[Federal Register Volume 62, Number 232 (Wednesday, December 3, 1997)]
[Rules and Regulations]
[Pages 63864-63872]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-31713]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 20 and 22
[WT Docket No. 96-162; FCC 97-352]
Competitive Service Safeguards for Local Exchange Carrier
Provision of Commercial Mobile Radio Services and Implementation of
Section 601(d) of the Telecommunications Act of 1996
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this Report and Order, the Commission modifies the current
structural separation requirement for the provision of cellular service
by the Bell Operating Companies (BOCs), and adopts a new requirement
that all incumbent local exchange carriers (LECs) provide in-region
broadband CMRS, including cellular services, through a CMRS affiliate,
subject to the Commission's accounting and affiliate transactions
rules. Rural telephone companies will be exempt from this requirement;
however, a competing carrier, interconnected with the rural carrier,
may petition the Commission to remove the exemption, or the Commission
may do so on its own motion, where the rural telephone company has
engaged in anti-competitive conduct, such as discrimination. Companies
serving fewer than two percent of the nation's subscriber lines that
seek to provide broadband CMRS may petition the Commission for
suspension or modification of the requirement that broadband CMRS be
provided through a separate affiliate. These safeguards are adopted to
address concerns that recent developments in the CMRS market, such as
direct competition among telecommunications carriers and the
development of fixed wireless services, may increase the incentive for
anti-competitive behavior by incumbent LECs. The separate affiliate
requirement will sunset on January 1, 2002, unless the Commission
determines that the competitive conditions in the local exchange market
are such that continuation of these safeguards is in the public
interest.
EFFECTIVE DATE: February 11, 1998.
FOR FURTHER INFORMATION CONTACT: David Krech, Commercial Wireless
Division, Wireless Telecommunications Bureau, (202) 418-0620. For
additional information concerning the information collections contained
in this Order contact Dorothy Conway at (202) 418-7349, or via the
Internet at dconway@fcc.gov.
SUPPLEMENTARY INFORMATION: This Report and Order in WT Docket No. 96-
162, adopted September 30, 1997, and released October 3, 1997 (erratum
released October 29, 1997), clarification Order (FCC 97-389) adopted
October 24, 1997, and released October 27, 1997, is available for
inspection and copying during normal business hours in the FCC
Reference Center, Room 230, 1919 M Street N.W., Washington D.C. The
complete text may be purchased from the Commission's copy contractor,
International Transcription Service, Inc., 1231 20th Street, N.W.,
Washington D.C. 20036 (202) 857-3800. Synopsis of the Report and Order:
I. Background
1. Safeguards Under Section 22.903 for BOC Provision of Cellular
Service. Section 22.903 of the Commission's rules comprises two
principal parts: the requirement that BOCs provide cellular service
through a structurally separate corporation; and a series of
restrictions on the separate affiliate, including restrictions on use
and ownership of landline transmission facilities and requirements for
the independent operation of the separate cellular affiliate through
separate books of account, officers, operating, marketing,
installation, and maintenance personnel and utilization of separate
computer and transmission facilities in the provision of cellular
service. This requirement was adopted in order to preserve the
competitive potential of the non-wireline cellular provider, the
Commission required the wireline carrier to provide its cellular
service through a structurally separate affiliate, i.e., an independent
corporation with separate officers, separate books of account, and
separate operating, marketing, installation, and maintenance personnel.
The Commission also prohibited the wireline carrier's cellular
affiliate from owning facilities for the provision of landline
telephone service. These structural separation requirements were
intended to prevent wireline carriers from using their market power in
the local exchange market to engage in anti-competitive practices, such
as improper cost allocation between the wireline carrier and its
cellular affiliate and discrimination by the wireline carrier in favor
of its cellular affiliate. The Commission also prohibited the wireline
carrier's cellular affiliate from owning facilities for the provision
of landline telephone service.
2. Section 22.903 Separate Affiliate Not Required for LEC Provision
of personal communications services (PCS) and specialized mobile radio
(SMR). Section 22.903 applies only to BOC provision of cellular
service. Structural safeguards are not required for LEC, including BOC,
provision of other CMRS, such as broadband PCS. See Amendment of the
Commission's Rules to Establish New Personal Communications Services,
GEN Docket No. 90-314, Second Report and Order, 58 FR 59174 (Nov. 8,
1993), recon., 59 FR 32830 (June 24, 1994) (Broadband PCS Second Report
and Order); Implementation of Sections 3(n) and 332 of the
Communications Act, Regulatory Treatment of Mobile Service, GN Docket
No. 93-252, Report and Order, 59 FR 18493 (April 19, 1994) (CMRS Second
Report and Order). In addition, non-BOC LECs may provide cellular
service without structural safeguards.
3. Cincinnati Bell. In Cincinnati Bell Telephone v. FCC, 69 F.3d
752 (6th Cir. 1995) the Sixth Circuit found that the Commission had
failed to justify adequately the conclusion in the Broadband PCS Second
Report and Order that the record was insufficient to repeal section
22.903. The Court held that, in light of the decision that all LECs,
including BOCs, could provide broadband PCS without establishing a
structurally separate affiliate, the Commission was required--but had
failed--to give a reasoned explanation for the disparate treatment of
BOC provision of cellular and PCS, as well as the disparity in BOC and
non-BOC provision of cellular service.
