*Pages 1--23 from Microsoft Word - 17869.doc* DA 95- 1283 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D. C. 20554 In the Matter of ) ) BELL ATLANTIC ) TELEPHONE COMPANIES ) ) Offer of ) Comparably Efficient ) Interconnection to ) Providers of Video ) Dialtone- Related ) Enhanced Services ) ORDER Adopted: June 8, 1995 Released: June 9, 1995 By the Chief, Common Carrier Bureau: I. INTRODUCTION 1. Pursuant to the requirements of the Computer III proceeding, 1 the Bell Atlantic Telephone Companies (Bell Atlantic) 1 Amendment of Section 64.702 of the Commission's Rules and Regulations (Computer III), CC Docket No. 85- 229, Phase I, 104 FCC 2d 958 (1986) (Phase I Order), recon., 2 FCC Rcd 3035 (1987) (Phase I Recon. Order), further recon., 3 FCC Rcd 1135 (1988) (Phase I Further Recon. Order), second further recon., 4 FCC Rcd 5927 (1989) (Phase I Second Further Recon.), Phase I Order and Phase I Recon. Order vacated, California v. FCC, 905 F. 2d 1217 (9th Cir. 1990); Phase II, 2 FCC Rcd 3072 (1987) (Phase II Order), recon., 3 FCC Rcd 1150 (1988) (Phase II Recon. Order), further recon., 4 FCC Rcd 5927 (1988) (Phase II Further Recon. Order), Phase II Order, vacated, California v. FCC, 905 F. 2d 1217 (9th Cir. 1990); Computer III Remand Proceedings, 5 FCC Rcd 7719 (1990) (ONA Remand Order), recon., 7 FCC Rcd 909 (1992), pets. for review denied, California v. FCC, 4 F. 3d 1505 (9th Cir. 1993); Computer III Remand Proceedings: Bell Operating Company Safeguards and Tier 1 Local Exchange Company Safeguards, 6 FCC Rcd 7571 (1991) (BOC Safeguards Order); BOC Safeguards Order vacated in part and remanded, California v. FCC, 39 F. 3d 919 (1994) (California III). 1 2 filed, on January 27, 1995, a comparably efficient interconnection (CEI) plan for the enhanced services it plans to offer in conjunction with its provision of regulated video dialtone service. Under Computer III, a carrier is permitted to provide unregulated, enhanced services if it files a CEI plan demonstrating that the regulated, basic services the carrier uses to provide the enhanced services are available on an equivalent basis to unaffiliated Enhanced Service Providers (ESPs). 2 Two parties opposed Bell Atlantic's CEI plan. 3 Bell Atlantic subsequently filed supplemental information regarding the CEI plan. 4 As discussed below, we approve Bell Atlantic's CEI plan for providing enhanced services related to video dialtone services, upon the condition that Bell Atlantic first comply with all applicable Cost Allocation Manual filing requirements. II. BACKGROUND A. Computer III Requirements 2. Bell Atlantic has filed a CEI plan outlining the terms on which it proposes to offer enhanced services used in conjunction with video dialtone service. 5 The requirement to file a CEI plan was first established in the Computer III proceeding, in which the Commission adopted a regulatory framework through which Bell Operating Companies (BOCs) could offer integrated enhanced and basic services. Requiring BOCs to file CEI plans was one of the nonstructural measures imposed by the Commission, in lieu of 2 Phase I Order, 104 FCC 2d at 964- 965, ¶¶ 4- 5. 3 Comments of The National Cable Television Association, Inc. (NCTA), filed February 21, 1995; Reply Comments of Adelphia Communications Corporation, Comcast Cable Communications, Inc., Cox Enterprises, Inc. and Jones Intercable, Inc. (collectively, Joint Cable Parties), filed March 3, 1995; Ex Parte Reply Comments of NCTA, filed March 15, 1994. 4 Bell Atlantic Ex Parte letter and attachment to William Caton from Marie Breslin, filed March 16, 1995 (Bell Atlantic March 16, 1995 Ex Parte filing); Bell Atlantic Ex Parte letter to William Caton from Marie Breslin, filed April 4, 1995 (Bell Atlantic April 4, 1995 Ex Parte filing). 5 "Enhanced services" use the telephone network to deliver unregulated services that provide more than a basic voice transmission offering. See 47 C. F. R. § 64.702( a). "Basic services," such as "plain old telephone service" (POTS), are regulated transmission services that are offered under tariff pursuant to Title II of the Communications Act. 2 3 structural separation, to prevent cross- subsidization and discrimination. 6 As a first step in implementing Computer III, the Commission permitted the BOCs, which remained subject to various structural separation requirements, to offer individual enhanced services on an integrated basis following approval of service- specific CEI plans. 7 In their CEI plans, BOCs were required to describe: (1) the enhanced service or services to be offered, (2) how the underlying basic services would be made available for use by competing ESPs, and (3) how the BOC would comply with the other nonstructural safeguards imposed by Computer III. 3. The Computer III decision concluded that, in the longer term, with the implementation of Open Network Architecture (ONA), the BOCs should be allowed to provide integrated enhanced services without prior Commission approval of service- specific CEI plans. 8 In a series of orders between 1988 and the end of 1992, the Commission approved the BOC ONA plans that described the unbundled basic services each BOC proposed to provide as ONA services and the terms under which they would be offered. During 1992- 1993, the Common Carrier Bureau approved lifting structural separation requirements for individual BOCs that showed they had implemented all of the ONA services set forth in their ONA plans. Thus, BOCs have not filed CEI plans for several years. 4. In its California III decision, the U. S. Court of Appeals for the Ninth Circuit effectively reimposed the requirement that BOCs file CEI plans, at least pending further Commission action. 