[Federal Register Volume 61, Number 202 (Thursday, October 17, 1996)]
[Rules and Regulations]
[Pages 54099-54104]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26517]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 51
[CC Docket Nos. 96-98 and 95-185; FCC 96-378]
Implementation of the Telecommunications Act of 1996
AGENCY: Federal Communications Commission.
ACTION: Final rule; Denial of petitions for stay of rules.
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SUMMARY: The Federal Communications Commission here denies two
petitions seeking a stay of the rules contained in
[[Page 54100]]
the Commission's First Report and Order implementing the
Telecommunications Act of 1996. The Commission concluded that
petitioners failed to meet the legal criteria required to obtain a stay
of the rules. Denial of the petitions seeking a stay of the rules
allows the implementation of the Telecommunications Act of 1996 to
proceed without delay.
EFFECTIVE DATE: September 16, 1996.
FOR FURTHER INFORMATION CONTACT: David A. Konuch, 202-418-0199.
SUPPLEMENTARY INFORMATION:
Adopted: September 16, 1996
Released: September 17, 1996
I. Introduction
1. On August 1, 1996, the Commission adopted rules implementing the
local competition provisions of the Telecommunications Act of 1996
(1996 Act). Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, CC Docket No. 96-98, First Report and
Order, FCC 96-325 (released August 8, 1996), 61 FR 45476 (August 29,
1996) (First Report and Order). On August 28, 1996, GTE Corporation
(GTE) and the Southern New England Telephone Company (SNET) filed a
joint motion for stay of the Commission's rules pending judicial
review. Oppositions to the joint motion for stay were filed by the
United States Department of Justice and 16 private parties. On
September 6, 1996, after we received these oppositions, U S West, Inc.
(``U S West'') filed a stay petition similar to that filed by GTE and
SNET. The Competitive Telecommunications Association and ALTS filed
oppositions to U S West's petition.
2. For the reasons set forth below, we deny the motions for stay.
II. Summary of the Motions and Oppositions
3. GTE and SNET assert that a petition for review of the
Commission's First Report and Order is likely to succeed on the merits
because the Commission has exceeded its statutory authority and has
acted arbitrarily and capriciously in implementing provisions of the
1996 Act. In particular, GTE and SNET contend that the Commission lacks
authority to establish national pricing standards for interconnection
and unbundled network elements. GTE and SNET argue that, even if the
Commission has such authority, the pricing standards in the First
Report and Order would force incumbent LECs to offer interconnection,
unbundled network elements, and resold services at below-cost rates,
allegedly effecting an uncompensated taking in violation of the Fifth
Amendment to the United States Constitution. GTE and SNET also maintain
that the Commission has established default pricing proxies that are
inconsistent with the 1996 Act and the cost study methodology the
Commission adopted for use by state commissions. In addition, GTE and
SNET assert that the ability of competitors to ``reassemble'' unbundled
network elements nullifies the resale and exchange access provisions of
the 1996 Act. Finally, GTE and SNET argue that the First Report and
Order establishes a number of specific requirements with regard to
resale and exchange access charges that conflict with express terms of
the 1996 Act.
4. GTE and SNET contend that they will suffer irreparable harm in
the absence of a stay because the Commission's rules will stifle the
negotiation process and will require incumbent LECs to offer unbundled
elements or services to competitors at below-cost prices. GTE and SNET
argue that a stay will cause no harm to others because private
negotiations and state-supervised arbitrations can proceed in the
absence of Commission rules. GTE and SNET also assert that the public
interest favors a stay because of the disruption to business plans that
would result if the Court of Appeals reverses the First Report and
Order and the Commission subsequently modifies its rules.
