[Federal Register Volume 62, Number 16 (Friday, January 24, 1997)]
[Proposed Rules]
[Pages 3638-3653]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-1676]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Chapter I
[CC Docket No. 96-254; FCC 96-472]
Implementation of Section 273 of the Communications Act of 1934,
as Amended by the Telecommunications Act of 1996
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: The Commission is issuing this Notice of Proposed Rulemaking
(NPRM) to initiate a proceeding concerning the Bell Operating
Companies' (BOCs') manufacture of telecommunications equipment and
customer premises equipment (CPE) pursuant to Section 273 of the
Communications Act of 1934, as amended by the Telecommunications Act of
1996. In general, under Section 273, a BOC may provide
telecommunications equipment and may manufacture both
telecommunications equipment and CPE once the Commission authorizes the
BOC to provide in-region, interLATA services pursuant to Section 271.
The Commission seeks comment on procedures governing collaboration,
research and royalty agreements, nondiscrimination standards, and the
reporting and disclosure of protocols and other technical requirements
for connecting to the BOC's network. Section 273 also limits the
manufacturing activities of Bellcore and other entities that develop
industry-wide standards or generic requirements, or conduct
certification activities. The Commission seeks comment on proposed
measures to implement these provisions of Section 273. In addition, the
Commission seeks comment on the effects of the BOCs' proposed sale of
Bellcore on its implementation of Section 273.
DATES: Comments are due on or before February 24, 1997 and Reply
Comments are due on or before March 26, 1997. Written comments must be
submitted by the Office of Management and Budget (OMB) on the proposed
and/or modified information collections on or before March 25, 1997.
ADDRESSES: To file formally in this proceeding, interested parties must
file an original and six copies of all comments, reply comments, and
supporting comments, with the reference number ``CC Docket 96-254'' on
each document. Those parties wishing each Commissioner to receive a
personal copy of their comments must file an original plus eleven
copies. Parties must send comments and reply comments to the Office of
the Secretary, Federal Communications Commission, 1919 M Street, N.W.
Room 222, Washington, D.C. 20554. Parties must also provide four copies
to Secretary, Network Services Division, Common Carrier Bureau, 2000 M
Street, N.W., Room 235, Washington, D.C. 20554. Parties must also
provide one copy of any documents filed in this docket to the
Commission's copy contractor, International Transcription Services,
Inc., 2100 M Street, N.W., Suite 140, Washington, D.C. 20037. In
addition to filing comments with the Secretary, a copy of any comments
on the information collections contained herein should be submitted to
Dorothy Conway, Federal Communications Commission, Room 234, 1919 M
Street, N.W., Washington, D.C. 20554, or via the Internet to
dconway@fcc.gov, and to Timothy Fain, OMB Desk Officer, 10236 NEOB,
725-17th Street, N.W., Washington, D.C. 20503 or via the Internet to
fain__t@al.eop.gov.
FOR FURTHER INFORMATION CONTACT: Gregory Cooke, Attorney, Network
Services Division, Common Carrier Bureau, (202) 418-2351. For
additional information concerning the information collections contained
in this NPRM contact Dorothy Conway, (202) 418-0217, or via the
Internet at dconway@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking adopted December 10, 1996, and released December
11, 1996. (FCC 96-472). This NPRM contains proposed or modified
information collections subject to the Paperwork Reduction Act of 1995
(``PRA''). It has been submitted to the Office of Management and Budget
(``OMB'') for review under the PRA. OMB, the general public, and other
Federal agencies are invited to comment on the proposed or modified
information collections contained in this proceeding. The full text of
this Notice of Proposed Rulemaking is available for inspection and
copying during normal business hours in the FCC Reference Center (Room
239), 1919 M St., NW., Washington, D.C. and is also available from the
FCC's World Wide Web site, http://www.fcc.gov. The complete text also
may be purchased from the Commission's copy contractor, International
Transcription Service, Inc., (202) 857-3800, 2100 M St., NW., Suite
140, Washington D.C. 20037.
Paperwork Reduction Act
This NPRM contains either a proposed or modified information
collection. The Commission, as part of its continuing effort to reduce
paperwork burdens, invites the general public and the Office of
Management and Budget (OMB) to comment on the information collections
contained in this NPRM, as required by the Paperwork Reduction Act of
1995, Public Law No. 104-13. Public and agency comments are due at the
same time as other comments on this NPRM; OMB notification of action is
due March 25, 1997. Comments should address: (a) whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information
shall have practical utility; (b) the accuracy of the Commission's
burden estimates; (c) ways to enhance the quality, utility, and clarity
of the information collected; and (d) ways to minimize the burden of
the collection of information on the respondents, including the use of
automated collection techniques or other forms of information
technology.
OMB Approval Number: None.
Title: Implementation of Section 273 of the Communications Act of
1934, as amended by the Telecommunications Act of 1996.
Form No.: N/A.
Type of Review: New collection.
[[Page 3639]]
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Total
annual
capital and
startup
costs and
No. of Estimated Total Total annual total
Information collection respondents time per Frequency annual cost to annual
(approx.) response (per year) burden respondents operation
(hours) (hours) \1\ and
maintenance
and
purchase of
services
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Proposed Provision of
Information on Protocols and
Technical Requirements
(Section 273(c)(1))........... \2\ 7 8 25 1,400 $140,000 $77,000
Access By:
Competitors to Information
(Section 273(c)(3))....... \2\ 7 2 25 350 35,000 77,000
Proposed Provision of
Planning Information to
Interconnecting Carriers
(Section 273(c)(4))....... \2\ 7 2 75 1,050 105,000 77,000
Proposed Requirements for
Standard-Setting Entities
(Section 273(d)(4)(A)).... 50 5 10 2,500 250,000 0
Sunset of Manufacturing
Safeguards and Procedural
Requirements (Section
273(d)(6))................ 50 20 1 1,000 100,000 0
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\1\ Assuming cost of preparation to be $100/hr.
\2\ Regional Holding Companies (``RHCs''). These seven RHCs control all of the Bell Operating Companies
(``BOCs''). Each RHCs typically files information with the Commission on behalf of all of the BOCs under its
control.
Total Annual Burden: 6300 hours.
Respondents: Businesses or others for profit, including small
businesses.
Needs and Uses: The NPRM seeks comments on a number of issues, the
resolution of which may lead to the imposition of information
collections subject to the Paperwork Reduction Act. The information
collections proposed are required under the Telecommunications Act of
1996, Public Law No. 104-104. These information collections will also
be used to ensure that the BOCs, standards-setting organizations,
equipment manufacturers, and certification entities fulfill their
obligations under Section 273. The NPRM seeks comment on potential
overlap between existing information collections and the information
collections required under Section 273 and proposed in the NPRM.
Synopsis of Notice of Proposed Rulemaking
1. Introduction and Background: On February 8, 1996, the
Telecommunications Act of 1996 (``1996 Act'') became law.3 Through
this legislation, Congress sought to establish a ``pro-competitive, de-
regulatory national policy framework'' for the United States
telecommunications industry.4 The 1996 Act includes provisions
that are intended to promote competition in markets that are already
open to new competitors. Congress entrusted to this Agency the
responsibility for establishing the rules that will implement most
quickly and effectively the national telecommunications policy embodied
in the 1996 Act.5
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\3\ The Telecommunications Act of 1996, Public Law No. 104-104,
110 Stat. 96 (1996) (codified at 47 U.S.C. Secs. 151 et seq.).
\4\ Jt. Statement of Managers, S. Conf. Rep. No. 104-230, 104th
Cong., 2d Sess. 1 (1996) (``Joint Explanatory Statement'').
\5\ According to Representative Fields, ``[Congress] is
decompartmentalizing segments of the telecommunications industry,
opening the floodgates of competition through deregulation, and most
importantly, giving consumers choice * * * and from these choices,
the benefits of competition flow to all of us as consumers--new and
better technologies, new applications for existing technologies, and
most importantly * * * lower consumer price.'' 142 Cong. Rec. H1149
(Feb. 1, 1996) (statement of Rep. Fields).
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2. Section 273 seeks to facilitate BOC entry into manufacturing
while preserving the competitive nature of these markets by permitting
a BOC to manufacture telecommunications equipment and CPE only after
the BOC: (1) has been authorized to provide inter-LATA service pursuant
to Section 271(d) (which, inter alia, requires the BOC to have
demonstrated that it has implemented certain network access provisions
contained in Section 271(c)(2)(B) and that BOC provision of interLATA
service is in the public interest); 6 (2) has established a
separate subsidiary that complies with Section 272 (which contains
certain structural safeguards and other provisions to facilitate
detection of prohibited acts as well as to prevent discrimination and
cross-subsidization); 7 and (3) has met the requirements of
Section 273 (which, inter alia, requires BOC disclosure of certain
technical information, prohibits discriminatory equipment procurement
decisions, and imposes constraints on certain standards-setting, and
certification, entities).8
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\6\ 47 U.S.C. Sec. 273(a).
\7\ 47 U.S.C. Sec. 272(a)(2)(A).
\8\ 47 U.S.C. Sec. 273(a).
3. Section 273(a): Authorization. Section 273(a) explicitly
authorizes BOCs and BOC affiliates 9 to ``manufacture and
provide'' telecommunications equipment,10 and ``manufacture''
customer premises equipment 11 once they obtain authority to offer
in-region, interLATA service
[[Page 3640]]
under Section 271(d) and comply with any other rules and regulations
that result from this proceeding. We tentatively conclude that Section
273(a) allows a BOC to manufacture and provide telecommunications
equipment and to manufacture CPE, in compliance with the rules we adopt
in this proceeding, once that BOC has obtained authority to offer
interLATA service in any of its in-region states. We seek comment on
this tentative conclusion.
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\9\ The term ``Bell operating company'' is defined in the 1996
Act, and includes the successors and assigns of Bell operating
companies that provide ``wireline telephone exchange service,'' but
does not include an ``affiliate'' of a Bell operating company, other
than another Bell operating company or its successor or assigns. 47
U.S.C. Sec. 153(4). ``Affiliate'' is defined in the 1996 Act, 47
U.S.C. Sec. 153(1), to mean a person that directly or indirectly
owns or controls, is owned or controlled by, or is under common
ownership or control with, another person. For the purpose of
determining affiliate status under Section 153(1), ``owned'' means
an equity interest of more than ten percent. 47 U.S.C. Sec. 153(1).
For Bellcore, however, the equity interest creating an affiliate
relationship with a BOC is significantly less. Section 273(d)(1)(B)
precludes Bellcore from becoming a BOC manufacturing affiliate, but
allows for limited BOC ownership of Bellcore under Section
273(d)(8)(A). The latter paragraph states ``[t]he term `affiliate'
shall have the same meaning as in Section 3 of this Act, except
that, for purposes of paragraph (1)(B)--(i) an aggregate voting
equity interest in Bell Communications Research, Inc., of at least 5
percent of its total voting equity, owned directly or indirectly by
more than 1 otherwise unaffiliated Bell operating company, shall
constitute an affiliate relationship; and (ii) a voting equity
interest in Bell Communications Research, Inc., by any otherwise
unaffiliated Bell operating company of less than 1% of Bell
Communications Research's total voting equity shall not be
considered to be an equity interest under this paragraph.''
\10\ ``Telecommunications equipment'' means ``equipment, other
than customer premises equipment, used by a carrier to provide
telecommunications services, and includes software integral to such
equipment (including upgrades).'' 47 U.S.C. Sec. 153(45).
\11\ ``Customer premises equipment'' means ``equipment employed
on the premises of a person (other than a carrier) to originate,
route, or terminate telecommunications.'' 47 U.S.C. Sec. 153(14).
4. Section 273(a) also states that ``neither a Bell operating
company nor any of its affiliates may engage in such manufacturing in
conjunction with a Bell operating company not so affiliated or any of
its affiliates.'' 12 BOCs under the ownership or control of a
common Regional Holding Company (``RHC'') would appear to meet the
statutory definition of ``affiliates;'' therefore, we tentatively
conclude that this provision prevents joint manufacturing between or
among (1) unaffiliated RHCs; (2) unaffiliated BOCs that are not under
the ownership or control of a common RHC; and (3) an RHC and a BOC that
is not affiliated with that RHC. We seek comment on this tentative
conclusion.