9 In California III, the court remanded the portion of the BOC Safeguards Order that established the conditions for lifting all structural separation requirements imposed on BOCs seeking to provide integrated enhanced services. 10 The court found that the 6 Computer III Remand Proceedings: Bell Operating Company Safeguards; and Tier 1 Local Exchange Company Safeguards, Notice of Proposed Rulemaking and Order, 6 FCC Rcd 174, 175 (1990) at ¶ 9. 7 Phase I Order, 104 FCC 2d at 1034- 1059, ¶¶ 142- 200. 8 Id. at 1019- 1021, ¶¶ 113- 115, and 1059- 1068, ¶¶ 201- 222. 9 See Memorandum Opinion and Order, In the Matter of Bell Operating Companies' Joint Cable Petition for Waiver of Computer II Rules, DA 95- 36 (Com. Car. Bur. released January 11, 1995) (Bureau Interim Remand Order). 10 According to the BOC Safeguards Order, lifting all structural separation requirements or "full structural relief" meant removing requirements that BOCs receive approval of service- 3 4 Commission had not adequately justified its determination that fundamental unbundling was unnecessary to prevent access discrimination by BOCs. 5. Following the California III decision, the Common Carrier Bureau issued an order allowing the BOCs to continue providing enhanced services and conducting market trials pursuant to CEI plans approved prior to the lifting of structural separation. 11 The Bureau also granted waivers necessary to enable BOCs to continue providing other existing enhanced services and market trials, conditioned upon the BOCs filing CEI plans or market trial notifications, respectively, within 60 days of the Bureau Interim Remand Order. The Bureau required the BOCs to file CEI plans or market trial notifications prior to providing any new services or market trials. The Bureau declined to treat enhanced services offered in conjunction with video dialtone service differently from other enhanced services. 12 6. In response to the California III decision, the Commission has initiated a rulemaking proceeding to review the current nonstructural safeguards against BOC access discrimination. 13 B. Video Dialtone Requirements 7. Video dialtone is the method by which the Commission has permitted telephone companies to expand their role in the provision of video services within their telephone service areas, consistent with the telco- cable cross- ownership ban of the 1984 Cable Act. 14 In the Second Report and Order, the Commission specific CEI plans prior to offering any enhanced service. 11 Bureau Interim Remand Order at ¶¶ 2- 3, 30. 12 Id. 13 See Notice of Proposed Rulemaking, In the Matter of Computer III Further Remand Proceedings: Bell Operating Company Provision of Enhanced Services, Docket No. 95- 20 (released February 21, 1995) (Computer III Remand Notice of Proposed Rulemaking). For a more detailed history of rules governing the BOCs' participation in the enhanced services market, see, for example, Computer III Remand Notice of Proposed Rulemaking at ¶¶ 3- 10. 14 Telephone Company- Cable Television Cross- Ownership Rules, Sections 63.54- 63.58, Further Notice of Proposed Rulemaking, First Report and Order, and Second Notice of Inquiry, 7 FCC Rcd 300 (1991) (First Report and Order), recon., Memorandum 4 5 concluded that video dialtone service must include a basic common carrier platform with sufficient capacity to serve multiple video programmers on a nondiscriminatory basis. 15 The Commission defined the basic platform as a common carriage transmission service by which end- user subscribers can access video programming from programmer- customers using the platform. The basic service elements of the video dialtone platform must be offered on an unbundled basis. 16 On a second level platform, telephone companies and other providers may offer enhanced services and other unregulated services to end- user subscribers and video programmers in competition with the video programming being provided by others. 17 In the Second Report and Order, the Commission required local exchange carriers (LECs) to obtain prior authorization before constructing facilities to provide video dialtone service pursuant to Section 214 of the Communications Act of 1934. 18 In Opinion and Order on Reconsideration, 7 FCC Rcd 5069 (1992) (Memorandum Opinion and Order on Reconsideration), aff'd, National Cable Television Ass'n v. FCC, 33 F. 3d 66 (D. C. Cir. 1994) (NCTA v. FCC); Telephone Company- Cable Television Cross Ownership Rules, Sections 63.54- 53.58, Second Report and Order, Recommendation to Congress, and Second Further Notice of Proposed Rulemaking, 7 FCC Rcd 5781 (1992) (Second Report and Order), appeal pending sub nom. Mankato Citizens Tel. Co. v. FCC, No. 92- 1404 (D. C. Cir. filed Sept. 9, 1992), recon., Memorandum Opinion and Order on Reconsideration and Third Further Notice of Proposed Rulemaking, 10 FCC Rcd 244 (1994) (Video Dialtone Reconsideration Order); Fourth Further Notice of Proposed Rulemaking, FCC 95- 20 (released January 20, 1995); Third Report and Order, FCC 95- 203 (released May 16, 1995). 15 Second Report and Order, 7 FCC Rcd at 5797, ¶ 29. 16 Id. at 5831, ¶ 94. 17 Id. at 5788, ¶ 12. 18 47 U. S. C. § 214. In the Section 214 review process, the Commission evaluates whether a telephone company's proposed video dialtone service complies with the Communications Act, the Commission's video dialtone decisions, and the Commission's rules. See, e. g., 47 U. S. C. § 214; Second Report and Order; 47 C. F. R. § 63.01. Bell Atlantic's CEI plan was filed subsequent to the approval of Bell Atlantic's Section 214 application to construct and operate video dialtone facilities in Dover Township, New Jersey, Application of New Jersey Bell Telephone Company, 9 FCC Rcd 3677 (1994), recon. pending, and in anticipation of the grant of any pending or subsequently filed Section 214 applications. Bell Atlantic currently has one Section 214 application pending. Application of New Jersey Bell Tel. Co., W- P- C 6838 (filed Nov. 5 6 that order, the Commission concluded that Computer III requirements apply to video dialtone service. 