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SCOPE OF THE COMMISSION'S AUTHORITY p>"(#L 6  X -XxX` ` xA.` ` Electronic Publishing ` p>"(#L 6  X-XxX` ` xB.` ` Telemessaging ` p"(#I 21  X-XxX` ` xC.` ` Constitutional Issues ` p"(#I 35 XxPIII. BOC PROVISION OF ELECTRONIC PUBLISHING SECTION 274 p"(#I 41  X"-XxX` ` xA.` ` Definition of Electronic Publishing ` p"(#I 41  X#-XxX` ` X ` ` 1. Electronic Publishing Services under Section 274(h) p"(#I 41  Xh$-XxX` ` X ` ` 2. Dissemination by Means of "Basic Telephone Service" p"(#I 51  XQ%- ` pXxX` ` xB.` ` "Separated Affiliate" and "Electronic Publishing Joint Venture" Requirements of Section 274 ` p"(#I 58  X#'-XxX` ` X ` ` 1. The "Operated Independently" Requirement of Section 274(b) p"(#I 58  X (-XxX` ` X ` ` 2. Section 274(b)(2) p"(#I 66  X(-XxX` ` X ` ` 3. Section 274(b)(5) and Shared Services p"(#I 71"(,))ZZ'"Ԍ X-XxX` ` X ` ` 4. Section 274(b)(6) p"(#I 88  X-XxX` ` X ` ` 5. Section 274(b)(7) p"(#I 92  X-  XxX` ` X ` ` 6. Comparison with "Separate Affiliate" Requirement of Section 272 p!(#C 103  X-XxX` ` xC.` ` Joint Marketing ` p!(#C 116  X-XxX` ` X ` ` 1. Restrictions on Joint Marketing Activities Section 274(c)(1) p!(#C 116  Xv-XxX` ` X X a.Scope of Section 274(c)(1)(B) p!(#C 116  X_-XxX` ` X X b.Scope of Section 274(c)(1)(A) p!(#C 123  XH-XxX` ` X X c.Activities Prohibited under Section 274(c)(1) p!(#C 128  X1-  XxX` ` X X d.Interplay Between Section 274 Joint Marketing Provisions and Other Provisions of the Act p!(#C 140  X -XxX` ` X ` ` 2. Permissible Joint Activities Section 274(c)(2) p!(#C 143  X -XxX` ` X X a.Joint Telemarketing Section 274(c)(2)(A) p!(#C 143  X -XxX` ` X X b.Teaming Arrangements Section 274(c)(2)(B) p!(#C 157  X - yXxX` ` X X c.Electronic Publishing Joint Ventures Section 274(c)(2)(C) p!(#C 170  X-XxX` ` xD.` ` Nondiscrimination Safeguards ` p!(#C 189 XxPIV. TELEMESSAGING p!(#C 208  XK- ` p5XxX` ` xA.` ` Application of Sections 260 and 272 to BOC InterLATA Telemessaging Services ` p!(#C 208  X-XxX` ` xB.` ` Definition of "Telemessaging Service" ` p!(#C 211  X-XxX` ` xC.` ` Nondiscrimination Requirements ` p!(#C 214  X-XxX` ` X ` ` 1. Section 260(a)(2) and Sections 201 and 202 p!(#C 214  X-XxX` ` X ` ` 2. Section 260(a)(2) and Computer III/ONA Requirements p!(#C 218  X-XxX` ` X ` ` 3. Section 260(a)(2) and Adoption of Rules p!(#C 222 XxPV. FINAL REGULATORY FLEXIBILITY CERTIFICATION p!(#C 229 XxPVI. FINAL PAPERWORK REDUCTION ANALYSIS p!(#C 239 XxPVII. FURTHER NOTICE OF PROPOSED RULEMAKING p!(#C 242  X"-XxX` ` xA.` ` Meaning of "Control" and "Financial Interest" ` p!(#C 242  X -XxX` ` X ` ` 1. Meaning of "Control" p!(#F243  X-XxX` ` X ` ` 2. Meaning of "Financial Interest" p!(#F245  X- ` pDXxX` ` xB.` ` Meaning of "Transaction" in Section 274(b)(3) and the Requirements of Section 274(b)(3)(B) ` p!(#F247  X!-XxX` ` xC.` ` Procedural Matters ` p!(#F252 XxPVIII. ORDERING CLAUSES p!(#F259  #J:\POLICY\275\ELECPUB\INTRO# "S%,-(-(ZZ3'"Ԍ X-A JI. INTRODUCTION ă  X-x1.` ` In February 1996, the "Telecommunications Act of 1996" became law.$qC {OK-ԍxTelecommunications Act of 1996, Pub. L. No. 104104, 110 Stat. 56 (1996 Act), to be codified at 47  {O-U.S.C.  151 et seq. Hereinafter, all citations to the 1996 Act will be to the 1996 Act as it will be codified in the United States Code. The 1996 Act amended the Communications Act of 1934. We will refer to the Communications Act of 1934, as amended, as "the Communications Act" or "the Act." The intent of the 1996 Act is "to provide for a procompetitive, deregulatory national policy A framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information technologies and services to all Americans by opening  Xv-all telecommunications markets to competition."P\vqC {O -ԍxSee Joint Statement of Managers, S. Conf. Rep. No. 104230, 104th Cong., 2d Sess. 1 (1996) (Joint  {O -Explanatory Statement); see also 1996 Act,  706(a), 110 Stat. 56 (encouraging the deployment of advanced telecommunications capability to all Americans).P  XH-x2.` ` On July 18, 1996, the Commission released a Notice of Proposed Rulemaking  X1-("Notice") regarding implementation of sections 260, 274, and 275 of the Communications Act addressing telemessaging, electronic publishing, and alarm monitoring services,  X -respectively.\ qC {O-ԍxImplementation of the Telecommunications Act of 1996: Telemessaging, Electronic Publishing, and  {OX-Alarm Monitoring Services, CC Docket No. 96152, Notice of Proposed Rulemaking, FCC 96310 (rel. July 18, 1996). This Order implements the nonaccounting requirements of sections 260 and 274. We address in separate proceedings the alarm monitoring provisions of section 275 and  X -the enforcement issues related to sections 260, 274, and 275.O^ qC {O-ԍxSee Amendment of Rules Governing Procedures to be Followed When Formal Complaints are Filed  {ON-Against Common Carriers, CC Docket No. 96238, Notice of Proposed Rulemaking, FCC 96460 (rel. Nov.27,  {O-1996) at  62 ("Enforcement NPRM").O In addition, the accounting safeguards required to implement sections 271 through 276 and section 260 are addressed in a  X -separate proceeding.O^ "qC {O|-ԍxSee Implementation of the Telecommunications Act of 1996: Accounting Safeguards under the  {OF-Telecommunications Act of 1996, CC Docket No. 96150, Report and Order, FCC 96490, (rel. Dec. 24, 1996)  {O-("Accounting Safeguards Order").O  X{-x3.` ` The 1996 Act opens local markets to competing providers by imposing new interconnection, unbundling, and resale obligations on existing providers of local exchange  XM-services.NMHqC {OF$-ԍxSee 47 U.S.C.  251.N In enacting sections 260 and 274, Congress recognized that the local exchange market will not be fully competitive immediately. Congress therefore imposed requirements applicable to local exchange carriers' (LECs') provision of telemessaging services in section 260, and a series of requirements applicable to Bell Operating Companies' (BOCs') provision",-(-(ZZ " of electronic publishing services in section 274. Collectively, these requirements are designed to prevent, or facilitate the detection of, improper cost allocation, discrimination, or other anticompetitive conduct.  X-x4.` ` Section 260 permits incumbent LECs (including BOCs) to provide telemessaging service subject to certain nondiscrimination safeguards.  I.B. Section 274 allows a BOC to provide electronic publishing service disseminated by means of its basic telephone service only through a "separated affiliate" or an "electronic publishing joint venture" that meets the separation, joint marketing, and nondiscrimination requirements in that section. BOCs that were offering electronic publishing services at the time the 1996 Act was enacted  X -must comply with section 274 by February 8, 1997.K qC {O -ԍxId.  274(g)(1). K As noted in part VIII, infra, the  X -requirements of this Order will become effective 30 days after publication of a summary in  X -the Federal Register. In addition, the collection of information contained in this Order is contingent upon approval by the Office of Management and Budget (OMB). Accordingly, we do not anticipate taking any enforcement action based on these requirements until they  X -become effective. The requirements under section 274 expire on February8, 2000.J ZqC {O-ԍxId.  274(g)(2).J  X-x5.` ` In this proceeding, our goal is to implement the nonaccounting requirements in sections 260 and 274 in a manner that is consistent with the fundamental goal of the 1996 Act to open all telecommunications markets to robust competition. By fostering competition in these markets, we seek to produce maximum benefits for consumers of telemessaging and electronic publishing services. #(J:\POLICY\275\ELECPUB\INTRO# )(J:\POLICY\275\ELECPUB\JURISORD.JG)  X-J #Xj\  P6G;cXP# II. SCOPE OF THE COMMISSION'S AUTHORITY ă T#Xj\  P6G;cXP#у  X- A.xElectronic Publishing  X-x 1.` ` Background (#`  Xk-x6.` ` In the Notice, we sought comment on the extent to which section 274 grants  XV-Jthe Commission authority over the intrastate provision of electronic publishing services.I VqC {O -ԍxNotice at  23.I We noted that section 274(b)(4) specifically refers to "such regulations as may be prescribed by  X(-the Commission or a State commission" for the valuation of BOC assets.: (~qC {OW$-ԍxId.: We therefore"( ,-(-(ZZ"" tentatively concluded that the Commission may not have exclusive jurisdiction over all  X-aspects of intrastate services provided pursuant to section 274.: qC {Ob-ԍxId.:  X-x7.` ` In addition, apart from any intrastate jurisdiction conferred by section 274 itself, we sought comment on the extent to which the Commission may have the authority to  X-preempt inconsistent state regulations with respect to matters addressed by section 274. ZqC {O-ԍxNotice at  25 (citing Louisiana Public Service Comm'n v. FCC, 476 U.S. 355, 375 n.4 (1986)  {Ob -(Louisiana PSC)).  X_-x 2.` ` Comments v _qC yO -ԍxParties that filed comments and replies are listed in the Appendix. v  X1-x8.` ` AT&T contends that section 274 covers both interstate and intrastate provision  X -of electronic publishing services,  FqC yO-ԍxAT&T at 910. We note also that NYNEX and YPPA contend that section 274 covers the provision of  {O-all electronic publishing services, both interLATA and intraLATA. See NYNEX at 45; YPPA at 2.  and that this section confers on the Commission general  X -jurisdiction over the provision of intrastate electronic publishing services.? qC yOT-ԍxAT&T at 1011.? In support of its position, AT&T points to several sections that, in its view, refer to Commission authority over intrastate electronic publishing, including: (1) section 274(e), which authorizes the Commission to hear complaints for violations of section 274; (2) section 274(f), which requires all separated BOC affiliates engaged in electronic publishing to file reports with the Commission; and (3) section 274(c)(2)(C), which grants the Commission the authority to determine whether the BOCs may be authorized to have a greater financial control of a joint  Xb-venture with small, local electronic publishers.:b0 qC {OC-ԍxId.: AT&T further maintains that the reference to valuation of BOC assets by state commissions in section 274(b)(4) does not restrict the Commission's general regulatory authority to establish rules, but merely indicates that, if a state commission has its own accounting rules, those rules should be applied to the extent  X-they are not inconsistent with the Commission's rules.H qC yOy!-ԍxAT&T at 1112. H  X-x9.` ` NAA contends that, because section 274 is silent with respect to whether it covers interstate or intrastate, and interLATA or intraLATA electronic publishing, and because electronic publishing services are not regulated telecommunications services, the Commission's authority under section 274 is limited to enforcing BOC compliance with the section's requirements that BOCs operate through a separated affiliate or electronic publishing"|R ,-(-(ZZn"  X-joint venture and make various filings and reports.<qC yOy-ԍxNAA at 23.< NAA further asserts that the Commission has authority to adjudicate complaints and requests for cease and desist orders with respect to violations of section 274, whether interstate or intrastate, but that states are not  X-precluded from also enforcing this law.:XqC {O-ԍxId.: NAA also contends that states should be allowed to  X-continue to use their cost allocation procedures for intrastate purposes.:qC {O? -ԍxId.:  Xv-x 10.` ` A number of BOCs and state commissions, on the other hand, argue that section 274 does not give the Commission authority over intrastate electronic publishing  XH-services.H|qC yOu-ԍxAmeritech at 4; Bell Atlantic at 24; BellSouth at 78; California Commission at 68; New York Commission at 2; PacTel at 45. Some of these commenters argue that section 274 covers such intrastate services, but that this section does not divest the states of their authority over intrastate services under  X -section 2(b) of the Communications Act.V qC yO-ԍxAmeritech at 67; Bell Atlantic at 4.V These latter commenters argue that section 274 contains new requirements that state commissions will implement in their traditional role of  X -regulating intrastate electronic publishing services.: d qC {O-ԍxId.:  X -x 11.` ` These BOCs and state commissions also argue that section 2(b) of the Communications Act and section 601(c) of the 1996 Act bar the Commission from exercising authority under section 274 with respect to intrastate electronic publishing services absent an  Xy-express grant of authority from Congress.y qC yO -ԍxAmeritech at 6; Bell Atlantic at 3; BellSouth at 78; BellSouth Reply at 34; California Commission at 7. PacTel and Ameritech contend that such a grant of authority is provided in section 274 in limited circumstances, including receiving BOC filings, prescribing regulations to value BOC asset transfers, and acting on complaints and  X4-applications for ceaseanddesist orders.Q4N qC yO3!-ԍxAmeritech at 56; PacTel at 45.Q The California Commission argues that, although section 274(e) clearly supports our jurisdiction over complaints alleging violations of section 274, that section does not preclude states from trying to resolve disputes prior to the filing of  X-a complaint or lawsuit in the federal arena.LqC yO~%-ԍxCalifornia Commission at 8.L BellSouth disputes even this limited grant of authority over intrastate electronic publishing services, arguing that section 274(e) does not"n,-(-(ZZ&" give the Commission either explicit or implicit statutory jurisdiction over intrastate electronic  X-publishing services.@qC yOb-ԍxBellSouth at 8.@  X-x 12.` ` Several BOCs and state commissions claim that the Commission may preempt state regulations and exercise jurisdiction over intrastate electronic publishing only to the extent that such services are inseparably mixed interstateintrastate communications, pursuant  Xv-to the standard set forth in Louisiana PSC.vXqC yO -ԍxBell Atlantic at 34; BellSouth at 8; BellSouth Reply at 34; California Commission at 89; New York  {OG -Commission at 45; see also Louisiana PSC, 476 U.S. at 375 n.4. The New York and California Commissions further argue that the Commission currently has no basis to make the showing necessary to  XJ-preempt state regulation of intrastate electronic publishing.JqC yO -ԍxBellSouth Reply at 34; California Commission at 89; New York Commission at 78.  X -x 13.` ` AT&T and MCI contend that the Commission retains the authority to preempt state regulatory requirements relating to electronic publishing that are inconsistent with its  X -policies and rules.N BqC yO-ԍxAT&T Reply at 910; MCI at 3.N AT&T further argues that, because the interstate and intrastate aspects of electronic publishing cannot be separated, the Commission's jurisdiction over interstate  X -electronic publishing services extends to such intrastate services as well.D qC yOC-ԍxAT&T Reply at 910.D  X-x 3.` ` Discussion (#`  Xd-x 14.` ` As discussed above, in the Notice, we tentatively concluded that the Commission may not have exclusive jurisdiction over all aspects of intrastate services  X8-provided pursuant to section 274, based on the language of section 274(b)(4).I 8b qC {OK-ԍxNotice at  23.I This section provides that BOCs and their separated affiliates or electronic publishing joint ventures must "value any assets that are transferred . . . and record any transactions by which such assets are transferred, in accordance with such regulations as may be prescribed by the Commission or a  X-State commission to prevent improper cross subsidies."J! qC yO"-ԍx47 U.S.C.  274(b)(4).J After examining the language of the statute and the comments filed in this proceeding, we conclude, f JURIS or the reasons set forth below, that the Commission's authority under section 274 applies to the provision of intrastate as well as interstate electronic publishing services. We conclude, therefore, that while states may impose regulations with respect to BOC provision of electronic publishing services, those regulations must not be inconsistent with section 274 and the Commission's rules"i !,-(-(ZZO" thereunder. We emphasize, however, that the scope of the Commission's authority under section 274 extends only to matters covered by that section.  X-x15.` ` Thus, we agree with AT&T and Bell Atlantic that section 274 applies not only to the provision of interstate electronic publishing services, but also to such services when  X-they are provided on an intrastate basis.R"qC yO-ԍxAT&T at 910; Bell Atlantic at 4.R The language in section 274 expressly demonstrates that Congress intended this section to reach intrastate electronic publishing services. For example, section 274(c)(2)(C) expressly limits the permissible participation of a BOC or affiliate in electronic publishing joint ventures to an interest of 50 percent or less, but also provides that, "[i]n the case of joint ventures with small, local electronic publishers, the Commission for good cause shown may authorize [a BOC] or affiliate to have a larger equity  X -interest."M# XqC yO -ԍx47 U.S.C.  274(c)(2)(C).M Notwithstanding the local nature of small, local electronic publishers,|$\ qC yO-ԍxWe note, for example, that the legislative history of this provision indicates that "small, local electronic  {Od-publishers" was intended to apply to publishers serving communities of fewer than 50,000 persons. See  {O.-discussion infra  LOCAL1171, LOCAL2175.| which suggests that they provide intrastate services, this section confers authority on the Commission to determine whether BOCs may have a greater interest in electronic publishing joint ventures with such electronic publishers.  X-x16.` ` In addition, section 274 requires that a BOC or BOC affiliate engage in the provision of electronic publishing services disseminated by means of that BOC or its affiliate's "basic telephone service" only through a "separated affiliate" or an electronic  XK-publishing joint venture."Q%K qC {O-ԍxSee 47 U.S.C.  274(a).Q The statute defines "basic telephone service" to mean "any  X4-wireline telephone exchange service, or wireline telephone exchange service facility . . . ."J&4qC {O-ԍxId.  274(i)(2).J The term "telephone exchange service," as defined in section 3(47), is a primarily intrastate  X-service.H'0 qC {O-ԍxId.  153(47).H As we noted in the Accounting Safeguards Order, these references to primarily intrastate services clearly indicate that the scope of section 274 encompasses intrastate  X-matters..(Z qC {OM#-ԍxSee Accounting Safeguards Order at  39 (finding that "telephone exchange service" and "basic telephone service" are primarily intrastate services, and that therefore section 274, among other sections, expressly reaches intrastate services). . "(,-(-(ZZ"Ԍ X-x17.` ` JURWe further conclude that, given the jurisdiction granted by section 274, the Commission also has jurisdiction under the Communications Act to establish rules applicable to intrastate electronic publishing services. Sections 4(i), 201(b), and 303(r) of the Act authorize the Commission to adopt any rules it deems necessary or appropriate in order to carry out its responsibilities under the Act, so long as those rules are not otherwise  X-inconsistent with the Act.)qC {O-ЍxSee United States v. Storer Broadcasting Co., 351 U.S. 192, 20203 (1956). Nothing in section 274 bars the Commission from clarifying and implementing the requirements of section 274. Moreover, courts repeatedly have held that the  X_-Commission's general rulemaking authority is "expansive" rather than limited.*_ZqC {Oj -ЍxNational Broadcasting Co. v. United States, 319 U.S. at 190, 219 (1943); see also FCC v. National  {O4 -Citizens Comm. for Broadcasting, 436 U.S. 775, 793 (1978). In addition, it is wellestablished that an agency has the authority to adopt rules to administer  X1-congressionally mandated requirements.+"1qC {O-ЍxSee Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984); Morton v. Ruiz, 415 U.S. 199, 231 (1974) (holding that "[t]he power of an administrative agency to administer a congressionally created. . . program necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly, by Congress").  X -x18.` `  PUBINT Our conclusion that the Commission has jurisdiction under the Communications Act to establish rules applicable to the full scope of section 274, including intrastate electronic publishing services, is particularly appropriate where, as here, the Commission is  X -authorized to adjudicate complaints alleging violations of section 274.!,& qC {O-ԍx PERM See In re Permanent Surface Mining Regulation Litigation, 653 F.2d 514 (D.C. Cir.) (en banc), cert.  {O-denied, 454 U.S. 822 (1981); National Petroleum Refiners Ass'n. v. FTC, 482 F.2d 672 (D.C. Cir. 1973), cert.  {O-denied, 415 U.S. 951 (1974) (both cases concluding that an agency that has authority to enforce a section of a statute also has generalized rulemaking authority to interpret that section in a rulemaking).! Section 274(e) provides VI. VI.A. a private right of action to any person claiming that an act or practice of a BOC,  X-affiliate, or separated affiliate has violated any requirement of section 274.Q- qC {O-ԍxSee 47 U.S.C.  274(e).Q Under section 274(e)(1), such person may file a complaint with the Commission or bring suit in a U.S.  Xb-District Court as provided in section 207.0.b qC yO3 -ԍx47 U.S.C.  274(e)(1). Section 207 states that "[a]ny person claiming to be damaged by any common carrier subject to the provisions of this Act may either make complaint to the Commission as hereinafter provided for, or may bring suit for the recovery of the damages for which such common carrier may be liable under the provisions of this Act, in any district court of the United States of competent jurisdiction; but such person shall not have the right to pursue both such remedies." 47 U.S.C.  207.0 In addition to damages, section 274(e)(2) permits an aggrieved person to apply to the Commission for a ceaseanddesist order or to a U.S.  X4-District Court for an injunction or an order compelling compliance.J/4qC yO&-ԍx47 U.S.C.  274(e)(2).J We find that it serves"4 `/,-(-(ZZH" the public interest for us to clarify in advance the section 274 requirements imposed on the BOCs that parties may ask us to enforce later. Such clarification of the requirements will reduce uncertainty, aid BOCs and their affiliates in complying with the requirements of section 274, and facilitate the prompt resolution of compliance disputes that may be presented  X-in complaint proceedings.0qC {O-ԍxSee Enforcement NPRM (seeking comment on proposals to improve the speed and effectiveness of the formal complaint process).  Xv- x19.` `  TOBE We reject the argument that section 2(b) of the Communications Act requires the conclusion that section 274, and the Commission's authority thereunder, apply only to the provision of interstate electronic publishing services. As demonstrated, for example, by section 274(c)(2)(C)'s grant of authority to the Commission to alter the maximum interest that a BOC may hold in electronic publishing joint ventures with small, local electronic publishers, Congress gave the Commission intrastate jurisdiction without amending section  X -2(b).21 "qC {O-ԍxSee also Implementation of the NonAccounting Safeguards of Sections 271 and 272 of the  {O-Communications Act of 1934, as amended, CC Docket No. 96149, Report and Order and Further Notice of Proposed Rulemaking, FCC 96489 (rel. Dec. 24, 1996) at  41 (discussing a number of other statutory examples where Congress, in enacting the 1996 Act, gave the Commission intrastate jurisdiction without amending section  {O-2(b)) (NonAccounting Safeguards Order). 2 Thus, we find that, in enacting section 274 after section 2(b), and squarely addressing therein the issues before us by using the statutory language discussed above, Congress intended for section 274 to take precedence over any contrary implications based on section  X -2(b).]2 qC {O0-Ѝx MORALES See, e.g., Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 (1992) ("it is a commonplace of  {O-statutory construction that the specific governs the general"); see also 2 J. Sutherland, Statutory Construction 22.34 (6th ed.) (where amended and original sections of a statute cannot be harmonized, the new provisions  {O-should prevail as the latest declaration of legislative will); American Airlines, Inc. v. Remis Industries, Inc., 494 F.2d 196, 200 (2d Cir. 1974).]  Xy-x20. JURIS2 ` ` We similarly are not persuaded that section 601(c) of the 1996 Act evinces an intent by Congress to preserve states' authority over intrastate matters arising under section 274. Section 601(c) of the 1996 Act provides that the Act and its amendments "shall not be construed to modify, impair, or supersede Federal, State, or local law unless expressly so  X-provided in such Act or amendments."3 qC yO\!-Ѝx1996 Act,  601(c)(1), 110 Stat. 56, 143 (to be codified as a note following 47 U.S.C.  152). As discussed above, we conclude that section 274 expressly modifies federal law, and the Commission's statutory authority thereunder, to reach intrastate electronic publishing services. " 3,-(-(ZZ"Ԍ X- B.xTelemessaging   X-x 1.` ` Background (#`  X-x21.` ` In the Notice, we sought comment on the extent to which section 260 grants  X-the Commission statutory authority over the intrastate provision of telemessaging services.P4qC {O-ԍxNotice at  1920.P We stated that telemessaging is an information service that, when provided by a BOC or its affiliate on an interLATA basis, is subject to the requirements of section 272 in addition to  XJ-the requirements of section 260.F5JZqC {OU -ԍxId. at  19.F We also noted that, in the NonAccounting Safeguards  X5-NPRM,R6^5qC {O -ԍxImplementation of the NonAccounting Safeguards of Sections 271 and 272 of the Communications Act  {O-of 1934, as amended, CC Docket No. 96149, Notice of Proposed Rulemaking, FCC 96149 (rel. July 18, 1996)  {Of-(NonAccounting Safeguards NPRM).R we tentatively concluded that the Commission's authority under sections 271 and 272 applies to interstate and intrastate interLATA information services provided by BOCs or  X -their affiliates.I7 qC {O-ԍxNotice at  19.I Further, we pointed out that section 260 applies not only to BOCs and their  X -affiliates, but also to all incumbent LECs.F8 qC {OG-ԍxId. at  20.F Finally, apart from any intrastate jurisdiction  X -conferred by section 260 itself, we sought comment in the Notice on the extent to which the Commission may have the authority to preempt inconsistent state regulations with respect to  X -matters addressed by section 260.x9 6 qC {O-ԍxId. at  21 (citing Louisiana PSC, 476 U.S. at 375 n.4).x  X-x 2.` ` Comments  XS-x22.` ` AT&T, ATSI, and VoiceTel contend that section 260, and the Commission's authority thereunder, apply to all telemessaging services provided by incumbent LECs, including interstate and intrastate, as well as interLATA and intraLATA, telemessaging  X-services.i: qC yO!-ԍxATSI at 4; ATSI Reply at 2; AT&T at 5; VoiceTel at 78.i ATSI contends that any attempt to limit the applicability of section 260 would deny providers of telemessaging a remedy against anticompetitive practices that Congress  X-intended to provide them.;;X qC yO$-ԍxATSI at 4.; AT&T further contends that section 260 is an independent grant of authority to the Commission and is not restricted in any way by sections 271 and 272. " ;,-(-(ZZ" Rather, AT&T contends that sections 271 and 272 complement section 260 by imposing  X-additional requirements on the BOCs.;<qC yOb-ԍxAT&T at 6.;  X-x23.` ` Some BOCs and state commissions, on the other hand, argue that section 2(b) of the Communications Act and section 601(c) of the 1996 Act bar the Commission from exercising authority under section 260 with respect to any intrastate telemessaging services  Xv-absent an express grant of authority from Congress.=vXqC yO -ԍxAmeritech at 56; Bell Atlantic at 3; BellSouth at 45; California Commission at 34; New York Commission at 2. Some of these commenters contend that nothing in section 260 gives the Commission authority over any intrastate telemessaging  XH-services.z>HqC yO -ԍxBell Atlantic at 3; California Commission at 4; New York Commission at 2.z Ameritech argues that section 260 grants the Commission limited jurisdiction over both interLATA and intraLATA telemessaging services, but only to the extent necessary to adjudicate complaints by other telemessaging providers that an incumbent LEC has improperly subsidized its telemessaging services or discriminated against other telemessaging  X -services in violation of section 260.@? @qC yO-ԍxAmeritech at 5.@ BellSouth argues that, although sections 271 and 272 give the Commission limited reach over intrastate interLATA telemessaging services, such jurisdiction is not comprehensive and does not reach intrastate intraLATA telemessaging  X -services.B@ qC yO(-ԍxBellSouth at 56.B  Xy-x24.` ` Several BOCs and state commissions claim that the Commission may preempt state regulations and exercise jurisdiction over intrastate telemessaging services only subject  XK-to the Louisiana PSCZAK` qC {O\-ԍxLouisiana PSC, 476 U.S. at 375 n.4.Z exception for inseparably mixed interstateintrastate communications.BK qC yO-ԍxBell Atlantic at 3; BellSouth at 6; BellSouth Reply at 34; California Commission at 45; New York Commission at 2. The New York Commission and BellSouth further argue that the Commission currently has no basis to make the showing necessary to preempt state regulation of intrastate telemessaging  X-services.tCJ qC yO#-ԍxBellSouth at 67; BellSouth Reply at 34; New York Commission at 2.t  X-x25.` ` AT&T, MCI, and VoiceTel contend that the Commission has authority to preempt state regulatory requirements relating to telemessaging services that are inconsistent" C,-(-(ZZ"  X-with its policies and rules.wDqC yOy-ԍxATSI at 5; AT&T at 6 n.3; AT&T Reply at 4; MCI at 3; VoiceTel at 78.w VoiceTel and AT&T further argue that, because the interstate and intrastate aspects of telemessaging services cannot be separated, the Commission's  X-jurisdiction over interstate telemessaging services extends to such intrastate services as well.^EXqC yO-ԍxATSI at 5; AT&T Reply at 4; VoiceTel at 78.^  X-x26.` ` Cincinnati Bell argues that the Commission should preempt state regulations that restrict the ability of small and midsized incumbent LECs to provide telemessaging  Xv-services on an integrated basis.HFvqC yO -ԍxCincinnati Bell at 78.H  XH-x 3.` ` Discussion (#`  X -x27.` ` For the reasons set forth below, we conclude that section 260, and the Commission's authority thereunder, apply to the provision of intrastate as well as interstate telemessaging services. Consequently, we find that section 2(b) of the Communications Act does not bar the Commission from establishing regulations to clarify and implement the requirements of section 260 that apply to intrastate services. We conclude, therefore, that the rules we may establish to implement section 260 are binding on the states, and that the states may not impose regulations with respect to incumbent LEC provision of telemessaging services that are inconsistent with section 260 and the Commission's rules thereunder.  XK-x28.` ` In the NonAccounting Safeguards Order, we concluded that telemessaging is an information service that, when provided by a BOC or its affiliate on an interLATA basis,  X-is subject to the requirements of section 272.cGxqC {OH-ԍxNonAccounting Safeguards Order at  145.c We further concluded that section 272 applies  X-to both intrastate and interstate interLATA information services.FH qC {O-ԍxId. at  30.F We have therefore already concluded that the Commission has jurisdiction over certain aspects of intrastate telemessaging services.  X-x29.` `  TERM Section 260 not only imposes additional obligations on BOCs to prevent unlawful subsidization, and discrimination in favor, of its telemessaging service, but also extends its requirements beyond BOCs and their affiliates to all incumbent LECs. We conclude that section 260 applies to the provision of all telemessaging services by incumbent LECs, whether interstate or intrastate, and for BOCs, whether interLATA or intraLATA. This conclusion is supported by the terms of the statute. Specifically, section 260 prohibits an incumbent LEC from, among other things, subsidizing its telemessaging service from its"" H,-(-(ZZ"  X-"telephone exchange service or its exchange access."JIqC yOy-ԍx47 U.S.C.  260(a)(1).J "Telephone exchange service," as  X-defined in section 3(47), is a primarily intrastate service.HJXqC {O-ԍxId.  153(47).H As we noted in the Accounting  X-Safeguards Order, this reference to a primarily intrastate service clearly indicates that the  X-scope of section 260 encompasses intrastate matters.KqC {OZ-ԍxSee Accounting Safeguards Order at  39 (finding that "telephone exchange service" is primarily an intrastate service, and that therefore section 260, among other sections, expressly reaches intrastate services).   X-x30.` ` We reject BellSouth's argument that section 260 does not apply to intrastate  Xz-intraLATA services. As discussed below,]LzDqC {Oo -ԍxSee infra  INTERLATA210.] section 260, unlike section 272, does not make a distinction between interLATA and intraLATA services. Moreover, the terms in section 260 encompass both interLATA and intraLATA services.  X -x31.` ` We further conclude that, given the jurisdiction granted by section 260, the Commission also has jurisdiction under the Communications Act to establish rules applicable to intrastate telemessaging services. As noted above, sections 4(i), 201(b), and 303(r) of the Act authorize the Commission to adopt any rules it deems necessary or appropriate to carry out its responsibilities under the Act, so long as those rules are not otherwise inconsistent  X -with the Act.`M qC {O2-ЍxSee supra   JUR17 .` Nothing in section 260 bars the Commission from clarifying and implementing the requirements of this section.  Xf-x32.` ` Our conclusion that the Commission has jurisdiction to establish rules applicable to intrastate telemessaging services is particularly appropriate where, as here, the  X8-Commission exercises an adjudicatory function.]N8h qC {OQ-ԍxSee supra note  PERM44 .] Section 260(b)  VI.B. EXPEDITEDrequires that the Commission establish expedited procedures for the receipt and review of complaints alleging violations of the nondiscrimination provisions in section 260(a), or regulations adopted pursuant thereto, that result in "material financial harm" to a provider of telemessaging  X-service.HO qC yO"-ԍx47 U.S.C.  260(b). H As in our discussion of section 274 above,YP qC {O$-ԍxSee supra  PUBINT18.Y we find that it serves the public interest for us to clarify in advance the section 260 requirements that are imposed on incumbent LECs and that parties may ask us to enforce later. Such clarifications will reduce uncertainty, aid incumbent LECs in complying with the requirements of section 260, and"P,-(-(ZZ" facilitate the prompt resolution of compliance disputes that may be presented in complaint  X-proceedings.QqC {Ob-ԍxSee Enforcement NPRM (seeking comment on proposals to improve the speed and effectiveness of the formal complaint process).  X-x 33.` ` We reject the argument that section 2(b) of the Communications Act requires the conclusion that section 260, and the Commission's authority thereunder, apply only to the provision of interstate telemessaging services. Rather, as discussed above with respect to electronic publishing under section 274, we find that, in enacting section 260 after section 2(b), and squarely addressing therein the issues before us, Congress intended for section 260  XH-to take precedence over any contrary implications based on section 2(b).WRH"qC {O -ԍxSee supra   TOBE19 .W  X -x!34.` ` We similarly are not persuaded that section 601(c) of the 1996 Act evinces an intent by Congress to preserve states' authority over intrastate matters arising under section 260. Section 601(c) of the 1996 Act provides that the Act and its amendments "shall not be construed to modify, impair, or supersede Federal, State, or local law unless expressly so  X -provided in such Act or amendments."S qC yO#-Ѝx1996 Act,  601(c)(1), 110 Stat. 56, 143 (to be codified as a note following 47 U.S.C.  152). As discussed above, we conclude that section 260 expressly modifies federal law, so that both federal law, and the Commission's authority thereunder, apply to both interstate and intrastate provision of telemessaging services. ) J:\POLICY\275\ELECPUB\JURISORD.JG) ! J:\POLICY\275\ELECPUB\BOA!  