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MEMORANDUM 6' <d6p<8INVOICE FEEFee Amount for Math Invoice   ,  $  j6LETTERHEADLetterhead - date/margins X       \R3'\  @..    \R3'\ш  X   | 8HIGHLIGHT 3Large, Italicized and UnderscoredV8HIGHLIGHT 2Large and Bold T,TITLETitle of a Document@.. j6LEGAL PORTLegal Portrait - 8.5 x 14    \RA'\    n8LETTER PORTLetter Portrait - 8.5 x 11    \R3'\    l6LEGAL LANDLegal Landscape - 14 x 8.5    \R'A\    p8LETTER LANDLetter Landscape - 11 x 8.5    \R'3\    ^&4DRAFT OFFTurn Draft Style off    p>S2DRAFT ONHeader A Text = DRAFT and DateX 8 =  '  X  C  $3C--XXXXXXX  XXXXRXXXXX X O(#DRAFT X HHG(#"US ,  > July19,1999!  HZ   '  555C @ $$@C  XX5 @ FederalCommunicationsCommission&&J(#FCC99104  ?' xdEx?   $57=CIOW_e98I.A.1.a.(1)(a)i)a)$57=CIQYag991.1.i.(1)(a)(i)1)a)     ($     m E$  555C @ $$ACK5Ԁ  1    ݀Section214(a)requirescarrierstoobtainCommissioncertificationtoconstruct,acquire,op erate,orengagein  transmissionoverlinesofcommunication(entrycertification)ortodiscontinue,reduce,orimpairservicetoacommunity(exitcertification).Section214(a)provides:0  Nocarriershallundertaketheconstructionofanewlineorofanextensionofanyline,orshallacquireoroperateanyline,orextensionthereof,orshallengageintransmissionoverorbymeansofsuchadditionalorextendedline,unlessanduntilthereshallfirsthavebeenobtainedfromtheCommissionacertificatethatthepresentorfuturepublicconvenienceandnecessityrequireorwillrequiretheconstruction,oroperation,orconstructionandoperation,ofsuchadditionalorextendedline....Nocarriershalldiscontinue,reduce,orimpairservice...unlessanduntilthereshallfirsthavebeenobtainedfromtheCommissionacertificatethatneitherthepresentnorfuturepublicconvenienceandnecessitywillbeadverselyaffectedthereby.... (#(# 47U.S.C.214(a).(9!2$ 8!8Kdd8 =     555C @ $3C  K5Ԁ  0   v E$  555C @ $$ACK5Ԁ  2    ݀PetitionforForbearanceoftheIndependentTelephone&TelecommunicationsAlliance,filedFeb.17,1998.  Initspetition,ITTAalsorequestedforbearancefromotherprovisions,whichweaddressinseparateorders.IndependentTelephoneandTelecommunicationsAlliance,PetitionforForbearancefor2%MidSizeLocalExchangeCompanies,AADFileNo.9843.  E$  555C @ $$ACK5Ԁ  3    ݀BlanketentrycertificationpreservestheCommission'sabilitylatertorevokeacarrier'soperatingauthority  whennecessaryfor,interalia,consumerprotection. 0 E$  555C @ $$ACK5Ԁ  4    ݀OurrevisedrulesaresetoutinAppendixB.  E$  555C @ $$ACK5Ԁ  5    ݀Seee.g.,KendallTelephone,Inc.ApplicationforAuthoritytoAcquireandProvideServiceover19Local  ExchangesinNorthernandCentralWisconsinPursuantto47U.S.C.214(a),NSDFileNo.WPC7161andAmeritechWisconsin(WisconsinBell)ApplicationforAuthoritytoDiscontinueServicein19LocalExchangesin D  NorthernandCentralWisconsinPursuantto47U.S.C.214(a),NSDFileNo.WPD429,OrderandCertificate g (rel.July31,1998). 1 E$  555C @ $$ACK5Ԁ  6    ݀Seee.g.,ApplicationsofNYNEXCorporationTransferor,andBellAtlanticCorporationTransferee,For  ConsenttoTransferControlofNYNEXCorporationandItsSubsidiaries,FileNo.NSDL9610,Memorandum z OpinionandOrder,FCC97286(rel.Aug.14,1997). ^ E$  555C @ $$ACK5Ԁ  7    ݀Seeinfrapara.17.Acquisitionsofcorporatecontrolentailmarketandeconomicconsiderationssuchasthose  presentedinHorizontalMergerGuidelines,issuedbytheU.S.DepartmentofJusticeandFederalTrade z CommissionApril2,1992,whicharenotexplicitlyaddressedbyourPart63rules.SeeInreApplicationof D Alascom,Inc.,AT&TCorporation,andPacificTelecom,Inc.ForTransferofControlofAlascom,Inc.fromPacificTelecom,Inc.toAT&TCorporation,OrderandAuthorization,WPC7037,11FCCRcd732,739740(1995).In ( aseparateproceeding,however,weareconsideringaspecificrequesttoforbearfromcertainreviewofcorporatecontroltransactions,submittedinPetitionforForbearanceoftheIndependentTelephoneandTelecommunicationsAlliance,ThirdMemorandumOpinionandOrder,AADFileNo.9843,FCC99105(rel.June30,1999)(asking 6  theCommissiontoforbearfromapplyingthemarketandeconomicanalysissetforthinIntheApplicationsofNYNEXCorporationTransferor,andBellAtlanticCorporationTransferee,ForConsenttoTransferControlofNYNEXCorporationandItsSubsidiaries,MemorandumOpinionandOrder,FileNo.NSDL9610,FCC97286    (rel.Aug.14,1997)).  E$  555C @ $$ACK5Ԁ  8    ݀Inthisproceedingwemodifyonlythoserulesthataffectdomesticcarriers.Therulesgoverninginternational  carrierentryandexitarefoundat47C.F.R.63.0963.24.Wehaverecentlystreamlinedinternationalsection214authorizationproceduresinaseparateaction.1998BiennialRegulatoryReviewReviewofInternationalCommonCarrierRegulations,ReportandOrder,IBDocketNo.98118,FCC9951(rel.Mar.23,1999). 7 E$  555C @ $$ACK5Ԁ  9    ݀78Cong.Rec.10314(1934)(RemarksofRep.Rayburn). P E$  555C @ $$ACK5Ԁ  10    ݀47C.F.R.63.01.Adomesticdominantcarrierisdefinedas"acarrierfoundbytheCommissiontohave  marketpower(i.e.,powertocontrolprices)."47C.F.R.61.3(o).TheCommissionhasclassifiedcarriersas"dominant"or"nondominant"since1980.PolicyandRulesConcerningRatesforCompetitiveCommonCarrierServicesandFacilitiesAuthorizationsTherefor,FirstReportandOrder,85F.C.C.2d1(1980);PolicyandRules ^ ConcerningRatesforCompetitiveCommonCarrierServicesandFacilitiesAuthorizationsTherefor,SecondReport ( andOrder,91F.C.C.2d59,7173(1982);PolicyandRulesConcerningRatesforCompetitiveCommonCarrier  ServicesandFacilitiesAuthorizationsTherefor,ThirdReportandOrder,Mimeo012(rel.Oct.6,1983),48Fed. l  Reg.46791(1983);PolicyandRulesConcerningRatesforCompetitiveCommonCarrierServicesandFacilitiesAuthorizationsTherefor,FourthReportandOrder,95F.C.C.2d554(1983),vacatedsubnom.AmericanTel.and  P Tel.Co.v.FCC,978F.2d727(D.C.Cir.1992);PolicyandRulesConcerningRatesforCompetitiveCommon    CarrierServicesandFacilitiesAuthorizationsTherefor,FifthReportandOrder,98F.C.C.2d1191(1984);Policy    andRulesConcerningRatesforCompetitiveCommonCarrierServicesandFacilitiesAuthorizationsTherefor,Sixth ^   ReportandOrder,99F.C.C.2d1020(1985);vacatedsubnom.MCITelecommunicationsCorp.v.FCC,765F.2d (x  1186(D.C.Cir.1985)(theCompetitiveCommonCarrierProceeding);MotionofAT&TCorp.tobeReclassifiedas B  aNonDominantCarrier,Order,11FCCRcd.3271(1995),recon.pending;RegulatoryTreatmentofLEC   ProvisionofInterexchangeServicesOriginatingintheLEC'sLocalExchangeArea,SecondReportandOrder,CC   DocketNo.96149;PolicyandRulesConcerningtheInterstate,InterexchangeMarketplace,ThirdReportand P  Order,CCDocketNo.9661,12FCCRcd15756(1997),OrderonReconsideration,12FCCRcd8730(1997), j  Order,13FCCRcd6427(1998). / 8!8Kdd8 @=    @ 555C @ $$AC  K5Ԁ  11  See47C.F.R.61.3(u)(definingadomesticnondominantcarrieras"acarriernotfoundtobedominant");  47C.F.R.63.07(a)("Anypartythatwouldbeanondominantdomesticinterstatecommunicationscarrierisauthorizedtoprovidedomestic,interstateservicestoanydomesticpointandtoconstruct,acquire,oroperateanytransmissionlineaslongasitobtainsallnecessaryauthorizationsfromtheCommissionforuseofradiofrequencies").  E$  555C @ $$ACK5Ԁ  12    ݀47C.F.R.63.02.  E$  555C @ $$ACK5Ԁ  13    ݀Id.63.03.  E$  555C @ $$ACK5Ԁ  14    ݀Id.63.04.  E$  555C @ $$ACK5Ԁ  15    ݀Id.63.05.  E$  555C @ $$ACK5Ԁ  16    ݀Id.63.06.  E$  555C @ $$ACK5Ԁ  17    ݀Id.63.08.  E$  555C @ $$ACK5Ԁ  18    ݀47U.S.C.214(a).  E$  555C @ $$ACK5Ԁ  19    ݀Id.63.60,63.71.  E$  555C @ $$ACK5Ԁ  20    ݀Id.63.62.  E$  555C @ $$ACK5Ԁ  21    ݀Id.63.63.  E$  555C @ $$ACK5Ԁ  22    ݀Id.63.65.  E$  555C @ $$ACK5Ԁ  23    ݀Id.63.66.  E$  555C @ $$ACK5Ԁ  24    ݀Id.63.100.  E$  555C @ $$ACK5Ԁ  25    ݀Id.63.90.  E$  555C @ $$ACK5Ԁ  26    ݀Id.63.71.  E$  555C @ $$ACK5Ԁ  27    ݀Implementationofsection402(b)(2)(A)oftheTelecommunicationsActof1996,NoticeofProposed  Rulemaking,CCDocketNo.9711,12FCCRcd(1997).  E$  555C @ $$ACK5Ԁ  28    ݀Section402(b)(2)(A)ofthe1996Act,asnotedearlier,states,"[t]heCommissionshallpermitanycommon  carriertobeexemptfromtherequirementsofsection214oftheCommunicationsActof1934fortheextensionofanyline...."47U.S.C.214nt.Section651(c)oftheActprovides,"[a]commoncarriershallnotberequiredtoobtainacertificateundersection214withrespecttotheestablishmentoroperationofasystemforthedeliveryofvideoprogramming."47U.S.C.571(c).  E$  555C @ $$ACK5Ԁ  29    ݀SeeAppendixA.  E$  555C @ $$ACK5Ԁ  30    ݀Section63.04(whichprovidesforrequestsfortemporaryandemergencyservice)isrenumberedassection  63.25andisrevisedtoapplyonlytointernationalcarriers.Also,wenotethatsection63.03(relatingtosmallprojectsforsupplementingfacilities)pertainstointernationalaswellasdomesticcarriersbutthatnointernationalcarrierhasusedthisruleinrecentyears;accordingly,itsdeletionisnoncontroversialandwefindthatgoodcauseexiststoeliminatetherule,inaccordwith15U.S.C.553(b).  E$  555C @ $$ACK5Ԁ  31    ݀Wealsorevisesection1.763,whichconcernsthenoticerequirementswhensection214entryapplicationsare  filed,byupdatingobsoletelanguage.Followingitsrevision,section1.763willcontinuetogovernapplicationsthatarefiledseekingauthorityformergersandsimilartransfersofcorporatecontrol.Weaddtosection1.763referencestotheSecretaryofDefenseandtheSecretaryofState,whichcomportswiththecurrentlanguageof47U.S.C.214(b),replacingthecurrentobsoletereferencestotheSecretaryoftheArmyandtheSecretaryoftheNavy.Theobsoletereferencescomportedwiththelanguageofsection214(b)priortoa1974amendmentsinPub.L.93506;88Stat.1577(Nov.30,1974);followingthatamendment,theCommissionrevisedonlythecorrespondinglanguageofsection1.764,pertinenttodiscontinuanceapplications.40F.R.51441(Nov.5,1975).  