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IN THE UNITED STATES COURT OF APPEALS
              FOR THE DISTRICT OF COLUMBIA CIRCUIT
                                        
AT&T CORPORATION et al.,                     )
                    Appellants,              )
                                        )
          v.                            )    Nos.  99-1538
                                        )             99-1540    
FEDERAL COMMUNICATIONS COMMISSION,      )
                    Appellee.           )

         OPPOSITION OF FCC TO EMERGENCY MOTION FOR STAY
                                
     AT&T and Covad Communications Co. have moved for an emergency stay of an order of the
Federal Communications Commission authorizing Bell Atlantic to provide long distance telephone
service to its customers in New York.  Application of Bell Atlantic New York, FCC 99-404 (rel.
December 22, 1999) ("Order").  The Commission issued the order pursuant to 271 of the
Communications Act, 47 U.S.C. 271, which directs the Commission to authorize a Bell Operating
Company ("BOC") to provide long distance service within its area of local operations when that BOC
has opened its local market to competition.  The Commission opposes the motion for stay and
respectfully asks the Court to allow competition in New York to proceed without delay.  The
Commission does not object to any reasonable briefing schedule that will permit the Court to resolve
this appeal expeditiously.  
     This case involves the FCC's first grant of authority to a BOC to provide long distance service. 
That is a significant step, and it fulfills a central premise of Congress's restructuring of the telephone
industry in the Telecommunications Act of 1996.  In ruling on the issue, the Commission took its
responsibilities under 271 quite seriously.  Although given only 90 days to act, the agency carefully
sorted through a huge record and closely analyzed dozens of separate issues, the result of which is a
painstakingly detailed 200+ page order.  The FCC does not grant permission under 271 lightly -- it
rejected five prior applications.
     The central premise of the Commission's decision is that Bell Atlantic has taken the statutorily
required steps to open the local telephone market in New York to competition.  Order  1.  Bell
Atlantic has worked with the New York regulators for 2« years to open its market, and as the result of
that work, more than a million telephone lines are now served by carriers competing with Bell
Atlantic, and more customers are switching every day, making New York the most competitive local
market in the country.  The New York Public Service Commission -- an agency that has led the
country in opening local telephone markets to competition and is charged with protecting the
consumers of New York -- strongly supported grant of the application.  The State authority also
developed and implemented a "Performance Assurance Plan" to monitor Bell Atlantic's performance
in the future and to ensure that the market remains open to competitors.  On that record, the FCC's
fundamental judgment that new entrants now have a fair opportunity to compete is sound.
The competitive dynamic of the New York market must be considered carefully in assessing the
claims made in support of a stay that would -- to AT&T's benefit -- delay Bell Atlantic's entry into
New York's long distance market.  AT&T has recently stepped up its campaign to woo local telephone
customers in New York by offering "one-stop shopping" for both local and long distance service.  See
Wall Street Journal, Dec. 30, 1999, p. A14.  That is a positive development and is consistent with the
objective of the 1996 Act to "ope[n] all telecommunications markets to competition."  But entry by
Bell Atlantic into long distance service once it has opened its local market to competitors such as
AT&T also fulfills one of Congress's objectives.  Indeed, the link Congress created in 271 between a
BOC's opening its local market and receiving authorization for entry into long distance undoubtedly
was a large part of the incentive for Bell Atlantic to take the steps it has taken in New York.  Delaying
Bell Atlantic's long distance entry while AT&T and other competitors actively mine the now-open local
market would break that link, would be unfair to Bell Atlantic, and above all would deny New York
consumers the full  benefits of competition promised in the 1996 Act.  
                           BACKGROUND
     A.   The 1996 Telecommunications Act
     Under a 1984 antitrust consent decree -- the "MFJ" -- that broke up the once-unified Bell
System, AT&T continued to provide long distance service in a market already open to competition,
and the divested BOCs provided local service, typically on a monopoly basis pursuant to State law. 
The MFJ banned the BOCs from providing long distance service, at least until they lost their
monopoly in the local market.
In the Telecommunications Act of 1996, Congress dramatically changed the structure and the
regulation of the nation's telephone industry.  Congress sought to "ope[n] all telecommunications
markets to competition" under "a pro-competitive, deregulatory national policy framework."  Two
principal, interrelated goals of this initiative were to open local telephone markets to competition for
the first time and, by releasing the BOCs from the long distance service restriction, to enhance the
competition that already had developed in long distance service.  In pursuit of those goals, the 1996
Act superseded the MFJ and preempted State grants of monopoly local exchange franchises. 