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\12\ Section 273(d)(1)(B) precludes Bellcore from becoming a BOC
manufacturing affiliate, but allows for limited BOC ownership of
Bellcore under Section 273(d)(8)(A). The latter paragraph states
``[t]he term `affiliate' shall have the same meaning as in Section 3
of this Act, except that, for purposes of paragraph (1)(B)--(i) an
aggregate voting equity interest in Bell Communications Research,
Inc., of at least 5 percent of its total voting equity, owned
directly or indirectly by more than 1 otherwise unaffiliated Bell
operating company, shall constitute an affiliate relationship; and
(ii) a voting equity interest in Bell Communications Research, Inc.,
by any otherwise unaffiliated Bell operating company of less than 1%
of Bell Communications Research's total voting equity shall not be
considered to be an equity interest under this paragraph.''
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5. Section 273(h) defines the term ``manufacturing'' to have ``the
same meaning as such term has under the AT&T Consent Decree.'' The U.S.
District Court for the District of Columbia, which supervised the
Decree, determined that the terms ``manufacture'' and ``manufacturing''
extend to the ``design, development and fabrication'' 13 of
telecommunications equipment, CPE, and the ``software integral to
[this] equipment hardware, also known as firmware.'' 14 Although
Section 273 defines only the gerund ``manufacturing,'' we tentatively
conclude that we should also accord the verb ``manufacture'' a meaning
that extends to include the activities identified by the District Court
and that is consistent with the definition of ``manufacturing''
provided in the statute. We seek comment on this interpretation.
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\13\ United States v. Western Elec. Co., 675 F. Supp. at 662.
\14\ Id. at 667 n.54.
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6. Section 273(b): BOC Collaboration and Research and Royalty
Agreements. Notwithstanding the restrictions on BOC entry into
manufacturing imposed by Section 273(a), Section 273(b) explicitly
permits BOCs to collaborate with manufacturers, engage in research
activities related to manufacturing, and enter into royalty agreements
with manufacturers. Specifically, Section 273(b)(1) permits a BOC to
engage ``in close collaboration with any manufacturer of customer
premises equipment or telecommunications equipment during the design
and development of hardware, software, or combinations thereof related
to such equipment.'' We seek comment on the types of activities that
would constitute ``close collaboration'' permissible under this
section. We tentatively conclude that the broad language of Section
273(b)(1) does not permit close collaboration in either of the
following two situations: (1) between a BOC or an RHC and the
manufacturing affiliate of another unaffiliated BOC or RHC; or (2)
between the manufacturing affiliates of two unaffiliated BOCs or RHCs.
Conversely, we tentatively conclude that Section 273(b)(1) does permit
joint collaboration between a BOC-affiliated manufacturer and a non-BOC
affiliated manufacturer. We request comment on these tentative
conclusions.
7. Section 273(b)(2) also permits BOCs, notwithstanding the
conditions imposed by Section 273(a), to ``(A) engage[] in research
activities related to manufacturing; and (B) enter[] into royalty
agreements with manufacturers or telecommunications equipment.'' We
seek appropriate definitions for the terms ``research activities'' and
``royalty agreements'' that will preserve BOC incentives to research
and develop innovative products, solutions and technologies, consistent
with the language of Section 273(b)(2), while minimizing potentially
anticompetitive incentives. We also seek comment on other ways to
protect against potential anticompetitive abuses and seek comment on
the relationship between Section 273(b)(2) and other sections of the
Act which may require disclosure of information, including, but not
limited to, Sections 251(c)(5), 251(e)(2), or 273(c)(1).
8. Section 273(c): BOC Information Requirements. Information with
respect to the technical characteristics of a network is essential for
manufacturers of telecommunications equipment and CPE.
Telecommunications equipment and CPE manufacturers' products cannot be
used in or with a network unless they comply with the technical
specifications and protocols necessary for incorporation in or
interoperation with that network.15 Changes in technical
specifications, protocols or both can foreclose competition or render
potential competition less likely if an affiliated manufacturer can
learn of such changes and then modify, or create new, products to be
compatible with those changes in advance of the rest of the
market.16
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\15\ United States v. AT&T, 552 F. Supp. at 190-91; Computer and
Business Equip. Mfrs. Assoc. Petition for Declaratory Ruling
Regarding Section 64.702(d)(2) of the Commission's Rules and the
Policies of the Second Computer Inquiry, Report and Order, 93
F.C.C.2d 1226, 1236-37 (1983).
\16\ See generally, Carl Shapiro, Antitrust in Network
Industries, Address before the American Bar Association (March 27,
1996). We will place a copy of this address in the docket file of
this proceeding.
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9. Our Computer Inquiry III rules recognize some of these concerns
by, inter alia, requiring carriers offering enhanced services or
providing customer premises equipment to disclose to the public ``all
information relating to network design and technical standards and
information affecting changes to the telecommunications network which
would affect either intercarrier interconnection or the manner in which
customer premises equipment is attached to the interstate network prior
to implementation and with reasonable advance notification.'' 17
In addition, the Commission's ``all carrier'' rule obligates ``all
carriers owning basic transmission facilities [to release] all
information relating to network design * * * to all interested parties
on the same terms and conditions, insofar as such information affects
either intercarrier interconnection or the manner in which
interconnected [customer-premises equipment]
[[Page 3641]]
operates.'' 18 The Commission's rules also require carriers to
disclose network changes to customers ``[i]f such changes can be
reasonably expected to render any customer's terminal equipment
incompatible with telephone company communications facilities, or
require modification or alteration of such terminal equipment, or
otherwise materially affect its use or performance'' 19 Common
carriers have also filed network specifications as part of their
tariffs so that customers may select from among features offered with a
package of services. To the extent that the notice and filing
requirements imposed on carriers by the 1996 Act (including,
especially, Sections 273(c)(1) and 273(c)(4)) may duplicate these or
other existing Commission notice and filing requirements related to
network interconnection, we seek comment on suggestions to consolidate
those requirements and the proposed text of rules that would achieve
that objective.
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\17\ 47 CFR Sec. 64.702(d)(2). See, e.g., Amendment to Sections
64.702 of the Commission's Rules and Regulations (Third Computer
Inquiry); and Policy and Rules Concerning Rates for Competitive
Common Phase II Carrier Service and Facilities Authorizations
Thereof, Report and Order, 2 FCC Rcd 3072, 3087 (1987), 52 FR 20714,
June 3, 1987 (``Phase II Order'')., recon., 3 FCC Rcd 1150 (1988),
53 FR 8629, March 16, 1988 (``Phase II Reconsideration Order''),
further recon., 4 FCC Rcd 5927 (1989), 55 FR 29022, July 17, 1990
(``Phase II Further Reconsideration Order''); Phase II Order vacated
sub. nom. California v. FCC, 905 F.2d 1217 (9th Cir. 1990)
(``California I''); Computer III Remand Proceeding, 5 FCC Rcd 7719
(1990), 56 FR 964, January 10, 1991 (``ONA Remand Order''), recon.,
7 FCC Rcd 909 (1992), 57 FR 5391, February 14, 1992, pets. for
review denied sub. nom. California v. FCC, 4 F.3d 1505 (9th Cir.
1993) (``California II''); BOC Safeguards Order, 6 FCC Rcd 7571
(1991), 57 FR 4373, February 5, 1992, vacated in part and remanded
sub. nom. California v. FCC, 39 F.3d 919 (9th Cir. 1994)
(``California III''), cert. denied, 115 S. Ct. 1427 (1995).
\18\ Amendment of Section 64.702 of the Commission's Rules and
Regulations (Second Computer Inquiry), Memorandum Opinion and Order
on Reconsideration, 84 F.C.C.2d 50, 82-83 (1980), 46 FR 5984,
January 21, 1981, further recon., 88 FCC 2d 512 (1981), 46 FR 59976,
December 8, 1981, aff'd sub nom. Computer and Communications Indus.
Ass'n v. FCC, 693 F.2d 198 (D.C. Cir. 1982), cert. denied, 461 U.S.
938 (1983).
\19\ 47 CFR Sec. 68.110(b). Certain past references to this rule
also use the term ``all carrier rule.'' In this proceeding, we use
that term to refer to our part 64 rule, above, and refer to 47 CFR
Sec. 68.110(b) specifically by number, if necessary.
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10. The legislative safeguards of Section 273(c) reduce the
potential for anticompetitive conduct that might otherwise accompany
the information advantage enjoyed by a network owner that also
manufactures network equipment.20 Section 273(c) requires the BOCs
to disclose certain information relating to their network standards.
Disclosure of that information may promote competition by facilitating
interconnectivity 21 and interoperability,22 alerting
competitors and others to changes in standards, and preventing the
imposition of unreasonable licensing fees by the BOCs. 23
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\20\ See Joint Explanatory Statement at 154.
\21\ The 1996 Act defines ``public telecommunications network
interconnectivity'' as ``the ability of two or more public
telecommunications networks used to provide telecommunications
service to communicate and exchange information without
degeneration, and to interact in concert with one another.'' 47
U.S.C. Sec. 256(d).
\22\ In the context of Section 251(c)(5), we recently defined
``interoperability'' as ``the ability of two or more facilities, or
networks, to be connected, to exchange information, and to use the
information that has been exchanged.'' Implementation of the Local
Competition Provisions in the Telecommunications Act of 1996, Second
Report and Order and Memorandum Opinion and Order, FCC 96-333, 61 FR
47284, September 6, 1996, at para. 178 (citing IEEE Standard
Dictionary of Electrical and Electronics Terms 461 (J. Frank ed.
1984)).
\23\ Cf. 47 U.S.C. Sec. 251(c), which imposes specific
interconnection obligations on incumbent LECs. Inter alia, Section
251 obligates incumbent LECs to negotiate interconnection agreements
in good faith (Section 251(c)(1)), requires that interconnection be
provided ``on rates, terms, and conditions that are just, reasonable
and nondiscriminatory'' (Section 251(c)(2)(D)), and requires that
incumbent LECs provide reasonable public notice of changes in
necessary information (Section 251(c)(5)). Accordingly, Sections
251(c) and 273(c) appear to overlap to some extent.
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11. Although the information disclosure requirements of Section
273(c) apply on their face to all BOCs, Section 273(c) is contained
within a statute that otherwise addresses BOC obligations in the
manufacturing context. We seek comment on whether Section 273(c)
applies to all BOCs or only to BOCs that are authorized to manufacture
under Section 273(a).
12. Section 273(c)(1): Section 273(c)(1) requires a BOC, ``in
accordance with regulations prescribed by the Commission, [to] maintain
and file with the Commission full and complete information with respect
to the protocols and technical requirements for connection with and use
of its telephone exchange service facilities.'' 24 A BOC also is
required to ``report promptly to the Commission any material changes or
planned changes to protocols and technical requirements for connection
with and use of its telephone exchange service.'' We seek comment on
how each of the terms in this subsection that are not defined by the
1996 Act (such as ``protocols'' and ``technical requirements'') should
be defined. Because our current rules regarding network information,
discussed above, address the needs of other carriers, information
service providers (``ISPs''), enhanced service providers (``ESPs''),
and other members of the public for information about network
capabilities,25 and not the specific needs of manufacturers who
wish to develop new network products, we tentatively conclude that our
existing rules do not satisfy the filing requirements of Section
273(c)(1). We seek comment on the need for specific disclosure rules to
implement Section 273(c) in light of this tentative conclusion, as well
as the specific language that commenters may conclude should appear in
them.
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\24\ 47 U.S.C. Sec. 273(c)(1) (emphasis supplied). Compare this
provision with the all carrier rule and 47 CFR Sec. 68.110(b),
above.
\25\ See, e.g., 47 CFR Secs. 64.702(d)(2), 68.110(b).
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13. Although Section 273(c)(1) mandates full disclosure of the
protocols and technical requirements used for network connection, in
network markets, the announcement of the impending availability of a
product prior to its actual availability also may have anticompetitive
effects.26 While the potential harm associated with early
disclosure in this context may not be as great as those associated with
excessive secrecy, we seek comment on the potential effects of early
disclosure of products, protocols or technical requirements.
