Table of Contents
XIV. PROVISIONS OF SECTION 252
A. Section 252(e)(5)
1. Background
1269. Section 252(e)(5) directs the Commission to assume responsibility for any
proceeding or matter in which the state commission "fails to act to carry out its
responsibility" under section 252.(1) In the NPRM, we
asked whether the Commission should establish rules and regulations necessary to carry out
our obligation under section 252(e)(5).(2) In addition, we
sought comment on whether in this proceeding we should establish regulations necessary and
appropriate to carry out our obligations under section 252(e)(5). In particular, we sought
comment on what constitutes notice of failure to act, what procedures, if any, we should
establish for parties to notify the Commission, and what are the circumstances under which
a state commission should be deemed to have "fail[ed] to act" under section
252(e)(5).(3)
1270. Section 252(e)(4) provides that, if the state commission does not approve or
reject (1) a negotiated agreement within 90 days, or (2) an arbitrated agreement within 30
days, from the time the agreement is submitted by the parties, the agreement shall be
"deemed approved."(4) We sought comment on the
relationship between this provision and our obligation to assume responsibility under
section 252(e)(5). We also sought comment on whether the Commission, once it assumes the
responsibility of the state commission, is bound by all of the laws and standards that
would have applied to the state commission, and whether the Commission is authorized to
determine whether an agreement is consistent with applicable state law as the state
commission would have been under section 252(e)(3).(5) In
addition, we sought comment on whether, once the Commission assumes responsibility under
section 252(e)(5), it retains jurisdiction, or whether that matter or proceeding
subsequently should be remanded to the state.
1271. Finally, we sought comment on whether we should adopt, in this proceeding, some
standards or methods for arbitrating disputes in the event we must conduct an arbitration
under section 252(e)(5). We noted some of the benefits and drawbacks of both "final
offer" arbitration and open-ended arbitration, and asked for comment on both.
2. Comments
1272. The majority of the parties that commented on this issue assert that the
Commission should establish guidelines under which it will carry out its responsibilities
under section section 252(e)(5).(6) The Illinois
Commission, for example, argues that regulations are needed in order to avoid
jurisdictional disputes that may arise.(7) Some parties, on
the other hand, argue that it is not critical for the Commission at this time to develop
rules governing the arbitration process.(8) The
Pennsylvania Commission, for example, argues that such rules should be adopted in this
proceeding only if the Commission perceives a real possibility that it will be asked in
the near future to arbitrate an interconnection agreement.(9)
1273. A broad range of parties comment on what constitutes a "failure to act"
and whether the Commission should establish a definition and procedures for interested
parties to notify us if a state commission fails to act.(10)
The Illinois Commission, for example, argues that, upon receipt of a petition to mediate
or arbitrate, or a BOC statement of generally available terms, the state commission should
issue and serve upon the Commission a notice of its intent to act. This will put the
Commission and interested parties on notice that the state commission intends to act.(11) Some state commissions argue that "failure to
act" occurs only if the state commission fails to respond to a request for mediation
or arbitration, or fails to issue an arbitration decision within nine months after the
incumbent LEC receives a request for interconnection under section 252.(12)
1274. Other parties contend that failure to act should mean that a state commission has
not taken any steps to act upon a request for arbitration, or has not taken any steps to
approve an arbitrated agreement within the time set out in section 252(e)(4).(13) Jones argues that a failure to act occurs where a state
fails to respond to a request for arbitration or fails to render a decision on time in the
arbitration proceeding.(14) Ohio Consumers' Counsel
contends that failure to carry out a state's responsibility means more than mere inaction,
and that, for example, willfully disregarding the standards in section 252(e)(2) for
approving or disapproving agreements might also "constitute a failure to act to carry
out its responsibility" under section 252.(15) USTA
argues that, where there has been no agreement and the state fails to act, the Commission
must step in and, in some instances, the Commission may need to step in to arbitrate or
mediate before an agreement has been reached.(16)
1275. Regarding the relationship between sections 252(e)(5) and 252(e)(4), most
commenters assert that, if a state fails to approve a negotiated agreement within 90 days,
or an arbitrated agreement within 30 days, the agreement will be deemed approved, and no
Commission action is required.(17) These parties contend
that approval or disapproval of negotiated or arbitrated agreements are not reviewable by
the Commission, but that aggrieved parties may seek relief in the appropriate federal
district court.
1276. A number of commenters believe that it is important that procedures be in place
for interested parties to notify the Commission if a state fails to act. These parties
argue that notice of failure to act should be in writing, and should contain the relevant
factual circumstances including the provision of the statute under which the state
allegedly has failed to act.(18) They contend that notice
should be given to allow interested parties and the state adequate time to respond. MCI
asserts that existing Commission procedures are adequate. MCI argues that any notice of an
alleged state commission failure to act should set forth relevant facts and the Commission
should place the item on public notice.(19)
1277. A majority of the commenting parties argue that, if the Commission assumes the
responsibility of a state commission, it should be bound by laws and standards that would
have applied to the state commission.(20) These parties
allege that this approach would produce consistent results, and that Congress did not
intend to create another forum with a separate set of rules. Time Warner, on the other
hand, argues against the Commission being bound by state law.(21)
1278. Parties disagree over whether authority would revert back to the states once the
Commission assumes a state commission's responsibility. A number of state commissions
argue that the Commission does not retain jurisdiction; it only assumes jurisdiction over
a particular proceeding or matter but does not substitute for the state commission on an
ongoing basis.(22) The District of Columbia Commission
asserts that, at any time, the state should be able to petition the Commission to
reconsider its decision to preempt, and such petitions should be granted upon a reasonable
assurance the state intends to carry out its obligations.(23)
A number of parties contend that, once the Commission assumes jurisdiction over a
proceeding or matter, it should retain jurisdiction.(24)
Teleport, for example, argues that the Commission "should not risk returning
jurisdiction to a state that has demonstrated an ineptitude for implementing
interconnection agreements."(25) Pacific Telesis and
Cable and Wireless argue that any agreement arbitrated by the Commission must be submitted
to the state for approval.(26)
1279. The vast majority of commenters recommend that the Commission adopt standards for
arbitrating disputes in the event that it assumes responsibility under section 252(e)(5).(27) These parties assert that sufficiently detailed rules
should ensure fair and expeditious handling of arbitrations. A few of the commenters favor
