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Notes: Telco Entrance into ESP Market

Notes> Computer III

These notes are not complete and there is no guarantee that they are accurate. They are presented simply as notes. Feel free to use them but as with all material on the Internet Telecom Project, you should consider them a beginning to your research and not an end.

Telephone Carrier Entrance into Enhanced Services Market continued
Computer III Purpose
Georgraphic Scope *
Litigation * California I *
BOC Safeguards Order *
California II *
California III *
Interim Waiver Order Non-Structural Safeguards CEI CEI Purpose *
CEI Plan Posting *
CEI Requirements * 1.3.7.1 Interface Functionality *
1.3.7.2 Unbundling of Basic Service *
1.3.7.3 Resale *
1.3.7.4 Technical Characteristics *
1.3.7.5 Installation, Maintenance, and Repair *
1.3.7.6 End User Access *
1.3.7.7 CEI Availability *
1.3.7.8 Minimization of Transport Costs *
1.3.7.9 Recipients of CEI * Integrated Basis *
CEI Temporary Requirement * Open Network Architecture

Computer III

41. In Computer III, the Commission revisited the issue of the appropriate competitive safeguards for the provision of enhanced services by common carriers. Recognizing the costs associated with structural separation, the Commission adopted revised rules that allowed AT&T, the BOCs and GTE the option of moving from full structural separation to a system of non-structural safeguards, which it found would prevent discriminatory behavior while avoiding the costs and inefficiencies associated with the separate subsidiary requirements. The non-structural safeguards included Comparably Efficient Interconnection (CEI) and Open Network Architecture (ONA), as well as quality, installation and maintenance reporting requirements. The Commission initially applied the Computer III rules to both AT&T and the BOCs, and then later relieved AT&T of most of the requirements. In 1994, the Commission extended the ONA requirements to GTE.
--In Re Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, CC Docket No. 02-33, CC Dockets Nos. 95-20, 98-10, NPRM ¶ 41 (February 15, 2002) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-42A1.doc

Amendment of Sections 64.702 of the Commission's Rules and Regulations (Third Computer Inquiry), Report and Order, 104 FCC2d 958 (1986) (Phase I Order), modified on reconsideration, 2 FCC Rcd 3035 (1987) (Phase I Reconsideration), further reconsideration, 3 FCC Rcd 1135 (1988) (Phase I Further Reconsideration), second further reconsideration pending, appeals pending sub nom. California v. FCC, No. 87-7230 (9th Cir.) (pet. for rev. filed May 28, 1987) and sub nom. Illinois Bell Telephone Co. v. FCC, No. 88-1364 (D.C.Cir.) (pet. for rev. filed May 16, 1988).

Under Computer III and ONA, the BOCs are permitted to provide enhanced services on an "integrated" basis (i.e., through the regulated telephone company), subject to certain "nonstructural safeguards," as described more fully below. These rules replaced those previously established in Computer II, which required AT&T (and subsequently the BOCs) to offer enhanced services through structurally separate subsidiaries.
-- In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶ 2 (January 30, 1998).

10. In Computer III, after reexamining the telecommunications marketplace and the effects of structural separation during the six years since Computer II, the Commission determined that the benefits of structural separation were outweighed by the costs, and that nonstructural safeguards could protect competing ESPs from improper cost allocation and discrimination by the BOCs while avoiding the inefficiencies associated with structural separation. The Commission concluded that the advent of more flexible, competition-oriented regulation would permit the BOCs to provide enhanced services integrated with their basic network facilities. Towards this end, the Commission adopted a two-phase system of nonstructural safeguards that permitted the BOCs to provide enhanced services on an integrated basis. The first phase required the BOCs to obtain Commission approval of a service-specific CEI plan in order to offer a new enhanced service. In these plans, the BOCs were required to explain how they would offer to ESPs all the underlying basic services the BOCs used to provide their own enhanced service offerings, subject to a series of "equal access" parameters. Thus, the CEI phase of nonstructural safeguards imposed obligations on the BOCs only to the extent they offered specific enhanced services. The Commission indicated that such a CEI requirement could promote the efficiencies of competition in enhanced services markets by permitting the BOCs to participate in such markets provided they open their networks to competitors.

11. During the second phase of implementing Computer III, the Commission required the BOCs to develop and implement ONA plans. The ONA phase was intended to broaden a BOC's unbundling obligations beyond those required in the first phase. ONA plans explain how a BOC will unbundle and make available to unaffiliated ESPs network services in addition to those the BOC uses to provide its own enhanced services offerings. These ONA plans were required to comply with a defined set of criteria in order for the BOC to obtain structural relief on a going-forward basis. This means that a BOC would not need to obtain approval of CEI plans prior to offering specific enhanced services on an integrated basis. The Commission also required the BOCs to comply with various other nonstructural safeguards in the form of rules related to network disclosure, customer proprietary network information (CPNI), and quality, installation, and maintenance reporting. All of these nonstructural safeguards were designed to promote the efficiency of the telecommunications network, in part by permitting the technical integration of basic and enhanced services and in part by preserving competition in the enhanced services market through the control of potential anticompetitive behavior by the BOCs.

-- In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶¶ 10-11 (January 30, 1998)

"In its Computer III decisions, the Commission permitted the BOCs to integrate their enhanced service and basic service offerings provided that they complied with certain nonstructural safeguards, including Comparably Efficient Interconnection (CEI) requirements. In the first stage of implementing Computer III, the Commission required the BOCs to obtain Commission approval for service-specific CEI plans prior to offering individual enhanced services on an integrated basis. In these CEI plans, the Commission required the BOCs to demonstrate how they would provide competing enhanced service providers (ESPs) with "equal access" to all basic underlying network services the BOCs used to provide their own enhanced services. During the second stage of Computer III, the BOCs developed and implemented Open Network Architecture (ONA) plans detailing the unbundling of basic network services; after the Commission approved these ONA plans and the BOCs filed tariffs for ONA services, they were permitted to provide integrated enhanced services without filing service-specific CEI plans." -- In the Matter of Bell Operating Companies Joint Petition for Waiver of Computer II Rules, DA 95-2264, Order ¶ 3 (October 31, 1995) (footnote number off)

5. In Computer III, the Commission reexamined the state of the telecommunications marketplace and the effects of structural separation during the six years since Computer II, and determined that structural separation was no longer in the public interest. [FN11] The Commission concluded that nonstructural safeguards could protect competing enhanced service providers (ESPs) from anticompetitive activity by the BOCs while avoiding the inefficiencies associated with structural separation. The Commission therefore permitted the BOCs to provide enhanced services on an integrated basis with their basic service pursuant to Comparably Efficient Interconnection (CEI) requirements. [FN12] In the first stage of implementing Computer III, BOCs had to obtain, prior to offering any new enhanced services, FCC approval of service-specific CEI plans. In these plans, the BOCs were required to explain how they would offer to ESPs all the underlying basic services the BOCs used for their own enhanced services. BOCs were obligated under CEI to offer these services to ESPs subject to a series of "equal access" parameters, including requirements that the services be offered at the same tariffed rates the BOCs themselves paid, and that the services offered to ESPs have the same technical characteristics and interface functionality as the services used by the BOCs. [FN13] The approved "CEI plans" did not require, however, that BOCs provide other network services that ESPs might find useful if the BOCs themselves did not use those network services. During the second stage of implementing Computer III, the BOCs were required to develop and implement ONA plans that detailed all network services they would provide to competitive ESPs and described how they would comply with certain nonstructural safeguards. The Commission required the BOCs to comply with various other nondiscrimination safeguards, including requirements regarding network disclosure, customer proprietary network information (CPNI) rules, and quality, installation, and maintenance reporting requirements. [FN14]

-- In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, Notice of Proposed Rulemaking, ¶ 5 (February 21, 1995)

[Computer III Final Decision, 104 FCC2d 958, 1040 (1986) (CEI parameters require BOC to unbundle and tariff all basic services and for affiliated-BOC ISP to take basic service only pursuant to CEI tafiff).]

[Computer III, 104 FCC2d at 1040 (BOC must unbundle and tariff basic service, and affiliated ISP must take service on a resale basis so that all ISPs obtain basic telecommunications services at the same price).]

Purpose

One of the Commission's main objectives in the Computer III and ONA proceedings has been to permit the BOCs to compete in unregulated enhanced services markets while preventing the BOCs from using their local exchange market power to engage in improper cost allocation and unlawful discrimination against ESPs. The concern has been that BOCs may have an incentive to use their existing market power in local exchange services to obtain an anticompetitive advantage in these other markets by improperly allocating to their regulated core businesses costs that would be properly attributable to their competitive ventures, and by discriminating against rival, unaffiliated ESPs in the provision of basic network services in favor of their own enhanced services operations. In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review
-- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶ 9 (January 30, 1998)

The Commission's goals in addressing BOC provision of information services have been both to promote innovation in the provision of information services and to prevent access discrimination and improper cost allocation. Because the BOCs control the local exchange network and the provision of basic services, in the absence of regulatory safeguards they may have the incentive and ability to engage in anticompetitive behavior against ISPs that must obtain basic network services from the BOCs in order to provide their information service offerings. For example, BOCs may discriminate against competing ISPs by denying them access to services and facilities or by providing ISPs with access to services and facilities that is inferior to that provided to the BOCs' own information services operations. BOCs also may allocate costs improperly by shifting costs they incur in providing information services, which are not regulated under Title II of the Act, to their basic services.
-- In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶ 43 (January 30, 1998)

We conclude that, relative to nonstructural safeguards, the structural separation requirements impose significant costs on the public in decreased efficiency and innovation that substantially outweight their benefits in limiting the ability of AT & T and the BOCs to make unfair use of their regulated operations for the benefit of their unregulated, enhanced services activities.
--In the Matters of: Amendment of Sections 64.702 of the Commission's Rules and Regulations (Third Computer Inquiry); and Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities Authorizations Thereof Communications Protocols under Section 64.702 of the Commission's Rules and Regulations, CC Docket No. 85-229, Report and Order, ¶ 3 (June 16, 1986)

Georgraphic Scope

We also concluded in the Non-Accounting Safeguards Order that the Commission's Computer II, Computer III, and ONA requirements are consistent with section 272 of the Act, and continue to govern the BOCs' provision of intraLATA information services, since section 272 only addresses BOC provision of interLATA services.