E$  555C @ $$ACK5Ԁ  32    ݀47U.S.C.160(a).  E$  555C @ $$ACK5Ԁ  33    ݀Section10(b)illustratesthemethodbywhichcompetitiveeffectistobeweighed:  8  Inmakingthedeterminationundersubsection(a)(3),theCommissionshallconsiderwhetherforbearancefromenforcingtheprovisionorregulationwillpromotecompetitivemarketconditions,includingtheextenttowhichsuchforbearancewillenhancecompetitionamongprovidersoftelecommunicationsservices.IftheCommissiondeterminesthatsuchforbearancewillpromotecompetitionamongprovidersoftelecommunicationsservices,thatdeterminationmaybethebasisforaCommissionfindingthatforbearanceisinthepublicinterest.  E$  555C @ $$ACK5Ԁ  34    ݀Id.  E$  555C @ $$ACK5Ԁ  35    ݀NPRMatpara.37.  E$  555C @ $$ACK5Ԁ  36    ݀Wespecificallyasked,forexample,forcommentsonwhethertostreamlineoursection214application  proceduresforthethreeidentifiedclassesofcarriersinsteadofforbearingfromthesection214authorizationrequirements.NPRMatpara.49.  E$  555C @ $$ACK5Ԁ  37    ݀USTACommentsat45.  E$  555C @ $$ACK5Ԁ  38    ݀SBCCommentsat34. < E$  555C @ $$ACK5Ԁ  39    ݀ALLTELCommentsat1;NCTACommentsat5;USTACommentsat36.  E$  555C @ $$ACK5Ԁ  40    ݀ALLTELCommentsat45.  E$  555C @ $$ACK5Ԁ  41    ݀NTCACommentsat3.  E$  555C @ $$ACK5Ԁ  42    ݀NPRMatparas.24and45.47C.F.RPart31governstheuniformsystemofaccountsfortelecommunications  companies.47C.F.RPart61governstariffs.47C.F.RPart64containsmiscellaneousrulesrelatingtocommoncarriers.  E$  555C @ $$ACK5Ԁ  43    ݀ITTACommentsat67. < E$  555C @ $$ACK5Ԁ  44    ݀Id.at2.WeaddressITTA'sseparatearguments,below.  E$  555C @ $$ACK5Ԁ  45    ݀USWESTCommentsat910.  E$  555C @ $$ACK5Ԁ  46    ݀GTECommentsat8.  E$  555C @ $$ACK5Ԁ  47    ݀MCICommentsat45.  E$  555C @ $$ACK5Ԁ  48    ݀MCICommentsat24.  E$  555C @ $$ACK5Ԁ  49    ݀PolicyandRulesConcerningRatesforCompetitiveCommonCarrierServicesandFacilitiesAuthorizations  Therefor,FirstReportandOrder,85F.C.C.2d1(1980).  E$  555C @ $$ACK5Ԁ  50    ݀Id. # E$  555C @ $$ACK5Ԁ  51    ݀See,e.g.,USTACommentsat34.  E$  555C @ $$ACK5Ԁ  52    ݀See,e.g.,CCN,Inc.,etal.,Order,CCDocketNo.97144,FCC9876(rel.Apr.21,1998)(unanimous  decisionoftheCommissionrevokingtheFletcherCompanies'section214operatingauthorityandimposingmultimilliondollarpenaltiesforslamming).  E$  555C @ $$ACK5Ԁ  53    ݀Seesuprapara.2. < E$  555C @ $$ACK5Ԁ  54    ݀SeeG.T.E.TelenetMerger,72F.C.C.2d91(1979). ) E$  555C @ $$ACK5Ԁ  55    ݀Thereisnopracticalneedforconcernthat acarriercouldavoidhavingtofileanapplicationforsection214  authoritybystructuringacorporatecontrolacquisitiondisguisedasaseriesoflineacquisitions,becausethesellerofalinewillstillberequiredtofileadiscontinuanceapplication,evenifthepurchaserpurportedlyhasblanketauthorityfortheacquisition.Shouldwenoticeapatternofdiscontinuancesinvolvingtransactionsbetweenthesametwocarriers,wewouldscrutinizethosetransactionscarefully.  E$  555C @ $$ACK5Ԁ  56    ݀UnderestablishedCommissionprecedent,acquistionsofcorporatecontrolarenotlimitedtoacquistionsof  equityownership,suchasstockorpartnershipinterests,andincludeactualworkingcontrolbywhatevermannerexercised(suchas,forexample,byvetopower,controllinginterestinaboardofdirectors,orothershareholderagreementprovisions).See,e.g.,47C.F.R.63.09(b),Note1(asamendedinReportandOrder,IBDocketNo. ^ 98118,supranote8). > E$  555C @ $$ACK5Ԁ  57    ݀PetitionforForbearanceoftheIndependentTelephone&TelecommunicationsAlliance("ITTA"),filed  February17,1998("Petition").ITTAcharacterizesitsfourteenmembersas"2%midsizeincumbentlocalexchangecarriers('2%midsizedcompanies'),thosemidsizecompaniesservinglessthan2percentofthenation'saccesslines."AppendixBofitspetitionidentifiesitsmembersas:AliantCommunications,ALLTEL,ATUTelecommunications,CenturyTelephoneEnterprises,Inc.,CincinnatiBellTelephone,CitizensCommunications,TheConcordTelephoneCompany,IllinoisConsolidatedTelephoneCo.,LufkinConroeTelephoneExchange,Inc.,NorthStateTelephoneCompany,RockHillTelephoneCompany,RosevilleTelephoneCompany,SouthernNewEnglandTelephoneCompany(SNET),andTDSTelecom.  OnApril2,1998,aPublicNoticewasissuedseekingcommentsonITTA'spetition.Independent    TelephoneandTelecommunicationsAllianceFilesPetitionforForbearancefor2%MidSizeIncumbentLocalExchangeCompanies,PublicNotice,AADFileNo.9843,DA98480(rel.Apr.2,1998).Sevenpartiesfiled ^   commentsinresponsetothePublicNotice(Ameritech;AT&T;BellAtlantic;GTE;SBC;TelecommunicationsResellersAssociation("TRA");andUnitedStatesTelephoneAssociation("USTA").Fivepartiesfiledreplies(AnchorageTelephoneUtility("ATU");CincinnatiBellTelephoneCompany("CincinnatiBell");GeneralCommunication,Inc.("GCI");andITTA).  OnJanuary19,1999,thedeadlinefortheCommission'sactiononITTA'spetitionwasextendedby90daystoMay18,1999.SeePetitionforForbearanceoftheIndependentTelephoneandTelecommunicationsAlliance, 4 AAD9843,Order,DANo.99197(adoptedJan.19,1999). L E$  555C @ $$ACK5Ԁ  58    ݀ITTA'sothereightforbearancerequestsarebeingaddressedinotherdecisions. 0 E$  555C @ $$ACK5Ԁ  59    ݀Petitionat29;seealsoUSTACommentsat16.  E$  555C @ $$ACK5Ԁ  60    ݀ITTArefersto"tariffingrequirements,affiliatetransactionrules,andthecomplaintprocess,"citing47U.S.C  204,105.Petitionat29.  E$  555C @ $$ACK5Ԁ  61    ݀SeeAT&TCommentsat2.  E$  555C @ $$ACK5Ԁ  62    ݀See,e.g.,BellAtlanticCommentsat2;GTECommentsat68;USTACommentsat56.Nocommenter  providesspecificevidencethatactualorprospectivecompetitionexists,enablingconsumerstobeprotectedintheabsenceofsection214certification.USTA,forexample,presentsonlyexpansivegeneralizationsinsupportofallnineofITTA'sforbearancerequests,assertingthatcompetitivelocalexchangecarriers(CLECs)arecertifiedinall50statesandtheDistrictofColumbia,thatmanyholdcertificatesinfiveormorestates,thatCLECsandcompetitiveaccessproviders(CAPS)haveannouncedplanstoofferserviceinnearly800cities,thatCAPShavefibernetworksinoperationinover300citiesandtowns,andthat"incumbentLECshavelostalmost1.75milliontelephonelinestocompetitors(practicallyalllucrativebusinesscustomers)[and]competitionhasreachedsmallergeographicareasandaneverwideningrangeofservices." \ E$  555C @ $$ACK5Ԁ  63    ݀SeePolicyandRulesConcerningtheInterstateInterexchangeMarketplace,PetitionsforForbearance,  MemorandumOpinionandOrder,CCDocketNo.9661,FCC98347,para.30(rel.Dec.31,1998)("noevidence z presentedtoshowthatrateintegrationisnotnecessaryfortheprotectionofconsumers"). v 8!8Kdd8 @=    @ 555C @ $$AC  K5Ԁ  64  Weobservedthat,historically,thecertificationprocess,standards,andrequirementsapplicabletobothnew  linesandlineextensionswereidenticalandthatneitherthecourtsnortheCommissionpreviouslyhaveneededtodefineordistinguishdifferentkindsof"lines."NPRMatpara.5;see,e.g.,GeneralTel.Co.ofCaliforniav.F.C.C., D 413F.2d390,402(D.C.Cir.1969),cert.denied,396U.S.888(1969);AmericanTel.andTel.Co.,10F.C.C.315, ^ 320(1944).  E$  555C @ $$ACK5Ԁ  65    ݀Section402(b)(2)(A),however,didnotrelievecarriersfromtherequirementtoobtainappropriate  authorizationfortheuseofradiofrequenciesunderTitleIIIoftheCommunicationsActof1934.  E$  555C @ $$ACK5Ԁ  66    ݀Addressingrelevantdictionarydefinitions,legislativeintent,geographicconsiderations,andcapacity  considerations,theCommissiontentativelydefinedan"extension"asalinethatallowsacarriertoexpanditsserviceintoageographicterritorythatitiseligibletoservebutthatitsnetworkdoesnotcurrentlyreach.Italsoinvitedcommentonalternativedefinitions.NPRMatparas.520,para.21. f E$  555C @ $$ACK5Ԁ  67    ݀WenoteourtentativeconclusionintheNPRMthat:"Becausetheinitiationofservicetoanewforeignpoint  raisesanarrayofissuesnotassociatedwiththeexpansionofservicewithinthedomesticUnitedStates...suchinitiationofserviceinvolvestheconstruction,acquisition,oroperationof'newlines.'"NPRM,para.31.Seealsoid. D paras.33&34(tentativelyconcludingthatfewcarrieractivitiesinvolvingtheprovisionofinternationalservicescanproperlybeconsideredline"extensions"withinthemeaningofsection214orsection402(b)(2)(A)). # E$  555C @ $$ACK5Ԁ  68    _Ԁ47U.S.C.571(c).  E$  555C @ $$ACK5Ԁ  69    _ԀSeeImplementationofsection302oftheTelecommunicationsActof1996,OpenVideoSystems,Reportand  Order,CSDocketNo.9646,FCC9699,11FCC_Rcd_.14639(1996). > E$  555C @ $$ACK5Ԁ  70    _Ԁ_NPRM_Ԁatpara.73. > E$  555C @ $$ACK5Ԁ  71    _Ԁ_NPRM_Ԁatpara.70.  E$  555C @ $$ACK5Ԁ  72    _ԀId. B E$  555C @ $$ACK5Ԁ  73    _Ԁ47_C.F.R._Ԁ63.90.  E$  555C @ $$ACK5Ԁ  74    ݀47C.F.R.63.71.  E$  555C @ $$ACK5Ԁ  75    ݀NPRMatpara.71.  E$  555C @ $$ACK5Ԁ  76    ݀USTACommentsat8.  E$  555C @ $$ACK5Ԁ  77    ݀MCICommentsat15.  E$  555C @ $$ACK5Ԁ  78    ݀DNSICommentsat2.  E$  555C @ $$ACK5Ԁ  79    ݀DNSIfurtherbelievesthatthisriskisnowexacerbatedbecausetheCommissionhasconcludedthatBOCs,  includingSBC,shouldbeallowedtonegotiatewithpaytelephonelocationproviderstoselectpresubscribedinterLATAcarriersfrompaytelephones.DNSICommentsat57(citingImplementationofthePayTelephoneReclassificationProvisionsoftheTelecommunicationsActof1996,ReportandOrder,4Comm.Reg.(P&F)938, ^ OrderonReconsideration,5Comm.Reg.(P&F)321(1996)).  E$  555C @ $$ACK5Ԁ  80    ݀Id.at4.  E$  555C @ $$ACK5Ԁ  81    ݀APUCCommentsat4.  