4. NPRM. In the NPRM, Amendment of the Commission's Rules to
Establish Competitive Service Safeguards for Local Exchange Carrier
Provision of Commercial Mobile Radio Services, WT Docket No. 96-162,
Notice of Proposed Rulemaking, Order on Remand, and Waiver Order, 61 FR
46420 (Sept. 3, 1996), the Commission observed that the BOCs currently
retain market power in the local exchange market because they control
bottleneck facilities and serve the vast majority of customers within
their service areas, and other carriers must seek interconnection from
the BOC. To address this issue, the Commission proposed two
alternatives to the existing structural safeguards for BOC cellular
operations, and asked commenters to submit information regarding the
costs of the structural separation requirement: (1) to retain the
structural separations requirements of section 22.903 for BOC provision
of in-region cellular service, but sunset the restrictions for a
particular BOC when that BOC receives authorization to provide
interLATA service originating in any in-region state; or (2) to
eliminate the structural safeguards of section
[[Page 63865]]
22.903 immediately in favor of uniform safeguards for all Tier 1 LEC
provision of broadband CMRS. With respect to both options, the
Commission proposed to replace section 22.903 with safeguards similar
to those adopted in the Competitive Carrier Fifth Report and Order
proceeding. See Policy and Rules Concerning Rates for Competitive
Common Carrier Services and Facilities Authorizations Therefor, CC
Docket No. 79-252, Fifth Report and Order, 49 FR 34824 (Sept. 4, 1984)
(Competitive Carrier Fifth Report and Order). In that order, the
Commission concluded that, in order to qualify for treatment as a
nondominant carrier, an independent local exchange company must provide
interstate interexchange services through a separate affiliate that (1)
has separate books of account; (2) does not jointly own transmission or
switching facilities with that local exchange company; and (3) acquires
any services from the affiliated local exchange carrier at tariffed
rates, terms, and conditions. In addition, the Commission subjected the
affiliate to the Commission's joint cost and affiliate transaction
rules. In the NPRM, the Commission proposed a similar framework of
safeguards for Tier 1 LECs providing in-region broadband CMRS
II. Report and Order
A. General Issues Regarding Incumbent LEC Provision of CMRS
5. Section 22.903 was intended to apply only to cellular service;
however, the anti-competitive practices it was meant to address are by
their nature not unique to cellular service, but can occur any time a
competing service provider requests interconnection with a local
exchange network. That is because LECs that own CMRS subsidiaries have
the incentive to engage in such anti-competitive practices in order to
benefit their own CMRS subsidiaries and to protect their local exchange
monopolies from wireless competition. At the same time, LEC control of
bottleneck local exchange facilities, upon which competing CMRS
providers must rely, gives LECs the opportunity to engage in anti-
competitive behavior.
6. Improper cost allocation occurs when a LEC shifts costs from its
CMRS subsidiary to its regulated local exchange service. Cost shifting
has the effect of both subsidizing the LEC's CMRS subsidiary, thus
giving the subsidiary a substantial competitive advantage over non-LEC
affiliated CMRS providers, and of raising the costs borne by the LEC's
captive local exchange ratepayers. See Regulatory Treatment of LEC
Provision of Interexchange Services Originating in the LEC's Local
Exchange Area and Policy and Rules Concerning the Interstate,
Interexchange Marketplace, Second Report and Order in CC Docket No. 96-
149 and Third Report and Order in CC Docket No. 96-61, 62 FR 35974
(Jul. 3, 1997) (Dom/Nondom Order).
7. Requiring LECs to create a separate affiliate for the provision
of CMRS services helps deter the LECs' incentive and ability to engage
in anti-competitive practices and facilitates their detection. Arm's
length transactions between LECs and their CMRS affiliates and the
requirement that agreements be reduced to writing will help the
Commission and competing CMRS providers to detect, and address,
competitive abuses. Ease of detection will, in turn, deter a LEC from
engaging in such abuses in the first place.
8. The Commission observes that in the past structural separation
requirements were applied in the wireless context only to BOC provision
of cellular service. In the Broadband PCS Second Report and Order and
the CMRS Second Report and Order the Commission concluded that
nonstructural accounting safeguards were sufficient to protect against
improper cost allocations and interconnection discrimination by LECs
providing PCS or other CMRS. Not only did the Commission, prior to
divestiture, apply structural separation in the wireless context only
to cellular service, but in formulating rules for cellular service, the
Commission applied the structural separation rules only to the BOCs,
and not to the non-BOC LECs, in the provision of cellular service. The
Commission believes that the rules should treat similar services
consistently and that any structural separation requirements should be
uniform to avoid disparate treatment. Thus, the choices for achieving
regulatory symmetry are either to extend the section 22.903 structural
safeguards for BOC provided cellular service to all LECs and all CMRS
services, or to eliminate section 22.903 in favor of less restrictive
safeguards applicable to the provision of all broadband CMRS.
B. Separate Affiliate Requirements for In-Region Incumbent LEC
Provision of CMRS
9. Anti-competitive interconnection practices, particularly
discriminatory behavior, pose a substantial threat to full and fair
competition in the CMRS marketplace, and all LECs, not just the BOCs,
have the ability and incentive to engage in anti-competitive behavior.
There are ways to lessen the threat of discrimination, predatory price
squeezes, and cost misallocation that are less burdensome than the
requirements currently imposed by section 22.903. For example,
accounting safeguards, section 251 of the Communications Act, 47 U.S.C.
251, and related interconnection rules, and price cap regulation all
serve to protect local exchange ratepayers from bearing the costs and
risks of the telephone companies' other nonregulated activities and
reduce the likelihood that LECs will raise interconnection rates in
order to effect a predatory price squeeze. Such mechanisms do not,
however, eliminate the possibility of interconnection discrimination.
10. In this Report and Order, the Commission requires that
incumbent LECs offering in-region broadband CMRS services do so through
a separate corporate affiliate. The CMRS affiliate must: (1) maintain
separate books of account, and must maintain the books, records, and
accounts in accordance with generally accepted accounting principles;
(2) not jointly own transmission or switching facilities with the
affiliated LEC that the affiliated LEC uses for the provision of local
exchange services in the same in-region market; and (3) acquire any
services from the affiliated LEC on a compensatory arm's length basis,
as required by our affiliate transactions rules. The affiliate will be
subject to the Commission's joint cost and affiliate transaction rules.
Title II common carrier services or services, facilities, or network
elements provided pursuant to sections 251 and 252 that are acquired
from the affiliated LEC must be available to all other carriers,
including CMRS providers, on the same terms and conditions.
11. Applicability of Safeguards to Out-of-Region CMRS Operations.
The Commission's concerns regarding incumbent LEC provision of CMRS
services extend only to the provision of in-region CMRS services
because concerns regarding discrimination in interconnection
arrangements are not present outside of an incumbent LEC's wireline
service territory. In addition, the geographic separation between an
incumbent LEC's in-region service area and out-of-region CMRS mitigates
the potential for undetected improper allocation of costs. With regard
to interconnection, the lack of control of ``bottleneck'' local
facilities means that an incumbent LEC providing CMRS ``out-of-region''
is similar to any other provider of CMRS.
12. The Commission is not requiring any LEC to provide out-of-
region CMRS offerings through a separate affiliate. To the extent there
is potential for incumbent LECs that provide out-of-
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region CMRS to engage in anti-competitive behavior or cost
misallocations such potential is adequately addressed through
accounting requirements and other non-structural safeguards.
13. The Commission also recognizes that CMRS license areas and
incumbent LEC wireline service areas are not generally congruent.