XK-#Xj\  P6G;cXP# C.xConstitutional Issues   X-x"35.` ` BellSouth and U S WEST raise constitutional concerns with respect to our  X-implementation of sections 260 and 274.TDqC yO-ԍxBellSouth at 23; U S WEST Reply at 23. These concerns were not raised in response to any inquiry  {O-in the Notice. BellSouth contends that the Commission must be "circumspect" in its construction of sections 260 and 274 because both the separate affiliate requirement of section 272 that we proposed applying to BOCs' interLATA telemessaging services and the separated affiliate requirement of section 274 "impose impermissible prior  X-restraints on BOCs' speech activities," in violation of the First Amendment.BUqC yO!-ԍxBellSouth at 23.B Further, it maintains that sections 260 and 274, as well as other sections of the Act, are unconstitutional "bills of attainder" to the extent they single out BOCs by name and impose restrictions on"|. U,-(-(ZZ"  X-them alone.VqC yOy-ԍxBellSouth states that singling out BOCs for specific treatment under the Act violates Articles I and III  {OA-of the Constitution and specifically, the Bill of Attainder Clause, Art. I,  9, cl.3. Id. Article I,  9, applicable to Congress, provides, in relevant part, that "[n]o Bill of Attainder or ex post facto Law shall be passed." A Bill of Attainder is a legislative act that applies "either to named individuals or to easily ascertainable members of a group in such a way as to inflict punishment on them without a judicial trial." Black's Law Dictionary 150 (5th ed. 1979). Recognizing that we have no discretion to ignore Congress' mandate to apply  X-sections 260 and 274, BellSouth urges us to construe these sections, and others, narrowly.jWXBqC yO-ԍxFor example, BellSouth states that since section 260 does not impose a separate affiliate requirement on BOCs' telemessaging operations, we should "avoid engrafting on such activities the constitutionallyinfirm separate affiliate requirements of Section 272 for interLATA information services." BellSouth at 3. j US WEST concurs with BellSouth and urges the Commission not to adopt any structural  X-rules beyond the express terms of the statute."XXb qC yO -ԍxU S WEST Reply at 23 (contending that "FCC rules adding to these statutory restrictions especially if adopted as a matter of statutory interpretation, not public interest analysis would create a second violation of the Constitution")."  X-x#36.` ` NAA, in reply, dismisses BellSouth's constitutional arguments.Y qC yO-ԍxNAA's comments only address BellSouth's comments respecting the constitutionality of section 274. NAA Reply at 23. It rejects as frivolous the argument that the electronic publishing safeguards are an unconstitutional prior restraint on BOCs' speech activities. It further states that the separated affiliate requirement (1) is a "reasonable approach to detecting and preventing crosssubsidy and discrimination that does not unnecessarily burden the BOCs' right to speak;" (2) does not violate the First Amendment because it expires four years after enactment of the Act and serves important government interests; and (3) is not a bill of attainder because BOCs are only singled out for  X -"temporary, narrowlyfocused, economic regulation.":Z qC {Ow-ԍxId.:  X -x$37.` ` Although decisions about the constitutionality of congressional enactments are  X -generally outside the jurisdiction of administrative agencies,n[ lqC {O-ԍxSee Johnson v. Robison, 415 U.S. 361, 368 (1974).n we have an obligation under Supreme Court precedent to construe a statute "where fairly possible to avoid substantial constitutional questions" and not to "impute to Congress an intent to pass legislation that is  Xb-inconsistent with the Constitution as construed by the [Supreme Court]."\bqC {O$-ԍxUnited States v. XCitement Video, 115 S. Ct. 464, 467, 469 (1994); see also NonAccounting  {O$-Safeguards Order at  279. As BellSouth"bZ\,-(-(ZZ" concedes, we have no discretion to ignore Congress' mandate respecting these sections or any  X-other sections of the Act.B]qC yOb-ԍxBellSouth at 23.B Nevertheless, we find BellSouth's argument to be without merit.  X-x%38.` ` With respect to section 274, we reject the argument that requiring BOCs to provide electronic publishing services through a separated affiliate violates the First Amendment. BellSouth bases its argument on an assertion that, as "contentrelated" services,  Xv-electronic publishing services are commercial speech entitled to First Amendment protection.@^vXqC {O -ԍxId. at 3.@ We conclude that, to the extent that BOC provision of electronic publishing services constitutes speech for First Amendment purposes, the section 274 separated affiliate requirement neither prohibits the BOCs from providing such services, nor places any restrictions on the content of the information the BOCs may provide. Instead, the section 274 separated affiliate requirement is a contentneutral restriction on the manner in which BOCs may provide electronic publishing services that are disseminated by means of a BOC's basic  X -telephone service.D_Z qC yOp-ԍxContentneutral time, place, and manner restrictions that serve a substantial government interest are  {O8-constitutionally permissible. See, e.g., City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, reh'g denied, 475 U.S. 1132 (1986). D These restrictions address the important governmental interest of protecting against improper cost allocation and discrimination by the BOCs, and they do so in a narrowlytailored, contentneutral manner. Thus, we conclude that the separated affiliate requirement imposed by section 274 on BOC provision of electronic publishing services does not violate the First Amendment.  XK-x&39.` ` Similarly, we reject BellSouth and U S WEST's argument that section 274 is an unconstitutional "bill of attainder" because the statute singles out BOCs by name and imposes restrictions on them alone. We conclude that section 274 is not an unconstitutional  X-bill of attainder simply because it applies only to the BOCs.` qC {O-ԍxSee Nixon v. Administrator of Gen. Servs., 433 U.S. 425, 47172 (concluding that the fact that a statute applies only to a limited group does not automatically offend the Bill of Attainder Clause). Rather, judicial precedent teaches that, in determining whether a statute amounts to an unlawful bill of attainder, we must consider whether the statute "further[s] nonpunitive legislative purposes," and whether  X-Congress evinced an intent to punish.af qC {O!-ԍxSelective Serv. Sys. v. Minnesota Public Interest Research Group, 468 U.S. 841, 852 (1984). As noted above, the section 274 restrictions on BOC provision of electronic publishing services are temporary requirements aimed at protecting against improper cost allocation and discrimination by the BOCs. Moreover, we find no evidence, and BellSouth and US WEST have offered none, that would support a finding that Congress enacted section 274 to punish the BOCs. In fact, in enacting the 1996 Act,"e a,-(-(ZZ"  X-Congress freed BOCs from the terms of an antitrust consent decree.bqC {Oy-ԍxSee 1996 Act,  601(a), 110 Stat. 56, 143 (to be codified as a note following 47 U.S.C.  152). Thus, we conclude that the section 274 restrictions imposed on BOCs do not violate the Bill of Attainder Clause.  X-x'40.` ` With respect to section 260, BellSouth raises constitutional issues in this  X-proceeding regarding the tentative conclusion in the NonAccounting Safeguards NPRM that, under section 272, BOCs must provide interLATA telemessaging services through a separate  Xx-affiliate.c$xZqC {O -ԍxNonAccounting Safeguards NPRM at  54. Because the NonAccounting Safeguards Order concluded that BOC provision of interLATA telemessaging services is an information service subject to the requirements of section 272, that order required BOCs that provide such services on an interLATA basis to do so through a  {O -separate affiliate. See NonAccounting Safeguards Order at  145. We find no merit in BellSouth's arguments for the same reasons discussed above  Xc-and in the NonAccounting Safeguards Order.+dZcFqC {OZ-ԍxSee NonAccounting Safeguards Order at  87 (finding that, to the extent that the separate affiliate requirement in section 272 restricts protected speech, it is a contentneutral restriction that does not violate the First Amendment).+  X7-#Xj\  P6G;cXP# !J:\POLICY\275\ELECPUB\BOA! )J:\POLICY\275\ELECPUB\DEFINIT.MMC) T#Xj\  P6G;cXP# Ń  X - rIII. BOC PROVISION OF ELECTRONIC PUBLISHING SECTION 274 ă  X - A.xDefinition of Electronic Publishing  X - x1.` ` Electronic Publishing Services under Section 274(h)  X-x` ` a. Background  Xh-x(41.` ` Section 274(h)(1) defines "electronic publishing" as: Xxthe dissemination, provision, publication, or sale to an unaffiliated entity or person, of any one or more of the following: news (including sports); entertainment (other than interactive games); business, financial, legal, consumer, or credit materials; editorials, columns, or features; advertising; photos or images; archival or research material; legal notices or public records; scientific, educational, instructional, technical, professional, trade, or other  X-literary materials; or other like or similar information.Jeh qC yO"-ԍx47 U.S.C.  274(h)(1).J  Section 274(h)(2) also lists specific services that are excluded from the definition of electronic publishing. These excepted services include, among other things, common carrier provision of telecommunications service, information access service, information gateway service, voice storage and retrieval, electronic mail, certain data and transaction processing services,"= e,-(-(ZZ "" electronic billing or advertising of a BOC's regulated telecommunications services, language translation or data format conversion, "white pages" directory assistance, caller identification services, repair and provisioning databases, credit card and billing validation for telephone company operations, E 911 and other emergency assistance databases, and video  X-programming and full motion video entertainment on demand.VfqC {O-ԍxSee 47 U.S.C.  274(h)(2). V  Xv-x)42.` ` In the Notice, we sought comment on how to distinguish the services that are properly included in the definition of electronic publishing in section 274(h)(1) from those services that are excluded under 274(h)(2). We asked parties to identify any enhanced services that BOCs currently provide that appear to meet the definition of an electronic publishing service under section 274. To the extent it is unclear whether a particular service, or a particular group of services, is encompassed by the statutory definition of electronic publishing, we invited parties to identify the basis for the ambiguity and to make  X -recommendations on how the service, or services, should be classified.Ig ZqC {O-ԍxNotice at  31.I For example,  X -we cited the NonAccounting Safeguards NPRM, which sought comment on whether we should classify as "electronic publishing" services those services for which the carrier "controls, or has a financial interest in, the content of the information transmitted by the  X}-service."Kh}qC {O-ԍxId. at  29 n.41.K  XO-x*43.` ` In addition, we observed in the Notice that, although electronic publishing is  X:-specifically included in the definition of information services,Hi:~qC yOi-ԍx47 U.S.C.  153(20).H BOC provision of electronic publishing is explicitly exempted from the separate affiliate and nondiscrimination requirements of section 272 that apply to BOC provision of interLATA information  X-services.MjqC {O-ԍxId.  272(a)(2)(C).M We noted that, in contrast to section 272, which applies only to BOC provision of interLATA information services, section 274 does not distinguish between the intraLATA and interLATA provision of electronic publishing services. We sought comment, therefore, on whether section 274 applies to BOC provision of both intraLATA and interLATA electronic  X-publishing services.IkqC {O"-ԍxNotice at  29.I "2 k,-(-(ZZP"Ԍ X- x` ` b. Comments  X-x+44.` ` NAA asserts that the definition of electronic publishing in section 274(h) is clear and detailed; therefore, it contends, there is no need to anticipate ambiguous services at  X-this time.;lqC yO-ԍxNAA at 3. ; Other commenters agree that the definition of electronic publishing in section 274(h)(1) is clear, but suggest that Commission clarification of some of the exceptions to  Xv-electronic publishing in section 274(h)(2) would be appropriate.mvXqC {O -ԍxSee, e.g., Bell Atlantic at 45; Joint Parties at 3; NYNEX Reply at 12; USTA at 3. For example, several parties ask us to clarify that the "gateway" exception in section 274(h)(2)(C) includes access to a home page that electronically links selected Internet sites or other home pages. Similarly, they contend that introductory information regarding an Internet service provider's services and electronic linkage to these services should also be included in the "gateway"  X -exception.0n\ qC {O-ԍxJoint Parties at 35; NYNEX Reply at 1213; PacTel Reply at 5 n.7; SBC Reply at 6; USTA at 3; see  {Oh-also Ameritech at 9 (arguing that we should interpret the "gateway exception" in section 274(h)(2)(C) broadly); Bell Atlantic at 5.0 In addition, they contend that software browsers should be considered "navigational systems," which are also excluded from the definition of electronic publishing  X -under section 274(h)(2)(C).wo qC yO-ԍxJoint Parties at 35; NYNEX Reply at 1213; SBC Reply at 6; USTA at 3.w AT&T notes, however, that, even where particular BOC services are exempt from the requirements of section 274, the separate affiliate requirements  X -of section 272 may still apply.Up qC yO-ԍxAT&T at 12; AT&T Reply at 10, n. 22.U  Xy-x,45.` ` Some commenters also ask us to clarify that BOC transmission of information that falls within the definition of electronic publishing under section 274(h)(1) does not make the BOC's transmission of such information subject to the requirements of section 274 unless  X4-the BOC has control of, or a financial interest in, the content of the information transmitted.q4. qC {O-ԍxSee NYNEX at 78; NYNEX Reply at 1112; PacTel Reply at 45; SBC Reply at 56; YPPA at 23. Those situations where a BOC merely provides access to another entity's content, they argue, should not be considered electronic publishing. v  X- x` ` c. Discussion  X-x-46.` ` We find, as the commenters indicate, that electronic publishing services may include services provided through the Internet or through proprietary data networks. We also find that, although the definition of electronic publishing in section 274(h) is quitve detailed, clarification of the "gateway" exception of section 274(h)(2)(C) is appropriate. Section 274(h)(2)(C) provides that electronic publishing shall not include:"N q,-(-(ZZ"ԌXxThe transmission of information as part of a gateway to an information service that does not involve the generation or alteration of the content of information, including data transmission, address translation, protocol conversion, billing management, introductory information content, and navigational systems that enable users to access electronic publishing services, which do not affect the presentation of such electronic publishing services to users.  We conclude, consistent with the comments on this issue, that a BOC's provision of access to introductory World Wide Web home pages, other types of introductory information, and software (such as browsers) does not constitute the provision of electronic publishing services under section 274(h)(2)(C). We find that, as long as a BOC merely provides access to a home page, or an initial screen that does not include any of the enumerated content types in section 274(h)(1), it is engaged in the provision of "gateway" services that section 274(h)(2)(C) excludes from the definition of electronic publishing services. Further, the statute expressly excludes "introductory information content" from the definition of electronic publishing services. Similarly, we find that end user software products, such as World Wide Web browsers, to the extent they enable users "to access electronic publishing services" and do not themselves incorporate the content types listed in section 274(h)(1), constitute  Xb-"navigational systems" that are excepted from the definition of electronic publishing. Further,  XK-we conclude that hypertext "links,"|r\KqC yO-ԍxA "hypertext link" is a reference from one document to another. On the World Wide Web, a user can  {O-select a link on one page and "jump" to a second page referenced by that link. See generally Wired Style:  {OV-Principles of English Usage in the Digital Age (Hale ed., 1996) at 49-50.| and other pointers, from any gateway or navigational system to electronic publishing content are similarly "navigational" systems and thus are not electronic publishing services under section 274(h)(1).  X-x.47.` ` Moreover, we find that, to the extent BOCs engage in activities that are excluded from the definition of electronic publishing under section 274(h), they are not  X-subject to the joint marketing restrictions of section 274(c) with respect to those activities.UsqC {O^-ԍxSee, e.g., Joint Parties at 5.U We find, however, that certain activities that are excluded from the definition of electronic publishing may still be information services subject to the separate affiliate, nondiscrimination, and joint marketing requirements of section 272. For example, although "gateway" services, as discussed above, are generally excluded from the definition of  XN-electronic publishing services, in the NonAccounting Safeguards Order we found that certain BOCprovided Internet access services may be interLATA information services subject to the  X"-requirements of section 272.ct"~qC {OQ$-ԍxNonAccounting Safeguards Order at  127.c  X-x/48.` ` As to services that are neither expressly included nor excluded from the definition of electronic publishing, or services whose proper classification may be otherwise"t,-(-(ZZ" ambiguous, it would be speculative for us to determine at this time whether such services are  X-electronic publishing services.uqC yOb-ԍxWe note, for example, that the definition of electronic publishing in section 274(h)(1) includes "other like or similar information." 47 U.S.C.  274(h)(1). Rather, we find that the appropriate classification of an ambiguous service will necessarily involve a factspecific analysis that is best performed on a  X-casebycase basis.v qC {O-ԍxThis conclusion is consistent with the discussion of electronic publishing services in the NonAccounting  {OV-Safeguards Order. See NonAccounting Safeguards Order at  140. Moreover, we decline to adopt NAA's proposal that we rely solely on  X-whether such service involves "the generation or alteration of the content of information."_w|qC {O -ԍxNAA at 3; see also NYNEX Reply at 1112._ Although we recognize that Congress used this language in describing several exceptions to the definition of electronic publishing, we do not find this fact to be dispositive in itself. There is no indication in section 274 or its legislative history that Congress intended the "generation or alteration" language to be the controlling factor in determining the nature of ambiguous services. We may, nevertheless, take it into consideration in any determination we make concerning the classification of an ambiguous service.  X -x049.` ` As to the electronic publishing services described in section 274(h)(1), we conclude, for the reasons discussed below, that a BOC must control, or have a financial interest in, the content of information transmitted over its basic telephone service in order to be subject to the requirements of section 274. We therefore agree with those parties that argue that a BOC is not subject to section 274 requirements merely because it provides the transmission component of an electronic publishing service offered by an unaffiliated entity to end users. We find support for our conclusion in two of the exceptions to the definition of electronic publishing section 274(h)(2)(B), which excepts from the definition of electronic publishing "[t]he transmission of information as a common carrier," and section 274(h)(2)(M), which excludes "[a]ny other network service of a type that is like or similar to these network services and that does not involve the generation or alteration of the content of  X-information."VxqC yO-ԍx47 U.S.C.  274(h)(2)(B), (M).V We note further that this "control or financial interest" test is consistent with  X-the definition of electronic publishing in the Modification of Final Judgment (MFJ).yqC yO' -ԍxThe MFJ, among other things, prohibited AT&T from engaging in electronic publishing over its own transmission facilities. It defined "electronic publishing" as the "provision of any information which AT&T or  {O!-its affiliates has, or has caused to be, originated, authored, compiled, collected, or edited, or in which it has a  {O"-direct or indirect financial or proprietary interest, and which is disseminated to an unaffiliated person through  {OK#-some electronic means." See United States v. Western Electric, 552 F. Supp. 131, 18081 (D.D.C. 1982)  {O$-(emphasis added), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 (1983). As discussed below, however, because we received very few comments on the exact meaning of"y,-(-(ZZ" "control" and "financial interest," we are seeking additional comment on this issue in a  X-Further Notice of Proposed Rulemaking ("Further Notice").zqC {Ob-ԍxSee part VII, infra. In addition, we note that based on the record in the NonAccounting Safeguards  {O,-Order, we did not adopt a "control or financial interest" test in that proceeding for the purpose of determining  {O-whether ambiguous information services are subject to section 272 or section 274. See NonAccounting  {O-Safeguards Order at  140. We stated, however, that the definition of electronic publishing could be further  {O-refined in the instant proceeding, as we are doing herein. Id.   X-x150.` ` Finally, we conclude that section 274 applies to a BOC's provision of both intraLATA and interLATA electronic publishing services. Nothing in the statute or its legislative history suggests that Congress intended to distinguish between intraLATA and interLATA electronic publishing services. We therefore agree with those commenters that argue that, if Congress had intended to distinguish between intraLATA and interLATA electronic publishing as it did in describing information services subject to section 272, it  X3-would have done so.f{3qC {Of-ԍxSee, e.g., NAA at 3 n.2, NYNEX at 5; YPPA at 2.f  X - x2.` ` Dissemination by Means of "Basic Telephone Service"  X -x` ` a. Background  X -x251.` ` Section 274 prescribes the terms under which a BOC may offer electronic publishing. Section 274(a) states that no BOC or BOC affiliate "may engage in the provision of electronic publishing that is disseminated by means of such [BOC's] or any of its affiliates' basic telephone service, except that nothing in this section shall prohibit a separated affiliate or electronic publishing joint venture operated in accordance with this section from  X6-engaging in the provision of electronic publishing."P|6qC yO-ԍx47 U.S.C.  274(a).P In the Notice, we tentatively concluded that a BOC or BOC affiliate may engage in the provision of electronic publishing services disseminated by means of a BOC or its affiliate's basic telephone service only through a  X-"separated affiliate" or an "electronic publishing joint venture."I}qC {OH-ԍxNotice at  32.I  X-x ` ` b. Comments  X-x352.` ` No commenters disagree with our tentative conclusion that a BOC or BOC affiliate may engage in the provision of electronic publishing services disseminated by means of a BOC or its affiliate's basic telephone service only through a "separated affiliate" or an"i6 },-(-(ZZ"  X-"electronic publishing joint venture."~qC {Oy-ԍxSee, e.g., MCI at 34; PacTel at 8; SBC Reply at 5; Time Warner at 8; U S WEST at 3; U S WEST Reply at 4. The majority of BOCs point out, however, that  X-electronic publishing not disseminated via the basic telephone service of a BOC or its affiliate  X-is not subject to the requirements of section 274."qC yO-ԍxAmeritech at 78; Bell Atlantic Reply at 8; NYNEX at 6; PacTel at 8; SBC at 4. For example, PacTel maintains that a BOC or its affiliate may engage in the provision of electronic publishing service disseminated by means of telephone exchange service or facilities provided by a competitive wireline telephone service provider without having to create a separated affiliate or electronic  Xx-publishing joint venture under section 274(a).=xqC yO -ԍxPacTel at 8.=  XJ-x453.` ` Similarly, Ameritech asserts, and SBC agrees, that if a BOC only provides exchange access, and not basic telephone service, it is not subject to section 274  X -requirements.j BqC yO-ԍxAmeritech at 78; Ameritech Reply at 12; SBC Reply at 5.j For example, Ameritech contends that, if a BOC originates or terminates a toll call disseminating electronic publishing information, the BOC is providing "exchange  X -access," not exchange service.Z qC yOq-ԍxThus, Ameritech argues, if a database used to provide the electronic publishing service is located outside the BOC's service territory and accessible only by the BOC's provision of exchange access, the BOC is not  {O-providing electronic publishing service subject to section 274. See Ameritech Reply at 1; SBC Reply at 5. In response, AT&T asserts that "basic telephone service" under section 274 extends to any electronic publishing disseminated by means of either the BOC or its affiliate's local exchange service or local exchange facilities. This definition,  X -AT&T argues, would include the exchange access service of a BOC or its affiliate.E qC yON-ԍxAT&T Reply at 1011.E  X{-x ` ` c. Discussion  XM-x554.` ` We affirm our tentative conclusion that, pursuant to the plain language of section 274(a), a BOC or BOC affiliate may engage in the provision of electronic publishing services disseminated by means of a BOC or its affiliate's basic telephone service only through a "separated affiliate" or an "electronic publishing joint venture." Moreover, in reading section 274(a) together with the definition of "basic telephone service" in section 274(i)(2), we conclude that a BOC or BOC affiliate is not required to provide electronic publishing services through a separated affiliate or electronic publishing joint venture if it disseminates its electronic publishing via the basic telephone service of a competing wireline" ,-(-(ZZ"  X-local exchange carrier or commercial mobile radio service provider. qC yOy-ԍxSection 274(i)(2) expressly excepts from the definition of basic telephone service "a competitive wireline telephone exchange service provided in a telephone exchange area where another entity provides a wireline telephone exchange service that was provided on January1, 1984" and "commercial mobile service." 47 U.S.C.  274(i)(2)(A),(B). We find that dissemination via the basic telephone service of competing, unaffiliated providers significantly reduces the ability of the BOC to allocate costs improperly and to discriminate in favor of its  X-affiliate.@ZqC {O -ԍxSee generally Notice at  7,8 (arguing that, because of the BOCs' existing monopoly power in providing local exchange and exchange access service, they may potentially discriminate in the provision of such services and facilities to their competitors).@ We therefore decline to apply the requirement that a BOC provide electronic publishing services through a separated affiliate or electronic publishing joint venture where Congress did not. We also conclude that, with respect to electronic publishing services provided through the Internet, "dissemination" means the transmission of information via a BOC or its affiliate's basic telephone service to the Internet, rather than the transmission of information to the end user. Thus, a BOC that is providing Internet access services to end users, and nothing more, is not engaged in the provision of electronic publishing pursuant to section 274.  X -x655.` ` We reject Ameritech's assertion, however, that a BOC's dissemination of electronic publishing services through its exchange access service is exempt from the requirements of section 274. Pursuant to section 274(a), BOCs that provide electronic publishing services disseminated via their own "basic telephone service" must do so through a separated affiliate or electronic publishing joint venture. Section 274(i)(2) defines "basic  Xy-telephone service" as "any wireline telephone exchange service, or wireline telephone  Xd-exchange service facility, provided by a [BOC] in a telephone exchange area."[dqC yO-ԍx47 U.S.C.  274(i)(2) (emphasis added).[ We find that, when a BOC provides exchange access service, it uses its telephone exchange service facilities. Indeed, "exchange access" is defined in section 153(16) as "the offering of access  X!-to telephone exchange services or facilities for the purpose of the origination or termination  X -of telephone toll services."Y b qC {O-ԍxId.  153(16) (emphasis added).Y Since the definition of "basic telephone service" in section  X-274(i)(2) encompasses both the telephone exchange service and the exchange service facility, the use of exchange access service, which in turn uses the BOC's telephone exchange service facilities, for the dissemination of electronic publishing falls within this definition and must be provided in accordance with the requirements of section 274. This conclusion is appropriate as a matter of policy, too, since the BOCs' nearmonopoly over exchange access service as well as local exchange service gives them an incentive to allocate costs improperly  Xm-and discriminate against unaffiliated electronic publishing entities.Xm qC {O'-ԍxSee Notice at  7,8.X "m ,-(-(ZZ"Ԍ X-ԙx756.` ` We conclude therefore that, to be engaged in the provision of electronic publishing services subject to section 274, the BOC must disseminate the information via its basic telephone service (as defined by 274(i)(2)) and have control of, or a financial interest in, the content of the information being provided. Similarly, we also conclude that control of, or a financial interest in, the content of the information alone, without BOC dissemination of  X-information, is not electronic publishing under section 274.FqC {O-ԍxSee NYNEX at 6.F  X_-x857.` ` We note that, to the extent a BOC disseminates electronic publishing services through the facilities of a competing wireline local exchange carrier, or commercial mobile service provider, and thus is not required to provide such services through a separated affiliate or electronic publishing joint venture, it may still be subject to the joint marketing prohibition of section 274(c)(1)(B). As discussed below, this section contemplates situations in which a BOC affiliate is involved in the provision of services that are "related to" the provision of electronic publishing, but does not provide electronic publishing services disseminated by  X -means of a BOC or its affiliate's basic telephone service.v ZqC {O-ԍxSee infra  RELATED120ש 121122 .v )%J:\POLICY\275\ELECPUB\DEFINIT.MMC) *%J:\POLICY\275\ELECPUB\STRUCSEP.SL2*  X- B.Xx"Separated Affiliate" and "Electronic Publishing Joint Venture" Requirements of  Xy-Section 274 (# x  XK- x1.` ` The "Operated Independently" Requirement of Section 274(b) x  X-x` ` a. Background  X-x958.` ` Section 274(b) states that a separated affiliate or electronic publishing joint venture established to provide electronic publishing services pursuant to section 274(a) shall be "operated independently" from the BOC. Subsections 274(b)(1)(9) then list nine structural separation and transactional requirements that apply to the separated affiliate or electronic  X-publishing joint venture.IqC yO0-ԍx47 U.S.C.  274(b). I In the Notice we addressed only the structural separation  X~-requirements of section 274(b) and only those requirements are addressed herein.S~|qC {O -ԍxSee Notice at  35, n.51.S Subsections 274(b)(1), (3), (4), (8), and (9) are transactional requirements that are addressed  XP-in the Accounting Safeguards Order.rPqC {O$-ԍxSee Accounting Safeguards Order at  22526, 24044.r We observed in the Notice that the structural separation requirements of section 274(b) do not refer, in all instances, to both separated";,-(-(ZZe""  X-affiliates and electronic publishing joint ventures.qC yOy-ԍxSome of the subsections of section 274(b) refer only to a BOC and its separated affiliate, while others refer to a BOC and its separated affiliate or electronic publishing joint venture. We, therefore, sought comment on whether Congress intended the phrase "operated independently" to have a different meaning  X-for separated affiliates and for electronic publishing joint ventures.I qC {O-ԍxNotice at  35.I We also sought  X-comment in the Notice on whether the Commission should adopt additional regulatory requirements to ensure compliance with the "operated independently" requirement of section  X-274(b).:qC {O -ԍxId.:  Xa-x ` ` b. Comments  X3- x:59.` ` Several commenters argue that Congress intended the phrase "operated independently" to have the same meaning for separated affiliates and electronic joint publishing ventures when subsections 274(b)(1)(9) refer to both separated affiliates and electronic publishing joint ventures. They note, however, that some of the requirements of section 274(b) do not apply to electronic publishing joint ventures. Where the statutory language does not refer to both separated affiliates and electronic publishing joint ventures, these commenters maintain that the phrase "operated independently" should not be read to render all the requirements in subsections (b)(1)(9) applicable to both separated affiliates and electronic publishing joint ventures; they contend, for example, that sections 274(b)(5) and 274(b)(7) are inapplicable to electronic publishing joint ventures since those subsections refer  XM-only to separated affiliates.XMDqC yOB-ԍxAmeritech Reply at 10; AT&T at 13; Bell Atlantic at 5; Bell Atlantic Reply at 45; BellSouth at 1112; BellSouth Reply at 11; NAA at 4; NYNEX at 89; NYNEX Reply at 45; PacTel at 910; PacTel Reply at 6; SBC at 56; USTA at 4.  Other commenters argue that the language "operated independently" compels us to apply all of the section 274(b) requirements to separated  X-affiliates and electronic publishing joint ventures.lXd qC yO4-ԍxMCI at 45 (contending that section 274(b)(5) should be applied both to separated affiliates and electronic publishing joint ventures); Time Warner at 12 n.19, 1415 (contending that both sections 274(b)(5) and (7) apply to separated affiliates and electronic publishing joint ventures); Time Warner Reply at 1819.l  X-x;60.` ` As to the issue of whether we should adopt regulatory requirements to ensure compliance with the "operated independently" requirement of section 274(b), BOCs and several trade associations argue that the structural and transactional safeguards of section 274 are clear, selfexecuting and comprehensive. They assert that Congress could have expressly provided for additional requirements had it deemed them necessary to ensure the operational" ,-(-(ZZQ" independence of BOCs from their separated affiliates and electronic publishing joint  X-ventures.7qC yOy-ԍxAmeritech Reply at 9; Bell Atlantic at 46; Bell Atlantic Reply at 45; BellSouth at 1213; Joint Parties at 2 (contending, without specific reference to section 274(b), that section 274 is selfexecuting); NYNEX at 89; NYNEX Reply at 45; PacTel at 910; PacTel Reply at 6; SBC at 56; SBC Reply at 34; USTA at 4; U S WEST at 45 n.11; U S WEST Reply at 67; YPPA at 3; YPPA Reply at 23.  They further assert that the phrase "operated independently" is not a separate substantive restriction, as their competitors maintain, but that subsections 274(b)(1)(9) reflect  X-Congress' determination of the requirements necessary to achieve operational independence.LXqC yO3-ԍxBell Atlantic at 5; BellSouth Reply at 1213; NYNEX Reply at 46; PacTel Reply at 6; U S WEST at 4 n.11 (also contending that it is premature for us to exercise any regulatory authority we might have until there is a demonstrated necessity); U S WEST Reply at 67; YPPA Reply at 23.L Several of these commenters observe that this position is consistent with the Commission's  X-interpretation of the same language in Computer II and the cellular separation rules, where  Xx-"operate independently" is not given an independent meaning.xxqC yO-ԍxBell Atlantic at 56; BellSouth at 13; SBC Reply at 34; YPPA at 34. x Finally, several commenters assert that Congress did not grant the Commission authority to adopt additional regulations in  XJ-section 274(b).JwqC yOr-ԍxAmeritech Reply at 9; BellSouth at 10; NYNEX at 8; NYNEX Reply at 4; PacTel at 910; U S WEST Reply at 67; YPPA at 3.  