[Federal Register: October 12, 2007 (Volume 72, Number 197)]
[Rules and Regulations]
[Page 58021-58027]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12oc07-8]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 53 and 64
[WC Docket No. 02-112; CC Docket No. 00-175; FCC 07-159]
Sunset of the BOC Separate Affiliate and Related Requirements and
2000 Biennial Regulatory Review Separate Affiliate Requirements
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this Order, the Commission establishes a new framework to
govern the provision of in-region, long distance services by the Bell
Operating Companies (BOCs) and their independent incumbent local
exchange carrier (incumbent LEC) affiliates. The new framework permits
the BOCs to provide in-region, interstate, long distance services
either directly or through affiliates that are neither section 272
separate affiliates nor Commission rule 64.1903 separate affiliates,
subject to nondominant carrier regulation, as long as they comply with
certain targeted safeguards and other continuing statutory and
regulatory obligations.
DATES: The Report and Order is effective November 13, 2007, subject to
Office of Management and Budget (OMB) approval for new or modified
information collection requirements contained in the Report and Order.
The FCC will publish a document in the Federal Register announcing the
effective date for those sections.
ADDRESSES: Federal Communications Commission, 445 12th Street, SW.,
Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT: Melissa Kirkel, Wireline Competition
Bureau, (202) 418-1580.
For additional information concerning the Paperwork Reduction Act
information collection requirements contained in this document, contact
Jerry R. Cowden at (202) 418-0447, or via the Internet at PRA@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order and Memorandum Opinion and Order (Order) in WC Docket Nos.
02-112 and 06-120, and CC Docket No. 00-175, FCC 07-159, adopted August
30, 2007, and released August 31, 2007. The text of this document is
available for inspection and copying during
[[Page 58022]]
normal business hours in the FCC Reference Information Center, Portals
II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. This
document may also be purchased from the Commission's duplicating
contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room
CY-B402, Washington, DC 20554, telephone (800) 378-3160 or (202) 863-
2893, facsimile (202) 863-2898, or via e-mail at http://www.bcpiweb.com.
It is also available on the Commission's Web site at
http://www.fcc.gov.
Synopsis of the Report and Order and Memorandum Opinion and Order
1. In May 2002, the Commission initiated a rulemaking proceeding
(the Section 272 Sunset proceeding (67 FR 42211, June 21, 2002)) to
determine what regulatory framework should apply to BOC provision of
in-region, interLATA telecommunications services after the section 272
safeguards (other than those in section 272(e)) had sunset pursuant to
section 272(f)(1). The Commission invited comment on whether it should
extend those safeguards beyond the three-year period Congress
established for each state. The Commission also invited comment on
what, if any, alternative safeguards it might apply to the BOCs'
provision of in-region, interLATA, telecommunications services.
2. In May 2003, the Commission issued a Further Notice (68 FR
32007, May 29, 2003) seeking comment on whether the BOCs should be
classified as dominant if they provided in-region, interstate and
international, long distance services in a way that did not comply with
the section 272 separate affiliate requirements. This Further Notice
also invited further comment on the issues raised in the Independent
Incumbent LEC proceeding (66 FR 50139, Oct. 2, 2001), concerning
whether independent incumbent LECs should be classified as dominant in
their provision of in-region, interstate and international,
interexchange telecommunications services if the Commission eliminated
or modified the separate affiliate requirements in Sec. 64.1903 of the
Commission's rules.
3. In this Order, the Commission establishes a new framework to
govern the provision of in-region, long distance services by the BOCs
and their independent incumbent LEC affiliates. This framework replaces
unnecessarily burdensome regulation with less intrusive measures that
protect important customer interests while allowing the BOCs and their
independent incumbent LEC affiliates to respond to marketplace demands
efficiently and effectively. The Commission finds that this new
framework will increase the BOCs' and the BOC affiliates' ability to
develop and deploy innovative long distance services that meet their
customers' needs.
