Table of Contents
XII. EXEMPTIONS, SUSPENSIONS, AND MODIFICATIONS
OF SECTION 251 REQUIREMENTS
A. BACKGROUND
1249. Section 251(f)(1) grants rural telephone companies an exemption from section
251(c), until the rural telephone company has received a bona fide request for
interconnection, services, or network elements, and the state commission determines that
the exemption should be terminated.(1) Section 251(f)(2)
allows LECs with fewer than two percent of the nation's subscriber lines to petition a
state commission for a suspension or modification of any requirements of sections 251(b)
and (c). Section 251(f) imposes a duty on state commissions to make determinations under
this section, and establishes the criteria and procedures for the state commissions to
follow. In the NPRM, we tentatively concluded that state commissions have the sole
authority to make determinations under section 251(f). In addition, we sought comment on
whether we should issue guidelines to assist state commissions when they make
determinations regarding exemptions, suspensions, or modifications under section 251(f).
1250. Although subsections (f)(1) and (f)(2) both address the circumstances under which
an incumbent LEC could be relieved of duties otherwise imposed by section 251, subsection
251(f)(2) also applies to non-incumbent LECs. The standard for determining whether to
exempt a carrier under subsection 251(f)(1) is different from the standard for determining
whether to grant a suspension or modification under subsection (f)(2). Subsection
251(f)(1)(B) requires state commissions to determine that terminating a rural exemption is
consistent with the universal service provisions of the 1996 Act.(2)
Subsection 251(f)(2)(A)(i) requires state commissions to grant a suspension or
modification if it is necessary to "avoid a significant adverse economic impact on
users of telecommunications services generally," and subsection 251(f)(2)(B) requires
a suspension or modification to be "consistent with the public interest, convenience,
and necessity."(3) Although we address these two
subsections together, we highlight instances in which we believe that differences in
statutory language require different treatment by state commissions.
1251. We discuss below issues raised by the commenters, and establish some rules
regarding the requirements of section 251(f) that we believe will assist state commissions
as they carry out their duties under section 251(f). For the most part, however, we expect
that states will interpret the requirements of section 251(f) through rulemaking and
adjudicative proceedings. We may in the future initiate a Notice of Proposed Rulemaking on
certain additional issues raised by section 251(f) if it appears that further action by
the Commission is warranted.
B. NEED FOR NATIONAL RULES
1. Comments
1252. Most state commissions(4) and some other parties(5) assert that states should have exclusive responsibility
for the guidelines and determinations made under this section. Several commenters contend
that any guidelines the Commission might issue would be useless, because generalized
national guidelines could not take into account the variations among states and among
individual LECs.(6) For example, the Minnesota Independent
Coalition argues that the additional grant of authority to states under section 214(e)
confirms that state commissions have the sole authority to make determinations under
section 251(f).(7) A number of small telephone companies
and associations of LECs advocate mandatory national rules regarding implementation of
section 251(f). They assert that such rules would ensure that states carry out this
provision in accordance with congressional intent.(8) Some
commenters favor a middle ground, claiming that non-mandatory guidelines from the
Commission would be helpful, but that mandatory requirements would conflict with the Act's
delegation to the states to make determinations under section 251(f).(9)
2. Discussion
1253. We agree with parties, including small incumbent LECs, who argue that determining
whether a telephone company is entitled, pursuant to section 251(f), to exemption,
suspension, or modification of the requirements of section 251 generally should be left to
state commissions.(10) Requests made pursuant to section
251(f) seek to carve out exceptions to application of the section 251 rules that we are
establishing in this proceeding. We find that Congress intended the section 251
requirements, and the Commission's implementing rules thereunder, to apply to all carriers
throughout the country, except in the circumstances delineated in the statute. We find
convincing assertions that it would be an overwhelming task at this time for the
Commission to try to anticipate and establish national rules for determining when our
generally-applicable rules should not be imposed upon carriers. Therefore, we
establish in this Order a very limited set of rules that will assist states in their
application of the provisions in section 251(f).
1254. Many parties have proposed varying interpretations of the provisions in section
251(f), and have asked for Commission determination or a statement of agreement. Because
it appears that many parties welcome some guidance from the Commission, we briefly set
forth our interpretation of certain provisions of section 251(f). Such statements will
assist parties and, in particular, state commissions that must make determinations
regarding requests for exemption, suspension, and modification.