X -x<61.` ` Other commenters contend that the inclusion of the phrase "operated independently," in addition to the requirements in subsection 274(b)(1)(9), supports the conclusion that we are authorized to and should adopt additional regulations to ensure compliance with section 274(b). They maintain that the "operated independently" language is  X -a separate substantive requirement from those restrictions in subsections 274(b)(1)(9).| qC yO@-ԍxAT&T at 1314; AT&T Reply at 1214; MCI Reply at 24; Time Warner at 1113.| These commenters urge us to read the "operated independently" language as authorizing us to  X-adopt additional rules such as those adopted in Computer II. Specifically, they urge us to adopt regulations precluding the separated affiliated or joint venture from: (1) leasing or sharing physical space collocated with regulated transmission facilities used to provide basic service; (2) sharing computer facilities with the local exchange carrier; (3) developing software jointly with the regulated entity; and (4) marketing any other equipment or services  X!-to any affiliate.k!_ qC yO1!-ԍxAT&T at 14 & n.10; MCI Reply at 5; Time Warner at 1213. k Time Warner further proposes that we adopt regulations precluding the separated affiliate or electronic publishing joint venture from constructing, owning or operating its own transmission facilities, thereby requiring the separated affiliate or joint venture to purchase its capacity from the regulated carrier under tariff and ensuring "that local  X-exchange monopoly power is not leveraged into the provision of electronic publishing."C qC yOe&-ԍxTime Warner at 13.C ",-(-(ZZ"Ԍ X-x` ` c. Discussion x  X-x=62.` ` COMMONPROP OPERIND  OPIND We conclude that the "operated independently" requirement of section 274(b) obligates a separated affiliate to comply with all the requirements of subsections 274(b)(1)(9). We further conclude that an electronic publishing joint venture, to comply with the "operated independently" requirement of section 274(b), need only satisfy the requirements of subsections 274(b)(1)(4), (6), and (8)(9), since subsections 274(b)(5) and 274(b)(7) specifically refer to separated affiliates and not to electronic publishing joint ventures. We  XH-discuss more fully below the structural separation requirements of section 274(b), i.e.,  X3-subsections 274(b)(2), and (5)(7). As noted above, the transactional requirements of section  X -274(b), i.e., subsections 274(b)(1), (3), (4), (8), and (9), are discussed in the Accounting  V -Safeguards Order.  X -x>63. OPINDEP ` ` B5We reject the arguments made by certain commenters that the phrase "operated independently" is a separate substantive restriction that requires us to apply subsections 274(b)(1)(9) to both separated affiliates and electronic publishing joint ventures even where the statute refers only to a separated affiliate. We see no reason for Congress to have expressly referred in section 274(b)(5) and section 274(b)(7) to separated affiliates if the restrictions in those subsections were intended to apply to both separated affiliates and electronic publishing joint ventures.  X!-x?64.` ` We also reject the similar argument that the phrase "operated independently" is a separate substantive restriction authorizing us to adopt additional restrictions beyond those in subsections 274(b)(1)(9). There is no evidence in the statute or its legislative history that Congress intended the restrictions in section 274(b) merely to be a list of minimum requirements that need to be supplemented by additional rules to be imposed on separated affiliates or electronic publishing joint ventures. We find, therefore, that the "operated independently" requirement in section 274(b) is satisfied if a BOC and its separated affiliate or electronic publishing joint venture comply with the applicable restrictions in subsections  Xi-274(b)(1)(9), as noted above.XiqC {O-ԍxSee supra   OPIND62 .X While we decline to adopt additional restrictions beyond those in subsections 274(b)(1)(9), we reject the argument that Congress did not grant the  X;-Commission the authority to do so.o;ZqC {OF -ԍxSee supra   JURIS14 שJURIS220.o  X -x@65.` ` This interpretation of the "operated independently" requirement in section  X-274(b) is not inconsistent with our determination in the NonAccounting Safeguards Order that the section 272(b)(1) "operate independently" provision imposes requirements beyond  X -those contained in subsections 272(b)(2)(5).j qC {Og&-ԍxNonAccounting Safeguards Order at  15670.j The "operated independently" requirement in section 274(b) is followed by nine substantive restrictions that we read as the criteria to be"!~,-(-(ZZ " satisfied to ensure operational independence between a BOC and its electronic publishing entity created pursuant to section 274(a). In contrast, the "operate independently" provision in section 272 appears in subsection 272(b)(1), which is one of five separate substantive  X-requirements in section 272(b).SqC {O4-ԍxContra AT&T Reply at 1213. S x  X-_ x2.` ` Section 274(b)(2)   X_-x` ` a. Background  X1-xA66.` ` Section 274(b)(2) provides that a separated affiliate or electronic publishing joint venture and the BOC with which it is affiliated shall "not incur debt in a manner that _would permit a creditor of the separated affiliate or joint venture upon default to have  X -recourse to the assets of the [BOC]."L ZqC yO-ԍx47 U.S.C.  274(b)(2). L We sought comment in the Notice on the types of activities a BOC, a separated affiliate, or an electronic publishing joint venture are precluded from engaging in under section 274(b)(2). We tentatively concluded that a BOC may not cosign a contract, or any other instrument, with a separated affiliate or an electronic publishing joint venture by which it would incur debt in violation of section 274(b)(2). We also sought comment on: whether this subsection affects a separated affiliate differently than an electronic publishing joint venture because of their different corporate relationships to the BOC, and whether we should establish specific requirements regarding the types of activities  X6-contemplated by section 274(b)(2).Q6qC {O-ԍxNotice at  3738. Q  X-x` ` b. Comments  X- xB67.` ` A number of commenters generally agree with our tentative conclusion that section 274(b)(2) prohibits a BOC from cosigning with a separated affiliate or an electronic publishing joint venture a contract, or any other instrument, that allows a creditor, upon  X-default, to have recourse to the assets of the BOC.5|qC yO-ԍxAT&T at 1516 (stating, however, that we should clarify that section 274(b)(2) is not limited to such "obvious violations" and that we should retain flexibility to deal with other credit arrangements that may come to our attention); Bell Atlantic Reply at 89; MCI at 4; NAA at 4; NYNEX Reply at 6; SBC at 6 (contending that the provision is "selfexplanatory" and that "no useful purpose would be served by . . . promulgating a regulation prohibiting a BOC from cosigning a contract or any other instrument . . .").5 AT&T and MCI maintain that we should also interpret section 274(b)(2) to prohibit a BOC's parent holding company from co Xg-signing a debt of a separated affiliate or electronic publishing joint venture.Ig, qC yOD&-ԍxAT&T at 1516; MCI at 4.I The BOCs, in reply, assert that interpreting section 274(b)(2) to preclude a BOC's parent company from"P ,-(-(ZZ" cosigning a contract or any other instrument with a BOC's separated affiliate or electronic publishing joint venture is neither supported by the statutory language nor public policy. They further state that there is no need for additional regulations to effectuate section  X-274(b)(2).qC yO4-ԍxBell Atlantic Reply at 89; BellSouth Reply at 13; NYNEX Reply at 6; PacTel Reply at 7; SBC Reply at 7; U S WEST Reply at 78.` `  X-x` ` c. Discussion  X_-xC68.` ` As stated in the Notice, we find that the intent of section 274(b)(2) is to protect BOC local exchange and exchange access service subscribers from bearing the cost of default  X3-by BOC affiliates.I3 qC {O -ԍxNotice at  36.I We adopt our tentative conclusion that section 274(b)(2) prohibits a BOC from cosigning with a separated affiliate or an electronic publishing joint venture a contract, or any other instrument, that would incur debt in a manner that grants the creditor  X -recourse, upon default, against the assets of a BOC. qC yOQ-ԍxWe note that the term "Bell operating company" is defined in section 274(i)(10), which references section 3 of the Act (47 U.S.C.  153(4)). Consistent with this conclusion, we further conclude that a BOC's parent is precluded from cosigning a contract or other instrument for a BOC's separated affiliate or electronic publishing joint venture, if the effect is to provide its creditor with recourse, upon default, to a BOC's assets. We reject, however, the arguments urging us to extend the restrictions in section 274(b)(2) to preclude a BOC's section 274 separated affiliate or electronic publishing joint venture from incurring debt in a manner that would permit a creditor, upon default, to have recourse to the assets of a BOC's parent holding company, provided that this recourse does not effectively result in recourse to the assets of the BOC. The text of the statute does not support the proposed restriction. Moreover, it would leave section 274 separated affiliates and electronic publishing joint ventures at a disadvantage as compared with other electronic publishing companies that are  X-permitted to rely upon the credit of their parent corporations.Y qC {O-ԍxAccord Bell Atlantic Reply at 89.Y  X-xD69.` ` We decline to apply this section differently as to separated affiliates and electronic publishing joint ventures. No arguments were advanced supporting the need for different treatment with respect to these alternate vehicles for providing electronic publishing services, and we see no evidence at this time indicating that this subsection affects these entities differently. In this regard we agree with SBC that "no useful purpose would be served by . . . speculating as to whether the subsection might affect a separated affiliate"P,-(-(ZZ" differently than a joint venture," and that we should proceed on a casebycase basis, rather  X-than adopt a "one size fits all" rule.@qC yOb-ԍxSBC at 6 & n.7.@  X-xE70.` ` We reject AT&T's proposal that we require contracts or other instruments through which a separated affiliate or electronic publishing joint venture obtains credit to provide expressly that the creditor has no recourse either to the assets of a BOC or to the  Xv-assets of the parent holding company of a BOC.?vXqC yO -ԍxAT&T at 1516.? As stated above, we do not read section 274(b)(2) to preclude a creditor of a separated affiliate or electronic publishing joint venture from having recourse, upon default, to the assets of a BOC parent holding company. Further, given the clarity of section 274(b)(2), we see no need to adopt a rule at this time requiring contracts through which a separated affiliate or electronic publishing joint venture obtains credit to provide expressly that the creditor has no recourse to the assets of a BOC. BOCs, nevertheless, may include such a provision in their contracts, if they so choose.  X -x 3.` ` Section 274(b)(5) and Shared Services  X-x` ` a. Background  Xb- xF71.` ` Section 274(b)(5) provides that a separated affiliate and a BOC shall "(A) have no officers, directors, and employees in common after the effective date of this section; and  X4-(B) own no property in common."J4qC yO-ԍx47 U.S.C.  247(b)(5).J We tentatively concluded in the Notice that, since this subsection does not specifically refer to electronic publishing joint ventures, BOCs are not precluded from sharing officers, directors, and employees with an electronic publishing joint  X-venture.IxqC {O-ԍxNotice at  39.I We also tentatively concluded in the Notice that section 274(b)(5) does not preclude a BOC from owning property in common with an electronic publishing joint  X-venture.: qC {O-ԍxId.:  X-xG72.` ` We also sought comment on the extent of the separation between a BOC and a separated affiliate required by section 274(b)(5)(A). We noted, for example, "that section 274(c)(2) permits joint marketing activities between a BOC and either a separated affiliate or  XR-electronic publishing joint venture under certain conditions."FRqC {O%-ԍxId. at  40.F With respect to a BOC and a separated affiliate, we sought comment on "whether, to the extent that they are engaged in"; . ,-(-(ZZ" permissible joint marketing activities, the separated affiliate may share marketing personnel  X-with the BOC.":qC {Ob-ԍxId.: We further sought comment on "how BOCs may engage in joint marketing activities with a separated affiliate pursuant to section 274(c)(2)(A) if they cannot share  X-marketing personnel.":ZqC {O-ԍxId.:  X-xH73.` ` We invited comment on the types of property encompassed by the phrase "property in common." We tentatively concluded that section 274(b)(5)(B) prohibits a BOC and its separated affiliate from jointly owning goods, facilities, and physical space. We also tentatively concluded that it prohibits the joint ownership of telecommunications transmission and switching facilities, one of the separation requirements we adopted for independent LECs  X -in the Competitive Carrier Fifth Report and Order.X^ qC {O-ԍxPolicy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities  {O-Authorizations Therefor, CC Docket No. 79252, Fifth Report and Order, 98 FCC 2d 1191, 1198 (1984)  {OK-(Competitive Carrier Fifth Report and Order) at  9.X Finally, we sought comment on whether the section 274(b)(5) prohibition on joint ownership of property between a BOC and its separated affiliate also precludes a BOC and a separated affiliate from sharing the use of  X -property owned by one entity or the other and from jointly leasing any property.I qC {O-ԍxNotice at  42.I  X -x` ` b.  Comments  X-  X{-xI74.` ` Applicability of Section 274(b)(5) to Electronic Publishing Joint Ventures. The BOCs and NAA agree with our tentative conclusion that section 274(b)(5) does not preclude a BOC from having officers, directors, or employees in common with an electronic publishing joint venture. These parties also agree with our tentative conclusion that this section does not  X-bar a BOC from owning property in common with its electronic publishing joint venture.qC yOt-ԍxAmeritech at 1213; Ameritech Reply at 10; Bell Atlantic at 5; Bell Atlantic Reply at 45; BellSouth at 1112; NAA at 5; NAA Reply at 34; NYNEX at 89; PacTel at 10; PacTel Reply at 78; SBC at 7. Other commenters disagree with our tentative conclusions. MCI and Time Warner maintain that section 274(b)(5) should apply to both separated affiliates and electronic publishing joint ventures and that interpreting this section to apply only to BOCs and their separated affiliates would undermine what they consider to be the separate substantive "operate independently"  X-requirement of section 274(b).v qC yOY$-ԍxMCI at 45; Time Warner at 1415; 1718; Time Warner Reply at 1617. v AT&T recognizes that section 274(b)(5), on its face, does not prohibit a BOC from sharing common personnel or owning property in common with an electronic publishing joint venture, but argues that we have authority to proscribe such"~! ,-(-(ZZP" sharing arrangements or ownership under section 274(b)(5), if necessary to ensure compliance  X-with the "operated independently" language.FqC yOb-ԍxAT&T Reply at 1617. F  X-xJ75.` ` Extent of the Separation Required Between a BOC and a Separated Affiliate.(#(#XSeveral BOCs state that section 274(b)(5)(A) should not be interpreted to act as a limitation upon the permissible joint marketing activities in section 274(c)(2). They contend that it is not necessary for a BOC and its separated affiliate to have employees in common to engage in the joint marketing activities permitted by section 274(c)(2). According to these commenters, employees of one entity may perform inbound telemarketing or referral services  X1-permitted under section 274(c)(2)(A) and (B) for the other entity.1XqC yO: -ԍxBell Atlantic at 1011; BellSouth at 15; NYNEX Reply at 1011; PacTel at 1011; U S WEST at 1516.  {O -See infra  EMPLOYEES143.  X -xK76.` ` SBC argues that a BOC and a separated affiliate, to the extent they engage in permissible joint marketing activities, should be allowed to employ individuals in common. Specifically, it states that "where there is a conflict between the authority conferred by [s]ection 274(c)(2) and the general operational independence requirements of Section 274(b),  X -the former, more specific provisions should control."N qC yO -ԍxSBC at 7, 13; SBC Reply at 9.N  Xy-xL77.` ` AT&T states that section 274(b)(5) "prohibit[s] BOC personnel from participating in the operation, planning, marketing or other activities of the separated affiliate,  XK-and vice versa . . . ."<KBqC yO>-ԍxAT&T at 16.< MCI states that a BOC should only be allowed to provide  X4-telemarketing services pursuant to nondiscriminatory, publicly disclosed contracts.:4qC yO-ԍxMCI at 5.:  X-xM78.` ` "Property in Common." No commenters oppose and some commenters agree with our tentative conclusion that section 274(b)(5)(B) prohibits a BOC and its separated affiliate from jointly owning goods, facilities, and physical space. They further agree that this section prohibits the joint ownership of telecommunications transmission and switching  X-facilities.ob qC yO"-ԍxAT&T at 1617; MCI at 5; NAA at 5; Time Warner at 17 & n.26. o  X|-xN79.` ` Shared Use or Joint Leasing of Property. The BOCs argue that section 274(b)(5)(B) does not prohibit a BOC and its separated affiliate from sharing the use of property owned by one of the entities, or from jointly leasing property. They maintain that"N" ,-(-(ZZ"  X-section 274(b)(5)(B) pertains only to ownership of property."qC yOy-ԍxAmeritech at 13; Ameritech Reply at 11; BellSouth at 15; NAA at 5; NYNEX at 910; NYNEX Reply at 7; PacTel at 11; SBC at 8; SBC Reply at 78; USTA at 4 (noting that we must continue to recognize the  {O -economies of integration derived from sharing that we have allowed under our Computer II structural separation requirements); U S WEST at 1819; YPPA at 45.  Several BOCs note that potential concerns arising from shared use of property are addressed by the requirements of  X-section 274(b)(3).]qC yO5-ԍxCOLLOCATENAA at 5; NYNEX Reply at 7; PacTel at 11; SBC Reply at 78; USTA at 4; U S WEST at 1819; YPPA at 45. Section 274(b)(3) provides that a separated affiliate or electronic publishing joint venture and the BOC with which it is affiliated "shall carry out transactions (A) in a manner consistent with such [operational] independence, (B) pursuant to written contracts or tariffs that are filed with the Commission and made publicly available, and (C) in a manner that is auditable in accordance with generally accepted auditing standards." ] AT&T and Time Warner, on the other hand, urge us to interpret section 274(b)(5)(B) to prohibit a BOC and its separated affiliate both from sharing property owned  X-by one of the entities and from jointly leasing property.-"b qC yO-ԍxAT&T at 1617 (contending that we should clarify that this section precludes a BOC from establishing a second affiliate to perform services or own property for both a BOC and its separated affiliate and from using any compensation system that bases the compensation of BOC personnel on the performance of the affiliate, or  {O-vice versa, discussed infra at  AFFILIATE181, AFFILIATE287); AT&T Reply at 15; Time Warner at 13; Time Warner Reply at 12.(#(#X- MCI does not address whether this section permits joint leasing of property. It states, however, that joint use of property would invite the improper allocation of costs against which the separated affiliate requirement is  X_-intended to protect.L_L qC yO\-ԍxMCI at 5; MCI Reply at 56.L MCI and Time Warner specifically contend that a separated affiliate should not be permitted to collocate its equipment with BOC local exchange and exchange  X1-access equipment or to share computer facilities.S1qC yO-ԍxMCI Reply at 5; Time Warner at 13.S  X - xO80.` ` Sharing of Services. NYNEX and Ameritech argue that neither the Act nor its legislative history can be read to prohibit a BOC and its separated affiliate from utilizing the administrative and corporate governance functions provided by their parent holding  X -company."Z lqC {O-ԍxAmeritech Reply at 12; NYNEX at 1018; NYNEX Reply at 78; see also PacTel Reply at 8 (stating that nothing in section 274(b)(5)(A) prevents an affiliate of both a BOC and a separated affiliate from providing services to both of them)." AT&T argues that we should prohibit, pursuant to section 274(b)(5), a BOC from establishing a second affiliate to perform services or own property for both the BOC and  X-its separated affiliate.<qC yO#-ԍxAT&T at 17.< MCI, in reply to the BOCs' comments, states that we should preclude the sharing of inhouse functions, either by having one entity perform such functions"y#,-(-(ZZ" for the other or by having another affiliate, or the parent, perform them for both a BOC and  X-its separated affiliate.@qC yOb-ԍxMCI Reply at 6.@  X-xP81.` ` Other Activities. AFFILIATE1AT&T argues that we "should prohibit the BOCs from using any compensation system that directly or indirectly bases the compensation of BOC officers,  X-directors, or other employees on the performance of the affiliate, or vice versa."<XqC yO-ԍxAT&T at 17.< The BOCs generally reply that there is no statutory basis for such a requirement, which would effectively preclude BOCs from offering stock options, other forms of deferred compensation, and bonuses which are commonly used in industry and frequently are based, in part, upon the  X1-performance of entities within a corporate family.t1qC yO -ԍxBellSouth Reply at 1314; PacTel Reply at 8; U S WEST Reply at 89.t  X -x` ` c. Discussionhh  X - xQ82.` ` Applicability of Section 274(b)(5) to Electronic Publishing Joint Ventures. We a (B)(5) dopt our tentative conclusion that section 274(b)(5)(A) does not preclude a BOC from having officers, directors, and employees in common with an electronic publishing joint venture. We also adopt our tentative conclusion that section 274(b)(5)(B) does not preclude a BOC from owning property in common with an electronic publishing joint venture. Congress expressly limited the scope of these restrictions to a BOC's separated affiliate. Moreover, we find no basis in this record for extending these restrictions to a BOC's electronic publishing joint venture. This determination is consistent with our finding above that the phrase "operated independently" in section 274(b) is not a separate substantive restriction and, therefore, does not provide a basis for making section 274(b)(5) applicable to electronic  X-publishing joint ventures.ZxqC {O-ԍxSee supra  OPINDEP63.Z  X-xR83.` ` Extent of the Separation Required Between a BOC and a Separated Affiliate. We find that section 274(b)(5)'s provision barring a BOC and its separated affiliate from having "officers, directors, and employees in common" does not limit the permissible joint  X|-activities set forth in section 274(c)(2).| qC {O7"-ԍxSee generally part III.C.2, infra, discussing "permissible joint activities" pursuant to section 274(c)(2). As certain commenters note, it is not necessary for a BOC and its separated affiliate to have employees in common to engage in the joint activities permitted under section 274(c)(2). For this reason, we reject those comments urging us to read section 274(c)(2) as allowing a BOC and its separated affiliate to have personnel in common for the purpose of engaging in permissible joint activities. Such an exception to the prohibition in section 274(b)(5) is not necessary to give effect to sections 274(b)(5) and" $,-(-(ZZ" 274(c)(2) and is not supported by the statutory language. While our interpretation of the interplay between section 274(b)(5) and section 274(c)(2) may result in some reduced  X-efficiency in engaging in the joint activities permitted under section 274(c)(2),SqC {OK-ԍxSee Notice at  40.S we are not convinced that it will be substantial enough to warrant our reading into section 274(b)(5) an  X-exception where none exists in the statutory language.ZqC yO-ԍxOnly SBC argues that requiring a BOC and its separated affiliate to employ separate marketing personnel "would reduce the efficiencies generally associated with joint marketing ventures." SBC at 7.  Xv-xS84.` ` "Property in Common." We adopt our tentative conclusion that section 274(b)(5) prohibits a BOC and its separated affiliate from jointly owning goods, facilities, and physical space, including telecommunications transmission and switching facilities. The prohibition against joint ownership of goods, facilities and physical space is clear on the face of the statute. Moreover, none of the commenters disagree with this tentative conclusion.  X -xT85.` ` Shared Use or Joint Leasing of Property. We agree with the BOCs that the statutory prohibition in section 274(b)(5) does not preclude a BOC and its separated affiliate from either sharing the use of property owned by either a BOC or its separated affiliate or jointly leasing property. For example, we find that section 274(b)(5) permits a separated affiliate to collocate its equipment in end offices or on other property owned or controlled by  Xy-the BOC, as long as such collocation agreements satisfy section 274(b)(3).yqC {O-ԍxSee supra note COLLOCATE185, see also NonAccounting Safeguards Order at  161. We also find that this section permits a BOC and its separated affiliate to contract with each other for the use of joint transmission and switching equipment, again subject to the requirements of section 274(b)(3). Those commenters arguing for an expanded interpretation of "own" to include a prohibition against shared use of property and joint leasing of property offer no statutory support for their position. We are unwilling to assume that Congress intended the prohibition against ownership of property in section 274(b)(5) to include leaseholds and the shared use of property owned by either a BOC or its separated affiliate. Further, we find that allowing shared use of property and joint leases between a BOC and its separated affiliate enables the BOC to take advantage of economies of scale and scope. Concerns about anticompetitive behavior can be addressed through the transactional requirements of section 274(b)(3), the nondiscrimination requirements of section 274(d), and the Commission's  Xe-affiliate transaction rules.\eDqC {OZ"-ԍxSee 47 C.F.R.  64.90164.904.\  X7-xU86.` ` Sharing of Services. The prohibition in section 274(b)(5)(A) against a BOC and its separated affiliate having "officers, directors, and employees in common" is worded slightly differently from the requirement in section 272(b)(3) that a BOC and its separate affiliate have "separate officers, directors, and employees." We interpret, however, these two"%,-(-(ZZZ"  X-provisions to have the same substantive meaning.gqC {Oy-ԍxSee NonAccounting Safeguards Order at  178.g Both sections 272 and 274 preclude the same person from serving simultaneously as an officer, director, or employee of both a BOC and its section 272 or 274 affiliate, respectively. Thus, an individual may not be on the payroll of both entities. Based on the record before us, we decline to read section 274(b)(5)(A) to prohibit a BOC and its separated affiliate from utilizing the administrative and corporate governance functions provided by their parent holding company or another BOC affiliate. Section 274 does not address whether the parent company of a BOC and its separated affiliate or another BOC affiliate is permitted to perform functions for both a BOC and its separated affiliate. There is no basis in the record for concluding that administrative and corporate governance functions provided to a BOC and its separated affiliate by a parent company or another BOC affiliate would result in the BOC and its separated affiliate violating section 274(b)(5)(A)'s prohibition on having "officers, directors, and employees in common." Further, a parent company that performs services for both a BOC and its section 274 separated affiliate must fully document and properly apportion the costs incurred in  X -furnishing such services.\ ZqC {O-ԍxSee 47 C.F.R.  64.90164904.\  X-xV87.` ` Other Activities. AFFILIATE2We reject AT&T's request that we interpret section 274(b)(5)(A) to prohibit compensation schemes that base the level of remuneration of BOC officers, directors, and employees on the performance of the section 274 separated affiliate, or vice versa. We find that tying the compensation of an employee of a section 274 separated affiliate to the performance, for example, of the BOC's parent holding company and all of its enterprises as a whole, including the performance of the BOC, does not make that individual an employee of the BOC for purposes of section 274(b)(5)(A). Nor does such a compensation arrangement for a BOC employee make that individual an employee of the  X-section 274 separated affiliate.nqC {Ou-ԍxSee also NonAccounting Safeguards Order at  186. n Further, we agree with those commenters stating that such a scheme would effectively preclude BOCs from offering stock options, other forms of deferred compensation, and bonuses, which are commonly used in industry and frequently are based,  X-in part, upon the performance of entities within a corporate family.c~qC {O-ԍxSee supra  AFFILIATE181.c Indeed, as PacTel notes, "[i]t is common for corporations to have compensation systems that base a portion of compensation, especially for officers and directors, on the performance of the corporation as a  XN-whole. This is consistent with the fiduciary duty of corporate officers and directors . . . ."CNqC yO$-ԍxPacTel Reply at 8.C "7&,-(-(ZZ"Ԍ X-_x 4.` ` Section 274(b)(6)  X-x` ` a. Background  X-xW88.` ` Section 274(b)(6) states that a separated affiliate or electronic publishing joint venture and the BOC with which it is affiliated shall "not use for the marketing of any _product or service of the separated affiliate or joint venture, the name, trademarks, or service marks of an existing [BOC] except for names, trademarks, or service marks that are owned by  XH-the entity that owns or controls the [BOC]."JHqC yO -ԍx47 U.S.C.  274(b)(6).J We tentatively concluded that this provision is  X1-sufficiently precise as to make unnecessary the adoption of implementing regulations.I1XqC {O: -ԍxNotice at  43.I  X -x` ` b. Comments  X -xX89.` ` Time Warner asks us to clarify that the prohibition in section 274(b)(6) prevents a BOC from sharing a name, trademark, or service mark with the Regional Bell Holding Company ("RBOC"). It argues that the exception in section 274(b)(6) permitting the separated affiliate or electronic publishing joint venture to use the name, trademark, or service mark of the RBOC would "vitiate the general prohibition against crosslabeling if the BOC affiliates or joint ventures were permitted to use names, trademarks, or service marks that are  XK-shared by an operating company and the [RBOC]."FKqC yO-ԍxTime Warner at 1617.F  X-xY90.` ` The BOCs and YPPA, in reply, state that Time Warner's suggestion is unsupported by the statutory language and would eliminate the express statutory exception  X-Congress created in section 274(b)(6).zqC yO-ԍxAmeritech Reply at 1415; Bell Atlantic Reply at 7; BellSouth Reply at 1415; NYNEX Reply at 8; PacTel Reply at 9; SBC Reply at 1011; YPPA Reply at 78.  X-x` ` c. Discussion  X- x ` `  X-xZ91.` ` We adopt our tentative conclusion that section 274(b)(6) does not require the adoption of implementing regulations. We find that Time Warner's suggestion is contradicted by the statutory language and legislative history that expressly allow a separated affiliate or electronic publishing joint venture to use "the names, trademarks, or service marks that are  X7-owned by the entity that owns or controls the [BOC]."~7qC {O%-ԍx47 U.S.C.  274(b)(6); see Joint Explanatory Statement at 155.~ We agree with BellSouth that the adoption of Time Warner's suggestion "would require the Commission to assume that" 'd ,-(-(ZZ" Congress was unaware that four of the seven [RBOCs] share their names with their BOC  X-subsidiaries."GqC yOb-ԍxBellSouth Reply at 14.G We decline to make this assumption.  X-x 5.` ` Section 274(b)(7)  X-x` ` a. Background  X_- x[92.` ` Section 274(b)(7) states that a BOC is not permitted "(A) to perform hiring or training of personnel on behalf of a separated affiliate; (B) to perform the purchasing, installation, or maintenance of equipment on behalf of a separated affiliate, except for telephone service that it provides under tariff or contract subject to the provisions of this  X -section; or (C) to perform research and development on behalf of a separated affiliate."J XqC yO -ԍx47 U.S.C.  274(b)(7).J Since this subsection does not specifically refer to electronic publishing joint ventures, we tentatively concluded that BOCs are permitted to perform these functions on behalf of an  X -electronic publishing joint venture.I qC {OW-ԍxNotice at  44.I In addition, we sought comment on whether, "[t]o the extent that a BOC and a separated affiliate are engaged in permissible joint marketing activities," a BOC may perform the hiring or training of marketing personnel on behalf of its  Xy-separated affiliate under section 274(b)(7)(A).FyzqC {O-ԍxId. at  45.F We also sought comment on the type of "equipment" encompassed by section 274(b)(7)(B). We asked, for example, whether a BOC providing telephone service to a separated affiliate under tariff or contract subject to the requirements of section 274 is permitted under section 274(b)(7)(B) to purchase, install, and  X-maintain transmission equipment for the separated affiliate.: qC {O-ԍxId.:  X-x\93.` ` With respect to section 274(b)(7)(C), we asked whether there are any circumstances under which a BOC may share its research and development with its separated affiliate. Specifically, we sought comment on whether this provision simply limits a BOC's ability to perform research and development for the sole and exclusive use of a separated affiliate, or whether it requires a BOC to refrain from performing any research and development that may be potentially useful to a separated affiliate. We also asked about other ways in which this provision may limit a BOC's ability to perform research and  XN-development for the separated affiliate.FNqC {O%-ԍxId. at  46.F@ "7(0 ,-(-(ZZ"Ԍ X-x ` ` b. Comments  X-  X-x]94.` ` Applicability of Section 274(b)(7) to Electronic Publishing Joint Ventures. The BOCs and NAA agree with our tentative conclusion that BOCs are permitted to perform the  X-functions in section 274(b)(7) on behalf of an electronic publishing joint venture.qC yO-ԍxAmeritech at 14; Ameritech Reply at 10; Bell Atlantic at 5; Bell Atlantic Reply at 4 & n.10; BellSouth at 12; BellSouth Reply at 1112; NAA at 5; NAA Reply at 3; PacTel at 12; PacTel Reply at 910; SBC at 89.  Time Warner and AT&T disagree with our tentative conclusion. They maintain, consistent with their argument respecting section 274(b)(5), that section 274(b)(7) should apply to both a separated affiliate and an electronic publishing joint venture. They state that this interpretation is necessary to give effect to what they consider a separate substantive requirement that a BOC be "operated independently" from its electronic publishing joint  X -venture. qC yO -ԍxTime Warner at 1415; 20; Time Warner Reply at 1617; AT&T Reply at 1617 (acknowledging that section 274(b)(7) does not expressly bar a BOC from performing the functions in that section on behalf of an electronic publishing joint venture, but asserting that the "operated independently" language gives the Commission the authority to preclude such activities between a BOC and an electronic publishing joint venture). MCI made the same argument only with respect to section 274(b)(5).   