4. The new framework, which applies to AT&T, Qwest, and Verizon, is
consistent with the Commission's decision in the Qwest Section 272
Sunset Forbearance Order, 22 FCC Rcd 5207 (2007). As discussed in that
Order, the Commission's current rules force a BOC to choose between two
different regulatory regimes in providing in-region, long distance
services, both of which impose significant burdens and costs: the BOC
can provide these services on a nondominant carrier basis through a
section 272 separate affiliate; alternatively, it can provide these
services directly or through an affiliate that is not a section 272
separate affiliate subject to dominant carrier regulation, including
rate regulation and tariff-filing requirements. AT&T's and Verizon's
independent incumbent LEC affiliates must provide in-region, domestic,
interexchange telecommunications services and in-region, international
telecommunications services only through Commission rule 64.1903
separate affiliates. The Commission concludes that a new regulatory
framework is more appropriate. The new framework allows AT&T, Qwest,
and Verizon to provide in-region, interstate, long distance services
either directly or through affiliates that are neither section 272
separate affiliates nor Commission rule 64.1903 separate affiliates,
subject to nondominant carrier regulation, as long as they comply with
certain targeted safeguards as well as with other continuing statutory
and regulatory obligations.
5. In the Order, the Commission considers whether each BOC, if it
provides in-region, interstate and international, long distance
services through an affiliate that is not compliant with section 272,
could exercise market power with respect to such services by either:
(1) Unilaterally raising the retail price of its in-region, interstate,
long distance services (i.e., exercising ``classical'' market power);
or (2) using its control over bottleneck local facilities to raise its
rivals' costs (i.e., exercising ``exclusionary'' market power). The
Commission concludes that the BOCs lack market power with respect to
interstate, long distance services and in-region, international
telecommunications services. The Commission further concludes, however,
that the BOCs have failed to demonstrate that they lack exclusionary
market power with regard to these services by reason of their control
over ubiquitous telephone exchange service and exchange access
networks. The Commission therefore assumes, for the purposes of this
proceeding, that each of the BOCs individually continues to possess
exclusionary market power within its respective region by reason of its
control over these bottleneck access facilities.
6. In the Order, the Commission finds that application of dominant
carrier regulation to AT&T's, Verizon's, and Qwest's in-region,
interstate, long distance services is unwarranted. First, as the market
analysis indicates, AT&T, Qwest, and Verizon do not possess classical
market power in the provision of in-region, interstate, long distance
services, which is the type of market power that dominant carrier
regulation is designed to address. Second, as the Commission recognized
in the LEC Classification Order (66 FR 35974, July 3, 1997), dominant
carrier regulation is not designed to guard against potential abuse of
exclusionary market power. Instead, the Commission finds that existing
safeguards, combined with the additional safeguards adopted in the
Order, adequately address the ability of AT&T, Qwest, and Verizon to
raise their long distance rivals' costs through their control of
bottleneck access facilities.
7. While the Commission recognizes that dominant carrier regulation
of AT&T's, Qwest's, and Verizon's in-region, long distance services
could provide some increased level of protection against the exercise
of exclusionary market power beyond that provided by these alternative
safeguards, such regulation would impose significant costs. These costs
include the administrative costs imposed on both the carriers and the
Commission that are associated with price regulation, tariff-filing
requirements, and reporting requirements. Application of dominant
carrier regulation to these services also would restrict AT&T's,
Qwest's, and Verizon's ability to respond to competitors' pricing and
product initiatives, and would give competitors advance notice of
AT&T's, Qwest's, and Verizon's own pricing plans and new products. By
impeding the BOCs' ability to compete, these requirements could dampen
competition. Given the relative inefficiency of dominant carrier
regulation in constraining the exercise of exclusionary market power
and the significant costs associated with such regulation, the
Commission finds that alternative safeguards adopted in this Order are
more cost-effective than, and
[[Page 58023]]
preferable to, imposing dominant carrier regulation.
8. Thus, the Commission finds the BOCs to be nondominant in the
provision of in-region, interstate, long distance services that they
provide either directly or through affiliates that are not section 272
separate affiliates as long as they comply with certain targeted
safeguards adopted in the Order as well as continuing statutory and
regulatory obligations. The Commission also finds the BOCs' independent
incumbent LEC affiliates to be nondominant in the provision of in-
region, long distance services either directly or through affiliates
that are not Commission rule 64.1903 separate affiliates.