E$  555C @ $$ACK5Ԁ  82    ݀Section214(b)provides:  0  (b)Uponreceiptofanapplicationforanysuchcertificate,theCommissionshallcausenoticethereoftobegivento,andshallcauseacopyofsuchapplicationtobefiledwith,theSecretaryofDefense,theSecretaryofState(withrespecttosuchapplicationsinvolvingservicetoforeignpoints),andtheGovernorofeachStateinwhichsuchlineisproposedtobeconstructed,extended,acquired,oroperated,orinwhichsuchdiscontinuance,reduction,orimpairmentofserviceisproposed,withtherighttothosenotifiedtobeheard;andtheCommissionmayrequiresuchpublishednoticeasitshalldetermine. M E$  555C @ $$ACK5Ԁ  83    ݀Section1.764oftherulesprovidesfornoticeandcopiesofdiscontinuanceapplicationstobefiledwiththe  SecretaryofDefenseandStategovernors,inaccordwith47U.S.C.214(b).Boththeregulationsat47C.F.R.1.764and47C.F.R.63.90(d)providefornoticeandfilingwithStatecommissions. P E$  555C @ $$ACK5Ԁ  84    ݀AlthoughtheCommissiondidnorproposeconsolidatingtheseprovisionsintheNPRM,priornoticeand  commentsareunnecessary.See5U.S.C.553(b)(A),underwhichtherulemakinggeneralnoticerequirementsdo z notapplyto"rulesofagencyorganization,procedure,orpractice...."  E$  555C @ $$ACK5Ԁ  85    ݀5U.S.C.601612.  E$  555C @ $$ACK5Ԁ  86    ݀5U.S.C.605(b)(asamendedbytheContractWithAmericaAdvancementAct,Pub.L.No.104121,110  Stat.847,866(1996)).  E$  555C @ $$ACK5Ԁ  87    ݀5U.S.C.801(a)(1)(A).  E$  555C @ $$ACK5Ԁ  88    ݀5U.S.C.605(b).  E$  555C @ $$ACK5Ԁ  89    ݀Id. @ E$  555C @ $$ACK5Ԁ  90    ݀Pub.L.No.10413,codifiedat44U.S.C.35013520.=>?@BCDE ;=CIOU]ekOrderI.A.1.a.(1)(a)i)a)56789:;< =W]ciowAgendaAgenda ItemsI.A.1.a.(1)(a)i)a)-./01234 7w}100Right-Aligned Paragraph NumbersI.A.1.a.(1)(a)i)a), 7101Starts 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) !"# CyParagraph1. a. i. (1) (a) (i) 1) a)I.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 Roman|\  P6G;P%\  `&Times New RomanXXj\  P6G;XP'\  `*Times New RomanTT&d\  PC&P<6X9`(CourieromanTXx6X@`7X@+ `*Times New RomanTTe P[CP2 HA`$ArialTTomanTTX&d H@X@\  `*Times New RomanTT6\  PQP.2A`ArialTTomanTXXm2PG;XP `*Times New RomanTTXPWP) `*Times New RomanTTO P\7P  `*Times New RomanTTXX\ P^QXP22AArialBoldTTT 2pdC " [  `*Times New RomanTTX)a [ PgQXP! `>  `6Times New RomanItalicTTX)^ `> XijQXX$ [  `*Times New RomanTTcTTw [ PQP)o> A`ArialTTomanTTcTTX)ao> PQXP#~>  *Times New RomanTTcTTT~> pQp*o> A`ArialTTomanTTcTTCo> PQP(8$8Kdd8 =     555C @ $3C dHP LaserJet 4,,,,,,03#37=CIQYag1.a.i.(1)(a)(i)1)a).&cDDA{&ertyBarx]U 8!8Kdd8 =     555C @ $ C  ? = K5_@gg+ Beforethe g @ FederalCommunicationsCommission@%Washington,D.C.20554   XXKo[X` hp x (#%'0*,.8135@8:<H?AXoIntheMattersof@0)  ( @0)ImplementationofSection402(b)(2)(A)@0) p CCDocketNo.9711 o  oftheTelecommunicationsActof1996@0) _  PetitionforForbearanceoftheIndependent@0)0 p AADFileNo.9843? p(#p(# Telephone&TelecommunicationsAlliance@0) /  @  REPORTANDORDERinCCDocketNo.9711    @ SECONDMEMORANDUMOPINIONANDORDERinAADFileNo.9843      Adopted: May18,1999 h      p Released:June30,1999 x  BytheCommission:0 CommissionerNessissuingastatement;CommissionerFurchtgottRoth X concurringinpart,dissentinginpart,andissuingastatement;andCommissionerPowellconcurringandissuingastatement.  (# (# @( TableofContents    K(#Paragraph< X4` (#XpX<I.INTRODUCTION""S(#.  1 O II.BACKGROUND""S(#.~ ~ 3 / III.ENTRYCERTIFICATION""S(#.$8 ! 0  A.0(#(#BlanketSection214AuthorityforAllCarriers""S(#.?8!(#(# 0  B.0(#(#ITTAForbearancePetition`"`"R(#.zz)19#x(#(# 0  C.0(#(#StatutoryExemptionsLineExtensionsandVideoProgrammingSystems`"`"R(#.@@T22%X!(#(# IV.EXITCERTIFICATION`"`"R(#. "26 '8 # V.PROCEDURALMATTERS`"`"R(#.!33 )"% VI.ORDERINGCLAUSES`"`"R(#. 37 _+#' APPENDIXALISTOFPARTIESINCCDOCKETNO.9711 ?-%) APPENDIXBFINALRULES  g x[X` hp x (#%'0*,.8135@8:<H?AX,(#x  @AA(I.INTRODUCTION  g C A $$@CB  2  1  .3  Ԁ ` InthisReportandOrder,weeliminateentrycertificationfilingrequirementsunder G  section214oftheCommunicationsActof1934,asamended(theAct).D C  1      ׀Further,wesignificantly 7  streamlineexitcertificationrequirementsunderthatsection.Withthisaction,wenotonlygrantthesubstanceofthesection214regulatoryreliefrequestedbythemembersoftheIndependentTelephoneandTelecommunicationsAlliance("ITTA")intheirpetitionforforbearance,F  C  2      ׀butalso   extendthatrelieftoallotherdomesticcarriers.  2  2  .3  Ԁ ` Ratherthanusingforbearancefromsection214,asrequestedbyITTA,wemodify p  ourrulessoastograntblanketauthoritytoalldomesticcarriers,includingITTA'smembers,thusprovidingsubstantiallythesameregulatoryreliefsoughtbyITTAbuttoalargerclassofcarriers.G C  3      ׀ P  Specifically,wegrant"blanket"entrycertificationtoallcarriersseekingtoconstruct,operate,orengageintransmissionoverdomesticlinesofcommunication,totheextentsuchauthorityisrequiredunderthestatute.H C  4      ׀Forcarriersseekingauthorityforacquisitions,wereviseourrulesto   grantblanketauthorityforacquisitionsofdomesticlinessuchasbypurchaseorlease.I C  5      ׀Thisblanket w B B B  authoritydoesnotincludeauthorizationforacquisitionsofcorporatecontrol,J$ C  6      ׀whichinvolve g differentconsiderationsthandoacquisitionsunderPart63.KJ C  7      ׀Further,westreamlineourexit W certificationproceduressothatalmostallapplicationsfordiscontinuanceofdomesticservicewillbegrantedautomatically,withoutadditionalCommissionaction.Wealsomodifyourrulestoimplementthe1996Act'sexemptionsfromsection214certificationforlineextensionsandvideoprogrammingservices.L C  8         @vv) II.BACKGROUND      2  3  .3  Ԁ ` Congressenactedthesection214(a)entrycertificationrequirementstoprevent p  uselessduplicationoffacilitiesthatcouldresultinincreasedratesbeingimposedoncaptivetelephoneratepayers.Mz C  9      ׀Part63ofourrulesprescribesproceduresforobtainingboththeentryand P  exitcertificationrequiredbysection214.  0    2  4  .3  Ԁ ` Underthecurrententrycertificationrules,dominantcarriersmustsubmitapplications g forsection214authority.N C  10      ׀Nondominantcarriersarealreadygrantedblanketauthoritytoaddnew W  linesorservicesbythetermsoftheruleitself,andtheyneednotsubmitapplicationsforcertificationtotheCommission.O C  11      ׀Therulesalsoincludespecialproceduresandreportingrequirementsina 7  numberofspecificsituations,includingextensionsinvolvingsmallprojects,PH C  12      ׀smallprojectsthat '   supplementexistingfacilities,Q C  13      ׀temporaryandemergencyauthority,Rl C  14      ׀terminationofauthorityfor   projectsnotcommencedpromptly,S C  15      ׀annualprogramplansinlieuofseparateapplicationsfor g supplementingexistingfacilities,TZ C  16      ׀andcertainlinesoutsideofacarrier'sexchangeservicearea.U C  17       W    2  5  .3  Ԁ ` Thesection214(a)exitrequirementsensurethatservicetocommunitiesmaynotbe 7  discontinuedwithoutadvancednoticetothepublicandCommissionauthorization.V~ C  18      ׀Underthe '  currentexitcertificationrules,bothdominantandnondominantcarriersmustsubmitdiscontinuanceapplications.W C  19      ׀Therulesincludespecialproceduresandfilingrequirementsinanumberofspecific   situations,includingimpairmentoftelephoneandtelegraphservice,X C  20      ׀emergencydiscontinuances,Y4  C  21         closureofpublictollstations,Z  C  22      ׀closuresatmilitaryestablishments,[X  C  23      ׀andnotificationofservice  outages.\ C  24      ׀Theexitcertificationrulesdonotconferanyblanketexitauthority.Bothdominantand p  nondominantcarriersmustfileapplicationsandmustalsogivepublicnoticeoftheirrequesteddiscontinuancesbythetimetheyfiletheirapplicationswiththeCommission.DominantcarriersmustpublishnewspapernoticesandnotifystatepublicutilityCommissions;]| C  25      ׀nondominantcarriers @  mustnotifytheiraffectedcustomersandincludeaprescribedstatementthattheCommission"willnormallyauthorizethisproposeddiscontinuance...unlessitisshownthatcustomerswouldbeunabletoreceiveserviceorareasonablesubstitutefromanothercarrier...."^ C  26      ׀Dominantcarrier w discontinuanceapplicationsaredecidedindividually,basedontherecordineachcase,whereasnondominantcarrierdiscontinuanceapplicationsaregrantedautomaticallyafter31daysunlesstheCommissionnotifiesthecarrierotherwise. G Ї  2  6  .3  Ԁ ` Followingenactmentofthe1996Act,theCommissionissuedtheNoticeofProposed g Rulemaking(NPRM)inthisproceeding._ C  27      ׀Section402(b)(2)(A)ofthe1996Actexemptsthe W "extension"ofanylineandsection651(c)oftheActexemptsvideoprogrammingsystemsfromtherequirementsofsection214.`$ C  28      ׀IntheNPRM,theCommissionproposedto(1)codifythestatutory 7  exemptions,(2)forbearfromenforcingsection214forsomecarriers;and(3)streamlinetheexitcertificationrules.EighteencommentsandninereplycommentswerefiledinresponsetotheNPRM.a C  29      ׀ITTAfiledaseparatepetitiononFebruary17,1998,askingtheCommissiontoforbear   from,interalia,applyingtherequirementsofsection214toitsmembers.     2  7  .3  Ԁ ` InthisReportandOrder,toderegulateentry,wedeletesections63.0163.06and p  63.08,whichcomprisetheexistingdomesticdominantcarrierentrycertificationrulesandthespecialproceduresinspecificsituations,referredtoabove.bp  C  30      ׀Werevisesection63.07,whichcurrently P  confersblanketauthorityonnondominantdomesticcarriers,toconferblanketauthorityonalldomesticcarriers,andwerenumberitassection63.01.c* C  31      ׀Bygrantingblanketauthority,we 0  substantiallygrantITTA'srequestforregulatoryrelieffromsection214.Wefurtheraddnewsection63.02toreflectthestatutoryexemptionsforlineextensionsandvideoprogrammingsystems.Finally,tostreamlinethediscontinuanceregulations,werevisesection63.71.Section63.71 g currentlygrantsonlynondominantcarrierdiscontinuanceapplicationsautomatically,butasreviseditwillautomaticallygrantdiscontinuanceapplicationstoallcarriersunlesstheCommissionotherwisenotifiestheapplicants.