In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶ 20 (January 30, 1998)

In the Non-Accounting Safeguards Order, we noted that section 272 of the Act imposes specific separate affiliate and nondiscrimination requirements on BOC provision of "interLATA information services," but does not address BOC provision of intraLATA information services. We concluded that, pending the conclusion of the Computer III Further Remand proceeding, BOCs may continue to provide intraLATA information services on an integrated basis, in compliance with the Commission's nonstructural safeguards established in Computer III and ONA.

In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶ 66 (January 30, 1998)

97. As discussed above, we tentatively conclude in this Further Notice that the Commission's nonstructural safeguard regime should continue to apply to BOC provision of intraLATA information services. Prior to the enactment of the 1996 Act, however, we did not distinguish between intraLATA and interLATA information services, and we did not explicitly apply our Computer III and ONA rules to BOC provision of interLATA information services since the BOCs were prevented under the MFJ from providing interLATA services. Section 272 of the 1996 Act, however, does distinguish between intraLATA and interLATA information services by imposing separation and nondiscrimination requirements on BOC provision of interLATA information services. We seek comment, therefore, on whether the Commission's ONA requirements, as modified or amended by this proceeding, should be interpreted as encompassing BOC provision of interLATA information services. We also seek comment on whether it would be inconsistent with section 272 for the Commission to apply ONA requirements to BOC provision of interLATA information services.

Litigation

5. The Computer III regime was vacated in 1990 by the Ninth Circuit in the California I decision¹⁴ The court concluded that the Commission had not explained why accounting safeguards would be effective in preventing the BOCs from cross-subsidizing their enhanced service offerings with their regulated services, but approved the Commission's safeguards against access discrimination, including CEI and ONA requirements. Subsequently, the Commission adopted the BOC Safeguards Order, which strengthened the accounting standards criticized in California I and again concluded that structural separation requirements should be fully eliminated once BOC ONA plans were approved and implemented.¹⁵
6. In California II, ¹⁶ the Ninth Circuit reviewed a series of Commission orders approving ONA plans.¹⁷ The court concluded that the orders under consideration constituted a retreat from the policy announced in Computer III because they advanced the view that structural separation could be lifted before implementation of a fully realized ONA. ¹⁸ Because the orders under review did not themselves eliminate structural separation, however, the court upheld the Commission orders approving the BOC ONA plans and did not reach the question of whether the noted change in policy had been adequately explained. ¹⁹
7. In the California III decision, the U.S. Court of Appeals for the Ninth Circuit remanded the portion of the BOC Safeguards Order that established the conditions for lifting all structural separation requirements imposed on BOCs seeking to provide integrated enhanced services.²⁰ In California III, the court determined that although the Commission had adequately explained its decision to strengthen the protections against cross-subsidization at issue in California I, it had not justified its retreat from its position that "fundamental unbundling" was a prerequisite for eliminating structural separation.²¹ The court concluded that because the Commission had failed to explain its decision to lift structural separation without fundamental unbundling as a safeguard against access discrimination, the cost-benefit analysis adopted by the BOC Safeguards Order was flawed and must be set aside as arbitrary and capricious under the Administrative Procedures Act (APA).²²
8. Following the California III decision, the Common Carrier Bureau issued an order that concluded that the California III decision effectively reimposed the requirement that BOCs file CEI plans for each new enhanced service, pending further Commission action.²³ In that order, the Bureau allowed the BOCs to continue to provide enhanced services and conduct market trials pursuant to CEI plans approved prior to the lifting of structural separation.²⁴ The Bureau concluded that the BOCs could continue to provide other existing enhanced services and market trials implemented pursuant to ONA plans, conditioned upon the BOCs filing CEI plans or market trial notifications, respectively, within 60 days of the Bureau Interim Waiver Order. The Bureau required the BOCs to file CEI plans or market trial notifications prior to providing any new services or market trials.
9. In response to the California III decision, the Commission also has initiated a rulemaking proceeding to review the current nonstructural safeguards for BOC provision of integrated enhanced services. ²⁵

^14.California I, supra%u.
^15.BOC Safeguards Order, 6 FCC Rcd 7571.
^16. California II, supra%u.
^17. The orders reviewed were: Filing and Review of Open Network Architecture Plans, Phase I, 4 FCC Rcd 1 (1988) (BOC ONA Order); 5 FCC Rcd 3084 (1990) (ONA Reconsideration Order); 5 FCC Rcd 3103 (1990) (BOC ONA Amendments Order); 5 FCC Rcd 7719 (1990) (ONA Remand Order).
^18.California II, 4 F.3d at 1512-13.
^19. Id.
^20. According to the BOC Safeguards Order, lifting all structural separation requirements, or "full structural relief," meant removing requirements that BOCs receive approval of service-specific CEI plans prior to offering any enhanced service.
^21. California III, 39 F.3d at 927, 929.
^22. Id. at 929.
^23. See Bell Operating Companies' Joint Petition for Waiver of Computer II Rules, 10 FCC Rcd 1724 (1995) (Bureau Interim Waiver Order).
^24. Bureau Interim Waiver Order, 10 FCC Rcd at 1724, 1730, paras. 2-3, 30.
²⁵. Notice of Proposed Rulemaking, Computer III Further Remand Proceedings: Bell Operating Company Provision of Enhanced Services, 10 FCC Rcd 8360 (1995) (Computer III Remand Notice of Proposed Rulemaking). See also id. at 8362-8369, paras. 3-10.

In re US West Communications, Inc., Petition for Computer III Waiver, Order, 11 FCC Rcd. 1195 (Nov 6, 1995)

7. In 1990, the Ninth Circuit vacated and remanded three of the Commission's Computer III orders on the basis that the Commission had not shown that its nonstructural guidelines adequately protect against improper cross- subsidization of enhanced services by the BOCs.¹¹ The Commission at that time issued an interim waiver permitting the BOCs to continue offering enhanced services on an integrated basis pursuant to their approved CEI plans.¹² In addition, the Commission reimposed ONA requirements on the BOCs independent of removing structural separation requirements.¹³ In 1991, the Commission adopted the BOC Safeguards Order, which strengthened the safeguards criticized by the court in California I, and decided to lift Computer II structural separation requirements fully once BOC ONA plans were approved and implemented.¹⁴
8. In a series of orders between 1988 and the end of 1992, the Commission approved BOC ONA plans that described the unbundled basic services each BOC proposed to provide as ONA services and the terms under which they would be offered.   During the 1992-1993 period, the Common Carrier Bureau approved the lifting of structural separation requirements for individual BOCs upon their showing that they had implemented all of the ONA services in their initial ONA plans.¹⁵
9. In 1993, the Ninth Circuit decided California II, which upheld the orders approving BOC ONA plans.¹⁶ The California II court concluded that the Commission had scaled back its vision of ONA since Computer III, but that the issue of whether the lifting of structural separation was still justified was not properly before it.¹⁷
10. In California III, the Ninth Circuit upheld much of the BOC Safeguards Order.¹⁸ The court upheld the Commission's findings that a regime of nonstructural safeguards adequately prevented improper cross-subsidization of enhanced services by the BOCs.   The court also upheld the preemption elements of the BOC Safeguards Order.¹⁹ Moreover, the court noted that California I had determined that the Commission had justified, in Computer III, the use of nonstructural safeguards such as ONA to prevent the BOCs from providing ESPs with inferior access to basic network services.²⁰ The court acknowledged that as an interim measure until ONA was implemented, CEI plans "ensured that enhanced services competitors were provided with interconnections with the BOCs' own networks that were substantially equivalent to the interconnections that the BOCs provided for their own enhanced services."²¹
11. Nonetheless, the court remanded that part of the BOC Safeguards Order lifting all structural separation requirements.   The court found that the Commission had not adequately explained the decision to lift these requirements when the BOCs' approved ONA plans did not provide for fundamental unbundling of the BOC networks.   According to the court, the Commission had found, in the original Computer III Phase I Order, that fundamental unbundling was necessary to protect against access discrimination in the absence of general structural separation requirements.²² Under the Commission's interim CEI regime, "the BOCs could provide integrated enhanced services pending the unbundling of the networks" pursuant to individually approved CEI plans that ensured that the interconnections given BOCs and their competitors were "substantially equivalent."²³ In contrast, ONA was supposed to give competing ESPs the ability to "pick and choose" network service elements not used by the BOCs in providing their own enhanced services.²⁴ In the absence of an explanation from the Commission why it no longer regarded such fundamental unbundling as necessary to prevent access discrimination, the court found the Commission's overall cost benefit analysis flawed, and the decision to lift structural separation arbitrary and capricious under the Administrative Procedure Act.²⁵
-- Bell Operating Companies' Joint Petition for Waiver of Computer II Rules, Memorandum Opinion and Order, 10 FCC Rcd 1724 (Jan 11, 1995)

California I

"In 1990, the Court of Appeals for the Ninth Circuit vacated three orders in the Computer III proceeding, finding that the Commission had not adequately justified the decision to rely on (nonstructural) cost accounting safeguards as protection against cross-subsidization of enhanced services by the BOCs." -- In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶ 12 (January 30, 1998)

"In California I, the court determined that although the Commission had made a plausible showing that CEI and ONA in combination would be effective in reducing the risk of access discrimination, it had not shown adequate justification for its decision to abandon structural separation and rely exclusively on cost accounting regulations to protect against cross-subsidization. Because both the CEI plan and ONA regimes relied upon the cost accounting regulations criticized by the California I court, it followed that both regimes were vacated by that decision." -- In the Matter of Bell Operating Companies Joint Petition for Waiver of Computer II Rules, DA 95-2264, Order ¶ 24 (October 31, 1995) (footnote numbering off)