19 In the Video Dialtone Reconsideration Order, the Commission reaffirmed, among other things, the basic video dialtone regulatory framework adopted in the Second Report and Order and required that LECs offering video dialtone service make available a common carrier platform that provides sufficient capacity to serve multiple video programmers. 20 Recently, the Commission initiated a rulemaking to determine the safeguards that should be imposed on telephone companies that provide video programming over facilities they own or control in their telephone service areas. 21 III. SERVICE DESCRIPTION 8. Bell Atlantic seeks to offer, on a structurally unseparated basis, video programming, interactive services, and Level Two Gateway services. 22 The proposed Level Two Gateway services would allow end- users to select Bell Atlantic programming and informational services in a user- friendly manner. 23 Navigational functionalities would allow end- users to access Bell Atlantic's Level Two gateway and make selections via interactive menus, specialized search capabilities, program preview options, and interactive messages. 24 In addition, the Level Two Gateway would provide storage of video content, as well as business support functionality for billing and operations. 25 Certain applications may also involve protocol conversions. The programming content and interactive services would involve the 16, 1992). 19 Second Report and Order, 7 FCC Rcd at 5823, ¶ 79. 20 Video Dialtone Reconsideration Order, 10 FCC Rcd at 247- 248, ¶ 2. 21 Telephone Company- Cable Television Cross- Ownership Rules, Fourth Further Notice of Proposed Rulemaking, FCC 95- 20 (released January 20, 1995) (Fourth Further Notice). See also Public Notice, Supplemental Comments Sought on Possible Grant of Blanket Section 214 Authorization, CC Docket No. 87- 266, DA 95- 665 (Released April 3, 1995). 22 Bell Atlantic March 16, 1995 Ex Parte filing. 23 Id. 24 Id. 25 Id. 6 7 selection, packaging, pricing, and production of video program offerings and interactive services, such as interactive games and video shopping. 26 Bell Atlantic would provide interstate and intrastate access services and private line services, set forth in Appendix A of its CEI plan, as underlying basic services. 27 In addition, once its proposed tariff goes into effect, Bell Atlantic would provide video dialtone service as an underlying basic service. 28 IV. COMPLIANCE ISSUES A. CEI Parameters 9. The Commission's CEI requirements are designed to give ESPs equal and efficient access to those basic services that AT& T and the BOCs use to provide their own enhanced services. 29 The Commission has established nine CEI parameters, 30 with the intention that they can be satisfied in a flexible manner, consonant with the particular services at issue. 31 10. Bell Atlantic has described in its submissions in this proceeding how its proposed enhanced services will satisfy each of the nine CEI parameters laid out by the Commission. NCTA and the Joint Cable Parties raise several objections to Bell Atlantic's CEI plan, including an argument by NCTA that Bell Atlantic failed to unbundle properly its services in accordance with one of those CEI parameters. We review below Bell Atlantic's CEI plan with 26 Id. 27 Bell Atlantic lists as basic services: intrastate access services (DS1, DS3, and DDS (56 Kbps and subrate)), interstate access services (DS1, DS3, DDS (56 Kbps and subrate), and Sonet OC3 F. C. C. No. 1), and private line services (DS1 and DDS 56 Kbps and subrate). Bell Atlantic CEI Plan, Appendix A. 28 Bell Atlantic March 16, 1995 Ex Parte filing. 29 Phase I Recon Order, 2 FCC Rcd at 3048, ¶ 91. 30 Phase I Order, 104 FCC 2d at 1039- 1043, ¶¶ 154- 166. 31 See, e. g., Southwestern Bell Telephone Company, Comparably Efficient Interconnection Plan for the Provision of Voice Messaging Services, Memorandum Opinion and Order, 3 FCC Rcd 6912 at ¶ 7 (1988); The Bell Atlantic Telephone Companies, Offer of Comparably Efficient Interconnection to Providers of Gateway Services, Memorandum Opinion and Order, 3 FCC Rcd 6045 at ¶ 2 (1988) (Bell Atlantic CEI Order). 7 8 respect to each of the parameters delineated by the Commission. 1. Unbundling of Basic Services 11. The unbundling parameter requires the carrier to unbundle, and associate with a specific rate element in the tariff, the basic services and basic service functions that underlie the carrier's enhanced service offering. 32 Nonproprietary information used by the carrier in providing the unbundled basic services must be made available as part of CEI. 33 In addition, any options available to a carrier in the provision of such basic services or functions must be included in the unbundled offerings. 34 12. Bell Atlantic states that it will unbundle its basic services, as shown in its listed tariffs. 35 Bell Atlantic also provides a list of rates and charges for separate elements included in its video dialtone service. 36 (a) Positions of the Parties 13. NCTA claims that Bell Atlantic has not sufficiently unbundled its Direct Access Connection Termination (DACT) charge, which consists of charges for both terminating equipment at the programmer's location and transmission facilities from the programmer's location to the serving wire center. 