X -x^95.` ` Relationship Between Section 274(b)(7)(A) and Section 274(c)(2). Several commenters argue that there is no exception in section 274(b)(7) for permissible joint marketing activities in section 274(c)(2) and, therefore, we should not permit a BOC, when engaged in permissible joint marketing with its separated affiliate, to perform the hiring or  X-training of marketing personnel on behalf of the separated affiliate.uqC yO-ԍxAT&T at 18; NAA at 5; Time Warner at 19; Time Warner Reply at 1011.u SBC, however, argues that we should allow a BOC to hire and train marketing personnel to carry out the permissible joint marketing activities in section 274(c)(2). It states that this approach is not anticompetitive because teaming or other business arrangements entered into by a BOC  X4-pursuant to section 274(c)(2)(B) must be conducted on a nondiscriminatory basis.:4` qC yOE-ԍxSBC at 9.:  X-x_96.` ` NONDISCRIM EQUIPMT The Type of "Equipment" Encompassed by Section 274(b)(7)(B). The majority of commenters agree that section 274(b)(7)(B) permits a BOC to purchase, install, and maintain transmission EQUIP  equipment for its separated affiliate if the BOC is providing telephone  X-service to the separated affiliate under tariff or contract. qC yOb#-ԍxAmeritech at 15 (as long as transmission equipment is an integral part of a BOC provision of telephone service); Bell Atlantic at 6; NAA at 56; PacTel at 12; SBC at 10; USTA at 4. Bell Atlantic urges us to  X-differentiate between "provision of a service that uses equipment owned by the BOC, an arrangement specifically permitted under this subsection, from the purchasing, installation,")H ,-(-(ZZQ"  X-and maintenance of equipment 'on behalf of' the affiliate, which is barred."[qC yOy-ԍxBell Atlantic at 6 (emphasis in original).[ The distinction, according to Bell Atlantic, is that in the latter situation, the equipment would be owned by the separated affiliate. U S WEST similarly states that this section prohibits a BOC from providing any depreciable equipment to be used by its separated affiliate in conducting the affiliate's business, but that it does not prohibit a BOC from providing  X-services to its section 274 affiliate operation.CXqC yO-ԍxU S WEST at 1920.C Several other BOCs argue that the provision of telephone services includes purchasing, installation, or maintenance of transmission equipment, and any other equipment necessary or incidental to providing such service. They note that section 274(b)(3) ensures that there are ample safeguards that such transactions are  X1-conducted at arm's length.e1qC yO -ԍxPacTel at 12; SBC at 10; SBC Reply at 12; USTA at 4.e Other commenters state only that section 274(b)(7)(B) requires  X -BOCs to provide telephone service pursuant to section 274(d).O xqC yOC-ԍxAT&T at 18; Time Warner at 19.O Time Warner specifically urges us to require BOCs to provide unaffiliated electronic publishers with the same access to wireline telephone exchange services that they provide to their inregion separated affiliate or  X -electronic publishing joint venture.C qC yO-ԍxTime Warner at 19.C  X - x`97.` ` Limitations on Research and Development. The BOCs, NAA, and USTA generally argue that section 274(b)(7)(C) only limits their ability to perform research and development for the sole and exclusive use of the separated affiliate. They contend that it would be against public policy to restrict BOCs from performing research and development  XK-simply because the results might, at some later date, be applied to electronic publishing.KqC yO-ԍxAmeritech at 15 (contending that section 274(b)(7)(C) only prohibits BOC research and development activity for the sole or "primary" use of a separated affiliate); Ameritech Reply at 11; Bell Atlantic at 67; BellSouth at 1314 & n.33; NAA at 6; NYNEX Reply at 89; PacTel at 1213; PacTel Reply at 10; SBC at 1011; SBC Reply at 1213; USTA at 5; U S WEST at 20; U S WEST Reply at 9 (contending that a BOC is permitted to engage in R&D and to share it with all entities within the corporate family as long as it is not performed "solely, exclusively, or primarily for the electronic publishing affiliate").  Time Warner argues that the statutory language of section 274(b)(7)(C) should lead us to prohibit BOCs, under any circumstances, from sharing any research and development work or results with their inregion electronic publishing affiliates. It further states that we should  X-adopt the Computer II rules that preclude specific research and development by the regulated  X-entity on behalf of the competitive affiliate.fqC yO%-ԍxTime Warner at 1920 & n.20; Time Warner Reply at 12.f AT&T, in reply to the BOCs' comments, states only that we "should reject the BOCs' attempts to circumvent the prohibition in"*,-(-(ZZ" [s]ection 274(b)(7)(C) against BOC research and development on behalf of a separated  X-affiliate through hypertechnical constructions."BqC yOb-ԍxAT&T Reply at 16.B  X-x` ` c. Discussion  X-xa98.` ` Applicability of Section 274(b)(7) to Electronic Publishing Joint Ventures. We adopt our tentative conclusion that section 274(b)(7) does not preclude a BOC from performing the activities in section 274(b)(7) on behalf of an electronic publishing joint venture. The reasons supporting this determination are the same as those supporting our  X1-determination that section 274(b)(5) is inapplicable to electronic publishing joint ventures.1XqC {O: -ԍxSee supra  OPERIND62ש B563 , (B)(5)82.  X -xb99.` ` Relationship Between Section 274(b)(7)(A) and Section 274(c)(2). We agree with those commenters asserting that the restrictions in section 274(b)(7)(A) on a BOC performing the hiring or training of personnel on behalf of a separated affiliate apply even  X -when the BOC is engaged in permissible joint activities pursuant to section 274(c)(2). qC {OY-ԍxSee generally discussion of "permissible joint activities," infra part III.C.2. Reading an exception into section 274(b)(7)(A) for the joint activities permitted under section 274(c)(2) is neither supported by the statutory language, nor necessary to give effect to that section and section 274(c)(2). Thus, a BOC may not perform the hiring or training of personnel on behalf of its separated affiliate, even though it may be engaged in permissible joint activities under section 274(c)(2), such as providing inbound telemarketing services or  X4-engaging in nondiscriminatory teaming or business arrangements, as discussed below.;4|qC {Oa-ԍxId. ;  X-xc100.` ` The Type of "Equipment" Encompassed by Section 274(b)(7)(B). We find that section 274(b)(7)(B) prohibits a BOC from purchasing, installing, or maintaining equipment on behalf of its separated affiliate, except for the telephone service that it provides under tariff or contract. We agree with the position of several commenters that the provision of telephone service includes purchasing, installing, and maintaining equipment necessary or  X-incidental to providing such service.ZqC {OR!-ԍxSee supra  EQUIPMT96.Z As long as the equipment providing the telephone service is owned by a BOC, and not its separated affiliate, such activities are permissible under this section. We note, as some commenters suggest, that, even when engaging in permissible activities under section 274(b)(7), BOCs remain subject to the nondiscrimination  X7-requirements in section 274(d).D7qC {O&-ԍxSee id.D"7+2 ,-(-(ZZ"Ԍ X-ԙxd101.` ` Limitations on Research and Development. We conclude that the prohibition in section 274(b)(7)(C) on a BOC performing research and development "on behalf of" its separated affiliate precludes a BOC, at a minimum, from performing research and development for the sole and exclusive use of the separated affiliate. We also find that it precludes a BOC from performing research and development for the use or benefit of its section 274 separated affiliate together with other affiliates. We further conclude, however, that the prohibition in section 274(b)(7)(C) on a BOC performing research and development "on behalf of" its separated affiliate, as interpreted herein, does not limit a BOC's ability to perform research and development simply because the results might, at a future date, be applied to electronic publishing. We agree with those commenters arguing that such an interpretation "would not serve the public's continued desire for new and different  X -communications solutions"; qC yO| -ԍxSBC at 11.; and would be "antithetical to the public interest and national  X -policy under Section 7 of the Communications Act."  XqC yO-ԍxBellSouth at 1314, citing 47 U.S.C.  157(a). This section provides that "[i]t shall be the policy of the United States to encourage the provision of new technologies and services to the public. Any person or party (other than the Commission) who opposes a new technology or service proposed to be permitted under this Act shall have the burden to demonstrate that such proposal is inconsistent with the public interest." We also find that it would be impractical for a BOC to anticipate all potential uses of research and development activities it  X -might undertake.D @qC yO-ԍxBellSouth at 1314.D We recognize that these principles may not address all of the possible scenarios that may arise. Such determinations are fact specific and will need to be made on a casebycase basis.  Xb-xe102.` ` Further, we disagree with Time Warner that prohibiting a BOC from sharing any research and development work or results with its separated affiliate is supported by the statutory language. Time Warner and AT&T fail to offer any persuasive statutory or policy arguments in support of their position.  X-  X-x x6.` ` Comparison with "Separate Affiliate" Requirement of Section 272  X-  X-x` ` a. Background  X-  X-xf103.` ` We sought comment in the Notice on the interrelationship between the requirements for a "separate affiliate" in section 272(b) and the requirements for a "separatedx  Xg-affiliate" and "electronic publishing joint venture" in section 274(b).gqC {O#-ԍxNotice at  47. We note that the structural and transactional requirements in section 272 for a "separate affiliate" are different than those in section 274 for a "separated affiliate." To the extent that certain BOCs currently are providing all of their information services on an integrated basis, we sought comment on what modifications these BOCs would have to make to their current"9,* ,-(-(ZZ" provision of service in order to provide electronic publishing services in compliance with the  X-separated affiliate or electronic publishing joint venture requirements of section 274.:qC {Ob-ԍxId.:  X-xg104.` ` We also sought comment on whether a BOC may provide electronic  X-publishing services through the same entity or affiliate through which it provides inregion interLATA telecommunications services, manufacturing activities, and interLATA information  Xv-services.OvZqC {O -ԍxId. at  48. O In addition, we sought comment on whether a BOC providing any or all of its section 272 services and its section 274 electronic publishing services through the same entity  XH-would have to comply with the requirements of section 272, section 274, or both.:HqC {O -ԍxId.:  0  X -x` ` b. Comments  X - xh105.` ` There were few comments on the interrelationship between the requirements in sections 272(b) and 274(b). Ameritech states that the requirements of section 272(b) are a subset of those found in section 274(b), but that section 274(b) imposes additional requirements beyond those in section 272(b). It notes that another principal difference between the separation requirements of the two sections is that a section 272 separate affiliate may own or be owned by a BOC as long as the separation requirements of that section are satisfied; however, a section 274 separated affiliate may not own or be owned by the BOC  XK-entity.DK~qC yOz-ԍxAmeritech at 1011.D NYNEX states that sections 272 and 274 deal with considerably different affiliate  X4-activities and should be construed to be independent of each other.=4qC yO-ԍxNYNEX at 10.= PacTel states that, to the extent there are similarities in the requirements specified in sections 272(b) and 274(b),  X-those requirements should be interpreted consistently.>qC yOU-ԍxPacTel at 13.>  X-xi106.` ` AT&T also notes that several of the requirements in the two sections overlap,  X-but, like Ameritech states, that section 274(b) imposes additional requirements having no  X-counterpart in section 272(b).. qC yO#-ԍxAT&T at 1819 & n.12 (noting that sections 274 (b)(4),(b)(5)(B), (b)(6), (b)(7) and (b)(8) have no counterpart in section 272(b)). AT&T further asserts that all interLATA electronic publishing services should be subject to the requirements of section 272, and that section 274"- ,-(-(ZZ"  X-merely supplements the requirements of section 272.=qC yOy-ԍxAT&T at 24.= In reply, Bell Atlantic and YPPA state that a section 274 separated affiliate need not also comply with section 272, even if the electronic publishing services are interLATA. They maintain that Congress, in enacting section 272(a)(2)(C), expressly exempted interLATA electronic publishing services from the  X-requirements of section 272.`XqC yO-ԍxBell Atlantic Reply at 24; YPPA Reply at 56. ` hh  Xv-xj107.` ` All of the commenters agree that a BOC may provide electronic publishing  X_-services through the same entity or affiliate through which it provides section 272 services.$X_qC yO -ԍxAmeritech at 12; Ameritech Reply at 11; AT&T at 19; Bell Atlantic at 7; BellSouth at 1516; MCI at 6; NYNEX at 5; NYNEX Reply at 13; PacTel at 1314; Time Warner at 31; Time Warner Reply at 12; U S WEST at 34; U S WEST Reply at 4; YPPA at 5.$ They disagree, however, on whether an affiliate providing both section 272 and section 274 services must comply with all of the requirements of both sections. AT&T, MCI and Time Warner state that a BOC offering electronic publishing services and section 272 services through the same affiliate must comply with all of the requirements of sections 272 and 274,  X -i.e., the structural separation and transactional requirements, as well as the joint marketing and  X -nondiscrimination provisions of both sections.x qC yO-ԍxAT&T at 19; MCI at 6; Time Warner at 3132; Time Warner Reply at 1213.x  X -xk108.` ` The BOCs and YPPA disagree with the other commenters. They argue that a BOC providing electronic publishing services through the same entity or affiliate through which it provides section 272 services must comply with the separation requirements in both sections 272(b) and 274(b) on a servicebyservice basis. Specifically, they maintain that the entity providing both section 272 services and electronic publishing services must comply  X6-only with the requirements of each section relevant to the particular service (i.e., a section 272 service or electronic publishing services) being provided. They further argue that a BOC need only comply with the joint marketing and nondiscrimination restrictions of sections 272  X-and 274 on a servicebyservice basis."XqC yO<-ԍxAmeritech at 12 & n.34; Ameritech Reply at 1112 & n.36; Bell Atlantic at 7; BellSouth at 16 n.37; NYNEX at 5; NYNEX Reply at 13; PacTel at 1314; PacTel Reply at 11; U S WEST at 34; U S WEST Reply at 46; YPPA at 56; YPPA Reply at 46. "  X-xl109.` ` There is some disagreement among the BOCs as to those requirements in  X-section 274(b) that they deem applicable when providing section 272 and section 274 services through the same entity. Several BOCs assert that the separation requirements unique to either section 272 or section 274 would apply only to those services specified in their  Xi-respective sections, e.g., because section 272 does not prohibit the hiring and training of personnel, section 274(b)(7)(A) would only apply with respect to the entity's electronic"T. ,-(-(ZZ"  X-publishing activities.xqC yOy-ԍxAmeritech Reply at 12 & n.36; Bell Atlantic at 7 (stating that any combined activities would be subject to the restrictions contained in both sections,"to the extent those restrictions differ," but that separable activities within the same affiliate would, where feasible, be subject only to the section of the statute addressing each activity); NYNEX at 5; NYNEX Reply at 1314; PacTel at 1314; U S WEST at 34; U S WEST Reply at 46. We note that Ameritech, in its initial comments, asserted that "the affiliate chosen to house both Section 272 and Section 274 services must comply with the separations [sic] requirements of both Sections." Ameritech at 12 n.34. U S WEST categorizes those requirements that the entity must comply with in sections 272(b) and 274(b) as structural separation requirements, arguing that compliance with the "transactional" requirements of either section is necessitated on a service X-byservice basis.XqC yOt -ԍxU S WEST at 45; U S WEST Reply at 46.X It categorizes section 274(b)(7)(A) as an example of a transactional requirement. YPPA, too, distinguishes between the structural separation requirements and the affiliate transaction requirements of sections 272(b) and 274(b), arguing that the latter need only be complied with on a servicebyservice basis. It cites sections 272(b)(5) and 274(b)(3) as examples of affiliate transaction requirements that need only be complied with on a  XH-servicebyservice basis.PHqC yO-ԍxYPPA at 56; YPPA Reply at 46.P  X -x` ` c. Discussion  X - xm110.` `  SEPAFF We conclude that a BOC may provide electronic publishing services and  X -section 272 services through the same entity or affiliate. Nothing in the Act or its legislative history suggests otherwise. We further conclude that the BOC or the entity providing both section 272 and section 274 services, as applicable, must comply with the requirements of both these sections, including: (1) all of the requirements of section 272(b) and section 274(b); (2) all applicable requirements of section 272(g) and section 274(c); and (3) all applicable requirements of section 272(c) and section 274(d). To the extent there is a conflict between the provisions of sections 272 and 274, the BOC or the entity providing both section 272 and 274 services, as applicable, must comply with the more stringent requirement of either section. These conclusions are discussed more fully below. We specifically reject AT&T's contention that electronic publishing services are subject to the section 272 separate affiliate requirements, pursuant to section 272(a)(2)(B), which imposes a separate affiliate  X-requirement on interLATA telecommunications services.=( qC yO!-ԍxAT&T at 24.= Electronic publishing services are  X-included within the statutory definition of information services in section 153(20).H qC yO*$-ԍx47 U.S.C.  153(20).H They"/H ,-(-(ZZq" are specifically excluded, however, from the section 272 separate affiliate requirement  X-pursuant to section 272(a)(2)(C).gqC {Ob-ԍxSee NonAccounting Safeguards Order at  142.g  X-xn111.` ` Section 272(b) and Section 274(b) Requirements. We agree with those commenters asserting that a BOC providing electronic publishing services through the same entity or affiliate through which it provides section 272 services must comply with all of the requirements of both section 272(b) and section 274(b). Allowing the BOCs to comply with the requirements of sections 272(b) and 274(b) on a servicebyservice basis is likely to lead  XH-to ad hoc determinations as to those requirements in both sections 272(b) and 274(b) with  X3-which the entity must comply.F3ZqC yO> -ԍx For example, the commenters suggest some confusion as to those requirements in section 274(b) we should deem inapplicable when the entity is providing only section 272 services. Ameritech and PacTel state that the entity providing both section 272 and section 274 services must satisfy only the separation requirements  {O-common to both sections. See Ameritech Reply at 1112 & n.36; PacTel at 1314. U S WEST agrees with Ameritech and Pactel. It, however, refers to sections 274(b)(5) and 274(b)(7), which have no counterpart in  {O(-section 272(b) as "transactional," even though they are addressed in the Notice as structural separation requirements of section 274(b). YPPA, on the other hand, refers to section 274(b)(3) as an affiliate transaction  {O-requirement, consistent with our treatment of that subsection in the Accounting Safeguards Order.  X -xo112.` ` We find that allowing the entity performing section 272 and section 274 services to determine how to comply with the section 272(b) and section 274(b) requirements creates the potential for administrative and enforcement problems. As a practical matter, however, requiring the entity providing both section 272 and section 274 services to comply with all the requirements of sections 272(b) and 274(b) will not be substantially more onerous than requiring the entity to comply with only those provisions of one section or the other.  X{-We determined in the NonAccounting Safeguards Order that the "operate independently" requirement of section 272(b)(1) imposes requirements beyond those listed in subsections 272(b)(2)(5). We therefore adopted additional requirements in our rules to implement section 272(b) to ensure operational independence between a BOC and its section 272  X!-affiliate; several of these are parallel to provisions in section 274(b).n!h qC {O:-ԍxSee NonAccounting Safeguards Order at  15670.n Thus, BOCs providing section 272 and section 274 services are already required to comply with many of the same requirements; and to the extent these services are combined the complications of complying with both sections 272(b) and 274(b) will be few.  X-xp113.` ` Joint Marketing and Nondiscrimination Provisions in Sections 272 and 274. As  X-noted above, while a BOC may provide both section 272 services and electronic publishing services through the same entity, it must comply with the applicable joint marketing and nondiscrimination provisions in both sections 272 and 274. With respect to the joint marketing provisions, if a BOC chooses to provide section 272 services together with its electronic publishing services, it must comply with the joint marketing restrictions of section";0 ,-(-(ZZ" 274(c)(1)(A) and section 272(g). Section 274(c)(1)(A) precludes the BOC from carrying out any "promotion, marketing, sales, or advertising for or in conjunction with a separated  X-affiliate."yqC {OK-ԍx47 U.S.C.  274(c)(1)(A). See discussion infra part III.C.1. y An entity established by a BOC to provide section 272 services and electronic publishing services is a section 274 "separated affiliate" for purposes of section 274(c)(1)(A), as it will be a "corporation . . . that engages in the provision of electronic publishing  X-services." ZqC yO-ԍxSection 274(i)(9) defines "separated affiliate" as a "corporation under common ownership or control with a [BOC] that does not own or control a [BOC] and is not owned or controlled by a [BOC] and that engages in the provision of electronic publishing which is disseminated by means of such [BOC's] or any of its affiliates' basic telephone service." 47 U.S.C.  274(i)(9).  The BOC, therefore, must comply with all the section 274 joint marketing provisions pertaining to its "separated affiliate." In addition, since the entity is also providing section 272 services, the joint marketing provisions in section 272(g) would apply as well.  X1-xq114.` ` The statutory language in sections 272(c) and 274(d) also requires that a BOC  X -providing both section 272 services and electronic publishing services together in one entity comply with the nondiscrimination provisions in both sections 272 and 274. To the extent that a BOC under "common ownership or control with a separated affiliate or electronic publishing joint venture" provides "network access and interconnections for basic telephone  X -service to electronic publishers,"I BqC yO-ԍx47 U.S.C.  274(d). I it must do so subject to the nondiscrimination  X -requirements in section 274(d).q qC {O*-ԍxSee discussion of section 274(d) infra part III.D. q In addition, section 272(c) imposes certain nondiscrimination safeguards on a BOC's dealings with an affiliate providing section 272  Xy-services.Qyd qC {O-ԍxSee 47 U.S.C.  272(c).Q The nondiscrimination safeguards of section 272(c) thus pertain to the BOC's dealings with an entity or affiliate providing both section 272 services and electronic publishing services.  X-xr115.` `  SEPAFF2 In sum, we find that a BOC may provide both section 272 and section 274  X-services through the same entity, but in doing so, must comply with the applicable joint marketing and nondiscrimination requirements in each of those sections. We find that the express statutory language in each of those sections compels this result. As noted above, to the extent there is a conflict between the provisions of sections 272 and 274, the BOC or the entity providing both section 272 and 274 services, as applicable, must comply with the more stringent requirement of either section. For example, if a BOC is permitted to engage in a joint marketing activity under section 272(g), but that activity is barred under section  Xe-274(c)(1)(A), the latter provision would preclude the BOC from engaging in that activity. * J:\POLICY\275\ELECPUB\STRUCSEP.SL2* * J:\POLICY\275\ELECPUB\JOINTMKT.RTR* "e1 ,-(-(ZZg "Ԍ X-řC.xJoint Marketing  X-  X- Xx1.X` ` Restrictions on Joint Marketing Activities Section 274(c)(1) (#`  X-  X-Xx X` ` a.X Scope of Section 274(c)(1)(B) (#  X-  Xv-XxX` ` X 1)XBackground(#  X_-  XH-xs116.` `  JTMKT1 Section 274(c)(1) of the Act establishes several restrictions on joint marketing  X1-activities in which a BOC may engage with either a "separated affiliate" or an "affiliate." In particular, section 274(c)(1)(A) provides that "a [BOC] shall not carry out any promotion,  X -marketing, sales, or advertising for or in conjunction with a separated affiliate."M qC yO| -ԍx47 U.S.C.  274(c)(1)(A).M Section 274(c)(1)(B) states that "a [BOC] shall not carry out any promotion, marketing, sales, or advertising for or in conjunction with an affiliate that is related to the provision of electronic  X -publishing."M XqC {O-ԍxId.  274(c)(1)(B).M  X-xt117.` ` In the Notice, we observed that the clause "that is related to the provision of  X{-electronic publishing" in section 274(c)(1)(B) may be interpreted to modify either the "promotion, marketing, sales, or advertising" activities that are circumscribed by that section,  XM-or the word "affiliate."I MqC {O-ԍxNotice at  50.I We also noted that the definition of "affiliate" in section 274  X6-expressly excludes a "separated affiliate."F 6|qC {Oc-ԍxId. at  49.F We therefore sought comment on the proper  X-interpretation of section 274(c)(1)(B).F qC {O-ԍxId. at  50.F  X-XxX` `  2)Comments (#  X-  X-xu118.` ` Several commenters argue that section 274(c)(1)(B) of the Act should be  X-interpreted to prohibit a BOC from carrying out joint marketing activities for or in  X-conjunction with an affiliate if the activities of the BOC relate to the provision of electronic  X-publishing.] qC yO#-ԍxAmeritech at 18; BellSouth at 17; SBC at 11.] In particular, BellSouth argues that section 274(c)(1)(B) is intended to address situations in which a BOC affiliate offers electronic publishing services or services related to  XR-electronic publishing, and nonelectronic publishing services, i.e., an affiliate that provides"R20 ,-(-(ZZ"  X-print directory services as well as electronic publishing services.A qC yOy-ԍxBellSouth at 17.A BellSouth contends that, by omitting the word "separated" in subsection (c)(1)(B), Congress clarified that some activities of a BOC affiliate that is engaged in the provision of electronic publishing services  X-may be unrelated to electronic publishing.:XqC {O-ԍxId.: According to BellSouth, a BOC therefore may engage in joint marketing activities with its directory affiliate so long as such activities "relate to the traditional directory products of the directory affiliate rather than any electronic  Xv-directory products.":vqC {O -ԍxId.: SBC argues that section 274(c)(1)(B) does not apply if a BOC  X_-performs services for an affiliate that are unrelated to the provision of electronic publishing.;_|qC yO -ԍxSBC at 11.;  X -xv119.` ` U S WEST, in contrast, argues that the phrase "that is related to the provision  X -of electronic publishing" modifies "affiliate" because such an interpretation provides BOCs with greater flexibility in organizing their businesses and is consistent with congressional  X -intent.? qC yO-ԍxU S WEST at 7.? For example, U S WEST contends that, if we adopt this interpretation, a BOC choosing to provide electronic publishing services through a section 272 affiliate would be  X -subject to the joint marketing provisions of section 274(c)(1)(B), rather than section 272.& qC yO-ԍxWe note that, while U S WEST argues that the phrase "that is related to the provision of electronic publishing" modifies the word "affiliate" in section 274(c)(2)(B), it also contends that this interpretation would permit the section 274 joint marketing restrictions to be applied only to the electronic publishing activities of a section 272 affiliate. In that respect, therefore, U S WEST's argument is similar to those of commenters supporting a contrary semantic interpretation of the phrase. & x  Xy-x` `  3)Discussion  Xb-  XK-xw120.` `  RELATED We conclude that the phrase "that is related to the provision of electronic  X4-publishing" modifies the "promotion, marketing, sales, or advertising" activities that are circumscribed by section 274(c)(1)(B). As such, we interpret section 274(c)(1)(B) of the Act to prohibit a BOC from carrying out any promotion, marketing, sales or advertising activities  X-with an affiliate, if such activities "relate to" the provision of electronic publishing.XXL qC yO#-ԍxThe term "affiliate" is defined in section 274(i)(1) as "any entity that, directly or indirectly, owns or controls, is owned or controlled by, or is under common ownership or control with, a Bell operating company. Such term shall not include a separated affiliate." 47 U.S.C.  274(i)(1). X As an initial matter, we find that the joint marketing prohibition in section 274(c)(1)(B) is intended to address situations that are not otherwise covered by section 274(c)(1)(A). Consequently,"3l,-(-(ZZ" we conclude that section 274(c)(1)(B) contemplates situations in which a BOC affiliate is involved in the provision of services that are in some manner "related to" the provision of electronic publishing, but does not provide electronic publishing services disseminated by means of a BOC's or any of its affiliates' basic telephone service. Because a BOC or BOC affiliate may engage in the provision of electronic publishing that is disseminated by means of such BOC's or any of its affiliates' basic telephone service only through a separated affiliate  Xv-or an electronic publishing joint venture,QvqC {O-ԍxSee 47 U.S.C.  274(a).Q a BOC "affiliate" that falls under section 274(c)(2)(B) of the Act, by definition, must not engage in such provision of electronic publishing. A BOC affiliate that provides electronic publishing services by means of its basic telephone service would constitute a "separated affiliate" subject to the joint marketing restriction in section 274(c)(1)(A).  X -xx121.` ` Consequently, section 274(c)(2)(B) addresses situations in which a BOC may have, for example, an affiliated holding company that, in turn, holds an ownership interest in a separated affiliate. Such a BOC would be precluded from carrying out any promotion, marketing, sales or advertising activities for or in conjunction with that affiliated holding company if and to the extent that such activities are "related to the provision of electronic publishing." A BOC, however, would not be prohibited from engaging in marketing activities with the affiliated holding company that are unrelated to the provision of electronic publishing. This interpretation of section 274(c)(1)(B) effectively would prevent the BOCs from indirectly promoting, marketing, selling, or advertising the electronic publishing services of a separated affiliate.  X-xy122.` ` 121We reject U S WEST's contention that section 274(c)(1)(B) prohibits a BOC  X-from carrying out marketing activities for or with an affiliate that is related to the provision of electronic publishing. Given the definition of "separated affiliate," which contemplates the provision of electronic publishing services by such entity, it is difficult to conceive of an affiliate "related to the provision of electronic publishing" that would not otherwise constitute a separated affiliate, and thus be subject to the joint marketing restriction in section 274(c)(1)(A). We also reject BellSouth's contention that section 274(c)(1)(B) of the Act is intended to address situations in which a BOC provides electronic publishing and nonelectronic publishing services through one affiliate. As noted above, a BOC affiliate that provides electronic publishing services through the BOCs' or any of its affiliates' basic telephone service would constitute a "separated affiliate" that would be subject to the joint marketing prohibition in section 274(c)(1)(A). "4Z,-(-(ZZ"Ԍ X-x ` ` ab. Scope of Section 274(c)(1)(A)  X-  X-x` `  1)Background  X-  X-xz123.` ` We sought comment in the Notice on whether a BOC can carry out both  X-section 272 and section 274 activities through one entity or affiliate, and, if so, whether the  Xx-affiliate woulad have to comply with the requirements of section 272, section 274, or both.IxqC {O-ԍxNotice at  48.I  Xa-We conclude in this Order that a BOC may provide both section 272 and section 274 services through the same affiliate. In so doing, however, a BOC must comply with the structural and  X5-transactional requirements of both sections 272(b) and 274(b).v5ZqC {O@ -ԍxSee supra at  SEPAFF110שSEPAFF2115.v We also conclude that a BOC providing section 272 and section 274 services through the same affiliate must comply with the applicable joint marketing provisions and nondiscrimination provisions of both those  X -sections.: qC {O-ԍxId.:  X -x{124.` ` Some parties raised the issue of whether and to what extent the joint marketing  X -restrictions of section 274 apply in cases where a BOC provides through the same affiliate  X-electronic publishing services and nonelectronic publishing services, i.e., print directory  X-services, that do not fall under section 272 of the Act.~qC {O-ԍxSee U S WEST at 811; BellSouth ex parte letter, October 15, 1996. Because BOCs currently may be providing electronic publishing and such nonelectronic publishing services through one affiliate, or may wish to provide such services through one entity in the future, we address  X:-that issue in this Order.  X-x` `  2)Comments  X-  X-x|125.` ` U S WEST and BellSouth argue that, if a BOC provides electronic publishing  X-services and nonelectronic publishing services, such as print directory services, through the  X-same affiliate, the joint marketing restrictions of section 274 would apply only to the  X-electronic publishing activities of the affiliate.;qC {O^!-ԍxId. ; U S WEST argues, inter alia, that Congress, in adopting the prohibitions in section 274(c)(1) of the Act, intended to circumscribe, for a limited time, joint marketing activities between a BOC and its section 274 separated affiliate because such affiliate would use the BOC's basic telephone service to disseminate its  XC-electronic publishing services.BCqC yO&-ԍxU S WEST at 910.B U S WEST argues that the section 274 joint marketing"C52 ,-(-(ZZ" prohibitions thus were intended to restrict the BOCs' ability to "leverage those basic services  X-to favor its electronic publishing services which use [such] services."AqC {Ob-ԍxId. at 10.A U S WEST maintains therefore that, absent a connection between a publishing activity and the BOC's network operations, there is no indication that Congress meant to impede commercial speech activities  X-engaged in by a BOC corporate enterprise.:ZqC {O-ԍxId.:  Xv-x` `  3)Discussion  X_-  XH-x}126.` `  2721 We conclude that, while a BOC may provide through the same affiliate both  X1-electronic publishing services and nonelectronic publishing services, such as print directory services, which do not fall under section 272 of the Act, it must comply with the joint marketing requirements of section 274. The plain language of section 274(c)(1)(A) states that "a [BOC] shall not carry out any promotion, marketing, sales, or advertising for or in  X -conjunction with a separated affiliate."