| FEDERAL REPORT
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| RE: FEDERAL REGULATORY REPORT DATE: DECEMBER 8, 1999 ______________________________________________________________________________ Set forth below is the Federal Regulatory Report for the December December 9, 1999, meeting of the Board of Directors of the Telecommunications Resellers Association: Major Occurrences: • Advanced Services Resale: In a major victory for the resale industry, the FCC has ordered incumbent local exchange carriers to make xDSL-based advanced services available at wholesale rates for resale. Agreeing with TRA, the FCC declared that “advanced services sold at retail by incumbent LECs to residential and business end-users are subject to the section 251 (c)(4) discounted resale obligation, without regard to their classification as telephone exchange service or exchange access service.” Unfortunately, at the same time the FCC afforded the resale industry the right to obtain xDSL services at wholesale rates, it created a loophole which incumbent LECs can use in their continuing efforts to deny resale carriers discounted access to these critical services. Thus, the FCC absolved incumbent LECs of their obligation to offer at wholesale rates for resale those xDSL-based advanced services they sell to Internet service providers “as an input component to the Internet Service Providers’ retail Internet service offerings.” The impact of this loophole will depend in large part on whether incumbent LECs also make volume and term offerings of xDSL services available to business end-users. The FCC has declared that xDSL services offered “directly to business end-user subscribers under arrangements where the end-user makes volume and term commitments and pays discounted rates” are telecommunications services provided at retail. TRA is currently evaluating whether to lodge an appeal of the FCC’s ruling to the extent it denies resale carriers the right to obtain discounted access to those xDSL-based advanced services offered to ISPs. • Line Sharing: In another major victory for competition, the FCC has directed incumbent local exchange carriers to implement “line sharing” by unbundling the high- frequency portion of the local loop and making it available to competitors as an unbundled network element. Line sharing will allow competitive providers of DSL-based advanced services to provide such services on lines over which incumbent LECs provides voice service, eliminating the need to purchase a separate line. Operational issues are to be resolved within a six month window, although the FCC has already relieved incumbent LECs of certain responsibilities, such as any requirement to provide access to the high- frequency portion of a loop over which they are not providing voice service or to allow multiple carriers to share a single line. The FCC will provide pricing guidelines for state regulators, who will set rates for the new UNE, and is encouraging the use of interim rates pending completion of requisite cost analyses. • SBC/Ameritech Merger: TRA has appealed that portion of the FCC’s order approving the SBC/Ameritech merger which relieved the surviving company of any requirement to offer xDSL-based advanced services at wholesale rates for resale. TRA has argued that the FCC, in so doing, acted arbitrarily and capriciously, abused its discretion and violated the Communications Act. TRA is the only appellant in this action, although CompTel and AT&T have intervened. • MCI WorldCom/Sprint Merger: In a voluminous application submitted last month, MCI WorldCom and Sprint formally requested FCC approval of their proposed merger. In their filing, the applicants urge the FCC to sanction their combination in order to “produce a new, strengthened competitor able to offer residential customers and businesses an independent, competitive alternative for a full spectrum of voice and data services across all distances utilizing an array of narrowband and broadband, wireline and wireless distribution media.” With respect to concerns raised regarding potential adverse impacts of the proposed merger on the wholesale long distance market, however, MCI WorldCom and Sprint offer no commitments, declaring instead that “numerous sources of supply are available to resellers” and that “retail carriers with established customer bases and better known brands . . . have an incentive to provide . . . [wholesale] services.” Indeed, the applicants urge the Commission not to evaluate the wholesale long distance market as a separate market segment, declining to acknowledge their disproportionately large combined share of that market. With respect to wireless, local exchange and broadband services, MCI WorldCom and Sprint simply do not address the impact of their proposed merger on resale providers. The FCC has not yet called for public comment on the MCI WorldCom/Sprint application, although it will likely do so in the near future. • Regulation