37 NCTA objects to Bell Atlantic's DACT charge because programmer- customers cannot buy transmission from the programmer's location to the serving wire center without also paying for the terminating equipment. 32 Phase I Order, 104 FCC 2d at 1040, ¶ 158. 33 Id. 34 Id. 35 Bell Atlantic CEI Plan at 6. 36 Id. at Appendix B, section 6. These charges are broken down into the general categories of Video Dialtone Access Link, Broadcast Channel Services, Narrowcast Channel Services, and Optional Features. 37 NCTA Comments at 2- 3. According to Bell Atlantic, the DACT charge recovers costs associated with network terminating equipment at the programmer- customer's designated location as well as transport facilities between that location and the nearest Bell Atlantic Serving Wire Center. Bell Atlantic CEI Plan, Appendix B, Original Page 23. 8 9 14. Bell Atlantic does not dispute that the DACT charge includes charges for terminating equipment at the programmer-customer's location and for transmission facilities from the programmer- customer's location to the serving wire center. Bell Atlantic argues, however, that it is entitled to bundle these charges. Bell Atlantic states that the Commission has already found that video dialtone service is a form of interstate access. 38 Therefore, Bell Atlantic argues, the unbundling requirements for video dialtone should be similar to requirements the Commission has found reasonable for the comparable voice- based access service. 39 According to Bell Atlantic, the extent to which services need to be unbundled: "is determined by customer needs. That is, to the extent a useful service element is severable from the overall service, it must be unbundled so that the customer does not have to order unneeded service in order to obtain the useful service element." 40 Bell Atlantic maintains that its DACT charge in its video dialtone tariff is comparable to its entrance facilities tariffs for switched access and its channel termination tariffs for special access. Bell Atlantic also notes that programmer- customers have the option of obtaining equivalent terminating equipment and transmission from another provider. 41 In addition, Bell Atlantic argues that no potential customer has objected to the bundling of charges for terminating equipment and transmission facilities in the Direct Access Connection Termination charge, and that the Commission has not mandated a greater degree of unbundling. 15. In its Reply Comments, NCTA responds that a carrier's obligation to unbundle does not depend on whether a potential customer requests that a service be unbundled. 42 NCTA further claims that its concerns would be addressed if Bell Atlantic were required to unbundle the DACT charge upon request by a potential 38 Bell Atlantic Reply at 3 (citing Video Dialtone Reconsideration Order, 10 FCC Rcd at 335, ¶ 195). 39 Id. 40 Id. (citing Investigation of Access and Divestiture Related Tariffs, Memorandum Opinion and Order, 97 FCC 2d 1082 at 1257 (1984)). 41 Id. at 3. 42 NCTA Reply Comments at 2. 9 10 customer. 43 (b) Discussion 16. NCTA does not allege that a customer has asked Bell Atlantic to unbundle charges the for terminating equipment and transmission facilities contained in its proposed DACT charge. In addition, as Bell Atlantic notes, the Commission has not required this level of unbundling in the video dialtone proceeding. In fact, the Commission has permitted comparable elements to remain bundled in other instances. 44 Under Computer III, carriers must specify in their ONA plans the procedures by which ESPs may request and receive new unbundled Basic Service Elements in an expeditious manner. ESPs may request unbundled Basic Service Elements using the 120- day process. 45 Alternatively, an ESP can ask the Information Industry Liaison Committee (IILC) for technical assistance in developing and requesting new network services before requesting a service through the 120- day process. 46 In view of these existing procedures, we believe it is premature to require Bell Atlantic to unbundle its DACT charge at this time. We therefore decline to reject Bell Atlantic's CEI plan on the ground that it has not adequately unbundled its Direct Access Connection Termination charge. 2. Interface Functionality 17. The interface functionality parameter requires the carrier to "make available standardized hardware and software 43 Id. 44 See, e. g., Bell Atlantic Tariff F. C. C. No 1, Section 7.1.2( a), 6th revised page 278 (equipment and wire bundled in the Special Access Channel Termination charge). 45 Phase I Order, 104 FCC 2d at ¶ 217. Under the 120- day process, a BOC must respond within 120 days, indicating the terms on which it will provide the requested capability, or, alternatively, specifying reasons for not providing the requested capability. The BOC evaluation is to be based on the selection criteria set forth in the Phase I Order: market area demand, utility as perceived by ESPs, and costing and technical feasibility. If an ESP is not satisfied with the BOC's response, the ESP may then seek redress by filing with the Commission a petition for declaratory ruling. Filing and Review of Open Network Architecture Plans, 6 FCC Rcd 7646 at 7654, ¶ 11 (1991). 46 Filing and Review of Open Network Architecture Plans, 4 FCC Rcd 1, 33- 34, ¶¶ 52- 54 (1988). 10 11 interfaces that are able to support transmission, switching, and signalling functions identical to those utilized in the enhanced service provided by the carrier." 47 18. The company states that all applicable interfaces will be either standard network interfaces or new interfaces that Bell Atlantic previously has disclosed. 