^ qC yOr-ԍx47 U.S.C.  274(c)(1)(A) (emphasis added).^ Section 274(c)(1)(A), therefore, precludes a BOC from engaging in certain activities with a separated affiliate as a corporate entity, even in connection with nonelectronic publishing services.  X{-x~127.` `  2722 While our interpretation could provide a disincentive for BOCs to offer  Xd-electronic publishing and nonelectronic publishing services through the same affiliate, as  XM-U S WEST points out,@M|qC yOz-ԍxU S WEST at 10.@ the unambiguous statutory language requires this interpretation. We  X6-thus conclude that section 274(c)(1)(A) prohibits marketing and salesrelated activities carried out by a BOC for or in conjunction with a separated affiliate, irrespective of whether such affiliate provides both electronic publishing services and nonelectronic publishing services, such as print directory services, that do not fall under section 272 of the Act.   X-x ` ` c. Activities Prohibited under Section 274(c)(1) (#  X-  X-x` `  1)Background  X~-  Xg-x128.` ` In the Notice, we observed that the activities proscribed by section 274(c)(1)  XR-include the "promotion, marketing, sales, or advertising" by a BOC for or with an affiliate.IR qC {O$-ԍxNotice at  53.I We tentatively concluded that such activities "encompass prohibitions on advertising the availability of local exchange or other BOC services together with the BOC's electronic publishing services, making those services available from a single source and providing" 6,-(-(ZZ" bundling discounts for the purchase of both electronic publishing and local exchange  X-services.": qC {Ob-ԍxId.: We sought comment on that tentative conclusion and on whether any other types  X-of prohibitions were contemplated.:!ZqC {O-ԍxId.:  X-x` `  2)` Comments (#  X-  Xv-x129.` ` Ameritech, AT&T and NAA generally agree with our tentative conclusion  X_-regarding the types of activities that are prohibited under sections 274(c)(1)(A) and (B) of the  XH-Act.W"HqC yO -ԍxAmeritech at 16; AT&T at 20; NAA at 6.W Ameritech also argues, however, that the only prohibited marketing activities are  X1-those that "involve the BOC and the electronic publishing affiliate working together,"A#1|qC yO^-ԍxAmeritech at 16.A and therefore nothing precludes unilateral marketing, promotion, or sales activities by either the  X -BOC or its separated affiliate.$$ qC {O-ԍxId. Ameritech argues, for example, that section 271(c)(1) does not prohibit a BOC from unilaterally purchasing an electronic ad for its services in the electronic publishing affiliate's Internet service, because such action does not involve a "coordinated effort" with the electronic publishing affiliate to jointly promote both the  {O-BOC's and the electronic publisher's services. Id. In addition, Ameritech contends that bundling discounts may  X -be offered in all cases of permissible joint marketing activities.G% qC yO-ԍxAmeritech Reply at 17.G According to Ameritech, "while the BOC requires regulatory authority to discount regulated services, the electronic publisher is free to set its unregulated price and any promotional discounts as it sees  X -fit.":& qC {O-ԍxId.: AT&T disputes Ameritech's contention that section 274(c)(1) of the Act permits a BOC to market the electronic publishing services of its separated affiliate so long as it does  Xy-not "coordinate" its promotional activities with such affiliate.B'yqC yOD-ԍxAT&T Reply at 17.B  XK-x130.` ` U S WEST generally agrees that the activities prohibited under sections  X4-274(c)(1)(A) and (B) of the Act include making local exchange or other BOC services available together with electronic publishing services, but states that this prohibition is subject  X-to the inbound telemarketing exception in section 274(c)(2)(A) of the Act.@(qC yOa%-ԍxU S WEST at 15.@ PacTel argues that a separated affiliate, electronic publishing joint venture, teaming or other business entity is not precluded from purchasing the telecommunications services of a BOC and then"7:(,-(-(ZZ&" advertising such services with electronic publishing services, making the services available  X-from a single entity, and providing bundled discounts.D)qC yOb-ԍxPacTel Reply at 11.D  X-x131.` ` A number of parties contend that sections 274(c)(1)(A) and (B) of the Act  X-prohibit only the BOCs from carrying out certain joint marketing activities, and that the provisions should not be interpreted to restrict the joint marketing activities that may be carried out by either a "separated affiliate" under section 274(c)(1)(A), or an "affiliate" under  X_-section 274(c)(1)(B).*_XqC yOh -ԍxBell Atlantic at 9; NYNEX Reply at 9; SBC Reply at 14; USTA at 5; YPPA Reply at 7. SBC specifically argues that the statute should not be interpreted to impose any restrictions on a separated affiliate's ability "to market and sell services or  X1-products of the BOC, or those of any other affiliate or an unrelated party."A+1qC yO -ԍxSBC Reply at 14.A Bell Atlantic similarly contends that an affiliate is not prohibited under the statute "from marketing the  X -BOC's services and products or acting as a single point of contact for the customer."D, xqC yO,-ԍxBell Atlantic at 9.D  X -x132.` ` NYNEX and YPPA argue that permitting a separated affiliate to market jointly  X -its electronic publishing services with BOC telecommunications services would allow  X -customers to realize the benefits of onestop shopping.P- qC yO`-ԍxNYNEX Reply at 10; YPPA at 67.P In addition, NYNEX and PacTel maintain that imposing marketing restrictions on a BOC separated affiliate that do not also apply to such affiliate's competitors would place the separated affiliate at a competitive  Xb-disadvantage.Q.bqC yO-ԍxNYNEX at 19; PacTel Reply at 11.Q A number of parties also contend that nothing in the Act prohibits a BOC affiliate from carrying out joint marketing activities as an agent for either or both the BOC  X4-and the separated affiliate.f/4( qC yO -ԍxNYNEX Reply at 910 n.23; SBC Reply at 15; USTA at 5.f  X-x133.` ` Conversely, AT&T and Time Warner argue that the marketing prohibitions in  X-section 274(c)(1) should not be construed to apply only to the marketing activities of the  X-BOC.Z0 qC yOA#-ԍxAT&T Reply at 17; Time Warner Reply at 4.Z According to AT&T, allowing a separated affiliate to market jointly its electronic publishing services with BOC telecommunications services would allow the BOC to "move its entire marketing department into the separated affiliate" in violation of the statutory prohibition against a BOC carrying out any marketing 'in conjunction with' a separated"8H 0,-(-(ZZ"  X-affiliate."B1qC yOy-ԍxAT&T Reply at 17.B Time Warner similarly states that interpreting section 274(c)(1) to apply only to the BOCs would allow the BOCs to circumvent the joint marketing restrictions of section  X-274.J2XqC yO-ԍxTime Warner Reply at 45.J  X-x` `  3)Discussion  X-  Xv-x134.` ` As an initial matter, we conclude that the prohibitions in section 274(c)(1) apply only to activities carried out by a BOC. Sections 274(c)(1)(A) and (B) of the Act only  XH-proscribe BOC activities.`3HqC {O -ԍxSee 47 U.S.C.  274(c)(1)(A), (B).` We also find that neither a separated affiliate under section 274(c)(1)(A), nor an affiliate under section 274(c)(1)(B), is prohibited from marketing its services together with BOC telecommunications services, so long as such marketing activity is performed unilaterally by the separated affiliate or affiliate, respectively. Thus, a separated affiliate or affiliate is permitted under sections 274(c)(1)(A) and (B) to market its electronic publishing services with basic telephone service purchased from the BOC. We conclude that this type of marketing, in which a separated affiliate or affiliate unilaterally markets BOC local exchange service as an input to its electronic publishing services, is not prohibited under sections 274(c)(1)(A) or (B). We specify that marketing by the separated affiliate or affiliate must be unilateral not because section 274(c)(1) directly imposes any marketing restrictions on such entities, but, as a practical matter, because section 274(c)(1) bars a BOC from carrying out "marketing . . . for or in conjunction with" such separated affiliates or  X4-affiliates.:44zqC {O_-ԍxId.:  X-x135.` ` We reject AT&T's and Time Warner's contention that permitting a separated affiliate to market BOC telecommunications services would allow a BOC to circumvent the restrictions of section 274. As noted above, section 274(c)(1), by its terms, applies only to activities carried out by a BOC. While AT&T's and Time Warner's arguments pertain only to a "separated affiliate," we have no basis for concluding that Congress intended to apply the restrictions in sections 274(c)(1)(A) and (B) to either separated affiliates or affiliates, respectively. Moreover, based on the plain language of sections 274(c)(1)(A) and (B), which  Xe-prohibits a BOC from carrying out any "promotion, marketing, sales, or advertising for or in  XP-conjunction with" a separated affiliate or affiliate, a BOC would be precluded from, for example, "moving its entire marketing department into the separated affiliate" in order to  X$-circumvent the section 274(c)(1) restrictions.L5$ qC {O%-ԍxSee AT&T Reply at 17.L " 95,-(-(ZZ"Ԍ X-x136.` ` Based on the above analysis, we also find that a BOC affiliate may carry out  X-"promotion, marketing, sales, or advertising" activities as an agent for either a "separated affiliate" under section 274(c)(1)(A), or another "affiliate" under section 274(c)(1)(B). Because neither a separated affiliate nor an affiliate is subject to the restrictions in sections 274(c)(1)(A) and (B) of the Act, a BOC affiliate that acts as an agent for such separated affiliate or affiliate also is not subject to those restrictions. As in the case of a separated affiliate or affiliate, however, the scope of the agent's activities may be limited, as a practical matter, by the legal bar on a BOC carrying out promotion, marketing, sales or advertising activities "for or in conjunction with" such affiliates. We conclude, however, that because section 274(c)(1)(A) applies to activities carried out by BOCs, a BOC affiliate is prohibited from acting as an agent for the BOC in performing marketing and salesrelated activities under that section, contrary to arguments raised by some parties. We also note that, under the definition of "Bell operating company" in section 274(i)(10), a BOC includes "any entity or  X -corporation that is owned or controlled by" such BOC.K6 qC yON-ԍx47 U.S.C.  274(i)(10).K As such, the section 274(c)(1) joint marketing prohibitions applicable to BOCs also would apply to entities that are owned or controlled by a BOC, such as an entity that acts as an agent for a BOC.  Xy-x137.` ` We also conclude, based on their language, that sections 274(c)(1)(A) and (B)  Xb-of the Act prohibit a BOC or BOC agent from advertising local exchange or other BOC services together with electronic publishing services, making those services available from a single point of contact and providing bundling discounts for the purchase of both electronic publishing and local exchange services, except as permitted under section 274(c)(2) of the  X-Act._7XqC {O-ԍxSee infra Part III.C.2.a. and III.C.2.c._ Since section 274 only proscribes BOC activities, however, we conclude, consistent with our discussion above, that these activities may be carried out by a separated affiliate or affiliate, subject only to the practical limitation that a BOC may not participate owing to the legal bar on its ability to carry out promotion, marketing, sales or advertising activities "for or in conjunction with" a separated affiliate or an affiliate.  X|-x138.` ` In our NonAccounting Safeguards Order implementing sections 271 and 272  Xg-of the Act, we recognized that "bundling" contemplates the offering of BOC resold local exchange services and interLATA services as a package under an integrated pricing  X9-schedule.c89qC {O!-ԍxNonAccounting Safeguards Order at  277.c As a result, we concluded that the concept of "bundling" includes "providing a discount if a customer purchases both interLATA services and BOC resold local services, conditioning the purchase of one type of service on the purchase of the other, and offering  X-both interLATA services and BOC resold local services as a single combined product.";9|qC {O!&-ԍxId. ; ":9,-(-(ZZ;"Ԍ X-x139.` `  JTMKT2 Based on the definition of "bundling" in our NonAccounting Safeguards  X-Order, we conclude that "bundling" refers to the offering by a BOC or BOC agent of BOC local exchange and electronic publishing services as a package under an integrated pricing schedule. This restriction flows not only from section 274(c)(1), but from the fact that a BOC is forbidden by section 274(a) to engage in the provision of electronic publishing disseminated by means of its basic telephone service except through a separated affiliate or an electronic publishing joint venture. By providing such bundled services, the BOC or its agent would be engaged in the provision of electronic publishing in contravention of section 274(a).  XL-We further find, consistent with the NonAccounting Safeguards Order, that sections 274(c)(1)(A) and (B) of the Act prohibit a BOC or BOC agent from providing customer discounts for the purchase of local exchange and electronic publishing services, conditioning the purchase of one type of service on the other, or offering both electronic publishing and local exchange services as one product. Moreover, we conclude, based on the explicit language of section 274(c)(1), that sections 274(c)(1)(A) and (B) of the Act prohibit a BOC or BOC agent not only from offering for sale both local exchange and electronic publishing services, but also from advertising those services in a single advertisement, and from selling  X-both services through a single point of contact, e.g., a single sales agent, except as permitted  X-under section 274(c)(2)._:qC {O-ԍxSee infra Part III.C.2.a. and III.C.2.c._ We find that Congress intended to proscribe those activities in adopting sections 274(c)(1)(A) and (B) of the Act. x  X<-a x` ` d. Interplay Between Section 274 Joint Marketing Provisions and  X%-Other Provisions of the Act (#  X-x` `  1)Background  X-  X-x140.` ` In the Notice, we sought comment on whether and to what extent the joint  X-amarketing provisions in section 272(g) and the customer proprietary network information  X-(CPNI) provisions in section 222 of the Act affect implementation of section 274.I;ZqC {O-ԍxNotice at  53.I  Xo-x` `  2)Comments  XX-  XA-x141.` ` NYNEX argues that, because the marketing provisions in sections 272 and 274  X*-of the Act apply to different services, the restrictions in section 274 should not be applied to  X-the services and facilities provided under section 272.=<qC yO#-ԍxNYNEX at 19.= PacTel maintains that sections  X-272(g) and 222 of the Act do not affect implementation of section 274.>=|qC yO)&-ԍxPacTel at 14.> U S WEST maintains that, based on implied consent gleaned from either the business relationship or"; =,-(-(ZZ;" customer notification, CPNI may be used by the BOC in marketing a separated affiliate's  X-electronic publishing offerings.>qC yOb-ԍxU S WEST at 17. U S WEST notes, however, that CPNI could not necessarily be used with respect to  {O*-comparable electronic publishing offerings of others without customer consent. Id.  U S WEST also contends that, under section 222(d)(3) of the Act, a BOC could use CPNI on an inbound telemarketing call for both telecommunications and electronic publishing services of the BOC and third parties, provided  X-the customer consented to such use on the call.C?"qC yOw-ԍxU S WEST at 1718.C x  Xv-x` `  3)Discussion  X_-  XH-x142.` ` As discussed above, we conclude that, while a BOC may provide through the  X1-same affiliate both section 272 and section 274 services, it must comply with the applicable joint marketing restrictions of both those sections. We decline to address arguments raised in this proceeding regarding the interplay between section 274 and section 222 of the Act, relating to privacy of customer information. The Commission has pending a proceeding to  X -implement section 222 of the Act.c@^ qC {O8-ԍxSee Implementation of the Telecommunications Act of 1996: Telecommunications Carriers' Use of  {O-Customer Proprietary Network Information and Other Customer Information, CC Docket 96115, Notice of  {O-Proposed Rulemaking, 11 FCC Rcd 12513 ("CPNI NPRM").c Until the completion of that proceeding, we defer any decision on the extent, if any, that section 222 of the Act affects implementation of section  X -274. As noted in the CPNI NPRM, the CPNI requirements the Commission previously  X-established in the Computer II and Computer III proceedingsAqC {O-ԍxSee discussion of Computer II and Computer III infra at  COMP2189. remain in effect pending the outcome of the CPNI proceeding, to the extent that they do not conflict with section 222 of  Xf-the Act.KBfj qC {O-ԍxCPNI NPRM at  3.K  X8- x2.` ` Permissible Joint Activities Section 274(c)(2)  X!-  X -x` ` a. Joint Telemarketing Section 274(c)(2)(A)  X-  X-x` `  1)Background  X-  X-x143.` ` EMPLOYEESAs we observed in the Notice, section 274(c)(2) of the Act permits three types  X-of joint activities between a BOC and a separated affiliate, electronic publishing joint venture,  X-affiliate, or unaffiliated electronic publisher under specified conditions.IC qC {O/&-ԍxNotice at  54.I Under section 274(c)(2)(A) of the Act, a BOC may provide "inbound telemarketing or referral services"k< C,-(-(ZZ1" related to the provision of electronic publishing for a separated affiliate, electronic publishing  X-joint venture, affiliate or unaffiliated electronic publisher: [p]rovided, [t]hat if such services are provided to a separated affiliate, electronic publishing joint venture, or affiliate, such services shall be made available to all electronic publishers on request, on nondiscriminatory  X-terms."MDqC yO-ԍx47 U.S.C.  274(c)(2)(A).M  Xx-x144.` ` We stated in the Notice that the statute is silent as to the specific obligations  Xc-section 274(c)(2)(A) imposes on a BOC.KEcXqC {Ol -ԍxNotice at  55. K We noted that the term "inbound telemarketing" is defined in section 274(i)(7) as "the marketing of property, goods, or services by telephone  X5-to a customer or potential customer who initiated the call."JF5qC yO -ԍx47 U.S.C.  274(i)(7).J The term "referral services,"  X -however, is not defined in the statute. As we discussed in the Notice, the Joint Explanatory Statement states that the Conference Committee adopted the provisions of the House bill relating to electronic publishing, with some modifications relating to sunset of the section 274 requirements and use of BOC trademarks by separated affiliates and electronic publishing  X -joint ventures.TG zqC yO-ԍxJoint Explanatory Statement at 156.T The provision of the House bill relating to electronic publishing joint ventures was identical to the provision ultimately adopted by the Conference Committee.  X-x145.` ` The Committee Report accompanying H.R. 1555 states that:   Subsection (c)(2)(A) permits a BOC to provide inbound telemarketing or  X:-referral services related to the provision of electronic publishing, if the BOC provides the same service on the same terms and conditions, and prices to nonaffiliates as to its affiliates. The term 'inbound telemarketing or referral services' is defined . . . to mean 'the marketing of property, goods, or services by telephone to a customer or potential customer who initiated the call.' Thus, a BOC may refer a customer who seeks information on an electronic publishing service to its affiliate, but must make sure that the referral service is available to unaffiliated providers. No outbound telemarketing or similar activity, under which the call is initiated by the BOC or its affiliate or someone  Xk-on its behalf, is permitted.Hk q {O&#-ԍxSee H.R. Rep. 104204, 104th Cong., 1st Sess. 86 (1995) ("House Report" or "Report").  XT-  "T=H,-(-(ZZ"Ԍ X-In the Notice, we sought comment on whether the conditions imposed on inbound telemarketing discussed in the House Report should be adopted, and whether we should adopt  X-any regulations pertaining to outbound telemarketing.IIqC {OM-ԍxNotice at  55.I  X-x` `  2)Comments  X-  Xx-x146.` ` AT&T argues that we should adopt the conditions on inbound telemarketing  Xa-discussed in the House Report, i.e., that a BOC may offer inbound telemarketing services to its affiliate only if it makes those services available to unaffiliated providers of electronic  X5-publishing services on the same terms, conditions and prices.VJ5ZqC {O@ -ԍxAT&T at 20; see also YPPA at 7.V In addition, it contends that a BOC should be prohibited from engaging in outbound telemarketing, consistent with the  X -House Report.<K qC yO-ԍxAT&T at 20.< AT&T argues that section 274(c)(2)(A) should not be construed as an "openended authorization for the BOCs to market the electronic publishing services of their separated affiliates" because such an interpretation would result in the exception swallowing  X -the rule.BL |qC yO-ԍxAT&T Reply at 18.B While NAA agrees that we should adopt the conditions on inbound telemarketing discussed in the House Report, it also argues that a BOC may provide outbound telemarketing  X-services to an electronic publishing joint venture under section 274(c)(2)(C).:M qC yOQ-ԍxNAA at 7.:  Xf-x147.` ` Conversely, the BOCs generally contend that they are permitted to engage in a  XO-broader range of marketing activities under section 274(c)(2)(A). In particular, Ameritech argues that section 274(c)(2)(A) expressly authorizes a BOC to handle all aspects of the  X!-electronic publisher's sales process while on an inbound telephone call.N$!qC {On-ԍxAmeritech at 20; see also U S WEST Reply at 10. According to Ameritech, this includes: (1) promoting the publisher's services and quoting prices; (2) consummating a sale; (3) obtaining salesrelated information; (4) obtaining credit information; (5) forwarding all such information to the publisher; and (6)  {O-promoting the BOC's services to work in conjunction with the electronic publisher's services. Id.  NYNEX similarly maintains that section 274(c)(2)(A) does not restrict in any way the inbound telemarketing services that a BOC may provide to a separated affiliate, electronic publishing joint venture or affiliate, except to require the BOC to make such services available to all electronic  X-publishers "on request, on nondiscriminatory terms."1O  qC yO$-ԍxNYNEX at 2021. NYNEX therefore argues that section 274(c)(2)(A) should be interpreted to permit a BOC to engage in any of the following inbound telemarketing activities on a nondiscriminatory basis: (1) handle, as an agent for the separated affiliate providing the electronic publishing services, incoming telephone calls from customers or potential customers requesting products or services; (2) use a tollfree number provided"V'N,-(-('" by the separated affiliate for use by customers or potential customers of the separated affiliate; (3) respond to incoming calls using the separated affiliate's name and, if possible, a script approved in advance by the separated affiliate; (4) answer customer questions, provide information and take orders for products or services using data procedures provided or approved by the separated affiliate; and (5) process orders for fulfillment by the separated  {O-affiliate and forward such orders to the separated affiliate. Id.1 In addition, SBC argues that section">zO,-(-(ZZ" 274(c)(2)(A) allows a BOC not only to refer a customer who requests information regarding an electronic publishing service to its affiliate, but also permits a BOC to market electronic  X-publishing services to customers who inquire about them.>PzqC yO-ԍxSBC at 1314.> SBC also argues that section 274(c)(2)(A) "allow[s] a separated affiliate or a BOC to advertise a BOC callin number to  X-which potential customers might choose to initiate a call.":Q qC {O_ -ԍxId.: BellSouth argues that section 274(c)(2)(A) of the Act is clear on its face, and therefore "no further elucidation" of that  Xv-section is necessary.ARvqC yO-ԍxBellSouth at 18.A  XH-x148.` ` PacTel argues that section 274(c)(2)(A)'s requirement that inbound  X1-telemarketing or referral services "be made available to all electronic publishers on request, on nondiscriminatory terms" means that the terms of the service must be generally available  X -to all similarly situated electronic publishers.?S , qC yO-ԍxPacTel at 15. ? U S WEST argues that the requirement  X -should be construed to apply only to services that are of "like kind."T qC yO[-ԍxU S WEST at 11. U S WEST argues, for example, that, if a section 274 affiliate offered an electronic travel bureau service to which U S WEST made referrals on an inbound calling basis, section 274(c)(2)(A) could be interpreted to require U S WEST to refer callers to all other electronic publishers, upon request, regardless of whether the services provided by such electronic publishers were comparable to those of U S  {O{-WEST's section 274 affiliate. Id. at 14.  PacTel contends that  X -section 274(c)(2)(A), like section 202(a) of the Act, allows reasonable discrimination.>U nqC yO-ԍxPacTel at 15.> Conversely, Time Warner argues that nothing in the Act indicates that Congress intended to limit the provision of inbound telemarketing or referral services required by section 274(c)(2)(A) to competing electronic publishers offering services "comparable" to those  X{-offered by a BOC separated affiliate.HV{qC yO*#-ԍxTime Warner Reply at 8.H "d?V,-(-(ZZ"Ԍ X-x` `  3)Discussion  X-  X-x149.` ` We conclude that a BOC may, pursuant to section 274(c)(2)(A), both provide  X-"referral services" and "market" property, goods, or services related to the provision of electronic publishing by telephone to a customer or potential customer who initiated the call. This is consistent with the plain language of the statute, including the definition of "inbound telemarketing" in section 274(i)(7), and with the legislative history interpreting section 274(c)(2)(A). We also conclude, however, consistent with the clear language of the statute and with the House Report, that, to the extent a BOC provides inbound telemarketing or referral services for a separated affiliate, electronic publishing joint venture, or affiliate, it must make available "such services . . . to all electronic publishers on request, on  X -nondiscriminatory terms."MW qC yO| -ԍx47 U.S.C.  274(c)(2)(A).M Consistent with the legislative history, this means that the BOC must offer "the same service on the same terms and conditions, and prices to nonaffiliates as  X -to its affiliates."DX XqC yO-ԍxHouse Report at 86.D  X -Hx150.` ` A BOC may choose to provide inbound telemarketing or referral services either pursuant to a contractual arrangement or during the normal course of its inbound telemarketing operations. To the extent a BOC chooses either or both of these approaches in providing inbound telemarketing or referral services to a separated affiliate, electronic publishing joint venture or affiliate, we conclude, based on the nondiscrimination proviso in section 274(c)(2)(A), that it must make available the same approach to unaffiliated electronic publishers. H  X-x151.` ` With regard to inbound telemarketing or referral services provided by a BOC  X-to its separated affiliate, electronic publishing joint venture, or affiliate pursuant to a contractual arrangement, we find that the BOC must make available the same terms, conditions, and prices for such services to unaffiliated electronic publishers, except to the extent legitimate price differentials may exist. For example, such price differentials may reflect differences in cost, or may reflect the fact that an unaffiliated electronic publisher has requested superior or less favorable treatment in exchange for paying a higher or lower price  XN-to the BOC. As we stated in the First Interconnection Order, where costs differ, rate  X9-differences that accurately reflect those differences are not unlawfully discriminatory.Y9qC {O!-ԍxImplementation of the Local Competition Provisions of the Telecommunications Act of 1996, CC Docket  {O"-No. 9698, First Report and Order  860, 11 FCC Rcd 15499, 15928 (1996) (First Interconnection Order),  {Of#-Order on Reconsideration, 11 FCC Rcd 13042 (1996) (First Reconsideration), further recon. pending, pet. for  {O0$-review sub nom. and partial stay granted, Iowa Utilities Board v. FCC, No. 963221 and consolidated cases (8th  {O$-Cir. filed Sept. 6, 1996), partial stay lifted in part, Iowa Utilities Board v. FCC, No. 963321 and consolidated cases, 1996 WL 589284 (8th Cir. Oct. 15, 1996). We similarly conclude that price differences, "when based upon legitimate variations in costs, are""@j Y,-(-(ZZz"  X-permissible under the 1996 Act when justified.":ZqC {Oy-ԍxId.: PacTel's argument that the "nondiscriminatory" requirement in section 274(c)(2)(A) means that the terms of the service must be generally available to all "similarly situated" electronic publishers, therefore, has merit to the extent that price differences among electronic publishers reflect legitimate differences in cost.  Xv-x152.` ` The statute requires that, to the extent a BOC markets property, goods or services related to the provision of electronic publishing to a customer, or refers a customer to a separated affiliate, electronic publishing joint venture or affiliate during the normal course of its telemarketing operations, it must provide such marketing or referral services to all unaffiliated electronic publishers requesting such services, on nondiscriminatory terms. Thus, to the extent that a BOC provides referral service if a customer has not initially independently requested a specific referral to the BOC affiliate, a BOC must provide the names of all such unaffiliated electronic publishers, as well as its own affiliated electronic publishers, in random order, to the customer. A similar standard may also be appropriate for particular inbound telemarketing activities. We find that our interpretation is consistent with the intent of section 274(c)(2)(A) to ensure that a BOC providing inbound telemarketing or referral services to a separated affiliate provides such services on a nondiscriminatory basis to all unaffiliated electronic publishers.  X4-x153.` ` We reject U S WEST's argument that imposing such a requirement on the  X-BOCs with respect to referral services would be overly burdensome.L[ZqC {O(-ԍxSee U S WEST at 14. L We note, for example, that BOCs currently are subject to similar requirements in cases where a new local exchange customer of the BOC requests information regarding interexchange service. In such cases,  X-BOCs are required, inter alia, to provide customers with the names and, if requested, the  X-telephone numbers of carriers offering interexchange services.\qC {O`-ԍxSee Investigation of Access and Divestiture Related Tariffs, CC Docket No. 831145, 101 F.C.C.2d 935, 950 (rel. Aug. 20, 1985). As part of this requirement, a BOC must ensure that the names of the interexchange carriers are provided in random  X-order.B]FqC {O -ԍxId. at 950.B  Xg-x154.` ` We disagree with U S WEST's contention that a BOC's obligation to provide inbound telemarketing or referral services under section 274(c)(2)(A) applies only with respect to services that are "comparable" to those of its separated affiliate. We conclude that a BOC's obligation under section 274(c)(2)(A) to make available inbound telemarketing and referral services on a nondiscriminatory basis requires that a BOC make available to unaffiliated electronic publishers the same services it provides to an affiliated electronic"A],-(-(ZZZ" publisher, regardless of whether the unaffiliated electronic publishers offer services that are "comparable" to those of the BOC. Nothing in the statute or its legislative history indicates that a BOC must make available inbound telemarketing and referral services only to electronic publishing entities providing services "comparable" to those of the BOC's affiliate. To the extent that a BOC's agreement with its affiliated electronic publisher is limited to certain types of marketing or referral services, however, the BOC is then only obligated to make the same types of marketing or referral services available to unaffiliated electronic  X_-publishers. ` `  X1-x155.` ` With respect to AT&T's concern that interpreting section 274(c)(2)(A) to allow BOCs to "market" the electronic publishing services of their separated affiliates would circumvent the joint marketing prohibitions in section 274(c)(1), we find that the unambiguous statutory definition of "inbound telemarketing" in section 274(i)(7), and the fact that the general prohibition in section 274(c)(1) applies "except as provided in paragraph (2) [274(c)(2)]," requires this interpretation. We note that the statutory language allows BOCs to provide such marketing services only on nondiscriminatory terms, as discussed above. In addition, while our interpretation of the nondiscrimination requirement may serve as a disincentive for certain BOCs to market the services of an affiliated electronic publisher on an inbound call, we find that the statutory language compels this interpretation.  X4-x156.` ` JM2Finally, we conclude that section 274(c)(2)(A) prohibits outbound telemarketing  X-or similar activities in which a call is initiated by a BOC, its affiliate, or someone on its behalf. Because section 274(c)(2)(A), by its terms, applies only to "inbound telemarketing" or referral services related to the provision of electronic publishing, we believe that Congress did not intend to permit BOCs to engage in outbound telemarketing activities in adopting section 274(c)(2)(A). To the extent that the statutory language leaves any ambiguity on this question, the House Report supports our interpretation that a BOC is prohibited under section  X-274(c)(2)(A) from engaging in outbound telemarketing.N^qC {O -ԍxSee House Report at 86.N We also believe that allowing a BOC to engage in outbound telemarketing activities to promote the electronic publishing services of its separated affiliate would eviscerate the general prohibition on BOC joint marketing activities in section 274(c)(1)(A) of the Act.  X -x` ` b. Teaming Arrangements Section 274(c)(2)(B)  X -  X-x` `  1)Background  X-  X -x157.` ` In the Notice, we observed that, in addition to certain joint telemarketing  X!-activities, a BOC is permitted to engage in "teaming" or "business arrangements" to provide  X"-electronic publishing services under certain conditions pursuant to section 274(c)(2)(B).I_"ZqC {O&-ԍxNotice at  56.I ""B_,-(-(ZZ!" Section 274(c)(2)(B) specifically states that a "[BOC] may engage in nondiscriminatory teaming or business arrangements to engage in electronic publishing with any separated affiliate or with any other electronic publisher if (i) the [BOC] only provides facilities,  X-services, and basic telephone service information/`XqC yO4-ԍx"Basic telephone service information" is defined in section 274 as "network and customer information of a [BOC] and other information acquired by a [BOC] as a result of its engaging in the provision of basic telephone service." 47 U.S.C.  274(i)(3)./ as authorized by this section, and (ii) the  X-[BOC] does not own such teaming or business arrangement."MaqC yO= -ԍx47 U.S.C.  274(c)(2)(B).M  Xv-x158.` ` We sought comment in the Notice on what types of arrangements are  Xa-encompassed by the terms "teaming" or "business arrangements,"IbaxqC {O -ԍxNotice at  56.I and on the significance of  XJ-section 274(c)(2)(B)'s placement under the "Joint Marketing" provisions in section 274(c).FcJ qC {O-ԍxId. at  57.F We also sought comment on what regulations, if any, are necessary to ensure that the arrangements in which BOCs engage pursuant to section 274(c)(2)(B) are "nondiscriminatory," and on how the provision of "basic telephone service information" under  X -that section relates to the requirements in section 222 for access to and use of CPNI.:d qC {O;-ԍxId.:  X -x` `  2)Comments  X -  X-x159.