of Incumbent LECs: Agreeing with TRA and other representatives of the competitive industry, the FCC has denied various petitions filed by incumbent local exchange carriers seeking additional pricing flexibility in their provision of certain special access and high capacity dedicated transport services in key geographic markets. The petitioning incumbent LECs had argued that they no longer possessed market power in these market segments and hence should not be regulated as dominant providers. The FCC concluded that the petitioners had failed to demonstrate that sufficient competition exists to preclude anti-competitive conduct even in the largest special access and high- capacity dedicated transport markets. • Access for the Disabled: New rules adopted by the FCC to enhance access to telecommunications equipment and services for the disabled are scheduled to go into effect on January 28, 2000, with potentially significant ramifications for both telecommunications equipment manufacturers and service providers. The new rules, which apply to non-facilities-based, as well as facilities-based, carriers, require service providers to ensure that their services are accessible to and usable by individuals with disabilities, if readily achievable, and if such requirements are not readily achievable, to ensure that their services are compatible with existing peripheral devices or specialized customer premises equipment commonly used by individuals with disabilities to achieve access, also if readily achievable. Pertinent disabilities include both physical and mental impairments. Accessability requires the ability to make full use of the service, while the “readily achievable” standard implicates not only the cost and nature of the required action, but the overall resources available to the service provider, including potentially those available to its corporate parent. Impacted services include not only traditional telecommunications services, but such ancillary services as voice mail and electronic mail. • UNE Loops: As an interim measure, pending final resolution of the matter, the FCC has prohibited interexchange carriers from converting special access services to unbundled loops and transport network element combinations, although it declined to apply this constraint to an IXC that uses network element combinations to provide a significant amount of local exchange service, in addition to exchange access, to a particular customer. In a related matter, the FCC has identified May 1, 2000 as the date on which its stay of its deaveraging rules for unbundled network elements will be lifted. By this date, states will be required to establish different rates for interconnection and UNEs in at least three geographic areas. Following the last Board Meeting, TRA made the following filings with the FCC: • Comments, filed with the FCC on December 3, 1999, in which TRA supported efforts by the Commission to obtain data necessary to accurately assess the development of local telephone service competition and the deployment of advanced telecommunications capabilities, Local Competition and Broadband Reporting, CC Docket No. 99-301. • Comments, filed with the FCC on December 2, 1999, in which TRA supported proposals to modify Commission-adopted safeguards of customer proprietary network information to the extent that they hinder the marketing efforts of competitive providers, Implementation of Telecommunications Act of 1996, Telecommunications Carriers’ Use of Customer Proprietary Network Information and Other Customer Information, CC Docket Nos. 96-115 and 96-149. • Opposition, filed with the FCC on December 1, 1999, in which TRA opposed incumbent LEC petitions urging the Commission to reconsider its elimination of the low-end adjustment mechanism for those price-cap local exchange carriers that qualify for, and choose to exercise, enhanced pricing flexibility, Access Charge Reform, CC Docket Nos. 96-262, 94-1, and 98-157 and CCB/CPD File No. 98-63. • Reply Comments, filed with the FCC on November 30, 1999, in which TRA, among other things, opposed capacity-based local and tandem switching charges and geographic deaveraging of traffic-sensitive charges, and supported proposals to modify the local exchange carrier price cap mechanism to bestow on interexchange carriers the benefits of demand growth for access services, Access Charge Reform, CC Docket Nos. 96-262, 94-1, and 98-157 and CCB/CPD File No. 98-63. • Comments, filed with the FCC on November 12, 1999, in which TRA commented on an integrated package of interstate access charge reforms jointly proposed by AT&T, Sprint and several large incumbent local exchange carriers, Access Charge Reform, CC Docket Nos. 96-262, 94-1, 99-249, and 96-45. • Comments, filed with the FCC on November 2, 1999, in which TRA addressed potential regulation of originating and terminating access charges assessed by competitive local exchange carriers, Access Charge Reform, CC