Congress thus ushered in a new regime of competition in local markets.  Congress required all
incumbent local exchange carriers, including the BOCs, to allow new entrants to use their facilities to
offer competitive local service.  To provide an incentive for the BOCs and to add a significant measure
of new competition in long distance service, Congress promised the BOCs that they would be allowed
to enter the long distance market in states where they had local franchises if they satisfied a checklist
of obligations designed to permit an adequate level of competition in the local market.  That promise
was contained in 47 U.S.C. 271.
     B.   Section 271 Authorization
     Section 271 "both gives the BOCs an opportunity to enter the long-distance market and
conditions that opportunity on the BOCs' own actions in opening up their local markets."  U S WEST
Communications, Inc. v. FCC, 177 F.3d 1057, 1060 (D.C. Cir. 1999).  Pursuant to 271, a BOC must
apply to the FCC for authorization to provide long distance service originating in any State where the
BOC provides local service.  47 U.S.C. 271(b)(1).  Before the FCC can authorize a BOC to provide
long distance service in a particular in-region State, the Commission must find that the BOC has
satisfied several statutory prerequisites.  47 U.S.C. 271(d)(3).
     First, as it is relevant here, the BOC must demonstrate to the FCC that it is providing or
offering to provide network access and interconnection to competing providers of local service.  47
U.S.C.  271(c)(1); see SBC Communications Inc. v. FCC, 138 F.3d 410 (D.C. Cir. 1998).  Second,
the BOC must establish that it has fully implemented the fourteen requirements of a statutory
"competitive checklist."  47 U.S.C. 271(c)(2)(B).  Third, the BOC must show that it will provide long
distance services in accordance with the separate affiliate and nondiscrimination requirements of
272.  47 U.S.C. 271(d)(3)(B).  Finally, the BOC must persuade the FCC that "the requested
authorization is consistent with the public interest, convenience, and necessity."  47 U.S.C.
271(d)(3)(C).  AT&T's motion is confined to issues concerning compliance with the checklist.
          C.   The FCC's Approval Of Bell Atlantic's Application 

     For more than two years, Bell Atlantic, the New York Public Service Commission ("NYPSC"),
and competitive carriers (including AT&T) worked closely together in the State commission's effort to
open New York's local exchange market to competition.  Order  8-12, 21-22.  That process entailed,
in part, the NYPSC's retaining the consulting firm KPMG and the computer company Hewlett-
Packard to develop and test the technical systems that are necessary for the competitive provision of
local service.  Order  10.  KPMG posed as a "pseudo local exchange carrier" to evaluate the
adequacy of the various systems pursuant to a comprehensive testing plan.  This "rigorous,
comprehensive third party testing," supervised every step of the way by the NYPSC, identified and
addressed various problems, and KPMG ultimately found that commercial entry was viable.  Ibid.  At
the same time, the NYPSC developed and applied its own measures of performance testing, resulting in
"data that accurately measur[e] Bell Atlantic's actual performance."  Id.  11.  With the framework
for competition in place under the auspices of the State regulator, a "thriving market for the provision
of local exchange and exchange access has developed in New York."  Order  13-14.  On September
29, 1999, Bell Atlantic filed with the FCC its application for long distance authorization. 
Numerous parties filed comments supporting and opposing Bell Atlantic's application.  Two
are worth specific mention.  The NYPSC, supported by 220 pages of comments and reams of data
generated in its 2« year study of the issues, concluded that "Bell Atlantic-NY is meeting its legal
obligations" under the checklist.  NYPSC Comments at 1.  The Department of Justice criticized certain
aspects of Bell Atlantic's performance, but found ultimately that the company had made "great
progress in opening the [local] market to competition."  DOJ Evaluation at 2.  DOJ expressly "le[ft]
for the Commission's judgment" whether Bell Atlantic had complied with the checklist.  Id. at 13 n.25. 
DOJ advised the Commission not to allow entry by Bell Atlantic until certain problems regarding
access to network elements had been solved.  DOJ acknowledged, however, that "information from
Reply Comments and ex parte submissions will provide additional support for Bell Atlantic's claims
and [may] justify a conclusion by the Commission different from that reached by the Department on
the basis of the current record."  Id. at 41.
On December 22, 1999, within the 90-day statutory deadline for action on applications, the
FCC granted Bell Atlantic authorization.  The Commission found that Bell Atlantic had satisfied
271(c)(1)(A) by implementing interconnection agreements with competing carriers in New York. 
