[Federal Register Volume 66, Number 133 (Wednesday, July 11, 2001)]
[Rules and Regulations]
[Pages 36206-36208]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-17168]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 53
[CC Docket No. 96-149; FCC 01-140]
Implementation of the Non-Accounting Safeguards of Section 271
and 272 of the Communications Act of 1934
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: This document summarized the Remand Order reaffirming the
Commission's conclusion in the Implementation of the Non-Accounting
Safeguards of Section 271 and 272 of the Communications Act of 1934, as
amended (Non-Accounting Safeguards Order published January 21, 1997 at
62 FR 2927), that the term ``interLATA service'' used in section 271
encompasses interLATA information services as well as interLATA
telecommunications services.
DATES: Effective July 11, 2001.
FOR FURTHER INFORMATION CONTACT: Brent Olson, Deputy Chief, Policy and
Program Planning Division, Common Carrier Bureau, (202) 418-1580.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order
on Remand, CC Docket No. 96-149, FCC 01-140, adopted April 23, 2001 and
released April 27, 2001. The complete text of this Order is available
for inspection and copying during normal business hours in the FCC
Reference Information Center, Courtyard Level, 445 12th Street, SW.,
Washington, DC, and also may be purchased from the Commission's copy
contractor, International Transcription Services, (ITS, Inc.), CY-B400,
445 12th Street, SW., Washington, DC.
Synopsis
1. Section 271 of the Communications Act of 1934, as amended
(Communications Act or Act), states that neither a Bell operating
company (BOC) nor its affiliate may provide ``interLATA services''
except as set forth in that section. In the Non-Accounting Safeguards
Order, the Commission concluded that the term ``interLATA services'' as
used in section 271 encompasses interLATA telecommunications services
and interLATA information services. Following the Commission's
reconsideration of other aspects of the Non-Accounting Safeguards
Order, the Bell Atlantic telephone companies (now known as the Verizon
telephone companies) and US WEST, Inc. (now known as Qwest
Communications International Inc.) (collectively, Petitioners)
petitioned for judicial review of the Commission's determination that
interLATA information services fall within the scope of interLATA
services. Because the arguments advanced by the Petitioners in their
appellate brief had not been raised in the administrative proceeding,
the Commission moved for a voluntary remand to consider further the
issues raised by the Petitioners. The D.C. Circuit granted the
Commission's motion.
2. In this Order on Remand, the Commission examines the scope of
the term ``interLATA services'' and reaffirms the Commission's
conclusion in the Non-Accounting Safeguards Order that the term
``interLATA services'' as used in section 271 encompasses interLATA
information services as well as interLATA telecommunications services.
As summarized, the Commission finds that conclusion the most reasonable
given the statutory language, structure, and history. The Commission
also finds that its 1998 Universal Service Report to Congress is not
inconsistent with this conclusion. A BOC therefore may provide
interLATA information services only in accordance with the provisions
of section 271.
3. Our conclusion reaffirms the longstanding view of the federal
courts and this Commission that limitations on BOC provision of
interLATA extend to interLATA information services. The D.C. Circuit
examined precisely this question within the contours of the MFJ and
explicitly rejected claims by some BOCs that information service cannot
also constitute the provision of interLATA telecommunications in the
context of the MFJ's interLATA prohibition. The Commission also reached
this same conclusion in the Non-Accounting Safeguards Order, finding
that an information service that contains a bundled interLATA
telecommunications component includes ``telecommunications'' between
points located in different LATAs, and thereby satisfies the statutory
definition of an ``interLATA service.''
4. Even though, under the Communications Act of 1934, as amended,
the terms ``information service'' and ``telecommunications service''
are mutually exclusive, each is a subset of the broader term
``interLATA services'' insofar as each type of service involves
telecommunications that cross LATA boundaries. Indeed, this matter
apparently was so clear in 1996 that the BOCs themselves urged the same
construction of the statutory language. In a reversal of their prior
position, the Petitioners claimed that the statutory language
``clearly'' requires precisely the opposite of what they previously
asserted was the ``clear'' meaning. We reject their latest position as
contrary to the Act's text, structure, history, and purpose.
I. Statutory Language
5. Whether section 271's restriction on the BOC's provision of
interLATA services includes interLATA information services depends on
the statutory language.
A. Is the InterLATA Restriction in Section 271(a) Governed by a Plain
Meaning Interpretation?
6. The BOCs contend that a straightforward reading of the Act's
definitions shows that a BOC that provides an information service via
telecommunications cannot also be deemed to be providing an
``interLATA,'' which is defined as a form of telecommunications. We
conclude that the relevant statutory definitions, either separately or
in combination, do not clearly indicate whether ``interLATA services''
in section 271 includes or excludes information services. Rather, we
find that including interLATA information
[[Page 36207]]
services within the scope of ``interLATA services'' in section 271 is
the interpretation that most reasonably fits with the statutory
language.
B. Do InterLATA Services as Used in Section 271(a) Encompass Only
Separate Offerings of Telecommunications?
7. In the BOCs' view, the ``telecommunications'' referenced in the
definition of ``interLATA service'' must comprise a separate offering
to the customer and cannot be an input in the offering of an
information or other service. Such an interpretation, however, is not
supported in the statute because ``interLATA service'' does not require
that the telecommunications aspect of such a service be provided
directly to end-users rather than as a component in an unbundled
offering. It suffices under the broad ``interLATA services'' definition
that the information service is conveyed via telecommunications that is
interLATA in nature.
C. What Impact Does the Commission's Previous Interpretation of the
Term ``Provide,'' as Used in Section 271(a), Have on the Scope of the
Term ``InterLATA Services?''