@$ III.ENTRYCERTIFICATION  '   A.0  BlanketAuthorityforAllCarriers.  (#(#   2  8  .3  Ԁ ` Background.IntheNPRM,weproposedtoforbearfromenforcingsection214for  newlinesofsome,domesticcarriersi.e.,nondominantcarriers,pricecapLECs,andaveragescheduleLECs.Undersection10(a)oftheAct,d C  32      ׀theCommissionmustforbearfromenforcing `  provisionsoftheActwhenitfindsthat:(1)enforcementisnotnecessarytoensurethatpricesarejustandreasonableandnotunreasonablydiscriminatory;(2)enforcementisnotnecessarytoprotectconsumers;and(3)forbearanceisconsistentwiththepublicinterest.Forthisthirdfactor,section10(b)expresslyrequirestheCommissiontoconsiderwhetherforbearancewillpromotecompetition.eZ C  33       TheCommissionmayalsoconsiderotherfactorsindeterminingthepublicinterest.fr  C  34      ׀ w WetentativelyconcludedthatnondominantcarriersfacecompetitivemarketforcesandthatpricecapLECsandaveragescheduleLECsfaceregulatoryratelimits,consistentwiththecriteriaofsection10.g  C  35      ׀Wetentativelyfound,however,thatdominantrateofreturncarriershavetheability G toinvestinunneededfacilitiesandtopassthecostsofthoseinvestmentsontotheircustomers.Hence,wedidnotproposeforbearanceforsuchcarriers.Weneverthelessaskedforcommentsonalternativestoforbearance.h  C  36            2  9  .3  Ԁ ` Anumberofcommentersarguethatweshouldforbearfromexercisingsection214 g entryauthorityovercertaincategoriesofcarriers.i C  37      ׀SBCsupportsforbearingfromapplyingsection W 214requirementstopricecapcarriers.jZ C  38      ׀ALLTEL,NTCA,andUSTAarguespecificallythat G  forbearanceshouldbeextendedtorateofreturnLECs.k C  39      ׀ALLTELcontendsthatrateofreturn 7  LECslacktheabilityto"goldplate"theirinvestments,andarguesthatrateofreturncarriershavenomoremarketpowerthanothers,becauseofthecomplexityoftelecommunicationsmarketproductsandbecausetheyaccountforlessthan2percentofinterstaterevenues.l~ C  40      ׀NTCAconcurs   thatexistingaccountingandcostallocationrulesaredesignedtoprotectcaptiveratepayersandbelievesthattheCommissionshouldnot"selectivelyimposesection214certificationrequirementsonrateofreturnLECs"whileforbearingfromimposingthoserequirementsonothercarriers.m C  41      ׀ p  USTAarguesthattheforbearancecriteriaofsection10arealreadysatisfied,basedonstatementsintheNPRMthatsection214certificationisintendedonlytopreventwastefulandduplicativeinvestments,notprecludeabusivepractices,andthattheCommissionhasotherrulesinplacetoensurethatcarrierratesandpracticesarejust,reasonable,andnondiscriminatory,including47C.F.R.Parts32,61,and64.n C  42           2   10  .3  Ԁ ` Severalcommentersraiseother,specific,forbearancepositions.ITTAurgesthe g Commissiontoforbearfromrequiringitsmembers"midsizedindependenttelephonecompanies"tocomplywithsection214requirements.o  C  43      ׀ITTAcontendsthatthesecompaniesexerciselittle,if G any,marketpower,becausetheyare"toosmalltobeathreattotheindustrygiants,yettheyaretoobigtobeaffordedmanyoftheregulatoryprotectionsavailabletohundredsofsmallLECs."pZ  C  44      ׀US ' WESTproposestoexpandforbearancetoincludesalesofexchanges,regardlessofwhetherthebuyerorthesellerisdominantornondominant,aslongas(1)therewillbenoterminationorinterruptionofservicebecauseofatransferofexchanges,and(2)astatecommissionhasapproved  thetransfer.q C  45      ׀GTEasksustoclarifythatweintendtoforbearfromrequiringsection214 g authorizationsfornewlinesofincumbentLECsoperatingascompetitivelocalexchangecarriers(CLECs)outsideoftheirterritories,oncetheyhaveexpandedintonewterritories,andthattheseCLECswillbeconsiderednondominant"justasareotherCLECs."rZ C  46       7    2   11  .3  Ԁ ` Ontheotherhand,MCIrecommendsthatweretainsection214reviewoverpricecap   LECs,averagescheduleLECs,andrateofreturncarriers,andlimitsection214forbearancetonondominantcarriers.MCIcontendsthatincumbentLECsmaymakeinefficientinvestmentstoforeclosecompetitiveentrybyinvestinginexcesscapacitytosupporttargeted,anti-competitivepricereductions,tothwarttheefficientoperationsoftheircompetitors,ortofavortheiraffiliates,regardlessofwhethertheinvestmentsareinefficientfortheirownnetworks.s C  47      ׀MCIarguesthat `  Congressionalintentwasnotlimitedtoforestallinginvestmentin"duplicative"facilities,butincludedforestallinginvestmentin"inefficient"facilities.t~ C  48       @      2   12  .3  Ԁ ` Discussion.Weconcludethatweshouldconferblanketsection214authorityfornew   linesofallcarriers,ratherthanforbearfromexercisingoursection214jurisdiction.Blanketauthoritywillpromotecompetitionbyderegulatingdomesticentry,allowingcarrierstoconstruct,operate,orengageintransmissionoverlinesofcommunicationwithoutfilinganapplicationwiththeCommission.Atthesametime,withblanketauthority,unlikeforbearance,weretaintheabilitytostopextremelyabusivepracticesagainstconsumersbywithdrawingtheblanketsection214authorizationthatallowstheabusivecarriertooperate.  2   13  .3  Ԁ ` Blanketauthorityforalldomesticcarriers,ratherthanforbearance,isclearly  warrantedandinthepublicinterestfordominantandnondominantcarriers,pricecapandrateofreturncarriers,andmidsizeandothercarriers.AstheCommissionexplainedin1980,whenitcreatedthesection63.07blanketauthorityregulationfornondominantcarriersinparticular,broadsection214certificationobviatesroutinefilings.u C  49      ׀TheCommissionparticularlyexpectedthat,with `  initialcertificationundersection63.07,successfuldomesticcarrierswouldcontinuetoexpand  P incrementallywithinthecontinentalUnitedStates.v C  50      ׀Certainly,today,eliminatingtherequirement g  forallcarrierstofileapplicationsforsection214authoritywillhavethesamederegulatory,procompetitiveeffect.WhilewetentativelyconcludedintheNPRMinthisproceeding,thatgoldplatingremainsaproblemforrateofreturncarriers,ourexperienceinreviewingsection214entryapplicationsreceivedinrecentyearsleadsustoconcludethatvirtuallynocarriers,rateofreturncarriersorothers,areinfactattemptingto"goldplate"theirnetworksattheexpenseofconsumers.Since1997,whentheNPRMwasissued,seventeendomesticsection214applicationswerefiled;nonewereopposed.Moreover,ourconclusionissubstantiatedbythecommenterstotheNPRM,whogenerallyassertthatgold-platingrarelyoccurs.wZ C  51      ׀Ratherthanmaintainingaregulatoryregime  thatmaystiflenewandinnovativeservices"input"regulationrequiringcasebycasesection214authorizationwebelieveitismoreconsistentwiththegoalsofthe1996Acttoremovethishurdle.Instead,wewillrelyonthemarketplacetoensurereasonablebehaviorbycarriers,includingdominantrateofreturncarriers,andonourenforcementauthoritytoremedytheveryfewproblemsthatmayoccurintheabsenceofentryregulation.  2   14  .3  ԀWebelievethatblanketsection214authorityforallcarrierswillaccomplishtheprimaryderegulatorygoalsthatCongressaddressedin1996,inthesection10forbearancecriteria.Byitsveryterms,blanketauthorityremovesregulatoryhurdlestomarketentry,therebypromotingcompetition.Forbearance,however,isnotinthepublicinterestbecauseitwouldremoveanenforcementtoolagainstabusivepractices.Inaddition,forbearancewouldcontravenethesecondforbearancecriterion,section10(a)(2),becausesomeenforcementofsection214isnecessaryforconsumerprotection.Werewetoforbearcompletely,wewouldhavenopowertopreventacarrierfromcommittingseriousabusesagainstconsumersbywithdrawingtheoperatingauthorityconferredundersection214.  2  15  .3  Ԁ ` RecentCommissionexperienceillustratesthatblanketauthorityisinthepublic p interestandwillensurethebenefitsofconsumerprotection.x C  52      ׀Priortolastyear,forexample,the ` FletcherCompanieshadobtainedblanketauthorityasnondominantcarriersunder47C.F.R63.07.Then,lastyear,theCommissionrevokedtheFletcherCompanies'section214authoritybecauseofthecarriers'extremelyabusiveslammingactivities.IftheFletcherCompanieshadbeenbeneficiariesofforbearance,andthusabletooperatewithoutobtainingsection214authority,thisCommissionwouldnothavebeenabletorevokethatauthorityandtherebyprecludetheFletcher w$ Companiesfromcontinuingtheirillegaloperations.Becauseofthisassuredconsumerprotectionweareconfidentthatblanketauthorityfordominantcarriersaswellasnondominantcarriersisinthepublicinterest.  2  16  .3  Ԁ ` Accordingly,wefindthatthepresentandfuturepublicconvenienceandnecessity '  requiretheconstructionandoperationofalldomesticnewlinespursuanttoblanketauthority,undersection214(a).Followingadoptionofblanketsection214authorityforallcarriers,theCommissionwillstilltobeabletorevokeacarrier'ssection214authoritywhenwarrantedintherelativelyrareinstancesinwhichcarriersmayabusetheirmarketpowerortheircommoncarrierobligations.Thisenforcementtoolwouldnotbeavailableifcarrierswerepermittedthroughforbearancetooperatewithouthavingsection214authorityinthefirstinstance.Hence,weadoptblanketsection214authority,ratherthancompletelyforbear,soastoprovidetheprimaryderegulatorybenefitsofforbearancewhile,atthesametime,ensuringthatwecantakeenforcementactionsasnecessarytoprotectconsumers.