6. In 1990, the Court of Appeals for the Ninth Circuit in California I vacated three orders in the Computer III proceeding. [FN15] The court concluded that the Commission had not adequately justified the decision to rely on cost accounting safeguards as protection against cross-subsidization of enhanced services by the BOCs. [FN16] In order to avoid disruption in service while it conducted remand proceedings, the Commission granted an interim waiver to allow the BOCs to continue providing enhanced services pursuant to previously- approved CEI plans pending completion of the rulemaking proceeding that culminated in the BOC Safeguards Order. [FN17] In that order, the Commission reevaluated the costs and benefits of lifting structural separation, and concluded that, with strengthened cost accounting requirements, the removal of structural separation requirements served the public interest. [FN18] The Commission determined that its experience in the decade since the Computer II Final Decision demonstrated that structural separation inhibited the deployment of enhanced services, and that the safeguards it adopted in the BOC Safeguards Order would ensure a fair competitive environment.
-- In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, Notice of Proposed Rulemaking, ¶ 6 (February 21, 1995)

Note 11. California v. FCC, 905 F.2d 1217 (9th Cir.1990) (California I). The court concluded that the Commission had not provided a sufficient explanation for its determination that cost allocation safeguards could effectively prevent cross-subsidization of competitive enhanced service offerings by regulated ratepayers. Id. at 1238-39. The court also vacated the sections of Computer III that preempted all state structural separation requirements and all inconsistent state nonstructural safeguards, on the grounds that the Commission had not demonstrated that such state regulation would negate federal interests. Id. at 1243-45.
--Bell Operating Companies' Joint Petition for Waiver of Computer II Rules, Memorandum Opinion and Order, 10 FCC Rcd 1724 (Jan 11, 1995) (Interim Waiver Order)

BOC Safeguards Order

In 1990, the Court of Appeals for the Ninth Circuit vacated three orders in the Computer III proceeding, finding that the Commission had not adequately justified the decision to rely on (nonstructural) cost accounting safeguards as protection against cross-subsidization of enhanced services by the BOCs. In response to this remand, the Commission adopted the BOC Safeguards Order, which strengthened the cost accounting safeguards, and reaffirmed the Commission's conclusion that nonstructural safeguards should govern BOC participation in the enhanced services industry, rather than structural separation requirements. -- In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶ 12 (January 30, 1998)

California II

After California I and the Commission's response in the BOC Safeguards Order, the Ninth Circuit in California II upheld the Commission's orders approving BOC ONA plans. In California II, the court concluded that the Commission had scaled back its vision of ONA since Computer III by approving BOC ONA plans before "fundamental unbundling" had been achieved. The court also concluded that the issue of whether implementation of ONA plans justified the lifting of structural separation, as the Commission had determined, was not properly before it.

In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶ 14 (January 30, 1998)

8. After California I, and after the issuance of the BOC Safeguards Order on remand, the Ninth Circuit in California II upheld the orders approving BOC ONA plans. [FN25] The California II court concluded that the Commission had scaled back its vision of ONA since Computer III, but that the issue of whether the lifting of structural separation was still justified was not properly before it. [FN26]

-- In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, Notice of Proposed Rulemaking, ¶ 8 (February 21, 1995)

California III

In California III, the Court of Appeals for the Ninth Circuit partially vacated the Commission's BOC Safeguards Order. The California III court found that, in granting full structural relief based on the BOC ONA plans, the Commission had not adequately explained its apparent "retreat" from requiring "fundamental unbundling" of BOC networks as a component of ONA and a condition for lifting structural separation. The court was therefore concerned that ONA unbundling, as implemented, failed to prevent the BOCs from engaging in discrimination against competing ESPs in providing access to basic services. The court did find, however, that the Commission had adequately responded to its concerns regarding cost-misallocation by strengthening its cost accounting rules and introducing a system of "price cap" regulation; the court indicated its belief that these strengthened safeguards would significantly reduce the BOCs' incentive and ability to misallocate costs. The court also upheld the scope of federal preemption adopted in the BOC Safeguards Order.
-- In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶ 15 (January 30, 1998)

4. The Computer III decision concluded that, in the longer term, with the implementation of Open Network Architecture (ONA), the BOCs should be allowed to provide integrated enhanced services without prior Commission approval of service-specific CEI plans. In orders adopted between 1988 and the end of 1992, the Commission approved a series of BOC ONA plans that described the unbundled basic services each BOC proposed to provide as ONA services, and the terms upon which they would be offered. During 1992 and 1993, the Bureau approved lifting structural separation requirements for individual BOCs that showed they had implemented all of the ONA services set forth in their ONA plans.
5. In California III, the United States Court of Appeals for the Ninth Circuit determined that, although the Commission had adequately explained its decision to strengthen the protections against cross-subsidization at issue in California I, it had not justified its retreat from its initial position regarding the level of unbundling necessary for eliminating structural separation. The court concluded that the cost-benefit analysis associated with the Commission's decision to lift structural separation was flawed and must be set aside as arbitrary and capricious under the Administrative Procedure Act. In response to the California III decision, the Commission initiated a rulemaking proceeding to review the existing nonstructural safeguards against BOC access discrimination.
6. Following the California III decision, the Bureau issued an order allowing the BOCs to continue providing enhanced services and conducting market trials pursuant to CEI plans approved prior to the lifting of structural separation. The Bureau also granted waivers necessary to enable BOCs to continue providing other enhanced services and market trials, conditioned upon their filing CEI plans or market trial notifications for such services or trials within 60 days of the Bureau Interim Waiver Order. The Bureau required the BOCs to file CEI plans or market trial notifications prior to providing any new services or market trials. In addition, the Bureau Interim Waiver Order required the BOCs to continue to comply with the procedures established in approved ONA plans. For example, BOCs still must provide new ONA services that ESPs need to provide enhanced services and file federal and state tariffs for ONA services.
-- In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service, CCBPol 97-03, Order (December 31, 1997).

22. . . . Upon reconsideration, we decline to reverse the conclusions that we reached when we issued the Interim Waiver Order. In that order, we concluded that in California III, the court had remanded only the portion of the BOC Safeguards Order that lifted all structural separation requirements, based on its determination that the Commission had not adequately explained its reliance on ONA plans that did not provide for "fundamental unbundling" of the BOC networks, as contemplated by the Computer III Phase I Order. Neither ITAA nor the other commenters raise any significant new arguments in support of ITAA's reconsideration petition that we have not previously addressed in the Interim Waiver Order. Thus, we reaffirm our earlier conclusion that California III returned the regulation of enhanced services not to a Computer II structural separation regime, but rather to a Computer III service-specific CEI plan regime, whereby BOCs may provide specific enhanced services on an integrated basis, pursuant to approved CEI plans.

24. . . . In contrast, in California III the court determined that the Commission had first approved ONA plans which failed to provide for "fundamental unbundling" and then completely lifted structural separation requirements for the BOCs, without adequately justifying this change in policy. This determination did not implicate the interim, service-specific CEI regime, and accordingly it was appropriate for us to conclude that the decision's effect was to return regulation of enhanced services to the interim CEI plan regime.
--In the Matter of Bell Operating Companies Joint Petition for Waiver of Computer II Rules, DA 95-2264, Order ¶ 22 (October 31, 1995) (footnote numbering off)

"In its California III decision, the U.S. Court of Appeals for the Ninth Circuit effectively reimposed the requirement that BOCs file CEI plans, at least pending further Commission action. In California III, the court remanded the portion of the BOC Safeguards Order that established the conditions for lifting all structural separation requirements imposed on BOCs seeking to provide integrated enhanced services. The court found that the Commission had not adequately justified its determination that fundamental unbundling was unnecessary to prevent access discrimination by BOCs."
--In the Matter of Bell Atlantic Telephone Companies, Offer of Comparably Efficient Interconnection to Providers of Video Dialtone-Related Enhanced Services, DA 95-1283, Order ¶ 4 (June 9, 1995)

On October 18, 1994, the Ninth Circuit decided California v. FCC [FN3] (California III), which remanded the BOC Safeguards Order. The California III decision held that we had not sufficiently explained our conclusion that totally removing structural separation requirements was in the public interest, given that our Open Network Architecture (ONA) requirements no longer called for "fundamental unbundling" of the BOC networks.
2. In response to the Ninth Circuit's concerns, we review the various nonstructural safeguards against BOC access discrimination [FN4] that are currently in place. The issue remanded by the court is whether we should totally lift structural separation requirements, as applied to BOC provision of enhanced services, given the current state of network unbundling under ONA. [FN5] We also solicit comments, broadly, on whether structural separation should be reimposed for some or all BOC enhanced services. [FN6]
--In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, Notice of Proposed Rulemaking, ¶ 1 (February 21, 1995)

9. In California III, the Court of Appeals for the Ninth Circuit partially vacated the BOC Safeguards Order. [FN27] The court held that the Commission had "responded to our concerns" expressed in California I about improper cross- subsidization, and that the Commission had "demonstrated that the BOCs' incentive and ability to cross-subsidize will be significantly reduced" under the Commission's regime of nonstructural safeguards. [FN28] The decision also upheld the preemption elements of the BOC Safeguards Order. [FN29] As discussed in greater detail below, however, the court observed that the BOC Safeguards Order permitted the BOCs to move beyond the CEI plan regime to a framework of full structural integration based on the approved BOC ONA plans. The court reaffirmed the conclusion of California II that the Commission had retreated from its commitment to require "fundamental unbundling" of BOC networks as a component of ONA, and noted that the issue of how this policy shift affected structural relief was now squarely before it. The court observed that parties had argued that ONA, as implemented, failed to prevent BOCs from engaging in access discrimination against competing ESPs. [FN30] As the Commission had not explained why its shift away from "fundamental unbundling" did not undermine the decision to rely on ONA safeguards under full structural relief, the California III court concluded that the Commission's cost benefit analysis was flawed. California III therefore vacated the Commission's decision in the BOC Safeguards Order to move from a service-specific CEI plan regime to full structural relief.
--In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, Notice of Proposed Rulemaking, ¶ 9 (February 21, 1995)