9. The Commission further finds no practical distinctions between
the BOCs' incentives and ability to use any in-region market power in
their provision of international services on the one hand, and
interstate long distance services on the other. Accordingly, to the
extent the BOCs and their independent incumbent LEC affiliates are
deemed nondominant in the provision of any in-region, international
telecommunications service provided through a section 272 or Commission
rule 64.1903 separate affiliate, the Commission finds them to be
nondominant in the provision of that service in the event they choose
to provide it directly or through an affiliate that is not a section
272 or Commission rule 64.1903 separate affiliate, subject to their
compliance with the targeted safeguards set forth in the Order.
10. In view of the Commission's nondominance determinations in the
Order, the Commission finds that, subject to the conditions set forth
in the Order, AT&T, Verizon, and Qwest are no longer subject to the
requirements in section 203 of the Act (47 U.S.C. 203) and certain of
the Commission's price cap, rate of return, and tariffing rules with
respect to in-region, interstate and international, long distance
services. Specifically: (1) AT&T, Verizon, and Qwest are not required
to, and are in fact barred from, filing tariffs for in-region,
interstate and international, long distance services pursuant to
section 203 of the Act and Sec. 61.31 through 61.38, and 61.43 of the
Commission's rules (47 CFR 61.31 through 61.38; 47 CFR 61.43); (2)
AT&T, Verizon, and Qwest are not required to establish an
``interexchange basket'' pursuant to Sec. 61.42(d)(4) of the
Commission's rules (47 CFR 61.42(d)(4)), to the extent that Sec.
61.42(d)(4) would require the establishment of an interexchange basket
for the services covered by this Order when those services are provided
directly or through an affiliate that is neither a section 272 nor a
Commission rule 64.1903 separate affiliate; and (3) AT&T, Verizon, and
Qwest need not comply with Sec. 61.28 of the Commission's rules (47
CFR 61.28) for the provision of in-region, international
telecommunications services to the extent that, and only to the extent
that, the BOCs or their affiliates that are neither section 272 nor
Commission rule 64.1903 separate affiliates would be treated as
dominant carriers under Sec. 61.28 for no other reason than their
provision of in-region, international telecommunications services. To
the extent that the BOCs or their affiliates that are neither section
272 nor Commission rule 64.1903 separate affiliates otherwise would be
treated as dominant carriers under Sec. 61.28, this Order has no
effect on that treatment.
11. The Commission also finds that, subject to the conditions set
forth in the Order, AT&T, Qwest, and Verizon are not subject to certain
of the Commission's discontinuance and streamlined transfer of control
rules in connection with their in-region, interstate and international,
long distance services. Specifically, AT&T, Qwest, and Verizon are not
subject to Sec. Sec. 63.03, 63.19, 63.21, 63.23, and 63.60 through
63.90 of the Commission's rules (47 CFR 63.03, 63.19, 63.21, 63.23,
63.60 through 63.90) for their provision of in-region, interstate and
international, long distance services to the extent that, and only to
the extent that, the BOCs or their affiliates would be treated as
dominant carriers under these rules for no reason other than their
provision of those services directly or through an affiliate that is
neither a section 272 nor a Commission rule 64.1903 separate affiliate.
To the extent that the BOCs or their affiliates otherwise would be
treated as dominant carriers under these rules, that treatment shall
continue.
12. The Commission further finds that, subject to the conditions
set forth in the Order, AT&T, Qwest, and Verizon are not subject to
Sec. 43.51 of the Commission's rules (47 CFR 43.51) with respect to
their provision of in-region, interstate or international, long
distance services directly or through an affiliate that is neither a
section 272 nor a Commission rule 64.1903 separate affiliate.
Specifically, the BOCs and their affiliates are not subject to Sec.
43.51 of the Commission's rules with respect to their provision of in-
region, interstate or international, long distance services directly or
through an affiliate that is neither a section 272 nor a Commission
rule 64.1903 separate affiliate to the extent that, and only to the
extent that, the BOCs or their affiliates would be treated as dominant
carriers under Sec. 43.51 for no other reason than their provision of
in-region, interstate or international, long distance services directly
or through an affiliate that is neither a section 272 nor a Commission
rule 64.1903 separate affiliate. To the extent that the BOCs or their
affiliates otherwise would be treated as dominant carriers under Sec.
43.51, that treatment shall continue.