national rules governing state arbitration proceedings.(28)
SCBA, for example, favors national standards requiring state commissions to use
abbreviated, lower cost arbitration proceedings for small cable operators.(29)
The majority of commenters, however, argue against national rules that would govern state
arbitration proceedings.(30)
1280. There is also significant disagreement regarding whether final-offer arbitration
should be the arbitration model adopted by the Commission in the event the Commission must
conduct the arbitration itself. A broad range of parties argue that final offer
arbitration would result in reasonable recommendations to the arbitrator.(31)
Vanguard argues that the "final offer" method of arbitration should permit
post-offer negotiation by the parties and allow the parties to tailor counter-proposals.(32) Under this approach, the Commission would permit
negotiation to continue after arbitration offers are exchanged in order to promote
negotiated settlements.(33)
1281. Many competitors oppose a "final offer" arbitration standard.(34) Sprint, for example, argues that "final-offer" arbitration works well when there is a single, narrowly defined issue on the table, but, where there are numerous complex technical and economic issues, confronting the arbitrator with an "either/or" choice leaves insufficient flexibility to achieve a result that comports with section 251.(35) In addition, Sprint asserts that, because arbitration proceedings have a public interest component that sets them apart from mere private disputes, neither party's offer might serve the public interest.(36) Some parties recommend an "open-ended" arbitration system,(37) while California is in favor of a hybrid between the two. (38)
1282. SBC contends that Congress did not intend for arbitration to be binding to the extent that parties are not legally obligated to enter into an agreement after the arbitrator issues a decision.(39) SBC argues that parties are bound by the arbitrator's decision only if they decide to enter into an agreement. Vanguard responds that SBC's proposal is contrary to the statute, which does not give parties the opportunity to reject the results of arbitration and which does not provide for de novo review.(40)
3. Discussion
1283. After careful review of the record, we are convinced that establishing
regulations to carry out our obligations under section 252(e)(5) will provide for an
efficient and fair transition from state jurisdiction should we have to assume the
responsibility of the state commission under Section 252(e)(5). The rules we establish in
this section with respect to arbitration under section 252 apply only to instances where
the Commission assumes jurisdiction under section 252(e)(5); we do not purport to advise
states on how to conduct arbitration when the Commission has not assumed jurisdiction. The
rules we establish will give notice of the procedures and standards the Commission would
apply to mediation and arbitration, avoid delay if the Commission had to arbitrate
disputes in the near future, and may also offer guidance the states may, at their
discretion, wish to consider in implementing their own mediation and arbitration
procedures and standards. We decline to adopt national rules governing state arbitration
procedures. We believe the states are in a better position to develop mediation and
arbitration rules that support the objectives of the 1996 Act. States may develop specific
measures that address the concerns of small entities and small incumbent LECs
participating in mediation or arbitration.
1284. The rules we adopt herein are minimum, interim procedures. Adopting minimum interim procedures now will allow the Commission to learn from the initial experiences and gain a better understanding of what types of situations may arise that require Commission action. We note that the Commission is not required to adopt procedures and standards for mediation and arbitration within the six-month statutory deadline and that, by adopting minimum interim procedures, the Commission can better direct its resources to more pressing matters that fall within the six-month statutory deadline.
1285. Regarding what constitutes a state's "failure to act to carry out its
responsibility under" section 252,(41) the Commission
was presented with numerous options. The Commission will not take an expansive view of
what constitutes a state's "failure to act." Instead, the Commission interprets
"failure to act" to mean a state's failure to complete its duties in a timely
manner. This would limit Commission action to instances where a state commission fails to
respond, within a reasonable time, to a request for mediation or arbitration, or fails to
complete arbitration within the time limits of section 252(b)(4)(C).(42)
The Commission will place the burden of proof on parties alleging that the state
commission has failed to respond to a request for mediation or arbitration within a
reasonable time frame. We note the work done by states to date in putting in place
procedures and regulations governing arbitration and believe that states will meet their
responsibilities and obligations under the 1996 Act.(43)
1286. We agree with the majority of commenters that argue that our authority to assume
the state commission's responsibilities is not triggered when an agreement is "deemed
approved" under section 252(e)(4) due to state commission inaction. Section 252(e)(4)
provides for automatic approval if a state fails to approve or reject a negotiated or
arbitrated agreement within 90 days or 30 days, respectively. Rules of statutory
construction require us to give meaning to all provisions and to read provisions
consistently, where it is possible to do so. We thus conclude that the most reasonable
interpretation is that automatic approval under section 252(e)(4) does not constitute a
failure to act.
1287. We also believe that we should establish interim procedures for interested
parties to notify the Commission that a state commission has failed to act under section
252. We believe that parties should be required to file a detailed written petition,
backed by affidavit, that will, at the outset, give the Commission a better understanding
of the issues involved and the action, or lack of action, taken by the state commission.
Allowing less detailed notification increases the likelihood that frivolous requests will
be made. With less detailed notification, the Commission's investigations would be broader
and more burdensome. A detailed written petition will facilitate a decision about whether
the Commission should assume jurisdiction based on section 252(e)(5).
1288. The moving party should submit a petition to the Secretary of the Commission
stating with specificity the basis for the petition and any information that supports the
claim that the state has failed to act, including, but not limited to the applicable
provision(s) of the Act and the factual circumstances which support a finding that a state
has failed to act. The moving party must ensure that the applicable state commission and
the parties to the proceeding or matter for which preemption is sought are served with the
petition on the same date the party serves the petition on the Commission. The petition
will serve as notice to parties to the state proceeding and the state commission who will
have fifteen days from the date the petition is filed with the Commission to comment.
Under section 252(e)(5), the Commission must "issue an order preempting the state
commission's jurisdiction of that proceeding or matter" no later than 90 days from
the date the petition is filed.(44) If the Commission
takes notice, as section 252(e)(5) permits, that a state commission has failed to act, it
will, on its own motion, issue a public notice and provide fifteen days for interested
parties to submit comment on whether the Commission should assume responsibility under
section 252(e)(5).