11. The partial vacation of the BOC Safeguards Order generally reinstates the Computer III service-by-service CEI plan regime. BOCs also must still comply with the requirements of their approved ONA plans, as ONA requirements are independent of structural relief. [FN33] The California III court acknowledged that as an interim measure until ONA was implemented, CEI plans "ensured that enhanced service competitors were provided with interconnections to the BOCs' own networks that were substantially equivalent to the interconnections that the BOCs provided for their own enhanced services." [FN34] California III focused, however, on the decision to move from the CEI plan regime to full structural relief under ONA, and specifically on the risk of access discrimination under the current level of BOC network unbundling.
12. The California III court found the BOC Safeguards Order arbitrary and capricious insofar as it completely lifted structural separation requirements without explaining how an ONA regime without "fundamental unbundling" would provide an adequate safeguard against access discrimination by the BOCs. The court stated that "the FCC never explains why it now authorizes lifting structural separation when it recognizes that its assumptions in Computer III regarding ONA have not proven correct, and that fundamental unbundling is not attainable at this time." [FN35] California III thus requires us to reexamine the public interest benefits and the risk of access discrimination that result from totally lifting structural separation requirements, given the current level of network unbundling. Accordingly, we are here seeking comment on whether the nonstructural access discrimination safeguards spelled out below-- including the current level of ONA network unbundling--provide sufficient protection, given the benefits of integrated BOC provision of enhanced services, to lift the service-specific CEI plan filing requirements, as contemplated in Computer III and the BOC Safeguards Order.
-- In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, Notice of Proposed Rulemaking, ¶¶ 11-12(February 21, 1995)

19. In California III, the court remanded only one issue: the adequacy of the BOC Safeguards Order's cost benefit analysis to support the complete removal of structural separation after the unbundling of basic network services described in the BOC ONA plans.⁵² The California III court did not hold that the safeguards elaborated in the BOC Safeguards Order were inadequate; rather, it stated that the Commission had never explained its rationale for lifting structural separation requirements completely, after the "dilution" of the original vision for ONA.
20. The court did not find fault with the Computer III CEI service-specific plan regime. In fact, the court acknowledged that the CEI plans ensured that competitors received substantially equivalent interconnection.⁵³ Thus, we disagree with parties who argue that the effect of California III is to reinstate Computer II rules that had previously governed the BOCs' enhanced services offerings. Instead, we conclude that the partial vacation of the BOC Safeguards Order generally reinstates the Computer III service-by-service CEI plan regime, augmented by the implementation of ONA under BOC ONA plans. Thus, as safeguards against access discrimination, BOCs must file CEI plans for integrated enhanced services until the Commission concludes remand proceedings.

^52.The court concluded that the Commission "has addressed the concerns expressed by this court in California I." California III, slip op. at 12761. The California III court also upheld challenges to the Commission's resolution of CPNI and preemption issues in the BOC Safeguards Order. As noted above, the only Commission action that the court found to be inadequate was the Commission's failure to explain, in the BOC Safeguards Order, how access discrimination safeguards were sufficient under the approved ONA plans, rather than under the model of ONA the court determined to be required by Computer III. See supra para. 11.

--Bell Operating Companies' Joint Petition for Waiver of Computer II Rules, Memorandum Opinion and Order, 10 FCC Rcd 1724 (Jan 11, 1995) (Interim Waiver Order)

Interim Waiver Order

In response to California III, the Bureau issued the Interim Waiver Order, which reinstated the requirement that BOCs must file CEI plans, and obtain Commission approval of those plans, to continue to provide specific enhanced services on an integrated basis. Also in response, the Commission issued the Computer III Further Remand Notice, which sought comment on the California III court's remand question regarding the sufficiency of ONA unbundling as a condition of lifting structural separation, and on the general issue of whether relying on nonstructural safeguards serves the public interest.
--In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶ 16 (January 30, 1998)

In the Interim Waiver Order adopted in response to the California III decision, the Bureau allowed the BOCs to continue to provide existing enhanced services on an integrated basis, provided that they filed CEI plans for those services. In addition, the Bureau required the BOCs to file CEI plans for new enhanced services they propose to offer, and to obtain the Bureau's approval for these plans before beginning to provide service. We concluded that the partial vacation of the BOC Safeguards Order in California III reinstated the service-specific CEI plan regime, augmented by implementation of ONA, until the Commission concluded its remand proceedings. BOCs were also required to comply with the requirements established in their approved ONA plans, because we had previously determined that ONA requirements are independent of the removal of structural separation requirements.
--In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶ 60 (January 30, 1998)

10. Under the requirements of Computer III and the Bureau Interim Waiver Order, US West must file a CEI plan for a proposed enhanced service offering or receive a waiver of the Commission's CEI requirements, if it wishes to offer an enhanced service on an integrated basis that is not the subject of a previously approved CEI plan. A CEI plan would require US West to demonstrate that it will provide interconnection opportunities to other enhanced service providers (ESPs) on an "equal access" basis, making basic facilities available on an unbundled and functionally equivalent basis.
--In re US West Communications, Inc., Petition for Computer III Waiver, Order, 11 FCC Rcd. 1195 (Nov 6, 1995)

10. On November 14, 1994, the BOCs filed a joint petition (Interim Waiver Petition) requesting an interim waiver to permit them to continue offering enhanced services pursuant to their approved ONA plans. [FN31] The BOCs also requested an interim waiver to continue unseparated research and development, and to offer on an integrated basis new enhanced services associated with video dialtone. On January 11, 1995, the Common Carrier Bureau granted the BOCs a limited interim waiver (Interim Waiver Order). [FN32] The Bureau concluded that, because California III generally returned our regulation of BOC enhanced services to a CEI plan regime, waivers would only be necessary for new enhanced services or market trials, and for those existing services and market trials that were not covered by previously-approved CEI plans. The Interim Waiver Order allows the BOCs to continue to offer existing enhanced services pursuant to their ONA plans, so long as they file CEI plans within sixty days. BOCs are also permitted to offer new enhanced services after filing and receiving FCC approval of service-specific CEI plans. The Bureau declined to treat video- dialtone-related enhanced services differently from other new enhanced services. The Interim Waiver Order specifies similar requirements for BOCs to continue existing market trials, and to begin new market trials for enhanced services.
-- In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, Notice of Proposed Rulemaking, ¶ 10 (February 21, 1995)

2. Specifically, we conclude that, after the California III decision, the BOCs may generally provide enhanced services after complying with the Comparably Efficient Interconnection (CEI) plan regime in effect before the Commission completely lifted structural separation requirements.⁵ We grant the BOCs a limited waiver to continue providing those enhanced services that they first offered after the CEI plan approval requirement had expired, conditioned on their filing CEI plans for those services within sixty days after the release of this order. We also grant the BOCs a limited waiver to continue existing market trials initiated after the expiration of the CEI plan approval requirement, conditioned on their filing market trial notifications within sixty days after the release of this order. To the extent that the California III decision might be regarded as returning regulation to the Computer II framework, we grant the BOCs limited waivers of the Computer II structural separation requirements, pending conclusion of remand proceedings.
3. Accordingly, we grant any necessary waivers to enable the BOCs to: (1) provide existing enhanced services pursuant to CEI plans approved prior to the lifting of structural separation; (2) continue providing other existing enhanced services, pending Commission consideration of CEI plans for those services; (3) file CEI plans for any new enhanced services; (4) continue to perform research and planning activities and technical trials for enhanced services; (5) continue existing market trials, conditioned on their filing the market trial notifications required under the CEI plan regime; and (6) begin market trials of new enhanced services pursuant to the market trial requirements of the CEI plan regime. We decline to treat video-dialtone- related enhanced services differently from other new enhanced services.
-- Bell Operating Companies' Joint Petition for Waiver of Computer II Rules, Memorandum Opinion and Order, 10 FCC Rcd 1724 (Jan 11, 1995) (Interim Waiver Order)

22. In the interim, until the Commission acts on the California III remand, the BOCs must continue to comply with the procedures established in their approved ONA plans, since ONA requirements are independent of the removal of structural separation requirements.⁵⁹ For example, BOCs still must provide new ONA services that ESPs need to provide enhanced services.⁶⁰ The 120-day service request process permits ESPs to request a new ONA basic service and within 120 days to receive a response from the BOC of whether the BOC will provide the service.⁶¹ The BOC must give specific reasons if it declines to offer the service.   The BOC evaluation is to be based on the ONA selection criteria set forth in the original Computer III Phase I Order: market area demand, utility as perceived by ESPs, and costing and technical feasibility.   If an ESP finds the BOC response unsatisfactory, it may seek redress from the Commission by filing a petition for declaratory ruling.⁶² ESPs may also request that the Information Industry Liaison Committee (IILC) of the Alliance for Telecommunications Industry Solutions consider the technical feasibility of the service before requesting the service from one or more BOCs.
23. In addition, the BOCs must continue to comply with other safeguards against access discrimination, including CEI parameters and the equal access standard requirements discussed above, CPNI rules, nondiscrimination reporting requirements, and network information disclosure rules.⁶³ Our experience with these safeguards indicates that they are effective in reducing the ability of BOCs to engage in access discrimination.⁶⁴
24. Finally, as they could under the Computer III CEI regime, the BOCs may continue to perform on an integrated basis, planning, research, and development for new enhanced services, including technical and market trials.⁶⁵
. . . . .
30. Accordingly, we grant any necessary waivers, pending the completion of remand proceedings, so that BOCs are subject to the following requirements:
    a. BOCs may continue to provide existing enhanced services pursuant to approved CEI plans.   If new basic services are used to provide those enhanced services or major changes are made in the enhanced services as approved in specific CEI plans, the BOCs must file amendments to the CEI plans within sixty days.   Whether the Commission will seek public comment on those amendments will depend on the magnitude of the change.⁷¹ BOCs may continue to provide these services while the Commission reviews any amendments.
    b. BOCs may continue to provide existing enhanced services on an integrated basis pursuant to approved ONA plans.⁷² Each BOC is required to file CEI plans for enhanced services not covered by existing CEI plans within sixty days of the release date of this order.   These CEI plans will be placed on comment cycles and will be deemed approved in ninety days unless the Commission notifies the BOC otherwise.   Because the BOC ONA plans already incorporate the CEI parameters that will be reviewed in the CEI plans filed for these services, and to avoid customer disruption, BOCs may continue to provide these services pursuant to this waiver while the Commission reviews the CEI plans.
    c. BOCs must file CEI plans for new enhanced services that they propose.⁷³ New enhanced services shall not be provided until their CEI plans are approved by the Common Carrier Bureau.
    d. BOCs may continue existing market trials of enhanced services.   Within sixty days of the release of this order, for market trials currently underway, BOCs must file market trial notifications as required in the BOC Market Trial Order.⁷⁴ As indicated in that order, market trials will be deemed approved in ninety days unless the Commission notifies the BOC otherwise.   BOCs must follow the market trial requirements of the BOC Market Trial Order for new market trials they propose.
    e. As they could under the Computer III CEI plan regime prior to the lifting of structural separation, the BOCs may continue to perform on an integrated basis planning, research, and development for new enhanced services, including technical trials.   We note that although the Commission's 1990 Computer II waiver denied the BOCs this ability, the California III court has concluded that the Commission's strengthened cost accounting safeguards are adequate safeguards against improper cross- subsidization.   The possibility of access discrimination in integrated research and development activities is minimal, as the BOCs cannot discriminate in providing access to services that do not yet exist.   As the BOCs explain in their petition, the failure to grant such a waiver will lead to significant wasted expenditures in identifying noncompliant research and development activities, and could delay or halt the deployment of new enhanced services of benefit to consumers. ⁷⁵
-- Bell Operating Companies' Joint Petition for Waiver of Computer II Rules, Memorandum Opinion and Order, 10 FCC Rcd 1724 (Jan 11, 1995) (Interim Waiver Order)