C. APPLICATION OF SECTION 251(f)
1. Comments
1255. Some commenters urge the Commission to require states to grant exemptions,
suspensions, or modifications only on a case-by-case basis, and only to the extent
warranted by the particular circumstances. They ask the Commission to prohibit states from
granting broad-scale or generalized exemptions, suspensions or modifications.(11) AT&T argues that, to ensure that states do not allow
LECs to avoid the regulatory and policy framework that Congress has mandated, the
Commission should clarify that states must narrowly tailor suspensions and modifications
to protect against specific, identifiable harm.(12)
Telecommunications Carriers for Competition and GCI argue that section 251(f) allows
states to delay imposing the requirements under section 251(b) and (c), but it does not
allow states to protect LECs from those requirements indefinitely.(13)
In response, Rural Tel. Coalition and SNET state that, while the term
"suspensions" could be interpreted as allowing a time delay in implementation,
the addition of the term "modifications" allows states to act more broadly.(14) SNET favors allowing the states "broad discretion
to change the nature of any requirement imposed by subsections (b) and (c)."(15) USTA argues that states should not be permitted to
eliminate all exemptions for all carriers.(16)
1256. A number of parties allege that the Commission should encourage or require states
to establish a legal presumption that the LEC seeking an exemption, suspension, or
modification must prove to the state commission that such request is merited under the
criteria set forth in section 251(f). AT&T argues that a carrier petitioning for
suspension or modification under section 251(f)(2) should be obliged to demonstrate that
"the application to it of the [s]ection 251(b) or (c) obligations that are the
subject of its petition would inflict substantial harm on the LEC and customers in its
territories that would not be inflicted on larger LECs and customers in their
territories."(17) SCBA asserts that the burden should
be upon the incumbent LEC, which has strong disincentives to promote competitive entry.(18) Local exchange carriers contend, on the other hand, that
the party making a request under section 251(b) or (c) should have to prove that an
exemption, suspension, or modification is not justified. For example, TCA, Inc. argues
that, because of the high cost of providing telephone service in rural areas, competing
carriers should be required to prove that competition will benefit a given rural area.(19) Bay Springs, et al. and Bogue, Kansas argue
that rural carriers should benefit from a presumption that they continue to qualify for
the exemption in section 251(f)(1).(20) SNET suggests
that, if a LEC makes a prima facie case in its petition for suspension or
modification, the state should automatically grant a temporary suspension of section
251(b) and (c) obligations, as allowed by section 251(f)(2).(21)
1257. USTA, some rural LECs, and several other parties advocate that the Commission
clarify what constitutes a bona fide request under section 251(f)(1).(22)
USTA recommends that a bona fide request must include, at a minimum: (1) a request for
service to begin within one year from the date of the request, with a minimum one-year
service period; (2) identification of the points where interconnection is sought,
specification of network components and quantities needed, and the date when
interconnection is desired; and (3) an indication that the requesting carrier is willing
to agree to pay charges sufficient to compensate the LEC for all costs incurred in
fulfilling the terms of the interconnection agreement as part of the agreement. USTA also
contends that the states should be allowed to mandate longer minimum service periods and
require competitive providers to post bonds or submit deposits to ensure that a rural
telephone company does not bear the cost of interconnection.(23)
Anchorage Telephone Utility claims that simply responding to requests for interconnection
imposes a tremendous burden and expense on rural telephone companies, and that rural LECs
should not have to respond to requests that do not meet minimum criteria.(24)
Several parties state that they do not believe that generalized form letter requests
should be considered a bona fide request.(25)
1258. Other commenters either favor a broader definition of a bona fide request or
oppose federal standards entirely.(26) NCTA and GCI argue
that a request for interconnection should be presumed bona fide until a rural telephone
company shows that it is not. They object to a bona fide request requirement, such as the
one proposed by USTA, that includes burdensome "pre-filing" requirements as a
condition for state review under section 251(f).(27)
1259. Subsection 251(f)(2) applies to LECs "with fewer than 2 percent of the
Nation's subscriber lines installed in the aggregate nationwide."(28)
Several parties suggest that the Commission clarify which carriers meet the numerical
standard.(29) AT&T and a number of other parties argue
that the 2 percent should be applied at the holding company level in order to ensure that
no BOC operating company can apply for a suspension or modification under this subsection.(30) Some parties further question whether Tier 1 LECs should
be allowed to petition for suspension or modification under subsection (f)(2).(31) Other parties argue that the two percent statutory