48 No party has challenged this aspect of Bell Atlantic's CEI plan. We find that Bell Atlantic's plan comports with the interface functionality requirement established by the Commission. 3. Resale 19. The resale parameter requires the "carrier's enhanced service operations to take the basic services used in its enhanced service offerings at their unbundled tariffed rates as a means of preventing improper cost- shifting to regulated operations and anticompetitive pricing in unregulated markets." 49 20. Bell Atlantic states that it will purchase all underlying basic services at full rates, add the video enhancements, and provide the resulting enhanced services on an unregulated basis. 50 No party has challenged this aspect of Bell Atlantic's CEI plan. We find that Bell Atlantic's plan comports with the resale requirement established by the Commission. 4. Technical Characteristics 21. This parameter requires a carrier to provide basic services with technical characteristics that are equal to the technical characteristics the carrier uses for its own enhanced services. 51 22. Bell Atlantic states that it "will provide facilities that are comparably efficient in type, quality and all technical parameters to both affiliated and unaffiliated programmer-customers." 52 No party has challenged this aspect of Bell 47 Phase I Order, 104 FCC 2d at 1039, ¶ 157. 48 Bell Atlantic CEI Plan at 5. 49 Phase I Order, 104 FCC 2d at 1040, ¶ 159. 50 Bell Atlantic CEI Plan at 6. 51 Phase I Order, 104 FCC 2d at 1041, ¶ 160. 52 Bell Atlantic CEI Plan at 6. 11 12 Atlantic's CEI plan. We find that Bell Atlantic's plan comports with the technical characteristics requirement established by the Commission. 5. Installation, Maintenance and Repair 23. This parameter requires that the time periods for installation, maintenance and repair of the basic services and facilities included in a CEI offering must be the same as those the carrier provides to its own enhanced service operations. 53 The Commission also notes that carriers must satisfy reporting and other requirements showing that they have met this requirement. 54 24. Bell Atlantic states that the procedures for "ordering, installing, maintaining and repairing underlying basic services will be identical for affiliated and unaffiliated programmer-customers." 55 It also notes that the Commission has already approved the company's procedures for ensuring against discrimination with respect to these functions. 56 No party has challenged this aspect of Bell Atlantic's CEI plan. We find that Bell Atlantic's plan comports with the installation, maintenance and repair requirement established by the Commission. 6. End- User Access 25. This parameter requires the carrier to provide the same capabilities to all end users with respect to use of abbreviated dialing or signalling to activate or access enhanced services that utilize the carrier's facilities. This parameter also requires the carrier to provide end users equal opportunities to access basic facilities through derived channels, whether they use the enhanced service offerings of the carrier or of a competing provider. 57 26. Bell Atlantic states that end users will be able to 53 Phase I Order, 104 FCC 2d at 1041, ¶ 161. 54 Id. Bell Atlantic must provide quarterly reports on installation and maintenance of its video dialtone service. Id. at 1055- 1056, ¶¶ 192- 193. 55 Bell Atlantic CEI Plan at 6- 7. 56 Id. at 7 (citing Filing and Review of Open Network Architecture Plans, Memorandum Opinion and Order, 4 FCC Rcd at 1, ¶¶ 468- 470 (1988)). 57 Phase I Order, 104 FCC 2d at 1041, ¶ 162. 12 13 access in the same manner the services of both affiliated and unaffiliated programmer- customers through Bell Atlantic's basic video dialtone Level One Gateway. It also states that all programmer- customers will have an equal ability to provide end-users with customized access arrangements through their enhanced Level Two Gateways or through other means they may choose. 58 No party has challenged this aspect of Bell Atlantic's CEI plan. We find that Bell Atlantic's plan comports with the end- user access requirement established by the Commission. 7. CEI Availability 27. This parameter requires a carrier's CEI offering to be available and fully operational on the date that it offers its corresponding enhanced service to the public. The parameter also requires the carrier to provide a reasonable time prior to that date when prospective users of the CEI offering can utilize the CEI facilities and services for purposes of testing their enhanced service offerings. 59 28. Bell Atlantic states that its video dialtone services will be available to both affiliated and unaffiliated programmer-customers at the same time in any given geographical area. 60 The company also states that it will provide all programmer- customers with a reasonable time period for compliance and application testing of new CEI basic service elements. 61 No party has challenged this aspect of Bell Atlantic's CEI plan. We find that Bell Atlantic's plan comports with the CEI availability requirement established by the Commission. 8. Minimization of Transport Costs 29. This parameter requires carriers to provide competitors with interconnection facilities that minimize transport costs. 62 30. Bell Atlantic states that affiliated and unaffiliated programmer- customers will be charged the same rate for all underlying basic services. 63 Bell Atlantic points out that the 58 Bell Atlantic CEI Plan at 7. 59 Phase I Order, 104 FCC 2d at 1041, ¶ 163. 60 Bell Atlantic CEI Plan at 7. 61 Bell Atlantic March 16, 1995 Ex Parte filing. 