Non Structural Safeguards

5. Pursuant to our CEI requirements, AT & T and the BOCs will be permitted to offer specific enhanced services on an unseparated basis if they: (a) file a CEI Plan and associated tariff material demonstrating that their implementation of a particular enhanced service satisfies our CEI requirements; (b) file a detailed cost allocation plan based on the proposals of our Joint Cost Notice; [FN15] and (c) adhere to interim requirements relating to network disclosure and customer proprietary network information (CPNI); and (d) receive our approval that their plans and actions satisfy our requirements. We will subject these interim, service-specific filings to expedited review after first putting them out for public comment.
6. As preconditions to complete structural relief for their enhanced services operations, we require AT & T and the BOCs to: (a) implement approved Open Network Architecture Plans, to be filed by February 1, 1988, that satisfy our CEI requirements and additional unbundling requirements through a set of tariffed Basic Service Elements; (b) file detailed cost allocation plans that comply with the requirements to be established in the pending Joint Cost proceeding; (c) adhere to modified versions of the existing network information disclosure requirements; and (d) follow certain procedures with respect to their basic services CNPI. While we specify the majority of these requirements in this Order, we defer to the Supplemental Notice certain aspects of the nondiscrimination, network information disclosure, and CPNI requirements.
--In the Matters of: Amendment of Sections 64.702 of the Commission's Rules and Regulations (Third Computer Inquiry); and Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities Authorizations Thereof Communications Protocols under Section 64.702 of the Commission's Rules and Regulations, CC Docket No. 85-229, Report and Order (June 16, 1986)

CEI

11. We believe that, in today=s telecommunications market, compliance with the Commission=s CEI requirements remains conducive to the operation of a fair and competitive market for information services. Moreover, we believe that full public disclosure of how a BOC intends to comply with these requirements facilitates the successful operation of the requirements themselves. Based on the record before us in this proceeding, and as we discuss below, we conclude that the BOCs= CEI plans have continuing importance in that they provide non-BOC ISPs with helpful information regarding their interconnection rights, options, and methods. These plans thus ensure that non-BOC ISPs have access to the underlying basic services that the BOCs use for their own information service offerings, access which enables those non-BOC ISPs to provide competitive offerings. We find that neither the protection afforded by ONA nor the effect of the 1996 Act has yet rendered the CEI plans superfluous as an effective means of making this information available and of promoting BOC compliance with their interconnection obligations.[30] For these reasons, we do not at this time eliminate the requirement that BOCs publicly disclose in a written document how they will comply with the Commission=s CEI parameters.
12. We further conclude, however, that, although the BOCs must continue to prepare CEI plans, we should no longer require BOCs to file their CEI plans with the Commission, or obtain the Commission=s approval of these plans, before initiating a new or changing an existing intraLATA information service. We conclude that the chief burdens associated with the CEI requirements B the administrative burden associated with filing the plans, and the delay in the introduction of new services B can be eliminated without compromising the efficient dissemination of the information contained in the BOC CEI plans. For these reasons, and as we discuss below, we eliminate the requirement that BOCs file with the Commission and obtain from the Commission approval of their CEI plans. In its place, we require the BOCs to post on their publicly accessible Internet page, linked to and searchable from the BOC=s main Internet page, their CEI plan for any new or altered intraLATA information service offering, and to notify the Common Carrier Bureau at the time of the posting.[31] Through this public disclosure requirement, we protect the emerging development of competition in the information services marketplace, which has yielded consumer benefits.

³⁰ See Computer III Phase I Order, 104 FCC 2d at 1039-42, && 154-166.
³¹ Specific posting and notification requirements are listed infra at & 20.

-- In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Report and Order (March 10, 1999).

In this Order, we adopt our tentative conclusion that BOCs should not be required either to file or to obtain pre-approval of CEI plans for information services that are offered through section 272 or section 274 separate affiliates. The reasons that persuade us to eliminate the CEI filing and approval process in the context of intraLATA information services that a BOC offers on an integrated basis B reduction of administrative burden and elimination of delay B apply with at least equal force to the intraLATA services that a BOC chooses to offer through a section 272 or section 274 separate affiliate. -- In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Report and Order ¶ 33 (March 10, 1999).

"BOCs were required to describe in their CEI plans: (1) the enhanced service(s) to be offered; (2) how the underlying basic service(s) would be made available for use by competing ESPs; and (3) how the BOCs would comply with the other nonstructural safeguards imposed by Computer III." -- In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service CCBPol 97-03 ORDER ¶ 3 (December 31, 1997) (footnote numbering off)

3. The requirement to file a CEI plan was first established in the Computer III proceeding, where the Commission adopted a regulatory framework through which BOCs could offer integrated enhanced and basic services. ¹⁰ As a first in implementing Computer III, a BOC was permitted to provide unregulated, "enhanced" services if it filed a CEI plan demonstrating that the regulated, basic services it used to provide the enhanced services were available to unaffiliated enhanced service providers (ESPs) on an unbundled basis with technical specifications, functional capabilities, and other quality and operational characteristics equal to those provided to the BOC's enhanced services. ¹¹ Requiring BOCs to file CEI plans was one of the nonstructural safeguards imposed by the Commission, in lieu of structural separation, to prevent cross-subsidization and access discrimination. ¹²

^10.Amendment of Section 64.702 of the Commission's rules and Regulations (Computer III), CC Docket No. 85-229, Phase I, 104 FCC 2d 958 (1986) (Phase I Order), recon., 2 FCC Rcd 3035 (1987) (Phase I Reconsideration Order), further recon., 3 FCC Rcd 1135 (1988) (Phase I Further Reconsideration Order), second further recon., 4 FCC Rcd 5927 (1989) (Phase I Second Further Reconsideration Order); Phase I Order and Phase I Reconsideration Order vacated California v. FCC, 905 F.2d 1217 (9th Cir. 1990); Phase II, 2 FCC Rcd 3072 (1987) (Phase II Order), recon., 3 FCC Rcd 1150 (1988) (Phase II Reconsideration Order), further recon., 4 FCC Rcd 5927 (1988) (Phase II Further Reconsideration Order); Phase II Order vacated, California v. FCC, 905 F.2d 1217 (9th Cir. 1990) (California I); Computer III Remand Proceeding, 5 FCC Rcd 7719 (1990) (ONA Remand Order), recon., 7 FCC Rcd 909 (1992), pets. for review denied, California v. FCC, 4 F.3d 1505 (9th Cir. 1993) (California II); Computer III Remand Proceedings: Bell Operating Company Safeguards and Tier 1 Local Exchange Company Safeguards, 6 FCC Rcd 7571 (1991) (BOC Safeguards Order), BOC Safeguards Order vacated in part and remanded, California v. FCC, 39 F.3d 919 (9th Cir. 1994) (California III), cert. denied, 115 S.Ct. 1427 (1995).
^11.Phase I Order, 104 FCC 2d at 964-65, paras. 4-5, 147, & n. 210.
^12.Computer III Remand Proceedings: Bell Operating Company Safeguards; and Tier 1 Local Exchange Company Safeguards, Notice of Proposed Rulemaking and Order, 6 FCC Rcd 174, 175 (1990) at para. 9.

In re US West Communications, Inc., Petition for Computer III Waiver, Order, 11 FCC Rcd. 1195 (Nov 6, 1995)

"In their CEI plans, BOCs were required to describe: (1) the enhanced service or services to be offered, (2) how the underlying basic services would be made available for use by competing ESPs, and (3) how the BOC would comply with the other nonstructural safeguards imposed by Computer III." -- In the Matter of Bell Atlantic Telephone Companies, Offer of Comparably Efficient Interconnection to Providers of Video Dialtone-Related Enhanced Services, DA 95-1283, Order ¶ 2 (June 9, 1995)

18. Since Computer III, the BOCs have been permitted to provide particular enhanced services on an integrated basis pursuant to approved service-specific CEI plans. [FN46] BOC CEI plans detailed how the BOCs proposed to define and comply with the CEI "equal access" parameters for specific enhanced services. Those CEI parameters include: interface functionality; unbundling of basic services; resale; technical characteristics; installation and maintenance reporting; end user access; availability as of the date the BOC offers its own enhanced services to the public; minimization of transport costs; and availability to all interested ESPs. Under CEI, the BOCs must offer ESPs interconnection to their networks at the same tariffed rates that the BOCs themselves pay. [FN47] CEI also requires the BOCs to provide ESPs with access to all network service elements that the BOCs need to offer their own enhanced services. [FN48] CEI therefore is intended to prevent the BOCs from providing competing ESPs network connections inferior to those that the BOCs themselves rely on. [FN49] After the implementation of ONA and the removal of structural separation requirements, the BOCs still have to offer network services to competing ESPs on a CEI "equal access" basis even though they are no longer obligated to file CEI plans for each new enhanced service they wish to offer. In the Computer III Phase I Order, the Commission determined that the equal access standard of CEI "will increase the public welfare by maximizing the availability of enhanced services to the public." [FN50] The Commission also concluded that CEI would deter access discrimination by the BOCs.
-- In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, Notice of Proposed Rulemaking, ¶ 18 (February 21, 1995)