1289. If the Commission assumes authority under section 252(e)(5), the Commission must
also decide whether it retains authority for that proceeding or matter. We agree with
those parties who argue that, once the Commission assumes jurisdiction of a proceeding or
matter, it retains authority for that proceeding or matter. For example, if the Commission
obtains jurisdiction after a state commission fails to respond to a request for
arbitration, the Commission maintains jurisdiction over the arbitration proceeding.
Therefore, once the proceeding is before the Commission, any and all further action
regarding that proceeding or matter will be before the Commission. We note that there is
no provision in the Act for returning jurisdiction to the state commission; moreover, the
Commission, with significant knowledge of the issues at hand, would be in the best
position efficiently to conclude the matter. Thus, as both a legal and policy matter, we
believe that the Commission retains jurisdiction over any matter and proceeding for which
it assumes responsibility under Section 252(e)(5).
1290. We reject the suggestion by some parties that, once the Commission has mediated
or arbitrated an agreement, the agreement must be submitted to the state commission for
approval under state law. We note that section 252(e)(5) provides for the Commission to
"assume the responsibility of the State commission under this section with respect to
the proceeding or matter and act for the State commission."(45)
This includes acting for the state commission under section 252(e)(1), which calls for
state commission approval of "any interconnection agreement adopted by negotiation or
arbitration."(46) We, therefore, do not read section
252(e)(1) or any other provision as calling for state commission approval or rejection of
agreements mediated or arbitrated by the Commission. In those instances where a state has
failed to act, the Commission acts on behalf of the state and no additional state approval
is required.
1291. Requirements set forth in section 252(c) for arbitrated agreements would apply to
arbitration conducted by the Commission. We see no reason, and no party has suggested a
policy or legal basis, for not applying such standards when the Commission conducts
arbitration. Thus, arbitrated agreements must: (1) meet the requirements of section 251,
including regulations prescribed by the Commission pursuant to section 251; (2) establish
any rates for interconnection, services, or network elements according to section 252(d);
and (3) provide a schedule for implementation of the terms and conditions by the parties
to the agreement.(47) We reject the suggestion made by
some parties that, if the Commission steps into the state commission role, it is bound by
state laws and standards that would have applied to the state commission. While states are
permitted to establish and enforce other requirements, these are not binding standards for
arbitrated agreements under section 252(c). Moreover, the resources and time potentially
needed to review adequately and interpret the different laws and standards of each state
render this suggestion untenable. Finally, we conclude that it would not make sense to
apply to the Commission the timing requirements that section 252(b)(4)(c) imposes on state
commissions. The Commission, in some instances, might not even assume jurisdiction until
nine months (or more) have lapsed since a section 251 request was initiated.
1292. Based on the comments of the parties, we conclude that a "final offer"
method of arbitration, similar to the approach recommended by Vanguard, would best serve
the public interest.(48) Under "final offer"
arbitration, each party to the negotiation proposes its best and final offer and the
arbitrator determines which of the proposals become binding. The arbitrator would have the
option of choosing one of the two proposals in its entirety, or the arbitrator could
decide on an issue-by-issue basis. Each final offer must: (1) meet the requirements of
section 251, including the Commission's rules thereunder; (2) establish rates for
interconnection, services, or network elements according to section 252(d); and (3)
provide a schedule for implementation of the terms and conditions by the parties to the
agreement.(49) If a final offer submitted by one or more
parties fails to comply with these requirements, the arbitrator would have discretion to
take steps designed to result in an arbitrated agreement that satisfies the requirements
of section 252(c), including requiring parties to submit new final offers within a time
frame specified by the arbitrator, or adopting a result not submitted by any party that is
consistent with the requirements in section 252(c).
1293. The parties could continue to negotiate an agreement after they submit their
proposals and before the arbitrator makes a decision. Under this approach, the Commission
will encourage negotiations, with or without the assistance of the arbitrator, to continue
after arbitration offers are exchanged. Parties are not precluded from submitting
subsequent final offers following such negotiations. We believe that permitting post-offer
negotiations will increase the likelihood that the parties will reach consensus on
unresolved issues. In addition, permitting post-offer negotiations will increase
flexibility and will allow parties to tailor counter-proposals after arbitration offers
are exchanged. To provide an opportunity for final post-offer negotiation, the arbitrator
will not issue a decision for at least 15 days after submission of the final offers by the
parties. In addition, the offers must be consistent with section 251, including the
regulations prescribed by the Commission. We reject SBC's suggestion that an arbitrated
agreement is not binding on the parties. Absent mutual agreement to different terms, the
decision reached through arbitration is binding. We conclude that it would be inconsistent
with the 1996 Act to require incumbent LECs to provide interconnection, services, and
unbundled elements, impose a duty to negotiate in good faith and a right to arbitration,
and then permit incumbent LECs to not be bound by an arbitrated determination. We also
believe that, although competing providers do not have an affirmative duty to enter into
agreements under section 252, a requesting carrier might face penalties if, by refusing to
enter into an arbitrated agreement, that carrier is deemed to have failed to negotiate in
good faith.(50) Such penalties should serve as a
disincentive for requesting carriers to force an incumbent LEC to expand resources in
arbitration if the requesting carrier does not intend to abide by the arbitrated decision.
1294. Adopting a "final offer" method of arbitration and encouraging
negotiations to continue allows us to maintain the benefits of final offer arbitration,
giving parties an incentive to submit realistic "final offers," while providing
additional flexibility for the parties to agree to a resolution that best serves their
interests. To the extent that these procedures encourage parties to negotiate voluntarily
rather than arbitrate, such negotiated agreements will be subject to review pursuant to
section 252(e)(2)(A), which would allow the Commission to reject agreements if they are
inconsistent with the public interest. This approach also addresses the argument that
under "final offer" arbitration neither offer might best serve the public
interest, because it allows the parties to obtain feedback from the arbitrator on public
interest matters.
1295. We believe that the arbitration proceedings generally should be limited to the
requesting carrier and the incumbent local exchange provider. This will allow for a more
efficient process and minimize the amount of time needed to resolve disputed issues. We
believe that opening the process to all third parties would be unwieldy and would delay
the process. We will, however, consider requests by third parties to submit written
pleadings. This may, in some instances, allow interested parties to identify important
public policy issues not raised by parties to an arbitration.