62 Phase I Order, 104 FCC 2d at 1042, ¶ 164. 63 Bell Atlantic CEI Plan at 8. 13 14 Commission previously has found that this parameter is satisfied if the carrier "charges itself an access link rate that is the same as that paid by non- collocated enhanced service providers, provided that the access connections in each case are equivalent in technical quality." 64 No party has challenged this aspect of Bell Atlantic's CEI plan. We find that Bell Atlantic's plan comports with the minimization of transport costs requirement established by the Commission. 9. Recipients of CEI 31. This parameter prevents carriers from restricting the availability of the CEI offering to any particular class of customer or enhanced service competitor. 65 32. Bell Atlantic states that all the underlying basic services the company uses to provide enhanced services related to the provision of video dialtone service will be available to all users for any lawful purpose. No party has challenged this aspect of Bell Atlantic's CEI plan. We find that Bell Atlantic's plan comports with the CEI reception requirement established by the Commission. B. Other Nonstructural Safeguards 33. In addition to the CEI requirements established in Computer III, a LEC proposing to provide enhanced services on a structurally integrated basis must comply with requirements regarding the use of customer proprietary network information (CPNI), disclosure of network information, and nondiscrimination reporting. 66 1. Customer Proprietary Network Information 34. Bell Atlantic is required to describe the procedures it intends to establish to comply with CPNI safeguards. 67 The Phase II Order established CPNI requirements for BOCs' enhanced service operations, requiring them in part to (1) make CPNI available, 64 Amendment to Section 64.702 of the Commission's Rules and Regulations (Third Computer Inquiry), Memorandum Opinion and Order on Reconsideration, 3 FCC Rcd 1150, 1155 (1988), ¶ 34. 65 Phase I Order, 104 FCC 2d at 1042, ¶ 165. 66 Phase II Order, 2 FCC Rcd at 3082, ¶¶ 73- 75. 67 Phase II Order at 3095, ¶ 156. 14 15 upon customer request, to unaffiliated enhanced service vendors, on the same terms and conditions that are available to their own enhanced services personnel; (2) limit their enhanced services personnel from accessing a customers CPNI if the customer so requests; and (3) notify multiline business customers annually of their CPNI rights. 68 The Commission also requires BOCs, but not AT& T, to provide to unaffiliated enhanced service vendors on the same terms and conditions, any nonproprietary, aggregate CPNI that the BOCs provide to their own enhanced services personnel. 69 35. Bell Atlantic has filed a statement that, in providing enhanced services in conjunction with video dialtone service, it will comply with the CPNI procedures described in its previously filed in its Open Network Architecture Plan Amendments. 70 No party has challenged this aspect of Bell Atlantic's CEI plan. We find that Bell Atlantic's plan comports with the Commission's CPNI requirements. 2. Network Information Disclosure 36. Bell Atlantic is also required to disclose to the enhanced services industry information about network changes and new network services that affect the interconnection of enhanced services with the network. Bell Atlantic must make that disclosure at the "make/ buy" point, that is, when the carrier decides whether to make or to procure from an unaffiliated entity any product whose design affects or relies on the network interface. 71 Bell Atlantic must provide that information to members of the enhanced services industry that sign a nondisclosure agreement, within 30 days after the execution of such nondisclosure agreement. 72 Bell Atlantic also must publicly disclose technical information about a new or modified network 68 Id. at 3093- 3097, ¶¶ 141- 174. The Commission subsequently amended its CPNI requirements to prohibit BOC personnel engaged in the marketing of enhanced services from accessing the CPNI of customers with more than 20 lines, unless they first obtain permission from the customer. BOC Safeguards Order, 6 FCC Rcd at 7613, ¶ 89. 69 Phase II Order 2 FCC Rcd at 3097, ¶¶ 172- 174. 70 Bell Atlantic April 4, 1995 Ex Parte Filing (referencing Bell Atlantic Open Network Architecture Plan Amendments, CC Docket 88- 2, filed May 19, 1989, April 15, 1991, and April 15, 1992). 71 Phase II Order at 3086, ¶ 102. 72 Id. at 3091- 3093, ¶¶ 134- 140. 15 16 service twelve months before that service is introduced. 73 BOCs need not describe network disclosure procedures in their CEI plans, because they are obligated to obey those rules. 74 Bell Atlantic said that it would comply with existing and any revised Network Information Disclosure requirements. 75 None of the parties has suggested that Bell Atlantic has failed to comply with the network information disclosure requirements. We find that Bell Atlantic's plan comports with the Commission's Network Information Disclosure requirements. 3. Nondiscrimination Reporting 37. Bell Atlantic is required to file quarterly nondiscrimination reports with respect to its video dialtone services, thereby ensuring that Bell Atlantic provides the access promised in its CEI plan. 76 Bell Atlantic said that it would comply with existing and any revised Nondiscrimination Reporting requirements. 77 None of the parties has suggested that Bell Atlantic has failed to comply with its nondiscrimination reporting requirements. We find that Bell Atlantic's plan comports with the Commission's Nondiscrimination Reporting requirements. C. Other Compliance Issues 1. Filing Separate CEI Plans 73 Id. at 3092, ¶ 136. If a BOC is able to introduce the service within twelve months of the make/ buy point, however, it may make public disclosure at the make/ buy point. It may not, however, introduce the service less than six months after the public disclosure. 