̀  2  17  .3  Ԁ ` Asnotedabove,acquisitionsunderthestatutecanbeeitheracquisitionsofassets, w suchasbypurchaseorleaseoflines,oracquisitionsofcorporatecontrol.y C  53      ׀TheCommissionhas g interpretedsection214toapplytobothtypesofacquisitions.zZ C  54      ׀IntheNPRM,weproposedrevising W Part63ofourrules,whichgovernsdomesticlineconstruction,acquisition,andoperation,butwedidnotaddresstheeconomicandmarketconsiderationspertinenttoacquisitionsofcorporatecontrol.Weconcludethatonlyacquisitionsofassets,suchasbypurchaseorleaseoflines,shouldbecoveredbyblanketauthority.{ C  55          2  18  .3  Ԁ ` Weincludeacquisitionsofassetsundertheblanketauthoritybecauseourexperience  inreviewingsuchfilingshasshownthattheyvirtuallyneverraisepublicinterestconcerns.Thesetypesofacquisitionsaregenerallyverylimitedinscope,veryfew,ifany,commentsarefiledinresponsetoourpublicnotices,andthesection214certificationisgenerallygrantedonanalmostpro formabasisasaresult.Acquisitionsofcorporatecontrol,bycontrast,oftenraiseseriouspublic  P interestconcernsregardingthestateofcompetitionfollowingtheproposedacquisitionormerger.| C  56      ׀ g  Suchacquisitionsareoftencontestedanddrawsignificantpubliccommentsthatweareboundtoconsider.Webelievethatthemagnitudeofcorporateacquisitionsandtheirpotentialeffectoncompetitiondistinguishesthemfromacquisitionsofassetsandhasledustoconcludethatcorporateacquisitionsshouldnotbecoveredbyblanketauthority. B.ITTAForbearancePetition      2  19  .3  Ԁ ` OnFebruary17,1998,ITTAfiledapetitionforforbearance,askingtheCommission  toforbearfromapplyingnineseparateregulatoryrequirementstoitsmembers,whichITTAcharacterizesas"2%midsizedcompanies."} C  57      ׀OneoftheregulatoryrequirementsfromwhichITTA `  seeksforbearanceissection214certificationfornewdomesticlines.Asnotedinourdiscussionabove,ITTAalsorequestedforbearancefromsection214requirementsinitscommentsontheNPRMinthisproceeding.WedenythispartofITTA'spetition.~ C  58      ׀ITTAanditssupporting 0  commentershavenotpresentedinformationorargumentsshowingthattheconclusionsabout   forbearancefromtheapplicationofsection214discussedaboveshouldbedifferentfor2%midsizedLECs.Inparticular,ITTAandothercommentershavenotshownthatforbearanceisinthepublicinterestandthatenforcementisnotnecessarytoprotectthepublicinterest.  2  20  .3  Ԁ ` ITTAarguesinitspetitionthatcompetitiveforces C  59      ׀andotherregulationsZ C  60      ׀protect '  consumers,butitdoesnotidentifycompetitorsorprovideanyspecificevidenceofcompetitioninitsmembers'serviceareas. C  61      ׀SupportingcommentersagreewithITTAthatsection214certification   requirementsareunnecessary,buttheysimilarlyofferonlygeneralpropositionsregardingtheeliminationofunnecessaryregulationsinthepresenceofcompetition.H C  62      ׀    2  21  .3  ԀTheargumentsofITTAanditssupportingcommenters,withoutsupportingfacts,cannotsatisfytherequirementsforforbearance.* C  63      ׀Inparticular,ITTA'spetitiondoesnotsatisfythesecond P  criterionofsection10(a),thatenforcementisnotnecessaryfortheprotectionofconsumers.TheCommissionmustbeabletotakestrongenforcementactionagainstcarriersthatundertakeabusivepracticesagainstconsumers,byretainingtheabilitytorevokeacarrier'sauthoritytooperate.Asnotedabove,althoughwemustthereforedenyITTA'sforbearancepetition,ITTAwillobtainsubstantiallyidenticalregulatoryreliefthroughtheblanketsection214entryauthoritythatweconfer g inthisproceeding,applicabletoalldomesticcarriers. C.0  StatutoryExemptionsLineExtensionsandVideoProgrammingSystems 7(#(#  '   2  22  .3  Ԁ ` LineExtensions.Section214statesthat"[n]ocarriershallundertaketheconstruction g ofanewlineorofanextensionofanyline,orshallacquireoroperateanyline...orshallengageintransmissionoverorbymeansofsuchadditionalorextendedline"withoutacertificatefromtheCommission.Section214definesa"line"as"anychannelofcommunicationestablishedbytheuseofappropriateequipment,otherthanachannelofcommunicationestablishedbytheinterconnectionoftwoormoreexistingchannels."AsdiscussedintheNPRM,whilesection214referstotwobroadcategoriesoflines,newlinesandlineextensions,thetwohavenotpreviouslybeendefinedordistinguished. C  64      ׀     2  23  .3  Ԁ ` Section402(b)(2)(A)ofthe1996Actstatesthatlineextensionsareexemptfrom p  section214requirements. C  65      ׀IntheNPRM,weproposedtodefine"extension." C  66      ׀Inourfinalrules, `  however,itisnotnecessarytodefinethisterm,becauseourdecisiontograntblanketentryauthorityforallnewdomesticlinesmeansthatnodomesticcarrierwillneedtosubmitanapplicationforentryauthority,regardlessofwhetheritsproposedlineisanexemptextensionoranewline.Werecognizethat,inspecificinstances,partiesmaydisputewhetheralineisanexemptextension,andinthoseinstanceswecanevaluatethecharacterofthelinesonacasebycasebasis.Forexample,internationalcarriersmuststillfileapplicationsfornewlines.  C  67      ׀Accordingly,toreflecttheline g extensionexemption,weneedonlycodifythesection402(b)(2)(A)statutoryexemption,andwemakeitpartofourregulationsbyincorporatingthelanguageofthesectionintoourrulesat47C.F.R.63.02(a). _ '   2  24  .3  Ԁ ` VideoProgrammingSystems.Undersection651(c)oftheAct, C  68      ׀videoprogramming g  systemsareexemptfromtherequirementsofsection214.InMarch1996,inaseparateproceedingthatimplementedthisprovision,wemodifiedourrules"totheextenttheyrelatetoanyrequirementthatacommoncarrierobtainacertificateundersection214toestablishoroperateavideoprogrammingdeliverysystem,"andweremovedfromourregulationstherulesat47_C.F.R._Ԁ63.5463.58thatgovernedsection214certificationofvideoprogramming._Z C  69      _     2  25  .3  Ԁ ` Inthe_NPRM_,weproposedtoaddlanguagetoourrulesexpresslyincorporating   languagefromsection651(c):"[a]commoncarriershallnotberequiredtoobtainacertificateundersection214withrespecttotheestablishmentoroperationofasystemforthedeliveryofvideoprogramming."_ C  70      _ԀThisproposaldidnotgeneratesignificantcontroversy,although_Ameritech_ `  suggestedthatamendmentoftheruleswouldbeunnecessarybasedonourMarch1996action.Toreflectthevideoprogrammingexemption,wewillcodifythesection651(c)statutoryexemption,makingitpartofourregulations,asproposed.Thelanguageofthesectionwillbeincorporatedintoourrulesat47_C.F.R._Ԁ63.02(b).@$ IV.EXITCERTIFICATION  g   2  26  .3  Ԁ ` Background.TheTelecommunicationsActof1996didnotchangethe G discontinuanceprovisionsofsection214.Inthe_NPRM_,however,wenotedthatcarriersassumeacertainamountofriskinenteringanewmarketandthat,iftherearesignificantbarrierstoexit,acarriermaybereluctanttoassumetheserisksandmaychoosenottoenterthemarket._H C  71      _Ԁ  Accordingly,weproposedtomodifyourexistingdiscontinuancerulesfordomesticcarrierstoreduceregulatoryexitburdensandadvanceCongress'pro-competitiveandderegulatorypolicies. C  72      ׀  Underourexistingrules,asnotedearlier,bothdominantandnondominantdomesticcarriersmustfilediscontinuanceapplicationsunder47_C.F.R._Ԁ63.61and63.71,respectively.BythetimeoffilingwiththeCommission,dominantcarriersmusthavepublishednewspapernoticesandnotifiedtherelevantstatecommissionoftheirsoughtdiscontinuances,_l  C  73      _Ԁandnondominantcarriersmusthave  P _notifiedeachaffectedcustomer. C  74      ׀Nondominantcarrierdiscontinuanceapplicationsaregranted g automaticallyafter31daysunlesstheCommissionnotifiesthecarrierotherwise.IntheNPRM,weproposedextendingthatproceduretodominantcarriersaswell,providing60dayautomaticdiscontinuancecertificationunlesstheCommissionnotifiesthecarriersotherwise.WeaskedinourNPRMforcommentsonwhetherthisproposalwouldprovideadequateincentivestocarriersandprotectiontoconsumers.Z C  75           2  27  .3  Ԁ ` GTEcontendsthatthecustomernotificationrequirementsthatapplyto   discontinuancesshouldapplytoallcarriers.USTAarguesthat31daysissufficienttoallowdiscontinuancewithoutadverseimpactonconsumersandthattheuniversalservicerequirementsof47U.S.C.214(e)(4)donotrequireacarriertogive60daysadvancenoticetothestatecommissioninordertorelinquishitsdesignationasacarriereligibletoreceiveuniversalservicesupport. C  76       P    2  28  .3  Ԁ ` Observingthatthe1996Actdidnotalteroursection214discontinuanceauthority, 0  MCIandDNSIopposestreamlineddiscontinuanceproceduresfordominantcarriers.~ C  77      ׀Arguingthat   theNPRMpresumesincorrectlythatcarriersdiscontinueserviceonlytoavoidlosses,DNSIcontendsthat"incumbentLECsmayseektodiscontinueserviceinordertostiflecompetition"fromconnectinginterexchangecarrierssuchasDNSI. C  78      ׀Asanillustration,DNSIreferstoSBC'splanto W eliminateitsOperatorTransferService,whichenablespayphonecustomerstorequestselectionofaninterexchangecarrierfromarandomlygeneratedlist.DNSIarguesthatSBCcandrivecarrierssuchasDNSIfromthatmarketbydiscontinuingthisserviceandselectinginterexchangecarriersaccordingtoitsownpreferenceratherthanfromtherandomlygeneratedlist. C  79      ׀AT&Tfurtherargues  thattheCommissionshouldeliminatethecustomernoticerequiremententirelyfornondominantinterexchangecarriers,competitiveaccessproviders,andcompetitivelocalexchangecarriers.