Specifically, we request that commenters address: (1) whether early
disclosure or late disclosure of information has a greater potential to
damage the operations of carriers, manufacturers, and other market
participants; (2) the extent to which early disclosure of planned
products, technical specifications, or protocols could stifle the
development of competing products, technical specifications, or
protocols; (3) whether any provision of the Communications Act fully
addresses the potential problems associated with early disclosure; and
(4) whether we should exempt bona fide equipment trials from Section
273(c)(1)'s disclosure requirements, as we did in the context of
carriers' Section 251(c)(5) network disclosure obligations.27
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\26\ See, e.g., id. at 123-24; Farrell, Joseph, and Garth
Saloner, Installed Base and Compatibility: Innovation, Product
Preannouncements, and Predation, Amer. Econ. Rev., Vol. 76, No. 5 at
940-55 (Dec. 1986).
\27\ Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, Second Report and Order and
Memorandum Opinion and Order, FCC 96-333, at para. 260.
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14. The BOCs are required to ``maintain'' the information described
in Section 273(c)(1) in addition to filing it with the Commission. We
tentatively conclude that, in fulfilling their obligation to
``maintain'' this information, the BOCs must keep it ``full and
complete,'' accurate, and up-to-date. In addition, because the BOCs'
obligation to ``maintain'' this information is contained within a
section of a statute otherwise addressing public disclosure
requirements through Commission filings, we tentatively conclude that
each BOC must keep the relevant information within its service area in
a form that is available for inspection by the public upon reasonable
request. By doing so, the BOCs would: (1) maintain the information in a
form that is available at a location physically close to those parties
that are most likely to need it; and (2) promote competition by making
the information more widely available than it would be if the
Commission were the sole source. We seek comment on this tentative
conclusion. We also seek comment on how long we should
[[Page 3642]]
require the BOCs to ``maintain'' this information.
15. All of the BOCs now have sites on the Internet that are easily
accessible to millions of users around the world. We tentatively
conclude that one method by which the BOCs could satisfy their
obligation to ``maintain'' information in accordance with Section
273(c)(1) would be by placing the information on their publicly-
accessible World Wide Web sites or by making files available through
other Internet protocols, such as FTP, Gopher, or electronic mail. We
seek comment on this tentative conclusion, including comment on (1)
whether we should impose requirements on BOCs choosing to use such
Internet postings concerning the format and location of material to
ensure that competitors can access the necessary files easily; and (2)
whether information that cannot be made available as plain ASCII text
could be posted using cross-platform formats such as Postscript or PDF
(Adobe Acrobat), allowing users to view or print materials with freely-
available ``reader'' software.
16. Section 273(c)(1) also requires the BOCs to ``report promptly
to the Commission any material changes or planned changes'' to the
information described in that section. We seek comment both on when and
how such reports must be filed. For instance, we have recently
concluded that network changes in the context of Section 251(c)(5)
should be disclosed at the ``make/buy'' point because, at that point,
carriers' plans are sufficiently developed to provide adequate and
useful guidance to competing service providers.28 Disclosure of
changes at the ``make/buy'' point, however, may not fully address the
information needs of manufacturers. Information provided at the ``make/
buy'' point may come too late for a rival manufacturer that might
otherwise attempt to offer a competing product that can serve a similar
function to the product the BOC has chosen to manufacture or purchase.
In addition, unlike Section 251(c)(5), which mandates the disclosure of
certain network ``changes,'' Section 273(c)(1) requires disclosure of
``planned changes.'' We seek comment, therefore, on whether a different
disclosure standard would be appropriate in the context of Section
273(c)(1). We also seek comment on the potential use by the BOCs of
alternative methods of reporting to the Commission changes in protocols
or technical requirements, such as the use of electronic mail.
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\28\ Id. at para. 223.
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17. We request that commenters submit draft rules implementing the
information filing, maintenance, and disclosure requirements contained
in Section 273(c)(1) including, for those parties advocating the use of
Internet capabilities in the context of Section 273(c)(1), specific
language that we should adopt to implement this option. In addition, we
request comment on whether the FCC should provide information on its
own Internet site, in the form of actual files and/or hypertext links
to BOC Internet sites, to create a central on-line point of contact for
materials describing technical requirements and protocols.
18. Section 251(c)(5) requires all incumbent local exchange
carriers, including all BOCs, ``to provide reasonable public notice of
changes in the information necessary for the transmission and routing
of services using that local exchange carrier's facilities or networks,
as well as of any other changes that would affect the interoperability
of those facilities and networks.'' We have recently adopted rules
implementing this provision and describing incumbent LECs' network
disclosure obligations under Section 251(c)(5).29 In light of
these obligations, we seek comment on the relationship between the
filing and information disclosure requirements of Section 273(c)(1),
Section 251(c)(5), and our existing disclosure requirements under the
rules discussed above. Specifically, we seek comment on (1) the degree
of specificity of information that we should require the BOCs to
disclose and the timing of that disclosure; (2) whether compliance with
the network disclosure obligations of Section 251(c)(5), as implemented
by the Commission, would satisfy the information disclosure
requirements of Section 273(c)(1); and (3) the text of proposed rules
that would govern disclosure of this information.
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\29\ See Implementation of the Local Competition Provisions of
the Telecommunications Act of 1996, Second Report and Order and
Memorandum Opinion and Order, FCC 96-333, at Paras. 165-260.
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19. Section 273(c)(2): Section 273(c)(2) bars BOCs from disclosing
``any information required to be filed under [Section 273(c)(1)] unless
``that information has been filed promptly, as required by regulation
by the Commission.'' We interpret this requirement to mean that BOCs
may not disclose information described in Section 273(c)(1) until the
BOC has made that information publicly available by filing it with this
Commission. We request comment on this interpretation.
20. We note that Section 273(b)(1) permits the BOCs to engage in
``close collaboration with any manufacturer of customer premises
equipment or telecommunications equipment during the design and
development of hardware, software, and combinations thereof related to
such equipment.'' Under Section 273(c)(1), however, each ``Bell
Operating Company shall, in accordance with regulations prescribed by
the Commission, maintain and file with the Commission full and complete
information with respect to the protocols and technical requirements
for connection with and use of its telephone exchange facilities.'' To
ensure compliance with Section 273(c)(1), we seek to prevent ``close
collaboration'' from resulting in the communication of technical
information and protocols in advance of the disclosure requirement that
is contained in Section 273(c)(2).30 Section 273(g) provides that
this Commission ``may prescribe such additional rules and regulations
as the Commission determines are necessary to carry out the provisions
of this section, and otherwise prevent discrimination and cross-
subsidization in a Bell operating company's dealing with its affiliate
and with third parties.'' 31 We seek comment as to how sections
273(b)(1) and 273(g) may be made to work together in a manner that is
both efficient and effective, and ask commenting parties to propose any
rules necessary to harmonize those sections. In addition, commenters
should provide data with respect to the measurement of costs and
benefits that can be ascribed to specific rules that are proposed by
parties to this proceeding.
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\30\ 47 U.S.C. Sec. 273(c)(2).
\31\ 47 U.S.C. Sec. 273(g).
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21. Section 273(c)(3): Under Section 273(c)(3) ``[t]he Commission
may prescribe such additional regulations'' as may be needed to ensure
that ``manufacturers have access to the information with respect to the
protocols and technical requirements for connection with and use of
telephone exchange service facilities that a Bell operating company
makes available to any manufacturing affiliate or any unaffiliated
manufacturer.'' As noted above in the context of Section 273(c)(1), our
existing network disclosure rules address the information needs of
other carriers, ISPs, ESPs, and other members of the public. Our rules
have not, until now, focussed specifically on the needs of
manufacturers for information affecting the design of end user
equipment. We request comment on whether
[[Page 3643]]
regulations in addition to those already in place, or adopted under
Section 273(c)(1), are needed to assure that manufacturers have access
to the necessary information and, if so, what those regulations should
be.
22. Section 273(c)(4): Section 273(c)(4) requires the BOCs to
provide ``to interconnecting carriers providing telephone exchange
service, timely information on the planned deployment of
telecommunications equipment.'' While the 1996 Act does not define
``interconnecting carrier,'' we interpret this subparagraph to mean
that a BOC must provide adequate notice to all telecommunications
carriers providing local exchange service with whom the BOC has an
interconnection arrangement.32 We request comment on this
tentative conclusion. We also request comment on (1) the level of
information this section requires BOCs to disclose; and (2) how far in
advance a BOC needs to disclose this information for the disclosure to
be considered ``timely.''
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\32\ ``Telecommunications carrier'' includes ``any provider of
telecommunications services, except that such term does not include
aggregators of telecommunications services (as defined in section
226).'' 47 U.S.C. Sec. 153(44).
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23. We seek comment on the relationship between the type of
information required by Section 251(c)(5) and that required by Section
273(c)(4). We also seek comment as to whether a BOC's Section 273(c)(4)
filing could satisfy its obligation under Section 251(c)(5). In
addition, we seek specific comment on whether the disclosure timetable
we recently adopted to govern network disclosure under section
251(c)(5) is either necessary or sufficient to meet the ``timely''
standard of section 273(c)(4). We seek comment as to how the Commission
might minimize the administrative burden of the notice and filing
requirements while still achieving Congress' objectives in establishing
these reporting and notice requirements. We also seek comment on
whether information filed to meet Section 64.702 or 68.110 requirements
or filed as part of carrier exchange access tariffs could or should
satisfy the requirements of Section 273(c)(4).
24. Section 273(d): General Manufacturing Safeguards. Section
273(d) limits the manufacturing activities of standard-setting
organizations. Section 273(d) addresses three types of activities:
standards development; industry-wide generic requirements development;
and certification of telecommunications equipment and customer premises
equipment. Section 273(d)(8) defines ``certification,'' 33
``generic requirements'' 34 and ``industry-wide.'' 35 We
tentatively conclude that these and the other definitions contained in
Section 273(d)(8) are complete and self-explanatory, but seek comment
as to whether any clarifications are required.
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\33\ ``The term `certification' means any technical process
whereby a party determines whether a product, for use by more than
one Local Exchange Carrier, conforms with the specified requirements
pertaining to such product.'' 47 U.S.C. Sec. 273(d)(8)(D).
Certification here pertains to the private sector process of
determining that equipment is in compliance with voluntary
standards.
\34\ ``The term `generic requirement' means a description of
acceptable product attributes for use by local exchange carriers in
establishing product specifications for the purchase of
telecommunications equipment, customer premises equipment and
software integral thereto.'' 47 U.S.C. Sec. 273(d)(8)(B).
\35\ ``The term `industry-wide' means activities funded by or
performed on behalf of local exchange carriers for use in providing
wireline telephone exchange service whose combined total of deployed
access lines in the United States constitutes at least 30 percent of
all access lines deployed by telecommunications carriers in the
United States as of the date of enactment of the Telecommunications
Act of 1996.'' 47 U.S.C. Sec. 273(d)(8)(C).
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25. While Section 273(d)(8) defines ``accredited standards
development organization,'' 36 neither Section 273(d)(8), nor any
other section of the Act defines ``standards.'' We seek comment on how
``standards'' should be defined for purposes of implementation of the
1996 Act to ensure that standards processes are open and accessible to
the public. By establishing a clear definition of the term
``standard,'' we seek (1) to clarify for manufacturers, BOCs, Bellcore
and other interested parties the scope of those sections of the 1996
Act that address standards development; and (2) to facilitate
compliance with standards development regulations. We also seek to
understand better the possible ways that we may distinguish among
different types of activities that might be characterized as standards
setting activities under Section 273(d). We request comment as to the
generic and conceptual distinctions among different types of standards.
For example, generic distinctions might be based on the type of entity
creating the standard. Thus, it might be possible to distinguish
between accredited standards (i.e., those standards developed by an
accredited standards development organization, such as Committee T1)
and ``de facto'' standards (i.e., those standards not developed by an
accredited standards development organization). ``De facto'' standards
might further be separated into ``de facto'' standards (1) created by a
group of interested parties seeking to promote interoperability; (2)
imposed upon an industry by a dominant entity or dominant entities; or
(3) adopted without any explicit coordination by market participants
that independently select the same or similar standards. On a
conceptual level, we seek to understand the role of these different
types of standards within the industry and their relative impact on
manufacturing competition. We seek comment as to the meaning of the
term ``industry'' as used in this section. Comments that address the
conceptual issues associated with ``standards'' development will assist
us in developing precise rules for standards setting entities.