` ` Ameritech, NAA, NYNEX, and PacTel generally argue that the terms  X{-"teaming" or "business arrangements" in section 274(c)(2)(B) contemplate a broad range of  Xd-permissible activities.ed. qC yOC-ԍxAmeritech at 22; NAA at 8; NYNEX at 22; PacTel at 1617. NYNEX specifically argues that, under section 274(c)(2)(B), a BOC and its separated affiliate are permitted to engage in the following teaming activities: (1) provide to a customer, and contract separately with that customer for, regulated telephone service and electronic publishing services, respectively; (2) make joint sales calls through premises visits or telemarketing, and plan for such sales calls; (3) supply potential customers with copies of sales literature describing each entity's products and services which are the subject of the teaming arrangement; (4) advertise and promote the availability of the products and services offered through the teaming arrangement, so long as the advertising makes clear that the products are separately provided; and (5) coordinate the installation of services. NYNEX at 2223. Ameritech argues that, so long as all the conditions under section 274(c)(2)(B) are met and the requirements of section 274 are otherwise satisfied, a BOC should be free to enter into a teaming or business arrangement with a separated affiliate or  X-electronic publishing joint venture to jointly market electronic publishing services.kfqC {O&-ԍxAmeritech at 22; see also NAA at 8; PacTel at 1617.k NYNEX"Cf,-(-(ZZ)" contends that teaming arrangements provide another form of "onestop shopping" for  X-consumers and present minimal risk of anticompetitive behavior.=gqC yOb-ԍxNYNEX at 23.= PacTel argues that the language of section 274(c)(2)(B) is so broad that it includes any activity other than the provision of electronic publishing itself, including promotion, marketing, sales and advertising  X-activities.>hXqC yO-ԍxPacTel at 17.> SBC argues that section 274(c)(2)(B) should be interpreted to permit a BOC and its separated affiliate jointly to promote, market, sell, and advertise their respective services  Xv-pursuant to any form of business arrangement.;ivqC yO -ԍxSBC at 15.;  XJ-x160.` ` Bell Atlantic argues that the term "teaming or business arrangements" as used  X3-in section 274(c)(2)(B) encompasses myriad arrangements which include, but are not limited to, marketing proposals in which a BOC and an electronic publisher each prepares its portion  X -of a joint bid to a customer.Ej xqC yO.-ԍxBell Atlantic at 10.E BellSouth contends that a teaming or business arrangement is more substantial than a coordinated joint marketing or sales campaign or joint bid preparation  X -arrangement, given the statute's reference to BOC ownership in section 274(c)(2)(B).Ak qC yO-ԍxBellSouth at 19.A YPPA argues that teaming arrangements, which it asserts were permissible under the MFJ, are any arrangements whereby "two businesses act independently to provide related products or services, but coordinate their activities so that the customer obtains a 'complete' package of  X{-the desired products or services."l{qC yO-ԍxYPPA at 8. The term "teaming arrangement," however, does not appear in the MFJ and was never specifically defined by the district court that administered the MFJ. According to YPPA, "teaming" may include joint sales activities (including joint planning for sales calls), through advertising, premise visits or  XM-telemarketing."rmM qC {O-ԍxId. YPPA argues, for example, that a BOC could team with its separated affiliate, "with the BOC providing a customer with regulated telephone service and the separated affiliate providing the same customer  {O-with electronic publishing services, and perhaps interLATA service as well." Id. In addition, YPPA contends that a BOC and a separated affiliate may coordinate advertising activities so that the BOC's and the separated  {O!-affiliate's separate advertisements appear on the same page of the newspaper. Id. at 89. r  X-x161.` ` Conversely, Time Warner argues that section 274(c)(2)(B) permits a BOC to  X-engage in a nonBOC owned teaming or business arrangement to provide its electronic publishing affiliate with the necessary facilities and telephone service for electronic"Dm,-(-(ZZ " publishing, provided that such facilities and services are offered on a nondiscriminatory basis  X-pursuant to tariffed rates and conditions.CnqC yOb-ԍxTime Warner at 24.C  X-x162.` ` Bell Atlantic argues that, by placing section 274(c)(2)(B) under the "Joint  X-Marketing" provisions in section 274(c), Congress intended to clarify that "teaming or  X-business arrangements" are not to be considered joint marketing activities.EoXqC yO-ԍxBell Atlantic at 10.E PacTel argues that "teaming arrangements" are included under the heading of "Joint Marketing" because  X_-such arrangements are one of the three categories of exceptions listed under that heading.>p_qC yO -ԍxPacTel at 17.>  X1-x163.` ` PacTel argues that the nondiscrimination requirement for teaming and other  X -business arrangements relates to how a BOC provides facilities, services and basic telephone  X -service information to electronic publishers, not to a BOC's choice of teaming partners.Aq xqC {O,-ԍxId. at 18.A Even if the nondiscrimination requirement were interpreted to apply to a BOC's choice of teaming partners, PacTel argues, a BOC nevertheless would retain discretion to team only  X -with electronic publishers that met its reasonable standards.;r qC {Oy-ԍxId. ; BellSouth similarly contends that the nondiscrimination obligation of section 274(c)(2)(B) precludes a BOC from giving preference to the teaming or business arrangement in the conduct of its regulated common carrier activities, but does not impose on the BOC an obligation to invest in a particular  Xb-entity.AsbqC yO-ԍxBellSouth at 19.A SBC argues that the nondiscrimination requirement in section 274(c)(2)(B) "provide[s] evenhandedness in the BOCs' provision of marketing and other services to  X4-[unaffiliated] electronic publishers.">t4, qC yO-ԍxSBC at 1516.> YPPA argues that the nondiscrimination requirement means that a teaming arrangement between a BOC and its separated affiliate "cannot be markedly different" from teaming arrangements made available to other electronic  X-publishers.;u qC yO\"-ԍxYPPA at 9.; x  X-x164.` ` NAA argues that, if a BOC uses its CPNI to provide "basic telephone service  X-information" as part of a teaming arrangement, it is subject to the privacy requirements in"EL u,-(-(ZZ"  X-section 222 for access to and use of the CPNI.:vqC yOy-ԍxNAA at 8.: PacTel states that section 274(c)(2)(B) allows a BOC to use CPNI as part of a teaming arrangement, consistent with section 222 of  X-the Act.AwXqC yO-ԍxPacTel at 1819.A PacTel therefore argues that "BOCs can use CPNI with the type of telecommunications service from which the information was derived, and with customer  X-authorization can use it with any service."AxqC {O= -ԍxId. at 19.A PacTel maintains that, to the extent that "basic telephone service information" is also CPNI, section 222 of the Act and any implementing  Xv-regulations the Commission adopts govern the use of such information.:yvzqC {O -ԍxId.: To the extent such information is not CPNI, but network information, PacTel argues that a BOC is required to  XH-share such information with all electronic publishers with which the BOC teams.:zH qC {O-ԍxId.: SBC argues that, where information qualifies as both "basic telephone service information" under section 274(i)(3) as well as CPNI under section 222(f)(1), the terms of section 274 should  X -prevail over the general terms in section 222 of the Act.>{ qC yOR-ԍxSBC at 1617.> SBC points out that section 274 of the Act contains no "approval" requirement as a precondition for using, disclosing, or  X -accessing basic telephone service information.A| . qC {O-ԍxId. at 17.A As such, SBC argues, a BOC should be permitted to use such information without first obtaining approval under section 222(c)(1)  X -when engaged in permissible teaming or business arrangements.:} qC {O-ԍxId.:  Xy-x` `  3)Discussion  Xb-  XK-x165.` ` We decline at this time to adopt specific regulations clarifying the types of  X4-arrangements that are contemplated by the terms "teaming or business arrangements" in section 274(c)(2)(B) of the Act. We conclude that those terms, which are not defined in the statute, may encompass a broad range of permissible marketing activities because section 274(c)(2)(B) imposes no explicit marketing limitations. At the same time, however, this provision contains no language that operates to remove business or teaming arrangements  X-from the scope of the prohibitions in section 274(c)(1).:~R qC {O%-ԍxSee discussion of the prohibitions in section 274(c)(1), supra at  JTMKT1116שJTMKT2139, and discussion of electronic  {O&-publishing joint ventures, infra at   EPJV186 שEPJV2188.: We thus find that Congress, in"F~,-(-(ZZ" including the general terms "teaming or business arrangements" in section 274(c)(2)(B), did not intend to limit or expand the types of marketing activities in which BOCs could engage under that section other than those specifically restricted or authorized elsewhere in section  X-274 (e.g., in section 274(c)(1)).  X-x166.` ` Under section 274(c)(2)(B), therefore, a BOC providing telecommunications services and the electronic publishing provider with which it teams are limited to marketing their respective services. This interpretation is supported by the plain language of section 274(c)(2)(B), which generally provides that a BOC may engage in teaming or business arrangements if such BOC "only provides facilities, services, and basic telephone service information as authorized by [section 274]." Under this interpretation, a BOC is permitted to market only the facilities, services and basic telephone service information that section 274(c)(2)(B) permits the BOC to provide. This interpretation also is supported by a comparison of the text in section 274(c)(2)(B) with the text of sections 274(c)(2)(A) and (C), relating to inbound telemarketing and electronic publishing joint ventures, respectively. Unlike section 274(c)(2)(C), section 274(c)(2)(B) does not specifically permit the authorized entity to engage in joint marketing activities otherwise prohibited to the BOC by section  X{-274(c)(1), i.e., promotion, marketing, sales, and advertising activities. In addition, unlike section 274(c)(2)(A), section 274(c)(2)(B) contains no language that explicitly addresses marketing. We therefore conclude that a BOC participating in a teaming arrangement may not market the electronic publishing services of an electronic publishing provider with which it teams. In addition, the restrictions specifically set forth in section 274(c)(2)(B) would  X -apply, i.e., that such BOC only provide facilities, services and basic telephone service information as authorized by section 274, that the BOC not "own" the teaming or business arrangement, and that the teaming arrangement be "nondiscriminatory."  X-x167.` ` As noted above, a few commenters provide examples of the types of activities  X-they believe are permissible under section 274(c)(2)(B) as a "teaming or business arrangement." Bell Atlantic, for example, contends that such arrangements include, but are not limited to, marketing proposals in which a BOC and an electronic publisher each prepares  XT-its portion of a joint bid to a customer.ETqC yO-ԍxBell Atlantic at 10.E In addition, YPPA argues that a teaming arrangement is any arrangement whereby "two businesses act independently to provide related products or services, but coordinate their activities so that the customer obtains a 'complete'  X-package of the desired products or services.";XqC yO"-ԍxYPPA at 8.; YPPA states, for example, that a BOC may engage in a teaming arrangement with a separated affiliate whereby the BOC provides a customer with regulated telephone service and the separated affiliate provides the same  X -customer with electronic publishing services.: qC {Oc&-ԍxId.: We conclude that nothing in the statute prohibits a BOC from engaging in the types of activities proposed by these commenters, so"!Gz,-(-(ZZ " long as all of the requirements of section 274, including section 274(c)(2)(B), are satisfied. To the extent issues arise in the future as to whether certain other activities are permissible under section 274(c)(2)(B) as "teaming or business arrangements," we intend to address those issues on a casebycase basis.  X-x168.` `  TEAMING We also conclude that section 274(c)(2)(B)'s requirement that a BOC only  Xv-engage in teaming or business arrangements that are "nondiscriminatory" means that a BOC may provide to the teaming arrangement the necessary facilities, services and basic telephone service information for electronic publishing, provided that such facilities, services and information are offered on a nondiscriminatory basis both to other teaming arrangements and to unaffiliated electronic publishers. Under this interpretation, for example, a BOC would be prohibited from favoring a teaming arrangement with a separated affiliate over an arrangement with an unaffiliated electronic publishing provider in the provision of the BOC's facilities, services and basic telephone service information under section 274(c)(2)(B). We agree with PacTel and BellSouth that section 274(c)(2)(B) of the Act does not require a BOC to participate in a teaming arrangement with, or to invest in, an electronic publishing provider. Given that a "teaming arrangement" under section 274(c)(2)(B) contemplates that a  Xy-BOC may hold less than a 10 percent interest in such arrangement,$yqC {O-ԍxWe note that under section 274(c)(2)(B) a BOC may not "own" a teaming arrangement, i.e., have a direct or indirect equity interest (or the equivalent thereof) of more than 10 percent of an entity, or the right to  {O-more than 10 percent of the gross revenues of an entity under a revenue sharing or royalty agreement. See 47 U.S.C.  274(i)(8).  we believe that Congress did not intend to compel a BOC to acquire such an interest in other arrangements simply because the BOC has chosen to participate in a teaming arrangement with an electronic publisher of its choice. In addition, we find that such an interpretation would provide a disincentive for BOCs to engage in teaming arrangements in contravention of the plain language of section 274(c)(2)(B) and the procompetitive goals of the 1996 Act.  X-x169.` ` We defer to our pending CPNI proceeding the question of whether the term  X-"basic telephone service information" as defined in section 274(i)(3) of the Act includes CPNI as defined in section 222 of the Act. Based on the definition of "basic telephone service information" in section 274(i)(3), however, we conclude that the term includes network  X|-information of the BOC.T|qC {O-ԍxSee 47 U.S.C.  274(i)(3).T We also defer to our CPNI proceeding the issue of whether section 222 requires a BOC engaged in permissible marketing activities under section 274(c)(2) to obtain customer approval before using, disclosing, or permitting access to CPNI. In particular, we defer to that proceeding the issue of whether or to what extent section 274(c)(2)(B) of the Act imposes any obligations on BOCs that use, disclose, or permit access to CPNI pursuant to a teaming arrangement. As noted above, however, the CPNI  X-requirements the Commission previously established in the Computer II and Computer III proceedings remain in effect, pending the outcome of the CPNI proceeding, to the extent that they do not conflict with section 222 of the Act. Because we conclude that "basic telephone" HF,-(-(ZZ" service information" under section 274(i)(3) includes network information, BOCs that provide network information as part of a teaming arrangement are required to provide such information to other teaming arrangements on a nondiscriminatory basis pursuant to section 274(c)(2)(B).  X- x` ` c. Electronic Publishing Joint Ventures Section 274(c)(2)(C)  Xv-  X_-x` `  1)` Permissible Level of BOC Ownership Interest in Electronic  XH-Publishing Joint Venture and Waiver for "Good Cause" (#  X -x` `  a)hhBackground  X -  X -x170.` ` Section 274(c)(2)(C) of the Act expressly permits a BOC or affiliate to  X -"participate on a nonexclusive basis in electronic publishing joint ventures with entities that  X - are not a [BOC], affiliate, or separated affiliate to provide electronic publishing services."M qC yO7-ԍx47 U.S.C.  274(c)(2)(C).M The BOC or affiliate, however, may not hold more than a 50 percent direct or indirect equity interest (or the equivalent thereof) or the right to more than 50 percent of the voting control  Xy-over the joint venture.:yXqC {O-ԍxId.: In addition, officers and employees of a BOC or affiliate participating in an electronic publishing joint venture may hold no greater than 50 percent of  XK-the voting control over the joint venture.:KqC {O-ԍxId.: The House Report clarifies that this restriction  X4-prohibits officers and employees of a BOC from "collectively having more than 50 percent of  X-the voting control of the venture."|qC yOL-ԍxHouse Report at 86 (emphasis added). As noted above, the Conference Committee adopted the House provisions, with some modifications. Joint Explanatory Statement at 156. In the Notice, we tentatively concluded that a BOC is deemed to "own" an electronic publishing joint venture "if it holds greater than a 10 percent but not more than a 50 percent direct or indirect equity interest in the venture, or has the right  X-to greater than 10 percent but not more than 50 percent of the venture's gross revenues."IqC {Oa-ԍxNotice at  59.I  X-We sought comment on that tentative conclusion.:f qC {O!-ԍxId.:  X-x171.` `  LOCAL1 Section 274(c)(2)(C) also provides that, "[i]n the case of joint ventures with  X-small, local electronic publishers, the Commission for good cause shown may authorize [a BOC] or affiliate to have a larger equity interest, revenue share, or voting control but not to"iI ,-(-(ZZ1"  X-exceed 80 percent."MqC yOy-ԍx47 U.S.C.  274(c)(2)(C).M As we observed in the Notice, although the term "small, local electronic publisher" is not defined in the statute, the House Report indicates that the term  X-was intended to apply to publishers serving communities of fewer than 50,000 persons.IXqC {O-ԍxNotice at  60.I We  X-sought comment in the Notice on how we should determine the service area of a "small, local  X-electronic publisher" for the purpose of applying the 80 percent threshold.FqC {OC -ԍxId. at  61.F In addition, we sought comment on whether it would be consistent with congressional intent to adopt additional standards for determining which electronic publishers are subject to the 80 percent  Xc-threshold, and, if so, what such standards should be.:c|qC {O -ԍxId.: We also sought comment on how we  XL-should define "local" under section 274(c)(2)(C).:LqC {O -ԍxId.:pp  X -x172.` ` With regard to section 274(c)(2)(C)'s provision allowing waiver of the 50  X -percent equity interest and revenue share limitation in the case of joint ventures with small, local electronic publishers for "good cause shown," we sought comment on the "good cause" showing that is required under that provision, and whether any additional regulations are  X -necessary to implement the provision.F qC {O-ԍxId. at  62.F  X-x` `   b)hhComments  X}-  Xf-x173.` ` The Joint Parties agree that a minimum 10 percent equity interest or gross  XO-revenue share by a BOC is sufficient to constitute ownership of an electronic publishing joint  X8-venture.D82 qC yO-ԍxJoint Parties at 3.D NAA states that a BOC must "own" an electronic publishing joint venture, which means it must hold greater than a 10 percent direct or indirect equity interest in the venture,  X -or have the right to greater than 10 percent of the venture's gross revenues.:  qC yO}!-ԍxNAA at 8.: NAA also points out that, except for joint ventures with small, local electronic publishers, a BOC is  X-limited to a minority stake in the electronic publishing joint venture.;R qC {O$-ԍxId. ; NAA argues that we should not adopt any standards at this time for determining what constitutes a "small, local electronic publisher" under section 274(c)(2)(C), but instead should address the issue in the"J,-(-(ZZ"  X-context of specific waiver applications.@qC {Oy-ԍxId. at 9.@ NAA maintains that, in such cases, the "good cause" showing that is required under section 274(c)(2)(C) would be satisfied by demonstrating that greater participation by the BOC "is needed to enable the [electronic  X-publishing] service to be provided to the public."<ZqC {O-ԍxId. <  X-x` `   c)hhDiscussion  Xv-  X_-x174.` ` We conclude that a BOC may hold greater than a 10 percent but not more than  XH-a 50 percent direct or indirect equity interest in an electronic publishing joint venture under section 274(c)(2)(C) of the Act, or may have the right to greater than 10 percent but not more than 50 percent of the venture's gross revenues. Therefore, while a BOC may "own" an electronic publishing joint venture, it is limited to a 50 percent stake in such venture. Our interpretation is consistent with the definition of "electronic publishing joint venture" in section 274(i)(5) of the Act, which contemplates a degree of ownership by a BOC or  X -affiliate,T qC {O[-ԍxSee 47 U.S.C.  274(i)(5).T the definition of "own" in section 274(i)(8), and with the plain language of section 274(c)(2)(C), which restricts a BOC's ownership or revenue share interest in an electronic publishing joint venture to 50 percent.  Xb-x175.` `  LOCAL2 We decline at this time to adopt any standards for determining which entities constitute "small, local electronic publishers" for the purpose of applying the 80 percent threshold in section 274(c)(2)(C) of the Act. While the House Report indicates that the term was intended to apply to publishers serving communities of fewer than 50,000 persons, it is difficult from a practical standpoint to define the service area of such publishers, given that electronic publishing services, by definition, contemplate the dissemination of information to the general public. Moreover, the term "small" may be defined based on a variety of standards, including the size of the community served, the gross revenues of the electronic publishing entity, or other factors. Given the difficulties with establishing standards at this time for determining what constitutes a "small, local electronic publisher" under section 274(c)(2)(C), we conclude that it is best to clarify this phrase on a casebycase basis.  XN-x176.` ` With regard to the "good cause" showing that is required for a BOC to hold a  X7-greater interest in an electronic publishing joint venture with a small, local electronic publisher under section 274(c)(2)(C) of the Act, one factor we may consider in determining whether a BOC has satisfied this standard is whether increased investment by the BOC is necessary to enable the joint venture to provide electronic publishing services. In adopting  X-section 274(c)(2)(C), we believe that Congress intended, inter alia, to encourage market participation by small, local electronic publishing entities in the provision of electronic publishing services by allowing a BOC to hold a greater ownership interest in electronic"!K~,-(-(ZZ " publishing joint ventures with such entities. We emphasize, however, that this is only one factor we may consider in determining whether a BOC satisfies the "good cause" standard under section 274(c)(2)(C), and that other circumstances may exist that militate for or against a finding of "good cause." We thus conclude that the issue of what constitutes "good cause" under section 274(c)(2)(C) should be addressed on a casebycase basis in the context of factspecific waiver applications. x  X_-x` `  2)BOC Participation on a "Nonexclusive" Basis  XH-  X1-x` `   a)hhBackground h  X -  X -x177.` ` In the Notice, we also sought comment on what regulations, if any, are  X -necessary to ensure that a BOC participates in an electronic publishing joint venture on a  X -"nonexclusive" basis.I qC {OP-ԍxNotice at  63.I We noted that this provision appears to prohibit arrangements whereby a BOC participates in an electronic publishing joint venture with an electronic  X -publishing entity to the exclusion of all other such entities.: ZqC {O-ԍxId.: We also sought comment on whether the provision prohibits contracts between a BOC and an electronic publisher whereby 6the electronic publisher is committed to purchase basic transmission services necessary to provide electronic publishing exclusively from such BOC, or whether the provision  XM-contemplates other types of prohibitions.:MqC {O-ԍxId.: 6  X-x` `   b)hhComments  X-  X-x178.` ` BellSouth, NAA, and NYNEX argue that the "nonexclusive" requirement in  X-section 274(c)(2)(C) precludes a BOC from entering into an electronic publishing joint  X-venture with one entity to the exclusion of all others.^~qC yO-ԍxBellSouth at 20; NAA at 9; NYNEX Reply at 11.^ PacTel similarly states that a BOC and its affiliate are prohibited under the provision from entering into an agreement that either prohibits other parties from participating in the joint venture or precludes the BOC or its  X~-affiliate from participating in other electronic publishing joint ventures with other parties.A~qC yO="-ԍxPacTel at 1920.A BellSouth states, however, that a BOC is not obligated to participate in more than one  XP-electronic publishing joint venture.APqC yO%-ԍxBellSouth at 20.A BellSouth and NAA also argue that the provision does not preclude a BOC from insisting, as a condition of its participation in the electronic"9L. ,-(-(ZZ" publishing joint venture, that the joint venture purchase basic transmission services  X-exclusively from the BOC in order to provide electronic publishing services.KqC yOb-ԍxBellSouth at 21; NAA at 9.K NAA and PacTel contend that the provision does not require an electronic publishing joint venture to be open to all, nor does it prelude a BOC from exercising its business judgment regarding its  X-joint venture partners.mXqC {O-ԍxNAA at 9; PacTel at 1920; see also NYNEX Reply at 11.m  Xv-x` `   c)hhDiscussion  X_-  XH-x179.` ` We conclude that the section 274(c)(2)(C) requirement that a BOC or affiliate  X1-participate in an electronic publishing joint venture on a "nonexclusive" basis prohibits a BOC or affiliate from entering into an agreement with its joint venture partner that precludes either entity from participating in other such ventures with other parties. The "nonexclusive" requirement in section 274(c)(2)(C) protects against the potential that a BOC could place competing local exchange providers at a competitive disadvantage by preventing its joint venture partners from aligning with such providers in other electronic publishing joint ventures. We note, however, that while section 274(c)(2)(C) of the Act proscribes these types of exclusive arrangements, it does not prevent a BOC from agreeing with its joint venture partner to exclude other parties from that particular venture. In addition, we find that section 274(c)(2)(C) does not require that an electronic publishing joint venture be open to any and all potential venture participants, nor does it preclude a BOC from exercising its business judgment regarding its joint venture partners. As noted above, because an "electronic publishing joint venture" as defined in section 274(i)(5) of the Act, contemplates some degree of BOC ownership, a BOC should be allowed to retain discretion regarding its joint venture partners. Requiring a BOC to take an ownership interest in a joint venture in which it was not free to select its partner would discourage BOCs from participating in such ventures and  X-restrict competition in the provision of electronic publishing services.qC {O\-ԍxSee, e.g., discussion of "nondiscriminatory" in the context of teaming arrangements supra at  TEAMING168.  X-x180.` ` We also find that the "nonexclusive" requirement in section 274(c)(2)(C) of the  X|-Act does not require a BOC or BOC affiliate to participate in more than one electronic publishing joint venture. As BellSouth points out, such an interpretation could be viewed as precluding a BOC from consummating an electronic publishing joint venture arrangement with its joint venture partner until the BOC had located and negotiated with another partner  X -with whom to establish a joint venture.A |qC yOM$-ԍxBellSouth at 20.A A BOC thus may refuse to participate in a second electronic publishing joint venture that is proposed to it after it has entered into an electronic publishing joint venture with another unaffiliated entity. Given that Congress, in adopting section 274 of the Act, sought to promote competition in the provision of electronic"M ,-(-(ZZ;" publishing services by allowing BOCs to provide such services subject to certain safeguards, we conclude that section 274(c)(2)(C) was not intended to require a BOC to participate in more than one electronic publishing joint venture. Such a requirement could restrict competitive entry into the provision of electronic publishing services by hampering BOC participation in electronic publishing joint ventures.  Xv-x181.` ` We also conclude that section 274(c)(2)(C) does not preclude a BOC from  X_-requiring an electronic publishing joint venture to purchase basic transmission services exclusively from the BOC as a condition of the BOC's participation in the joint venture. The express language of section 274(a) of the Act contemplates the provision by an electronic publishing joint venture of electronic publishing services that are disseminated by means of the BOC or BOC affiliate's basic telephone service. Moreover, nothing in section 274(a) indicates that Congress intended to prohibit a BOC participating in an electronic publishing joint venture from requiring that the joint venture purchase basic telephone service exclusively from the BOC.  X- x` `  3)` Interplay Between Section 274(c)(1)(B) and Section  Xy-274(c)(2)(C) (#  XK-x` `   a)hhBackground  X4-  X-x182.` ` We noted in the Notice that the joint marketing prohibitions in section  X-274(c)(1) of the Act appear not to apply to an electronic publishing joint venture.IqC {O-ԍxNotice at  51.I We also sought comment on the extent to which section 274(c)(2)(C), which allows a BOC to  participate in electronic publishing joint ventures under certain conditions, permits a BOC to market jointly with an electronic publishing joint venture in light of other provisions in  X-section 274 that prohibit certain marketing activities.FZqC {O-ԍxId. at  52.F We noted, for example, that section 274(b)(6) prohibits an electronic publishing joint venture from using the "name, trademark, or service marks of an existing [BOC]" for the marketing of any product or service, while section 274(c)(2)(A) permits a BOC to provide inbound telemarketing services for, among  XP-other things, an electronic publishing joint venture, but only under certain conditions.:PqC {O -ԍxId.: In  X9-addition, we sought comment in the Notice on the distinction, if any, between the term "carry out" in sections 274(c)(1)(A) and (B), which set forth the general marketing prohibitions on  X -BOCs, and the term "provide" in section 274(c)(2)(C).F ~qC {O<%-ԍxId. at  53.F "N,-(-(ZZZ"Ԍ X-x` `   b)hhComments  X-  X-x183.` ` A number of commenters argue that section 274(c)(2)(C) is an exception to the  X-general joint marketing prohibitions in section 274(c)(1) of the Act and thus permits a BOC to provide promotion, marketing, sales and advertising services to an electronic publishing  X-joint venture.qC yO-ԍxBell Atlantic at 7; BellSouth at 17; Joint Parties at 2; SBC at 1213; USTA at 5. SBC argues that, because section 274(c)(2)(C) authorizes a BOC participating in an electronic publishing joint venture to "provide promotion, marketing, sales,  X_-or advertising personnel and services," the venture itself may be staffed by BOC marketing  XJ-and sales personnel.;JXqC yOS -ԍxSBC at 14.; Ameritech argues that joint marketing activities otherwise prohibited under section 274(c)(1) are permitted to the extent they come under one of the three  X -categories of permissible joint marketing activities in section 274(c)(2) of the Act.A qC yO-ԍxAmeritech at 17.A NAA argues that section 274(c)(2)(C) permits a BOC to market jointly with an electronic publishing joint venture subject to the restrictions in section 274(b)(6) on use of names and  X -trademarks.: xqC yO-ԍxNAA at 6.: In addition, NAA contends that the use of the terms "carry out" in section 274(c)(1) and "provide" in section 274(c)(2)(C) was not intended to limit the services a BOC  X -may perform for an electronic publishing joint venture.@ qC {Ob-ԍxId. at 7.@  X{-x184.` ` Conversely, Time Warner argues that a BOC is prohibited from jointly marketing its local exchange services with the electronic publishing services of an electronic  XM-publishing joint venture, and vice versa.FMqC yO-ԍxTime Warner at 2526.F According to Time Warner, if a joint venture were permitted to jointly market its electronic publishing services with the BOC's local exchange services, "the ability to leverage the BOC's local exchange monopoly into the electronic  X-publishing market would remain."C* qC {O-ԍxId. at 26. C  X-x185.` ` Bell Atlantic contends that sections 274(b)(6) and (c)(2)(A) of the Act do not affect the right of a BOC to provide marketing services for an electronic publishing joint  X-venture.F qC yO%-ԍxBell Atlantic at 89.F According to Bell Atlantic, the statute prohibits the joint venture, not the BOC,"OL ,-(-(ZZ"  X-from using the BOC's name, trademark or service marks.@qC {Oy-ԍxId. at 9.@ To the extent the BOC is providing services to the joint venture, Bell Atlantic argues, it is free to use its own name,  X-trademark and service marks.:ZqC {O-ԍxId.: Bell Atlantic also maintains that it is subject to the conditions on inbound telemarketing in section 274(c)(2)(A) of the Act to the extent it  X-performs inbound telemarketing activities for a joint venture.:qC {OA -ԍxId.:  Xv-x` `   c)hhDiscussion  X_-  XH-x186.` `  EPJV We conclude that section 274(c)(2)(C) provides an exception to the general joint marketing prohibitions imposed on BOCs in section 274(c)(1) of the Act. As some commenters point out, the introductory clause in section 274(c)(1) of the Act indicates that subsections (c)(1)(A) and (B) prohibit BOCs from carrying out certain types of joint  X -marketing activities "[e]xcept as provided in [section 274(c)(2)]."J ~qC yO-ԍx47 U.S.C.  274(c)(1).J Therefore, while section 274(c)(1)(B) of the Act might otherwise be interpreted to prohibit a BOC from carrying out joint marketing activities with an electronic publishing joint venture, section 274(c)(2)(C) provides a clear exception that allows a BOC to engage in such activities. In particular, section 274(c)(2)(C) of the Act expressly permits a BOC participating in an electronic publishing joint venture to provide "promotion, marketing, sales or advertising personnel and  Xb-services" to such joint venture.MbqC {O!-ԍxId.  274(c)(2)(C).M  X4-x187.` ` Given the plain language of section 274(c)(2)(C), which allows a BOC participating in an electronic publishing joint venture to provide "promotion, marketing, sales  X-or advertising personnel and services" to such joint venture,NqC {OW-ԍxId. (emphasis added). N we agree with SBC that an electronic publishing joint venture may be staffed by BOC marketing and sales personnel. Moreover, we agree with NAA that use of the terms "carry out" in section 274(c)(1) and "provide" in section 274(c)(2)(C) was not intended to limit the services a BOC may perform for an electronic publishing joint venture. To the contrary, based on the more specific  X-language of the statute, which allows BOC provision of marketing personnel as well as services, we conclude that section 274(c)(2)(C) contemplates a broader range of BOC marketing activities than those proscribed in section 274(c)(1) of the Act. "RP2 ,-(-(ZZ"Ԍ X-x188.