********************************************************    
                         NOTICE
********************************************************

This document was converted from
WordPerfect to ASCII Text format.

Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.

All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.

Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.

If you need the complete document, download the
WordPerfect version or Adobe Acrobat version, if available.

*****************************************************************
     

                            Before the
                FEDERAL COMMUNICATIONS COMMISSION
                     Washington, D.C.  20554



In the Matter of                        )
                                   )
Implementation of the Local Competition      )    CC Docket No. 96-98
Provisions in the Telecommunications Act          )
of 1996                            )
                                   )
Interconnection between Local Exchange       )    CC Docket No. 95-185
Carriers and Commercial Mobile Radio         )
Service Providers                       )
                                   )


                              ORDER

   Adopted:  December 18, 1996          Released: December 18, 1996 

By the Commission:

                         I. Introduction

     1.  On August 1, 1996, the Commission adopted rules implementing the local
competition provisions of the Telecommunications Act of 1996 (1996 Act).  On October 2,
1996, the Rural Telephone Coalition (RTC) filed a motion for stay of three rules adopted in the
First Report and Order pending judicial review.  Oppositions to the motion for stay were filed
by MCI, the Association for Local Telecommunications Service (ALTS), and the National
Cable Television Association (NCTA).  For the reasons set forth below, we dismiss the
motion in part, and otherwise deny the motion for stay.

                          II. Background

     2.  Section 251(c) of the Communications Act of 1934, as amended, (the Act) imposes
on incumbent local exchange carriers (LECs) obligations regarding interconnection, resale of
services, and unbundled network elements.  Section 251(f)(1) of the Act provides that a rural
telephone company is exempt from the requirements of section 251(c) unless the state
commission finds that the rural carrier has received a bona fide request for interconnection,
services, or network elements, and the state commission determines that the request "is not
unduly economically burdensome, is technically feasible, and is consistent with section 254
(other than subsections (b)(7) and (c)(1)(D) thereof)."  Section 251(f)(2) of the Act permits
LECs "with fewer than 2 percent of the Nation's subscriber lines installed nationwide" to
petition a state commission for suspension or modification of application of one or more
requirements of sections 251(b) or 251(c).  The petition shall be granted to the extent that, and
for such duration as, the state commission determines that the suspension or modification:

          (A) is necessary--
               (i) to avoid a significant adverse economic impact on users of
          telecommunications services generally;
               (ii) to avoid imposing a requirement that is unduly economically
          burdensome; or
               (iii) to avoid imposing a requirement that is technically infeasible; and
     (B) is consistent with the public interest, convenience, and necessity.       
     
     3.  In the First Report and Order, and in Section 51.405 of the Commission's rules, the
Commission held that, once a requesting carrier has made a bona fide request for
interconnection, services, or network elements, incumbent rural LECs bear the burden of
proving that they should continue to be exempt from the requirements of section 251(c).  The
Commission also offered guidance on what would constitute an "unduly" economically
burdensome requirement for purposes of sections 251(f)(1) and 251(f)(2), holding that the
incumbent rural carrier must offer evidence that the application of the requirements of section
251(c) of the Act would be likely to cause economic burden "beyond the economic burden that
is typically associated with efficient competitive entry."  

     4.  Section 252(a) of the Act, entitled "Agreements Arrived at Through Negotiation,"
provides, in part, that, "[t]he agreement, including any interconnection agreement negotiated
before the date of enactment of the Telecommunications Act of 1996, shall be submitted to the
State commission under subsection (e) of this section."  In the First Report and Order, and as
set forth in Section 51.303 of its rules, the Commission concluded that interconnection
agreements that were reached before the 1996 Act was enacted must be submitted to the state
commission for review under section 252, including agreements between adjacent incumbent
local service providers.  In addition, section 252(i) of the Act requires a LEC to make
available "any interconnection, service, or network element provided under an agreement
approved under" section 252 to which the LEC is a party to any other requesting
telecommunications carrier upon the same terms and conditions as those provided in the
agreement.  In the First Report and Order and Section 51.809 of its rules, the Commission
interpreted that provision to require an incumbent LEC to make available to a requesting
telecommunications carrier, upon the same rates, terms, and conditions, any individual
interconnection, service, or network element arrangement contained in any agreement
approved by the state under section 252 to which the incumbent LEC is a party. 