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\36\ ``The term `accredited standards development organization'
means an entity composed of industry members which has been
accredited by an institution vested with the responsibility for
standards accreditation by the industry.'' 47 U.S.C.
Sec. 273(d)(8)(E).
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26. Section 273(d)(1): Application to Bell Communications Research
or Manufacturers. Bell Communications Research, Inc., (``Bellcore'')
was established on January 1, 1984, under the Plan of Reorganization as
part of the divestiture of AT&T. Originally, called the Central
Services Organization and consisting primarily of former Bell
Laboratories employees, Bellcore was established to give support to the
newly formed regional Bell Operating Companies in a manner similar to
that which had been provided to AT&T by Bell Laboratories.37
Today, Bellcore is the predominant source of industry-wide generic
requirements; it conducts extensive technical certification of
telecommunications equipment and it is a leading contributor and
participant in standards developed by accredited standards development
organizations.38 Since its creation, Bellcore has been owned and
controlled jointly by the RHCs. The RHCs, however, have recently
announced their agreement to sell Bellcore to Science Applications
[[Page 3644]]
International Corporation (``SAIC''), a large defense
contractor.39
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\37\ United States v. Western Electric Co., Civil Action No. 82-
0192, Plan of Reorganization, filed December 16, 1982, at 336; see
United States v. Western Electric, 569 F. Supp. 1057, 1113-1118
(D.D.C. 1983) (approving creation of Central Services Organization
proposed in Plan of Reorganization), aff'd sub nom. California v.
United States, 464 U.S. 1013 (1983).
\38\ Bellcore indicates that, in 1996, its budget exceeds $1
billion and it employs nearly 6,000 people. Over 4000 of these
employees were ``highly trained and experienced engineers and
scientists who provide a critical mass of telecommunications
expertise and resources.'' These employees make Bellcore ``unique[]
in its ability to provide end-to-end solutions for its customers.''
In addition, Bellcore's patent portfolio contains more than 680
domestic and foreign patents. See Bellcore Ownership in Transition,
undated briefing materials received Dec. 4, 1996. We will place a
copy of these briefing materials in the docket file of this
proceeding.
\39\ Bellcore Owners Sell Business to Defense Contractor,
Communications Daily, Nov. 22, 1996, at 1.
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27. Section 273(d) limits the circumstances under which Bellcore or
any successor entity or affiliate may manufacture telecommunications
equipment or CPE. Section 273(d)(1)(B) prohibits Bellcore from
``manufacturing telecommunications equipment or customer premises
equipment as long as it is an affiliate of more than 1 otherwise
unaffiliated Bell operating company or successor or assign of any such
company.'' 40 BOCs that are commonly owned or controlled by a
single RHC would appear to meet the 1996 Act's definition of
affiliates. Accordingly, we tentatively conclude that Section
273(d)(1)(B) prohibits Bellcore from manufacturing telecommunications
equipment or CPE only as long as it is (1) affiliated with two or more
otherwise unaffiliated RHCs; (2) affiliated with two or more BOCs that
are not under the ownership or control of the same RHC, and are not
otherwise affiliated; or (3) affiliated with an RHC and a BOC that is
not otherwise affiliated with that RHC. We seek comment on this
tentative conclusion.
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\40\ Section 273(d)(1)(B) (emphasis supplied). This subsection
further states that ``[n]othing in this subsection prohibits Bell
Communications Research, Inc., or any successor entity, from
engaging in any activity in which it is lawfully engaged on the date
of enactment of the Telecommunications Act of 1996.'' 47 U.S.C.
Sec. 273(d)(1).
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28. Section 273(d)(1)(A) provides that Bellcore ``shall not be
considered a [BOC] or a successor or assign of a BOC at such time as it
is no longer an affiliate of any [BOC].'' 41 Based on the limited
information before us,42 we tentatively conclude that, if the
announced sale of Bellcore to SAIC were eventually to be consummated,
under Section 273(d)(1)(A), Bellcore would no longer be considered a
BOC, a BOC affiliate, or a BOC successor or assign. As such, we
tentatively conclude that it would be permitted to begin manufacturing
telecommunications equipment and CPE in accordance with Sections
273(d)(1)(B) and 273(d)(3). We seek comment on these tentative
conclusions, including specific comment on these and other implications
of Bellcore's sale.
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\41\ 47 U.S.C. Sec. 273(d)(1)(A).
\42\ Bellcore Owners Sell Business to Defense Contractor,
Communications Daily, Nov. 22, 1996, at 1.
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29. Section 273(d)(2): Proprietary Information. Section 273(d)(2)
provides that: ``[a]ny entity which establishes standards for
telecommunications equipment or customer premises equipment, or generic
network requirements for such equipment, or certifies
telecommunications equipment or customer premises equipment shall be
prohibited from releasing or otherwise using any proprietary
information, designated as such by its owner, in its possession as a
result of such activity, for any purpose other than purposes authorized
in writing by the owner of such information, even after such entity
ceases to be so engaged.'' 43
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\43\ 47 U.S.C. Sec. 273(d)(2).
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30. We seek to clarify to which entities this section should apply,
how Section 273(d)(2) should be enforced, and what impact this section
may have on accredited standards development organizations and industry
forums and accordingly seek comment on these issues. While Section
273(d)(4) sets procedures for use by ``any entity that is not an
accredited standards development organization and that establishes
industry-wide standards,'' Section 273(d)(2), on its face applies to
``any entity that establishes standards.'' A comparison of the two
provisions suggests that the term ``any entity that establishes
standards'' encompasses a broader range of entities than does Section
273(d)(4). Specifically, we tentatively conclude that Section 273(d)(2)
applies to all entities that develop standards, and includes entities
that create ``de facto'' standards. We seek comment on the extent to
which Section 273(d)(2) also applies to ISO 9000 certification 44
or interoperability testing in general. We also seek comment on the
extent to which this section applies to BOCs' or other carriers'
development of internal interfaces and protocols that might or might
not be adopted more widely. 45 We also tentatively conclude that,
because Section 273(d)(2) uses the terms ``standards'' or ``generic
requirements'' rather than ``industry-wide standards,'' or ``industry-
wide generic requirements,'' this section applies to the establishment
of any standard or requirement, not just those that are industry-wide.
We seek comment on the validity of these tentative conclusions.
Similarly, we seek comment on the types of certification activities
that are encompassed by Sections 273(d)(2), Section 273(d)(3), and
Section 273(d)(4), including comment on possible differences in the
scope of certification activities encompassed by each.
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\44\ The ISO 9000 Series, published by the International
Standards Organization, is a set of three generic standards (ISO
9001, ISO 9002, and ISO 9003) that ``provide quality assurance
requirements and quality management guidance.'' ISO 9001 is a
quality assurance standard for companies involved in the design,
testing, manufacture, delivery, or service of products. ISO 9002
covers manufacturing and installation. ISO 9003 addresses product
testing. Newton, Harry, Newton's Telecom Dictionary 328 (11th Ed.
1996).
\45\ In this case, by ``internal interfaces and protocols,'' we
intend to include both (1) those standards that are used only
internally by the BOCs and are otherwise transparent to network
interconnectors and/or users, at least in the absence of the
unbundling or sale of individual network elements; and (2) those
standards that are adopted by the BOCs on an ``individual'' basis,
but which may nevertheless have the effect of foreclosing other
alternative standards by virtue of the BOCs' substantial size and
market share.
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31. In addition, we seek specific comment as to whether, and if so,
how, Section 273(d) applies to the activities of industry forums such
as the ATM Forum 46 or the National ISDN User's Forum. 47 The
work of these forums can be characterized in a variety of ways. For
example, the ATM Forum maintains a World Wide Web page in which it
describes its work product as ``specifications.'' The
Telecommunications Industry Association (TIA) characterizes the ATM
Forum as a ``standards development organization,'' 48 while the
Network Reliability Council states that industry forums, like the ATM
Forum, ``use and influence standards to create user application
profiles of standards and implementation agreements based on options
approved in standards.'' 49 We seek comment on whether the work
product of these types of industry forums constitutes either a
``standard'' or a ``generic requirement.'' Additionally, we seek
comment as to whether these forums, if they have some relationship with
``accredited standards
[[Page 3645]]
development organizations'' should themselves be considered
``accredited standards development organizations'' for the purpose of
this section of the Act. We also seek comment as to what type of
relationship, if any, should lead to these industry forums being
classified as ``accredited'' for the purposes of Section 273(d), and
how ``accredited'' should be defined for the purpose of administering
Section 273. We encourage commenters to address the advantages and
disadvantages of interpreting this section to include industry forums
as standards setting entities within the meaning of Section 273(d) of
the Act, and further encourage commenters to address the impact on
members of these groups of a finding that they are covered by Section
273(d).
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\46\ The ATM Forum is an international non-profit organization
formed with the objective of accelerating the use of ATM products
and services through a rapid convergence of interoperability
specifications. In addition, the Forum promotes industry cooperation
and awareness. The ATM Forum consists of over 700 member companies,
and it remains open to any organization that is interested in
accelerating the availability of ATM-based solutions.
\47\ The North American ISDN Users' Forum (NIUF) objectives are
to provide users the opportunity to influence developing ISDN
technology to reflect their needs; to identify ISDN applications,
develop implementation requirements and facilitate their timely,
harmonized, and interoperable introduction; and to solicit user,
product provider, and service provider participation in the process.
In 1988, the National Institute of Standards and Technology (NIST)
collaborated with industry to establish the NIUF. Members of NIST's
Computer Systems Laboratory have served as the chair of the forum
and have hosted the NIUF Secretariat. Over 300 organizations
participate in the NIUF. The NIUF is open to all interested parties,
product providers, and service providers.
\48\ TIA Standards and Technology Annual Report 1995. We will
place a copy of this document in the docket file of this proceeding.
\49\ Network Reliability Council Increased Interconnection Task
Group II Report (Dec. 1, 1995) at 57.
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32. We also seek comment on the extent to which the preceding
interpretations would require accredited standards organizations and
industry forums to alter their existing practices and procedures for
protecting proprietary information to comply with this provision of the
Act, and the projected costs and benefits of such alterations. We
recognize that the protection of proprietary information is vital to
continued development of new technology and innovative network
advances. Assuming accredited standards development organizations and
industry forums must comply with Section 273(d)(2), we seek comment on
and draft language for any rules that a commenting party asserts we
should establish to mitigate any adverse effects of improper
disclosure.
33. Section 273(d)(3): Manufacturing Safeguards. Section 273(d)(3)
has three parts. In general, Section 273(d)(3)(A) restricts the ability
of an entity to manufacture and certify any particular class of
telecommunications equipment or CPE and requires that such
manufacturing be performed only through an affiliate separate from the
certifying entity. Sections 273(d)(3)(B) and 273(d)(3)(C) impose
specific separation requirements on the manufacturing affiliate and the
certifying entity, respectively. Under Section 273(d)(3)(B), the
entity's manufacturing affiliate must maintain books, records and
accounts separate from those of the certifying affiliate, must not
engage in joint manufacturing activities with the certifying entity,
and must have segregated facilities and separate employees. Under
Section 273(d)(3)(C), a certifying entity must not discriminate in
favor of its manufacturing affiliate, must not disclose unaffiliated
manufacturers' proprietary information without authorization, and must
not permit any employee engaged in certification activities to
participate in joint equipment sales or marketing activities with the
certifying entity's manufacturing affiliate. We tentatively conclude
that, if the sale of Bellcore to SAIC were to be consummated, Bellcore
would be permitted to engage in manufacturing activities, but would
need to comply with the structural and accounting safeguards of Section
273(d)(3). We seek comment on this tentative conclusion.