8. The term ``provide'' in section 271 must be construed in the
context of the unique terms, structure, history, and purposes of that
section. Use of the term ``provide'' in section 271(a) therefore must
be considered in light of that section's dual purposes of preventing
the BOCs from using bottleneck local facilities to discriminate in
favor of their owned or leased interLATA facilities and giving the BOCs
maximum incentive to open their local markets to competition. Thus,
section 271's use of ``provide'' should be read to apply to information
services that include interLATA transmission components.
II. Statutory Structure
9. Our conclusion that interLATA services encompass information
services permits a uniform application of the terms and structure of
sections 271 and 272. Section 271(g) explicitly exempts some
information services from the interLATA services restriction in section
271(a). By exempting these services, the statute presupposes that
``incidental interLATA services'' are a subset of the broader category
of interLATA services to which the restriction applies. If information
services identified in section 271(g), when conveyed via interLATA
telecommunications, were not also ``interLATA services,'' it would have
been unnecessary for Congress to exempt them from section 271(a)'s
restriction.
10. The BOC's claim that Congress enacted certain provisions of
section 271(g) as mere ``extra, unnecessary assurance'' that certain
specified information services were not intended to be included within
section 271(a)'s interLATA service restriction even though, under the
BOC's rationale, such services should already be excluded from the
section 271(a) restriction, under the plain meaning of section 271(a).
This argument is flawed in multiple respects. First, it fails to
interpret the statutory language in a manner that gives meaning to each
word. Moreover, the BOC's argument conflicts with section 271(h), which
states that the exceptions in section 271(g) are to be narrowly
construed. Finally, the BOC's position would cause tension between
section 271 and certain provisions of section 272, which requires the
BOCs to provide both interLATA telecommunications services and
interLATA information services through a separate affiliate.
III. Statutory Purpose and History
11. Allowing the BOCs immediately to provide information services
across LATA boundaries would reduce the BOC's incentive to comply with
the Section 271 market-opening requirements. We find no evidence that
Congress intended to blunt the effectiveness of this incentive by
excluding BOC provision of in-region, interLATA information services
from the restrictions of section 271.
A. MFJ Precedent
12. Prior to the 1996 Act, the service offerings of the BOCs were
governed by the consent decree, commonly known as the Modification of
Final Judgment or MFJ, that settled the Department of Justice's
antitrust suit against AT&T and required the divestiture of the BOCs.
The MFJ prohibited the BOCs from entering certain lines of business,
including interexchange (i.e., long distance) services and information
services (provided on either an interLATA or intraLATA basis). Although
the district court overseeing the decree eventually lifted the
restriction on providing information services within a LATA, in the
Gateway Services Appeal the court left intact the MFJ's ``core''
interLATA restrictions, which prevented the BOCs from providing
information services on an interLATA basis.
B. Legislative History and Purpose
13. The 1996 Act enacted market-opening mechanisms to remove
impediments to competition and give all carriers an opportunity to
provide local services. Section 271 established a process for the BOCs
to gain entry into the long distance market. However, Congress chose to
maintain the MFJ's restriction on BOC provision of in-region, interLATA
services until the BOC's local markets are open to competition.
14. In enacting the 1996 Act, Congress modified the interLATA
restriction explicitly to allow the immediate provision of out-of-
region interLATA services. The BOCs claim that this action somehow
shows that Congress also intended to lift the MFJ's restriction on
interLATA transmission of information services. However, nothing in the
1996 Act or its legislative history suggests that Congress intended to
overrule the Gateway Services Appeal. We are not persuaded that
Congress would preserve the in-region, interLATA restriction using
language similar to that used in the decree yet intend a result sharply
divergent from the D.C. Circuit's interpretation of that restriction.
To the contrary, when Congress intended to modify the MFJ's
restrictions, as in the case of out-of-region interLATA services, it
did so explicitly.
15. We disagree with the BOCs that our construction of section 271
undermines Congress's goal of ``opening all telecommunications markets
to competition.'' Congress did not seek to achieve the market-opening
aspects of the 1996 Act by permitting the BOCs to provide interLATA
immediately. We also reject the BOC's argument that treating interLATA
information services as interLATA services will somehow subject
information service providers to regulation as common carriers. The
BOC's argument ignores the Act's distinction between
``telecommunications'' and ``telecommunications service.'' We also are
not persuaded that the current state of the law results in a
competitive disadvantage for the BOCs.
IV. Universal Service Report to Congress
16. Finally, the BOCs contend that our conclusion that the term
``interLATA services'' in section 271 includes interLATA information
services is inconsistent with statements the Commission made in a 1998
Universal Service Report to Congress. The BOCs rely heavily on certain
statements read in isolation and taken out of context to suggest that
the terms ``information services'' and ``telecommunications'' are
mutually exclusive. That language, however, is properly interpreted as
[[Page 36208]]
distinguishing between information services and telecommunications
services, both of which include and use telecommunications.
17. In fact, the Report to Congress recognized that in cases in
which an information service provider owns the underlying transmission
facilities, and engages in data transport over those facilities in
order to provide an information service, one could argue that the
information service provider is ``providing'' telecommunications to
itself by furnishing raw transmission capacity for its own use.
Although the Commission does not currently require such information
service providers to contribute to universal service mechanisms, the
Commission indicated that it might be appropriate to reexamine that
result. Moreover, the Commission examined the services provided by
information service providers in general, leaving room for a different
conclusion in specific situations.
List of Subjects in 47 CFR Part 53
Communications common carriers, Telecommunications, Bell operating
companies.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 01-17168 Filed 7-10-01; 8:45 am]
BILLING CODE 6712-01-M