cut-off is not a loophole and that the statutory standard should not be altered by the
Commission to exclude Tier 1 LECs.(32) PacTel suggests
that the standard should be applied at the operating company level because section
251(f)(2) by its terms applies to "local exchange carrier[s]" not local exchange
carriers "and their affiliates."(33)
1260. Some parties recommend that the Commission offer guidance on how to determine
whether a request for exemption, modification, or suspension should be granted.(34) For example, sections 251(f)(1) and (f)(2) both include
consideration of "technical feasibility" in deciding whether to grant an
exemption, suspension, or modification. Some parties urge the Commission to clarify
whether the standard for determining technical feasibility for purposes of section 251(f)
is different than the technical feasibility standard set forth in sections 251(b) and (c).(35) Sections 251(f)(1) and (f)(2) require the states to
consider whether a request is "unduly economically burdensome."(36)
Generally, comments from rural LECs and others contend that smaller LECs cannot afford to
hire staff to respond to requests, or expend funds for additional facilities or
operational systems without jeopardizing their financial stability.(37)
In contrast, other parties argue that LECs should not be relieved of any duties otherwise
imposed by sections 251(b) and (c) merely because they would require the expenditure of
funds.(38)
1261. Some incumbent LECs recommend that carriers that compete with rural LECs should
be required to assume some of the universal service obligations of rural carriers.(39) They argue that, without such safeguards, competing LECs
will enter rural markets and take the incumbent LECs' profitable customers. USTA argues
that state commissions should be encouraged to grant waivers until universal service
issues are resolved.(40) Commenters also propose varying
interpretations of what constitutes "significant adverse impact on users."(41) USTA proposes that the definition include any request
that would cause a LEC to "have difficulty raising sufficient investment capital, and
where the remaining customers . . . would likely bear an increase in rates or a reduction
in service to cover a shortfall or subsidy to a new entrant."(42)
TLD proposes that the Commission establish a numerical benchmark, for example, that more
than 50 percent of the users would suffer a rate increase of at least 20 percent before a
request would be considered in violation of subsection (f)(2)(A)(i).(43)
3. Discussion
1262. Congress generally intended the requirements in section 251 to apply to carriers
across the country, but Congress recognized that in some cases, it might be unfair or
inappropriate to apply all of the requirements to smaller or rural telephone companies.(44) We believe that Congress intended exemption, suspension,
or modification of the section 251 requirements to be the exception rather than the rule,
and to apply only to the extent, and for the period of time, that policy considerations
justify such exemption, suspension, or modification. We believe that Congress did not
intend to insulate smaller or rural LECs from competition, and thereby prevent subscribers
in those communities from obtaining the benefits of competitive local exchange service.
Thus, we believe that, in order to justify continued exemption once a bona fide request
has been made, or to justify suspension, or modification of the Commission's section 251
requirements, a LEC must offer evidence that application of those requirements would be
likely to cause undue economic burdens beyond the economic burdens typically associated
with efficient competitive entry. State commissions will need to decide on a case-by-case
basis whether such a showing has been made.
1263. Given the pro-competitive focus of the 1996 Act, we find that rural LECs must
prove to the state commission that they should continue to be exempt pursuant to section
251(f)(1) from requirements of section 251(c), once a bona-fide request has been made, and
that smaller companies must prove to the state commission, pursuant to section 251(f)(2),
that a suspension or modification of requirements of sections 251(b) or (c) should be
granted. We conclude that it is appropriate to place the burden of proof on the party
seeking relief from otherwise applicable requirements. Moreover, the party seeking
exemption, suspension, or modification is in control of the relevant information necessary
for the state to make a determination regarding the request. A rural company that falls
within section 251(f)(1) is not required to make any showing until it receives a bona fide
request for interconnection, services, or network elements. We decline at this time to
establish guidelines regarding what constitutes a bona fide request. We also decline in
this Report and Order to adopt national rules or guidelines regarding other aspects of
section 251(f). For example, we will not rule in this proceeding on the universal service
duties of requesting carriers that seek to compete with rural LECs. We may offer guidance
on these matters at a later date, if we believe it is necessary and appropriate.
1264. We find that Congress intended section 251(f)(2) only to apply to companies that,
at the holding company level, have fewer than two percent of subscriber lines nationwide.