34. Section 273(d)(3)(A) states that ``any entity which certifies
telecommunications equipment and customer premises equipment
manufactured by an unaffiliated entity shall only manufacture a
particular class of telecommunications equipment or customer premises
equipment for which it is undertaking or has undertaken, during the
previous 18 months, certification activity for such class of equipment
through a separate affiliate.'' 50 While the terms
``telecommunications equipment'' and ``customer premises equipment''
are defined in the Act, ``class'' is not defined by the Act. We
tentatively conclude that we should define specific classes of
equipment and that these classes should be based on existing industry
classifications to the extent that they exist. We request comment that
describes classifications currently used within the industry and
proposed definitions for each class of equipment. We also seek comment
on the practical effects of defining ``classes'' broadly, versus
narrowly.
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\50\ 47 U.S.C. Sec. 273(d)(3)(A).
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35. The breadth of the term ``class'' may also affect how quickly
the sunset provision contained in Section 273(d)(6) becomes effective.
If classes are defined more narrowly, it may be easier for the
Commission to make a determination that the requirements of Section
273(d)(3) should be terminated with respect to a specific class, but it
would have many such determinations to make. Conversely, if the
Commission defined ``class'' broadly, it would be more difficult for
the Commission to make a determination that the requirements of Section
273(d)(3) should be terminated, but there would be a much smaller
number of determinations needed.
36. We also seek comment on how to interpret the phrase ``during
the previous 18 months'' in Section 273(d)(3)(A). 51 One
interpretation of the italicized phrase is that if, at the date on
which an entity seeks to manufacture equipment, that entity is
currently certifying equipment, or has within the previous 18 months
certified equipment within a particular class, it may manufacture
equipment within that class only through a separate affiliate. If an
entity that certifies equipment seeks to manufacture equipment within a
particular class of equipment and within the previous 18 months that
entity has not certified equipment within that same class, it may
manufacture equipment directly. A second possible interpretation of the
phrase is that if the certification entity was certifying equipment and
manufacturing equipment within the same class within 18 months prior to
the effective date of the 1996 Act, the entity may continue to do so
without creating a separate affiliate. We seek comment on the proper
interpretation of this phrase.
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\51\ 47 U.S.C. Sec. 273(d)(3)(A).
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37. Section 273(d)(3)(B) specifies particular separate affiliate
requirements, such as the maintenance of separate books, records and
accounts. The Commission has issued a separate NPRM addressing
affiliate transactions that fall within the scope of that section.
52 In addition to these accounting safeguards, however, Section
273(d)(3)(C) states that the certification entity, inter alia, shall
``not discriminate in favor of its manufacturing affiliate in the
establishment of standards, generic requirements, or product
certification.'' We tentatively conclude that our existing
nondiscrimination rules are inadequate in the context of Section
273(d)(3)(C) because these rules do not address the ability of a
certification entity to discriminate in favor of its manufacturing
affiliate. Unlike Section 202, which prohibits ``unjust or unreasonable
discrimination,'' Section 273(d)(3)(C) uses no adjectives to modify the
meaning of the verb ``discriminate.'' We seek comment, therefore, on
whether Congress intended to impose a stricter standard for compliance
with Section 273(d)(3)(C) by enacting a flat prohibition on all
discrimination. 53 The verb, ``to discriminate'' means to ``make a
clear distinction'' or to ``act on the basis of
[[Page 3646]]
prejudice.'' 54 We tentatively conclude, therefore, that Section
273(d)(3)(C) requires the certification entity to provide its services
to its manufacturing affiliate on terms, conditions or rates that are
at least as good as those it provides to unaffiliated manufacturers. We
seek comment on this tentative conclusion, including comment on (1) any
specific concerns that we should address in this proceeding; (2) the
language of proposed rules, if any, that a party asserts we should
adopt to address these dangers; and (3) the relationship, if any,
between Section 273(d)(3)(C) and Section 272(c)(1), which prohibits a
BOC from discriminating between an affiliate and any other entity in,
inter alia, the establishment of standards. We tentatively conclude
that the other prohibitions that are contained in Section
273(d)(3)(C)(ii-iii) are clear and that no clarification or additional
rules appear to be necessary to implement this section.
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\52\ Implementation of the Telecommunications Act of 1996:
Accounting Safeguards Under the Telecommunications Act of 1996,
Notice of Proposed Rulemaking, 11 FCC Rcd 9054, 9099-9102 (1996), 61
FR 40161, August 1, 1996, corrected 61 FR 41208, August 7, 1996.
\53\ We sought comment on a similar issue in Implementation of
the Non-Accounting Safeguards of Sections 271 and 272 of the
Communications Act of 1934, as amended; and Regulatory Treatment of
LEC Provision of Interexchange Services Originating in the LEC's
Local Exchange Area, CC Docket No. 96-149, Notice of Proposed
Rulemaking, FCC 96-308, para. 72 (released July 18, 1996), 61 FR
39397, July 29, 1996.
\54\ Webster's II New Riverside University Dictionary, Riverside
Publishing Co., at 385 (1994).
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38. Section 273(d)(4): Manufacturing Limitations for Standards-
Setting Organizations. Section 273(d)(4) prescribes procedures that are
intended to be open to all interested parties in the process for
setting and establishing industry-wide standards and generic
requirements for telecommunications equipment and CPE. 55 These
procedures apply to standards-setting activities by ``any entity that
is not an accredited standards development organization and that
establishes industry-wide standards for telecommunications equipment or
customer premises equipment, or industry-wide generic network
requirements for such equipment, or that certifies telecommunications
equipment or customer premises equipment manufactured by an
unaffiliated entity.'' Additionally, this section imposes requirements
to assure fair, even-handed certification processes, 56 and
prohibits anticompetitive behavior. 57
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\55\ 47 U.S.C. Sec. 273(d)(4)(A).
\56\ 47 U.S.C. Sec. 273(d)(4)(B).
\57\ 47 U.S.C. Sec. 273(d)(4)(C)-(D).
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39. Section 273(d)(4) potentially could encompass a wide range of
entities or alliances of entities. Bellcore would appear to fall
squarely within the ambit of Section 273(d)(4); we seek comment,
however, on whether the sale of Bellcore to SAIC or another entity
unaffiliated with the BOCs could affect the applicability of this
section to Bellcore. We also seek comment on the potential additional
scope of this section, including the extent to which it could apply to
research, development, or adoption of standards, specifications, or
generic requirements by large carriers, other entities, or alliances.
In addition, we seek comment on these specific issues: (1) the ability
of the RHCs, Bellcore or other carriers to circumvent the requirements
of 273(d)(4) by designating standards or generic requirements as, for
example, ``internal,'' ``non industry-wide,'' ``optional,'' company-
specific ``specifications,'' etc.; (2) the appropriate definition, and
treatment, of such de facto standards or requirements that may not be
adopted through the 273(d)(4) processes, including the relationship
between these standards and the definition of ``industry-wide''
standards contained in 273(d)(8)(C); and (3) the adequacy of 273(d)(5)
and our recently-adopted default dispute resolution processes 58
to address the anti-competitive harms that may result from the
establishment of such standards or requirements. Furthermore, we seek
comment on the appropriate treatment of standards developed or adopted
by large entities or alliances (e.g., individual RHCs, GTE, or
alliances) (a) in the event the entity or alliance were to control at
least 30% of the deployed access lines in the United States, as defined
in 273(d)(8)(C); and (b) in the event that the entity or alliance were
to control fewer than 30% of such lines.
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\58\ Implementation of Section 273(d)(5) of the Communications
Act of 1934, as Amended by the Telecommunications Act of 1996--
Dispute Resolution Regarding Equipment Standards, Report and Order,
11 FCC Rcd 12955 (1996), 61 FR 24897, May 17, 1996.
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40. Section 273(d)(4)(A) specifies procedures to be followed by any
entity subject to Section 273(d)(4) in establishing and publishing any
industry-wide standard, industry-wide generic requirement, or
``substantial modification'' thereto for telecommunications equipment
or customer premises equipment. We seek comment on what should be
deemed to constitute a ``substantial modification.'' Specifically, we
ask commenters to address whether the Commission should define
``substantial modification'' precisely or whether we should establish
factors that should be considered in determining what constitutes a
``substantial modification.'' With regard to factors to be considered,
we request comment on what factors, such as impact on network
reliability, performance, security, and interoperability, might be
established to assess what constitutes a ``substantial modification.''
Furthermore, we seek comment on the appropriate weight that should be
given to each individual factor proposed.
41. Section 273(d)(4)(A) imposes five duties upon any entity,
``that is not an accredited standards development organization'' and
that establishes an industry-wide standard or generic requirement.
Section 273(d)(4)(A)(i) requires any such entity to ``issue a public
notice of its consideration of a proposed industry-wide standard or
industry-wide generic requirement.'' The 1996 Act does not specify what
constitutes adequate ``public notice.'' We seek comment on the means of
publication most likely to ensure broad knowledge of the impending
activity.
42. We tentatively conclude that publications such as the Bellcore
Digest of Technical Information 59 and publications on the World
Wide Web similar to that of the ATM Forum would constitute adequate
public notice because these forms of notice are available to the public
at reasonable expense, provide a summary of the proposed work, provide
contact information, and set tentative dates for when the requirement
or specification will be available. We seek comment on this tentative
conclusion and on any additional factors that should be considered in
determining generally what should constitute adequate ``public
notice.'' We also seek comments listing other publications or means of
providing ``public notice'' that would meet the public notice
requirement. To the extent that public notice can be provided by
placing material on World Wide Web sites, we seek comment on whether
and how the public could reasonably be informed of the location of this
information. We also seek comment on whether public notice could be
provided by posting information through the Internet on relevant Usenet
newsgroups, or on a new newsgroup established for this purpose. In
addition, we seek comment as to whether public notice should be
provided by electronic mail, either by sending information directly to
interested parties or by posting information on relevant Internet
``mailing lists.'' Finally, we seek comment on the role that the ATIS
industry forums and TIA groups might play in ensuring interested
parties have access to industry-wide generic requirement and standard
development processes.
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\59\ The annual subscription fee is $110. Bellcore, Digest of
Technical Information, Jan. 1996. We are concerned that fees for
``publications'' that satisfy this ``public notice'' requirement
remain inexpensive.
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43. Section 273(d)(4)(A)(ii)-(v) states
[[Page 3647]]
``(ii) Such entity shall issue a public invitation to interested
parties to fund and participate in such efforts on a reasonable and
nondiscriminatory basis, administered in such a manner as not to
unreasonably exclude any interested industry party;
(iii) Such entity shall publish a text for comment by such
parties as have agreed to participate in the process pursuant to
clause (ii), provide such parties a full opportunity to submit
comments, and respond to comments from such parties;
(iv) Such entity shall publish a final text of the industry-wide
standard or industry-wide generic requirement, including the
comments in their entirety, of any funding party which requests to
have its comments so published; and
(v) Such entity shall attempt, prior to publishing a text for
comment, to agree with the funding parties as a group on a mutually
satisfactory dispute resolution process which such parties shall
utilize as their sole recourse in the event of a dispute on
technical issues as to which there is disagreement between any
funding party and the entity conducting such activities, except that
if no dispute resolution process is agreed to by all parties, a
funding party may utilize the dispute resolution procedures
established pursuant to paragraph (5) of this subsection.''
We have recently limited the definition of a ``funding party'' in
the context of Section 273(d)(5)'s dispute resolution processes to
include only parties that ``provide actual funding to support the
standards-setting process,'' specifically excluding parties that merely
post a ``performance bond'' or provide ``in-kind'' support. 60 We
tentatively conclude that this definition should apply in the context
of Section 273(d)(4)(A) as well, and that the remainder of the
requirements imposed by Section 273(d)(4)(A) (ii)-(v) are self-
explanatory. We request comment on these tentative conclusions.
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\60\ Implementation of Section 273(d)(5) of the Communications
Act of 1934 as amended by Telecommunications Act of 1996--Dispute
Resolution Regarding Equipment Standards, Report and Order, 11 FCC
Rcd at 12969.
---------------------------------------------------------------------------
44. Section 273(d)(4)(B) sets forth procedures that an entity must
follow when it ``engages in product certification for
telecommunications equipment or customer premises equipment
manufactured by unaffiliated entities.'' Such activity must be
performed pursuant to ``published'' and ``auditable'' criteria, and
must use ``available industry-accepted testing methods and standards.''