Moreover, non-BOC incumbent LECs, particularly smaller companies, do
not necessarily have distinct service areas but may have discrete
patches of coverage over a large area. With respect to CMRS, on the
other hand, licensees typically have a well-defined geographic service
area (e.g., major trading area (MTA), basic trading area (BTA)) under
our rules. The Commission observes that an incumbent LEC's incentives
and ability to act anti-competitively are significantly attenuated
where the area served by its bottleneck wireline facilities is a small
fraction of the area served by its wireless operations. Indeed, in
situations where there is de minimis overlap between the incumbent's
wireline service area and its CMRS license area, that incumbent LEC is
close to offering ``out-of-region'' services. Therefore, the Commission
is applying ``in-region'' CMRS structural safeguards only to an
incumbent LEC whose wireline service area substantially overlaps its
CMRS license area. The Commission defines ``in-region'' CMRS to be a
CMRS offering where 10 percent or more of the population covered by the
CMRS service area is within the incumbent LEC's wireline service area.
The Commission concludes that the standard 10 percent attribution
criteria should apply with respect to ownership relationships between
an incumbent LEC and an in-region CMRS licensee.
14. Applicability of Safeguards to All Broadband CMRS Services and
All In-Region Incumbent LECs. The separate affiliate rules adopted
herein will apply to all in-region LEC broadband CMRS operations
because all incumbent LECs have the incentive and ability to
discriminate against unaffiliated broadband CMRS providers of every
type--not just cellular operators--where there is sufficient overlap
between the incumbent LEC's wireline service area and the CMRS service
area. Thus, limited safeguards applicable to all in-region incumbent
LECs for all broadband CMRS services are necessary to promote
competitive communications markets and to achieve regulatory symmetry.
15. Increased competition and convergence of services in the CMRS
market has heightened the need for regulatory symmetry among commercial
mobile radio services and among different kinds of CMRS providers. In
applying a separate affiliate requirement to all in-region incumbent
LEC provision of CMRS and not just BOC provision of cellular service,
the Commission is imposing certain costs on, and limiting flexibility
for, independent LECs, which were not previously subject to these
requirements or to any of the other requirements of section 22.903.
Nevertheless, the competitive concerns regarding the ownership and
control of bottleneck facilities are significant so long as there is a
substantial geographic overlap between the incumbent LEC's wireline
local telephone service area and the LEC's CMRS service area. When that
overlap passes the 10 percent overlap threshold, the benefits of
preventing the competitive harm inherent in the incumbent LEC-CMRS
relationship significantly outweigh the costs imposed by safeguards. To
the extent that incumbent LECs are concerned that imposition of a
separate affiliate requirement will impair their ability to offer
integrated wireline and wireless services, the rules permit the
creation of certain bundled and integrated service packages, either
through an incumbent LEC's offering facilities and services to the CMRS
affiliate on nondiscriminatory terms, or solely through the CMRS
affiliate that is able to offer competitive local exchange service.
Absent a separate affiliate requirement, it would be more difficult for
the Commission and competitors to detect and prevent cost
misallocation, discrimination and other anti-competitive behavior by
incumbent LECs. Particularly with respect to interconnection, a
separate affiliate requirement is an effective way to afford the
requisite degree of ``transparency'' to enable competitors and the
Commission to detect discrimination in interconnection. Without a
separate affiliate requirement, non-affiliated CMRS providers would
have greater difficulty determining whether their interconnection
arrangements with the LEC are comparable to those between the LEC and
its CMRS provider.
16. The Commission recognizes that this decision represents a
departure from prior decisions in the Broadband PCS Second Report and
Order and CMRS Second Report and Order where the Commission declined to
impose structural safeguards for broadband PCS providers affiliated
with LECs, and for LECs with CMRS affiliates, respectively. The
Commission similarly declined to impose structural safeguards in the
SMR Wireline Order, in which we permitted wireline carriers to obtain
SMR licenses without restriction. The Commission's decision in this
Report and Order strikes a different balance between the interest in
fostering efficient provision of CMRS and the commitment to prevent
unlawful discrimination and other anti-competitive practices by
incumbent LECs than our decisions in the Broadband PCS Second Report
and Order, CMRS Second Report and Order, SMR Wireline Order, and
Cellular Reconsideration Order. These earlier decisions were not based
on a full analysis of the competitive harms that might result from LEC
provision of SMR, PCS, and cellular, particularly with respect to
discrimination against unaffiliated competitors requesting
interconnection.
17. Basis for Level of Safeguards. These structural safeguards are
substantially similar to those recently adopted with regard to
independent LEC provision of in-region interstate, domestic,
interexchange service, and are similar to the separate affiliate
requirements the Commission adopted in the Competitive Carrier Fifth
Report and Order. These safeguards provide an adequate measure of
transparency between an incumbent LEC's wireline and in-region CMRS
operations so as to prevent improper cost allocations and to ensure
that competing CMRS providers are receiving nondiscriminatory
treatment. The affiliate transactions rules and the requirement of
separate books of account are useful to detect and address potential
misallocation of costs and/or assets between a LEC and its CMRS
affiliate. Any transaction between the incumbent LEC and its CMRS
affiliate becomes subject to the Commission's affiliate transactions
rules, which serve to prevent cost misallocation. The Commission
concludes that, while price cap regulation may reduce the incentive for
misallocation of costs of the nonregulated wireless services, it does
not entirely eliminate that incentive. The Commission's requirement
that any services and facilities provided by the incumbent LEC to its
CMRS affiliate must also be available to independent CMRS operators on
the same prices, terms, and conditions ensures that these transactions
between the incumbent and its CMRS affiliate will be arms-length
transactions. The Commission anticipates that interconnection
arrangements between the incumbent LEC and its CMRS affiliate will be
undertaken pursuant to tariff or through section 251 negotiated or
arbitrated
[[Page 63867]]
interconnection agreements that are available to all CMRS carriers.
18. Differences between In-Region Incumbent LEC-CMRS Safeguards and
Current BOC Cellular Safeguards. In two critical respects, the
requirements adopted herein are less stringent than the section 22.903
restrictions. First, the CMRS separate affiliate does not need to have
separate officers and employees from the incumbent LEC. Second, the
CMRS separate affiliate is permitted to own its own wireline local
exchange facilities, and the CMRS affiliate may operate as a
competitive local exchange carrier in its region. The only restriction
on the wireline LEC activities of the CMRS affiliate is that the
affiliate may not jointly own transmission and switching facilities
that the affiliated LEC uses for the provision of local exchange
service in the region. This safeguard is generally consistent with the
proposal made in the NPRM. This does not preclude the CMRS affiliate
from using the affiliated incumbent LEC's central office, switch, roof
space or other facilities--the incumbent LEC and the CMRS affiliate are
merely precluded from jointly owning such facilities. This does not
preclude the affiliate from jointly using the LEC's landline facilities
to provide integrated service (subject to applicable interconnection
and other regulations). Such transactions between the CMRS affiliate
and the incumbent LEC for joint use would be subject to the affiliate
transaction rules and the requirement that any facilities or services
an incumbent LEC makes available to its CMRS affiliate also be made
available to independent CMRS operators on the same rates, terms, and
conditions.