            III. Summary of the Motion and Oppositions

     5.  RTC requests a stay of the Commission rules described above.  RTC contends that
the Commission unlawfully modified the standard to be used by states in considering whether
to terminate the rural exemption.  RTC contends that placing the burden of proof on the
incumbent LEC, and the Commission's definition of "unduly economically burdensome," will
cause rural LECs to suffer irreparable harm.  RTC claims that certain rural LECs will lose
exemptions that they would not have lost if the requesting carrier bore the burden of proof. 
RTC also asserts that the Commission's rules will cause rural LECs to incur costs and expend
resources to retain exemptions from section 251(c) obligations.  RTC further argues that the
Commission's rules ignore two of the three statutory factors that must be considered in
deciding whether to terminate a rural LEC's exemption.  RTC also contends that the
Commission failed to give adequate public notice of its intent to establish a test concerning the
burden of proof and its intent to establish a rule interpreting the phrase "unduly economically
burdensome."  

      6.  In addition, RTC maintains that the Commission exceeded its authority by requiring
incumbent LECs to file with state commissions interconnection agreements with neighboring
LECs that predate the 1996 Act, and by requiring incumbent LECs to make the individual
provisions of such agreements available to competing carriers.  RTC asserts that requiring
incumbent LECs to file interconnection agreements negotiated prior to the 1996 Act ultimately
will force rural LECs to pay higher interconnection rates that in turn will result in higher rates
for rural LECs' customers.

     7.  In general, parties opposing the stay motion contend that RTC's motion does not
meet the four-part test for granting a stay of an agency order.  These parties contend that RTC
is unlikely to prevail on the merits of its claims; that it will suffer no irreparable harm if a stay
is not granted; that grant of a stay will harm third parties; and that the public interest weighs in
favor of denying a stay.

                          IV. Discussion

     8.  As a threshold matter, the United States Court of Appeals for the Eighth Circuit
granted a stay of certain rules the Commission adopted in the First Report and Order,
including Section 51.809, interpreting section 252(i) of the Act.  Therefore, we need not
address RTC's motion for administrative stay of Section 51.809.

     9.  We examine the remaining portions of RTC's motion for stay pursuant to well-
established legal principles.  A party seeking a stay is required to demonstrate: (1) that it is
likely to prevail on the merits; (2) that it will suffer irreparable harm if a stay is not granted;
(3) that other interested parties will not be harmed if the stay is granted; and (4) that the public
interest favors the grant of a stay.

     10.  With respect to RTC's motion for stay of Sections 51.303, concerning filing of
interconnection agreements negotiated before the 1996 Act became law, and 51.405,
concerning rural carriers' burden of proof under section 251(f)(1) of the Act, we conclude that
RTC has not shown that it will suffer irreparable harm absent a stay.  A concrete showing of
irreparable harm is an essential factor in any request for a stay.  As the U.S. Court of
Appeals for the District of Columbia Circuit has observed, "economic loss does not, in and of
itself, constitute irreparable harm."  Moreover, competitive harm is merely a type of
economic loss, and "revenues and customers lost to competition which can be regained through
competition are not irreparable."  Even if the alleged harm is not fully remediable, the
irreparable harm factor is not satisfied absent a demonstration that the harm is "both certain
and great; ... actual and not theoretical."  We find that RTC's claims of harm do not satisfy
these exacting standards. 

     11.  RTC argues that certain rural LECs will be irreparably harmed by our finding that
the LECs seeking to avoid application of section 251(c) bear the burden of proof under section
251(f), and by our interpretation that, in order for a requirement to be "unduly economically
burdensome" within the meaning of section 251(f), it must cause economic burden beyond the
economic burden typically associated with efficient competitive entry.  RTC complains that the
Commission's "burden of proof and standards requirements substantially increase the
probability that the exemption will be terminated."

