Table of Contents

Index of Full Citations

Summary of Evaluation

Introduction

1. The State of Competition in Louisiana

2. BellSouth's Requirement That New Entrants May Combine UNEs Only Through Collocation Imposes Unnecessary Costs, Delay and Technical Obstacles

   1. BellSouth's Policy of Requiring Collocation for Combining UNEs Inevitably Imposes Unnecessary Costs and Technical Obstacles on Competitors

   2. BellSouth Has Not Demonstrated That It Would Be Capable of Providing UNEs in a Manner Permitting Them to Be Combined In a Timely and Reliable Fashion Using Its Collocation Arrangements

3. BellSouth Has Not Demonstrated That Its Current or Future Prices for Unbundled Network Elements Will Permit Entry or Effective Competition by Efficient Firms

4. BellSouth Has Failed To Demonstrate That Its Wholesale Support Processes Are Adequate To Ensure An Open Market

   1. Inadequacies in BellSouth's Evidence from Actual Commercial Usage

   2. Inadequacies in BellSouth's Evidence from Testing

   3. Lack of Benchmarks or Other Guarantees of Future Performance

5. BellSouth's "Public Interest" Arguments Do Not Justify Approval of This Application 40

6. Conclusion

Index of Full Citations

Based upon the record before us, BellSouth's second application to provide in-region interLATA service in Louisiana should be denied because BellSouth has not yet satisfied the requirements of section 271 of the Telecommunications Act of 1996.

Applications under section 271 should be granted only when the local markets in a state have been fully and irreversibly opened to competition. This standard seeks to ensure that the barriers to competition that Congress sought to eliminate in the 1996 Act have in fact been fully eliminated and that there are objective criteria to ensure that competing carriers will continue to have nondiscriminatory access to the facilities and services they will need from the incumbent BOC.

At the time of BellSouth's first section 271 application in Louisiana, there was no significant competition in Louisiana, and there were critical barriers that impeded the growth of competition. In the nine months since the first application was filed, there have been encouraging developments in competition by resellers and facilities-based entrants, but the market penetration of those competitors is still quite modest, and not all barriers have been removed for these types of competition. Most significantly, however, there is still virtually no competition in Louisiana through the use of unbundled network elements, and every reason to believe there would be such competition if most of the impediments, which we discussed in our previous evaluation, were not still in place.

As before, BellSouth has failed to demonstrate that it offers access to unbundled network elements in a manner that allows requesting carriers to combine such elements in order to provide telecommunications service, as required by the 1996 Act. Similarly, in a few significant areas, such as geographic deaveraging and collocation pricing, BellSouth has again failed to demonstrate that its prices permit entry and effective competition by efficient competitors.

Despite a number of encouraging improvements since its earlier applications in South Carolina and Louisiana, BellSouth has not yet demonstrated that it has developed and deployed wholesale support processes that are adequate to ensure an open market. BellSouth's evidence based on actual commercial usage is unconvincing because of the relatively small volume of transactions processed by those systems, the absence of data measuring some important dimensions of performance, and indications of inadequate performance in some of BellSouth's performance data. Likewise, BellSouth's testing evidence does not overcome these problems because in critical respects it either fails to address certain key issues or does so only in a conclusory fashion. Even if BellSouth could overcome these problems, the lack of performance commitments or enforceable benchmarks suggests that the current limited development of local competition in Louisiana has not yet been shown to be irreversible.

Finally, in light of our determination that BellSouth's local markets have not been fully and irreversibly opened to competition, we conclude once again that the potential for competitive benefits in markets for interLATA services does not justify approving this application. BellSouth's estimates of the magnitude of those benefits rest on unconvincing analytical and empirical assumptions, but more importantly, its analysis fails to give adequate consideration to the more substantial benefits from increased competition in local markets that will be gained by requiring that local markets be opened before allowing interLATA entry.