Order  62.  The Commission also determined that Bell Atlantic had fully implemented the competitive
checklist.  Order  63-400.  In addition, the Commission found that Bell Atlantic had demonstrated
that it would provide long distance service in compliance with the separation and nondiscrimination
requirements of 272.  Order  401-421.  Finally, the FCC concluded that approval of Bell Atlantic's
application would serve the public interest by promoting competition in both the local exchange and
long distance markets in New York.  Order  422-445.
                            ARGUMENT
     To obtain the extraordinary remedy of a stay, AT&T must demonstrate that:  (1) it will likely
prevail on the merits; (2) it will suffer irreparable harm if a stay is not granted; (3) other interested
parties will not be harmed if a stay is granted; and (4) grant of a stay will further the public interest. 
Washington Metropolitan Area Transit Commission v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C.
Cir. 1977). AT&T has failed to satisfy any of those requirements.
I.   AT&T And Covad Are Not Likely To Prevail On The Merits.
     AT&T raises three fact-bound issues on which it claims it will prevail.  The standard of review
for such claims is whether the agency has articulated a "rational connection between the facts found
and the choices made."  Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962).  In no
event may the Court "substitute its judgment for that of the agency."  Motor Vehicle Mfrs. Ass'n v.
State Farm Automobile Ins. Co., 463 U.S. 29, 43 (1983).
     Covad in particular has no chance of success, for it lacks standing.  Covad acknowledges that
it does not provide long distance telephone service.  See Markley Affidavit at 1, App. B to Motion. 
Covad therefore will suffer no harm from Bell Atlantic's entry into the long distance market.  It thus
fails the primary element of the test for standing.  Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61
(1992).  Covad claims (Motion at 19) that allowing Bell Atlantic into long distance will "remove Bell
Atlantic's incentive" to provide sufficient data circuits, but that claim is insufficient to support
standing.  Lujan, supra.  Although the Commission agrees that the opportunity to enter the long
distance market provided an important incentive to Bell Atlantic to open its local market to
competition, it now has the incentive to maintain its performance in order to avoid being penalized
pursuant to 271(d)(6).  The NYPSC's performance assessment plan provides additional incentive.  If
Bell Atlantic fails to provide sufficient data circuits, Covad may pursue remedies at either the state or
federal level.  But in the absence of a concrete injury that arises from Bell Atlantic's 271
authorization, Covad lacks standing to challenge the grant of that authorization.
     1.  Digital Subscriber Line ("DSL") Loops.
     A "loop" is the wire that connects a customer's home or business to the local switch; a "DSL
loop" (also called an "xDSL loop") is an ordinary loop that has been "conditioned" to carry data at
high speeds, such as for internet access.  Item 4 of the competitive checklist requires a BOC to provide
access to "[l]ocal loop transmission from the central office to the customer's premises, unbundled
from local switching or other services."  47 U.S.C. 271(c)(2)(B)(iv).  AT&T and Covad argue that
Bell Atlantic does not provide adequate access to DSL loops.  
The Commission acted reasonably with respect to DSL loops.  To determine whether a BOC
satisfies checklist item 4, the FCC assesses whether the BOC provides loops "in substantially the same
time and manner as it does to its retail customers."  Order  279.  The Commission, in the
circumstances of this case, made its assessment on the basis of Bell Atlantic's "performance data for
all of the various loop[s] . . . in order to obtain a comprehensive picture of whether Bell Atlantic is
providing unbundled loops in accordance with the requirements of checklist item 4."  Order  278
(emphasis added).  The analysis did not focus on "any single type of loop."  Ibid.  Applying that test,
the Commission found that Bell Atlantic satisfied item 4 the of checklist.  The evidence showed that the
BOC "provides unbundled local loop transmission . . . in a nondiscriminatory manner."  Order  273. 
In particular, through September 1999, Bell Atlantic had provided 200,000 loops to competing
providers and had shown its ability to "easily meet the current commercial demand for unbundled
local loops."  Id.  277.  Thus, competitors had a meaningful opportunity to enter the market.
     AT&T's principal contention on this point is that the Commission was required to analyze
DSL loops separately.  As AT&T points out, the Commission announced that, in assessing future 271
applications, it will separately consider the applicant's provision of DSL loops under checklist item 4. 
Order  330.  Given the growing demand for DSL services by competitors and their customers,
examining those loops separately in the future makes sense.  Applicants for 271 authority --
including Bell Atlantic in applications for states other than New York -- are now on notice that they
must make a separate showing with respect to DSL loops.  But the Commission's future intentions did
not, as AT&T suggests (Motion at 6), require separate analysis of DSL loops in this case.