` `  EPJV2 We also conclude that section 274(c)(2)(C) does not override the general  X-prohibition in section 274(b)(6) of the Act on the use of "name, trademarks, or service marks of an existing [BOC]" by an electronic publishing joint venture and a BOC for the marketing of any product or service of the joint venture. Nothing in section 274 of the Act indicates that Congress intended section 274(c)(2)(C) to provide an exception to the broad restriction in section 274(b)(6) on the use of an existing BOC's name, trademarks and service marks. As such, to the extent a BOC engages in marketing activities permissible under section 274(c)(2)(C) of the Act, it must still comply with section 274(b)(6), as well as all other applicable provisions in section 274. For example, we agree with Bell Atlantic that a BOC is subject to the conditions in section 274(c)(2)(A) of the Act to the extent it performs inbound telemarketing activities for an electronic publishing joint venture. *J:\POLICY\275\ELECPUB\JOINTMKT.RTR* &J:\POLICY\275\ELECPUB\DISCR274&  X - D.xNondiscrimination Safeguards  X -  X -x1.` ` Background  X -  X-x189.` `  COMP2 Section 274(d) requires a BOC "under common ownership or control with a  Xy-separated affiliate or electronic publishing joint venture [to] provide network access and interconnections for basic telephone service to electronic publishers at just and reasonable rates that are tariffed (so long as rates for such services are subject to regulation) and that are not higher on a perunit basis than those charged for such services to any other electronic  X-publisher or any separated affiliate engaged in electronic publishing."GqC {O-ԍxId.  274(d).G Prior to the Act, electronic publishing services were regulated as enhanced services and were subject to the  X-nondiscrimination requirements established under the Commission's Computer II^ZqC {O-ԍ xAmendment of Section 64.702 of the Commission's Rules and Regulations ("Computer II"), 77 FCC 2d  {O-384 (1980) ("Final Order"), recon., 84 FCC 2d 50 (1981), aff'd sub nom. Computer and Communications  {O-Industry Ass'n v. FCC, 693 F.2d 198 (D.C. Cir. 1982), cert. denied, 461 U.S. 938 (1983). and  X-Computer III regimes.qC {O -ԍ xAmendment of Section 64.702 of the Commission's Rules and Regulations ("Computer III"), CC Docket  {O-No. 85229, Phase I, 104 FCC 2d 958 (1986) ("Phase I Order"), recon., 2 FCC Rcd 3035 (1987) ("Phase I  {O-Reconsideration Order"), further recon., 3 FCC Rcd 1135 (1988) ("Phase I Further Reconsideration Order"),  {Oi-second further recon., 4 FCC Rcd 5927 (1989) ("Phase I Second Further Reconsideration Order"); Phase II, 2  {O3 -FCC Rcd 3072 (1987) ("Computer III Phase II Order"), recon., 3 FCC Rcd 1150 (1988) ("Phase II  {O -Reconsideration Order"), further recon., 4 FCC Rcd 5927 (1989) ("Phase II Further Reconsideration Order");  {O!-Computer III Remand Proceeding, 5 FCC Rcd 7719 (1990) ("ONA Remand Order"), recon., 7 FCC Rcd 909  {O"-(1992); Computer III Remand Proceedings: Bell Operating Company Safeguards and Tier I Local Exchange  {O[#-Company Safeguards, 6 FCC Rcd 7571 (1991) ("BOC Safeguards Order").  Under Computer III and Open Network Architecture,(^b qC {O$-ԍ xSee Filing and Review of Open Network Architecture Plans, 4 FCC Rcd 1 (1988) ("BOC ONA Order"),  {O%-recon., 5 FCC Rcd 3084 (1990) ("BOC ONA Reconsideration Order"); 5 FCC Rcd 3103 (1990) ("BOC ONA  {O&-Amendment Order"), erratum, 5 FCC Rcd 4045, pets. for review denied, California v. FCC, 4 F.3d 1505 (9th  {OK'-Cir. 1993), recon., 8 FCC Rcd 97 (1993) ("BOC ONA Amendment Reconsideration Order"); 6 FCC Rcd 7646"K',-(-(r'"  {O-(1991) ("BOC ONA Further Amendment Order"); 8 FCC Rcd 2606 (1993) ("BOC ONA Second Further  {OZ-Amendment Order"), pet. for review denied, California v. FCC, 4 F.3d 1505 (9th Cir. 1993) (collectively referred  {O$-to as the ONA Proceeding). BOCs have"Q,-(-(ZZ" been permitted to provide enhanced services on an integrated basis. Moreover, BOCs have been required to provide at tariffed rates nondiscriminatory interconnection to unbundled  X-network elements used to provide enhanced services.ZqC {Oq-ԍ xSee Computer III, 104 FCC 2d 958.Z  X-x190.` ` We concluded in the Notice that the Computer III/ONA requirements should  X-continue to apply to the extent that such requirements are not inconsistent with the Act.KqC {O -ԍ xNotice at  65.K  Xx-We sought comment on whether the requirements of Computer III/ONA are consistent with  Xc-the nondiscrimination requirements of section 274(d).:cqC {O&-ԍxId.: To the extent that commenters argue  XL-that the Computer III/ONA requirements are inconsistent, we sought comment on whether and  X7-to what extent regulations are necessary to implement section 274(d).M7qC {O-ԍxId. at  6465.M  X -x191. ` ` We also tentatively concluded in the Notice that section 274(d) prohibits BOCs  X -under common ownership or control with a separated affiliate or electronic publishing joint venture from providing volume discounts, term discounts, or other preferential rates for basic  X -telephone service to electronic publishers.F 6 qC {O-ԍxId. at  67.F In reaching this tentative conclusion, we reasoned that any such discount would be unlawful because section 274(d) prohibits BOCs from providing basic telephone services to some electronic publishers at rates that are "higher  X-on a perunit basis" than rates charged to other electronic publishers.R qC {O-ԍxId.; 47 U.S.C.  274(d).R We also tentatively concluded that section 274(d) does not require BOCs to file tariffs for services that no longer  XS-are subject to tariff regulation.ISZ qC {O^ -ԍxNotice at  67.I Finally, we sought comment on the meaning of the requirement that access and interconnection be provided to electronic publishers "at just and reasonable rates that are tariffed (so long as rates for such services are subject to  X-regulation)."RqC {O$-ԍxId.; 47 U.S.C.  274(d).R "R~,-(-(ZZ("Ԍx  X- x2.` ` Comments  X-  X-x192. ` ` The parties generally agree that the language of section 274(d) is sufficiently  X-clear and that there is no need for the Commission to adopt additional rules to implement this  X-provision of the statute.qC yO-ԍxBell Atlantic at 11; BellSouth at 21; Cincinnati Bell at 23; NYNEX at 24; NYNEX Reply at 1516; PacTel at 2021; PacTel Reply at 16; SBC at 17; USTA at 56; YPPA at 10; YPPA Reply at 9. If the Commission nonetheless adopts rules to implement section 274(d), Cincinnati Bell would exempt "any LEC with less than 2% of the nation's access  X_-lines."F_ qC yO0 -ԍxCincinnati Bell at 6.F MCI contends that the BOCs, in complying with section 274(d), must provide competitors with "functional equality or service of equal quality relative to the services the  X1-BOCs provide their affiliates.";1qC yO-ԍ xMCI at 7.;  X -x193. ` ` In addition, the commenters generally agree that the Computer III/ONA  X -nondiscrimination requirements are consistent with section 274(d),] @qC {O-ԍ  xSee, e.g., MCI at 67; PacTel at 20.] but they disagree on whether we should continue to apply these requirements to BOC intraLATA electronic  X -publishing services. qC {OC-ԍ  xSee, e.g., Ameritech Reply at 1819; AT&T at 2122; AT&T Reply at 2122; BellSouth at 21; BellSouth Reply at 17; MCI at 67; MCI Reply at 78; NYNEX at 24; NYNEX Reply at 1617; PacTel at 2021; PacTel  {O-Reply at 1415; Time Warner at 22. We note that the Computer III/ONA requirements do not distinguish between interLATA and intraLATA information services; however, prior to the Act the BOCs effectively were  {Og-precluded from providing information services on an interLATA basis pursuant to the MFJ. See Notice at  4, n.7.  Some of the BOCs argue that application of the Computer III/ONA requirements is unnecessary because section 274 imposes a separate affiliate requirement on  X-BOCs that is similar to the structural separation requirements of Computer II.P qC yO-ԍ xBellSouth Reply at 17; NYNEX at 24; NYNEX Reply at 1617; PacTel at 2021; PacTel Reply at 1415. Ameritech  X-supports elimination of the Computer III/ONA requirements, claiming that they "were, and  Xj-are, simply a solution in search of a problem."LjqC yO!-ԍ xAmeritech Reply at 1819.L Other commenters, in contrast, support  XS-retaining the Computer III/ONA requirements.S8qC yO<$-ԍ xAT&T at 2122; AT&T Reply at 2122; BellSouth at 21; MCI at 67; MCI Reply at 78; Time Warner at 22. Time Warner argues that, although the  X>-Computer III/ONA requirements "have not been useful to enhanced service providers," these requirements will be more effective if combined with the structural separation and")S,-(-(ZZe"  X-nondiscrimination requirements of section 274.EqC yOy-ԍ xTime Warner at 22.E MCI and AT&T observe that there is no  X-evidence that Congress intended to displace the Computer III/ONA requirements for electronic publishing services, although MCI states that the requirements are "inadequate to prevent  X-discrimination."`XqC yO-ԍ xAT&T at 22; AT&T Reply at 21; MCI Reply at 7.`  X-x194.` ` With regard to preferential rates, AT&T and Time Warner agree with our  Xx-tentative conclusion that section 274(d) prohibits BOCs under common ownership or control with a separated affiliate or electronic publishing joint venture from providing volume and term discounts for network access and interconnections for basic telephone service to  X3-electronic publishers.\3qC yO -ԍxAT&T Reply at 2021; Time Warner at 2122. \ They contend that, because the rates charged to one electronic publisher must not be higher on a "perunit basis" than the rates charged to other electronic  X -publishers, the statute requires uniform rates for such services.: xqC {O.-ԍxId.: A number of BOCs, on the other hand, argue that volume and term discounts are permitted so long as the BOC offers the  X -same discount to other electronic publishers on the same terms and conditions.| qC yO-ЍxBell Atlantic at 11; NYNEX Reply at 18.; PacTel at 22; USTA at 6.|  X -x195.` ` PacTel also argues that Congress did not define the term "units" for purposes  X-of calculating perunit rates.>qC yO-ԍxPacTel at 22.> PacTel notes that it provides transport in units such as DSO,  X{-DS1, and DS3,X{* qC yOV-ԍxDSO, DS1 and DS3 refer to transmission facilities with varying degrees of capacity. A DSO link is a 64 kbps channel. A DS1 link has 24 times the carrying capacity of a DSO link. A DS3 link has 28 times the capacity of a DS1 link. which are priced differently based on its cost savings.>{J qC yOv-ԍxPacTel at 22.> PacTel further asserts that a group of minutes of use, when sold together as a block, could constitute a unit,  XM-which presumably would cost less than buying the minutes of use individually.<MqC {O!-ԍxId. < It thus asserts that BOCs may continue to create reasonable units or groups of services, and must  X-only offer such units to all electronic publishers at the same price.:lqC {O<%-ԍxId.: "T,-(-(ZZd"Ԍ X-x196.` ` Time Warner also argues that the requirement that rates be just and reasonable  X-and nondiscriminatory should apply independently of any decision to reduce or eliminate  X-tariff filing requirements.CqC yOK-ԍxTime Warner at 22.C In order to enforce this requirement in the event of detariffing, Time Warner contends that the Commission should require BOCs to file with the Commission, and furnish to any electronic publisher upon request, a list of rates charged to  X-electronic publishers.:XqC {O-ԍxId.: Several BOCs, on the other hand, argue that filing a rate list is unnecessary because, under section 274(b)(3)(B), if a particular service is not subject to tariffing requirements, the transaction must be reduced to writing and made publicly  XH-available.vHqC yO -ЍxBell Atlantic at 12; NYNEX Reply at 18; PacTel Reply at 16.v Moreover, some commenters note that, since section 274(d) does not require 4BOCs to file tariffs for services that are no longer subject to tariff filing requirements, a separate rate list requirement would be both inconsistent with the statute and overly  X -regulatory.] zqC yO.-ԍxPacTel at 21; PacTel Reply at 16; USTA at 6.] 4  X -x197.` ` PacTel and YPPA further argue that, once the rates for basic telephone service  X -are no longer subject to regulation, section 274(d) is no longer applicable.P qC yOy-ԍxPacTel Reply at 16; YPPA at 10.P These commenters contend that the Commission detariffs services when it determines that competition will keep rates just and reasonable, and therefore that the market, rather than  Xy-tariff filings or other regulatory requirements, will ensure that rates are just and reasonable.:yqC {O-ԍxId.:  XK-x v3.` ` Discussion  X4-  X-x198.` ` We decline to adopt rules to implement section 274(d), based on the record  X-before us; we will reconsider this decision if circumstances warrant. We find that the language of section 274(d) is sufficiently clear to ensure that BOCs provide unaffiliated electronvic publishers with network access and interconnections for basic telephone service that are equal in quality, and at nondiscriminatory terms, relative to those it provides to electronic publishers affiliated with the BOC. We reject MCI's contention, however, that section 274(d)  X-is a guarantee of functional equivalence for unaffiliated electronic publishers.:, qC yOp$-ԍxMCI at 7.: We find that neither the statute nor its legislative history supports such an interpretation. "eU ,-(-(ZZO"Ԍ X-x199. ` ` We also conclude that the Computer III/ONA requirements are consistent with  X-the requirements of section 274(d).]qC {Od-ԍ  xSee, e.g., MCI at 67; PacTel at 20.] The parties have not indicated that there is any  X-inconsistency between the nondiscrimination requirements of Computer III/ONA and section  X-274(d). Section 274(d), moreover, does not repeal or otherwise affect the Computer III/ONA requirements.  X|-x200.` ` We recognize, however, that section 274(b) imposes certain structural  Xe-separation requirements on BOC provision of electronic publishing services. Under our  XN-current regulatory regime, a BOC must comply fully with the Computer II separate subsidiary requirements in providing an information service to be relieved of the obligation to file a Comparably Efficient Interconnection (CEI) plan to provide that service on an integrated basis  X -pursuant to Computer III. The record in this proceeding, however, is insufficient to support a  X -finding, as NYNEX proposes,H ZqC {O-ԍxSee NYNEX at 24. H that BOC electronic publishing services that are offered  X -through a section 274 separated affiliate satisfy all the relevant requirements of Computer II. Instead, we will consider this issue, as well as issues raised regarding the revision or  X -elimination of the Computer III/ONA requirements, qC {OP-ԍxSee, e.g., Ameritech Reply at 1819; BellSouth Reply at 17; NYNEX at 24; NYNEX Reply at 1617; PacTel at 2021; PacTel Reply at 1415. in the context of the Computer III  X-Further Remand proceeding.FqC {O-ԍxComputer III Further Remand Proceedings: Bell Operating Company Provision of Enhanced Services,  {O_-Notice of Proposed Rulemaking, 10 FCC Rcd 8360 (1995) ("Computer III Further Remand"). We conclude, therefore, that Computer II, Computer III, and  X-ONA requirements continue to govern the BOCs' provision of intraLATA electronic publishing services. We also note that the nondiscrimination requirements of section 274(d) apply to the BOCs' provision of both intraLATA and interLATA electronic publishing services.  X-x201.` ` We further conclude that section 274(d) prohibits preferential rates, including  X-volume or term discounts. This section expressly requires that a BOC under common ownership or control with a separated affiliate or electronic publishing joint venture must provide other electronic publishers network access and interconnections for basic telephone service at rates "that are not higher on a perunit basis than those charged for such services"  X-to its own affiliates or other competing electronic publishers.GqC yO"-ԍx47 U.S.C.  274(d).G We conclude from the plain language of the statute that Congress intended that BOCs under common ownership or control"V2 ,-(-(ZZ2" with a separated affiliate or electronic publishing joint venture must charge electronic  X-publishers a uniform perunit rate for a service.8, qC yOb-ЍxWe find further support for this interpretation in a floor statement that Congressman Hyde made regarding the purpose of the amendment that contained the "not higher on a perunit basis" language: XxIn the development of the manager's amendment to be offered by Chairman Bliley, the Judiciary Committee has worked closely with the Commerce Committee to improve H.R. 1555 in areas that are of particular concern to, and under the jurisdiction of the Judiciary Committee.  {O-. . . Under the manager's amendment, the Bell companies will be required to provide services  {O-to small electronic publishers at the same perunit prices that they give to larger publishers. This will allow the small newspapers and other electronic publishers to bring the information superhighway to rural areas that might otherwise be passed by.  141 Cong. Rec. H829293 (daily ed. Aug. 2, 1995) (statement of Rep. Hyde, Chairman of the House Committee on the Judiciary) (emphasis added).8  X-x202.` ` We conclude, however, that section 274(d) only prohibits discounts for network access and interconnections for basic telephone service used in the provision of electronic publishing services. Thus, under this section, BOCs may offer discounts for the provision of such services to an electronic publisher for use in any of its other nonelectronic publishing activities. Otherwise, an entity that engages in electronic publishing as well as other activities would be prohibited from obtaining a volume discount or term discount for any basic telephone service it purchases for any of its activities, whether or not related to its electronic publishing services. There is no indication that Congress intended to prohibit such discounts for an electronic publisher's nonelectronic publishing activities, thereby putting such electronic publisher at a competitive disadvantage visavis its nonelectronic publishing competitors.  X -x203.` ` Moreover, we find that section 274(d) does not require a BOC under common ownership or control with a separated affiliate or electronic publishing joint venture to charge electronic publishers the same perunit price for different services, particularly when those services use different facilities and impose different costs on the BOCs. Ignoring such cost disparities for providing different services would remove the incentive to use the most efficient service and could increase costs for all electronic publishers as well as hamper competition in the electronic publishing market.  X-x204.` ` We agree with PacTel that the statute does not define the term "units," for  X-purposes of calculating perunit rates.> qC yOE#-ԍxPacTel at 22.> BOCs, therefore, may charge a flat rate or, in the alternative, a rate based on usage for a service, each of which would have a different base"WL ,-(-(ZZ5"  X-unit.qC yOy-ԍxA service sold at a flat rate could be charged, for example, on a permonth basis regardless of actual usage, while a rate based on usage could be sold on a perminute basis. We reject, however, PacTel's argument that a group of minutes of use, for example, could constitute a unit, unless such a group of minutes is both the smallest unit of minutes offered to electronic publishers and accommodates the needs of small electronic publishers. In this manner, such a group of minutes would neither constitute a volume discount nor disadvantage small electronic publishers.  Xv-x205.` ` We also adopt our tentative conclusion that section 274(d) does not require BOCs to file tariffs for services that are not subject to rate regulation. Section 274(d) is clear that BOCs subject to the requirements in this section file tariffs for services only "so long as  X1-rates for such services are subject to regulation."G1 qC yO -ԍx47 U.S.C.  274(d).G No commenter disagrees with this conclusion.  X -x206.` ` In addition, we reject the argument that, because competition will be sufficient to ensure that a detariffed service's rates are just and reasonable, section 274(d) is inapplicable to such services. We find that the "just and reasonable" and "perunit" requirements in section 274(d) are independent of the requirement that rates be tariffed "so  X-long as rates for such services are subject to regulation.":qC {O-ԍxId.: Thus, the section 274(d) nondiscrimination requirements will continue to apply, regardless of whether the service is tariffed or no longer subject to regulation, until the sunset date of this provision in February, 2000.  X-x207.` ` We decline at this time to address Time Warner's argument that the  X-Commission should require BOCs to file rates for network access and interconnections for basic telephone service provided to electronic publishers even after elimination of tariff filing requirements. We note that BOCs currently are required to file state and federal tariffs for ONA services, which are the tariffed services generally used by enhanced service providers,  X-such as electronic publishers, to provide their services to customers.YBqC {O-Ѝx#X\  P6G;2P##c PE372P#See BOC ONA Amendment Order, 5 FCC Rcd at 3105,  13 (1990); BOC Safeguards Order, 6 FCC  {Og -Rcd at 7624 n.212; BOC ONA Order, 4 FCC Rcd at 11671,  224325.Y The Commission will determine whether additional filing or regulatory requirements are necessary if and when a service that is currently subject to tariff filing requirements is detariffed. Further, several BOCs stated that section 274(b)(3)(B) eliminates the need for additional regulatory requirements because under that section, if a particular service is not subject to tariffing requirements, the transaction between a BOC and its separated affiliate or joint venture must"7X,-(-(ZZ"  X-be pursuant to a written contract that is publicly available.xZqC {Oy-ԍxBell Atlantic at 12; NYNEX Reply at 18; PacTel Reply at 16; see also 47 U.S.C.  274(b)(3)(B) (providing that a BOC and its separated affiliate or electronic publishing joint venture must carry out transactions "pursuant to written contracts or tariffs that are filed with the Commission and made publicly available").x As discussed below, we are  X-issuing a Further Notice in this proceeding to seek additional comments on the meaning of  X-section 274(b)(3)(B).LqC {Oo-ԍxSee infra part VII.B.L & J:\POLICY\275\ELECPUB\DISCR274& * J:\POLICY\275\ELECPUB\DISCR260.AMK*  X-  IV. TELEMESSAGING  X-TP  Xx- A.xApplication of Sections 260 and 272 to BOC InterLATA Telemessaging Services  Xa-  XJ-x1.` ` Background  X3-  X -x208. ` ` We stated in our Notice that section 260 sets forth various requirements for the  X -provision of telemessaging service by LECs subject to the requirements of section 251(c), i.e.,  X -incumbent LECs.\ |qC {O-ԍ xSee 47 U.S.C.  260(a). Our discussion in this Order is limited to sections 260(a)(2) and (c), which concern nonaccounting safeguards and definitional issues. We address sections 260(a)(1) and 260(b), which  {O-concern accounting safeguards and enforcement issues, respectively, in separate proceedings. See  2 supra.ĝ The Commission's current rules permit BOCs to provide telemessaging  X -services on an integrated basis, subject to the Computer III/ONA requirements. Other LECs have been permitted to provide telemessaging services subject only to the requirements of  X -sections 201 and 202, which apply to all common carriers, including the BOCs. The Notice also recognized that section 260 does not distinguish between intraLATA and interLATA  X-provision of telemessaging services.KqC {O-ԍ xNotice at  75.K We therefore sought comment on whether section 260 applies to BOC provision of telemessaging services, both on an intraLATA and interLATA  XU-basis.<U2 qC {O8-ԍ xId.< We also noted that, in the NonAccounting Safeguards Notice, we tentatively concluded that telemessaging is an information service subject to the separate affiliate and nondiscrimination requirements of section 272 and, therefore, we tentatively concluded that BOC provision of interLATA telemessaging services is subject to the requirements of section  X-272 in addition to the requirements of section 260.< qC {Op"-ԍ xId.< We sought comment on whether, if we decided not to adopt this tentative conclusion, BOCs providing telemessaging services on either an intraLATA or interLATA basis would be subject only to the requirements of section  X-260.<V qC {O&-ԍ xId.<"Y,-(-(ZZ"Ԍ X-ԙ x2.` ` Comments  X-  X-x209. ` ` Commenters generally agree that section 260 applies to all incumbent LEC  X-provision of telemessaging, both on an intraLATA and interLATA basis.|qC yO4-ԍ xAT&T at 56; AT&T Reply at 8; Bell Atlantic at 14; MCI Reply at 12.| Commenters disagree, however, on whether BOC provision of interLATA telemessaging services is subject  X-to both sections 272 and 260.XqC {O-ԍ xCompare MCI at 7; MCI Reply at 1112; U S WEST Reply at 1516; and VoiceTel at 11; with BellSouth at 2526 and PacTel Reply at 1920. MCI, U S WEST, and VoiceTel state that BOC provision of interLATA services is subject to both sections 272 and 260, because telemessaging service is  X_-an "information service" and thus falls within the terms of section 272(a)(2)(C)._qC yO -ԍ xMCI at 78; MCI Reply at 1112; U S WEST at 31; U S WEST Reply at 1516; VoiceTel at 11. BellSouth and PacTel agree with this point, but argue that Congress, in enacting a separate provision for telemessaging services, did not intend BOC provision of interLATA telemessaging services to  X -be subject to the requirements of section 272.] BqC yO -ԍ xBellSouth at 2526; PacTel Reply at 1920.]  X - x3.` ` Discussion  X -  X -x210. ` `  STRING1 INTERLATAWe conclude that section 260 applies to all incumbent LEC provision of  X -telemessaging services, both on an intraLATA and interLATA basis. We find that neither the statute nor its legislative history evinces an intent by Congress to distinguish between BOCs and other LECs, or between intraLATA and interLATA services. Moreover, because we  Xb-concluded in the Commission's NonAccounting Safeguards Order that telemessaging service is an "information service," BOC provision of telemessaging service on an interLATA basis is  X6-subject to the requirements of section 272 in addition to the requirements of section 260.e6qC {O-ԍ xNonAccounting Safeguards Order at  145.e  X- B.XxDefinition of "Telemessaging Service"(#  X-  X- x1.` ` Background  X-  X-x211. ` ` Section 260(c) defines "telemessaging service" as "voice mail and voice storage and retrieval services, any live operator services used to record, transcribe, or relay messages (other than telecommunications relay services), and any ancillary services offered in  Xg-combination with these services."Igd qC yO|%-ԍ x47 U.S.C.  260(c).I We sought comment in the Notice on whether rules are"gZ ,-(-(ZZ"  X-necessary to clarify any ambiguities in this definition.KqC {Oy-ԍ  xNotice at  76.K We also sought comment on the  X-types of services contemplated by the term "ancillary services."<ZqC {O-ԍ  xId.<  X- x2. ` ` Comments  X-  X-x212. ` ` None of the commenters identifies any ambiguities in the definition of  Xv-"telemessaging service" in section 260(c). Some commenters state generally that the language  X_-of section 260 is clear and that no rules are needed to implement this provision._qC {O -ԍ  xBell Atlantic at 12, 1415; PacTel at 23; SBC at 3; USTA at 6; USTA Reply at 12. ATSI states that "ancillary services" are "all valueadded services in addition to those primary  X1-[telemessaging] services, offered by telemessagers to the communications customer."=1~qC yO`-ԍ xATSI at 6.= ATSI lists specific examples, but recommends against establishing a comprehensive list of primary or ancillary telemessaging services, since new services are created as technology and  X -consumer demands change.f qC {O-ԍ xSee ATSI at 6; see also VoiceTel at 4.f  X - x3.` ` Discussion  X -  X-x213. ` ` We conclude that the definition of "telemessaging service" in section 260(c) is  Xy-sufficiently clear and therefore decline to establish an exclusive list of "telemessaging  Xb-services" or "ancillary services."_bqC yO-ԍ xWe note that BellSouth asks us to clarify that live operator services do not fall within the Commission's  {O{-definition of "enhanced" services, because they do not employ "computer processing applications." See  {OE-BellSouth at 26. We concluded in the NonAccounting Safeguards Order that live operator services "are an example of one area in which the 'information service' definition is broader than that of 'enhanced services.'"  {O-NonAccounting Safeguards Order at  145 n.342._ We will determine whether any individual service is a "telemessaging service" or "ancillary service" as necessary on a casebycase basis. "K[V ,-(-(ZZg"Ԍ X- 1řC.xNondiscrimination Requirements  X-  X-x1.` ` Section 260(a)(2) and Sections 201 and 202(#`  X-  X-x` ` a. Background  X-  Xv-x214. ` ` Section 260(a)(2) provides that an incumbent LEC "shall not prefer or  X_-discriminate in favor of its telemessaging service operations in its provision of  XH-1telecommunications services."LHqC yO -ԍ x47 U.S.C.  260(a)(2).L We sought comment in the Notice on the extent to which section 260(a)(2) imposes greater obligations on LECs providing telemessaging services than  X -currently exist under sections 201 and 202 of the Act.K XqC {O% -ԍ xNotice at  77.K  X - x` ` b. Comments  X -  X -x215. ` ` Some commenters assert that section 260(a)(2) imposes greater obligations on  X -LECs providing telemessaging services than currently exist under sections 201 and 202 of the  X-Act, based on the broad, unqualified language in section 260(a)(2).qC yO--ԍ xATSI at 67; ATSI Reply at 3; AT&T at 78; AT&T Reply at 67, n.14; VoiceTel at 47, 10. Some of the BOCs, however, disagree, asserting that section 260(a)(2) merely duplicates the requirements of  Xd-sections 201 and 202 for incumbent LEC provision of telemessaging services.udzqC yO-ԍ xNYNEX Reply at 1819; PacTel at 23; PacTel Reply at 19; SBC at 22.u VoiceTel contends that, in complying with section 260(a)(2), "it is not sufficient for the interconnections offered to be comparable if the result is that the competitor is put at any  X-disadvantage."B qC yO-ԍ xVoiceTel at 6.B  X- x` ` c. Discussion  X-  X-x216. ` `  STRING2 As noted above, section 260(a)(2) states that an incumbent LEC "shall not  X-prefer or discriminate in favor of its telemessaging service operations in its provision of  X-telecommunications services."LqC yO"-ԍ x47 U.S.C.  260(a)(2).L Section 202(a), in contrast, prohibits "any unjust or unreasonable discrimination . . . , or . . . any undue or unreasonable preference or advantage"  Xg-by common carriers providing interstate communications services.Ig* qC {OB&-ԍ xId.  202(a).I Because the section 260(a)(2) nondiscrimination bar, unlike that of section 202(a), is not qualified by the terms"P\ ,-(-(ZZ0" "unjust and unreasonable," we conclude that Congress did not intend section 260(a)(2) to be synonymous with the nondiscrimination standard in section 202(a), but intended a more stringent standard. This conclusion is consistent with our interpretation of similar language in  X-sections 251(c)(2) and 272(c)(1).qC {O4-ԍxSee, e.g., First Interconnection Order at 15612,  217; NonAccounting Safeguards Order at  197. We therefore reject claims that section 260(a)(2) merely duplicates the nondiscrimination bar of section 202(a) for the provision of telemessaging  X-services by incumbent LECs.TZqC {O-ԍ xSee AT&T Reply at 7 n.14. T  X_-x217. ` ` We also conclude that section 260(a)(2) is not a guarantee of functional  XH-equivalence for unaffiliated telemessaging providers, as VoiceTel contends.@HqC yO -ԍxVoiceTel at 6.@ We find that neither the statute nor its legislative history supports such an interpretation. We note that the Joint Explanatory Statement states only that section 260(a)(2) prohibits incumbent LECs "from discriminating against nonaffiliated entities with respect to the terms and conditions of  X -any network services they provide to their own telemessaging operations."T |qC yO-ԍxJoint Explanatory Statement at 138.T To the extent that competitors require different telecommunications services than the LEC provides to its own telemessaging operations, we note that other nondiscrimination requirements in the Act  X -and analogous state nondiscrimination laws may apply to such requests. qC {Od-ԍxSee, e.g., 47 U.S.C.  201(a) (providing that "[i]t shall be the duty of every common carrier engaged in interstate . . . communication . . . to furnish such communication service upon reasonable request"). In addition, the  X-Commission's ONA rules require the BOCs and GTE to unbundle network services useful to  X{-enhanced service providers.{f qC {O-ԍxSee BOC ONA Order at 12, 1516, 20708,  4, 14, 39797; Phase I Order at 101920,  113.  XM<d x2.` ` Section 260(a)(2) and Computer III/ONA Requirements (#`  X7-  X -x` ` a. Background  X-x 218. ` ` We concluded in the Notice that the nondiscrimination requirements of  X-Computer III/ONA should continue to apply to the extent they are not inconsistent with  X-dsection 260(a)(2).I qC {Oq#-ԍxNotice at  77.I We sought comment on whether the nondiscrimination provisions of  X-Computer III/ONA are consistent with section 260(a)(2), and whether these provisions should"] ,-(-(ZZ" be applied only to the BOCs or to all incumbent LECs to fulfill the requirements of section  X-260(a)(2).<qC {Ob-ԍ xId.<  X- x` ` b. Comments  X-  X-x219. ` ` Most commenters agree that the Computer III/ONA nondiscrimination  Xx-requirements are consistent with section 260(a)(2) and assert that these requirements should  Xa-continue to apply to BOC intraLATA telemessaging services.<ZaZqC yOl -ԍ xATSI at 67; ATSI Reply at 4; AT&T at 89; AT&T Reply at 78; BellSouth at 26; BellSouth Reply at  {O4 -56; MCI at 78; MCI Reply at 78, 15; PacTel at 23; PacTel Reply at 1920; but see Bell Atlantic at 1415; US WEST at 34; VoiceTel at 6.< MCI and AT&T observe that  XJ-there is no evidence that Congress intended to displace the Computer III/ONA requirements  X5-for telemessaging services.m5|qC {Ob-ԍ xAT&T at 9; MCI Reply at 7; see also ATSI Reply at 4.m Similarly, ATSI asserts that "[s]ection 260 is not limited by  X -existing rules or other provisions of the Act."? qC yO-ԍ xATSI at 67.? The commenters disagree, however, on  X -whether the current scope of the Computer III/ONA requirements should be extended to  X -include all incumbent LECs, not just the BOCs. Cincinnati Bell asserts that the Computer  X -III/ONA requirements should not be extended beyond their current scope,J qC yO,-ԍ xCincinnati Bell at 67.J while PacTel and  X -U S WEST argue that they should be extended to include all incumbent LECs.P . qC yO-ԍ xPacTel at 23; U S WEST at 34.P AT&T  X -would extend the Computer III/ONA requirements to all incumbent LECs "possess[ing] substantial market power as a result of [their] bottleneck control over local exchange facilities  X-in a significant service area (e.g., SNET, GTE, and other Tier I LECs),"P  qC yO-ԍ xAT&T at 9; AT&T Reply at 89.P while USTA would  Xp-exempt small and midsized LECs from these requirements.? pN qC yOo-ԍ xUSTA at 67.?  XB-x220. ` ` Several commenters argue that the Computer III/ONA requirements should be  X--revised or eliminated. Although MCI supports continued application of the Computer  X-III/ONA requirements, it states that they "are inadequate to prevent access discrimination."N qC yO$-ԍ xMCI at 78; MCI Reply at 8.N  X-Ameritech supports elimination of the Computer III/ONA requirements, claiming that they"^n ,-(-(ZZE"  X-"were, and are, simply a solution in search of a problem."L qC yOy-ԍ xAmeritech Reply at 1819.L Bell Atlantic argues that the  X-Computer III/ONA rules are unnecessary, given that price caps and sections 202(a) and 251  X-"fully protect against discrimination."J XqC yO-ԍ xBell Atlantic at 1415.J  X- x` ` c. Discussion  X-  Xx-x221. ` ` We conclude that the Computer III/ONA requirements are consistent with the  Xc-requirements of section 260(a)(2). We affirm our conclusion, therefore, that Computer  XN-III/ONA requirements continue to govern the BOCs' provision of intraLATA telemessaging  X9-services.9qC {O -ԍxIn addition, we note that the Commission's Computer II requirements also continue to govern BOC provision of intraLATA information services, including telemessaging. We also note that the nondiscrimination requirements of section 260(a)(2) apply to the BOCs' provision of both intraLATA and interLATA telemessaging services, as well as other incumbent LECs' provision of telemessaging services. The parties have not indicated  X -that there is any inconsistency between the nondiscrimination requirements of Computer  X -III/ONA and section 260(a)(2). Section 260(a)(2), moreover, does not repeal or otherwise  X -affect the Computer III/ONA requirements. We will consider in the Commission's Computer  X -III Further Remand proceeding whether the Computer III/ONA requirements need to be  X-revised or eliminated. For the same reason, we also decline to extend the Computer III/ONA requirements to entities other than BOCs, as recommended by some commenters.  