5. U S West agrees with SNET and GTE's arguments, but additionally
claims that our default proxy prices, along with our misinterpretation
of 47 U.S.C. 252(i), the 1996 Act's ``most favored nation'' provision,
will impermissibly ``dictate'' the result of negotiations, as a
practical matter. Section 252(i) of the 1996 Act provides that a
``local exchange carrier shall make available any interconnection,
service, or network element provided under an agreement approved under
[section 252] to which it is a party to any other requesting
telecommunications carrier upon the same terms and conditions as those
provided in the agreement.'' 47 U.S.C. 252(i). Section 252(i) is known
as the 1996 Act's ``most favored nation'' provision, because it enables
carriers to obtain any interconnection, service, or network element on
terms as favorable as those contained in any state-commission-approved
interconnection agreement.
6. In general, parties opposing grant of the stay motion contend
that GTE's and SNET's motion does not satisfy the four factors that we
must consider in deciding whether to stay one of our orders. These
parties contend movants are unlikely to prevail on the merits of their
claims; that movants will suffer no irreparable harm if a stay is not
granted; that grant of a stay will harm third parties; and that the
public interest does not favor the grant of a stay.
III. Discussion
7. Petitioners' motions do not justify relief under the four-part
test for evaluating requests for interim relief. That test requires
proponents of a stay to demonstrate: (1) That they are likely to
prevail on the merits; (2) that they will suffer irreparable harm if a
stay is not granted; (3) that other interested parties will not be
harmed if the stay is granted; and (4) that the public interest favors
the grant of a stay. See Wisconsin Gas Co. v. FERC, 758 F.2d 669, 673-
74 (D.C. Cir. 1985); Washington Metropolitan Area Transit Authority v.
Holiday Tours, Inc., 559 F.2d 841, 843-43 (D.C. Cir. 1977); Virginia
Petroleum Jobbers Ass'n v. FPC, 259 F.2d 921, 925 (D.C. Cir. 1958). As
discussed below, we do not believe that petitioners have satisfied any,
much less all, of these requirements.
A. Irreparable Harm
8. A concrete showing of irreparable harm is an essential factor in
any request for a stay. `` `The key word' '' in an analysis of
irreparable harm is `` `irreparable.' '' ``[E]conomic loss does not, in
and of itself, constitute irreparable harm.'' Also, because competitive
harm is merely a type of economic loss, ``revenues and customers lost
to competition which can be regained through competition are not
irreparable.'' Moreover, even if the alleged harm is not fully
remediable, the irreparable harm factor is not satisfied absent a
demonstration that the harm is ``both certain and great; * * * actual
and not theoretical.'' ``Bare allegations of what is likely to occur
are of no value'' under this factor, because we ``must decide whether
the harm will in fact occur.'' Petitioners' three different claims of
harm absent a stay do not satisfy these exacting standards.
9. First, GTE and SNET argue specifically that they are harmed by
our interpretation of the ``just and reasonable'' standard of 47 U.S.C.
251(c) (2) and (3) for the pricing of interconnection and unbundled
network elements. They complain, in particular, that the pricing
methodology adopted in the First Report and Order unconstitutionally
prevents them from recovering the joint and common costs (hereinafter
collectively referred to as ``common costs''), and the historical
``embedded'' costs of such offerings to competing carriers. The First
Report and
[[Page 54101]]
Order generally uses the term ``common costs'' to refer to both joint
and common costs. Such ``below-cost'' pricing of section 251 offerings,
they claim, will result in unrecoverable lost revenues, customers, and
goodwill, particularly if state regulators do not allow them to
``rebalance'' (raise) rates for certain retail services that allegedly
have been subsidized in the past by the pricing regime that the section
251 offerings will erode.