     The statute itself does not address whether providing loops should be analyzed on an aggregate
basis or whether DSL loops should be evaluated separately from other loops.   Because Congress did
not address the precise issue presented, the Commission has discretion in applying the statute. 
Chevron v. NRDC, 467 U.S. 837, 843 (1984).  Because the telecommunications market is extremely
dynamic, it was wise of Congress to give the Commission that discretion, which it exercised properly in
this case by examining loops in the aggregate while announcing that, in the future, it would examine
DSL loops separately.
The Commission decided to evaluate loop provision in this case on an aggregate basis because
Bell Atlantic's application had presented "unique factual circumstances" with respect to DSL.  Order
 322.  Demand for DSL loops had arisen only recently and had surged unexpectedly.  As late as June
1999, Bell Atlantic had filled only 7 requests for DSL loops; that number rose to 56 in July, 449 in
August and 653 in September.  Order  320.  Furthermore, the issue had not arisen in any of the 5
previous 271 applications.  Order  316.  Most importantly, as of the date of filing, DSL loops
constituted a small portion of Bell Atlantic's overall provision of loops, about 1100 out of 200,000.  Id.
 277.  
The Commission found that those circumstances -- a sudden and unexpected demand for a
previously unsupplied kind of loop -- did not justify holding Bell Atlantic to a previously unannounced
standard; doing so, in the words of Commissioner Ness, "would be unfair."  Sep. Statement of
Comm'r Susan Ness at 2.  That is particularly so where the newly requested loop was a decidedly
minor part of the overall demand for loops and where there was no reason to believe that any initial
shortcomings would not be corrected.  There was thus a rational connection between the facts found
and the choice made.     
     AT&T spends a large part of its argument (Motion at 7-9) attempting to refute the factual
bases for the FCC's finding that the circumstances here were unique.  It disputes the finding that no
prior 271 orders considered DSL loops separately, but it fails to cite a single prior 271 order that did
so.  It disputes that the DSL issue arose recently, but the record shows that competitors first raised the
issue in the context of Bell Atlantic's 271 application before the NYPSC in July 1999.  NYPSC
Evaluation at 92.  The number of DSL lines provided by Bell Atlantic -- only 7 in June and 56 in July
1999 -- also shows the issue's recency.  The Commission's determination of DSL's proportion of total
loop provision was also solidly based in the record.  Order  277.  At most, AT&T can show divergent
data in the record.  When faced with such a mixed record, "the court must not second-guess the
particular way the agency chooses to weigh the conflicting evidence or resolve the dispute."  United
Steelworkers v. Marshall, 647 F.2d 1189, 1263 (D.C. Cir. 1980); accord Indiana Municipal Power
Agcy. v. FERC, 56 F.3d 247, 254 (D.C. Cir. 1995).
     AT&T also claims that the Commission improperly gave insufficient weight to the Justice
Department's view on Bell Atlantic's DSL performance.  Motion at 8.  That is wrong on several
grounds.  First, DOJ did not recommend that the FCC deny Bell Atlantic's application.  Although it
criticized Bell Atlantic's performance in some areas, including providing DSL loops, its ultimate
conclusion was to "leave for the Commission's judgment" whether to approve the application.  DOJ
Comments at 13 n.25.  Second, the Commission obviously considered carefully and gave substantial
weight to DOJ's analysis.  It discussed DOJ's views and explained the few instances in which it
differed with DOJ's assessment.  Order  328.  That is all that the statutory directive  of "substantial
weight" requires.  47 U.S.C. 271(d)(2)(a).  Moreover, the NYPSC, with which the FCC is also
required by 271(d)(2)(B) to consult, argued strongly in favor of a grant.
     Finally, AT&T asserts that it was "patently arbitrary" for the FCC to rely on Bell Atlantic's
commitment to provide DSL loops through a separate subsidiary.  Motion at 10.  In fact, the Order
expressly states that the Commission did not rely on Bell Atlantic's promise (contained in an ex parte
filing) as a basis for the decision.  Order  40.  The agency found some "assurance" in Bell Atlantic's
commitment, but the discussion of the separate subsidiary issue is in the context of suggesting that
future applicants may choose to show non-discrimination by creating a similar structure.  That the
agency's Chairman stated at a press conference that he found it to be a critical factor is of no moment. 