C. In-Region Safeguards Applicable to Rural and Certain Mid-Sized
Incumbent LECs
19. In the 1996 Act Congress expressed particular concern about
burdens placed on small and rural LECs. In determining where to draw
the appropriate balance between concerns about burdens on LECs other
than the largest LECs, Congress, in section 251 of the Communications
Act, excluded two groups of LECs from the same good faith negotiation,
interconnection, unbundling, resale, network disclosure and physical
collocation requirements imposed on other LECs. First, rural telephone
companies are exempt from the above-referenced section 251 requirements
until such company receives a bona fide request for interconnection and
the state commission acts to terminate the exemption. Second, local
exchange carriers with fewer than two percent of the nation's
subscriber lines installed in the aggregate nationwide may petition a
state commission for suspension or modification of requirements in
section 251 (b) and (c).
20. The Commission finds that it is appropriate and equitable to
exempt rural telephone companies from the separate affiliate
requirement. A competing carrier, interconnected with the rural
telephone company may petition the Commission to remove the exemption,
or the Commission may do so on its own motion, where the rural
telephone company has engaged in anti-competitive conduct, such as
discrimination. We also find, consistent with Congress's treatment of
LECs in section 251, that incumbent LECs with fewer than two percent of
the nation's subscriber lines, may petition the Commission for
suspension or modification of the separate affiliate requirement. The
Commission will grant such a petition where petitioner can show that
suspension or modification of the separate affiliate requirement is
necessary to avoid a significant adverse economic impact on users of
telecommunications services generally, or to avoid a requirement that
would be unduly economically burdensome. In addition, petitioners must
demonstrate that suspension or modification of the requirement is
consistent with the public interest, convenience and necessity. Some
LECs, especially rural telephone companies, might not have the
resources to comply with the separate affiliate requirements and still
provide CMRS. By reducing the regulatory burden on rural LECs the
Commission will encourage the development of wireless services in areas
where otherwise there may be no wireless service at all. Rural
telephone companies may find it economical to use CMRS licenses to
provide fixed wireless services in remote areas as an alternative means
of extending the local exchange network to unserved or hard to serve
areas. Moreover, under section 309(j)(3) of the Communications Act, 47
U.S.C. Sec. 309(j)(3), the Commission is required to promote the
development and rapid deployment of new technologies, products, and
services for benefit of the public, including those residing in rural
areas, and to disseminate licenses among a wide variety of applicants,
including small businesses, rural telephone companies, and businesses
owned by members of minority groups and women. Thus, foregoing a
separate affiliate requirement for rural incumbent LECs and allowing
these carriers to minimize any additional costs and reporting
requirements promotes the goals set by Congress in section 309(j).
21. For similar reasons, the Commission will permit carriers
serving fewer than two percent of the nation's subscriber lines to
petition the Commission for suspension or modification of the separate
affiliate requirement.
D. Joint Marketing
22. Overview. Section 601(d) of the 1996 Act provides:
``Notwithstanding section 22.903 of the Commission's regulations (47
CFR 22.903) or any other Commission regulation, a Bell operating
company or any other company may, except as provided in sections
271(e)(1) and 272 of the Communications Act of 1934 as amended by this
Act as they relate to wireline service, jointly market and sell
commercial mobile services in conjunction with telephone exchange
service, exchange access, intraLATA telecommunications service,
interLATA telecommunications service, and information services.''
23. While section 601(d) negates section 22.903(e), the Commission
retains authority to determine the permissible scope of LEC/CMRS joint
marketing, including the rules to define the relationship between the
affiliated entities engaged in such joint marketing. Section 601(d)
expressly permits a BOC to market jointly and sell CMRS in conjunction
with several types of landline services. Nothing in the plain language
of section 601(d) prohibits or circumscribes the Commission from
imposing conditions on, or defining the permissible scope of, such
joint marketing. The authority to engage in joint marketing and sale of
landline and CMRS services is expressly made subject to the provisions
of section 272, which include separate affiliate requirements. The
Commission requires that all incumbent LECs, other than LECs exempt
from the separate affiliate rules, engaging in joint marketing of local
exchange and exchange access and CMRS services, do so subject to the
affiliate transactions rules (i.e., governing the transaction between
the company's wireline and wireless affiliates). Such CMRS activity
will be classified as nonregulated under the Commission's accounting
rules, and must be conducted on a compensatory, arm's-length basis.
These agreements must be reduced to writing and must be made available
for public inspection upon request. Pursuant to the procedures set
forth in Implementation of the Telecommunications Act of 1996:
Accounting Safeguards Under the Telecommunications Act of 1996, CC
Docket No. 96-150, Report and Order,
[[Page 63868]]
62 FR 2927 (Jan. 21, 1997), concerning making agreements available for
public inspection, the CMRS affiliate, at a minimum, must provide a
detailed written description of the terms and conditions of the
transaction on the Internet within ten days of the transaction through
the company's home page. The broad access of the Internet will increase
the availability and accessibility of this information to interested
parties, while imposing a minimum burden. The Commission also requires
that the description of the terms and conditions of the transaction be
sufficiently detailed to allow evaluation of compliance with the
accounting rules. This information must also be made available for
public inspection at the principal place of business of the parties,
and must include a certification statement identical to the
certification statement currently required to be included with all
Automated Reporting and Management Information Systems (ARMIS) reports.
E. Resale
24. The Commission's analysis with respect to authority to impose
conditions on resale is necessarily quite similar to the analysis of
such authority with respect to joint marketing. Section 601(d) clearly
permits LECs to resell CMRS provided by their wireless affiliates, and
as discussed above, the Commission retains authority to place
conditions on, or define the scope of, resale of wireline and CMRS
services. There is a considerable amount of CMRS spectrum capacity
available in the open market. In addition, broadband CMRS providers
(including LEC affiliates) are prohibited from restricting resale of
their services or discriminating against resellers. In this
environment, there is no reason to be particularly concerned about the
terms and conditions in which the CMRS affiliate makes available CMRS
to its incumbent LEC parent for resale. Therefore, the Commission does
not believe it is appropriate to impose any further regulation upon
incumbent LEC resale of its CMRS affiliate's CMRS, aside from other
Commission rules such the accounting and affiliate transaction rules.
25. With respect to joint billing and collection, which is not
currently prohibited under Sec. 22.903, and other collateral activities
that are currently prohibited under Sec. 22.903, including joint
installation, maintenance, and repair for BOC cellular and wireline
local exchange services, the Commission is not imposing any
restrictions at this time. Carriers must adhere to other applicable
Commission rules such as accounting and affiliate transactions rules.