5. As a first step in implementing Computer III, the Commission permitted the BOCs, pending full structural relief, to offer individual enhanced services on an integrated basis following approval of service-specific CEI plans.⁸ In their CEI plans, BOCs were required to describe: (1) the enhanced service or services to be offered, (2) how the underlying basic services would be made available for use by competing enhanced service providers (ESPs), and (3) how the BOC would comply with the other nonstructural safeguards Computer III imposed. Such other safeguards governed: timely disclosure to competing ESPs of network information, including technical interfaces; access to and use of customer proprietary network information (CPNI); and quarterly reporting to help ensure that BOC provision of basic services to competing ESPs was nondiscriminatory in terms of quality, installation, and maintenance. Market trials of enhanced services were also allowed pursuant to more limited filing requirements.⁹
-- Bell Operating Companies' Joint Petition for Waiver of Computer II Rules, Memorandum Opinion and Order, 10 FCC Rcd 1724 (Jan 11, 1995) (Interim Waiver Order)

21. CEI plans were designed to ensure that the "basic service functions utilized by a carrier-provided enhanced service [were] available to others on an unbundled basis, with technical specifications, functional capabilities, and other quality and operational characteristics, such as installation and maintenance times, equal to those provided to the carrier's enhanced services." ⁵⁴ BOC CEI plans detailed how BOCs proposed to comply with a set of "CEI parameters" for specific enhanced services. CEI parameters established in Computer III include: interface functionality, unbundling of basic services, resale, technical characteristics, installation and maintenance reporting, end user access, CEI availability, minimization of transport costs, and recipients of CEI.⁵⁵ Under the CEI requirements, the BOCs must provide ESPs with interconnection to the BOCs' networks at the same tariffed rates that the BOCs themselves pay.⁵⁶ BOCs must provide ESPs with access to all network service elements that the BOCs require for the provision of their own enhanced services.⁵⁷ CEI therefore prevents the BOCs from providing competing ESPs with network connections inferior to those the BOCs themselves rely on.⁵⁸
-- Bell Operating Companies' Joint Petition for Waiver of Computer II Rules, Memorandum Opinion and Order, 10 FCC Rcd 1724 (Jan 11, 1995) (Interim Waiver Order)

CEI Purpose

"The CEI requirements are designed to give ESPs equal and efficient access to the basic services that the BOCs use to provide their own enhanced services." In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service CCBPol 97-03 ORDER ¶ 8 (December 31, 1997) (footnote numbering off)

" CEI plans are one of the nonstructural safeguards the Commission adopted in lieu of structural separation, to prevent cross-subsidization and discrimination. " In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service CCBPol 97-03 ORDER ¶ 3 (December 31, 1997) (footnote numbering off)

"CEI, and the CEI parameters of the Phase I Order, are designed to prevent discrimination by the BOCs in the provision of specific enhanced services." -- In the Matter of Filing and Review of Open Network Architecture Plans, CC Docket No. 88-2, Phase I, MEMORANDUM OPINION AND ORDER ¶ 4 (December 22, 1988)

The Phase I Order replaced structural separation for BOC and AT & T enhanced service operations with a set of nonstructural safeguards designed to prevent improper cost shifting in the provision of all unregulated services and to prevent discrimination by these carriers in their provision of enhanced services. -- In the Matter of Filing and Review of Open Network Architecture Plans, CC Docket No. 88-2, Phase I, Memorandum Opinion And Order ¶ 17 (December 22, 1988)

CEI Plan Posting

CIX next requests that the Commission clarify or, if necessary, reconsider that the BOCs are obligated to post on their websites a complete copy of all their CEI plans -- rather than merely a copy of "new or altered" plans. We grant this request. In the Computer III Remand Order, the Commission gave a number of reasons why CEI plans for new or altered intraLATA information services should be made available on the BOCs' Internet pages. We noted, for example, that CEI plans provide useful information that is either not available, or not available in as much detail, from other sources, and that CEI plans present this information in a more usable form than is otherwise available to ISPs. We further noted that the existence of CEI plans helps the Commission enforce compliance with BOC interconnection obligations. We conclude that the same reasons we gave for requiring CEI plans for new or altered services to be posted on the Internet are equally applicable to the BOCs' current CEI plans. As CIX notes in its petition, it is important for all current CEI plans to be available on the BOCs' websites, including those previously approved and still effective plans. Otherwise, it would be difficult for the ISPs to get information regarding plans filed with the Commission under the prior CEI regime. Moreover, we do not believe that requiring the BOCs to post all their effective plans and effective plan amendments - both old and new - is unduly burdensome, especially given the benefit of having all these plans available in one, easily accessible location. Accordingly, we require that the BOCs post all their existing and new CEI plans and plan amendments on their Internet websites and notify the Common Carrier Bureau at the time of the posting.

-- In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Order, ¶ 6 (December 17, 1999).

For reasons we explain below, we conclude that although the BOCs must continue to comply with their CEI obligations, they should no longer be required to file or obtain pre-approval of CEI plans and plan amendments before initiating or altering an intraLATA information service. Instead, we will require the BOCs to post their CEI plans and plan amendments on their publicly accessible Internet sites, and to notify the Common Carrier Bureau upon such posting. -- In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Report and Order, ¶ 4 (March 10, 1999).

12. We further conclude, however, that, although the BOCs must continue to prepare CEI plans, we should no longer require BOCs to file their CEI plans with the Commission, or obtain the Commission=s approval of these plans, before initiating a new or changing an existing intraLATA information service. We conclude that the chief burdens associated with the CEI requirements B the administrative burden associated with filing the plans, and the delay in the introduction of new services B can be eliminated without compromising the efficient dissemination of the information contained in the BOC CEI plans. For these reasons, and as we discuss below, we eliminate the requirement that BOCs file with the Commission and obtain from the Commission approval of their CEI plans. In its place, we require the BOCs to post on their publicly accessible Internet page, linked to and searchable from the BOC=s main Internet page, their CEI plan for any new or altered intraLATA information service offering, and to notify the Common Carrier Bureau at the time of the posting.[31] Through this public disclosure requirement, we protect the emerging development of competition in the information services marketplace, which has yielded consumer benefits.

[30] See Computer III Phase I Order, 104 FCC 2d at 1039-42, && 154-166.

[31] Specific posting and notification requirements are listed infra at & 20.

-- In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Report and Order (March 10, 1999).

CEI Requirements

In a CEI plan, a BOC must describe how it intends to comply with the CEI "equal access" parameters for the specific enhanced service it intends to offer. The CEI equal access parameters, discussed in greater detail below, include: interface functionality; unbundling of basic services; resale; technical characteristics; installation, maintenance and repair; end user access; CEI availability; minimization of transport costs; and availability to all interested customers or ESPs. -- In the Matter of Bell Operating Companies Joint Petition for Waiver of Computer II Rules, DA 95-2264, Order ¶ 35 (October 31, 1995)

In the Phase I Order, the Commission established, nine CEI parameters that are designed to ensure that the basic services a BOC uses in its own enhanced service operations are available to

other ESPs in an equally efficient manner. The Commission made clear that the CEI parameters could be satisfied in a flexible manner, consistent with the particular services at issue. The

Commission "did not require absolute technical equality, but rather sought to provide fairness and efficiency for all competing enhanced service providers." Factors in evaluating whether this

standard has been met include the absence of systematic differences between the basic services given to the carrier and to others, end- user perception of quality, and utility to other ESPs. In the Matter of Application of Open Network Architecture and Nondiscrimination Safeguards to GTE Corporation, CC Docket No. 92-256, Memorandum Opinion and Order, ¶ 41 (July 29, 1995)

Interface Functionality

Interface Functionality. The BOC must Amake available standardized hardware and software interfaces that are able to support transmission, switching, and signalling functions identical to those utilized in the enhanced service provided by the carrier.@ This provision ensures that a competitive ISP will know what interfaces it must use to interconnect with the BOC=s network. ---In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Report and Order ¶ 13 (March 10, 1999) (footnotes omitted).

23. The interface functionality requirement obligates a carrier to "make available standardized hardware and software interfaces that are able to support transmission, switching, and signalling functions identical to those utilized in the enhanced service provided by the carrier." --In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Report and Order ¶ 13 (March 10, 1999) (footnotes omitted).

Interface Functionality: This parameter requires the carrier to "make available standardized hardware and software interfaces that are able to support transmission, switching, and signalling functions identical to those utilized in the enhanced service provided by the carrier." -- In the Matter of Bell Operating Companies Joint Petition for Waiver of Computer II Rules, DA 95-2264, Order ¶ 37 (October 31, 1995)

The Commission requires exchange carriers subject to CEI requirements to "make available standardized hardware and software interfaces that are able to support transmission, switching, and signaling functions identical to those utilized" by the carrier's own enhanced services. -- In the Matter of Application of Open Network Architecture and Nondiscrimination Safeguards to GTE Corporation, CC Docket No. 92-256, Memorandum Opinion and Order, ¶ 42 (July 29, 1995).

17. The interface functionality parameter requires the carrier to "make available standardized hardware and software interfaces that are able to support transmission, switching, and signalling functions identical to those utilized in the enhanced service provided by the carrier." -- In the Matter of Bell Atlantic Telephone Companies, Offer of Comparably Efficient Interconnection to Providers of Video Dialtone-Related Enhanced Services, DA 95-1283, Order (June 9, 1995)

137. The Phase I Order required carriers to provide ESPs with standardized hardware and software interfaces that support transmission, switching, and signaling functions identical to those utilized in the carrier's own enhanced service offerings. [FN257]

-- In the Matter of Filing and Review of Open Network Architecture Plans, CC Docket No. 88-2, Phase I, Memorandum Opinion And Order ¶ 137 (December 22, 1988)

Unbundling of Basic Service

Unbundling of Basic Services. The BOC must unbundle, and associate with a specific rate in the tariff, the basic services and basic service functions that underlie the carrier=s enhanced service offering. This provision ensures that a competitive ISP can purchase the underlying telecommunications services on which it bases its enhanced services. For example, an ISP might purchase tariffed transport services for its voicemail service. --In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Report and Order ¶ 13 (March 10, 1999) (footnotes omitted).

