemstomeapreferenceforwholesaleseparationinacompetitivemarket.Bywayofillustration,theOrdersoftenspeakoftheimportanceofseparateaffiliatestoensurethattheyobtainfacilitiesonan"armslengthbasis"andtoensurethatallcompetinginregionprovidersandothercarriershavethesameaccess(i.e.,  wholesale).  t    tThoughCongressmadejudgementsaboutthecompetitivegroundrules,itdidnotendeavortosweepthroughourregulationsandapplythosejudgmentstoeachandeverystructuralrequirementonthebooks.Instead,itdirectedustosearchoutsuchrulesandapplythenewparadigm.Todoso,itgavetheCommissionthetwinenginesofthebiennialreviewandforbearance.ThisisonereasonIbelievethatsection10isimportantinevaluatingthecontinuedvalidityofseparateaffiliaterequirements,nototherwisemandatedbylaw,wherecompetitiveconditionsand/orotherregulatoryorenforcementmechanismsarealreadyinplace.  t P   tIbelievethatthepetitionbeforeusraisedsubstantialquestionswithregardtotheneedforstructuralseparationinlightofpresentconditions.Accordingly,Ibelievethatinresponseto_ITTA_'sforbearancepetition,weshouldhaveexaminedmorecarefullyalternativemethodsofenforcingcore_ILEC_Ԁresponsibilitiestoseeiftherewasn'tamorerational,limitedapproach.Forexample,weshouldhaveexploredincludingasunsetofthestructuralseparationrequirementforinregion_interexchange_Ԁserviceslikethatavailableto_BOCs_Ԁinsection272andtreatingmidsized_LECs_Ԁmorelikeruralcarriersunderthe_CMRS_separateaffiliaterequirement.  t p&!$   tForthesereasons,Irespectfullydissentinpartfromtheseparticulardecisions.  #XaXXa㍵## Xan#