*Pages 1--5 from Microsoft Word - 12286.doc* Federal Communications Commission DA 01- 2351 Before the Federal Communications Commission Washington, D. C. 20554 ) In the Matter of ) ) Verizon ) Petition for Limited Modification of LATA ) Boundary to Provide Expanded Local ) File No. NSD- L- 01- 76 Calling Service (ELCS) ) MEMORANDUM OPINION AND ORDER Adopted: October 12, 2001 Released: October 12, 2001 By the Acting Chief, Network Services Division, Common Carrier Bureau: I. INTRODUCTION 1. On March 26, 2001, Verizon Pennsylvania, Inc. (Verizon), pursuant to Section 3( 25) of the Communications Act of 1934, as amended, 1 filed a pet it ion to provide one- way expanded local calling service (ELCS) from the Lehighton exchange to the Palmerton exchange. 2 Verizon’s petition requests a limited modificat ion of a local access and transport area (LATA) boundary. 3 The petition was placed on public notice, 4 and no comments were filed. For the reasons stated below, we grant Verizon’s request. II. BACKGROUND 2. Requests for new ELCS routes are generally initiated by local subscribers. IntraLATA ELCS routes can be ordered by the state commission. 5 For interLATA routes, prior to the 1 See 47 U. S. C. § 153( 25). 2 Lehighton is a Verizon exchange. Palmerton is a Palmerton Telephone Company exchange. 3 Section 3( 25) of the Act defines LATAs as those areas established prior to enactment of the 1996 Act by a Bell Operating Company (BOC) such that no exchange area includes points within more than “one metropolitan statistical area, consolidated metropolitan statistical area, or State, except as expressly permitted under the AT& T Consent Decree”; or established or modified by a BOC after such date of enactment and approved by the Commission. 4 See Public Notice, “Comment Sought on Verizon’s Request for Limited Modification of LATA Boundaries to Provide Expanded Local Calling Service Between Certain Exchanges in Pennsylvania,” rel. April 27, 2001. 5 United States v. Western Electric Company, Inc., 569 F. Supp. 990, 995 (D. D. C. 1983). “The distance at which a local call becomes a long distance toll call has been, and will continue to be, determined exclusively by the 1 Federal Communications Commission DA 01- 2351 2 Telecommunications Act of 1996 (1996 Act), 6 the Bell Operat ing Companies (BOCs) were required t o secure state approval and then obtain a waiver from the United States District Court for the District of Columbia (Dist rict Court ). 7 In the years between the Consent Decree 8 and the 1996 Act, the District Court received more than one hundred requests for Consent Decree waivers to permit new interLATA ELCS routes. 9 Because of the large number of requests involved and because most of the requests were non- controversial, the District Court developed a streamlined process for handling such requests. 10 3. Under the st reamlined process developed by the Dist rict Court , the BOC submitt ed it s waiver request to the Department of Justice (Department). The Department reviewed the request and then submitted the request, along with the Department’s recommendation, to the District Court. In evaluating ELCS requests, the Department and the District Court considered the number of customers or access lines involved 11 as well as whether a sufficiently strong community of interest between the exchanges justified granting a waiver of the Consent Decree. 12 A community of interest could be demonstrated by such evidence as: (1) poll results showing that customers in the affect ed exchange were willing to pay higher rat es to be included in an expanded local calling area; 13 (2) usage dat a demonst rat ing a high level of calling bet ween the exchanges; and (3) narrat ive statements describing how the two exchanges were part of one community and how the lack of local calling between the exchanges caused problems for community residents. 14 In addition, the Department and the District Court gave deference to the state’s community of interest finding. The various state regulatory bodies.” Id. 6 Pub. L. No. 104- 104, 110 Stat. 56 (1996). 7 United States v. Western Electric, 569 F. Supp. at 995. 8 The Consent Decree required AT& T to divest its ownership of the BOCs. United States v. American Telephone and Telegraph Co., 552 F. Supp. 131 (D. D. C. 1982), aff'd sub nom. Maryland v. United States, 460 U. S. 1001 (1983). 9 Petitions for Limited Modification of LATA Boundaries to Provide Expanded Local Calling Service (ELCS) at Various Locations, Memorandum Opinion and Order, 12 FCC Rcd 10646, 10648 (1997) (July 1997 Order). 10 See United States v. Western Electric Company, Inc., No. 82- 0192 (D. D. C. Feb. 6, 1984); United States v. Western Electric Company, Inc., No. 82- 0192 (D. D. C. Mar. 15, 1984). 