We tentatively construe the phrase ``auditable criteria'' to mean
criteria that, when applied in a certification process, are
sufficiently precise that a neutral third party would be able to
replicate each certification and determine whether each certification
had, or had not, been performed in an unbiased manner. We request
comment on the validity of this construction, and also request comment
as to whether the ``Generally Accepted Auditing Standards'' that have
been propounded by the American Institute of Certified Public
Accountants are adequate for this purpose. 61 We seek comment on
what should constitute publication and how we should determine if the
criteria used to perform the product certification are auditable. In
addition, we seek comment as to how the term ``industry accepted
testing methods'' should be defined; whether such testing methods
currently exist and, if so, what they are; and what constitutes
``industry accepted.'' We also request comment as to how we should
determine whether a testing method is ``industry accepted.'' More
narrowly, in this context, we seek comment on whether the term
``industry'' includes all telecommunications service providers, or
those providers and all manufacturers, or subsets of these or
additional categories. We request that commenters address whether any
particular types of entities specifically should be included in, or
excluded from, the term ``industry?''
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\61\ See e.g., AICPA Codification of Statements on Auditing
Standards, AU 320.32, 320.36, 320.37 (1996).
---------------------------------------------------------------------------
45. Section 273(d)(4)(C) prohibits any entity that is not an
accredited standards development organization and that establishes
industry-wide standards from undertaking ``any actions to monopolize or
attempt to monopolize the market for such services.'' We seek comment
on how best to implement this provision.
46. Section 273(d)(4)(D) states that any entity that is not an
accredited standard development organization shall not ``preferentially
treat its own telecommunications equipment or customer premises
equipment or that of its affiliate, over that of any other entity in
establishing and publishing industry-wide standards or industry-wide
generic requirements for, and in certification of telecommunications
equipment and customer premises equipment.'' We seek comment on how
best to implement this provision. We suggest that parties interested in
commenting on these issues propose rules that they believe would most
efficiently, and effectively, enforce these provisions of the 1996 Act.
For example, one form of ``preferential treatment'' we can identify at
this time would be preferential licensing of proprietary technology. We
seek comment as to whether the Commission should require, as do the
International Organization for Standardization (``ISO'') and the
American National Standard Institute (``ANSI''), that participants
agree to license proprietary technology on ``reasonable'' terms before
that technology is incorporated into an official standard. We request
that commenters advocating such Commission action define terms that
should be considered ``reasonable,'' and that commenters opposing such
Commission action discuss other possible approaches to this potential
problem. In addition, we seek comment on whether we should use existing
ANSI, ISO, or other rule structures as a model for developing
Commission rules in this area, including specific comment on the
features of existing rule structures that work well, and potential gaps
that should be addressed.
47. Section 273(d)(5) requires that the Commission prescribe a
dispute resolution process to be used if all parties cannot agree on a
dispute resolution process when establishing and publishing any
industry-wide standard or generic requirement. Because this Commission
has already issued a Report and Order addressing Section 273(d)(5),
that section will not be addressed further here.62
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\62\ See Implementation of Section 273(d)(5) of the
Communications Act of 1934 as amended by Telecommunications Act of
1996--Dispute Resolution Regarding Equipment Standards, Report and
Order, 11 FCC Rcd 12955.
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48. Section 273(d)(6): Sunset. Section 273(d)(6) defines the
circumstances under which the Commission must lift the manufacturing
safeguards of Section 273(d)(3) and the procedural safeguards of
Section 273(d)(4), providing that:
The requirements of paragraphs (3) and (4) shall terminate for
the particular relevant activity when the Commission determines that
there are alternative sources of the industry-wide standards,
industry-wide generic requirements or product certification for a
particular class of telecommunications equipment or [CPE] available
in the United States. Alternative sources shall be deemed to exist
when such sources provide commercially viable alternatives that are
providing services to customers. The Commission shall act on any
application for such a determination within 90 days after receipt of
such application, and shall receive public comment on such
application.63
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\63\ 47 U.S.C. Sec. 273(d)(6).
We seek to identify those factors that the Commission should use in
making the determination required by Section 273(d)(6). We tentatively
conclude that factors that should be addressed include the number of
entities developing standards, developing generic requirements or
conducting certification work; the ability of these entities to
[[Page 3648]]
compete with each other; and the length of time during which those
entities have been conducting the relevant activity. We also seek
comment as to what factual record the Commission should compile in
making the determination required by Section 273(d)(6), including
specific procurement documents or other information the Commission
should require applicants to submit under this section. We ask that
commenters addressing this issue provide specific comments on
appropriate ways in which the Commission can balance its need to
develop an adequate factual record on such applications against its
statutory obligation to act within 90 days.
49. In addition, we seek comment on how we should define two
phrases within Section 273(d)(6). The first, ``class of
telecommunications equipment or CPE,'' was examined in our earlier
discussion of Section 273(d)(3). We request comment as to whether that
analysis should apply to this phrase as used in Section 273(d)(6) and
whether other considerations inherent in the implementation of Section
273(d)(6) should require a different interpretation or rule. The second
phrase we seek to define is ``commercially viable alternatives that are
providing services to customers.'' The term ``alternatives'' in this
phrase suggests that the number of entities conducting a relevant
activity is a factor we should consider, and that a minimum of two
entities must be conducting a relevant activity. We seek comment as to
whether the existence of two entities conducting a relevant activity is
both a necessary and sufficient condition for termination of the
Section 273(d) (3) and (4) safeguards. In addition, it appears that, to
assess the viability of entities, it is necessary to determine if the
alternative entities are competitive and to examine the duration of
their existences. We believe that such as analysis is necessary to
ensure that we keep in place the manufacturing safeguards set by
statute until they are no longer necessary. Finally, we seek comment on
the relationship among (1) the phrase ``commercially viable
alternatives that are providing services to customers;'' (2) the phrase
``alternative sources of industry-wide standards, industry-wide generic
requirements, or product certification;'' and (3) the definition of the
term ``industry-wide'' contained in Section 273(d)(8)(C).
50. While we do not want to lift statutory safeguards prematurely,
we also would seek to eliminate them as promptly as possible once they
are not needed. With this in mind, we tentatively conclude that the
regulations developed to implement Section 273(d) (3) and (4) should
not apply to certification pursuant to Part 15 (Radio Frequency
Devices) or registration pursuant to Part 68 (Connection of Terminal
Equipment to the Telephone Network) of the Commission's rules.64
We seek comment on this tentative conclusion.
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\64\ 47 CFR Parts 15 and 68.
---------------------------------------------------------------------------
51. Section 273(d)(7) states that in administering Section 273(d),
the Commission ``shall have the same remedial authority as the
Commission has in administering and enforcing the provisions of this
title with respect to any common carrier subject to this Act.''
Finally, Section 273(d)(8) defines several terms used in Section
273(d). We tentatively conclude that the language of these paragraphs
requires no further clarification at this time. We seek comment on this
tentative conclusion.
52. Section 273(E): BOC Equipment Procurement and Sales. Section
273(e) governs BOC practices in procuring and selling
telecommunications equipment. With the exception of Section 273(e)(4),
the provisions of Section 273(e) apply on their face to all BOCs.
Section 273(e), however, is contained within a statute that otherwise
addresses BOC obligations in the manufacturing context. We seek comment
therefore, on whether the requirements of Section 273(e) applies to all
BOCs or only to BOCs that are authorized to manufacture under Section
273(a).
53. To prevent Bell Operating Companies from favoring entities with
whom they have a telecommunications equipment manufacturing
relationship, Section 273(e)(1) requires that ``[i]n the procurement or
awarding of supply contracts for telecommunications equipment, a Bell
operating company, or any entity acting on its behalf, for the duration
of the requirement for a separate subsidiary including manufacturing
under this Act--(A) shall consider such equipment, produced or supplied
by unrelated persons; and (B) may not discriminate in favor of
equipment produced or supplied by an affiliate or related person.''
54. The Act provides no definition of the word ``consider.'' As a
consequence, we first look to the ordinary meaning of that word.
``Consider'' means to ``think about seriously'' or ``bear in mind.''
65 This definition suggests that Section 273(e)(1)(A) would be
satisfied if a BOC merely opened its procurement and sales processes to
entities other than itself or its affiliate(s). We request comment as
to (1) whether this definition of ``consider'' is sufficient, or
whether some other definition would be more consistent with the intent
of Congress; and (2) any specific actions that a BOC must take in
fulfilling this statutory obligation.
---------------------------------------------------------------------------
\65\ Webster's II New Riverside University Dictionary, Riverside
Publishing Co., at 301 (1994).
---------------------------------------------------------------------------
55. In contrast, Section 273(e)(1)(B) unequivocally prohibits BOCs
from discriminating in favor of equipment produced or supplied by an
affiliate or related person. Accordingly, the language of Section
273(e)(1)(B) seems to make it clear that the procurement decision may
not rest solely on the BOC's relationship with the supplying entity and
that, in addition to opening its procurement and sales processes, a BOC
may need to take affirmative steps to ensure that it does not favor
proposals from ``affiliates or related persons'' for reasons other than
merit. Section 272(a)(2)(A) requires a BOC to engage in manufacturing
only through a separate affiliate and Section 272(c)(1) provides that
the BOC ``may not discriminate between that . . . affiliate and any
other entity in the provision or procurement of goods, services,
facilities and information, or in the establishment of standards.''
With respect to this Section 272(c)(1) prohibition, we tentatively
concluded that, ``at minimum, that BOCs must treat all other entities
in the same manner as they treat their affiliates, and must provide and
procure goods, services, facilities and information to and from these
other entities under the same terms, conditions, and rates.'' 66
We seek comment on: (1) whether the word ``discriminate'' has any
different import in the context of Section 273(e)(1)(B) than it does in
Section 272(c)(1); (2) what specific actions or types of actions by or
on behalf of a BOC would be considered discriminatory in this context;
and (3) what affirmative steps, if any, a BOC would need to take to
ensure that it does not discriminate, in violation of Section
273(e)(1)(B).
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\66\ Implementation of the Non-Accounting Safeguards of Sections
271 and 272 of the Communications Act of 1934, as amended; and
Regulatory Treatment of LEC Provision of Interexchange Services
Originating in the LEC's Local Exchange Area, CC Docket No. 96-149,
Notice of Proposed Rulemaking, FCC 96-308, para. 73 (released July
18, 1996).
---------------------------------------------------------------------------
56. While the prohibition contained in Section 272(c)(1) applies to
affiliates, the prohibition contained in Section 273(e)(1)(B) applies
to ``affiliates and related persons.'' This use of the term ``related
persons'' suggests that the discrimination prohibition in Section
273(e)(1)(B) may apply to a larger class of entities than that
contained in
[[Page 3649]]
Section 272(c)(1) and corresponds with the use in Section 273(e)(1)(A)
of the term ``unrelated persons.'' We seek comment on the meaning of
the terms ``unrelated persons'' and ``related persons.'' These terms
suggest that the BOCs not be permitted to discriminate in favor of
parties with whom they have some type of relationship.67 We seek
comment as to specific types of relationships that would make an entity
a ``related person'' for purposes of Section 273(e). We note that
Section 273(d)(8)(A) defines ``affiliate'' as having the same meaning
as in Section 3 except that, for purposes of Section 273(d)(1)(B) an
``aggregate voting interest in [Bellcore] of at least 5 percent of its
total voting equity, owned directly or indirectly by more than 1
otherwise unaffiliated [BOC], shall constitute an affiliate
relationship.'' In contrast, no such specificity is provided with
regard to the meaning of ``related person.'' We request that commenters
provide the language of any rules that they assert would be needed to
ensure that a BOC does not discriminate in favor of either affiliates
or related persons, in violation of Section 273(e)(1)(B).
---------------------------------------------------------------------------
\67\ Webster's II New Riverside University Dictionary at 992
(defining ``related'' as ``connected'' or ``associated'').
---------------------------------------------------------------------------
57. Section 273(e)(2) requires that ``[e]ach Bell operating company
or any entity acting on its behalf shall make procurement decisions and
award all supply contracts for equipment, services, and software on the
basis of an objective assessment of price, quality, delivery, and other
commercial factors.'' We seek comment on the scope of, and request
appropriate definitions for, each of the terms ``equipment,''
``services,'' and ``software.'' For example, we seek comment on: (1)
whether the scope of the term ``equipment,'' in this context, should be
limited to telecommunications equipment and CPE; (2) what types of
services the mandate of Section 273(e)(2) encompasses; and (3) whether
the requirements of Section 273(e)(2) apply to the procurement of all
software, only the software ``essential to [the] design and development
of'' telecommunications equipment or CPE,68 or some other subset.