\  C  80      ׀  Ї  2  29  .3  Ԁ ` Discussion.Becauseofthepotentialimpactonconsumersofthediscontinuance, g reduction,orimpairmentofservicebyacarrier,wewillcontinuetorequirecertificationunderournewstreamlinedproceduresforadomesticcarriertodiscontinue,reduce,orimpairserviceoveraline,regardlessofwhetherthecarrier'sinitialcertificationfortheconstruction,acquisition,oroperationofthelinewasobtainedunderblanketauthorityorwasnotrequiredbecausethelineisexemptasanextension.Wewillrevise47C.F.R.63.71tostatethatadomesticnondominantcarrier'sdiscontinuanceapplicationwillbegrantedautomaticallyafter31daysandadomesticdominantcarrier'sdiscontinuanceapplicationgrantedautomaticallyafter60days,unlesswenotifythecarrierduringtheinterimperiodthatitsapplicationwillnotbeautomaticallygranted.Theadditionaltimeiswarrantedfollowingapplicationsbydominantcarriers,toensureadequateopportunityforcommentstobefiledonwhethersubstituteserviceisavailable.Thisrevisionwillpromotecompetitionandreduceregulationbyapplyingtoallcarrierstheautomaticgrantdiscontinuanceproceduresthatcurrentlyapplyonlytonondominantdomesticcarriers.  2  30  .3  Ԁ ` FairnoticetocustomersshouldincludethestatementthattheCommissionwill   normallyauthorizediscontinuances,especiallyunderournewautomaticapprovalprovisions.WearenotpersuadedbyAT&TthatweshouldrequireonlyincumbentLECstogivenoticeoftheirintenttodiscontinueservicetotheirinterexchangeaccesscustomersbutnotsimilarlyrequirenondominantinterexchangecarriers,competitiveaccessproviders,andcompetitivelocalexchangecarrierstonotifytheircustomers.Evencustomerswithcompetitivealternativesneedfairnoticeandinformationtochooseasubstituteservice.Furthermore,becausetherulesrequirenoticetoallcustomers,itwouldappearunnecessarytorequirenoticetointerexchangeaccesscustomersofincumbentLECsinparticular.  2  31  .3  Ԁ ` Wewill,however,includetherequirementsuggestedbyAPUCthatnoticeshould  begiventoStatecommissionsaswellastocustomers. C  81      ׀Furthermore,wewillalsoincludethe p requirementtofurnishnoticeandacopyoftheapplicationtotheGovernoroftheStateinwhichthe lineisproposedtobediscontinuedandtotheSecretaryofDefense,requiredbysection214(b).Z C  82      ׀  P Ourregulationsatsections1.764and63.90alreadyincludethesenoticerequirements. C  83      ׀ g  Consolidatingtheminto47C.F.R.63.71(a)willclarifyagencyprocedureandpractice. C  84       W   2  32  .3  Ԁ ` InourNPRM,weexpressedconcernthat,aslocalexchangemarketsbecome 7  increasinglycompetitive,manycurrentlydominantLECsmayfindthemselvesunderincreasingpressuretoreduceoreliminateserviceinunprofitableareas.WitharelativelyshortadvancecustomernotificationperiodsuchasthatsupportedbyUSTA,anincumbentLECmightobtainautomaticdiscontinuanceauthorityeventhoughitistheonlycarrierservingaparticularcommunity.EnsuringthatapplicantsnotifyStatepublicutilitycommissionswillalleviatethisconcern.Suchnotificationshouldalsoalleviateotherconcernsraisedbycommenters.Statecommissionswithnoticewillbebetterabletobringtoourattentiontheeffectsofdiscontinuancesuponcustomerswhomaybeunablethemselvestoinformusthattheylacksubstituteservice,uponinterexchangeaccessproviders,anduponcompetingcarrierswhomaynotreceivenoticeofanti-competitivediscontinuances.Accordingly,47C.F.R.63.71willincludetherequirementthattheapplicantmustsubmitacopyofitsapplicationtothepublicutilitycommissionaswellastotheGovernoroftheStateandtheSecretaryofDefense,andalsonotifyallaffectedcustomersoftheplanneddiscontinuance,reduction,orimpairmentofservice.@% V.PROCEDURALMATTERS  G   2   33  .3  Ԁ ` WecertifiedintheNPRMthattheRegulatoryFlexibilityActof1980 C  85      ׀isnot ' applicabletothisrulemakingproceeding.Westatedthatiftheproposedrulechangesarepromulgated,therewillnotbeasignificanteconomicimpactonasubstantialnumberofsmallbusinessentitiesbecausetheproposedruleschangeswouldlessen,notincrease,theregulatoryburdenonsmallbusinesses.TheSecretarysentacopyoftheNPRMtotheChiefCounselforAdvocacyoftheSmallBusinessAdministrationinaccordancewithsection605(b)oftheRegulatoryFlexibilityAct. C  86      ׀Nopartiescommentedonourregulatoryflexibilitystatement. `   P   2!  34  .3  Ԁ ` OurstatementintheNPRMwasnotdisputedbyanycommentersthattheproposed g ruleschangeswouldlessen,notincrease,theregulatoryburdenonsmallbusinesses.Werecognizethatareductioninregulatoryburdendoesnot,initself,warrantaconclusionthattherewillnotbeasignificanteconomicimpactonasubstantialnumberofsmallbusinessentities.Nevertheless,itisclearthatouractiontodayderegulatesfromsection214alldomesticcommoncarrierentry.Theminimalamountofdomesticsection24certificationregulationthatremainswillgovernonlyservicediscontinuances.Thisremainingregulationwillentailsimplifiedapplicationsthatwillnormallybegrantedautomatically,subjectonlytoexpeditedreview.Accordingly,becauseourstatementintheNPRMwasnotdisputedandbecauseofthedramaticde-regulatoryeffectofthisrulemaking,weagainconcludethattherewillnotbeasignificanteconomicimpactonasubstantialnumberofsmallbusinessentitiesresultingfromthisrulemakingproceeding.  2"  35  .3  Ԁ ` TheCommissionwillsendacopyofthisfinalcertification,alongwiththisReport @  andOrder,inareporttoCongresspursuanttotheSmallBusinessRegulatoryEnforcementFairnessActof1996, C  87      ׀andtotheChiefCounselforAdvocacyoftheSmallBusinessAdministration.Z C  88      ׀A   copyofthiscertificationwillbepublishedintheFederalRegister. C  89       w   2#  36  .3  Ԁ ` Finally,wenotethat,becausetheNPRMcontainedeitheraproposedormodified W informationcollection,weinvitedthegeneralpublicandtheOfficeofManagementandBudget(OMB)tocommentontheinformationcollectionscontainedintheNPRM,asrequiredbythePaperworkReductionActof1995.~ C  90      ׀WereceivedanOMBNoticeofAction,underOMBControl ' Number3060-0149,approvingthecollections.Nopubliccommentswerereceivedaddressingthismatter.   @( ORDERINGCLAUSES  g   2$  37  .3  Ԁ ` Accordingly,ITISORDERED,pursuanttotheauthoritycontainedinSections1, G  4(i),4(j),10,11,201205,214,218,403and651oftheCommunicationsActof1934,asamended,47U.S.C.151,154(i),154(j),160,201205,214,218,403,and571,thatPart63theCommission'srules,47C.F.R.Part63,ISHEREBYAMENDEDassetforthinAppendixBofthisReportandOrder.  2%  38  .3  Ԁ ` ITISFURTHERORDERED,pursuanttoSection10oftheCommunicationsActof  1934,asamended,47U.S.C.160,thatthepetitionforforbearancefiledbyITTAonFebruary17,1998isDENIEDasdescribedherein.  2&  39  .3  Ԁ ` ITISFURTHERORDEREDthatthepoliciesandregulationsadoptedinthisOrder @  WILLBECOMEEFFECTIVEthirtydaysafterpublicationintheFederalRegister. 0     `    FEDERALCOMMUNICATIONSCOMMISSION   `    MagalieRomanSalas   `    SecretaryC A $$AC'_  ' @+ APPENDIXA g @ LISTOFPARTIESINCCDOCKETNO.9711  G   Partiesfilinginitialcomments:    TheAlaskaPublicUtilitiesCommission(_APUC_)_ALLTEL_ԀTelephoneServicesCorporation(_ALLTEL_)_AmericaTel_ԀCorporation(_AmericaTel_)The_Ameritech_ԀOperatingCompanies(_Ameritech_)0  (The_Ameritech_ԀOperatingCompaniesare:IllinoisBellTelephoneCompany,IndianaBellTelephoneCompany,Incorporated,MichiganBellTelephoneCompany,TheOhioBellTelephoneCompany,andWisconsinBell,Inc.) (#(# AT&TCorp.(AT&T)BellAtlanticandNynexBellSouthCorporationandBellSouthTelecommunications,Inc.(BellSouth)DigitalNetworkServices,Inc.(_DNSI_)_GTE_ԀServiceCorporation(_GTE_)IndependentTelephone&TelecommunicationsAlliance(_ITTA_)MCITelecommunicationsCorporation(MCI)TheNationalTelephoneCooperativeAssociation(_NTCA_)PacificTelesisGroup(PacificTelesis)SouthwesternBellTelephoneCompany(_SBC_)SprintCommunicationsCompanyL.P.(Sprint)_Telefonica_Ԁ_Larga_Ԁ_Distancia_ԀdePuertoRico,Inc.(_TLD_)TheUnitedStatesTelephoneAssociation(_USTA_)USWEST,Inc.(USWEST) Partiesfilingreplycomments:  #    _Ameritech_AT&TBellAtlanticandNynex_GTE_MCIPacificTelesisSequelConcepts,Inc.(Sequel)_Teleglobe_ԀUSA,Inc.(_Teleglobe_)_USTA  +$' @+ APPENDIXB g @NN+FINALRULES  G  Part1ofTitle47oftheCodeofFederalRegulationsisrevisedasfollows: PART1PRACTICEANDPROCEDURE    1.TheauthoritycitationforPart1continuestoreadasfollows:AUTHORITY:47U.S.C.151,154,207,303,and309(j),unlessotherwisenoted.2.Section1.763isrevisedtoreadasfollows: 1.763Construction,extension,acquisitionoroperationoflines.  W *****  (b)Incasesunderthissectionrequiringacertificate,noticeisgiventoandacopyoftheapplicationisfiledwiththeSecretaryofDefense,theSecretaryofState(withrespecttosuchapplicationsinvolvingservicetoforeignpoints),andtheGovernorofeachStateinvolved.***Part63ofTitle47oftheCodeofFederalRegulationsisrevisedasfollows: PART63EXTENSIONOFLINES,NEWLINES,ANDDISCONTINUANCE, "0 REDUCTION,OUTAGEANDIMPAIRMENTOFSERVICEBYCOMMONCARRIERS;ANDGRANTSOFRECOGNIZEDPRIVATEOPERATINGAGENCYSTATUS  w$ 1.TheauthoritycitationforPart63isamendedbyrevisingthecitationasfollows:AUTHORITY:Sections1,4(i),4(j),10,11,201205,214,218,403and651oftheCommunicationsActof1934,asamended,47U.S.C.151,154(i),154(j),160,201205,214,218,403,and571,unlessotherwisenoted. +$' Ї2.Sections63.01,63.02,63.03,63.05,63.06and63.08areremoved.3.Section63.07isrenumberedassection63.01andisrevisedtoreadasfollows: 63.01Authorityforalldomesticcommoncarriers.      (a)Anypartythatwouldbeadomesticinterstatecommunicationscommoncarrierisauthorizedtoprovidedomestic,interstateservicestoanydomesticpointandtoconstruct,acquire,oroperateanydomestictransmissionlineaslongasitobtainsallnecessaryauthorizationsfromtheCommissionforuseofradiofrequencies.Thisauthoritydoesnotapplytoacquistionsofcorporatecontrol,whicharenotlimitedtoacquistionsofequityownership,suchasstockorpartnershipinterests,andwhichincludeactualworkingcontrolbywhatevermannerexercised(suchas,forexample,byvetopower,controllinginterestinaboardofdirectors,orothershareholderagreementprovisions).  (b)Domesticcommoncarrierssubjecttothissectionshallnotengageinanylineconstructionthatmayhaveasignificanteffectontheenvironmentasdefinedin1.1307ofthischapterwithoutpriorcompliancewiththeCommission'senvironmentalrules.See1.1312ofthischapter.4.Newsection63.02isaddedasfollows: 63.02Exemptionsforextensionsoflinesandforsystemsforthedeliveryofvideo  programming.     (a)Anycommoncarrierisexemptfromtherequirementsofsection214oftheCommunicationsActof1934,asamended,fortheextensionofanyline.  (b)Acommoncarriershallnotberequiredtoobtainacertificateundersection214oftheCommunicationsActof1934withrespecttotheestablishmentoroperationofasystemforthedeliveryofvideoprogramming.5.Section63.04isrenumberedassection63.25anditstitleisrevisedasfollows: 63.25Specialprovisionsrelatingtotemporaryoremergencyservicebyinternational ')!$ carriers.  *"%  +$' 6.Section63.52isrevisedtoreadasfollows: g  63.52Copiesrequired;fees;andfilingperiods.  G  *****  (b)NoapplicationacceptedforfilingandsubjecttoPart63oftheserules,unlessprovidedforotherwise,shallbegranted********7.Section63.71isamendedbyrevisingthesectionheading,firstparagraph,andsubsection(c),toreadasfollows: 63.71Proceduresfordiscontinuance,reductionorimpairmentofservicebydomestic w carriers.  g   Anydomesticcarrierthatseekstodiscontinue,reduceorimpairserviceshallbesubjecttothefollowingprocedures:  (a)Thecarriershallnotifyallaffectedcustomersoftheplanneddiscontinuance,reduction,orimpairmentofserviceandshallnotifyandsubmitacopyofitsapplicationtothepublicutilitycommissionandtotheGovernoroftheStateinwhichthediscontinuance,reduction,orimpairmentofserviceisproposed,andalsototheSecretaryofDefense,Attn.SpecialAssistantforTelecommunications,Pentagon,Washington,D.C.20301.Noticeshallbeinwritingtoeachaffectedcustomer***  *****  (5)Oneofthefollowingstatements:   ` (i)Ifthecarrierisnondominantwithrespecttotheservicebeingdiscontinued,reducedorimpaired,thenoticeshallstate:"TheFCCwillnormallyauthorizethisproposeddiscontinuanceofservice(orreductionorimpairment)unlessitisshownthatcustomerswouldbeunabletoreceiveserviceorareasonablesubstitutefromanothercarrierorthatthepublicconvenienceandnecessityisotherwiseadverselyaffected.Ifyouwishtoobject,youshouldfileyourcommentswithin15daysafterreceiptofthisnotification.AddressthemtotheFederalCommunicationsCommission,Washington,D.C.20554, +$' referencingthe63.71Applicationof(carrier'sname).Commentsshouldincludespecificinformationabouttheimpactofthisproposeddiscontinuance(orreductionorimpairment)uponyouoryourcompany,includinganyinabilitytoacquirereasonablesubstituteservice."   ` (ii)Ifthecarrierisdominantwithrespecttotheservicebeingdiscontinued,reducedorimpaired,thenoticeshallstate:"TheFCCwillnormallyauthorizethisproposeddiscontinuanceofservice(orreductionorimpairment)unlessitisshownthatcustomerswouldbeunabletoreceiveserviceorareasonablesubstitutefromanothercarrierorthatthepublicconvenienceandnecessityisotherwiseadverselyaffected.Ifyouwishtoobject,youshouldfileyourcommentswithin30daysafterreceiptofthisnotification.AddressthemtotheFederalCommunicationsCommission,Washington,D.C.20554,referencingthe63.71Applicationof(carrier'sname).Commentsshouldincludespecificinformationabouttheimpactofthisproposeddiscontinuance(orreductionorimpairment)uponyouoryourcompany,includinganyinabilitytoacquirereasonablesubstituteservice."  (b)********  (4)Whetherthecarrierisconsidereddominantornondominantwithrespecttotheservicetobediscontinued,reducedorimpaired.  (5)AnyotherinformationtheCommissionmayrequire.  (c)Theapplicationtodiscontinue,reduceorimpairservice,iffiledbyadomestic,non-dominantcarrier,shallbeautomaticallygrantedonthe31stdayafteritsfilingwiththeCommissionwithoutanyCommissionnotificationtotheapplicantunlesstheCommissionhasnotifiedtheapplicantthatthegrantwillnotbeautomaticallyeffective.Theapplicationtodiscontinue,reduceorimpairservice,iffiledbyadomestic,dominantcarrier,shallbeautomaticallygrantedonthe60thdayafteritsfilingwiththeCommissionwithoutanyCommissionnotificationtotheapplicantunlesstheCommissionhasnotifiedtheapplicantthatthegrantwillnotbeautomaticallyeffective.Forpurposesofthissection,anapplicationwillbedeemedfiledonthedatetheCommissionreleasespublicnoticeofthefiling._  G'" c            SeparateStatement }___ g __c%34, g         of_ g   CommissionerSusanNess   W   KXXXXKRe:_ITTA_ԀPetitionforForbearance   Weareinthemiddleofaturbulentperiodaswetransitionfrommonopolytocompetition.Manyrulesandevenstatutoryprovisionsthatwereputintoplaceduringamonopolyregimemaynolongerbenecessarytoeffectuatetheirintendedpurpose.Recognizingthatthemarketplaceisrapidlyevolving,CongresswiselyprovidedtheCommissionwithaflexibletooltoforbearfromenforcementofprovisionsoflawandregulationswheretheCommissionfindsitservesthepublicinteresttodoso.TheforbearancepetitionfiledbytheIndependentTelephoneandTelecommunicationsAlliance(_ITTA_)affordsusanopportunitytoreviewparticularrulestodeterminewhethertheycontinuetobenecessarytoservethepublicinterest.Thepetitionrequestsregulatoryreliefformidsizedlocalexchangecarriersthatservelessthantwopercentofthenationsaccesslines.Underasection10forbearanceanalysis,theCommissionmustforbearfromapplyinganyruleorregulationiftheCommissiondeterminesthat(1)enforcementisnotnecessarytoensurethatchargesandpracticesarejustandreasonable,(2)enforcementisnotnecessaryfortheprotectionofconsumers,and(3)forbearanceisconsistentwiththepublicinterest.Inaseriesoforders,wegranttheforbearancerequestedinsomeinstances;wegobeyondwhatwasrequestedinsomeinstancesbyprovidingrelieftoabroaderclassofcarriers;andinafewlimitedinstancesweconcludethatcontinuedenforcementisnecessaryfortheprotectionofconsumers.OnerequestthatthemajoritydoesnotgrantisforbearancefromtheCommissionsrequirementthatincumbentlocalexchangecarriersoffercertainservicesthroughseparateaffiliates.Whileourseparateaffiliateruleshaveservedaveryimportantpurposeinthepast,separationmaybelessessentialascompetitionevolves.Basedontherecordinthisproceeding,however,Iamnotconvincedthatcompetitionhasdevelopedtothepointwhereconsumerswillbeadequatelyprotectedifweforbearfromourrules.Ilookforwardtoworkingwiththepartiestodevelopabetterrecordandtodeterminewhetherstructuralseparationpromotescompetitionordetractsfromthecompetitivemarketplace.  )"% _  CONSOLIDATEDSEPARATESTATEMENTOF G  COMMISSIONERHAROLDFURCHTGOTT-ROTH   Re:PetitionforForbearanceoftheIndependentTelephone&Telecommunications   Alliance;RegulatoryTreatmentofLECProvisionofInterexchangeServicesOriginatingintheLEC'sLocalExchangeAreaIsupporttheseitemstotheextentthattheyprovidethereliefrequestedbytheIndependentTelephone&TelecommunicationsAlliances(ITTA)petition.Iobject,however,totheextentthattheregulatoryreliefrequestedisdeniedorsomelesserregulatoryreliefisprovided.Moreover,IquestiontheoverallapproachthattheCommissionhastakentothisforbearancepetition.IstartwiththepresumptionthattheITTApetitionhasbeen"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,theCommissiondeterminesthatITTAhasnotmetthecriteriaforforbearancetotheextentthatthepetitionrequestsreliefbeyondthatwhichisgrantedinacontemporaneousrulemakingproceeding.Seee.g., G'" PetitionforForbearanceoftheIndependentTelephone&TelecommunicationsAlliance,ThirdMemorandumOpinionandOrderinAADFileNo.9843,atpara.10(denyingrelieftotheextentthatpetition"extendsbeyondthereliefgrantedintheLEC *"% ClassificationSecondOrderonReconsideration.")Seealso,PetitionforForbearanceof +#& theIndependentTelephone&TelecommunicationsAlliance,SixthMemorandum +$' OpinionandOrderinAADFileNo.9843,atpara.2("Althoughwedonotgrantforbearancefromourrulesregardingapplicationsforspecialpermissionatthistime,weareconsideringwhether,andhow,weshouldmodifysomeofourrulesthatnecessitateapplicationsforspecialpermissionaspartofourongoingbiennialreviewrulemakingandexpecttomakeafinaldecisiononthebasisofthatmorecompleterecordinthenearfuture.").IamtroubledthattheCommissionhasdecidedtoprovidesomelesserformofregulatoryreliefthanthatwhichwasrequesteddoingsoinaseparaterulemakingwheretheCommissionhasmorediscretionandthenhasusedthatproceedingaspartofthejustificationfordenyingfullregulatoryforbearanceasrequested.Inotherwords,theCommissionhasdeterminedthatthesimplestmethodofdealingwiththesepetitionsistodenytheforbearancereliefatissuewhileatthesametimeprovidinglesserreliefinaseparaterulemakingproceeding.Butthatisnottheprocessthestatuterequires.Moreover,undersuchanapproach,theCommissionisabletoavoidthedifficultquestionofwhy,whenconsideringthesamefacts,particularregulatoryreliefisappropriateandotherregulatoryreliefwouldcontravenethestatute.Suchdistinctionswouldfrequentlybedifficulttojustifyastheforbearancecriteriafocusongeneralstandardse.g."protectionofconsumers,"or"inthepublicinterest."IobjecttotheCommission'sattempttoavoidtheobjectiverigorofthesection10forbearancetestbyprovidingregulatoryreliefinseparateproceedingswheretheCommissionhasmorediscretion.Inaddition,thisapproachlendsitselftoeliminatingonesetofrequirementsandatthesametimeadoptingnewalbeitlesserregulatoryrestrictionsthatwouldnotbejustifiedundersection10alone.Seee.g.,BiennialRegulatoryreviewofAccountingand  CostAllocationRequirements,PetitionforForbearanceoftheIndependentTelephone&TelecommunicationsAlliance,FourthMemorandumOpinionandOrderinAADFileNo.9843,atpar.25(reinterpretingITTApetitionasnotaskingtoforbearfromClassAaccountingaltogetherbut"[e]ssentially...askingustochangeourrules,nottoforbearfromapplyingthecurrentrules.").Whilesection10providesthattheCommissionmaybeabletoforbear"inwholeorinpart"fromaparticularprovisionorregulation,see !