17. The unbundling requirement obligates a carrier to unbundle, and associate with a specific rate element in the tariff, the basic services and basic service functions that underlie the carrier's enhanced service offering. Nonproprietary information used by the carrier in providing the unbundled basic services must be made available as part of CEI. In addition, any options available to a carrier in the provision of such basic services or functions must be included in the unbundled offerings. -- In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service, CCBPol 97-03, Order, ¶ 17 (December 31, 1997).

The Commission requires the basic service functions that underlie a carrier's enhanced services to "be unbundled from other basic service offerings and associated with a specific rate element

in the CEI tariff." Nonproprietary information used by the carrier in providing the unbundled basic services must be made available as part of CEI. In addition, any options available to a

carrier in the provision of such basic services or functions must be included in the unbundled offerings. -- In the Matter of Application of Open Network Architecture and Nondiscrimination Safeguards to GTE Corporation, CC Docket No. 92-256, Memorandum Opinion and Order, ¶ 44 (July 29, 1995)

11. The unbundling parameter requires the carrier to unbundle, and associate with a specific rate element in the tariff, the basic services and basic service functions that underlie the carrier's enhanced service offering. Nonproprietary information used by the carrier in providing the unbundled basic services must be made available as part of CEI. In addition, any options available to a carrier in the provision of such basic services or functions must be included in the

unbundled offerings. -- In the Matter of Bell Atlantic Telephone Companies, Offer of Comparably Efficient Interconnection to Providers of Video Dialtone-Related Enhanced Services, DA 95-1283, Order (June 9, 1995)

Unbundling of Basic Services: This parameter requires the carrier to unbundle, and associate with a specific rate element in the tariff, the basic services and basic service functions that underlie the carrier's enhanced service offering. Nonproprietary information used by the carrier in providing the unbundled basic services must be made available as part of CEI. In addition, any options available to a carrier in the provision of such basic services or functions must be included in the unbundled offerings. -- In the Matter of Bell Operating Companies Joint Petition for Waiver of Computer II Rules, DA 95-2264, Order, ¶ 36 (October 31, 1995)

Resale

Resale. The BOC's "enhanced service operations [must] take the basic services used in its enhanced services offerings at their unbundled tariffed rates as a means of preventing improper cost-shifting to regulated operations and anticompetitive pricing in unregulated markets." This provision ensures that both BOC and non-BOC ISPs pay the same amount for the underlying telecommunications services obtained from the BOC. --In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Report and Order ¶ 13 (March 10, 1999) (footnotes omitted).

25. The resale requirement established in Computer III obligates a carrier's enhanced service operations to take basic services, used in its enhanced service offerings, at their unbundled tariffed rates as a means of preventing improper cost-shifting to regulated operations and anticompetitive pricing in unregulated markets. -- In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service, CCBPol 97-03, Order, ¶ 25 (December 31, 1997).

Resale: This parameter requires the "carrier's enhanced service operations to take the basic services used in its enhanced service offerings at their unbundled tariffed rates as a means of preventing improper cost-shifting to regulated operations and anti-competitive pricing in unregulated markets." -- In the Matter of Bell Operating Companies Joint Petition for Waiver of Computer II Rules, DA 95-2264, Order, ¶ 38 (October 31, 1995)

Under CEI principles, a carrier subject to CEI requirements must take basic services used in its enhanced service offerings at their unbundled tariffed rates, in order to prevent improper cost-shifting to regulated markets and anticompetitive pricing in unregulated markets. -- In the Matter of Application of Open Network Architecture and Nondiscrimination Safeguards to

GTE Corporation, CC Docket No. 92-256, Memorandum Opinion and Order, ¶ 46 (July 29, 1995)

19. The resale parameter requires the "carrier's enhanced service operations to take the basic services used in its enhanced service offerings at their unbundled tariffed rates as a means of preventing improper cost-shifting to regulated operations and anticompetitive pricing in unregulated markets." -- In the Matter of Bell Atlantic Telephone Companies, Offer of Comparably Efficient Interconnection to Providers of Video Dialtone-Related Enhanced Services, DA 95-1283, Order, ¶ 19 (June 9, 1995)

Technical Characteristics

Technical Characteristics. The BOC must provide basic services with technical characteristics that are equal to the technical characteristics the carrier uses for its own enhanced services. This provision ensures that a competitive ISP can base its enhanced offering on telecommunications services that are of equal quality to those which the BOC's customers receive. --In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Report and Order ¶ 13 (March 10, 1999) (footnotes omitted).

27. This requirement obligates a carrier to provide basic services with technical characteristics that are equal to the technical characteristics the carrier uses for its own enhanced services. -- In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service, CCBPol 97-03, Order, ¶ 27 (December 31, 1997).

Technical Characteristics: This parameter requires a carrier to provide basic services with technical characteristics that are equal to the technical characteristics the carrier uses for its own enhanced services. -- In the Matter of Bell Operating Companies Joint Petition for Waiver of Computer II Rules, DA 95-2264, Order, ¶ 39 (October 31, 1995)

The Commission requires a carrier subject to the CEI requirements to provide to ESPs "basic services with technical characteristics that are equal to those of the basic services it utilizes for its own enhanced services." In the Matter of Application of Open Network Architecture and Nondiscrimination Safeguards to GTE Corporation, CC Docket No. 92-256, Memorandum Opinion and Order, ¶ 48 (July 29, 1995)

21. This parameter requires a carrier to provide basic services with technical characteristics that are equal to the technical characteristics the carrier uses for its own enhanced services. -- In the Matter of Bell Atlantic Telephone Companies, Offer of Comparably Efficient Interconnection to Providers of Video Dialtone-Related Enhanced Services, DA 95-1283, Order ¶ 21 (June 9, 1995)

144. The Phase I Order requires that each BOC offer basic services to ESPs with technical characteristics that are equal to those of the basic services the BOC utilizes for its own enhanced services. These characteristics include, but are not limited to: transmission parameters, such as bandwidth and bit rates; quality, such as bit error rate and delay distortions; and reliability, such as mean time between failures. [FN271] The Phase I Reconsideration stated that the standard "does not demand impossible or grossly inefficient over-engineering of the network so that absolute equality is always achieved." We specifically recognized, for example, that the signal level of an analog data connection will decrease to some extent with the loop distance from the central office. [FN272]

-- In the Matter of Filing and Review of Open Network Architecture Plans, CC Docket No. 88-2, Phase I, Memorandum Opinion And Order ¶ 144 (December 22, 1988)

Installation, Maintenance, and Repair

Installation, Maintenance, and Repair. The BOC must provide the same time periods for installation, maintenance, and repair of the basic services and facilities included in a CEI offering as those the carrier provides to its own enhanced service operations. This provision ensures that a competitive ISP can offer its customers support services of equal quality to those which the BOC's customers receive. --In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Report and Order ¶ 13 (March 10, 1999) (footnotes omitted).

30. This requirement ensures that the time periods for installation, maintenance, and repair of the basic services and facilities included in a CEI offering are the same as those a carrier provides to its own enhanced service operations. Carriers also must satisfy reporting and other requirements showing that they have met this requirement. -- In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service, CCBPol 97-03, Order, ¶ 30 (December 31, 1997).

Installation, Maintenance and Repair: This parameter requires that the time periods for installation, maintenance and repair of the basic services and facilities included in a CEI offering must be the same as those the carrier provides to its own enhanced service operations. Carriers must satisfy reporting and other requirements showing that they have met this requirement. -- In the Matter of Bell Operating Companies Joint Petition for Waiver of Computer II Rules, DA 95-2264, Order, ¶ 40 (October 31, 1995)

This parameter requires that the time periods for installation, maintenance and repair of the basic services and facilities included in a CEI offering must be the same as those that the carrier provides to its own enhanced service operations. Carriers subject to this CEI requirement must satisfy reporting and other requirements showing that they have met this requirement. -- In the Matter of Application of Open Network Architecture and Nondiscrimination Safeguards to GTE Corporation, CC Docket No. 92-256, Memorandum Opinion and Order, ¶ 50 (July 29, 1995)

23. This parameter requires that the time periods for installation, maintenance and repair of the basic services and facilities included in a CEI offering must be the same as those the carrier provides to its own enhanced service operations. The Commission also notes that carriers must satisfy reporting and other requirements showing that they have met this requirement. -- In the Matter of Bell Atlantic Telephone Companies, Offer of Comparably Efficient Interconnection to Providers of Video Dialtone-Related Enhanced Services, DA 95-1283, Order, ¶ 23 (June 9, 1995)

End User Access

End User Access. The BOC must provide to all end users the same abbreviated dialing and signalling capabilities that are needed to activate or obtain access to enhanced services that use the carrier's facilities, and provides to end users equal opportunities to obtain access to basic facilities through derived channels, whether they use the enhanced service offerings of the carrier or of a competitive provider. This provision ensures that a competitive ISP's customers will have the same access as the BOC's customers to special network functions offered in conjunction with information services. --In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Report and Order ¶ 13 (March 10, 1999) (footnotes omitted).

32. This requirement obligates a carrier to provide to all end users the same abbreviated dialing and signalling capabilities that are needed to activate or obtain access to enhanced services that use the carrier's facilities. This requirement provides end users equal opportunities to obtain access to basic facilities through derived channels, whether they use the enhanced service offerings of the carrier or of a competing provider. -- In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service, CCBPol 97-03, Order, ¶ 32 (December 31, 1997).