10. These claims mischaracterize the First Report and Order.
Contrary to GTE's and SNET's assertions, our pricing methodology does
not require ``below-cost'' pricing. On the contrary, it affirmatively
provides for the recovery of all the economic costs of providing
interconnection and unbundled network elements, and includes a
reasonable profit. We refer to the general pricing methodology we
adopted as Total Element Long Run Incremental Cost or ``TELRIC''. As we
explained, economic costs are forward-looking costs or, in other words,
the costs that an efficient provider would incur to provide the service
or facility. We also specifically provided that unbundled element
prices shall include a ``normal profit.'' In mischaracterizing our
pricing methodology as ``below-cost,'' GTE and SNET must be claiming
that historical embedded costs are always greater than economic costs,
and that sections 251 and 252 must be read to entitle them to recover
historical costs even where those costs exceed economic costs. Both
assertions are unfounded. Nothing in section 251 or 252 creates an
entitlement for GTE, SNET and other incumbent LECs to assess rates for
interconnection and unbundled network elements that are designed to
recover historical costs that exceed economic costs. Economists
generally agree that historical embedded costs are not the relevant
costs in competitive markets, and would, in fact, interfere with the
development of efficient competition. Moreover, GTE and SNET are simply
wrong in claiming that the Commission's pricing methodology denies them
an opportunity to recover common costs. We stated clearly in the First
Report and Order that ``for the aggregate of all unbundled elements,
incumbent LECs must be given a reasonable opportunity to recover their
forward-looking common costs attributable to operating the wholesale
network.''
11. Even accepting GTE's and SNET's reliance on historical costs,
their contention that the First Report and Order requires below-cost
pricing is speculative. In any given instance, forward-looking costs
``may be higher or lower than historical embedded costs.'' Thus, the
claimed loss of revenues--which does not present a question of
constitutional deprivation in any event--is premature because the
actual revenues that GTE and SNET will receive will not be known until
completion of the voluntary negotiations and state arbitration
proceedings that will actually set interconnection and unbundled
element prices. We expressly stated in the First Report and Order that
``[i]ncumbent LECs may seek relief from the Commission's pricing
methodology if they provide specific information to show that the
pricing methodology, as applied to them, will result in confiscatory
rates.'' Moreover, as DOJ correctly notes in its Opposition at page 3,
the Commission possesses discretion in ratemaking matters, so long as
the rates that result are just. See, e.g., Duquesne Light Co. v.
Barasch, 488 U.S. 299 (1989) (in which the Court rejected a takings
claim where a utility was denied recovery of a $34 million capital
investment, prudent and reasonable when made, because the financial
integrity of the company was not jeopardized). Speculation about
anticipated lost revenues in the future does not approach, at this
stage, a showing of irreparable harm.
12. Second, petitioners contend that they will be harmed by the
application of the interim default proxy rates that the Commission
adopted. This argument is fatally flawed in that there is no certainty
that those proxies will ever be applied to petitioners. These proxies
were established for use by the states if a state was not able to set
prices based on economic cost studies consistent with our methodology
within the statutory arbitration periods. If, as these carriers assert,
the proxy rates are unreasonably below costs, they have every
incentive, and possess the information necessary, to present credible
economic cost studies to the relevant state commissions to allow the
state commissions to set prices for interconnection and unbundled
network elements that are based on actual cost studies, rather than by
proxies. Their claims of harm thus lack the requisite certainty and
concreteness for a stay. Further, as discussed below, the carriers'
challenges to those proxies mischaracterize the Commission's action and
are unfounded on the merits.
13. Third, petitioners argue that the Commission's rules
unreasonably constrain both their ability to negotiate the terms of
voluntary agreements with other telecommunications carriers that
request interconnection or unbundled network elements, and the states'
ability to arbitrate the terms of such agreements if voluntary
negotiations fail. Quite apart from the fact that the statute directs
the Commission to adopt implementing rules in 47 U.S.C. 251(d)(1),
these allegations of harm also are too speculative to justify
injunctive relief. Section 251(d)(1) provides that, ``[w]ithin 6 months
after the date of enactment of the Telecommunications Act of 1996, the
Commission shall complete all actions necessary to establish
regulations to implement the requirements of this section.'' We also
note that section 253(a) provides that ``[n]o State or local statute or
regulation, or other State or local legal requirement, may prohibit or
have the effect of prohibiting the ability of any entity to provide any
interstate or intrastate telecommunications service.'' Further, section
253(d) provides that ``[i]f, after notice and an opportunity for public
comment, the Commission determines that a State or local government has
permitted or imposed any statute, regulation, or legal requirement that
violates subsection (a) or (b) [relating to the states' ability to take
certain actions], the Commission shall preempt the enforcement of such
statute, regulation, or legal requirement to the extent necessary to
correct such violation or inconsistency.'' Our rules clearly do not
prohibit voluntary negotiations between incumbent LECs and their
potential competitors, as contemplated in 47 U.S.C. 252(a). Indeed,
they facilitate them. Petitioners are free to negotiate agreements with
other carriers upon any terms they choose so long as they are not
discriminatory and are consistent with the public interest. Although we
fully expect the existence of our rules to provide a context in which
free negotiations can proceed consistent with the pro-competitive
purposes of the 1996 Act, petitioners cannot plausibly suggest in view
of the explicit mandate of 47 U.S.C. 251(d)(1) that they have a
cognizable right to negotiate without any rules adopted by the FCC.