11 See United States v. Western Electric Company, Inc., No. 82- 0192, slip op. at 3 n. 8 (D. D. C. July 19, 1984) (July 1984 Order). 12 See, e. g., United States v. Western Electric Company, Inc., No. 82- 0192 slip op. at 2, 3 n. 3 (D. D. C. Jan. 31, 1985) (Jan. 1985 Order); United States v. Western Electric Company, Inc., No. 82- 0192 (D. D. C. Dec. 3, 1993); United States v. Western Electric Company, Inc., No. 82- 0192 (D. D. C. Dec. 17, 1993). 13 See July 1984 Order at 2 n. 5. 14 See Jan. 1985 Order at 2- 3 & n. 3. 2 Federal Communications Commission DA 01- 2351 3 District Court also considered the competitive effects of granting a proposed ELCS waiver. 15 4. Matters previously subject to the Consent Decree are now governed by the Act. 16 Under section 3( 25)( B) of the Act, BOCs may modify LATA boundaries, if such modifications are approved by the Commission. 17 On July 15, 1997, the Commission released a decision granting 23 requests for limited boundary modificat ion to permit ELCS. 18 Although calls between the ELCS exchanges would now be treated as intraLATA, each ELCS exchange would remain assigned to the same LATA for purposes of classifying all ot her calls. 19 The Commission stated that it would grant requests for such limited modificat ions only where a pet it ioning BOC showed that the ELCS was a flat- rated, non- optional service, a significant community of interest existed among the affected exchanges, and grant of the requested waiver would not have any anticompetitive effects. 20 The Commission stated further that a carrier would be deemed to have made a prima facie case supporting grant of the proposed modification if the ELCS petition: (1) has been approved by the state commission; (2) proposes only traditional local service (i. e., flat- rated, non- optional ELCS); (3) indicates that the state commission found a sufficient community of interest to warrant such service; (4) documents this community of interest through such evidence as poll results, usage data, and descript ions of the communit ies involved; and (5) involves a limited number of cust omers or access lines. 21 15 See July 1984 Order at 3; Jan. 1985 Order at 2- 3; United States v. Western Electric Company, Inc., No. 82- 0192, slip op. at 2 (D. D. C. May 18, 1993) (May 1993 Order). The District Court granted waivers for more than one hundred flat- rated, non- optional ELCS plans that allow the provision of traditional local telephone service between nearby exchanges. See, e. g., Western Electric, 569 F. Supp. at 1002 n. 54; July 1984 Order at 3; January 1985 Order at 4. Under such plans, subscribers pay no extra charge for calls beyond their established monthly service charge (the plan involves a flat- rated charge), and all subscribers in the exchange are included in the plan (the plan is non- optional). 16 Section 601( a)( 1) of the 1996 Act states that “[ a] ny conduct or activity that was, before the date of enactment of this Act, subject to any restriction or obligation imposed by the AT& T Consent Decree shall, on and after such date, be subject to the restrictions and obligations imposed by the Communications Act of 1934 as amended by this Act and shall not be subject to the restrictions and obligations imposed by such Consent Decree.” On April 11, 1996, the District Court issued an order terminating the AT& T Consent Decree and dismissing all pending motions under the Consent Decree as moot, effective February 8, 1996. See United States v. Western Electric Company, Inc., No. 82- 0192, 1996 WL 255904 (D. D. C. Apr. 11, 1996). 17 See 47 U. S. C. § 153( 25)( B). 18 July 1997 Order, 12 FCC Rcd at 10646. 19 If an exchange were assigned to another LATA for all purposes, any existing local calling routes between that exchange and the original LATA would be lost because such traffic would now be interLATA and could no longer be carried by the BOC. Instead, the traffic would generally be carried by an interexchange carrier charging long distance toll rates. 20 July 1997 Order, 12 FCC Rcd at 10649- 50. 