13. Because the Commission finds that the section 272 safeguards
impose significant costs and that other less costly safeguards
adequately address the concerns raised by the BOCs' possession of
exclusionary market power, the Commission declines to impose on the
BOCs the section 272 safeguards that have sunset. The Commission finds
that the section 272 safeguards impose a variety of costs, including
administrative costs on both the BOCs and the Commission. For example,
providing interstate, interLATA telecommunications services through a
section 272 separate affiliate requires the BOCs, inter alia, to
operate these services independently of their telephone exchange
service and exchange access operations, and to maintain duplicate sets
of officers, directors, and employees. These restrictions not only
impose additional costs, but also prevent the BOCs from taking
advantage of the economies of scope and scale associated with
integrated operation that their competitors are able to realize.
Moreover, structural separation between a BOC's local telephone and
long distance operations is at odds with a market environment where the
distinction between those local and long distance services has been
blurred by the way those services are marketed and delivered to
consumers. As a general matter, these restrictions and their associated
costs make the BOCs less effective competitors in the market. These
restrictions also may prevent the BOCs and their affiliates from
quickly responding to technological and marketplace developments.
14. The Commission also finds good cause to waive Sec. 64.1903 of
the Commission's rules for the BOCs' independent incumbent LEC
affiliates, SNET, including Woodbury, and former GTE. The Commission
finds that the concerns regarding the costs of the section 272
safeguards effectively apply to both the BOCs and their independent
incumbent LEC affiliates. Therefore, the Commission finds that AT&T and
Verizon can more effectively implement the new regulatory framework
adopted in the Order if their independent incumbent LEC affiliates are
subject to
[[Page 58024]]
the same targeted safeguards as the rest of the company as a whole.
15. AT&T, Verizon, and Qwest remain subject to a number of legal
obligations that are an important component of the regulatory framework
that the Commission finds appropriate for the BOCs and their
independent incumbent LEC affiliates. In particular, these carriers are
still subject to: dominant carrier regulation of their interstate
exchange access services, including price cap regulation of most
exchange access services; the Commission's accounting and cost
allocation rules and related reporting requirements; equal access
obligations under longstanding Commission precedent and section 251(g)
of the Act (see 47 U.S.C. 251(g)); section 251 obligations (see 47
U.S.C. 251); section 271 obligations (see 47 U.S.C. 271), including the
obligation to continue to comply with the market-opening requirements
that the BOCs had to meet in order to receive authority to provide in-
region, interLATA services; and the continuing general obligation to
provide service on just, reasonable, and not unreasonably
discriminatory rates, terms, and conditions pursuant to sections 201
and 202 of the Act (see 47 U.S.C. 201, 202). In addition, the
nondiscrimination requirement in section 272(e)(1) of the Act (47
U.S.C. 272(e)(1)) and the imputation requirement in section 272(e)(3)
of the Act (47 U.S.C. 272(e)(3)) continue to apply. The Commission also
requires the continued treatment of the costs of, and revenues from,
the direct provision of in-region, long distance services as
nonregulated for accounting purposes. The Commission finds that this
requirement will provide an important protection against improper cost
shifting by the BOCs and their independent incumbent LEC affiliates;
address concerns of continued compliance with section 254(k) of the
Act; and lessen the chance that costs associated with such services are
inadvertently assigned to a local exchange or exchange access category.
16. In addition, in this Order the Commission adopts targeted
safeguards that will apply to the BOCs to the extent they choose to
provide in-region, interstate or international, long distance services
either directly or through an affiliate that is not a section 272
separate affiliate. As a further condition of this Order, the BOCs'
independent incumbent LEC affiliates also must comply with these
safeguards to the extent they provide in-region, interstate,
interexchange telecommunications services either directly or through an
affiliate that does not comply with the requirements of either section
272 or Sec. 64.1903 of the Commission's rules. The targeted safeguards
include: (1) Special access performance metrics to prevent non-price
discrimination in the provision of special access services; (2)
imputation requirements to help monitor BOC provisioning of these
services for possible price discrimination; (3) the offering of calling
plans to protect residential customers who make few interstate, long
distance calls; and (4) providing subscribers monthly usage information
to enable them to make cost-effective decisions concerning alternative
long distance plans.