14. We also conclude that petitioners have not demonstrated that
the FCC's decision to interpret the just and reasonable rate standard
would necessarily harm them, as compared with a decision to allow
states independently to interpret that standard in arbitration
proceedings. To the extent that states might adopt different standards
absent any FCC guidance, such standards could conceivably be either
more or less favorable to incumbent local exchange carriers.
15. Finally, it is a meaningful response to all of the harms that
petitioners allege that nothing in the
[[Page 54102]]
First Report and Order prevents incumbent local exchange carriers from
taking steps substantially to protect themselves by seeking to insert
into their voluntary agreements provisos that permit reformation of the
terms of those agreements in the event that the order is overturned or
modified pursuant to judicial review. Similarly, nothing in the order
prevents states, in arbitrating such agreements, from imposing such
provisos.
B. Harm to Others
16. Petitioners also have not proved that a grant of their motions
would not harm others. As discussed more fully below (paras. 28-31),
the ``stay'' they seek would not simply maintain the status quo, but
rather would have a significant impact on whether potential new
competitors currently involved in negotiations and state arbitration
proceedings choose to enter local exchange and exchange access markets
at this crucial time, and, if so, whether their entry would be pursuant
to statutory standards as interpreted by the Commission, or some other
standards. To the extent that petitioners claim that the Commission's
interpretations burden them with lost revenues and competitive harm,
other interpretations allowing them to charge new entrants higher rates
or to impose upon them more restrictive terms likely would burden new
entrants and, consequently, retard or even eliminate competitive entry.
As between incumbent LECs and new entrants, the former are more likely
to be able to repair the adverse consequences of any erroneous decision
on whether to grant a stay.
17. Moreover, to the extent that petitioners argue not only that
the Commission adopted an erroneous pricing standard, but also that the
Commission erred by failing to leave the standard to individual states,
the carriers are advocating a system that clearly would cause new
entrants particular harm and might even discourage them from entering
these markets. As we noted in the First Report and Order, efficient
entry strategies in many cases require entry on a regional, rather than
state-by-state, basis. The removal of national standards could severely
impede, or at least increase the cost of, such strategies.
C. Public Interest
18. GTE and SNET assert that a stay would serve the public interest
because it would leave interconnection negotiations to private parties,
and arbitrations in the hands of state regulators, where Congress
intended them to be. They also contend that ``progress toward
competition will be gravely impaired'' in the absence of a stay because
the Commission's rules will give potential competitors false signals
that may ``encourage entry by companies that would not normally enter
if they had known the true costs involved.'' GTE and SNET claim that
this means that a stay is necessary to protect the public from such
``uneconomic entry'' and from the disruptions that would attend
corrective actions if the Commission's rules were overturned. U S West
additionally claims that the public interest will be harmed because the
Commission's rules and ``inflexible prices'' will ``prevent carriers
from negotiating interconnection agreements with each other on terms
that are more advantageous than the defaults.''