21 Id. at 10659. The Commission also delegated authority to act on petitions to modify LATA boundaries to the Common Carrier Bureau. Id. at para 10657- 58. On August 6, 1997, the Commission released a decision granting requests to modify LATA boundaries to permit three independent telephone company (ITC) exchanges in Texas to change LATA association for purposes of improving service to subscribers. The Commission stated that a carrier will be deemed to have made a prima facie case supporting grant of a proposed association change if the 3 Federal Communications Commission DA 01- 2351 4 III. DISCUSSION 5. The petition proposes to establish one- way ELCS, and is accompanied by: (1) a statement t hat only t radit ional local service is proposed and that there will be no change in the exist ing service offerings of the customers; 22 (2) an order issued by the Pennsylvania Public Ut ilit y Commission indicating that the commission found a sufficient community of interest between the respective exchanges; (3) a statement of the number of access lines involved; 23 (4) a statement that no poll was t aken and no rat e increase will result ; 24 and (5) a statement of the average number of calls per access line per month between the respective exchanges. 25 The brief description of the community of interest reveals that customers in Lehighton cannot call to Palmerton without incurring toll charges. 6. We believe that the small number of access lines, the small volume of traffic involved for the proposed ELCS area in this petition, the fact that the petition merely extends the local calling area for customers in the Lehighton exchange, and the fact that there will be no change in the existing service offering to the customers make it highly unlikely that provision of ELCS service would reduce Verizon’s mot ivat ion to open its market to compet it ion. We conclude, therefore, that the information in the petition satisfies the criteria established in the July 1997 Order, and find that the proposed LATA modification will not have a significant anticompetitive effect on the interexchange market. 7. Granting Verizon’s petition serves the public interest by permitting a minor LATA modificat ion where such modificat ion is necessary to meet the needs of local subscribers and will not have any significant effect on competition. Accordingly, we approve Verizon’s petition for a limited LATA modification to provide one- way ELCS. The LATA is modified solely for the limited purpose of allowing Verizon to provide local calling service bet ween the specific exchanges or geographic areas identified in the requests. The LATA is not modified to permit the BOC to offer any other type of service, including calls that originate or terminate outside the specified areas. Thus, the ELCS between t he specified exchanges will be treat ed as int raLATA, and the provisions of the Act governing int raLATA service will apply. 26 Other types of service between the specified exchanges will remain int erLATA, and the provisions of the Act governing int erLATA service will apply. petition: (1) states that the association change is necessary because of planned upgrades to the ITC’s network or service that will require routing traffic through a different BOC LATA; (2) involves a limited number of access lines; and (3) includes a statement from the affected BOC( s) requesting a LATA modification, pursuant to section 3( 25) of the Act, to permit the change in association. Petitions for LATA Association Changes by Independent Telephone Companies, Memorandum Opinion and Order, 12 FCC Rcd 11769 (1977) (August 1997 Order). 22 Ex Parte Letter from Richard T. Ellis of Verizon to Magalie Roman Salas, September 21, 20001. 23 Lehighton has 8,390 access lines. Palmerton has 5,456 access lines. 24 Under Pennsylvania law, no poll was required to be taken since there is no change in monthly rates. 25 There are 0. 34 messages per line per month from Lehighton to Palmerton. 26 The BOC may provide ELCS service without meeting the section 271 requirements, see 47 U. S. C. § 271( a), and a separate affiliate is not required, see 47 U. S. C. § 272( a)( 2)( B). 4 Federal Communications Commission DA 01- 2351 5 VI. CONCLUSION AND ORDERING CLAUSES 8. Accordingly, IT IS ORDERED, pursuant to sections 3( 25) and 4( i) of the Communications Act of 1934, as amended, 47 U. S. C. §§ 153( 25), 154( i), and authority delegated by Sections 0.91 and 0.291 of the Commission’s rules, 47 C. F. R. §§ 0.91, 0.291, that the request of Verizon Pennsylvania, Inc. for a LATA modification for the limited purpose of providing one- way ELCS at the specific location, identified in File No. NSD- L- 01- 76, IS APPROVED. The LATA boundary is modified solely for the purpose of providing ELCS between the points in the specific exchanges or geographic areas indicated in the request. The LATA boundary for all other services shall remain unchanged. 9. IT IS FURTHER ORDERED that pursuant to section 416( a) of the Act, 47 U. S. C. § 416( a), the Secretary SHALL SERVE a copy of this order upon the petitioner, Verizon Pennsylvania, Inc. FEDERAL COMMUNICATIONS COMMISSION Diane Griffin Harmon Acting Chief, Network Services Division Common Carrier Bureau 5