We tentatively conclude that the remainder of this provision is self-
explanatory and that no further elaboration of this requirement is
necessary in our rules. We seek comment on this tentative conclusion
and request that parties that disagree with this tentative conclusion
propose the language for rules to address their concerns.
---------------------------------------------------------------------------
\68\ See United States v. Western Elec. Co., 675 F. Supp. at 667
n.54
---------------------------------------------------------------------------
58. We recognize that traditional, complaint-based enforcement
techniques may be inadequate for the effective enforcement of Sections
273(e)(1) and 273(e)(2). Even when confronted with clear violations of
the strictures of these sections, a manufacturer may be reluctant to
complain publicly because, in doing so, it might risk alienating one or
more customers that represent a significant source of potential future
sales. Accordingly, we request comment, including the text of proposed
rules, on whether we need to develop additional enforcement mechanisms,
such as mandatory auditing or reporting requirements, for use in
enforcing Sections 273(e)(1) and 273(e)(2).
59. Section 273(e)(3) provides that ``[a] Bell operating company
shall, to the extent consistent with the antitrust laws, engage in
joint network planning and design with local exchange carriers
operating in the same area of interest. No participant in such planning
shall be allowed to delay the introduction of new technology or the
deployment of facilities to provide telecommunications services, and
agreement with such other carriers shall not be required as a
prerequisite for such introduction or deployment.'' 69 We seek
comment on the extent to which current antitrust laws allow joint
network planning and design and on appropriate definitions of the terms
``area of interest'' and ``network planning and design.'' We also
request comment on the need for, and the proposed text of, any rules
that the Commission should adopt (1) to facilitate permissible, or bar
impermissible, joint network planning and design; and (2) otherwise to
ensure that the requirements of Section 273(e)(3) are achieved.
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\69\ 47 U.S.C. Sec. 273(e)(3).
---------------------------------------------------------------------------
60. The Commission recently issued a Notice of Proposed Rulemaking
in CC Docket No. 96-237 to implement Section 259, entitled
``Infrastructure Sharing.'' 70 Section 259 requires incumbent LECs
71 to make certain ``public switched network infrastructure,
technology, information, and telecommunications facilities and
functions'' available to defined ``qualifying carriers'' in the service
areas where such qualifying carriers have requested and obtained
designation as an eligible carrier under Section 214(e). 72 Some
potential definitions of a BOC's ``area of interest,'' as that phrase
is used in Section 273(e)(3), might subject a BOC and a Section 259-
defined qualifying carrier to obligations under both Section 259 and
Section 273(e)(3). We believe, however, that the obligations imposed by
Section 273(e)(3) are separate from, and consistent with, those imposed
by Section 259. Because Section 273(e)(3) requires joint network
planning and design among BOCs and LECs operating in the same ``area of
interest,'' we believe that Section 273(e)(3) specifically contemplates
joint network planning and design between a BOC and other LECs that may
be the BOC's competitors, to the extent that such activities are
consistent with the antitrust laws. In contrast, Section 259(b)(6)
specifically provides that an incumbent LEC shall not be required to
``engage in any [Section 259-derived] infrastructure sharing agreement
for any services or access which are to be provided or offered to
consumers by the qualifying carrier in such [LEC's] telephone exchange
area.'' 73 In other words, apparently unlike Section 273(e)(3),
Section 259 appears to apply only in instances where the qualifying
carrier does not seek to offer certain services within the incumbent
LEC's exchange area. 74 Accordingly, we
[[Page 3650]]
believe that the specific obligations imposed by Section 259 do not
conflict with Section 273(e)(3)'s mandates. We seek comment on this
interpretation, including comment on other possible implications for
carriers that may be subject to obligations under both Section 259, as
interpreted by the Commission in CC Docket No. 96-237, and Section
273(e)(3).
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\70\ We will address issues relating to Section 259 in a
separate proceeding. See Implementation of Infrastructure Sharing
Provisions in the Telecommunications Act of 1996, CC Docket No. 96-
237, Notice of Proposed Rulemaking, FCC 96-456 (released Nov. 22,
1996), 61 FR 63774, December 2, 1996 (``Infrastructure Sharing
NPRM''). Section 259(a) requires the Commission to prescribe
implementing regulations within one year of the date of enactment of
the 1996 Act, i.e., by February 8, 1997.
\71\ The term ``incumbent LEC'' is defined, for purposes of
Section 259, in Section 251(h), which states:
(1) DEFINITION--For purposes of this section, the term
``incumbent local exchange carrier'' means, with respect to an area,
the local exchange carrier that--
(A) On the date of enactment of the Telecommunications Act of
1996, provided telephone exchange service in such area; and
(B) (i) On such date of enactment, was deemed to be a member of
the exchange carrier association pursuant to section 69.601(b) of
the Commission's regulations (47 CFR 69.601(b)); or
(ii) Is a person or entity that, on or after such date of
enactment, became a successor or assign of a member described in
clause (i).
47 U.S.C. Sec. 251(h).
\72\ 47 U.S.C. Sec. 259. Section 259(d) defines a ``qualifying
carrier'' as a telecommunications carrier that:
(1) Lacks economies of scale or scope, as determined in
accordance with regulations prescribed by the Commission pursuant to
this section; and
(2) Offers telephone exchange service, exchange access, and any
other service that is included in universal service, to all
consumers without preference throughout the service area for which
such carrier has been designated as an eligible telecommunications
carrier under Section 214(e).
47 U.S.C. Sec. 259(d).
\73\ 47 U.S.C. Sec. 259(b)(6).
\74\ Infrastructure Sharing NPRM, at para. 11.
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61. Section 256, entitled ``Coordination for Interconnectivity,''
requires, inter alia, that the Commission establish procedures for
Commission oversight of coordinated network planning by
telecommunications carriers and other providers of telecommunications
services for the effective and efficient interconnection of
telecommunications networks used to provide telecommunications
service.75 We seek comment on the relationship between the BOCs'
obligations under Section 273(e)(3) and the obligations Section
256(b)(1) imposes on all telecommunications carriers and other
providers of telecommunications service. The newly revised charter for
the Commission's Federal Advisory Committee, the Network Reliability
and Interoperability Council (``NRIC''), asks the NRIC to provide
recommendations on the implementation of Section 256, including
specifically how the Commission can most efficiently conduct effective
oversight of coordinated telecommunications network planning and
design.76 We seek comment on the relationship between the NRIC's
responsibility under Section 256 and the BOCs' obligations under
Section 273(e)(3).
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\75\ 47 U.S.C. Sec. 256(b)(1).
\76\ FCC Amends Charter of Network Reliability and
Interoperability Council, 61 FR 26516, May 28, 1996. We will place a
copy of the text of the Network Reliability and Interoperability
Council Charter in the docket file of this proceeding.
---------------------------------------------------------------------------
62. Section 273(e)(4) states that ``[n]either a Bell operating
company engaged in manufacturing nor a manufacturing affiliate of such
a company shall restrict sales to any local exchange carrier of
telecommunications equipment, including software integral to the
operation of such equipment and related upgrades.'' We tentatively
conclude that this language is unambiguous and we seek comment on the
validity of this conclusion. We also seek comment with respect to
establishing criteria for determining when sales have been restricted.
Commenters may address, for example, whether restriction should be
measured by the volume of sales per unit of time, or by the type of
equipment sold, or both, or by some other measure. We also request that
commenters address: (1) Whether the Commission should require or
perform periodic audits of BOC sales; (2) whether the Commission should
collect information on procurement practices to enable us to detect
anomalous behavior that might trigger an audit or investigation; and
(3) whether the Commission should adopt other additional rules to
implement this provision of the 1996 Act.
63. Section 273(e)(5) states that ``[a] Bell operating company and
any entity it owns or otherwise controls shall protect the proprietary
information submitted for procurement decisions from release not
specifically authorized by the owner of such information.'' We
tentatively conclude that this language is unambiguous and self-
executing because it corresponds to the customary use of common legal
instruments such as non-disclosure agreements and license agreements.
We seek comment on this tentative conclusion.
64. Section 273(F): Administration and Enforcement Authority.
Section 273(f) provides that for ``the purposes of administering and
enforcing the provisions of this section and the regulations prescribed
thereunder, the Commission shall have the same authority, power, and
functions with respect to any Bell operating company or any affiliate
thereof as the Commission has in administering and enforcing the
provisions of this title with respect to any common carrier subject to
this Act.'' 77 We tentatively conclude that the Commission has
broad authority to regulate all matters contemplated by Section 273
under Sections 1,78 2(a),79 3,80 and 4(i) 81 of the
Communications Act and seek comment on this tentative conclusion.
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\77\ 47 U.S.C. Sec. 273(f) (emphasis added).
\78\ 47 U.S.C. Sec. 151.
\79\ 47 U.S.C. Sec. 152(a), which states that the Communications
Act ``applies to all interstate and foreign communications by wire
or radio * * *.''
\80\ 47 U.S.C. Secs. 153 (51) and (33), defines communications
by wire and radio in a manner that incorporates all technologies and
methods of operating.
\81\ 47 U.S.C. Sec. 154(i) permits the Commission to perform
``any and all acts * * * which may be necessary in the execution of
its functions.''
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65. Section 273 addresses standards development, joint network
planning, research and development, and collaboration with respect to
entities that are not common carriers. While Sections 206 to 209 of the
Communications Act provide statutory mechanisms for addressing
complaints regarding common carrier matters,82 additional
regulations may be needed to address violations of Section 273 by
entities that are not common carriers. We seek comment on, and the
proposed text of, any additional rules that may be necessary, or
desirable, to enforce Section 273, in addition to those that presently
exist to implement Sections 206 to 209, and 501 to 503 of the
Communications Act, as amended.
---------------------------------------------------------------------------
\82\ 47 U.S.C. Secs. 206-209.
---------------------------------------------------------------------------
66. Although Section 273(d)(5) requires the Commission to prescribe
a default process for use in resolving standards-setting
disputes,83 it does not contain any specific directives to govern
the resolution of complaints filed under other provisions of Section
273. Particularly with respect to Sections 273(d)(2) through 273(d)(4),
however, we recognize that accurate, efficient, and rapid resolution of
alleged violations of Section 273 will be essential to the proper
operation of this statutory section. We may find it beneficial to both
the Commission and industry to amend our rules in order to increase the
speed and efficiency of our complaint resolution processes and to meet
better the demands of this and other sections of the 1996 Act. We are
addressing potential means of accomplishing this goal in a separate
proceeding 84 and we encourage commenters in that proceeding to
address specific enforcement concerns relating to section 273 in
particular and other sections of the 1996 Act in general.
---------------------------------------------------------------------------
\83\ 47 U.S.C. Sec. 273(d)(5).
\84\ Implementation of the Telecommunications Act of 1996,
Amendment of Rules to Be Followed When Formal Complaints Are Filed
Against Common Carriers, CC Docket No. 96-238, Notice of Proposed
Rulemaking, FCC 96-460, (released November 27, 1996), 61 FR 67978,
December 26, 1996.
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67. Section 273(G): Additional Rules and Regulations. Section
273(g) states that ``[t]he Commission may prescribe such additional
rules and regulations as the Commission determines are necessary to
carry out the provisions of [Section 273], and otherwise to prevent
discrimination and cross-subsidization in a Bell operating company's
dealings with its affiliate and with third parties.'' 85 We seek
comment on what, if any, additional rules should be adopted under this
provision ``to prevent discrimination and cross-subsidization in a Bell
operating company's dealings with its affiliate and with third
parties,'' and we request that commenters proposing such rules do so in
their initial comments, so that other parties may respond to the
proposals during the reply comment period. We seek additional specific
comment on whether the sale of Bellcore, as announced, creates a need
for additional rules under this section.
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\85\ 47 U.S.C. Sec. 273(g) (emphasis supplied).