Docket Nos. 96-262, 94-1, and 98-157 and CCB/CPD File No. 98-63. Following the last Board Meeting, TRA made the following filings with the Federal Appellate Courts: • Docketing Statement, Certificate of Counsel and Issues Statement, filed with the U.S. Court of Appeals for the District of Columbia Circuit on December 9, 1999, in which TRA confirmed the basis for its appeal of that portion of the FCC’s order approving the merger of SBC Communications and Ameritech which relieved the surviving company of its obligation to make xDSL-based advanced services available at wholesale rates for resale, Telecommunications Resellers Association v. FCC, Case No. 99-1441. • Motion for Leave to Intervene, filed with the U.S. Court of Appeals for the District of Columbia Circuit on December 9, 1999, in which TRA signaled its intention to participate in the pending appeal of the FCC’s reaffirmation of its non-accounting safeguards as applied to Bell Operating Companies pursuant to Section 272 of the Communications Act, Bell Atlantic. v. FCC, Case No. 99-1479. • Motion for Leave to Intervene, filed with the U.S. Court of Appeals for the District of Columbia Circuit on December 9, 1999, in which TRA signaled its intention to participate in the pending appeal of the FCC’s implementation of the decision of the U.S. Court of Appeals for the Fifth Circuit’s decision reversing key elements of the Commission’s universal service funding mechanism, AT&T Corp. v. FCC, Case No. 99-1468 • Letter, filed with the U.S. Court of Appeals for the Eighth Circuit on December 6, 1999, in which TRA joined with other competitive carriers in responding to local exchange carrier mischaracterizations of the FCC’s UNE Remand Order, Southwestern Bell Telephone Company v. FCC, Case Nos. 97-3389, 97-3576, and 97-3663. • Statement of Position, filed with the U.S. Court of Appeals for the D.C. Circuit on December 3, 1999, in which TRA identified the positions it would espouse in the pending appeal of the FCC order granting incumbent local exchange carriers increased pricing flexibility, MCI WorldCom, Inc. v. FCC, Case No. 99-1395 (and consolidated cases). • Opposition, filed with the U.S. Court of Appeals for the District of Columbia Circuit on November 29, 1999, in which TRA opposed a motion urging the Court to partially lift its current stay of the FCC’s rules absolving from liability for up to 30 days’ of carrier charges any consumer who alleges that he or she has been slammed, MCI WorldCom, Inc. v. FCC, Case No. 99-1125. • Joint Brief, filed with the U.S. Court of Appeals for the District of Columbia Circuit on November 9, 1999, in which TRA joined with other competitive carriers in opposing the FCC’s mandatory detariffing policy, MCI Telecommunications Corp. v. FCC, Case No. 96-1459 (and consolidated cases). • Motion for Leave to Intervene, filed with the U.S. Court of Appeals for the District of Columbia Circuit on November 8, 1999, in which TRA signaled its intention to participate in the pending appeal of the FCC’s rules safeguarding carrier confidential data and customer proprietary network information, AT&T Corp. v. FCC, Case No. 99-1413. • Notice of Appeal, filed with the U.S. Court of Appeals for the District of Columbia Circuit on November 8, 1999, in which TRA initiated an appeal of that portion of the FCC’s order approving the merger of SBC Communications and Ameritech which relieved the surviving company of its obligation to make xDSL-based advanced services available at wholesale rates for resale, Telecommunications Resellers Association v. FCC, Case No. 99- 1441. Upcoming (in December/January) TRA Filings with the FCC: • Reply Comments, to be filed with the FCC on December 13, 1999, in which TRA will counter incumbent local exchange carrier support for petitions urging the Commission to reconsider its elimination of the low-end adjustment mechanism for those price-cap local exchange carriers that qualify for and choose to exercise pricing flexibility, Access Charge Reform, CC Docket Nos. 96-262, 94-1, and 98-157 and CCB/CPD File No. 98-63. • Reply Comments, to be filed with the FCC on December 13, 1999, in which TRA will respond to comments of other parties addressing matters raised in the Commission’s Notice of Inquiry regarding adverse impacts of state and local rights-of-way and tax policies on facilities-based competition, Promotion of Competitive Networks in Local Telecommunications Markets, WT Docket No. 99-217 and CC Docket No. 96-98. • Comments, to be filed with the FCC on December 17, 1999, in which TRA will address pending requests to extend the sunset date for the structural, non-discrimination, and other safeguards governing Bell Operating Company provision of in-region, interLATA information services, Requests for Extension of Sunset Date of Safeguards Governing Bell Operating Company Provision of In-Region, InterLATA Information Services, CC Docket No. 96- 147. • Reply Comments, to be filed with the FCC on