19. Contrary to GTE's and SNET's argument that a stay is needed to
avoid ``entry by companies that would not normally enter,'' a stay
might discourage entry by some who have every reasonable qualification
to compete and would do so under our rules. A stay in this crucial
initial period for the development of local exchange and local access
competition would not serve the public interest unless our rules were
virtually certain to be set aside on review and the actions taken on
interconnection requests in the meantime were irreversible. We believe
that our rules correctly carry out the objectives of Congress in
adopting section 251. Congress expressly mandated rulemaking by the
Commission to implement effectively the new statutory requirements.
Congress also made clear that time was of the essence, directing us to
``complete all actions necessary to establish [such] regulations'' by
August 8, 1996. As explained more fully below (paras. 30-31), a stay of
our rules would subvert Congress' plan to have such rules in place
during arbitration proceedings. Moreover, as we emphasized in the First
Report and Order, the rules we adopted under section 251 will have a
significant impact on the implementation of other provisions of the
1996 Act. We noted, for example, that our 251 rules ``will help the
states, the DOJ, and the FCC carry out their responsibilities under
section 271, and assist BOCs in determining what steps must be taken to
meet the requirements of section 271(c)(2)(B), the competitive
checklist.'' Section 271 establishes the requirements that a BOC must
satisfy in order to receive authorization to provide in-region
interLATA telecommunications services. Section 271(c)(2)(B) sets forth
a specific ``checklist'' of requirements that a BOC must meet as part
of the authorization process.
20. As to any necessary corrections after the fact, we believe that
agreements and arbitrations can take account of this possibility. As
noted above (paragraph 15), agreements and arbitrations could include
provisos calling for revisions if the Commission's rules should be
struck down. The joint motion acknowledges that the agreements can be
revised after the fact if the Commission's rules are upheld after a
stay is granted; its assertion that such revisions would not work if a
stay is denied and the rules later are struck down is implausible and
unexplained.
21. We further reject U S West's argument that our rules will harm
the public interest by providing carriers with insufficient flexibility
to negotiate agreements. For the reasons set out in this Order and in
the First Report and Order, we believe that our rules provide all
carriers with a full and fair opportunity, pursuant to the requirements
of the 1996 Act, voluntarily to negotiate interconnection agreements.
22. In summary on this point, the primary beneficiary of the
competitive policies our rules were designed to implement is the
public. We conclude that a stay would disserve the public interest
profoundly by eliminating our rules from the process of negotiation and
arbitration at the very most crucial time.
D. Likelihood of Success on the Merits
23. Because of the clear failure of petitioners to meet the
irreparable harm, harm to others, and public interest requirements for
obtaining a stay, we do not address specifically in this order all
their claims that we exceeded our statutory authority or that we acted
arbitrarily or capriciously. All the significant arguments raised by
the petitioners were squarely addressed in the First Report and Order.
We addressed issues concerning the Commission's authority under the
1996 Act to establish national pricing rules in section II.C. and II.D.
of the order. We discussed the legal and economic bases for the
establishment of the Commission's pricing methodology, including the
Fifth Amendment takings issue and the justification for the default
proxy ceilings and ranges, in section VII of the order. We addressed
arguments about whether we should permit competitors to reassemble
unbundled network elements, including possible effects on the resale
provisions of the 1996 Act and our access charge rules, in sections
V.H. and VII.B., respectively. In
[[Page 54103]]
section V.J., we set forth our rationale for including vertical
features within the definition of unbundled local switching; and in
sections IV.H., V.J., and VII.B., we discussed the compensation to
incumbent LECs for modifications made to their networks to accommodate
interconnection and unbundling. Finally, in section XIV.B of the First
Report and Order, we addressed arguments regarding the rights of third
parties to obtain ``any individual interconnection, service, or network
element arrangement'' under section 252(i). We need not repeat those
discussions in this order.
24. We will note, however that where the GTE and SNET address the
merits of the First Report and Order, they often mischaracterize and
distort the import of our analysis and conclusions. For instance, our
default proxy pricing measures are only interim approaches, setting
bounds for unbundled element pricing in the absence of state-approved
forward-looking cost studies. Our proxies will assist states in the
very near term when, because of time or staff resource constraints,
they may be unable to set prices by conducting or approving forward-
looking economic cost studies within the statutory time period set for
arbitrations. Indeed, the first set of state arbitrations must be
completed in early November under the deadlines established in the Act.