End User Access: This parameter requires the carrier to provide to all end users the same capabilities to use abbreviated dialing or signalling to activate or obtain access to enhanced services that utilize the carrier's facilities. This parameter also requires the carrier to provide end users equal opportunities to obtain access to basic facilities through derived channels, whether they use the enhanced service offerings of the carrier or of a competing provider. -- In the Matter of Bell Operating Companies Joint Petition for Waiver of Computer II Rules, DA 95-2264, Order, ¶ 41 (October 31, 1995)

This CEI parameter requires a carrier to provide to all end users the same capability to use abbreviated dialing or signalling to activate or access enhanced services that utilize the carrier's facilities. A carrier also must provide end users the same capability to access basic facilities through derived channels, whether the end users subscribe to the enhanced service offerings of the carrier or a competing provider. -- In the Matter of Application of Open Network Architecture and Nondiscrimination Safeguards to GTE Corporation, CC Docket No. 92-256, Memorandum Opinion and Order, ¶ 51 (July 29, 1995)

25. This parameter requires the carrier to provide the same capabilities to all end users with respect to use of abbreviated dialing or signalling to activate or access enhanced services that utilize the carrier's facilities. This parameter also requires the carrier to provide end users equal opportunities to access basic facilities through derived channels, whether they use the enhanced service offerings of the carrier or of a competing provider. -- In the Matter of Bell Atlantic Telephone Companies, Offer of Comparably Efficient Interconnection to Providers of Video Dialtone-Related Enhanced Services, DA 95-1283, Order, ¶ 25 (June 9, 1995)

CEI Availability

CEI Availability. The BOC must make its CEI offering available and fully operational on the date that it offers its corresponding enhanced service to the public, and provide a reasonable period of time when prospective users of the CEI offering can use the CEI facilities and services for purposes of testing their enhanced service offerings. This provision ensures that a non-BOC ISP is not put at a competitive disadvantage by a BOC initiating a service before the BOC makes interconnection with the BOC's network available to competitive ISPs, so that they are able to initiate a comparable service. --In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Report and Order ¶ 13 (March 10, 1999) (footnotes omitted).

34. This requirement obligates a carrier providing or marketing a CEI offering to make that CEI offering available and fully operational on the date that it offers its corresponding enhanced service to the public. The requirement also obligates a carrier to provide a reasonable period of time prior to that date when prospective users of the CEI offering can use the CEI facilities and services for purposes of testing their enhanced service offerings. Consequently, the Commission has required the BOCs to notify unaffiliated ESPs in advance about the impending deployment of new basic services. As noted above at paragraph six, the BOCs are required to file the appropriate state and federal tariffs for their ONA services. In addition, the Commission has separately stated that a carrier's CEI plan should contain a description of the geographic areas in which it will offer the enhanced service, as well as the network locations within those areas through which it will provide such service. -- In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service, CCBPol 97-03, Order (text) (December 31, 1997).

CEI Availability: This parameter requires a carrier's CEI offering to be available and fully operational on the date that it offers its corresponding enhanced service to the public. The parameter also requires the carrier to provide a reasonable time prior to that date when prospective users of the CEI offering can utilize the CEI facilities and services for purposes of testing their enhanced service offerings. -- In the Matter of Bell Operating Companies Joint Petition for Waiver of Computer II Rules, DA 95-2264, Order, ¶ 42 (October 31, 1995)

This parameter requires a carrier's CEI offerings to be available and fully operational on the date that the carrier offers its enhanced service to the public. The Commission also requires the carrier to specify a reasonable time before that date when prospective users of the CEI offering can use those facilities and services for testing their enhanced service offerings. -- In the Matter of Application of Open Network Architecture and Nondiscrimination Safeguards to GTE Corporation, CC Docket No. 92-256, Memorandum Opinion and Order, ¶ 53 (July 29, 1995)

27. This parameter requires a carrier's CEI offering to be available and fully operational on the date that it offers its corresponding enhanced service to the public. The parameter also requires the carrier to provide a reasonable time prior to that date when prospective users of the CEI offering can utilize the CEI facilities and services for purposes of testing their enhanced service offerings. -- In the Matter of Bell Atlantic Telephone Companies, Offer of Comparably Efficient Interconnection to Providers of Video Dialtone-Related Enhanced Services, DA 95-1283, Order (June 9, 1995)

Minimization of Transport Costs

Minimization of Transport Costs. The BOC must provide competitors with interconnection facilities that minimize transport costs. This provision ensures that BOCs can not require competitive ISPs to purchase unnecessarily expensive methods of interconnection with the BOC's network. --In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Report and Order ¶ 13 (March 10, 1999) (footnotes omitted).

36. This requirement obligates carriers to provide other ESPs with interconnection facilities that minimize transport costs. -- In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service, CCBPol 97-03, Order, ¶ 36 (December 31, 1997).

Minimization of Transport Costs: This parameter requires carriers to provide competitors with interconnection facilities that minimize transport costs. -- In the Matter of Bell Operating Companies Joint Petition for Waiver of Computer II Rules, DA 95-2264, Order, ¶ 43 (October 31, 1995)

This parameter requires carriers subject to CEI requirements to provide competitors with interconnection facilities that minimize transport costs . . . The Commission does not require LECs to provide physical collocation for ONA. The Commission has upheld the use of price

parity by the BOCs to satisfy their obligation to minimize transmission costs, and specifically has found two miles to be a reasonable minimum distance for price parity associated with a

distance-sensitive banded tariff. -- In the Matter of Application of Open Network Architecture and Nondiscrimination Safeguards to GTE Corporation, CC Docket No. 92-256, Memorandum Opinion and Order, ¶¶ 55-57 (July 29, 1995)

29. This parameter requires carriers to provide competitors with interconnection facilities that minimize transport costs. -- In the Matter of Bell Atlantic Telephone Companies, Offer of Comparably Efficient Interconnection to Providers of Video Dialtone-Related Enhanced Services, DA 95-1283, Order (June 9, 1995)

We also reaffirmed that the BOCs must minimize the transport costs incurred by other ESPs that connect with the BOCs' basic service facilities, but we clarified that multiplexing those connections to aggregate traffic is not the only acceptable cost-reduction technique. [FN30] Instead, a BOC may satisfy this requirement by charging the same transmission rates to all enhanced service providers, including its own enhanced service operations and those of noncollocated competitors. -- In the Matter of Filing and Review of Open Network Architecture Plans, CC Docket No. 88-2, Phase I, Memorandum Opinion And Order ¶ 22 (December 22, 1988)

150. The Phase I Order declined to require the BOCs to provide collocation opportunities to ESPs. Instead, we required BOCs to provide interstate facilities that minimize transmission costs. We stated that loop or trunk multiplexing is one technique for minimizing such costs and that collocation is another option, and required carriers to demonstrate what steps they would take to reduce transmission costs for competitors. [FN285]

151. The Phase II Reconsideration held that BOCs could satisfy our requirement to minimize transmission costs by offering price parity. We said that "carriers need only minimize transmission costs through some means or charge themselves the same rates that they charge others." [FN286]

-- In the Matter of Filing and Review of Open Network Architecture Plans, CC Docket No. 88-2, Phase I, Memorandum Opinion And Order (December 22, 1988)

Recipients of CEI

Availability to All Interested ISPs

In the Matter of

Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services

38. This requirement prohibits a carrier from restricting the availability of the CEI offering to any particular class of customer or enhanced service competitor.

-- In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service, CCBPol 97-03, Order (December 31, 1997).

Recipients of CEI: This parameter prevents carriers from restricting the availability of the CEI offering to any particular class of customer or enhanced service competitor.

-- In the Matter of Bell Operating Companies Joint Petition for Waiver of Computer II Rules, DA 95-2264, Order, ¶ 44 (October 31, 1995)

This parameter prohibits carriers subject to CEI requirements from restricting the availability of CEI offerings to any particular class of customer or enhanced service competitor. -- In the Matter of Application of Open Network Architecture and Nondiscrimination Safeguards to GTE Corporation, CC Docket No. 92-256, Memorandum Opinion and Order, ¶ 58 (July 29, 1995)

31. This parameter prevents carriers from restricting the availability of the CEI offering to any particular class of customer or enhanced service competitor. -- In the Matter of Bell Atlantic Telephone Companies, Offer of Comparably Efficient Interconnection to Providers of Video Dialtone-Related Enhanced Services, DA 95-1283, Order, ¶ 31 (June 9, 1995)

Integrated Basis

"The Computer III decision concluded that, in the longer term, with the implementation of Open Network Architecture (ONA), the BOCs should be allowed to provide integrated enhanced services without prior Commission approval of service-specific CEI plans." -- In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service, CCBPol 97-03, Order ¶ 4 (December 31, 1997) (footnote number off).

"As a first step in implementing Computer III, the Commission permitted the BOCs,
which remained subject to various structural separation requirements, to offer individual enhanced services on an integrated basis following approval of service-specific CEI plans." -- In the Matter of Bell Atlantic Telephone Companies, Offer of Comparably Efficient Interconnection to Providers of Video Dialtone-Related Enhanced Services, DA 95-1283, Order ¶ 2 (June 9, 1995)

note 4. By the term "integrated," we refer to the provision of enhanced services and basic services in a manner not consistent with the Computer II separation requirements. Under structural integration, BOCs have been able to offer enhanced services without establishing separate subsidiary companies, hiring separate personnel, or using separate computer equipment and other facilities. BOCs are still permitted to offer their enhanced services through subsidiaries, but those subsidiaries can share personnel and resources with the parent company.
--Bell Operating Companies' Joint Petition for Waiver of Computer II Rules, Memorandum Opinion and Order, 10 FCC Rcd 1724 (Jan 11, 1995) (Interim Waiver Order)

CEI Temporary Requirement

Several BOCs observe that, as we acknowledged in the Further Notice, the Commission originally intended CEI plans to be an interim measure that would in due course be supplanted by the Commission=s ONA scheme. Two reasons cause us to reevaluate that position, and to determine that, independent of ONA, publicized CEI plans remain valuable safeguards to competition at this point in time. First, the growth of the information service industry leads us to believe that many more, and more diverse, ISPs now exist than the Commission conceived at the inception of the ONA and CEI requirements in 1986. The great majority of these ISPs depend on access to the BOCs= public switched telephone network to reach their customers. Many of these ISPs, especially newer or smaller entities, or those not affiliated with a competitive LEC, may understandably find a BOC=s CEI plan, which facilitates efficient interconnection to basic services, more useful than a voluminous ONA filing, which primarily concerns interconnection to network elements.

-- In the Matter of Computer III Remand Proceeding: Bell Operating Company Provision of Enhanced Services, CC Docket No. 95-20, CC Docket No. 98-10, Report and Order ¶ 18 (March 10, 1999) (footnotes omitted).

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