17. Special Access Performance Metrics. As part of the Commission's
implementation of the section 272 structural safeguards, the BOCs have
implemented special access performance metrics designed to help ensure
that they refrain from non-price discrimination in their provision of
special access services. Once a BOC chooses to provide in-region,
interLATA telecommunications services either directly or through an
affiliate that is not a section 272 separate affiliate, those metrics
would cease to be available. AT&T, Verizon, and Qwest also are required
to implement special access metrics in accordance with their voluntary
commitments in connection with the SBC/AT&T Order, 20 FCC Rcd 18290
(2005), the Verizon/MCI Order, 20 FCC Rcd 18433 (2005), the AT&T/
BellSouth Order, 22 FCC Rcd 5662 (2007), and the Qwest Section 272
Sunset Forbearance Order. This latter group of special access metrics
addresses order taking, provisioning, and maintenance and repair of the
BOCs' DS0, DS1, DS3, and OCn services.
18. The Commission finds that the metrics the Commission approved
in the SBC/AT&T Order, the Verizon/MCI Order, the AT&T/BellSouth Order,
and the Qwest Section 272 Sunset Forbearance Order are necessary to
monitor whether the BOCs and their independent incumbent LEC affiliates
are engaging in non-price discrimination in the provision of special
access services to unaffiliated entities in light of the regulatory
relief the Commission grants those carriers in this Order. The
information that AT&T, Qwest, and Verizon record and report to the
Commission under these metrics will provide the Commission and other
interested parties with reasonable tools to monitor each BOC's
performance in providing these special access services to itself and
its competitors. This obligation shall apply beginning the first full
quarter following provision of any in-region, interLATA
telecommunications service through the BOC or through an affiliate that
is not a section 272 separate affiliate. In addition, each of AT&T's
and Verizon's independent incumbent LEC affiliates shall implement
these metrics for the first full quarter following provision of any in-
region, interstate, interexchange telecommunications service through
the BOC or through an affiliate that is not a section 272 separate
affiliate. The BOCs and their independent incumbent LEC affiliates must
continue to abide by special access performance metrics until there is
an affirmative Commission determination that such metrics no longer are
necessary.
19. Each BOC and each of AT&T's and Verizon's independent incumbent
LEC affiliates shall implement these metrics to the extent the BOC or
independent incumbent LEC provides one or more of the covered special
access services to itself, to any affiliate, or to third parties. The
BOCs and their independent incumbent LEC affiliates shall provide the
Commission with their performance measurement results on a quarterly
basis.
20. Imputation. The Commission also provides guidance, pursuant to
its authority under sections 201, 202(a), 220(a), and 272(e)(3) of the
Act (47 U.S.C. 201, 202(a), 220(a), 272(e)(3)), to AT&T, Qwest, and
Verizon regarding the treatment of charges for any access services that
their incumbent LEC affiliates provide their in-region, long distance
operations. In providing this guidance, the Commission addresses three
situations: (1) The BOCs' imputation in the event they provide in-
region, long distance services on an integrated basis; (2) the
obligations of AT&T's and Verizon's independent incumbent LEC
affiliates in the event they provide in-region, long distance services
on an integrated basis; and (3) AT&T's, Qwest's, and Verizon's
obligations in the event they provide in-region, long distance services
through an affiliate that is neither a section 272 nor a rule 64.1903
separate affiliate.
21. In order to ensure the BOCs' continued compliance with their
imputation obligations under section 272(e)(3), the Commission directs
each BOC to continue to impute to itself its highest tariffed rate for
access, including access provided over joint-use facilities. The
Commission also requires AT&T's and Verizon's independent incumbent LEC
affiliates, as a condition of the waiver granted to them in the Order,
to comply with the same requirement with regard to their provision of
access to any in-region, long distance services that they provide
directly. In addition, the Commission requires the BOCs and
[[Page 58025]]
their independent incumbent LEC affiliates to charge any non-section
272 affiliate through which they provide in-region, long distance
services the same amount for access that they would have charged a
section 272 separate affiliate under section 272(e)(3). Although the
statute does not address these latter two situations directly, applying
protections paralleling those in section 272(e)(3) to these situations
will assure that the degree of protection against improper cost
shifting does not vary with AT&T's, Qwest's, and Verizon's choice of
corporate structure for the provision of in-region, long distance
services.