F. Customer Proprietary Network Information
26. Section 22.903(f) of the Commission's rules, 47 CFR 22.903(f),
states that BOCs must not provide to their cellular separate affiliate
any customer proprietary information, unless such information is
publicly available on the same terms and conditions. The 1996
amendments to the Communications Act address telecommunications
carriers' use, disclosure and permission of access to Customer
Proprietary Network Information (CPNI) in general. Specifically,
section 222(c)(1), 47 U.S.C. 222(c)(1), provides: ``PRIVACY
REQUIREMENTS FOR TELECOMMUNICATIONS CARRIERS.--Except as required by
law or with the approval of the customer, a telecommunications carrier
that receives or obtains customer proprietary network information by
virtue of its provision of a telecommunications service shall only use,
disclose, or permit access to individually identifiable customer
proprietary network information in its provision of (A) the
telecommunications service from which such information is derived, or
(B) services necessary to, or used in, the provision of such
telecommunications service, including the publishing of directories.''
Section 222(c)(2), 47 U.S.C. 222(c)(2), provides that, ``[a]
telecommunications carrier shall disclose customer proprietary network
information, upon affirmative written request by the customer, to any
person designated by the customer.'' Section 222(c)(3), 47 U.S.C.
222(c)(3), allows a local exchange carrier to use, disclose, or permit
access to aggregate customer information for purposes other than those
described in section 222(c)(1) only if the LEC provides such
information to other carriers or persons on reasonable and
nondiscriminatory terms and conditions upon reasonable request.
27. The Commission recently initiated a separate proceeding to
consider the formulation of CPNI regulations pursuant to section 222
that would apply to all telecommunications carriers. See Implementation
of the Telecommunications Act of 1996: Telecommunications Carriers' Use
of Customer Proprietary Network Information and Other Customer
Information, CC Docket No. 96-115, Notice of Proposed Rulemaking, 61 FR
26483 (May 28, 1996) (CPNI NPRM). In the CPNI NPRM, the Commission
sought comment on whether Sec. 22.903(f) is inconsistent with section
222 of the Communications Act. The Commission also sought comment on
whether Sec. 22.903(f) should be eliminated even if the rule is
consistent with section 222, on the grounds that Sec. 22.903(f) is
superfluous in light of section 222.
28. Based on the record, the ability to use CPNI obtained from the
wireline monopoly service for marketing purposes is clearly a
competitive advantage the BOC CMRS providers would be very interested
in utilizing, and other carriers are equally anxious to obtain. So that
the Commission does not prejudge any aspect of the CPNI rulemaking,
however, the appropriate interpretation of the scope of section 222's
CPNI protections is deferred to CC Docket No. 96-115. Accordingly,
pending the decision in the CPNI proceeding, the Commission will not
eliminate Sec. 22.903(f) at this time, nor will Sec. 22.903(f) be
extended to non-BOC LECs and to all CMRS. The Commission will take
appropriate action regarding Sec. 22.903(f) upon resolution of the
section 222 proceeding.
29. As described above, section 222 provides general requirements
regarding a telecommunications carrier's use, disclosure and permission
of access to CPNI. These statutory provisions are self-executing.
Consequently, the requirements of section 222 are applicable to the
provision of CPNI by all incumbent LECs to their CMRS affiliates. (We
note that section 222 applies to all telecommunications carriers and
not just incumbent LECs. For the purposes of this Report and Order,
however, we address only the issue of section 222 as it applies to
incumbent LECs and their CMRS affiliates. This in no way limits the
statutory obligations of other telecommunications carriers under
section 222.) Specifically, we expect all incumbent LECs and their CMRS
affiliates to comply with the limitations on use, disclosure, and
access to CPNI set forth in section 222(c) in their provision of CMRS
and LEC services respectively. Further, we expect BOCs to continue to
comply with Sec. 22.903(f) of the Commission's rules with respect to
BOC provision of CPNI to their cellular affiliates.
G. Network Information Disclosure
30. Section 251(c)(5) of the Communications Act, 47 U.S.C.
251(c)(5), imposes a duty on incumbent LECs to provide reasonable
public notice of changes to the network necessary for the transmission
and routing of services using that LEC's facilities or networks, as
well as any other changes that would affect the
[[Page 63869]]
interoperability of those facilities and networks. The Commission
tentatively concluded that no specific Part 22 rule pertaining to
network information disclosure by the BOCs would be necessary or
appropriate due to the requirement in section 251(c)(5). Incumbent LECs
are required to ``provide public notice of changes in the information
necessary for the transmission and routing of services'' using the
incumbent LEC's CMRS facilities or networks, pursuant to section
251(c)(5). The Communications Act imposes on incumbent LECs the duty to
provide reasonable public notice of changes in the information needed
to transmit and route services using a LEC's facilities or networks.
Incumbent LECs must provide reasonable public notice of any other
changes that would affect the interoperability of those facilities or
networks. Section 51.325(c) of the Commission's rules, 47 CFR
51.325(c), provides that until public notice has been given, an
incumbent LEC may not disclose information about planned network
changes to ``separate affiliates, separated affiliates, or unaffiliated
entities.'' Accordingly, the Commission adopts the conclusion in the
NPRM that no specific Part 22 rule pertaining to network information
disclosure by the BOCs is needed.
VI. Conclusion
31. In this proceeding, the Commission has modified the rules to
reflect the Congressionally mandated goal of consistent treatment of
like services and to afford telecommunications providers flexibility in
structuring service offerings in response to changing consumer demand.
In so doing, the Commission has considered the increasing convergence
of regulated wireline services and nonregulated wireless services and
consumer demand for ``one-stop shopping'' for telecommunications
customers. At the same time, the Commission is mindful of concerns that
incumbent wireline providers, seeking to offer wireless services, may
take advantage of their wireline market power to allocate costs
improperly, discriminate against competitors, or engage in a predatory
price squeeze, all to the detriment of consumers. The Commission
believes that the approach adopted in this Report and Order, including
requiring incumbent LECs to offer in-region broadband CMRS through a
separate CMRS affiliate, appropriately balances the LECs' need for
flexibility in an evolving marketplace with competitors' concerns
regarding the incentive for anti-competitive behavior by incumbent
LECs. Further, the goals of section 22.903 are fulfilled through the
separate CMRS affiliate requirement and through other factors in the
marketplace, including increasing competition and convergence,
accounting safeguards, price cap regulation, new interconnection
requirements and other existing rules. Rural telephone companies are
exempt from the separate affiliate requirement, and companies serving
fewer than two percent of the nation's subscriber lines that seek to
provide broadband CMRS without forming a separate affiliate may
petition the Commission for suspension or modification of that
requirement.