B. Requirements of Section 252(i)
1. Background
1296. Section 251 requires that interconnection, unbundled element, and collocation
rates be "nondiscriminatory" and prohibits the imposition of
"discriminatory conditions" on the resale of telecommunications services.(51) 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."(52) In the NPRM, we
expressed the view that section 252(i) appears to be a primary tool of the 1996 Act for
preventing discrimination under section 251, and we sought comment on whether we should
adopt national standards for resolving disputes under section 252(i) in the event that we
must assume the state's responsibilities pursuant to section 252(e)(5). In addition,
because we may need to interpret section 252(i) if we assume the state commission's
responsibilities, we sought comment on the meaning of section 252(i).
1297. We also sought comment in the NPRM on whether section 252(i) requires that only
similarly-situated carriers may enforce against incumbent LECs provisions of agreements
filed with state commissions, and, if so, how "similarly-situated carrier"
should be defined. In particular, we asked whether section 252(i) requires that the same
rates for interconnection must be offered to all requesting carriers regardless of the
cost of serving that carrier, or whether it would be consistent with the statute to permit
different rates if the costs of serving carriers are different. We also asked whether the
section can be interpreted to allow incumbent LECs to make available interconnection,
services, or network elements only to requesting carriers serving a comparable class of
subscribers or providing the same service (i.e., local, access, or interexchange)
as the original parties to the agreement. In the NPRM, we tentatively concluded that the
language of the statute appears to preclude such differential treatment among carriers.
1298. Additionally, we sought comment in the NPRM on whether section 252(i) permits
requesting telecommunications carriers to choose among individual provisions of
publicly-filed interconnection agreements or whether they must subscribe to an entire
agreement. We also sought comment regarding what time period an agreement must remain
available for use by other requesting telecommunications carriers.
2. Comments
1299. Two state commissions and SBC believe that implementation of section 252(i)
should be left to the states,(53) while Time Warner favors
national standards.(54) CompTel argues that we should
adopt expedited procedures whereby carriers may complain to the Commission when incumbent
LECs refuse to make agreements available to them in alleged violation of section 252(i).(55)
1300. New entrants generally support the view that section 252(i) does not require that
requesting carriers seeking to avail themselves of a prior negotiated or arbitrated
agreement be "similarly situated" with respect to the original party who
negotiated the agreement.(56) They argue that such a
limitation would be contrary to Congress's intent,(57) or
that it could invite perpetual dispute over which carriers are similarly situated and what
cost differences are real and material.(58) Winstar
questions whether states could implement a "similarly situated" carrier
requirement without unintentionally creating a vehicle for incumbent LECs to discriminate
against competitive entrants.(59) LDDS specifically agrees
with the NPRM's tentative conclusion that section 252(i) prohibits incumbent LECs from
limiting the availability of agreements to a carrier based on the class of customers the
carrier serves or the type of service it provides.(60) The
Telecommunications Resellers Ass'n believes section 252(i) prohibits discrimination on the
basis of the cost of serving a carrier, and claims its members have been, and continue to
be, denied preferred service offerings and price points in the interexchange market under
the guise of a "similarly situated" criterion.(61)
1301. WinStar suggests we assign to the incumbent LEC a heavy burden of proving that a
new carrier is substantially different from the original parties to an agreement, and that
we require the incumbent LEC to provide service to the new entrant according to the
individual terms of an agreement while the dispute is pending. WinStar asserts that,
absent such requirements, the incumbent LEC could use alleged technological differences to
create barriers to entry.(62)
1302. GTE, PacTel, USTA, BellSouth, and the Ohio Consumers' Counsel believe the statute
contemplates drawing distinctions between carriers,(63)
such as, for instance, where the incumbent LEC faces different costs in serving different
carriers.(64) According to GTE and PacTel, carriers must
be "similarly situated" because the subsequent carrier's technical requirements
may be incompatible with the incumbent LEC's network.(65)
GTE asserts that providing service under an agreement to carriers that are not similarly
situated with respect to the technical feasibility and costs of interconnection and
transport and termination would be inconsistent with the 1996 Act's requirements that
interconnection be technically feasible and offered at cost-based rates.(66)
1303. Incumbent LECs also generally oppose the view that section 252(i) permits
competitive carriers to choose among provisions in a publicly-filed interconnection
agreement.(67) For instance, BellSouth contends that the
text of section 252(i) supports its view, and that the legislative history reference cited
in the NPRM casts no light on Congress' intent because the House did not recede to the
Senate's language.(68) GTE urges the Commission to treat
the availability of agreements under section 252(i) the same way it treats AT&T Tariff
12 and Contract Tariff offerings.(69) Ameritech, GTE and
SBC also contend that section 252(i)'s requirement that a requesting carrier take service
upon the same terms and conditions as the original carrier precludes unbundled
availability.(70) USTA argues unbundled availability of
agreement provisions will skew the individualized nature of negotiations, magnify the
importance of each individual term of an agreement, and encourage incumbent LECs to offer
only standardized, relatively high-cost packages.(71)
1304. New entrants, joined by the Ohio Commission, support the view that the statute
makes individual provisions of agreements available to carriers.(72)
They argue that this comports with the statutory language and legislative history,(73) and that requiring requesting carriers to take an entire
agreement will cause delay(74) and foster discrimination
by enabling incumbent LECs to fashion agreements so that no subsequent carrier may benefit
from them.(75) MCI argues that, although this approach may
make incumbents less likely to compromise, the effect on negotiations will be small.(76) The SBA asserts allowing entrants to utilize individual
provisions of agreements will lead to increased competition, which, in turn, will drive
prices towards the most economically efficient levels, and that these benefits outweigh
any additional burden that such unbundling may place upon incumbents in negotiating
agreements.(77) SBA further argues that failure to permit
unbundling of agreements would deter entry by smaller competitors that are unable or
unwilling to pay for all of the elements contained in a an agreement negotiated by a
larger competitor.(78) CompTel asks that we rule that an
incumbent LEC may not insist upon the observance of any term or condition that is not
reasonable in the context of the requesting carrier.(79)
1305. ALTS suggests that we permit unbundled availability to the level of the
individual paragraphs and sections of section 251, with the exception of network elements
provided pursuant to section 251(c)(3), which ALTS believes should be provided
individually to non-parties on a disaggregated basis.(80)
ALTS argues such a rule would reduce concern that unbundled availability would slow the
negotiation process by magnifying the importance of individual terms.(81)
Jones Intercable requests that we clarify that the statute permits so-called "most
favored nation" provisions, which allow a new entrant with an interconnection
agreement in place with an incumbent LEC to modify such an agreement to substitute the