@ section10(c),itdoesnotprovidetheCommissionwithanyauthoritytoadoptnew "0 regulationsortoimposeseparateconditionsinthecontextofaforbearancepetition. #  Section10'sprimaryemphasisisonderegulation,andIwillnotsupportthisprovision,oranyoftheproceedingsrequiredbyasection10petition,beingusedasanopportunitytoauthorizenewregulatoryrestrictionsorconditions.IfearthatthistypeofexpansivereadingoftheCommission'sauthorityundertheAct'sforbearanceprovisionswillleadtheCommissionastrayfromitsclearstatutorydutiesandlimitations.Finally,asIhavestatedpreviously,IamconcernedthattheCommissionisplacingtoohighaburdenonthepartiesrequestingforbearancerelief.IbelievethattheSection10forbearanceschemerequirestheCommissiontojustifycontinuedregulationinlightof +$' thecompetitiveconditionsinthemarketplace.TheCommissioncannotmeettheirstatutoryobligationsbysimplyshiftingtheburdentopetitionerstojustifyforbearance.  G  @ SEPARATESTATEMENTOFCOMMISSIONERMICHAELK.POWELL  g H4` hp x (#XH8  04  Re: PetitionforForbearanceoftheIndependentTelephoneand G  TelecommunicationsAlliance(AADFileNo.9843),andrelated 7  proceedings(CCDocketNo.9711,CCDocketNo.9881,CCDocketNo. '  96150,CCDocketNo.98117,WTDocketNo.96162,CCDocketNo.96149,CCDocketNo.9661) 4 4  Q1` hp x (#` XQ8      M  XXXXXXXX      H.` hp x (#XHӀ Iampleasedtojoinmycolleaguesingrantingsomeoftheregulatoryreliefrequestedinthe  forbearancepetitionfiledbytheIndependentTelephoneandTelecommunicationsAlliance(ITTA)onbehalfofmidsizedlocalexchangecarriers.AlthoughIconcurintheresultsofmostoftheseitems(especiallywhereregulatoryreliefisgranted),Iam,however,compelledtodissentinparttothreeofthedecisions,andIcontinuetobeconcernedabouttheCommissionshandlingandanalysisofforbearancerequestsundersection10oftheCommunicationsAct.Mthe       XXXXXXXX  ҀInthesevariousitems(someconcernotherongoingrulemakingproceedings),weaddressnineregulatoryrequirementsfromwhichITTA,onbehalfofmidsizedLECs,requestedforbearance.WeadoptedsevendifferentOrdersinresponsetothepetition(andotherpetitionsornotices).InlookingattheseOrdersasapackageandindividually,whilesomereliefisgranted,Icontinuetobeconcernedthat,whereforbearanceisdenied,thesepetitionsarenotbeingtreatedinamannerfullyconsistentwiththeintentandspiritofsection10oftheAct.WhileIconcurwiththeoutcomeofmostoftheseitemssinceIbelievewearereachingthecorrectresultIdocontinuetoquestion(alonglinessimilartothoseIhaveexpressedelsewhere)ourmeansandmethodsforhandlingforbearancepetitions.̀̀Imustrespectfullydissent,however,fromthecontinuedapplicationofseparateaffiliaterequirementsfortheprovisionofinregioninterexchangeservicesandcommercialmobileradioservices(CMRS)bymidsizedLECs.Myreasonsaretwofold.First,Icontinuetobeuneasywiththedegreetowhichrelianceonthisandsimilarregulatorydevicesisbasedonspeculationaboutanticompetitivebehavior.Ifullyunderstandthatanyanalysisaboutpotentiallyharmfulfutureconductentailssomeassessmentoflikelyconduct.Historically,theagencyhasstewardedthebasicprincipleofnondiscrimination,resultinginregulatoryprotectionsagainstcostmisallocationandanticompetitivebehaviorflowingfromcontrolofa"bottleneck"facility.Ourprecedents,suchasseparateaffiliaterequirements,wererightlypremisedontheexistenceofatruemonopolist(sanctionedbythestate)andtheassociatedrisks.Inthatenvironment,notonlydidtheincumbenthavemonopolypower,therewasnoprospectofcompetitionnoranywatchfulpresentorfuturecompetitors.Thesesafeguardsweredesignedtoprotectconsumersfromthepotentialilleffectsofsuchaccumulatedpower.   +#& ЀIbelieve,however,thatmuchhaschanged.Themovementtowardacompetitive environmentmeansthatwemusttakeintofullerconsiderationthenecessity,viability,andthepotentiallydistortingcompetitiveconsequencesofoldfamiliarregulatorydevices.Thus,totheextentwemustspeculateaboutpotentialharm(tocompetitionandconsumers)wemust,too,factorinmorefullythepotentialdiscipliningeffectsofbothrealcompetitionandpotentialcompetition.Iseeacontinuedtendencytoinvoketheancientmantra"toprotectagainstdiscriminatorythisorthat"asglibjustificationforcontinuedregulatoryconstraints.Ibelievewemustworkharderandpressmoreheavilyonthetraditionalrationales.Idonotbelievewedidsointhiscase.Moreover,todosowilltaketimeandresources,whichwedonothavewhenforbearancepetitionsarepresentedfordeliberationwithonlyasecondortwoleftonthestatutoryshotclock,aswasthecasehere.̀̀MysecondconcernrestswiththeextentthattheCommissionexpressesatendencytojustifycertainregulatoryrestrictionsinthenameofpromotingoradvancingcompetition.Thatalone,ofcourse,maybeworthy,butwearenotfreetodosoinamannerthatinvolvesintermediatejudgementsthatdifferfromthosereachedbyCongress.Letmeexplainmorefully.̀  ԀPriortothe1996Act,IbelievebothJudgeGreeneandtheFCCdidseektocreatelimitedcompetitivemarketsoutofthemonopolyproviderscontroland,concomitantly,imposesafeguardsdesignedtokeepthemonopolistfromthwartingfledglingcompetitorsaswellasensuringthatcoreregulatorygoalswerenotcompromisedbysuchcompetitiveforays.Thesecompetitiveexcursionswerelimitedandusuallymerelyincrementalvoyagesintocompetitiveservicemarkets.But,wemustberemindedthatthefundamentalparadigmremainedregulationandcentralcontroloverthemostprizedservices.ThekeypointisthatJudgeGreeneandtheCommissionhadafairlywidebirthtodeveloptheconditionsoftheirmarketopeningefforts.̀̀The1996Act,however,alteredtheparadigmandstructuredthebasictermsofcompetition.Competitiveservicesweretobecometherule,andregulatedservicesthelimitedexceptions.Byitsact,Congresscraftedacomprehensivecompetitivemodel,designedspecificallytosupplanttheMFJ.Inweavingthisfabric,Congressmadeanumberofsignificantjudgements.Theonemostrelevanthereisthatitconcludedthat,ratherthanrestricttheILECstoregulatedwholesaleservice,itallowedILECstocompeteattheretaillevelaswell.Thisjudgementmayproveunwiseorunworkable,butitistheonethatCongresschose.̀̀CongresswasnotoblivioustothechallengesorperilsofallowingtheILECstocompete,however,inlongdistanceandotherserviceswhiletheystillcontrolledmanyofthenecessaryfacilitiesandinputsthatothercompetitorswouldneed.Itaddressedthisproblembycrafting +$' anaccessandinterconnectionregime(sections251and252)thatplaceduniquedutiesandobligationsonILECs.Inaddition,CongressrecognizedthatdifferentclassesofLECsrequireddifferentlevelsofsafeguardsandincentives.BellOperatingCompanies(BOCs),andtheyalone,aresubjecttosections271and272.ILECshavemoredutiesandobligationsthanCLECs,andsoon.Thus,whetheronelikesitornot,Congresssubstantiallyaddressed '  thedangersof bottleneckcontrolanddiscriminatoryincentivesintheAct.̀̀Asaconsequence,Ibelieve,theCommissionisnotasfree(asitperhapswaspriortotheAct)tostewardatransitiontoacompetitionregimedifferentthanthatoftheonechosenbyCongress.Specifically,asitrelatestothequestionofseparateaffiliates,wemustbecarefulnottoimposeregulatoryrequirementsthatinpracticaleffectamounttowholesale/retailseparations,whereCongressintendednone.(Inotethatincontrasttothecarrierspetitioninghere,BOCsareexpresslysubjecttoseparateaffiliatesforsomeservices).Forthisreason,Iamuncomfortablewiththeanalysisprofferedtosupportcontinuedseparateaffiliaterequirements.Wecite bottlenecksand incentivesinwhatsubtly(thoughperhapsunintentionally)seemstomeapreferenceforwholesaleseparationinacompetitivemarket.Bywayofillustration,theOrdersoftenspeakoftheimportanceofseparateaffiliatestoensurethattheyobtainfacilitiesonan"armslengthbasis"andtoensurethatallcompetinginregionprovidersandothercarriershavethesameaccess(i.e.,wholesale). G Ѐ̀ThoughCongressmadejudgementsaboutthecompetitivegroundrules,itdidnotendeavortosweepthroughourregulationsandapplythosejudgmentstoeachandeverystructuralrequirementonthebooks.Instead,itdirectedustosearchoutsuchrulesandapplythenewparadigm.Todoso,itgavetheCommissionthetwinenginesofthebiennialreviewandforbearance.ThisisonereasonIbelievethatsection10isimportantinevaluatingthecontinuedvalidityofseparateaffiliaterequirements,nototherwisemandatedbylaw,wherecompetitiveconditionsand/orotherregulatoryorenforcementmechanismsarealreadyinplace.̀̀Ibelievethatthepetitionbeforeusraisedsubstantialquestionswithregardtotheneedforstructuralseparationinlightofpresentconditions.Accordingly,IbelievethatinresponsetoITTA'sforbearancepetition,weshouldhaveexaminedmorecarefullyalternativemethodsofenforcingcoreILECresponsibilitiestoseeiftherewasn'tamorerational,limitedapproach.Forexample,weshouldhaveexploredincludingasunsetofthestructuralseparationrequirementforinregioninterexchangeserviceslikethatavailabletoBOCsinsection272andtreatingmidsizedLECsmorelikeruralcarriersundertheCMRSseparateaffiliaterequirement.̀̀Forthesereasons,Irespectfullydissentinpartfromtheseparticulardecisions.