December 15, 1999, in which TRA will address the comments of other parties on schedules and procedures for phasing out or eliminating the interim hold-harmless provision of the Commission’s new forward-looking high-cost support mechanism for non-rural carriers, Federal-State Joint Board on Universal Service, CC Docket No. 96-45. • Comments, to be filed with the FCC on December 17, 1999, in which TRA will address issues raised by the Commission regarding factors limiting telecommunications deployment and subscribership in unserved and underserved areas, Federal-State Joint Board on Universal Service, CC Docket No. 96-45. • Ex Parte Submission, to be filed with the FCC in December, in which TRA will address additional materials regarding Bell Atlantic’s compliance with Section 271 submitted by the New York Public Service Commission, Application of New York Telephone Company (d/b/a Bell Atlantic - New York, Bell Atlantic Communications, Inc., NYNEX Long Distance Company, and Bell Atlantic Global Networks, Inc. for Authorization to Provide In-region, InterLATA Services in New York, CC Docket No. 99-295. • Joint Request for Expedited Rulemaking, to be filed with the FCC in December, in which TRA will join with other members of the interexchange community in urging the Commission to endorse, and require participation in, an industry-funded and directed third party administrator to serve as a clearinghouse for the receipt and adjudication of slamming complaints, Implementation of the Subscriber Carrier Selection Changes Provisions of the Telecommunications Act of 1996, Policies and Rules Concerning Unauthorized Changes of Consumers’ Long Distance Carriers, CC Docket No.94-129. • Reply Comments, to be filed with the FCC on December 20, 1999, in which TRA will respond to comments of other parties addressing efforts by the Commission to obtain data necessary to accurately assess the development of local telephone service competition and the deployment of advanced telecommunications capabilities, Local Competition and Broadband Reporting, CC Docket No. 99-301. • Comments, to be filed with the FCC on December 30, 1999, in which TRA will address issues involving the manner in which the local exchange carrier price cap productivity factor should be represcribed to address the concerns voiced by the U.S. Court of Appeals for the District of Columbia Circuit, Price Cap Performance Review for Local Exchange Carriers, CC Docket Nos. 94-1 and 96-262. • Motion for Stay, to be filed with the FCC in January, 2000, in which TRA will ask the Commission to stay the effectiveness of that portion of the FCC’s order approving the merger of SBC Communications and Ameritech which relieved the surviving company of its obligation to make xDSL-based advanced services available at wholesale rates for resale, Ameritech Corporation, Transferor, and SBC Communications Inc., Transferee, for Consent to Transfer Control of Corporations Holding Commission Licenses and Authorizations Pursuant to Sections 214 and 310(d) of the Communications Act and Parts 5, 22, 24 25, 63, 90, 95, and 101 of the Commission’s Rules, CC Docket No. 98-141. • Comments, to be filed with the FCC on January 11, 2000, in which TRA will address petitions seeking reconsideration of the Commission’s determination that incumbent local exchange carriers do not have the obligation to forward the subscriber listings of competitive local providers to competing directory listing publishers, Implementation of the Telecommunications Act of 1996 Telecommunications Carriers’ Use of Customer Proprietary Network Information and Other Customer Information, CC Docket Nos. 96-115, 96- 98 and 99-273. • Comments, to be filed with the FCC on January 12, 2000, in which TRA will address the lawfulness of use restrictions as applied to the unbundled availability of transport facilities when used in conjunction with switching to originate and terminate toll traffic to customers to whom the requesting carrier does not provide local service, Promotion of Competitive Networks in Local Telecommunications Markets, CC Docket No. 96-98. • Comments, to be filed with the FCC on January 13, 2000, in which TRA will address the applicability of the Commission’s newly-adopted rules requiring disabled access to telecommunications equipment and services to Internet Telephony and hardware and software ancillary to the network, Implementation of Sections 255 and 251(a)(2) of the Communications Act of 1934, as Enacted by the Telecommunications Act of 1996, WT Docket No. 96-198. • Reply Comments, to be filed with the FCC on January 14, 2000, in which TRA will respond to comments of other parties addressing issues involving the manner in which the local exchange carrier price cap productivity factor should be represcribed to address the concerns voiced by the U.S. Court of Appeals for the District of Columbia Circuit, Price Cap Performance Review for Local Exchange Carriers, CC Docket Nos. 94-1 and 