"Agency opinions, like judicial opinions, speak for themselves."  Checkosky v. SEC, 23 F.3d 452, 489
(D.C. Cir. 1994).  Statements made by agency members outside of formal, published orders cannot be
used to impeach the agency's formal written findings.  PLMRS Narrowband Corp. v. FCC, 182 F.2d
995, 1001 (D.C. Cir. 1999).
     The communications industry exists in a constant state of change, and the regulatory process
must be sufficiently flexible to accommodate that change in a realistic manner.  As Commissioner
Powell put it, "the section 271 snapshot inevitably will catch glimpses of uses of the incumbent's
network that have not fully developed."  Sep. Statement of Comm'r Michael Powell at 2; see id. at 3
("there may never be a time in which there are no outstanding issues for the applicant to address"). 
AT&T's preferred framework on the other hand -- perfect competition in every service, no matter how
small or recent -- would virtually ensure that the Commission never will be in a position to approve a
BOC's application to provide long distance service.  That outcome would favor AT&T's own economic
interests, but it is not the arrangement Congress envisioned.  In the circumstances of Bell Atlantic's
application, the Commission acted reasonably.
     2.  Hot Cuts
     AT&T raises three complaints concerning Bell Atlantic's performance in providing "hot cuts,"
the physical transfer of a customer's line from Bell Atlantic's switch to a competitor's.  Because the
line must be disconnected during the transfer, an error in the hot cut process can cause a temporary
loss of telephone service.
     a.  AT&T claims that the record showed that 4.5% of lines transferred to AT&T by a hot cut
resulted in service outages.  It claims that the agency failed to explain its decision to approve in the
face of that record.  Motion at 12.  In fact, the Commission explained its action quite carefully, and the
decision was reasonable.  
Other evidence in the record showed that, collectively, competing carriers receiving a hot cut
line reported subsequent problems with the line only in 0.5% to 1.3% of all hot cuts.  Order at 300
n.956.  Although those data do not capture all service outages, they are a good indicator of the overall
quality of hot cuts.  Given the extremely low rate of overall reported problems, the Commission
considered AT&T's outage rate of 4.5% acceptable.  Moreover, there appeared to be serious problems
with AT&T's figures.  For example, evidence showed that "AT&T fails to report installation troubles
within a reasonable period of time;" in many cases, "AT&T took longer to identify and report the
problem to Bell Atlantic than Bell Atlantic took to fix it."  Order  303.  NYPSC found that where a
service outage was attributable to Bell Atlantic, "the outages for the vast majority of customers were
measured in hours."  NYPSC Reply Comments at 29.  The Commission reasonably reached the view
that even if AT&T had experienced an abnormally high incidence of service outage, in general Bell
Atlantic's provision of hot cuts was acceptable.  In addition, a certain amount of service outage is
unavoidable:  the data showed that 1.6% of Bell Atlantic's own customers experienced "loop
troubles." Id.  303 n.966.  
     The data support the Commission's judgment that Bell Atlantic's hot cut performance did not
deny competing carriers a "meaningful opportunity to compete." Order  299.  In any event, that
determination amounts at bottom to a line-drawing exercise of the type that is entitled to considerable
deference and should be upheld unless it is "patently unreasonable."  Cassell v. FCC, 154 F.3d 478,
485 (D.C. Cir. 1998).  No system of hot cuts is likely to be perfect, and the Commission determined that
on the whole Bell Atlantic's hot cut performance was acceptable.  There is no good reason to overturn
that considered judgment.
     b.  Similar reasoning defeats AT&T's next complaint that the Commission could not properly
find acceptable Bell Atlantic's 90% on-time performance rate for hot cuts.  Motion at 13-14.  The
Commission again drew a reasonable line in finding that "on-time hot cut performance at a level of 90
percent or greater is sufficient to permit carriers to enter and compete in a meaningful way."  Order 
298.  Although the NYPSC preferred an on-time performance level of 95%, it vigorously supported
grant of the application.  Reply Comments of NYPSC at 28 (90% performance level "cannot, under
any definition, be considered discriminatory").  Moreover, the Commission found that State
performance standards are "not determinative of what is necessary to establish checklist compliance." 
Order  55.  Similarly, although DOJ criticized Bell Atlantic's on-time performance, it did not
conclude that Bell Atlantic failed to comply with the checklist.  Id.  297.
     c.  AT&T also complains that 10% of hot cuts resulted in the customer's number being
dropped from the directory assistance database.  Motion at 14.  AT&T's data were again hotly
contested, Order  355, and the Commission rejected AT&T's reliance on it.  It found instead that
"Bell Atlantic has taken adequate measures to detect any dropped listings and restore them to the
directory assistance database promptly," such as by adding more personnel to monitor and correct
mistakes.  Ibid. (emphasis added).  Bell Atlantic thus complied with the checklist at the time its
application was filed.  Although DOJ had relied on AT&T's data to criticize Bell Atlantic's
performance, DOJ "did not have the benefit of Bell Atlantic's Reply, which . . . rebuts AT&T's
claims."  Order  356.  