25. An example of GTE and SNET's misguided arguments on the merits
is their criticism of the Commission's unbundled loop proxy
calculation. In asserting that the Commission ``might just as well have
picked the default prices out of a hat,'' petitioners omit any mention
of the several pages of the order describing how we calculated our loop
proxy figures. As detailed in section VII.C. of the First Report and
Order, our proxy ceilings are based on prices set by six state
commissions as their best estimates of forward-looking costs after
analysis of economic cost studies. We then derived price ceilings for
individual states throughout the nation by adjusting the average of the
prices in these six states by the relative loop costs in those states,
as estimated by the two forward-looking economic cost-based models that
received significant comment by parties during this proceeding. To
allow a reasonable margin to enable the proxy ceiling to capture the
variation among states' forward-looking economic costing prices, we
then adjusted the resulting prices upward by five percent.
26. Contrary to GTE and SNET's arguments, it is no surprise, and
certainly not error, that the price ceiling for Florida--or for
Connecticut, Colorado, Michigan, Illinois, or Oregon, for that matter--
does not equal the results of the cost studies in those individual
states. We concluded that an average of the six states' prices
represented the best estimate of forward-looking loop costs available
to us at that time, and that relying on an average of the nationwide
relative costs from the Hatfield and BCM models was the best method for
deriving proxy price ceilings in individual states. We believe our
methodology is reasonable, even though our proxy ceiling in Florida is
$13.68 while the Florida Commission set a $20 per loop price for GTE
Florida. We note that the price set by the Florida Commission for GTE-
Florida was itself significantly higher than those the commission set
for BellSouth and United/Centel--the other local telephone companies
for which the state commission has set unbundled loop prices in
Florida. We concluded that the reliability of our foundation estimate
was enhanced by using an average of the prices established in all six
states for which information was available, rather than using just one
state or the six states individually. We did not, and could not in the
time frame permitted under the statute, independently verify the
accuracy of the six states' unbundled loop prices, many of which also
were interim in nature. Instead, we emphasized that each state, in our
judgment, used a standard that appeared to be reasonably close to the
forward-looking economic cost methodology specified in the First Report
and Order, although perhaps not consistent in every detail with our
prescribed methodology. Finally, we also are unpersuaded by GTE and
SNET's assertion that it was a fatal error to rely on the Florida cost
studies because the Florida Commission failed to include any
``significant'' contribution to GTE Florida's common costs. It is not
clear on its face that the ``insignificant'' contribution to common
costs is inconsistent with our requirement that there be a reasonable
allocation of common costs. In addition, the Florida Commission
affirmatively found that their rates were not below GTE Florida's
costs, and explicitly provided for recovery of a reasonable profit. GTE
and SNET have not demonstrated that use of the Florida Commission
prices as part of setting a proxy ceiling for unbundled loop prices was
so unreasonable as to result in a flawed loop proxy methodology. In
sum, we set default proxy price ceilings and ranges for use by state
commissions, in the absence of fully approved forward-looking cost
studies, based on the best evidence available to us within the
statutory time period for our decision.
27. Finally, petitioners' discussion of our proxy prices simply
ignores two key characteristics of our proxy rules. First, our order
makes clear that these proxies are interim in nature, and that states
utilizing the proxies must replace them with prices based on the
results of forward-looking cost studies as they become available.
Second, our rules permit incumbent LECs to obtain a price higher than
the Commission's proxy ceiling by submitting to a state commission
during an arbitration an economic cost study that demonstrates that the
incumbent LEC's costs do in fact exceed the proxy price. If the
forward-looking costs for petitioners are in fact higher than our proxy
price ceiling, as applied in an individual state, they need only
demonstrate that to the state commission.