96-262. • Reply Comments, to be filed with the FCC on January 19, 2000, in which TRA will respond to comments of other parties addressing issues raised by the Commission regarding factors limiting telecommunications deployment and subscribership in unserved and underserved areas, Federal-State Joint Board on Universal Service, CC Docket No. 96-45. • Reply Comments, to be filed with the FCC on January 21, 2000, in which TRA will reply to comments addressing petitions seeking reconsideration of the Commission’s determination that incumbent local exchange carriers do not have the obligation to forward the subscriber listings of competitive local providers to competing directory listing publishers, Implementation of the Telecommunications Act of 1996 Telecommunications Carriers’ Use of Customer Proprietary Network Information and Other Customer Information, CC Docket Nos. 96-115, 96-98 and 99-273. • Ex Parte Submission, to be filed with the FCC in January, 2000, in which TRA will discuss the impact of the Commission’s treatment of voice mail services in its order addressing disabled access to telecommunications equipment and services on TRA’s pending petition to require the availability at wholesale rates for resale of voice mail services, Price Cap Petition for Declaratory Ruling of the Telecommunications Resellers Association that Incumbent Local Exchange Carriers are Required to Make Voice Messaging Services Available for Resale at Wholesale Rates, CCB/CPD 98-16. • Comments, to be filed with the FCC in January, 2000, in which TRA will address the impact of the proposed merger of MCI WorldCom and Sprint on the wholesale market for interexcahnge and other telecommunications services, Sprint Corporation, Transferor, and MCI WorldCom, Inc., Transferee, for Consent to Transfer Control of Corporations Holding Commission Licenses and Authorizations Pursuant to Sections 214 and 310(d) of the Communications Act and Parts 5, 22, 24 25, 63, 90, 95, and 101 of the Commission’s Rules, CC Docket No. 99-333. • Opposition, to be filed with the FCC in January, 2000, in which TRA will oppose SBC Communications’ application for authority to provide in-region, interLATA services within the State of Texas, Application of SBC Communications, Inc. et al for Authorization to Provide In-region, InterLATA Services in Texas, CC Docket No. 00-___. • Petition for Reconsideration, to be filed with the FCC in January, 2000, in which TRA will urge the Commission, among other things, to reconsider limitations imposed on the unbundled available of local switching, Promotion of Competitive Networks in Local Telecommunications Markets, CC Docket No. 96-98. Upcoming (in December/January) TRA Federal Appellate Court Filings: • Reply to Dispositive Motions, filed with the U.S. Court of Appeals for the District of Columbia Circuit in January, 2000, in which TRA will counter challenges to its appeal of that portion of the FCC’s order approving the merger of SBC Communications and Ameritech which relieved the surviving company of its obligation to make xDSL-based advanced services available at wholesale rates for resale, Telecommunications Resellers Association v. FCC, Case No. 99-1441. • Motion for Leave to Intervene, to be filed with the U.S. Court of Appeals for the Tenth Circuit in January, 2000, in which TRA will signal its intention to participate in the pending appeal of the FCC’s refusal to provide certain incumbent local exchange carriers with additional flexibility in pricing certain special access and high capacity dedicated transport services in key geographic markets, U S West v. FCC, Case No. 99-9544. • Motion for Stay, to be filed with the U.S. Court of Appeals for the District of Columbia Circuit in January, 2000, in which TRA will ask the Court to stay the effectiveness of that portion of the FCC’s order approving the merger of SBC Communications and Ameritech which relieved the surviving company of its obligation to make xDSL-based advanced services available at wholesale rates for resale, Telecommunications Resellers Association v. FCC, Case No. 99-1441. • Intervenors’ Brief, to be filed with the U.S. Court of Appeals for the 10th Circuit on January 26, 2000, in which TRA will join with other competitive carriers in supporting the FCC’s number portability requirements, U S WEST, Inc. v. FCC, Case No. 9518. • Petition for Review, to be filed with the U.S. Court of Appeals for the District of Columbia Circuit in January, 2000, in which TRA will challenge the FCC’s ruling absolving incumbent LECs of their obligation to offer at wholesale rates for resale those xDSL-based advanced services they sell to Internet service providers as an input component to the Internet Service Providers’ retail Internet service offerings, Telecommunications Resellers Association v. FCC, Case No. 00-____. * * * * * * * * * Please feel free to call if you have any questions or would like to discuss any of the above-referenced matters. |