32. The separate affiliate requirement will sunset on January 1,
2002, unless the Commission determines that the competitive conditions
in the local exchange market are such that continuation of these
safeguards is in the public interest.
IV. Procedural Matters and Ordering Clauses
A. Regulatory Flexibility Analysis
As required by the Regulatory Flexibility Act, 5 U.S.C. 603 (RFA),
an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in
the Notice of Proposed Rulemaking (NPRM) in WT Docket No. 96-162. The
Commission sought written comments on the proposals in the NPRM,
including the IRFA. The Commission's Final Regulatory Flexibility
Analysis (FRFA) for the Report and Order conforms to the RFA, as
amended by the Contract With America Advancement Act of 1996.
1. Need for and Purpose of the Action
The Report and Order in this docket sets forth a consistent
regulatory framework for the provision of commercial mobile radio
services (CMRS) by incumbent local exchange carriers (LECs) and their
affiliates. This framework will treat all broadband CMRS, including
cellular services, uniformly and is narrowly tailored to address
specific concerns about potential anti-competitive use of bottleneck
wireline local exchange facilities.
2. Issues Raised in Response to the IRFA
The Commission sought comment generally on the IRFA. No comments
were submitted specifically in response to the IRFA.
3. Description and Estimates of the Number of Small Entities to Which
the Rules Adopted in This Report and Order Will Apply
The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that will be
affected by our rules. The RFA defines the term ``small entity'' as
having the same meaning as the terms ``small business,'' ``small
organization,'' and ``small governmental jurisdiction,'' and the same
meaning as the term ``small business concern'' under the Small Business
Act, unless the Commission has developed one or more definitions that
are appropriate to its activities. Under the Small Business Act, a
``small business concern'' is one which: (1) is independently owned and
operated; (2) is not dominant in its field of operation; and (3) meets
any additional criteria established by the Small Business
Administration (SBA). The SBA has defined a small business for Standard
Industrial Classification (SIC) category 4813 (Telephone
Communications, Except Radiotelephone) to be small entities having
fewer than 1,500 employees. This FRFA discusses generally the total
number of small telephone entities potentially affected by this Report
and Order.
The rules adopted in this Report and Order apply to all incumbent
LECs offering in-region broadband CMRS. Incumbent LEC is defined in
section 251(h)(1) of the Communications Act of 1934, as amended
(Communications Act), 47 U.S.C. 251(h)(1), with respect to an area, as
``the local exchange carrier that (A) on the date of enactment of the
Telecommunications Act of 1996, provided local 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).'' Rural telephone companies
are exempt from the structural safeguards imposed in this Report and
Order; however, a competing carrier, interconnected with the rural
telephone company, may petition the Commission to remove the exemption,
or the Commission may do so on its own motion, where the rural
telephone company has engaged in anti-competitive conduct. In addition,
companies serving fewer than two percent of the nation's subscriber
lines may petition the Commission for
[[Page 63870]]
suspension or modification of the separate affiliate requirement.
Small incumbent LECs subject to these rules are either dominant in
their field of operation or are not independently owned and operated,
and, consistent with our prior practice, they are excluded from the
definition of ``small entity'' and ``small business concerns.'' Out of
an abundance of caution, however, for regulatory flexibility analysis
purposes, we will consider small incumbent LECs within this analysis
and use the term ``small incumbent LECs'' to refer to any incumbent
LECs that arguably might be defined by the SBA as ``small business
concerns.''
The United States Bureau of the Census (``the Census Bureau'')
reports that at the end of 1992 there were 3,497 firms engaged in
providing telephone services, as defined therein, for at least one
year. This number contains a variety of different categories of
carriers, including local exchange carriers, interexchange carriers,
competitive access providers, wireless carriers, operator service
providers, pay telephone operators, and resellers. It seems certain
that some of the 3,497 telephone service firms may not qualify as small
incumbent LECs because they are not incumbent LECs or they are not
independently owned and operated. It seems reasonable to conclude that
fewer than 3,497 telephone service firms would qualify as small
incumbent LECs that may be affected by this Report and Order.
The SBA has developed a definition of small entities for
telecommunications companies other than radiotelephone (Telephone
Communications, Except Radiotelephone). The Census Bureau reports that
there were 2,321 such telephone companies in operation for at least one
year at the end of 1992. According to the SBA's definition, a small
business telephone company other than a radiotelephone company is one
employing fewer than 1,500 persons. Of the 2,321 non-radiotelephone
companies listed by the Census Bureau, 2,295 were reported to have
fewer than 1,000 employees. Thus, at least 2,295 non-radiotelephone
companies might qualify as small entities or small incumbent LECs based
on these statistics. As it seems certain that some of these carriers
are not independently owned and operated, this figure necessarily
overstates the actual number of non-radiotelephone companies that would
qualify as small businesses under the SBA definition. Consequently, the
Commission estimates that using this methodology there are fewer than
2,295 small entity telephone communications companies (other than
radiotelephone companies) that may be affected by the proposed
decisions and rules adopted in this Report and Order.
Neither the Commission nor the SBA has developed a definition of
small providers of local exchange services. The closest applicable
definition under the SBA rules is for telephone communications
companies other than radiotelephone companies. The most reliable source
of information regarding the number of LECs nationwide of which the
Commission is aware appears to be the data collected annually in the
TRS Worksheet. According to the most recent data, 1,347 companies
reported that they were engaged in the provision of local exchange
services. As some of these carriers have more than 1,500 employees, we
are unable at this time to estimate with greater precision the number
of LECs that would qualify as small business concerns under the SBA's
definition. Consequently, the Commission estimates that there are fewer
than 1,347 small incumbent LECs that may be affected by the decisions
and rules adopted in this Report and Order.
4. Reporting, Recordkeeping, and Other Compliance Requirements
The rule adopted in this Report and Order requires incumbent LECs
offering in-region broadband CMRS services to do so through a separate
corporate affiliate. The CMRS affiliate must:
(1) Maintain separate books of account, and must maintain the
books, records, and accounts in accordance with generally accepted
accounting principals (GAAP);
(2) Not jointly own transmission or switching facilities with the
affiliated LEC that the affiliated LEC uses for the provision of local
exchange services in the same in-region market; and
(3) Acquire any services from the affiliated LEC on a compensatory
arm's length basis, as required by our affiliate transactions rules.
The affiliate will be subject to the Commission's joint cost and
affiliate transaction rules. Title II common carrier services or
services, facilities, or network elements provided pursuant to sections
251 and 252 that are acquired from the affiliated LEC must be available
to all other carriers, including CMRS providers, on the same terms and
conditions.