     3.  Pricing
AT&T contends that the Commission erroneously deferred to the NYPSC on the issue whether
Bell Atlantic's prices for checklist items satisfy statutory standards.  As a result, it claims, the
Commission approved the application even though the rates for three elements are excessive.  Motion
at 15-17.  In fact, although the Commission relied significantly upon the NYPSC's rate evaluations, it
made independent determinations as to each of the three elements (switches and two kinds of loops)
that AT&T questions and found that they were "priced pursuant to a forward-looking, long-run
incremental [TELRIC] cost methodology."  Order  239; see also id.  242-261.  
TELRIC is the method the Commission prescribed for the States to apply in evaluating the
rates local exchange carriers charge for unbundled network elements under 251 and 252, and the
method the Commission applies in its consideration of 271 applications.  See Application of
Ameritech Michigan, 12 FCC Rcd 20543, 20695-99 (1997).  In prescribing that method, the
Commission recognized that it would not produce the same rates in every State, and "indeed it will not
even generate the same formula for pricing in every [S]tate."  12 FCC Rcd at 20699.  This is consistent
with 252(c)(2) of the 1996 Act, which assigns to the States the function of establishing the actual
rates for unbundled elements (subject to review in federal district court for compliance with the Act,
including the Commission's rules implementing the Act).
The Supreme Court recognized the separate roles of the FCC and State commissions in its
decision affirming the Commission's authority to prescribe a method for evaluating network element
prices, making clear that "[i]t is the States that will apply ... and implement that methodology,
determining the concrete results in particular circumstances."  AT&T Corp. v. Iowa Utilities Board,
119 S. Ct. 721, 732 (1999).  The Commission acted consistently with the statutes, its TELRIC
prescription, and its own previous orders in evaluating Bell Atlantic's prices in light of the NYPSC's
active review of those prices.  See Ameritech Michigan, 12 FCC Rcd at 20699.  There was no
abdication of responsibility here.  As to the three particular rates that AT&T challenges, brief
responses are sufficient.
a.  Switch prices.  AT&T argues that Bell Atlantic's switch prices are inconsistent with the
switching costs the Commission had used in calculating the level of universal service support to which
eligible carriers are entitled.  But the Commission pointedly had announced in the Tenth Report that
its cost determinations there were for universal service purposes only, and that they might not be
appropriate for other purposes, "such as determining prices for unbundled network elements."  And it
had cautioned parties not to make "any claims in other proceedings based upon the input values we
adopt in this Order."  Tenth Report  32.  See Order  245.  The determination of costs for federal
universal service support, which is a national program, is not necessarily instructive in the different
context of evaluating prices on a state-by-state basis for determining 271 checklist compliance.
In this case, the Commission found sufficient evidence in the record to show that Bell
Atlantic's switch prices were based on TELRIC costs.  Order  242.  It took comfort in the fact that the
NYPSC had examined Bell Atlantic's original estimate of $586 per line, applying TELRIC standards
to local conditions, and had reduced that estimate to $192, "an amount much closer to AT&T's
estimation" of the proper rate.  Order  243.  And, although the State's investigation of the rates was
"ongoing," the Commission found that they were "no less TELRIC-compliant on that account." 
Order  248.  AT&T has identified no error here.
b.  Voice grade local loops.  AT&T asserts that optical fiber loops cost more than copper, at
least for shorter loops, and that the Commission departed from TELRIC principles in acquiescing in
the NYPSC's adoption of prices based entirely on fiber costs.  The Commission concluded, however,
that the NYPSC reasonably had determined that the higher cost of fiber on some loops was "more than
offset" by the lower costs of "provisioning and maintenance."  Order  248.  The State commission
also found that fiber loops might "prove useful" in the future to competitors who choose to offer
enhanced services for which copper might be inappropriate, and that the comparison of copper and
fiber costs also had to take account of capacity differences.  Id.  AT&T has not shown error in the
Commission's conclusion that rates based on fiber technology are "not ... inconsistent with a TELRIC
methodology."  Order  249.
c.  xDSL loops.  AT&T complains that Bell Atlantic's rates for conditioning loops for data
services had been filed so recently that the NYPSC had not completed its evaluation of them, and
asserts that the rates are excessive.  AT&T does not allege that it uses or has ordered such "data
loops," but relies solely on Covad's showing before the Commission.  As we argue elsewhere, Covad
lacks standing to challenge the 271 authorization; and AT&T would appear not to be aggrieved by
the level of charges for a service or facility that it does not use.  This dispute would be better resolved
in a direct challenge to the xDSL rates by a party who actually would be injured if they were too high.