22. Section 69.727(a)(iii) of the Commission's rules (47 CFR
69.727(a)(iii)) requires that a price cap LEC cannot provide contract
tariff services to either a section 272 separate affiliate or a
Commission rule 64.1903 affiliate until after it ``certifies to the
Commission that it provides service pursuant to that contract tariff to
an unaffiliated customer.'' To ensure that equivalent protection is in
place in the event the BOCs provide in-region, long distance services
directly, the Commission requires that each AT&T, Verizon, and Qwest
incumbent LEC provide such a certification to the Commission prior to
providing contract tariff services to itself or to any affiliate that
is neither a section 272 nor a Commission rule 64.1903 separate
affiliate for use in the provision of any in-region, long distance
services.
23. The Commission requires that AT&T, Qwest, and Verizon revise
the cost allocation manuals they filed pursuant to Sec. 64.903 of the
Commission's rules (47 CFR 64.903) to include their imputation
methodologies, which will be subject to public comment. The Commission
also requires AT&T, Qwest, and Verizon to revise their cost allocation
manuals to include a description of how their provision of access
services will comply with the affiliate transaction rules, to the
extent they will offer in-region, interstate, long distance service
through an affiliate that is not a section 272 separate affiliate or a
Commission rule 64.1903 affiliate. Consistent with the Commission's
findings in the Accounting Safeguards Order (61 FR 41208, Aug. 7,
1996), the Commission requires that the BOCs and their independent
incumbent LEC affiliates continue to treat in-region, long distance
services as nonregulated for accounting purposes. These carriers also
must continue to apply the Commission's affiliate transaction rules to
any transactions they have with affiliates that provide long distance
services. The Commission also directs AT&T, Qwest, and Verizon to
modify their cost allocation manuals as necessary to ensure that their
imputation and access charge methodologies remain consistent with
section 272(e)(3) and this Order as each of these carriers changes the
degree to which it integrates its local telephone and long distance
operations.
24. Finally, under the Commission's rules, amounts imputed to each
BOC's, or BOC independent incumbent LEC affiliate's, in-region, long
distance operations pursuant to section 272(e)(3) and the Order must be
debited to account 32.5280 (47 CFR 32.5280), which includes
nonregulated operating revenue. To facilitate transparency of each
carrier's imputation of in-region, long distance costs, the Commission
requires AT&T, Qwest, and Verizon, as a condition of the Order, to
include the imputation charges it debits to account 32.5280 in its
ARMIS filings, accompanied by an explanatory footnote for each line
item identifying the amount imputed. This requirement should pose at
most a minimal additional burden to the carriers because they already
record imputation charges in a subsidiary record account for revenues
derived from regulated services treated as nonregulated for federal
accounting purposes, and already must file ARMIS reports.
25. Low Volume Usage Plans. Although it finds that the BOCs
generally lack classical market power in the provision of in-region,
interstate, long distance services, the Commission remains concerned
that BOC residential customers who make relatively few interstate long
distance calls and who do not also subscribe to wireless or broadband
Internet access service may have fewer competitive choices among in-
region, interstate long distance providers and may not be able to avoid
the impact of a price increase by engaging in usage substitution. To
address this concern, AT&T and Verizon each have committed for three
years to offer a rate plan tailored to these customers' needs.
Specifically, AT&T and Verizon each commit to offer a rate plan under
which residential consumers with a local access line may obtain 1+ long
distance telecommunications services at a rate of 12 cents per minute
with no monthly minimum or monthly recurring charge. In connection with
the Qwest Section 272 Sunset Forbearance Order, Qwest committed to
freeze for two years the per-minute prices for two calling plans that
it currently offers which are tailored to these customers' needs, and
to not increase the monthly fee that applies to one of these plans by
more than one dollar as a condition of the Commission's forbearance.
The Commission requires that AT&T, Qwest, and Verizon adhere to these
commitments as a condition of the relief granted in this Order, and
finds that this condition will help protect against the exercise of any
classical market power that Verizon, AT&T, or Qwest may have in
relation to customers that make relatively few interstate long distance
calls.
26. Monthly Usage Information. The Commission is also concerned
that interstate long distance consumers need adequate information
regarding their monthly usage in order to make informed choices among
alternative long distance calling plans. To address this concern, AT&T
has committed to provide, for three years, each residential customer
who subscribes to a calling plan that establishes a single rate for
unlimited wireline local exchange and long distance telecommunications
service with the total number of long distance telecommunications
service minutes used by that customer each month. Similarly, Verizon
has committed, for three years, to offer monthly long distance usage
information to customers who subscribe to wireline interstate,
interexchange telecommunications service plans that establish a single
rate for unlimited wireline local exchange, intraLATA toll, and 1+ long
distance telecommunications service. As a condition of the regulatory
relief granted in this Order, the Commission requires AT&T, Verizon,
and Qwest to provide such usage information without an additional
charge.