This rule may require incumbent LECs to have additional reporting
and recordkeeping with respect to transactions with the CMRS affiliate.
Affiliate transactions. Some incumbent LECs may now be required to
comply with the affiliate transactions rules in Part 32 of the
Commission's rules if they offer broadband CMRS through a separate
affiliate and conduct transactions with the CMRS affiliate. Prior to
the adoption of the rule in this Report and Order, the Commission
required the BOCs to establish a separate affiliate for provision of
cellular services, otherwise a separate affiliate was not required for
LEC provision of broadband CMRS. Therefore, LECs that previously did
not have a separate affiliate for broadband CMRS, and thus did not have
affiliate transactions, will now have to establish a separate affiliate
and comply with the Commission's affiliate transactions rules.
Joint marketing agreements. The rule adopted in this Report and
Order requires all incumbent LECs and the CMRS affiliates engaging in
joint marketing of local exchange and exchange access and CMRS to
reduce all such agreements to writing and make the agreements available
for public inspection upon request at the principal place of business
of the affiliate and the incumbent LEC. The documentation also must
include a certification statement identical to the certification
statement currently required to be included with all Automated
Reporting and Management Information Systems (ARMIS) reports. The
affiliate must also provide a detailed written description of the terms
and conditions of the transaction on the Internet within ten days of
the transaction through the affiliate's home page.
5. Steps Taken To Minimize Burdens on Small Entities and Significant
Alternatives Considered
The Commission sought to minimize burdens on small entities by
providing an exemption for rural telephone companies. Rural telephone
companies are exempted from the separate affiliate requirement;
however, a competing local exchange carrier, interconnected with the
rural telephone company, may petition the Commission to remove the
exemption, or the Commission may do so on its own motion, if the rural
telephone company has engaged in anti-competitive conduct.
The Commission sought to minimize burdens on small entities by
permitting incumbent LECs with fewer than two percent of the nation's
subscriber lines to petition the Commission for suspension or
modification of the separate affiliate requirement. The Commission will
grant such a petition if the incumbent LEC can demonstrate that
suspension or modification of the separate affiliate requirement is
necessary to avoid a significant adverse
[[Page 63871]]
economic impact on users of telecommunications services generally or to
avoid a requirement that would be unduly burdensome, and consistent
with the public interest, convenience, and necessity.
The Commission considered and rejected the proposals in the NPRM:
(1) to retain, but sunset, section 22.903 of the Commission's rules, or
(2) to require all Tier 1 (or Class A) LECs providing in-region
broadband CMRS to file a safeguards plan. Neither of the proposals in
the NPRM would impose additional regulation on Class B LECs. The
Commission instead decided to impose structural separation regulations
on all incumbent LECs providing broadband CMRS because anti-competitive
interconnection practices, particularly discriminatory behavior, pose a
substantial threat to full and fair competition in the CMRS
marketplace, and all incumbent LECs have the ability and incentive to
engage in anti-competitive behavior. The Commission observed that
increased competition in the CMRS market and the possibility that CMRS
in the future may substitute for wireline local loops may actually
increase incumbent LECs' incentive to discriminate against unaffiliated
CMRS providers. The Commission concluded that it was appropriate to
apply structural safeguards to all incumbent LECs. As described above,
however, the Commission has considered, and taken measures to address,
the additional burdens these requirements might have on rural telephone
companies and on those entities serving two percent of the nations'
subscriber lines.
6. Report to Congress
The Commission shall send a copy of this Final Regulatory
Flexibility Analysis with this Report and Order in a report to Congress
pursuant to section 251 of the Small Business Regulatory Enforcement
Fairness Act of 1996, 5 U.S.C. Sec. 801(a)(1)(A).
B. Paperwork Reduction Act
This Report and Order contains a modified information collection.
The Commission, as part of its continuing effort to reduce paperwork
burdens, has submitted this to Office of Management and Budget (OMB)
for emergency approval under the Paperwork Reduction Act of 1995, Pub.
L. No. 104-13.
Paperwork Reduction Act Comment Filing Procedures. Written comments
by the public on the proposed and/or modified information collections
are due on or before January 2, 1998. Written comments must be
submitted by the Office of Management and Budget (OMB) on the proposed
and/or modified information collections on or before February 2, 1998.
In addition to filing comments with the Secretary, a copy of any
comments on the information collections contained herein should be
submitted to Judy Boley, Federal Communications Commission, Room 234,
1919 M Street, N.W., Washington, DC 20554, or via the Internet to
jboley@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.
Further Information: For additional information concerning the
information collections contained in this Notice of Proposed Rulemaking
contact Dorothy Conway at (202) 418-7349 or via the Internet at
dconway@fcc.gov.
Supplementary Information
Title: Amendment of the Commission's Rules to Establish Competitive
Service Safeguards for Local Exchange Carrier Provision of Commercial
Mobile Radio Services and Implementation of section 601(d) of the
Telecommunications Act of 1996.
Type of Review: Revision of currently approved Collection.
Respondents:
Number of Respondents: We estimate up to 19.
Estimated Time Per Response: The average burden on the applicant is
6056 hours for the information necessary to maintain books of account
of incumbent LEC's in-region CMRS affiliate separate from LEC's local
exchange and other activities. The average burden on the applicant is
72 hours to conduct arms length transactions between the incumbent LEC
and the CMRS affiliate. The average burden on the affiliate is 1 hour
for making the written contracts available for public inspection at
their principal place of business and posting a written description of
the terms and conditions of the transaction in the Internet.
Total burden = 116,456 hours,
We estimate that up to five respondents may have to estabish
separate affiliates and thus would incur start-up costs.
Estimated Cost Per Respondent: $200,600.
Total Respondent Costs: $1,003,000.
Needs and Uses: The Commission imposes the recordkeeping collection
to ensure that incumbent LECs providing broadband CMRS in-region
through a separate affiliate are in compliance with the Communications
Act, as amended, and with Commission policies and regulations.
C. Authority
33. The above action is authorized under the Communications Act,
4(i), 303(r), 309(c), 309(j), and 332, 47 U.S.C. 154(i), 303(r),
309(c), 309(j), and 332, as amended.
D. Ordering Clauses
34. Accordingly, it is ordered that, pursuant to the authority of
sections 4(i), 303(g), 303(r), and 332(a) of the Communications Act of
1934, as amended, 47 U.S.C. 154(i), 303(g), 303(r), and 332(a), Part 22
of the Commission's Rules, 47 CFR Parts 20 and 22, is amended in the
rule changes.