preferable terms included in a later agreement that the incumbent LEC enters with a
subsequent new entrant.(82)
1306. Parties' suggestions for the length of time agreements should remain on file
pursuant to section 252(i) range from a reasonable period,(83)
until changes in the network adopted for independent reasons make it no longer feasible to
provide interconnection under an agreement,(84) to as long
as the agreement remains in operation.(85) Out of concern
that incumbent LECs might force competitors to renegotiate agreements at unreasonably
short intervals, the SBA argues that there should be no arbitrary limit on the duration of
agreements.(86)
1307. Several new entrants also raise issues concerning the filing of agreements
pursuant to section 252(i). Jones Intercable urges us to require that incumbent LECs file
copies of all negotiated agreements at the FCC, as well as at state commissions.(87)
1308. AT&T and the Telecommunications Resellers Ass'n believe section 252(i) requires that interconnection agreements negotiated prior to enactment of the 1996 Act be available for use by requesting telecommunications carriers,(88) while F. Williamson opposes this view.(89) MFS, NCTA and WinStar urge us to find that section 252(i) applies to interconnection agreements between adjacent, non-competing LECs.(90) BellSouth is opposed.(91)
3. Discussion
1309. We conclude that it will assist the carriers in determining their respective
obligations, facilitate the development of a single, uniform legal interpretation of the
Act's requirements and promote a procompetitive, national policy framework to adopt
national standards to implement section 252(i). Issues such as whether section 252(i)
allows requesting telecommunications carriers to choose among provisions of prior
interconnection agreements or requires them to accept an entire agreement are issues of
law that should not vary from state to state and are also central to the statutory scheme
and to the emergence of competition. National standards will help state commissions and
parties to expedite the resolution of disputes under section 252(i).
1310. We conclude that the text of section 252(i) supports requesting carriers' ability
to choose among individual provisions contained in publicly filed interconnection
agreements. As we note above, section 252(i) provides that a "local exchange carrier
shall make available any interconnection, service, or network element provided under an
agreement . . . to which it is a party to any other requesting telecommunications carrier
upon the same terms and conditions as those provided in the agreement."(92) Thus, Congress drew a distinction between "any
interconnection, service, or network element[s] provided under an agreement," which
the statute lists individually, and agreements in their totality. Requiring requesting
carriers to elect entire agreements, instead of the provisions relating to specific
elements, would render as mere surplusage the words "any interconnection, service, or
network element."
1311. We disagree with BellSouth regarding the significance of the legislative history
quoted in the NPRM. The Conference Committee amended section 251(g), S. 652's predecessor
to section 252(i), and changed "service, facility, or function" to
"interconnection, service, or element." The House of Representatives' bill did
not contain a version of section 252(i).(93) We find that
section 252(i)'s language does not differ substantively from the text of the Senate bill's
section 251(g). The Senate Commerce Committee stated its provision, section 251(g), was
intended to "make interconnection more efficient by making available to other
carriers the individual elements of agreements that have been previously negotiated."(94)
1312. We also find that practical concerns support our interpretation. As observed by
AT&T and others, failure to make provisions available on an unbundled basis could
encourage an incumbent LEC to insert into its agreement onerous terms for a service or
element that the original carrier does not need, in order to discourage subsequent
carriers from making a request under that agreement. In addition, we observe that
different new entrants face differing technical constraints and costs. Since few new
entrants would be willing to elect an entire agreement that would not reflect their costs
and the specific technical characteristics of their networks or would not be consistent
with their business plans, requiring requesting carriers to elect an entire agreement
would appear to eviscerate the obligation Congress imposed in section 252(i).
1313. We also choose this interpretation despite concerns voiced by some incumbent LECs
that allowing carriers to choose among provisions will harm the public interest by slowing
down the process of reaching interconnection agreements by making incumbent LECs less
likely to compromise. In reaching this conclusion, we observe that new entrants, who stand
to lose the most if negotiations are delayed, generally do not argue that concern over
slow negotiations would outweigh the benefits they would derive from being able to choose
among terms of publicly filed agreements. Unbundled access to agreement provisions will
enable smaller carriers who lack bargaining power to obtain favorable terms and conditions
-- including rates -- negotiated by large IXCs, and speed the emergence of robust
competition.(95)
1314. We conclude that incumbent LECs must permit third parties to obtain access under
section 252(i) to any individual interconnection, service, or network element arrangement
on the same terms and conditions as those contained in any agreement approved under
section 252. We find that this level of disaggregation is mandated by section 252(a)(1),
which requires that agreements shall include "charges for interconnection and each
service or network element included in the agreement," and section 251(c)(3), which
requires incumbent LECs to provide "non-discriminatory access to network elements on
an unbundled basis." In practical terms, this means that a carrier may obtain access
to individual elements such as unbundled loops at the same rates, terms, and conditions as
contained in any approved agreement. We agree with ALTS that such a view comports with the
statute, and lessens the concerns of carriers that argue that unbundled availability will
delay negotiations.
1315. We reject GTE's argument that section 252(i)'s statement, that requesting
carriers must receive individual elements "upon the same terms and conditions"
as those contained in the agreement, precludes unbundled availability of individual
elements. GTE's argument fails to give meaning to Congress's distinction between
agreements and elements, and ignores the 1996 Act's prime goals of nondiscriminatory
treatment of carriers and promotion of competition. Instead, we conclude that the
"same terms and conditions" that an incumbent LEC may insist upon shall relate
solely to the individual interconnection, service, or element being requested under
section 252(i). For instance, where an incumbent LEC and a new entrant have agreed upon a
rate contained in a five-year agreement, section 252(i) does not necessarily entitle a
third party to receive the same rate for a three-year commitment. Similarly, that one
carrier has negotiated a volume discount on loops does not automatically entitle a third
party to obtain the same rate for a smaller amount of loops. Given the primary purpose of
section 252(i) of preventing discrimination, we require incumbent LECs seeking to require
a third party agree to certain terms and conditions to exercise its rights under section
252(i) to prove to the state commission that the terms and conditions were legitimately
related to the purchase of the individual element being sought. By contrast, incumbent
LECs may not require as a "same" term or condition the new entrant's agreement
to terms and conditions relating to other interconnection, services, or elements in the
approved agreement. Moreover, incumbent LEC efforts to restrict availability of
interconnection, services, or elements under section 252(i) also must comply with the 1996
Act's general nondiscrimination provisions. See Section VII.d.3.