In any event, the Commission reasonably declined to reject Bell Atlantic's application on the
basis of unresolved complaints about the xDSL rate level, for several reasons.  First, the rates are
under expedited investigation now by the NYPSC and are subject to refunds if they are found non-
compliant.  Second, it is understandable that the rates have not been evaluated yet because "the
conditioning of xDSL loops is a relatively new issue" and new issues arise constantly.  Third, the 
NYPSC has a "substantial track record" of setting rates at TELRIC levels.  Order  250-259. 
AT&T's apparent assumption that the Commission may not grant any 271 application until all issues
in this rapidly developing industry come to rest cannot be correct.  The Commission acted reasonably
with respect to the xDSL pricing issue. 
     II.  AT&T And Covad Will Not Suffer Irreparable Injury In The Absence Of A Stay.
     
     "The basis for injunctive relief in the federal courts has always been irreparable harm and
inadequacy of legal remedies."  Sampson v. Murray, 415 U.S. 61, 88 (1974), quoted in Wisconsin Gas
Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985).  A party seeking a stay thus has the burden of
establishing that it will suffer irreparable harm in the absence of a stay   without regard to the other
factors listed in Holiday Tours.  Indeed, this Court has denied stay relief on the basis of its analysis of
claims of irreparable harm alone, without even addressing the other factors.  Wisconsin Gas Co., 758
F.2d at 674  (addressing only "whether the petitioners have demonstrated that in the absence of a stay,
they will suffer irreparable harm").  
     To satisfy the irreparable harm factor, a moving party must show that, in the absence of a stay,
it will suffer injuries that are "both certain and great." Wisconsin Gas Co.,  758 F.2d at 674.  The
injuries must be "actual and not theoretical," and they must be "imminen[t]."  Id.  The "key word" in
this consideration, moreover, is "irreparable," and the possibility of "adequate compensatory or other
relief" at a later date weighs heavily against a stay.  Id.
     As to the kinds of harm that might justify relief, "'mere' economic injuries ... are insufficient,"
although "severe" injury -- such as "the destruction of a business" -- may warrant a stay.  Holiday
Tours, 559 F.2d at 843 & n.2, citing Virginia Petroleum Jobbers, 259 F.2d at 925.  The threat of
additional competition in itself is not irreparable harm, at least in the absence of severe economic
impact that "threatens the very existence" of a business.  Wisconsin Gas Co., 758 F.2d at 674, citing
Holiday Tours, 559 F.2d at 843 nn.2, 3.
     AT&T's alleged injuries boil down to a claim that Bell Atlantic's entry into the New York long
distance market will require AT&T to face what it believes to be unfair competition, leading to the loss
of customers and revenue.  Posed by the world's largest long distance company, with nearly $60 billion
in yearly revenue, that claim does not pass the stringent test for a stay.
     AT&T's claim that Bell Atlantic's competition will be unfair   which is an essential premise of
its irreparable harm argument   depends upon the correctness of its merits arguments, addressed
above.  We have shown that the Commission reasonably applied the statutory standards in granting
Bell Atlantic's application and that Congress expressly contemplated and authorized competition of
this kind.  If we are correct, AT&T's irreparable harm claim is simply an indirect challenge to the
congressional policy favoring competition.
     AT&T's assertion that Bell Atlantic will have an advantage in offering "one-stop shopping"
for packages of local and long distance service ignores the facts that AT&T had a head start in that
offering, that AT&T already has a substantial presence in local markets in New York through resale
and the use of unbundled network elements, and that AT&T itself is a powerful economic force with
brand recognition and traditions of service working in its favor.  The underdog mantle does not fit
AT&T well.  
     More particularly, both the FCC and the NYPSC have found that Bell Atlantic meets the
statutory requirements.  AT&T's assertion that Bell Atlantic has the advantage of competitive rates for
the long distance service it will resell as part of a package does not make the competition unfair. 