35. It is further ordered that the rules adopted in this Report and
Order will be effective February 11, 1998.
List of Subjects in 47 CFR Parts 20 and 22
Communication common carriers, Reporting and recordkeeping
requirements.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Rule Changes
Title 47 of the Code of Federal Regulations part 20 is amended as
follows:
PART 20--COMMERCIAL MOBILE RADIO SERVICES
1. The authority citation for part 20 continues to read as follows:
Authority: Secs. 4, 251-52, 303, and 332, 48 Stat. 1066, 1062,
as amended; 47 U.S.C. 154, 251-52, 303, and 332 unless otherwise
noted.
2. Section 20.20 is added to read as follows:
Sec. 20.20 Conditions applicable to provision of CMRS service by
incumbent Local Exchange Carriers.
(a) Separate affiliate. An incumbent LEC providing in-region
broadband CMRS shall provide such services through an affiliate that
satisfies the following requirements:
(1) The affiliate shall maintain separate books of account from its
affiliated incumbent LEC. Nothing in this section requires the
affiliate to maintain separate books of account that comply with part
32 of this chapter;
(2) The affiliate shall not jointly own transmission or switching
facilities with its affiliated incumbent LEC that the affiliated
incumbent LEC uses for the provision of local exchange service in the
same in-region market. Nothing in this section prohibits the affiliate
from sharing personnel or other resources or
[[Page 63872]]
assets with its affiliated incumbent LEC; and
(3) The affiliate shall acquire any services from its affiliated
incumbent LEC for which the affiliated incumbent LEC is required to
file a tariff at tariffed rates, terms, and conditions. Other
transactions between the affiliate and the incumbent LEC for services
that are not acquired pursuant to tariff must be reduced to writing and
must be made on a compensatory, arm's length basis. All transactions
between the incumbent LEC and the affiliate are subject to part 32 of
this chapter, including the affiliate transaction rules. Nothing in
this section shall prohibit the affiliate from acquiring any unbundled
network elements or exchange services for the provision of a
telecommunications service from its affiliated incumbent LEC, subject
to the same terms and conditions as provided in an agreement approved
under section 252 of the Communications Act of 1934, as amended.
(b) Independence. The affiliate required in paragraph (a) of this
section shall be a separate legal entity from its affiliated incumbent
LEC. The affiliate may be staffed by personnel of its affiliated
incumbent LEC, housed in existing offices of its affiliated incumbent
LEC, and use its affiliated incumbent LEC's marketing and other
services, subject to paragraphs (a)(3) and (c) of this section.
(c) Joint marketing. Joint marketing of local exchange and exchange
access service and CMRS services by an incumbent LEC shall be subject
to part 32 of this chapter. In addition, such agreements between the
affiliate and the incumbent LEC must be reduced to writing and made
available for public inspection upon request at the principle place of
business of the affiliate and the incumbent LEC. The documentation must
include a certification statement identical to the certification
statement currently required to be included with all Automated
Reporting and Management Information Systems (ARMIS) reports. The
affiliate must also provide a detailed written description of the terms
and conditions of the transaction on the Internet within 10 days of the
transaction through the affiliate's home page.
(d) Exceptions. (1) Rural telephone companies. Rural telephone
companies are exempted from the requirements set forth in paragraphs
(a), (b) and (c) of this section. A competing telecommunications
carrier, interconnected with the rural telephone company, however, may
petition the FCC to remove the exemption, or the FCC may do so on its
own motion, where the rural telephone company has engaged in
anticompetitive conduct.
(2) Incumbent LECs with fewer than 2 percent of subscriber lines.
Incumbent LECs with fewer than 2 percent of the nation's subscriber
lines installed in the aggregate nationwide may petition the FCC for
suspension or modification of the requirements set forth in paragraphs
(a), (b) and (c) of this section. The FCC will grant such a petition
where the incumbent LEC demonstrates that suspension or modification of
the separate affiliate requirement is
(i) Necessary to avoid a significant adverse economic impact on
users of telecommunications services generally or to avoid a
requirement that would be unduly economically burdensome, and
(ii) Consistent with the public interest, convenience, and
necessity.
(e) Definitions. Terms used in this section have the following
meanings:
Affiliate. ``Affiliate'' means a person that (directly or
indirectly) owns or controls, is owned or controlled by, or is under
common ownership with, another person. For purposes of this section,
the term ``own'' means to own and equity interest (or the equivalent
thereof) of more than 10 percent.
Broadband Commercial Mobile Radio Service (Broadband CMRS). For the
purposes of this section, ``broadband CMRS'' means Domestic Public
Cellular Radio Telecommunications Service (part 22, subpart H of this
chapter), Specialized Mobile Radio (part 90, subpart S of this
chapter), and broadband Personal Communications Services (part 24,
subpart E of this chapter).
Incumbent Local Exchange Carrier (Incumbent LEC). ``Incumbent LEC''
has the same meaning as that term is defined in Sec. 51.5 of this
chapter.
In-region. For the purposes of this section, an incumbent LEC's
broadband CMRS service is considered ``in-region'' when 10 percent or
more of the population covered by the CMRS affiliate's authorized
service area, as determined by the 1990 census figures, is within the
affiliated incumbent LEC's wireline service area.
Rural Telephone Company. ``Rural Telephone Company'' has the same
meaning as that term is defined in Sec. 51.5 of this chapter.
(f) Sunset. This section will no longer be effective after January
1, 2002.
Title 47 of the Code of Federal Regulations part 22, subpart H is
amended as follows:
Subpart H--Cellular Radiotelephone Service
3. The authority citation for part 22 continues to read as follows:
Authority: 47 U.S.C. 154, 303, unless otherwise noted.
4. Section 22.903 is revised to read as follows:
Sec. 22.903 Conditions applicable to former Bell Operating Companies.
Ameritech Corporation, Bell Atlantic Corporation, BellSouth
Corporation, NYNEX Corporation, Pacific Telesis Group, Southwestern
Bell Corporation, U.S. West Inc., their successors in interest and
affiliated entities (BOCs) may engage in the provision of cellular
service only in accordance with the conditions in this section and
Sec. 20.20 of this chapter, unless otherwise authorized by the FCC.
BOCs may, subject to other provisions of law, have a controlling or
lessor interest in or be under common control with separate
corporations that provide cellular service only under the following
conditions:
(a) Through (e) [Reserved].
(f) Proprietary information. BOCs must not provide to any such
separate corporation any customer proprietary information, unless such
information is publicly available on the same terms and conditions.
(g) Reserved.
[FR Doc. 97-31713 Filed 12-2-97; 8:45 am]
BILLING CODE 6712-01-P