1316. We further conclude that section 252(i) entitles all parties with interconnection
agreements to "most favored nation" status regardless of whether they include
"most favored nation" clauses in their agreements. Congress's command under
section 252(i) was that parties may utilize any individual interconnection, service, or
element in publicly filed interconnection agreements and incorporate it into the terms of
their interconnection agreement. This means that any requesting carrier may avail itself
of more advantageous terms and conditions subsequently negotiated by any other carrier for
the same individual interconnection, service, or element once the subsequent agreement is
filed with, and approved by, the state commission. We believe the approach we adopt will
maximize competition by ensuring that carriers' obtain access to terms and elements on a
nondiscriminatory basis.
1317. We find that section 252(i) permits differential treatment based on the LEC's
cost of serving a carrier. We further observe that section 252(d)(1) requires that
unbundled element rates be cost-based, and sections 251(c)(2) and (c)(3) require incumbent
LECs to provide only technically-feasible forms of interconnection and access to unbundled
elements, while section 252(i) mandates that the availability of publicly-filed agreements
be limited to carriers willing to accept the same terms and conditions as the carrier who
negotiated the original agreement with the incumbent LEC. We conclude that these
provisions, read together, require that publicly-filed agreements be made available only
to carriers who cause the incumbent LEC to incur no greater costs than the carrier who
originally negotiated the agreement, so as to result in an interconnection arrangement
that is both cost-based and technically feasible. However, as discussed in Section VII
regarding discrimination, where an incumbent LEC proposes to treat one carrier differently
than another, the incumbent LEC must prove to the state commission that that differential
treatment is justified based on the cost to the LEC of providing that element to the
carrier.
1318. We conclude, however, that section 252(i) does not permit LECs to limit the
availability of any individual interconnection, service, or network element only to those
requesting carriers serving a comparable class of subscribers or providing the same
service (i.e., local, access, or interexchange) as the original party to the
agreement. In our view, the class of customers, or the type of service provided by a
carrier, does not necessarily bear a direct relationship with the costs incurred by the
LEC to interconnect with that carrier or on whether interconnection is technically
feasible. Accordingly, we conclude that an interpretation of section 252(i) that attempts
to limit availability by class of customer served or type of service provided would be at
odds with the language and structure of the statute, which contains no such limitation.
1319. We agree with those commenters who suggest that agreements remain available for
use by requesting carriers for a reasonable amount of time. Such a rule addresses
incumbent LEC concerns over technical incompatibility, while at the same time providing
requesting carriers with a reasonable time during which they may benefit from previously
negotiated agreements. In addition, this approach makes economic sense, since the pricing
and network configuration choices are likely to change over time, as several commenters
have observed. Given this reality, it would not make sense to permit a subsequent carrier
to impose an agreement or term upon an incumbent LEC if the technical requirements of
implementing that agreement or term have changed.
1320. We observe that section 252(h) expressly provides that state commissions maintain
for public inspection copies of interconnection agreements approved under section 252(f).
We therefore decline Jones Intercable's suggestion that we require carriers to file
agreements at the FCC, in addition to section 252(h)'s filing requirement. However, when
the Commission performs the state's responsibilities under section 252(e)(5), parties must
file their agreements with the Commission, as well as with the state commission.(96)
1321. We further conclude that a carrier seeking interconnection, network elements, or
services pursuant to section 252(i) need not make such requests pursuant to the procedures
for initial section 251 requests, but shall be permitted to obtain its statutory rights on
an expedited basis. We find that this interpretation furthers Congress's stated goals of
opening up local markets to competition and permitting interconnection on just,
reasonable, and nondiscriminatory terms, and that we should adopt measures that ensure
competition occurs as quickly and efficiently as possible. We conclude that the
nondiscriminatory, pro-competition purpose of section 252(i) would be defeated were
requesting carriers required to undergo a lengthy negotiation and approval process
pursuant to section 251 before being able to utilize the terms of a previously approved
agreement. Since agreements shall necessarily be filed with the states pursuant to section
252(h), we leave to state commissions in the first instance the details of the procedures
for making agreements available to requesting carriers on an expedited basis. Because of
the importance of section 252(i) in preventing discrimination, however, we conclude that
carriers seeking remedies for alleged violations of section 252(i) shall be permitted to
obtain expedited relief at the Commission, including the resolution of complaints under
section 208 of the Communications Act, in addition to their state remedies.
1322. We conclude as well that agreements negotiated prior to enactment of the 1996 Act
must be available for use by subsequent, requesting carriers. Section 252(i) must be read
in conjunction with section 252(a)(1), which clearly states that "agreement" for
purposes of section 252, "includ[es] any interconnection agreement negotiated before
the date of enactment . . . ."(97) We conclude that
this language demonstrates that Congress intended 252(i) to apply to agreements negotiated
prior to enactment of the 1996 Act and approved by the state commission pursuant to
section 252(e), as well as those approved under the section 251/252 negotiation process.
Accordingly, we find that agreements negotiated prior to enactment of the 1996 Act must be
disclosed publicly, and be made available to requesting telecommunications carriers
pursuant to section 252(i).
1323. We also find that section 252(i) applies to interconnection agreements between adjacent, incumbent LECs. We note that section 252(i) requires a local exchange carrier to make available to requesting telecommunications carriers "any interconnection service, or network element provided under an agreement approved under this section . . . ."(98) The plain meaning of this section is that any interconnection agreement approved by a state commission, including one between adjacent LECs, must be made available to requesting carriers pursuant to section 252(i). Requiring availability of such agreements will provide new entrants with a realistic benchmark upon which to base negotiations, and this will further the Congressional purpose of increasing competition. As stated in Section III of this Order, adjacent, incumbent LECs will be given an opportunity to renegotiate such agreements before they become subject to section 252(i)'s requirements. In Section III, we also consider, and reject, the Rural Tel. Coalition's argument that making agreements between adjacent, non-competing LECs available under section 252 will have a detrimental effect on small, rural carriers. See Section III, supra.