     12.  We find that RTC has not demonstrated that application of these rules has caused
or will cause harm to rural incumbent LECs that is certain, irreparable, or great.  As NCTA
and MCI assert, RTC has not shown that rural LECs would otherwise be exempt from the
obligations of section 251(c), absent the Commission's rules.  Moreover, even if RTC could
establish with certainty that rural carriers would lose exemptions as a result of the
Commission's rules, its contention that LECs would be irreparably harmed is speculative. 
First, economic harm that results from loss of customers to competitors does not constitute
irreparable harm.  Second, the Commission stated in the First Report and Order that
requesting carriers must compensate the incumbent LEC for the costs of services,
interconnection, or unbundled elements that the incumbent provides upon request, and RTC
has not shown why, in light of such compensation, it would suffer irreparable harm from
complying with the requirements of section 251(c).  Nor has RTC demonstrated that any harm
a rural LEC arguably might suffer would be substantial.

     13.  RTC also asserts that, because the Commission has placed the burden of proof on
rural carriers that seek to retain exemptions from section 251(c), they will incur costs that they
would not otherwise bear.  For example, RTC contends that rural LECs will need to bear
costs of hiring attorneys, cost consultants, and economists.  If the Commission's rule is
overturned by the court, RTC argues, rural LECs will have suffered irreparable harm by
incurring these costs.  NCTA and MCI contend that RTC has provided no evidence that,
absent our rules, it would not bear similar or identical costs to respond to bona fide requests
for interconnection, services or network elements.  We find no basis for concluding that rural
carriers will bear costs as a result of our rules that they would not otherwise bear.  Moreover,
courts have held that "[m]ere litigation expense, even substantial and unrecoupable cost, does
not constitute irreparable injury."

     14.  RTC further argues that the rule requiring the filing of interconnection agreements
that predate the 1996 Act will irreparably harm rural LECs and their customers by
"threaten[ing] higher rates, more toll calls, or both, for the affected rural customers."  This
argument is speculative, because it assumes without substantiation that existing agreements will
have to be renegotiated, and that the resulting terms will be significantly less favorable to
affected rural LECs.  As the District of Columbia Circuit has noted, in evaluating a
petitioner's allegations of irreparable harm, "[b]are allegations of what is likely to occur are of
no value" because the critical issue is "whether the harm will in fact occur."  RTC provides
no evidence to support its allegation that higher rates for customers will in fact occur if Section
51.303 of the Commission's rules is not stayed. 

     15.  Because, as discussed above, RTC has failed to demonstrate that any rural
telephone company would suffer irreparable harm due to the application of Sections 51.303 or
51.405 of our rules, we need not address RTC's remaining arguments concerning the other
three parts of the test governing a motion for stay.  Nevertheless, we take this opportunity to
clarify certain aspects of Section 51.405(c) of our rules that RTC challenges in its petition for
stay.  Section 51.405(c) states:
          
          In order to justify continued exemption under section 251(f)(1) of the Act once a
          bona fide request has been made, an incumbent LEC must offer evidence that
          the application of the requirements of section 251(c) of the Act would be likely
          to cause undue economic burden beyond the economic burden that is typically
     associated with efficient competitive entry.        
     
RTC erroneously contends that the Commission's rules implementing section 251(f)(1)
improperly ignore two of the three statutory criteria that a state commission must consider in
determining whether to remove a rural incumbent LEC's exemption from the requirements of
section 251(c) of the Act.  RTC's argument is not based on any affirmative statement in our
rules that state commissions may disregard evidence of technical infeasibility or harm to
universal service in deciding whether to remove an exemption.  Rather, RTC incorrectly infers
from the fact that our rules address only one of the statutory criteria for evaluating such issues
that we intended for state commissions to ignore the other two criteria.  In Section 51.405(c) of
our rules, we interpreted the meaning of the statutory term "unduly" as it modifies
"economically burdensome," because we found that this phrase is susceptible to differing
interpretations.  We did not find it necessary to adopt rules that addressed the meaning of
"technical feasibility" or "universal service."  That decision, however, does not in any way
affect a state's responsibility to consider all three of the factors set forth in section
251(f)(1)(A).  We similarly interpreted the phrase "unduly economically burdensome" in
adopting 47 C.F.R.  51.405(d), and did not thereby intend to limit LECs' rights to seek
suspensions or modifications by other means provided in section 251(f)(2).

                       V. Ordering Clause

     16.  Accordingly, IT IS ORDERED that the motion for stay filed by the Rural
Telephone Coalition IS DISMISSED to the extent that it seeks a stay of 47 C.F.R.  51.809,
and otherwise IS DENIED.
     

     FEDERAL COMMUNICATIONS COMMISSION



                         William F. Caton
                         Acting Secretary