This is consistent with the fact that the standard is based on the percent of subscriber
lines that a carrier has "in the aggregate nationwide."(45)
Moreover, any other interpretation would permit almost any company, including Bell
Atlantic, Ameritech, and GTE affiliates, to take advantage of the suspension and
modification provisions in section 251(f)(2). Such a conclusion would render the two
percent limitation virtually meaningless.
1265. We note that some parties recommend that, in adopting rules pursuant to section 251, the Commission provide different treatment or impose different obligations on smaller or rural carriers.(46) We conclude that section 251(f) adequately provides for varying treatment for smaller or rural LECs where such variances are justified in particular instances. We conclude that there is no basis in the record for adopting other special rules, or limiting the application of our rules to smaller or rural LECs.
1. 3060 A rural telephone company is defined as a local exchange carrier operating entity to the extent that such entity "(A) provides common carrier service to any local exchange carrier study area that does not include either-- (i) any incorporated place of 10,000 inhabitants or more, or any part thereof . . .; or (ii) any territory, incorporated or unincorporated, included in an urbanized area . . .; (B) provides telephone exchange service, including exchange access, to fewer than 50,000 access lines; (C) provides telephone exchange service to any local exchange carrier study area with fewer than 100,000 access lines; or (D) has less than 15 percent of its access lines in communities of more than 50,000 on the date of enactment of the Telecommunications Act of 1996." 47 U.S.C. 153(37).
2. 3061 The provision states, "the State commission shall terminate the exemption if the request . . . is consistent with section 254 (other than subsections (b)(7) and (c)(1)(D) thereof)." 47 U.S.C. 251(f)(1)(B).
3. 3062 47 U.S.C. 251(f)(2).
4. 3063 See, e.g., Alaska Commission comments at 6; Alabama Commission comments at 33-34; California Commission comments at 46; Idaho Commission comments at 14; Illinois Commission comments at 84; Louisiana Commission comments at 22-23; Ohio Commission comments at 80; Oregon Commission comments at 31; Pennsylvania Commission comments at 42; Texas Commission comments at 34; Wyoming Commission comments at 38-39.
5. 3064 Ad Hoc Telecommunications Users Committee comments at 11; ALLTEL comments at 16; Citizens Utilities comments at 34; Colorado Ind. Tel. Ass'n comments at 5-6; GVNW comments at 42; GTE comments at 80; Home Tel. comments at 1; Illinois Ind. Tel. Ass'n comments at 7; Minnesota Ind. Coalition comments at 14; Ohio Consumers' Counsel reply at 25-26; PacTel comments at 99; Puerto Rico Tel. reply at 16-17; Rural Tel. Coalition comments at 11-15.
6. 3065 Minnesota Ind. Coalition comments at 14; Western Alliance comments at 7.
7. 3066 Minnesota Ind. Coalition comments at 14.
8. 3067 Anchorage Tel.Utility comments at 2-4; Bay Springs, et al. comments at 10; Centennial Cellular Corp. comments at 12; Alaska Tel. Ass'n comments at 6; Matanuska Tel. Ass'n comments at 5; USTA comments at 87-93.
9. 3068 Kentucky Commission comments at 7; Anchorage Tel. Utility comments at 4. Several parties argue that any federal action should not be mandatory. Ohio Commission comments at 80; Citizens Utilities comments at 33; Colorado Ind. Tel. Ass'n comments at 6; Rural Tel. Coalition reply at 18-19.
10. 3069 See, e.g., Minnesota Ind. Coalition comments at 14; Rural Tel. Coalition comments at 11.
11. 3070 See, e.g., Centennial Cellular Corp. comments at 16; NCTA comments at 64; Vanguard reply at 21-22.
12. 3071 AT&T comments at 90-93; accord Ohio Consumers' Counsel reply at 26.
13. 3072 GCI comments at 16-19; TCC comments at 51-53, reply at 28.
14. 3073 Rural Tel. Coalition reply at 19-20; SNET comments at 36-37.
15. 3074 SNET comments at 36-37.
16. 3075 USTA comments at 87; Continental comments at 17 (citing actions of New Hampshire and Connecticut Commissions); Rural Tel. Coalition reply at 25.
17. 3076 AT&T comments at 92-93; contra Cincinnati Bell reply at 14; PacTel reply at 41; SNET reply at 8; USTA reply at 35-36.
18. 3077 SCBA comments at 17.
19. 3078 TCA comments at 10.