74 Filing and Review of Open Network Architecture Plans, 4 FCC Rcd 1, 252 (1988) at ¶ 490. 75 Bell Atlantic CEI Plan at 9. 76 See Filing of Open Network Architecture Plans, Memorandum Opinion and Order on Reconsideration, 5 FCC Rcd 3084, 3096, Appendix B (1990) (BOC ONA Recon. Order), 5 FCC Rcd 3103 (1990) (BOC ONA Amendment Order), Erratum, 5 FCC Rcd 4045, pets. for review denied, California v. FCC, 4 F. 3d 1505 (9th Cir. 1993), recon., 8 FCC Rcd 7646 (1991), 8 FCC Rcd 2606 (1993) (BOC ONA Second Further Amendment Order), pet. for review denied, MCI Telecomm. Corp. v. FCC, 4 F. 3d 1505 (1993); Phase II Order, 2 FCC Rcd at 3082, ¶ 73; Video Dialtone Reconsideration Order, 10 FCC Rcd at 351- 352, ¶ 232. 77 Bell Atlantic CEI Plan at 9. 16 17 (a) Positions of the Parties 38. NCTA argues that Bell Atlantic improperly seeks to obtain approval of "a generic CEI plan that covers video programming, interactive services, Level Two Gateway, and 'other related enhanced services'." 78 NCTA claims that "Bell Atlantic is required to file a separate CEI plan for each proposed enhanced service offering." 79 The Joint Cable Parties likewise argue that we should not grant Bell Atlantic generic approval for all enhanced services, but instead should require the company to file a separate CEI plan if it subsequently introduces new enhanced services. 80 39. In response, Bell Atlantic claims that the Commission has already rejected the assertion that a separate CEI plan is required for each video- related enhanced service, even if the service uses the network in the same way as services for which Bell Atlantic has already received approval. 81 Bell Atlantic claims that NCTA merely seeks to delay Bell Atlantic's video dialtone service, and that there is no reason to require separate plans for "packaged" enhanced services. 82 In a supplemental filing, Bell Atlantic clarified that "its CEI plan for enhanced video services specifically requests approval of plans to offer Level Two Gateway Services as well as programming content and interactive services." 83 That filing also provided additional information about the enhanced services that Bell Atlantic plans to offer, and the underlying basic services that will be used to furnish the enhanced offerings. 84 40. NCTA asserts in its reply that the Commission decision cited by Bell Atlantic was overruled in the January 11, 1995 78 NCTA Comments at 2. 79 Id. 80 Joint Cable Parties Reply Comments at 5. 81 Bell Atlantic Reply at 2 (citing Bell Atlantic Telephone Companies, Offer of Comparably Efficient Interconnection to Providers of Gateway Services, 3 FCC Rcd 6045, 6046- 6047, ¶ 16 (Com. Car. Bur. 1988)). 82 Id. 83 Bell Atlantic March 16, 1995 Ex Parte filing. 84 Id. 17 18 Bureau Interim Remand Order. 85 NCTA adds that Bell Atlantic is required to file service- specific CEI plans. 86 (b) Discussion 41. It is unclear whether NCTA and the Joint Cable Parties are claiming (1) that Bell Atlantic must file a separate CEI plan for every enhanced service it seeks to provide in conjunction with video dialtone service, or (2) that the filing originally submitted by Bell Atlantic failed to specify adequately each of the enhanced services it plans to offer in conjunction with video dialtone service. We reject any assertion that Bell Atlantic is required to file a separate CEI plan for each enhanced service related to it video dialtone service. The Commission has held that a carrier need not file separate CEI plans for enhanced services that are provided as a package. 87 Nothing in the Bureau Interim Remand Order or in the Computer III Remand Notice of Proposed Rulemaking altered that decision. 88 To the contrary, the Bureau Interim Remand Order reaffirmed existing CEI standards. 89 On the other hand, we agree with NCTA and the Joint Cable Parties that Bell Atlantic may not obtain generic approval to provide enhanced video services. This is consistent with the Commission decision cited by Bell Atlantic, which states that a telephone company must demonstrate that the CEI arrangements for the services it seeks to provide comply with the Commission's CEI requirements. 90 Bell Atlantic may file a single CEI plan for enhanced services it provides as a package, but it must describe each service with specificity. We find that the CEI plan and the additional material submitted by Bell Atlantic identify with adequate specificity the enhanced video- related services the 85 NCTA Reply Comments at 1. 86 Id. at 1- 2 (citing the Computer III Remand Notice of Proposed Rulemaking). 87 Bell Atlantic CEI Order, 3 FCC Rcd at 6046- 6047, ¶ 16. 88 NCTA cites no specific provision in the Bureau Interim Remand Order in support of its claim that the holding in Bell Atlantic CEI Order was overruled. 89 See, e. g., Bureau Interim Remand Order at ¶ 23 (requiring BOCs to continue to comply with existing safeguards against discrimination, such as CEI parameters) and at ¶ 30( a) (permitting BOCs to continue providing service pursuant to previously- approved CEI plans). 90 Bell Atlantic CEI Order, 3 FCC Rcd at 6046- 6047, ¶ 16. 18 19 company presently proposes to offer. 91 Bell Atlantic must file amendments to its CEI plan for video dialtone, however, if it intends to offer additional enhanced services or alter the underlying basic transmission facilities used to provide such enhanced services. Bell Atlantic need not file new CEI plans if it intends to offer identical services on the same terms in different locations. 