Xt-  X]-x3.` ` Section 260(a)(2) and Adoption of Rules  XF-  X/-x` ` a. Background  X-  X-x222. ` ` We sought comment in the Notice on whether and what types of specific  X-regulations may be necessary to implement section 260(a)(2).KBqC {O-ԍ xNotice at  77.K  X-   X-x` ` b. Comments  X-  X-x223. ` ` The BOCs argue that the language of section 260(a)(2) is sufficiently clear and  Xy-thus there is no need for the Commission to adopt rules to implement this provision.yqC yO#-ԍ xBell Atlantic at 15; BellSouth at 26; Cincinnati Bell at 3, 7; PacTel at 23; SBC at 13, 22; USTA at 6; U S WEST at 34. ATSI and VoiceTel, on the other hand, argue that the Commission should adopt rules to implement"b_, ,-(-(ZZ"  X-section 260(a)(2).bqC yOy-ԍ xATSI at 7; ATSI Reply at 4; VoiceTel at 1011.b VoiceTel states that Commission rules will ensure that complaints of discrimination are treated consistently and will help the Commission administer the Act  X-efficiently.BXqC yO-ԍ xVoiceTel at 9.B SBC argues that any rules adopted by the Commission must apply to all  X-incumbent LECs,=qC yOT-ԍ xSBC at 22.= while Cincinnati Bell would exempt any LEC with less than two percent  X-of the nation's access lines.HxqC yO -ԍ xCincinnati Bell at 6.H  Xv-x224. ` ` VoiceTel argues that the "broad language" of the nondiscrimination  X_-requirement in section 260(a)(2) "makes any discrimination in pricing or other behavior  XJ-unlawful," including the marketing of voice messaging services.BJqC yO-ԍ xVoiceTel at 6.B Some BOCs, on the other hand, argue that the scope of section 260(a)(2) is limited to the provision of "telecommunications services," which, as defined in section 3(46) of the Act, does not include  X -marketingrelated activities. qC yON-ԍ xBell Atlantic Reply at 11; BellSouth Reply at 6; NYNEX Reply at 19; PacTel Reply at 20; SBC Reply at 23; USTA Reply at 2; U S WEST Reply at 1617.  X -x225. ` ` VoiceTel also would require all incumbent LECs to establish a separate  X -affiliate to provide telemessaging services, in order to ensure that incumbent LECs comply  X -with section 260(a)(2).D qC yOJ-ԍxVoiceTel at 1112.D VoiceTel claims that nothing in the Act prevents the Commission  X-from imposing this measure.< qC {O-ԍ xId.< The BOCs argue, in contrast, that, if Congress had intended to establish a separate affiliate requirement, it would have expressly said so, as it did for certain information services in section 272 and for electronic publishing services in section  XM-274.MqC yO!-ԍ xBellSouth Reply at 56; PacTel Reply at 19; SBC Reply at 2324; USTA Reply at 23; U S WEST  {O!-Reply at 1516. See Bell Atlantic Reply at 1012. "6`l,-(-(ZZ"Ԍ X- x` ` c. Discussion  X-  X-x226. ` ` We conclude that no rules are necessary to implement section 260(a)(2), based on the record before us; we will reconsider this decision if circumstances warrant. We  X-therefore decline to adopt the specific rules proposed by certain commenters.dqC yO-ԍ xATSI at 78; ATSI Reply at 4; VoiceTel at 1011.d  Xv-x227. ` ` In particular, we decline to impose a separate affiliate requirement on all incumbent LECs providing telemessaging services. We find that the safeguards expressly established by Congress in section 260 are sufficient to guard against discriminatory behavior by incumbent LECs in favor of their own telemessaging operations. In addition, we find it significant that Congress limited the separate affiliate requirement in section 272 to BOC provision of interLATA information services (including interLATA telemessaging services), interLATA telecommunications services, and manufacturing, and in section 274 to BOC provision of electronic publishing services.  X -x228. ` ` Further, we conclude that the scope of section 260(a)(2) is limited, by its terms, to the provision of "telecommunications services," which, as defined in section 3(46) of the Act, does not include marketingrelated activities. Accordingly, we reject VoiceTel's  Xb-argument that marketing is included within the scope of 260(a)(2).KbXqC yOk-ԍ xVoiceTel at 67, 1011.K *J:\POLICY\275\ELECPUB\DISCR260.AMK* )J:\POLICY\275\ELECPUB\REGFLEX.ORD) T  X4-$  V. FINAL REGULATORY FLEXIBILITY CERTIFICATIONא X-TP  X-x229.` ` VI. VI.A. The Commission certified in the Notice that the conclusions it proposed to adopt would not have a significant economic impact on a substantial number of small entities  X-because the proposed conclusions did not pertain to small entities.IqC {Os-ԍxNotice at  87.I No comments were submitted in response to the Commission's request for comment on its certification. For the reasons stated below, we certify that the conclusions adopted herein will not have a  X-significant economic impact on a substantial number of small entities.FzqC yO-ԍx5 U.S.C.  605(b).F This certification conforms to the Regulatory Flexibility Act (RFA), as amended by the Small Business  Xg-Regulatory Enforcement Fairness Act of 1996 (SBREFA).g qC yO"#-ԍx5 U.S.C.  601611. SBREFA was enacted as Title II of the Contract With America Advancement Act of 1996 (CWAAA), Pub. L. No. 104121, 110 Stat. 847 (1996). "Pab ,-(-(ZZ!"Ԍ X-x230.` ` The RFA provides that the term "small business" has the same meaning as the  X-term "small business concern" under the Small Business Act.qC yOb-ԍx5 U.S.C.  601(3). The term "small entity" is a generic term encompassing the terms "small business,"  {O*-"small organization," and "small governmental jurisdiction" under the RFA. See 5 U.S.C.  601(6). The Small Business Act defines a "small business concern" as one that is independently owned and operated; is not dominant in its field of operation; and meets any additional criteria established by the Small  X-Business Administration (SBA).J "qC yOw-ԍx15 U.S.C.  632(a)(1).J SBA has not developed a definition of "small incumbent LECs." The closest applicable definition under SBA rules is for Standard Industrial  Xv-Classification (SIC) code 4813 (Telephone Communications, Except Radiotelephone).!$vqC {O -ԍxSee Executive Office of the President, Office of Management and Budget, Standard Industrial  {O -Classification Manual 282 (1987) (stating that SIC code 4813 includes "[e]stablishments primarily engaged in furnishing telephone voice and data communications . . . [or] leasing . . . methods of telephone transmission . . . and reselling . . . to others"). The SBA has prescribed the size standard for a "small business concern" under SIC code 4813 as  XH-1,500 or fewer employees.H"HqC yO-ԍx13 C.F.R.  121.201.H  X -x231.` ` The conclusions we adopt in this Order to implement section 274 apply only to the BOCs which, because they are large corporations that are dominant in their field of operation and have more than 1,500 employees, do not fall within the SBA's definition for a "small business concern." The conclusions we adopt pursuant to section 260, however, apply to all incumbent LECs. Some of these incumbent LECs may have fewer than 1,500 employees and thus meet the SBA's size standard to be considered "small." Because such incumbent LECs, however, are either dominant in their field of operations or are not independently owned and operated, consistent with our prior practice, they are excluded from  Xd-the definition of "small entity" and "small business concerns."#d. qC {OC-ԍxSee First Interconnection Order at 1614445, 16150,  132830, 1342. Accordingly, our use of the  XM-terms "small entities" and "small businesses" does not encompass small incumbent LECs.P$M qC {O-ԍxSee id. 16150,  1342.P Out of an abundance of caution, however, for regulatory flexibility analysis purposes, we will consider small incumbent LECs within this analysis and use the term "small incumbent LECs" to refer to any incumbent LECs that arguably might be defined by SBA as "small business concerns."   X-x232.` ` With respect to section 260, the most reliable source of information regarding the number of LECs nationwide of which we are aware appears to be the data that we collect annually in connection with the Telecommunications Relay Service (TRS). According to our most recent data, 1,347 companies reported that they were engaged in the provision of local"~bR $,-(-(ZZP"  X-exchange services.*%\qC {Oy-ԍxFederal Communications Commission, CCB, Industry Analysis Division, Telecommunications Industry  {OC-Revenue: TRS Fund Worksheet Data, Tbl. 21 (Average Total Telecommunications Revenue Reported by Class of Carrier) (Feb. 1996).* Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1,500 employees, we are unable at this time to estimate with greater precision the number of LECs that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 1,347 small incumbent LECs that may be affected by the conclusions adopted in this  X-Order.  Xa-x233.` ` The Commission adopts the conclusions in this Order to ensure the prompt implementation of sections 260 and 274 of the Act. Section 260 permits incumbent LECs, including the BOCs, to provide telemessaging service subject to certain nondiscrimination safeguards. We certify that although there may be a substantial number of small incumbent  X -LECs affected by the conclusions adopted in this Order to implement section 260, these conclusions will not have a significant economic impact on those affected small incumbent LECs.  X -x234. ` ` We decline to elaborate on the definition of "telemessaging service" prescribed by Congress or to establish a list of services that fall within section 260(c), for the reasons set  X-forth in Part IV.B. Because we take no action pursuant to section 260(c) in this Order, there will be no significant economic impact on a substantial number of small entities.  X<-x235.` ` Our conclusion that section 260(a)(2) imposes a more stringent standard for determining whether discrimination is unlawful than that which already exists under sections  X-201 and 202 and applies to all incumbent LECsj&qC {O-ԍxSee supra  STRING1210, 216.j will not have a significant economic impact on small incumbent LECs. Incumbent LECs, including small incumbent LECs, are subject to other nondiscrimination requirements in the Act and state law and therefore already are required to respond to complaints of discriminatory behavior or limit their participation in discriminatory activities. We therefore find that the impact on incumbent LECs, including small incumbent LECs, of the more stringent standard of section 260(a)(2) will most likely be minimal.  XV-x236.` ` Our decision not to extend the Computer III/ONA nondiscrimination requirements to all incumbent LECs, as well as our decision not to adopt rules implementing the nondiscrimination requirement of section 260(a)(2), as noted in Section IV.C, will prevent any significant economic impact on incumbent LECs, particularly small incumbent LECs. Thus, although their conduct will be subject to the requirements of section 260, small incumbent LECs will be spared the regulatory burdens and economic impact of complying with additional rules. "!c~&,-(-(ZZ "Ԍ X-x237.` ` Section 274 of the Act allows BOCs to provide electronic publishing service disseminated by means of its basic telephone service only through a "separated affiliate" or an "electronic publishing joint venture" that meets the separation, joint marketing, and nondiscrimination requirements prescribed by that section. BOCs that were offering electronic publishing services at the time the 1996 Act was enacted have until February 8, 1997, to meet those requirements, which expire on February 8, 2000. Because section 274 applies only to BOCs, which, as noted above, do not fall within the SBA's definition for a  X_-"small business concern," the conclusions we adopt in this Order implementing this section have no significant economic impact on a substantial number of small entities.  X -x238. ` ` The Commission shall send a copy of this certification, along with this Order, in a report to Congress pursuant to the SBREFA, 5 U.S.C.  801(a)(1)(A). A copy of this certification will also be provided to the Chief Counsel for Advocacy of the Small Business  X -Administration, and will be published in the Federal Register.  X -  VI. FINAL PAPERWORK REDUCTION ANALYSIS TP  X}-x239.` ` As required by the Paperwork Reduction Act of 1995, Pub. L. No. 10413,V'}qC {O-ԍx44 U.S.C.  3501 et seq.V  Xf-the Notice invited the general public and the OMB to comment on proposed changes to the  XQ-Commission's information collection requirements contained in the Notice.I(QZqC {O\-ԍxNotice at  88.I Specifically, the Commission proposed to extend various reporting requirements, which apply to the BOCs  X%-under Computer III, to all incumbent LECs pursuant to section 260(a)(2). OMB approved all of the proposed changes to the Commission's information collection requirements in  X-accordance with the Paperwork Reduction Act.)qC {O-ԍxNotice of Office of Management and Budget Action, OMB No. 30600738 (Sep. 27, 1996). In approving the proposed changes, OMB "encourage[d] the [Commission] to investigate the potential for sunsetting these requirements  X-as competition and other factors allow.":*~qC {O-ԍxId.:  X-x240.` ` In this Order, the Commission adopts none of the changes to our information  X-collection requirements proposed in the Notice. We therefore need not address the OMB's comment, although we note that our decision is consistent with the OMB's recommendation.  XE-x241. ` ` We conclude, however, that to the extent a BOC refers a customer to a separated affiliate, electronic publishing joint venture or affiliate during the normal course of its telemarketing operations, the BOC must refer that customer to all unaffiliated electronic publishers requesting the referral service, on nondiscriminatory terms. As part of this requirement, BOCs must provide the names of all such unaffiliated electronic publishers, as"d*,-(-(ZZ;" well as its own affiliated electronic publishers, in random order, to the customer. Implementation of this requirement is subject to OMB approval as prescribed by the Paperwork Reduction Act. ) J:\POLICY\275\ELECPUB\REGFLEX.ORD) ) J:\POLICY\275\ELECPUB\FURTHER.MMC)  X- VII. FURTHER NOTICE OF PROPOSED RULEMAKING ă  X-  Xv-A.xMeaning of "Control" and "Financial Interest"  XH-x242.` ` We concluded above, in Part III.A, that a BOC engaged in the provision of electronic publishing is subject to section 274 only to the extent that it controls, or has a financial interest in, the content of the information being disseminated over its basic telephone services. The record compiled in this proceeding, however, does not provide sufficient detail for us to determine the meaning of "control" and "financial interest" in this context. By clarifying these terms, we believe we will be in a better position to determine when, and under what circumstances, a BOC's participation in a service constitutes BOC provision of electronic publishing service subject to the requirements of section 274.  Xy-x 1.` ` Meaning of "Control"  XK-x243.` ` The term "control" in section 274(i)(4) is defined according to regulations promulgated by the Securities and Exchange Commission implementing the Securities Exchange Act of 1934. As defined thereunder, the term "control" means "the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or  X-otherwise."+qC {OQ-ԍxSee 47 U.S.C.  274(i)(4), which incorporates by reference 17 C.F.R.  240.12b2. We tentatively conclude that this definition, which defines the term "control" in a corporate context, is inappropriate for determining the meaning of "control" in the present  X-context, i.e., when a BOC has "control" of the content of information transmitted via its basic telephone service. We therefore seek comment on how we should determine whether a BOC has "control" of the content of the information being disseminated under section 274.  XP-x244.` ` For example, we seek comment on whether an ownership interest is required for a BOC to have "control" of the content of the information. If so, we seek comment on the percentage of ownership interest necessary for the BOC to be deemed to be in "control" of the content of the information. Alternatively, we seek comment on whether "control" should be broadly interpreted to include the ability of a BOC, when acting as a gateway provider, to limit the types of information to which its gateway connects. NYNEX suggests that this ability does not imply the type of "control" over the underlying information being  X!-transmitted and, therefore, does not constitute electronic publishing.<,!ZqC yO%-ԍxNYNEX at 7.< We seek comment on this interpretation. ""e,,-(-(ZZ'"Ԍ X-ԙXx 2.` ` Meaning of "Financial Interest" (#  X-x245.` ` We also seek comment on the meaning of the term "financial interest." We tentatively conclude that a BOC has a "financial interest" in the content of the information when the BOC owns the information or has a direct or indirect equity interest in the information being disseminated via its basic telephone services. We seek comment on this tentative conclusion. We also seek comment on other forms of BOC participation that should be considered indicia of "financial interest." For example, NYNEX maintains that a "financial interest" in the content of the information should not be interpreted to include receipt of compensation by a BOC for managing and presenting the content of unaffiliated entities as part of its gateway services. Alternatively, PacTel contends that a "financial interest" must be a legally protected property interest." We seek comment on these interpretations.  X -x246.` ` In addition, we seek comment on whether we should establish a de minimis exception to the financial interest requirement once financial interest has been established. For example, if a BOC has a financial interest in only one percent of the content of the information, should it be required to provide the electronic publishing service through a "separated affiliate" or "electronic publishing joint venture"? If not, should the BOC be required to do so if it has a financial interest of ten percent? We seek comment on the percentage of financial interest in an electronic publishing service, as defined in section  X-274(h), that makes a BOC subject to the requirements of section 274. )J:\POLICY\275\ELECPUB\FURTHER.MMC) #J:\POLICY\275\ELECPUB\B3SEC#  X-B.XxMeaning of "Transaction" in Section 274(b)(3) and the Requirements of Section 274(b)(3)(B)(#  X-  X-x247.` ` Section 274(b)(3) provides that a separated affiliate or electronic publishing joint venture established pursuant to section 274(a) and the BOC with which it is affiliated shall "carry out transactions (A) in a manner consistent with such independence, (B) pursuant to written contracts or tariffs that are filed with the Commission and made publicly available, and (C) in a manner that is auditable in accordance with generally accepted accounting  X9-standards."T-9qC yO-Ѝx47 U.S.C.  274(b)(3).T We note that the clause in section 274(b)(3)(B), "pursuant to written contracts or tariffs that are filed with the Commission," can be read to require the filing of both contracts and tariffs with the Commission, or only the filing of tariffs. In addition, the phrase "and made publicly available," could refer only to "tariffs" or also to "written contracts."  X-Although the Accounting Safeguards NPRM sought comment on section 274(b)(3), no commenters in that proceeding specifically addressed these issues regarding section  X!-274(b)(3)(B).n.!XqC {O%-ЍxSee Accounting Safeguards Notice at  110.n ""f.,-(-(ZZ'"Ԍ X-x248.` ` "Filed with the Commission." We seek comment on whether BOCs should be required under section 274(b)(3)(B) to file both written contracts and tariffs on Commission premises. We note that, pursuant to existing practice, BOCs are already required to file  X-tariffs with the Commission.N/qC yO4-Ѝx47 U.S.C.  203.N We also note that section 211 of the Communications Act imposes a general requirement on common carriers to "file with the Commission" copies of "contracts, agreements, or arrangements with other carriers, or with common carriers not  Xv-subject to the provisions of [the Communications Act]" relating to communications traffic.N0vXqC {O -ЍxId.  211.N Our rules implementing this section, however, require only that certain carriers file certain  XH-types of contracts with the Commission.Z1HqC {O -ЍxSee 47 C.F.R.  43.51.Z As to the remaining contracts within the scope of section 211, carriers are permitted to comply with section 211 by keeping the contracts on their premises such that they are readily accessible to Commission staff and members of the  X -public upon reasonable request."I2 |qC {O0-ԍxId.  43.51(c).I We invite parties to comment on whether we can and should adopt these procedures to implement the statutory language in section 274(b)(3)(B).  X -x249.` ` "Made Publicly Available." We tentatively conclude that section 274(b)(3)(B) requires that both written contracts and tariffs be made "publicly available." As noted above, BOCs are already required to make their tariffs and certain written contracts with other carriers publicly available by filing them with the Commission and make others contracts accessible upon reasonable request. We find that interpreting this section to require all contracts, as well as tariffs, to be made "publicly available," is necessary to ensure that BOCs are complying with the nondiscrimination and accounting safeguards of the Act and to enable competitors to detect discrimination and potential improper cost allocations by the BOCs. We seek comment on this tentative conclusion.  X-x250.` ` Assuming that section 274(b)(3)(B) does not require BOCs to file all their written contracts with separated affiliates or electronic publishing joint ventures on Commission premises, we seek comment on the means by which a BOC and its separated affiliate or electronic publishing joint venture must make their contracts "publicly available" pursuant to section 274(b)(3)(B). In interpreting a similar requirement in section 272(b)(5), which requires that BOCs and their section 272 affiliates reduce their transactions to writing  XN-and make them available for public inspection,R3ZNqC {O $-ЍxSee 47 U.S.C.  272(b)(5), providing that a separate affiliate required by section 272 "shall conduct all transactions with the [BOC] of which it is an affiliate on an arm's length basis with any such transactions reduced to writing and available for public inspection."R we found that a BOC must make information "available for public inspection" pursuant to that section by making it available at"7g0 3,-(-(ZZ" its corporate headquarters and not the RBOC corporate headquarters or the corporate  X-headquarters of the BOC's holding company.o4qC {Ob-ЍxAccounting Safeguards Order at  122 n.298.o We stated that this information must include a certification statement identical to the certification statement currently required to be included with all Automated Reporting and Management Information System ("ARMIS")  X-reports.05ZqC {O-ЍxSee, e.g., Automated Reporting Requirements for Certain Class A and Tier 1 Telephone Companies (Parts 31, 43, 67, and 69 of the FCC's rules), CC Docket No. 86182, Order, 4 FCC Rcd 1040, 1124. Such certification statement declares that an officer of the BOC has examined the submission and that to the best of the officer's knowledge all statements of fact contained in the submission are true and the submission is an accurate statement of the affairs of the BOC for the relevant period.0 We also concluded that detailed written descriptions of transactions between BOCs and their section 272 affiliates must be made available to the public on the Internet within ten  Xv-days of the transaction.m6v qC {O3-ЍxSee Accounting Safeguards Order at  122.m We therefore seek comment on whether, for written contracts within section 274(b)(3)(B) that we decide need not be filed on Commission premises, we should interpret the "publicly available" requirement of this section in the same manner as  X1-we interpreted the "available for public inspection" requirement in section 272(b)(5).71qC yO-ЍxWe note that section 272(b)(5) does not make any reference to filings with the Commission. Commenters disagreeing with this approach should explain why, and propose alternative approaches.  X -x251.` ` Meaning of "Transaction." We also seek comment on what constitutes a  X -"transaction" for purposes of section 274(b)(3).8 . qC {O-ЍxNo commenters addressed this issue in the Accounting Safeguards Order.ć We note that, for purposes of section 272(b)(5), we concluded that only once the BOC and its affiliate have agreed upon the terms and conditions for telephone exchange and exchange access does the agreement constitute a  Xy-"transaction."i9y qC {O-ЍxAccounting Safeguards Order at  124.i We also found that an agreement between a BOC and its affiliate for the provision of unbundled elements and facilities pursuant to explicit terms and conditions also  XK-constitutes a "transaction."D:KR qC {ON -ЍxId.D We seek comment here on whether we should adopt similar conclusions in the context of section 274(b)(3). We note, however, that section 274(d) requires BOCs to provide "network access and interconnections for basic telephone service to electronic publishers at just and reasonable rates that are tariffed (so long as rates for such services are subject to rate regulation)." We therefore tentatively conclude that, although section 274(b)(3)(B) provides that transactions must be carried out pursuant to "written contracts or tariffs," the specific transactions described in section 274(d) may only be carried"h:,-(-(ZZ" out pursuant to tariff (so long as such services are subject to rate regulation). We seek comment on this tentative conclusion.  X- C.xProcedural Matters  X- x1.` ` Ex Parte Presentations  X_-x252.` ` This Further Notice is a nonrestricted noticeandcomment rulemaking  XJ-proceeding. Ex parte presentations are permitted, in accordance with the Commission's rules,  X5-provided that they are disclosed as required.w;5qC {O -ԍxSee generally 47 C.F.R.  1.1200, 1.1202, 1.1204, 1.1206.w  X -Kx 2.` ` Regulatory Flexibility Certification  X -x253.` ` Section 603 of the Regulatory Flexibility Act, (RFA) as amended,C< ZqC yO-ԍx5 U.S.C.  603.C requires anK initial regulatory flexibility analysis in notice and comment rulemaking proceedings, unless we certify that "the rule will not, if promulgated, have a significant economic impact on a  X-substantial number of small entities."G=qC {O/-ԍxId.  605(b).G A "small entity" is an entity that is independently owned and operated; is not dominant in its field of operation; and meets any additional  Xf-criteria established by the Small Business Administration (SBA).>f|qC yO-ԍxThe RFA incorporates the definition of small business concerns set forth in 15 U.S.C.  632(a)(1). 5U.S.C.  601(3). SBA regulations define small telecommunications entities in SIC code 4813 (Telephone Companies Except Radio  X8-Telephone) as entities with fewer than 1,500 employees.I?8qC yO-ԍx13 C.F.R.  121.201. I This proceeding pertains to the BOCs which, because they are dominant in their field of operation and have more than 1,500  X -employees, do not qualify as small entities under the RFA.@ d qC {O- 1500 ׍xFederal Communications Commission, CCB, Industry Analysis Division, Preliminary Domestic  {O-Information From Statistics of Communications Common Carriers, Table 1.1 (July 1996). We also note that none of the BOCs is a small entity because each BOC is an affiliate of a Regional Holding Company  X-(RHC), and all of the BOCs or their RHCs have more than 1,500 employees.GA qC {OM#-ԍ 1500 xId.G We therefore certify, pursuant to section 605(b) of the RFA, that the tentative conclusions, if adopted, will not have a significant economic impact on a substantial number of small entities. The  X-Secretary shall send a copy of this Further Notice, including this certification and statement,"iR A,-(-(ZZ"  X-to the Chief Counsel for Advocacy of the Small Business Administration.FBqC yOy-ԍx5 U.S.C.  605(b).F A copy of this certification will also be published in the Federal Register.  X-x 3.` ` Initial Paperwork Reduction Act of 1995 Analysis  X-x254.` ` This Further Notice contains either a proposed or modified information collection. As part of its continuing effort to reduce paperwork burdens, we invite the general public and the OMB to take this opportunity to comment on the information collections  XJ-contained in this Further Notice, as required by the Paperwork Reduction Act of 1995, Pub. L. No. 10413. Public and agency comments are due at the same time as other comments on  X -this Further Notice; OMB comments are due 60 days from the date of publication of this  X -Further Notice in the Federal Register. Comments should address: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology.  XS-x 4.` ` Comment Filing Procedures  X%-x255.` ` Pursuant to applicable procedures set forth in Sections 1.415 and 1.419 of the Commission's rules, 47 C.F.R.  1.415, 1.419, interested parties may file comments on or before April 4, 1997, and reply comments on or before April 25, 1997. To file formally in this proceeding, you must file an original and six copies of all comments, reply comments, and supporting comments. If you want each Commissioner to receive a personal copy of your comments, you must file an original and eleven copies. Comments and reply comments should be sent to the Office of the Secretary, Federal Communications Commission, 1919 M Street, N.W., Room 222, Washington, D.C., 20554, with a copy to Janice Myles of the Common Carrier Bureau, 1919 M Street, N.W., Room 544, Washington, D.C., 20554. Parties should also file one copy of any documents filed in this docket with the Commission's copy contractor, International Transcription Services, Inc., 2100 M Street, N.W., Suite 140, Washington, D.C., 20037. Comments and reply comments will be available for public inspection during regular business hours in the FCC Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C., 20554.  X -x256.` ` Comments and reply comments must include a short and concise summary of the substantive arguments raised in the pleading. Comments and reply comments must also"!jXB,-(-(ZZ "  X-comply with Section 1.49 and all other applicable sections of the Commission's Rules.6C\qC {Oy-ԍxSee 47 C.F.R.  1.49. However, we require here that a summary be included with all comments and reply comments, regardless of length. This summary may be paginated separately from the rest of the pleading  {O -(e.g., as "i, ii").6 We also direct all interested parties to include the name of the filing party and the date of the filing on each page of their comments and reply comments. All parties are encouraged to utilize a table of contents, regardless of the length of their submission. Parties may not file  X-more than a total of ten (10) pages of ex parte submissions, excluding cover letters. This 10  X-page limit does not include: (1) written ex parte filings made solely to disclose an oral ex  Xz-parte contact; (2) written material submitted at the time of an oral presentation to Commission staff that provides a brief outline of the presentation; or (3) written materials  XN-filed in response to direct requests from Commission staff. Ex parte filings in excess of this limit will not be considered as part of the record in this proceeding.  X -x257.` ` Parties are also asked to submit comments and reply comments on diskette. Such diskette submissions would be in addition to, and not a substitute for, the formal filing requirements addressed above. Parties submitting diskettes should submit them to Janice Myles of the Common Carrier Bureau, 1919 M Street, N.W., Room 544, Washington, D.C., 20554. Such a submission should be on a 3.5 inch diskette formatted in an IBM compatible form using MS DOS 5.0 and WordPerfect 5.1 software. The diskette should be submitted in "read only" mode. The diskette should be clearly labelled with the party's name, proceeding, type of pleading (comment or reply comments) and date of submission. The diskette should be accompanied by a cover letter.  X%-x258.` ` Written comments by the public on the proposed and/or modified information collections are due April 4, 1997, and reply comments must be submitted not later than April 25, 1997. Written comments must be submitted by the OMB on the proposed and/or modified information collections on or before 60 days after date of publication in the Federal Register. In addition to filing comments with the Secretary, a copy of any comments on the information collections contained herein should be submitted to Dorothy Conway, Federal Communications Commission, Room 234, 1919 M Street, N.W., Washington, D.C., 20554, or via the Internet to dconway@fcc.gov, and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 17th Street, N.W., Washington, D.C., 20503 or via the Internet to  XV-fain_t@al.eop.gov. # J:\POLICY\275\ELECPUB\B3SEC# & J:\POLICY\275\ELECPUB\ORDERING& T  X(-VIII. ORDERING CLAUSES ă  X-x259.` ` Accordingly, IT IS ORDERED that pursuant to sections 1, 2, 4, 201, 202, 260, 274 and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.  151, 152, 154, 201, 202, 260, 274, and 303(r), the REPORT AND ORDER IS ADOPTED, and the requirements contained herein will become effective 30 days after publication of a summary"!kC,-(-(ZZ&" in the Federal Register. The collection of information contained within is contingent upon approval by the OMB.  X-x260.` ` IT IS FURTHER ORDERED that the Secretary shall send a copy of this REPORT AND ORDER, including the final regulatory flexibility certification, to the Chief Counsel for Advocacy of the Small Business Administration, in accordance with paragraph  Xv-605(b) of the Regulatory Flexibility Act, 5 U.S.C.  601 et seq.  XJ-x261. ` ` IT IS FURTHER ORDERED that pursuant to sections 1, 2, 4, 201, 202, 274 and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.  151, 152, 154, 201, 202, 274, and 303(r), the FURTHER NOTICE OF PROPOSED RULEMAKING IS ADOPTED.  X -x262.` ` IT IS FURTHER ORDERED that the Secretary shall send a copy of the FURTHER NOTICE OF PROPOSED RULEMAKING, including the regulatory flexibility certification, to the Chief Counsel for Advocacy of the Small Business Administration, in  X-accordance with paragraph 603(a) of the Regulatory Flexibility Act, 5 U.S.C.  601 et seq. x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhWilliam F. Caton x` `  hhActing Secretary &J:\POLICY\275\ELECPUB\ORDERING& (J:\POLICY\275\ELECPUB\LISTOF.COM( " lC,-(-(ZZ"  X- T*5Appendix # List of Commenters in CC Docket No. 96152  X- Alarm Detection Systems, Inc. Alarm Industry Communications Committee Alert Holding Group, Inc. Ameritech Association of Directory Publishers (ADP) Association of Telemessaging Services International (ATSI) AT&T Corporation (AT&T) Atlas Security Service, Inc. Bell Atlantic Telephone Companies (Bell Atlantic) BellSouth Corporation (BellSouth) Checkpoint Ltd. Cincinnati Bell Telephone (Cincinnati Bell) Commercial Instruments & Alarm Systems, Inc. Commonwealth Security Systems, Inc. ElectroSecurity Corporation Entergy Technology Holding Company George Alarm Company, Inc. Information Industry Association (IIA)  X-Joint PartiesCdqC yO-ԍxBell Atlantic and Newspaper Association of America d MCI Telecommunications Corporation (MCI) Merchant's Alarm Systems Midwest Alarm Morse Signal Devices National Security Service New York State Department of Public Service (New York Commission) Newspaper Association of America (NAA) NYNEX Corporation (NYNEX) Pacific Telesis Group (PacTel) Peak Alarm People of the State of California/California PUC (California Commission) Per Mar Security Services Post Alarm Systems Rodriguez, Francisco Safe Systems Safeguard Alarms, Inc. SBC Communications, Inc. (SBC)"#m ,-(-(ZZe""ԌSDA Security Systems, Inc. Security Systems by Hammond, Inc. Sentry Alarm Systems of America, Inc. Sentry Protective Systems Smith Alarm Systems Superior Monitoring Service, Inc. SVI Systems, Inc. Time Warner Cable (Time Warner) United States Telephone Association (USTA) U S West, Inc. (U S WEST) Valley Burglar & Fire Alarm Co., Inc. Vector Security VoiceTel Wayne Alarm Systems Yellow Pages Publishers Association (YPPA) (J:\POLICY\275\ELECPUB\LISTOF.COM(