1. 3114 47 U.S.C. 252(e)(5).
2. 3115 NPRM at 265.
3. 3116 NPRM at 266.
4. 3117 47 U.S.C. 252(e)(4).
5. 3118 NPRM at 267.
6. 3119 See, e.g., Jones Intercable comments at 16-18; California Commission comments at 49; Illinois Commission comments at 87; MCI comments at 94-95; BellSouth comments at 78; Cable & Wireless comments at 50-51; Time Warner comments at 104-105; Oregon Commission comments at 4.
7. 3120 Illinois Commission comments at 87.
8. 3121 See, e.g., Pennsylvania Commission comments at 42; PacTel comments at 99; Iowa Commission comments at 7; GTE comments at 80-81.
9. 3122 Pennsylvania Commission comments at 42.
10. 3123 See, e.g., Illinois Commission comments at 89; District of Columbia comments at 40; Ohio Commission comments at 81-82; Time Warner comments at 106-107; PacTel comments at 99; Jones Intercable comments at 16 (failure to act occurs where a state fails to respond to a request for arbitration or fails to render a decision on time in arbitration).
11. 3124 Illinois Commission comments at 89.
12. 3125 District of Columbia Commission comments at 40; Ohio Commission comments at 81-82; accord Cable & Wireless comments at 51.
13. 3126 See, e.g., Oregon Commission comments at 4; California Commission comments at 47; Ohio Consumers' Counsel comments at 49; Texas Commission comments at 36-37.
14. 3127 Jones Intercable comments at 16.
15. 3128 Ohio Consumers' Counsel comments at 49; see also California Commission comments at 48 (an agreement automatically approved because the state did not act within the specified time frame should not be deemed to be in compliance with state law).
16. 3129 USTA comments at 93-94.
17. 3130 See, e.g., USTA comments at 93-94; Illinois Commission comments at 88; BellSouth comments at 79; Jones Intercable comments at 15; Time Warner reply at 106-107; PacTel comments at 99.
18. 3131 See, e.g., Ohio Commission comments at 81; Ohio Consumers' Counsel comments at 49; Illinois Commission comments at 89-90.
19. 3132 MCI comments at 95.
20. 3133 See, e.g., PacTel comments at 13-14 (if there is any conflict between the Commission's own rules and requirements of that state, the Commission must lay aside its rules and enforce the state's); California Commission comments at 48; Illinois Commission comments at 90; BellSouth comments at 79; Ohio Commission comments at 82; Louisiana Commission comments at 28 (specific questions concerning a state's law could be certified to the state); SBC comments at 105.
21. 3134 Time Warner comments at 107-108 (the Commission's authority to interpret state law is suspect, and the Commission lacks the resources and expertise to sit as a trier of law in fifty jurisdictions).
22. 3135 See, e.g., Ohio Commission comments at 81; Louisiana Commission comments at 28; Pennsylvania Commission comments at 43; District of Columbia Commission comments at 40-41; BellSouth comments at 80.
23. 3136 District of Columbia Commission comments at 40-41.
24. 3137 See, e.g., Teleport comments at 89; Jones Intercable comments at 17; Time Warner comments at 109; Oregon Commission comments at 5 (failure by the state to act on one agreement should not vest jurisdiction over other agreements or matters).
25. 3138 Teleport comments at 89.
26. 3139 PacTel comments at 100; Cable & Wireless comments at 52.
27. 3140 See, e.g., Teleport comments at 85-86; MFS comments at 89-90; CompTel comments at 108; MCI comments at 95-96; Ohio Consumers' Counsel comments at 50; SBC comments at 99; Kentucky Commission comments at 7; Ohio Commission comments at 83; Illinois Commission comments at 91; Timer Warner comments at 109; Jones Intercable comments at 18; Vanguard comments at 35-37; Association of Telemessaging Services International reply at 18.
28. 3141 See, e.g., Vanguard comments at 35-37; Time Warner comments at 109.
29. 3142 SCBA comments at 11-12.
30. 3143 See, e.g., Oregon Commission reply at 11; Ohio Commission comment at 81; NARUC reply at 14; Illinois Commission at 91.
31. 3144 See, e.g., Teleport comments at 88; USTA comments at 94-95; SBC comments at 103;
32. 3145 Vanguard comments at 39-40.
33. 3146 Id. at 40.
34. 3147 See, e.g., MCI comments at 95-96; Sprint reply at 47; Time Warner comments at 111; Competitive Policy Institute reply at 21-22; GCI reply at 5.
35. 3148 Sprint reply at 47.
36. 3149 Id.
37. 3150 See, e.g., Time Warner comments at 111.
38. 3151 California Commission comments at 50. The California Commission's procedures for resolving interconnection disputes is based on a four-step expedited dispute resolution process for resolving disputes between parties who cannot agree on the terms of interconnection. Step 1 is informal resolution without state intervention. Step 2 provides for dispute resolution with mediation by the Administrative Law Judge (ALJ). Step 3 calls for the parties to submit short pleadings to the ALJ who shall use the state commission's "preferred outcomes" approach as a guideline in resolving dispute. Step 4 allows for a party to challenge an ALJ ruling by filing an expedited complaint.
39. 3152 SBC comments at 99.
40. 3153 Vanguard reply at 18-20; accord Competition Policy Institute reply at 18-19.
41. 3154 47 U.S.C. 252(e)(5).
42. 3155 47 U.S.C. 252(b)(4)(C).
43. 3156 See, e.g., In the Matter of the Implementation of the Mediation and Arbitration Provisions of the Federal Telecommunications Act of 1996, Case No. 96-463-TP-UNC, Ohio Commission, (May 30, 1996); Illinois Commerce Commission On Its Own Motion Adoption of 83 Ill. Adm. Code 761 to Implement the Arbitration Provisions of Section 252 of the Telecommunications Act of 1996, Docket No. 96-0297, Illinois Commission (June 14, 1996).
44. 3157 47 U.S.C. 252(e)(5).