AT&T may buy local service from Bell Atlantic for resale, including service at rates discounted for
high-volume customers.  Moreover, just as Bell Atlantic has an advantage in selling the local part of a
combined service package, AT&T has the advantage in selling long distance service to satisfied
customers who have been with that company for many years.  The efforts of Bell Atlantic and AT&T --
each with its advantages and specialized experience -- to sell their packages of service is the essence of
competition, and that is what Congress sought to promote in the 1996 Act and in 271 in particular. 
     The addition of a new competitor in itself does not justify a stay.  Holiday Tours, 559 F.2d at
843 n.3.  That is especially so here, where Congress has decided that opening all telecommunications
markets to competition is to be the national policy.  Bell Atlantic's entry into long distance service
upon the opening of its local market is nothing more than the increase in competition that Congress
envisioned when it created the framework of the 1996 Act. 
AT&T will surely lose some customers to Bell Atlantic.  At the same time, however, AT&T will
continue to win customers from Bell Atlantic in New York's local markets, where competitive
providers, including AT&T, already provide service to more than a million lines.  Order  14.  As this
Court has held, "revenues and customers lost to competition which can be regained through
competition are not irreparable."  Central & Southern Freight Tariff Ass'n v. United States, 757 F.2d
301, 309 (D.C. Cir.), cert. denied, 474 U.S. 1019 (1985); see ibid. ("[p]etitioners may seek to eliminate
the alleged competitive advantage . . . simply by engaging in the [same line of business] themselves"). 
Moreover, as AT&T points out, Bell Atlantic will initially provide long distance service by reselling the
services of existing long distance companies.  Thus, although AT&T will not be the retailer of that
service, it could be a wholesale provider.  AT&T has presented only the side of the loss picture; when
the entire situation is considered, any net injury to AT&T is more theoretical than actual.
     Finally, the Commission retains considerable enforcement power should Bell Atlantic
backslide in its performance.  Under 271(d)(6), the Commission may impose penalties, direct Bell
Atlantic to take corrective action, or even revoke its previously given approval.  Carriers may file
complaints concerning failures to meet the competitive conditions, and the Commission must act on
such complaints promptly.  The agency stands ready to wield such tools if necessary.  See Order 
446-453.  The NYPSC also has crafted a performance assurance plan, and it may also take corrective
measures.  Order  429-443.  Under those circumstances, AT&T faces little likelihood of irreparable
injury.  With respect to Covad, we have shown above that it lacks standing because it is not a long
distance telephone company and, in any event, has various remedies available to it if the New York
market ceases to remain open to competition.
III. Bell Atlantic Will Be Harmed By A Stay.
Congress has determined that once a BOC's local market is open to competition, the BOC
should be allowed to enter the long distance market.  To that end, 271 directs the Commission to
decide within 90 days whether a BOC has satisfied the competitive checklist, 47 U.S.C. 271(d)(3), and
directs the Commission to publish its orders in the Federal Register within 10 days of their issuance,
id. 271(d)(5).  Congress's judgment applies fully here.  Bell Atlantic has opened its market to
competition and is losing customers daily to AT&T and other new entrants.  Indeed, at this point
AT&T and others may offer consumers one-stop shopping with bundled local and long distance
service, while Bell Atlantic has been precluded from selling a competitive product.  To deny Bell
Atlantic its part of the 1996 Act's quid pro quo would cause it unfair harm.  It might also dampen the
incentive of other BOCs to open their markets if they see that the significant steps that Bell Atlantic
has taken are not sufficient to allow them to enter the long distance market.
IV.  The Public Interest Will Be Harmed By A Stay.

     In passing the 1996 Act, Congress found that the public interest would be served by opening
all markets to competition.  Competition lowers prices to consumers and expands the range of services
and options from which consumers may choose.  Should the Court delay Bell Atlantic's entry into New
York's long distance market, it is ultimately consumers -- the citizens of New York -- who will suffer
the consequences.  The benefits of expanded efforts to win their business will be delayed, prices will
remain higher than they should be, and the range of choices will be narrower than it could be.  That
outcome would directly contradict Congress's intent in creating the mechanisms of the 1996
Telecommunications  Act.  It would also undermine the Commission's finding in this case that
"additional competition in [the long distance] markets will enhance the public interest."  Order  428.
                           CONCLUSION
     For the foregoing reasons, the Court should deny the motion for a stay. 

                              Respectfully Submitted,


                                   Christopher J. Wright
                                   General Counsel


                                   John E. Ingle
                                   Deputy Associate General Counsel


                                   James M. Carr
                                   Joel Marcus
                                   Counsel
                                   Federal Communications Commission
                                   Washington, D.C.  20554
                                   (202) 418-1740
     January 3, 2000