E. Special Circumstances of This Case
28. In addition to movants' failure to satisfy the four-part test
for evaluating requests for stay, the circumstances of this specific
case particularly militate against the grant of their motions.
Ordinarily when we are asked to stay the effectiveness of one of our
orders or rules, the moving party seeks to maintain the status quo
until a reviewing authority can sort out the issues and render its
decision on the merits. That is not the case here, as the Joint Motion
itself recognizes. Under the terms of the 1996 Act, many voluntary
negotiations for private interconnection agreements and state-
supervised arbitrations that are now under way will be completed before
the end of the year, because Congress established strict timetables to
govern the negotiation and arbitration process. The question is whether
those proceedings will reflect the principles established by the
Commission to implement section 251.
29. Petitioners do not seek to preserve the status quo, but to
overturn Congress's requirement that state arbitrators ensure that
approved interconnection agreements reflect the Commission's
regulations implementing section 251. It is doubtful, in these
circumstances, that the ordinary standards for evaluating stay motions
should apply because, where the objective of the motion is not to
maintain the status quo, the courts have applied a more demanding
standard.
30. In our view, it is important that the regulations established
in the First Report and Order not be stayed while negotiation and
arbitration proceedings are taking place. As we stated in the First
Report and Order, the negotiations between incumbent LECs and new
[[Page 54104]]
entrants are not analogous to traditional commercial negotiations in
which each party owns or controls something the other party desires.
Under section 251, monopoly providers are required to make available
their facilities and services to requesting carriers that intend to
compete directly with the incumbent LECs for their customers and,
consequently, incumbents have strong incentives to resist such
obligations. Our national rules serve the critical role of equalizing
bargaining power by establishing certain baseline principles that will
``reduce delay and lower transaction costs''--burdens that we have
found ``impose particular hardships for small entities that are likely
to have less of a financial cushion than larger entities.'' A stay
would undermine that critical role at a most important time,
disproportionately harming the competition that the statute
contemplates from new entrants.
31. Moreover, Congress made clear that it wants our rules to be in
place at this critical time. Congress specifically ordered the
Commission to ``complete all actions necessary to establish regulations
to implement the requirements'' of section 251 by August 8, 1996. It
explained that it is ``important that the Commission rules to implement
new section 251 be promulgated within six months after the date of
enactment, so that potential competitors will have the benefit of being
informed of the Commission's rules in requesting access and
interconnection before the statutory window in new section 271(c)(1)(B)
shuts.'' Section 271(c)(1)(B) authorizes a Bell Operating Company (BOC)
to apply for approval to offer in-region interLATA telecommunications
services if it does not receive a request for access and
interconnection from a facilities-based competitor within seven months
after enactment. In section 252(c)(1), Congress further ordered state
arbitrators resolving interconnection disputes and imposing conditions
on telecommunications companies to ``ensure that such resolution and
conditions meet the requirements of section 251, including the
regulations prescribed by the Commission.'' Under the statute, those
state arbitrators must ``conclude the resolution of any unresolved
issues not later than 9 months after the date on which the local
exchange carrier received the [interconnection] request.'' Because many
LECs requested interconnection shortly after the enactment of the 1996
Act on February 8, 1996 (with the consequence that arbitration of such
requests must be completed soon), a stay of our rules would frustrate
implementation of the procedure established by Congress. As a matter of
mathematical certainty, the arbitrations cannot be completed on the
timetable established by Congress--with the arbitrators ensuring that
the agreements reflect the regulations prescribed by the Commission, as
Congress directed in section 252(c)(1)--if the regulations are stayed.
IV. Ordering Clauses
32. Accordingly, it is ordered that the joint motion for stay filed
by GTE Corporation and the Southern New England Telephone Company is
denied.
33. It is further ordered that the motion for stay filed by U S
West, Inc., is denied.
List of Subjects in 47 CFR Part 51
Communications common carriers, Telephone.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-26517 Filed 10-16-96; 8:45 am]
BILLING CODE 6712-01-P