27. The Commission finds that the new regulatory framework adopted
in this Order is preferable to the regulatory requirements previously
in place for the BOCs and their independent incumbent LEC affiliates.
In particular, the Commission finds that the new framework imposes
significantly fewer costs than the prior regulations. Because the new
framework does not involve retail price regulation or tariff filing
with respect to in-region interLATA telecommunications services, it
imposes fewer costs than would dominant carrier regulation. The new
framework also does not impose the costs and inefficiencies associated
with the full section 272 safeguards, including the costs and
inefficiencies from maintaining structural separation between local
telephone and long distance operations, operating these services
independently, and maintaining duplicate sets of officers, directors,
and employees. In addition, the new framework does not impose the same
constraints on the ability of the BOCs and their independent incumbent
[[Page 58026]]
LEC affiliates to respond to technological and marketplace developments
as do the section 272 and Commission rule 64.1903 safeguards. Further,
the Commission finds that the improved ability of AT&T, Verizon, and
Qwest to develop and deploy innovative interLATA services that meet
their customers' needs is a significant benefit associated with the new
framework adopted in this Order. Given its expertise and experience
with the regulation historically imposed on the BOCs and their
independent incumbent LEC affiliates; the evidence of significant
competition and evolution in the marketplace for interstate long
distance services within the AT&T, Verizon, and Qwest incumbent LEC
territories; and its conclusions regarding the adequacy of other
safeguards, the Commission finds it appropriate to remove hindrances to
the BOCs' and their independent incumbent LEC affiliates' becoming more
effective competitors in a manner that is administrable and adequately
protects customers and competition.
Paperwork Reduction Act Analysis
28. This document contains new or modified information collection
requirements. The Commission, as part of its continuing effort to
reduce paperwork burdens, invites the general public to comment on the
information collection requirements contained in this Order as required
by the Paperwork Reduction Act of 1995, Pub. L. 104-13. Public and
agency comments are due December 11, 2007. In addition, the Commission
notes that pursuant to the Small Business Paperwork Relief Act of 2002,
Pub. L. 107-198, see 44 U.S.C. 3506(c)(4), the Commission previously
sought specific comment on how it might ``further reduce the
information collection burden for small business concerns with fewer
than 25 employees.''
29. In this document, the Commission has assessed the effects of
the new or modified information collection requirements adopted in this
Order, and finds that they do not affect businesses with few than 25
employees.
In addition to filing comments with the Office of the Secretary, a
copy of any comments on the Paperwork Reduction Act information
collection requirements contained herein should be submitted to Jerry
R. Cowden, Federal Communications Commission, 1-C804, 445 12th Street,
SW., Washington, DC 20554, or via the Internet to PRA@fcc.gov.
Congressional Review Act
30. The Commission will send a copy of this Report and Order and
Memorandum Opinion and Order in a report to be sent to Congress and the
Government Accountability Office pursuant to the Congressional Review
Act, see 5 U.S.C. 801(a)(1)(A).
Final Regulatory Flexibility Act Analysis
31. In this Order, the Commission establishes a new framework to
govern the provision of in-region, long distance services by AT&T,
Qwest, and Verizon. This new framework replaces burdensome regulation
with less intrusive measures that protect important customer interests
while allowing AT&T, Qwest, and Verizon to respond to marketplace
demands efficiently and effectively. The issues addressed by the
Commission in this Order directly affect only the BOCs and their
affiliates, which do not qualify as small entities under the RFA. In
particular, none of the BOCs is a small entity because each BOC is an
affiliate of a Regional Holding Company (RHC), and all of the BOCs or
their RHCs have more than 1,500 employees. Insofar as this Order
applies to other BOC or RHC affiliates, those affiliates are controlled
by the BOCs or by the RHC. Accordingly, they are not ``independently
owned and operated'' entities for purposes of the RFA.
32. Therefore, the Commission finds that the requirements adopted
in this Order will not have a significant economic impact on a
substantial number of small entities. The Commission will send a copy
of the Order including a copy of this final certification, in a report
to Congress pursuant to the Small Business Regulatory Enforcement
Fairness Act of 1996. See 5 U.S.C. 801(a)(1)(A). In addition, a summary
of the Order will be sent to the Chief Counsel for Advocacy of the
Small Business Administration.