20. 3079 Bay Springs, et al. comments at 11; Bogue, Kansas comments at 8; contra Classic Tel. reply at 9.
21. 3080 SNET comments at 37; see also Anchorage Tel. Utility comments at 3-4; Cincinnati Bell comments at 41-42; USTA comments at 91-93.
22. 3081 Anchorage Tel. Utility comments at 5; Bay Springs, et al. at 10; Bogue, Kansas comments at 7; NECA comments at 12; TDS reply at 5-6; USTA comments at 87-88; see also Kentucky Commission comments at 7.
23. 3082 USTA comments at 87-88; accord Anchorage Tel. Utility comments at 6-7 (carriers that ultimately do not order the items identified in a request for interconnection, services, or network elements should be required to reimburse the incumbent LEC for the costs of responding to such request); Matanuska Tel. Ass'n comments at 5.
24. 3083 Anchorage Tel. Utility comments at 6 (reporting the receipt of two letters "purporting to request interconnection." "One is a 1-page letter that simply asserts a need for interconnection. The other is an 8-page, single-spaced letter that demands detailed technical, operational and cost information on practically every facet of Anchorage Tel. Utility's local exchange service, without providing any indication of what the requesting carrier actually plans, needs or wants"); accord NECA reply at 10-11 (any bona fide request standard should permit LECs to recover costs of responding to requests and enable LECs to avoid unnecessary costs in responding to requests); TDS reply at 5-6.
25. 3084 TDS reply at 5; Anchorage Tel. Utility comments at 6; Rural Tel. Coalition reply at 24-25.
26. 3085 See, e.g., Louisiana Commission comments at 22-23 (opposing any attempt by the Commission to define a standard for bona fide requests); see also Western Alliance comments at 7 n.16.
27. 3086 NCTA comments at 26-27; GCI reply at 17-18; but see USTA reply at 37 (disagreeing that its proposal would constitute "pre-filing" requirements).
28. 3087 47 U.S.C. 251(f)(2).
29. 3088 BellSouth comments at 76; Ohio Consumers' Counsel comments at 47-48.
30. 3089 AT&T comments at 90-93; Lincoln Tel. reply at 9-10; GCI reply at 17; TCC reply at 28; Ohio Consumers' Counsel argues that this interpretation is sound because section 251(f)(2) discusses the number of lines "in the aggregate nationwide," and individual operating companies do not operate on a nationwide scale. Ohio Consumers' Counsel reply at 26.
31. 3090 AT&T comments at 92; TLD comments at 6-7; Centennial Cellular Corp. comments at 12-15.
32. 3091 Alaska Tel. Ass'n comments at 6; Cincinnati Bell comments at 40, reply at 13; Lincoln Tel. comments at 10-11.
33. 3092 PacTel reply at 40-41.
34. 3093 See, e.g., NCTA comments at 63-67 (urging a very limited construction of the exemption, suspension and modification provisions); contra Western Alliance reply at 7; Rural Tel. Coalition reply at 21-22.
35. 3094 See, e.g., Bay Springs, et al. comments at 11; Lincoln Tel. comments at 23-24; SNET comments at 35; USTA comments at 92; Rural Tel. Coalition reply at 22-23.
36. 3095 47 U.S.C. 251(f).
37. 3096 A number of parties argue that, if smaller and rural LECs cannot recover their total costs, including any required investments and costs associated with developing rate levels and modifying support systems, the request should be deemed unduly economically burdensome. See, e.g., USTA comments at 92; SNET comments at 36; TLD comments at 2; Lincoln Tel. comments at 23-25; TLD comments at 11-13.
38. 3097 See, e.g., NCTA comments at 64 n.218.
39. 3098 Bay Springs, et al. comments at 12; TLD comments at 5; accord NECA comments at 11.
40. 3099 USTA comments at 91; but see NCTA reply at 25-26.
41. 3100 47 U.S.C. 251(f)(2)(A)(i).
42. 3101 USTA comments at 92.
43. 3102 TLD comments at 11.
44. 3103 47 U.S.C. 251(f).
45. 3104 47 U.S.C. 251(f)(2) (emphasis added).
46. 3105 For example, the Rural Tel. Coalition argues that interconnection and collocation points should be set in a flexible manner to take into account size and volume differences among carriers. Rural Tel. Coalition comments at 31.
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First Created February 15, 1999
Last Modified February 15, 1999