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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).
NEWSReport No. CC 97-60
COMMON CARRIER ACTION
COMMISSION DENIES BELLSOUTH'S APPLICATION TO PROVIDE LONG DISTANCE SERVICES IN SOUTH CAROLINA;
Cites BellSouth's 911 and Telemarketing Script as Complying With Act
In an Order released today, the Commission denied the application of BellSouth to provide long distance services originating in the State of South Carolina. While recognizing the progress BellSouth has made towards opening its local markets to competition, the Commission concluded that BellSouth has not met the requirements of the Communications Act for a Bell Operating Company (BOC) to enter the long distance market in a state within its local service region. In addition, the Commission provided further guidance to BellSouth and the other BOCs on meeting these requirements.
Under section 271 of the Communications Act, a BOC that applies for authority to offer in-region long distance service must show that: 1) it has fully implemented the 14-point competitive checklist, which enables BOC competitors to connect with and gain access to elements of the local network; 2) its long distance services will be provided in accordance with the structural separation and nondiscrimination requirements in section 272; and 3) its entry into the long distance market is consistent with the public interest.
The Commission concluded that BellSouth failed to meet the competitive checklist. First, the Commission found that BellSouth failed to show that it currently provides to competing carriers nondiscriminatory access to its operations support systems (OSS). OSS refers to a variety of systems that enable a local telephone company to provide services to its customers, such as pre-ordering and ordering, installation, repair and maintenance, and billing. Competitors that resell a BOC's local telephone services or lease elements of the BOC's telephone network to provide local service are vitally dependent on access to a BOC's OSS to provide a level of local service to their customers comparable to that which the BOC provides.
The Commission concluded that BellSouth did not demonstrate that it provides competitors access to its OSS that is equivalent to that which BellSouth provides to itself in connection with its own retail telephone services. As a result, competitors are much more likely to experience errors and delays when performing pre-ordering functions, such as the confirmation of customer information or the assignment of telephone numbers, than BellSouth experiences in performing its own pre-ordering and ordering functions. Similarly, the process BellSouth uses to handle competitors' orders is significantly more prone to error and delay than the process that BellSouth uses to handle its own retail orders. In addition, the Commission found that BellSouth does not provide to competitors information on the status of their orders as quickly as it does for its own retail orders. Further, BellSouth did not include information in its application that compares the average time it takes to provide service to its own retail customers with the average time it takes to provide resale service to its competitors' customers.
Second, the Commission concluded that BellSouth failed to show that it is providing access to portions of its network, or "unbundled network elements," in a manner that allows competing carriers to combine these elements to provide service. Specifically, the Commission found that BellSouth's statement of generally available terms fails to include definite terms and conditions addressing the manner in which competitors may combine network elements. The statement identifies only one method by which competitors may have access to network elements for purposes of combining those elements. The Commission concluded that BellSouth did not demonstrate that this method would be performed in a timely manner or that the resulting provision of combined elements would be of an acceptable level of quality.
Third, the Commission concluded that BellSouth's failure to offer certain individually tailored customer contracts, or Contract Service Arrangements (CSAs), at a wholesale discount to competing carriers is in violation of the Communications Act and the Commission's implementing regulations. The Commission expressed concern that since a significant percentage of BellSouth's high-volume customers have already been moved to CSAs, competing carriers may be prevented from effectively competing for that segment of the local exchange market.
BellSouth filed its application on September 30, 1997 for authorization under section 271 of the Communications Act to provide long distance services originating in South Carolina. Under section 271, the Commission had 90 days to issue a determination on BellSouth's application. In making its determination, the Commission consulted with the South Carolina Commission and the Department of Justice. While the South Carolina Commission recommended approval of BellSouth's application, the Department of Justice found that BellSouth's application did not meet the statutory requirements for authorization to provide in-region long distance services.
Section 271 of the Communications Act allows the BOCs to provide long distance services originating in the states where they currently provide local exchange and exchange access services once they satisfy certain statutory requirements. A BOC applicant must demonstrate either that: A) one or more unaffiliated competing providers of local telephone service to residential and business subscribers is connected to the BOC's network, and that such local telephone service is being "offered by such competing providers either exclusively over their own telephone exchange service facilities or predominantly over their own telephone exchange service facilities in combination with the resale of the telecommunications services of another carrier" (commonly referred to as "Track A"); or B) if no potential competing provider has requested to connect to a BOC's network, the BOC has a statement of generally available terms and conditions in place demonstrating that it is ready to allow potential competitors to connect to its facilities (commonly referred to as "Track B").
BellSouth filed its application under Track B. In addition to finding that BellSouth failed to satisfy the competitive checklist, the Commission found that BellSouth is not eligible to proceed under Track B at this time. The Commission stated that BellSouth has received requests from potential competitors to connect to its network that, if implemented, will lead to the provision of competing local telephone service to residential and business customers.
The Commission stated that, in light of its conclusion that BellSouth has not demonstrated that it satisfies the competitive checklist or is eligible under Track B, it has denied BellSouth's application. Nevertheless, in an effort to provide further guidance to BellSouth and other BOCs, the Commission examined other aspects of BellSouth's application and cited areas where BellSouth did meet statutory requirements.
The Commission, for example, concluded that BellSouth demonstrated that it offers nondiscriminatory access to its 911 and E911 services. This is the first time the Commission has found that a BOC has met a requirement of the competitive checklist in an application to provide in-region long distance services.
Moreover, the Commission found that BellSouth's inbound telemarketing script is consistent with the Communications Act. The Commission concluded that a BOC, during an inbound telephone call, may recommend its own long distance affiliate, as long as it contemporaneously states that other carriers also provide long distance service and offers to read to the customer a list of all available long distance carriers in random order.
Finally, though the Commission denied BellSouth's application, it stated that BellSouth has made progress in opening its local market to competition and commended BellSouth for the efforts that it has made thus far.
Action by the Commission December 24, 1997, by Memorandum Opinion and Order (FCC 97-418). Chairman Kennard, Commissioners Ness, Furchtgott-Roth, Powell, and Tristani, with Chairman Kennard and Commissioners Ness, Furchtgott-Roth, and Powell each issuing separate statements.
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News media contact: Rochelle Cohen at (202) 418-0253.
Common Carrier Bureau contact: Michael Pryor at (202) 418-1580.