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68. Conclusion. Section 273 establishes the conditions under which
[[Page 3651]]
Bell Operating Companies may manufacture and provide telecommunications
equipment, and manufacture customer premises equipment. It also sets
forth safeguards against anticompetitive behavior in manufacturing
markets by entities other than BOCs. With this NPRM, we seek to ensure
that the safeguards that Congress enacted are effectively and
efficiently administered. Our further objectives in this proceeding are
to develop regulations that will foster technological innovation and
competition in both the customer premises equipment and
telecommunication equipment markets. We encourage commenters to propose
innovative and administratively simple rules that will enable us to
meet these objectives, and request that interested parties propose the
text of any rules that they may deem appropriate to implement Section
273. We further request that, in general, those commenters proposing
such rules do so in their initial comments so that other parties may
reply to them in their reply comments.
Procedural Issues
A. Ex Parte Presentations
69. This is a non-restricted notice and comment rulemaking
proceeding. Ex parte presentations are permitted, except during the
Sunshine Agenda period, provided they are disclosed as provided in the
Commission's Rules. See generally 47 CFR Sections 1.1202, 1.1203, and
1.1206(a).
B. Regulatory Flexibility Act
70. We certify that the Regulatory Flexibility Act does apply to
this rulemaking proceeding because there may be a significant economic
impact on a substantial number of small business entities, as defined
by Section 601(3) of the Regulatory Flexibility Act.86 The
Secretary shall send a copy of this Notice of Proposed Rulemaking
including this certification, to the Chief Counsel for Advocacy of the
Small Business Administration in accordance with Section 603(a) of the
Regulatory Flexibility Act.87
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\86\ 5 U.S.C. Sec. 601(3).
\87\ 5 U.S.C. Sec. 603(a) (as amended by the Contract With
America Advancement Act of 1996, Public Law No. 104-121, 110 Stat.
847, 866 (1996)).
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71. Pursuant to Section 603 of the Regulatory Flexibility Act
(RFA), the Commission has prepared the following Initial Regulatory
Flexibility Analysis (IRFA) of the expected impact on small entities of
the policies and rules proposed in the Notice of Proposed Rulemaking
(NPRM). Written public comments are requested on the IRFA. These
comments must be filed in accordance with the same filing deadlines as
comments on the remainder of the NPRM, but they must have a separate
and distinct heading designating them as responses to the regulatory
flexibility analysis. The Secretary shall cause a copy of the NPRM,
including the IRFA, to be sent to the Chief Counsel for Advocacy of the
Small Business Administration in accordance with Section 603(a) of the
Regulatory Flexibility Act.
72. Reason for Action: The Commission, in compliance with Section
273 of the Communications Act of 1934 (``Communications Act''), as
amended by the Telecommunications Act of 1996 (``1996 Act''), proposes
rules and procedures intended to ensure the prompt adoption of
regulations to administer and enforce Section 273 provisions with
minimum regulatory and administrative burden on telecommunications
carriers. The rules proposed in the NPRM are necessary to implement
Section 273, in which Congress imposes requirements affecting Bell
Operation Companies (BOCs), Bellcore, and entities that develop
standards, develop generic requirements and conduct certification
activity. This NPRM proposes rules and seeks comment to implement
Section 273 in a manner that is consistent with Congress's intent.
73. Objectives and Legal Basis for Proposed Rules: The Commission's
objective in issuing the NPRM is to propose and seek comment on rules
enabling the Commission to administer and enforce Section 273
effectively and efficiently, and in a manner that is consistent with
the intent of Congress. The proposed action is authorized under
Sections 1, 3, 4, 7, 201-209, 218, 251, 273, and 403 of the
Communications Act, as amended, 47 U.S.C. Sections 151, 153, 154, 157,
201-209, 218, 251, 273, and 403.
74. Description and Estimated Number of Small Entities Affected:
Section 273 authorizes the Commission to impose standards on the BOCs,
Bellcore, and entities that develop standards, develop generic
requirements and conduct certification activity. Neither BOCs nor
Bellcore qualify as small business entities; for they are dominant in
their field of operation. See RFA, Section 601(3). Conversely, the size
of the entities that develop standards, develop generic requirements,
and conduct certification activity is unknown and may include small
business entities. Accordingly, we certify that the Regulatory
Flexibility Act of 1980, as amended, does not apply to this rulemaking
proceeding insofar as it pertains to BOCs or Bellcore since our rules
are not likely to have a significant economic impact on a substantial
number of small entities, as defined by section 601(3) of the
Regulatory Flexibility Act.
75. Our rules, however, may have a significant economic impact on a
substantial number of small businesses insofar as they apply to
entities that develop standards, develop generic requirements and
conduct certification activity. We request comment on the number of
possible small business entities that would fall under entities that
develop standards, develop generic requirements, and conduct
certification activity in addition to comment as to how to develop
requirements that would effectively assist and not unduly burden
qualifying small business entities.
76. Reporting, Recordkeeping and Other Compliance Requirements: The
NPRM requests comment on reasonable reporting requirements for BOCs as
to network planning, design, and interconnection arrangements.
Similarly, this IRFA seeks comment on measures that could be taken by
the Commission to limit any burdensome requirements upon small business
entities. It seeks comment on reasonable notice requirements for BOCs
as to communicating planned deployment of telecommunications equipment
to their interconnecting carriers.
77. The Commission's action in this proceeding is in direct
response to Congress's passage of the 1996, in particular Section 273.
This NPRM only sets forth tentative conclusions as to Congress's
intentions within Section 273. For an exhaustive recitation of the
Commission's tentative conclusions, see the NPRM at paragraphs 8-11,
18, 20-21, 26, 29, 37-38, 40, 43, 48, 50, 52-55, 59-62, 68, 71, 73-75.
78. This NPRM also seeks comment on rules proposed to administer
end enforce manufacturing safeguards potentially impacting entities
that develop standards, develop generic requirements and conduct
certification activities. Rules adopted in this proceeding may require
reporting, recordkeeping, and may impose other procedural requirements.
There are no other reporting requirements contemplated by the NPRM.
79. Federal Rules which Overlap, Duplicate or Conflict with these
Rules: The Commission seeks comment as to what overlap, if any, exists
or may exist among the requirements that this Commission may adopt to
implement Section 273 and the Commission's existing rules. For example,
the Commission has identified two sources
[[Page 3652]]
of potential overlap in 47 CFR Sec. 64.702 and 47 CFR Sec. 68.110, and
seeks comment as to how the procedures required in these existing rules
may be adapted to minimize additional regulatory burdens.
80. With respect to rules that may potentially affect BOCs,
Bellcore, and entities that develop standards, develop generic
requirements, or conduct certification activities, the Commission
tentatively concludes that no overlap, duplication, or conflict with
existing rules exists. The Commission seeks comment on this conclusion.
81. Significant Alternatives to the Proposed Rules which Accomplish
the Stated Objectives of Applicable Statutes and which Minimize any
Significant Economic Impact of the Proposed Rules on Small Entities: As
mentioned in paragraphs four and five of this IRFA, the Commission
believes that our rules may have a significant economic impact on a
substantial number of small businesses insofar as they apply to
entities that develop standards, develop generic requirements and
conduct certification activity. We request comment from the industry in
regards to significant alternatives to the proposed rules which
accomplish the stated objective of applicable statutes and which
minimize any significant economic impact of the proposed rules on small
entities.
82. We advance that our tentative conclusions were reached with the
interests and concerns of small businesses in mind. Although
tentatively there will be no differing compliance or reporting
requirements or timetables that take into account the resources
available to small entities, the Commission finds this to be
unnecessary. The Commission seeks comment on this tentative conclusion.
83. Additionally, the Commission tentatively concludes that the
clarification, consolidation, or simplification of compliance and
reporting requirements under the rule for small entities will not be
necessary. The Commission seeks comment on this tentative conclusion.
Lastly, neither the use of performance rather than design standards by
the Commission nor an exemption from coverage of the rule, or any part
thereof, for such small entities is believed to be required as a result
of actions taken by the Commission in the impending Report and Order.
The Commission seeks comment on this finding.
C. Initial Paperwork Reduction Act of 1995 Analysis
84. This NPRM contains either a proposed or modified information
collection. As part of our continuing effort to reduce paperwork
burdens, we invite the general public and the Office of Management and
Budget (OMB) to take this opportunity to comment on the information
collections identified in this NPRM, as required by the Paperwork
Reduction Act of 1995.88 Public and agency comments are due at the
same time as other comments on this NPRM; OMB comments are due 60 days
from date of publication of this NPRM in the Federal Register. Comments
should address: (a) Whether the proposed collection of information is
necessary for the proper performance of the functions of the
Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology.
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\88\ Public Law No. 104-13, codified at 44 U.S.C. Secs. 3501-
3520.
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D. Notice and Comment Provision
85. Pursuant to applicable procedures set forth in Sections 1.415
and 1.419 of the Commission's Rules, 47 CFR Sections 1.415 and 1.419,
interested parties may file comments on or before February 24, 1997,
and reply comments on or before March 26, 1997. To file formally in
this proceeding, interested parties must file an original and six
copies of all comments, reply comments, and supporting comments, with
the reference number ``CC Docket 96-254'' on each document. Those
parties wishing each Commissioner to receive a personal copy of their
comments must file an original plus eleven copies. Parties must send
comments and reply comments to the Office of the Secretary, Federal
Communications Commission, 1919 M Street, N.W. Room 222, Washington,
D.C. 20554. Parties must also provide four copies to Secretary, Network
Services Division, Common Carrier Bureau, 2000 M Street, N.W., Room
235, Washington, D.C. 20554. Parties must also provide one copy of any
documents filed in this docket to the Commission's copy contractor,
International Transcription Services, Inc., 2100 M Street, N.W., Suite
140, Washington, D.C. 20037.
86. Comments and reply comments will be available for public
inspection during regular business hours in the FCC Reference Center
(Room 239) of the Federal Communications Commission, 1919 M Street,
N.W., Washington, D.C. 20554. Copies of comments and reply comments
will also be available through the Commission's copy contractor:
International Transcription Service, Inc. (ITS, Inc.), 2100 M Street,
N.W., Suite 140, Washington, D.C. 20037 (202-857-3800).
87. In order to facilitate review of comments and reply comments,
both by parties and Commission staff, we require that comments not
exceed sixty (60) pages, including all appendices and attachments
(except the text of proposed rules), and that reply comments not exceed
thirty (30) pages. We can foresee no circumstances in which these page
limits would be waived. Comments and reply comments must also include a
short, concise summary of each substantive argument raised in the
pleading, regardless of length. The summary may be paginated separately
from the rest of the pleading and will not count toward the page
limitations established above.89
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\89\ See 47 CFR Sec. 1.49.
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88. Written comments by the public on the proposed and/or modified
information collections are due thirty days after publication of this
Notice in the Federal Register and must have a separate and distinct
heading designating the comments as responses to the regulatory
flexibility analysis. Written comments must be submitted by the Office
of Management and Budget (OMB) on the proposed and/or modified
information collections on or before 60 days after date of publication
in the Federal Register. In addition to filing comments with the
Secretary, a copy of any comments on the information collections
contained herein should be submitted to Dorothy Conway, Federal
Communications Commission, Room 234, 1919 M Street, N.W., Washington,
DC 20554, or via the Internet to dconway@fcc.gov and to Timothy Fain,
OMB Desk Officer, 10236 NEOB, 725--17th Street, N.W., Washington, DC
20503 or via the Internet to fain__t@al.eop.gov.
E. Ordering Clauses
89. Accordingly, it is ordered that pursuant to Sections 1, 3, 4,
7, 201-209, 218, 251, 273 and 403 of the Communications Act of 1934, as
amended, 47 U.S.C. Secs. 151, 153, 154, 157, 201-209, 218, 251, 273,
and 403 that this notice of proposed rulemaking is hereby adopted.
90. It is further ordered that the Secretary shall send a copy of
this notice of proposed rulemaking, including the regulatory
flexibility certification to the Chief Counsel for
[[Page 3653]]
Advocacy of the Small Business Administration, in accordance with
Section 603(a) of the Regulatory Flexibility Act, 5 U.S.C. Sec. 603(a).
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-1676 Filed 1-23-97; 8:45 am]
BILLING CODE 6712-01-P