45. 3158 47 U.S.C. 252(e)(5).
46. 3159 47 U.S.C. 252(e)(1).
47. 3160 47 U.S.C. 252(c).
48. 3161 Vanguard comments at 39-40.
49. 3162 47 U.S.C. 252(c).
50. 3163 See 47 U.S.C. 252(b)(5) (requiring parties to negotiate in good faith in the course of arbitration).
51. 3164 47 U.S.C. 251(c)(2)(D) (interconnection rates, terms, and conditions); 251(c)(3) (unbundled network elements rates, terms, and conditions); 251(c)(6) (collocation rates, terms, and conditions); and 251(c)(4)(B) (resale). Section 252(d)(1) also requires nondiscriminatory interconnection and network element charges. 47 U.S.C. 252(d)(1).
52. 3165 47 U.S.C. 252(i).
53. 3166 Pennsylvania Commission comments at 43; Louisiana Commission comments at 28-29; SBC Comments at 24.
54. 3167 Time Warner comments at 112.
55. 3168 CompTel comments at 107.
56. 3169 WinStar comments at 18-19; CompTel comments at 106; LDDS comments at 88; Time Warner comments at 113; ACSI reply at 23-24; Telecommunications Resellers Ass'n comments at 50.
57. 3170 CompTel comments at 106; LDDS comments at 88; Time Warner comments at 113. CompTel also asserts that, subject to cost-based deviations, no carrier should pay more than any other carrier when it purchases the same service or facility from the same incumbent LEC, nor should agreements include language regarding the nature of the carrier who may subsequently enter into the same agreements. CompTel comments at 106.
58. 3171 Telecommunications Resellers Ass'n comments at 50-51.
59. 3172 WinStar comments at 18-19.
60. 3173 LDDS comments at 88.
61. 3174 Telecommunications Resellers Ass'n comments at 50-51.
62. 3175 WinStar comments at 19 n.14. WinStar further suggests that the LEC should be required to adjust the arrangement to account for differences in technology employed by the new entrant, without revising material terms of the arrangement. Id.
63. 3176 GTE comments at 82-83; PacTel comments at 101; USTA comments at 95-96; BellSouth comments at 80-81; Ohio Consumers' Counsel comments at 51.
64. 3177 GTE comments at 82-83; Municipal Utilities comments at 14; USTA comments at 96.
65. 3178 GTE comments at 82-83; PacTel comments at 101.
66. 3179 GTE comments at 83.
67. 3180 See, e.g., Ameritech comments at 98-99; BellSouth comments at 81; Bay Springs et al comments at 19; GTE comments at 83; SBC comments at 24; USTA comments at 96-97.
68. 3181 BellSouth comments at 81.
69. 3182 GTE comments at 83; see also BellSouth comments at 81; USTA comments at 97.
70. 3183 Ameritech comments at 99; GTE comments at 83; SBC comments at 24.
71. 3184 USTA comments at 96.
72. 3185 See, e.g., ALTS comments at 54-55; LDDS comments at 89; Jones Intercable comments at 36; Sprint reply at 48; CompTel reply at 45; AT&T comments at 89-90; NEXTLINK comments at 36-37; MFS comments at 90-91; Time Warner reply at 45-46; Telecommunications Resellers Ass'n comments at 51; Ohio Commission comments at 84. Teleport argues that, if the FCC does not adopt its "preferred outcomes" paradigm for negotiations, it should allow carriers to pick and choose among provisions, asserting that without the ability to pick and choose among provisions, unequal bargaining conditions between LECs and competitive LECs will make meaningful negotiations impossible. Teleport comments at 54-55.
73. 3186 WinStar comments at 17-18; MCI comments at 96; Jones Intercable comments at 36; SBA comments at 17; Time Warner reply at 46.
74. 3187 WinStar comments at 18.
75. 3188 See, e.g., Telecommunications Resellers Ass'n comments at 51; Sprint reply at 48; AT&T comments at 90 n.139; MFS comments at 90-91.
76. 3189 MCI comments at 96.
77. 3190 SBA comments at 18.
78. 3191 SBA comments at 16-17; see also R. Koch comments at 3.
79. 3192 CompTel comments at 107.
80. 3193 ALTS comments at 54-55.
81. 3194 Id.
82. 3195 Jones Intercable comments at 36.
83. 3196 BellSouth comments at 81-82. GTE suggested agreements remain publicly available for a reasonable period, as Commission requires for AT&T's Tariff 12. GTE comments at 83.
84. 3197 MCI comments at 97.
85. 3198 Telecommunications Resellers Ass'n comments at 51-52; Time Warner comments at 114; Lincoln Tel. comments at 25-26.
86. 3199 SBA comments at 18.
87. 3200 Jones Intercable comments at 20.
88. 3201 AT&T comments at 89; Telecommunications Resellers Ass'n comments at 52.
89. 3202 F. Williamson comments at 5 (arguing that nothing in the 1996 Act requires that existing agreements be submitted or resubmitted to a state commission for approval). F. Williamson further comments that the statute does not permit one party to an existing agreement compel renegotiation (and/or arbitration) under the procedures in section 252. Id.
90. 3203 MFS comments at 86; NCTA reply at 13; WinStar reply at 19.
91. 3204 BellSouth comments at 64; see also Rural Tel. Coalition comments at 15-16 (asserting sections 251-252 do not apply to agreements between adjacent, non-competing carriers).
92. 3205 47 U.S.C. 252(i).
93. 3206 Although H.R. 1555's section 244(d) contained similar ideas, its language and structure are sufficiently different from that of section 252(i) that we do not consider section 244(d) to be a prior version of section 252(i).
94. 3207 Report of the Committee on Commerce, Science, and Transportation on S. 652, S. Rpt. 104-23, 104th Cong., 1st Sess. (1995) at 21-22.
95. 3208 See Regulatory Flexibility Act, 5 U.S.C. 601 et seq.
96. 3209 We note section 22.903(d) of our rules, which remains in effect, requires the BOCs to file with us their interconnection agreements with their affiliated cellular providers. 47 C.F.R. 22.903(d).
97. 3210 47 U.S.C. 252(a)(1).
98. 3211 47 U.S.C. 252(i) (emphasis supplied).
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Last Modified February 15, 1999