Ordering Clauses
33. Accordingly, it is ordered that, pursuant to sections 1, 2,
4(i), 4(j), 201 through 204, 214, 220(a), 251, 252, 271, 272, and
303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 151,
152, 154(i), 154(j), 201 through 204, 214, 220(a), 251, 252, 271, 272,
and 303(r), the Report and Order is adopted.
34. It is further ordered, pursuant to sections 1, 2, 4(i), 4(j),
201 through 204, 214, 220(a), 251, 252, 271, 272, and 303(r) of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i),
154(j), 201 through 204, 214, 220(a), 251, 252, 271, 272, and 303(r),
the Petition for Extension of section 272 Obligations of Southwestern
Bell Telephone Co. in the States of Arkansas and Missouri that Legacy
AT&T Corp. filed September 24, 2004 in WC Docket No. 02-112; the
Petition for Extension of section 272 Obligations of Verizon in the
State of Massachusetts that Legacy AT&T Corp. filed February 29, 2004
in WC Docket No. 02-112; the Petition for Extension of section 272
Obligations of Southwestern Bell Telephone Co. in the States of Kansas
and Oklahoma that Legacy AT&T Corp. filed December 8, 2003 in WC Docket
No. 02-112; and the Petition for Extension of section 272 Obligations
of Southwestern Bell Telephone Co. in the State of Texas in WC Docket
No. 02-112 that Legacy AT&T Corp. filed April 10, 2003 in WC Docket No.
02-112 are denied.
35. It is further ordered, pursuant to sections 1, 2, 4(i), 4(j),
201 through 204, 214, 220(a), 251, 252, 271, 272, and 303(r) of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i)-
154(j), 201-204, 214, 220(a), 251, 252, 271, 272, and 303(r), that
Sec. 64.1903 of the Commission's rules is waived as applied to
Southern New England Telephone Company and the General Telephone
Operating Companies, subject to the conditions set forth in this Report
and Order.
36. It is further ordered, pursuant to Sec. 1.103(a) and 1.427(b)
of the Commission's rules, 47 CFR 1.103(a), 1.427(b), that this Report
and Order shall be effective 30 days after publication of notice of the
Report and Order in the Federal Register, subject to Office of
Management and Budget (OMB) approval for new or modified information
collection requirements.
37. It is further ordered, pursuant to sections 1, 2, 4(i), 4(j),
10, 201 through 204, 214, 220(a), 251, 252, 271, 272, and 303(r) of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i),
154(j), 160, 201 through 204, 214, 220(a), 251, 252, 271, 272, and
303(r) that AT&T's Petition for Forbearance, filed June 2, 2006, is
granted in part, to the extent set forth herein.
38. It is further ordered, pursuant to sections 1, 4(i), 4(j), 201
through 204, 251(g), and 303(r) of the Communications Act of 1934, as
amended, 47 U.S.C. 151, 154(i) through 154(j), 201-204, 251(g), and
303(r), and Sec. 1.3 of the Commission's rules, 47 CFR 1.3, that the
Equal Access Scripting Requirement is waived as applied to Southern New
England Telephone Company and the General Telephone Operating Companies
as described in the Memorandum Opinion and Order, effective on August
31, 2007.
[[Page 58027]]
39. It is further ordered, pursuant to section 10 of the
Communications Act of 1934, as amended, 47 U.S.C. 160, and Sec.
1.103(a) of the Commission's rules, 47 CFR 1.103(a), that the
Memorandum Opinion and Order shall be effective on August 31, 2007.
Pursuant to Sec. 1.4 and 1.13 of the Commission's rules, 47 CFR 1.4,
1.13, the time for appeal from that Memorandum Opinion and Order shall
run from its release date.
40. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Order, including the Final Regulatory Flexibility
Certification, to the Chief Counsel for Advocacy of the Small Business
Administration.
List of Subjects in 47 CFR Parts 53 and 64
Accounting, Communications common carriers, Reporting and
recordkeeping requirements, Telephone, Telecommunications.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 07-5037 Filed 10-11-07; 8:45 am]
BILLING CODE 6712-01-P