2. Amendment of Cost Allocation Manual (a) Positions of the Parties 42. NCTA claims that Bell Atlantic's CEI plan should be rejected because Bell Atlantic has failed to satisfy its obligation to file an amended Cost Allocation Manual (CAM). 92 The Video Dialtone Reconsideration Order requires LECs to file CAM amendments within thirty days after the effective date of a Section 214 authorization and at least 60 days prior to providing unregulated products or services related to video dialtone. 93 NCTA and the Joint Cable Parties claim that, to their knowledge, Bell Atlantic has not complied with this requirement. 94 43. Bell Atlantic responds that it was not obligated to file an amended CAM, because Bell Atlantic does not plan to offer directly any enhanced services in connection with the Dover system. Rather, Bell Atlantic states, the current CAM specifies that Bell Atlantic will provide Bell Atlantic Video Services, Inc. (BVS) with regulated, tariffed services, and that no amendment of the CAM is required. 95 In its supplemental filing, Bell Atlantic asserts that, to the extent its CAM requires any revisions based on the provision of video- related enhanced services, Bell Atlantic will comply with the requirements set forth in the Video Dialtone Reconsideration Order with respect to filing CAM amendments. 96 91 See Bell Atlantic March 16, 1995 Ex Parte filing. 92 NCTA Comments at 3 (citing Video Dialtone Reconsideration Order, 10 FCC Rcd at 330, ¶ 181). 93 Video Dialtone Reconsideration Order, 10 FCC Rcd at 330, ¶ 181. 94 NCTA Comments at 3; Joint Cable Parties Reply Comments at 5- 6. 95 Bell Atlantic Reply Comments at 5. 96 Bell Atlantic March 16, 1995 Ex Parte filing. 19 20 (b) Discussion 44. The Video Dialtone Reconsideration Order requires a LEC to amend its CAM to reflect any provision of unregulated services or products related to video dialtone. All CAM revisions related to video dialtone also must conform with the CAM filing requirements set forth in the Responsible Accounting Officer Letter 25. 97 Bell Atlantic has not yet amended its CAM, but has stated that it will file any necessary CAM amendments in accordance with Commission requirements. Our approval of this CEI plan is conditioned upon Bell Atlantic's compliance, before it begins to provide service, with the CAM filing requirements set forth in the Video Dialtone Reconsideration Order and the Responsible Accounting Officer Letter 25. 3. Requiring Structural Separation (a) Positions of the Parties 45. In their Reply Comments, the Joint Cable Parties argue that the Commission should require Bell Atlantic to offer video dialtone- related enhanced services on a structurally separated basis pending Commission action on the Computer III Remand Notice of Proposed Rulemaking and the video dialtone Fourth Further Notice. 98 The Joint Cable Parties argue that it will be more efficient and less complicated to require structural separation pending completion of the rulemaking proceedings. 99 In addition, the Joint Cable Parties claim that the safeguards provided by structural separation of enhanced services related to video dialtone service outweigh the benefits (if any) of integration. The Joint Cable Parties also contend that Bell Atlantic has not shown that integration would increase efficiency or provide any benefits. 100 In addition, the Joint Cable Parties urge that, if the Commission finds that integration would produce efficiencies, it should require Bell Atlantic to offer enhanced services offered in conjunction with video dialtone, including provision of video 97 Responsible Accounting Officer Letter 25, DA 95- 703 (Accounting and Audits Div., Com. Car. Bur. released April 3, 1995). Among other things, that letter requires "LECs to amend their CAMs to identify any affiliate transactions related to their provision of video dialtone service." 98 Joint Cable Parties Reply Comments at 2. 99 Id. at 3. 100 Id. at 3- 4. 20 21 programming, in a separate subsidiary. 101 Bell Atlantic did not have an opportunity to respond to this argument within the pleading cycle established by the Commission, and made no response in its ex parte filings. (b) Discussion 46. We have already addressed the issues raised by the Joint Cable Parties. We previously considered and rejected arguments urging us to require structural separation pending conclusion of the remand proceeding regarding issues raised by the California III decision. 102 Moreover, while the remand is pending, we expressly declined to treat video dialtone- related enhanced services differently from other services subject to CEI filing requirements. 103 The Commission has initiated a rulemaking proceeding to determine whether, and to what extent, structural separation should be reimposed on BOCs seeking to provide enhanced services. 104 The Joint Cable Parties have presented no reason that would justify treating video dialtone- related enhanced services differently from other enhanced services during the pendency of the Computer III Remand rulemaking. The Commission has established protections against cross- subsidization and discrimination that remain in effect pending the conclusion of the rulemaking proceedings. 105 The Joint Cable Parties have not demonstrated that these safeguards are inadequate with respect to video dialtone- related enhanced services. We reject the claim that complete structural separation should be imposed pending the conclusion of outstanding rulemakings. C. Conclusion 47. We conclude that Bell Atlantic's CEI plan complies with the Computer III requirements, but that Bell Atlantic has not yet satisfied its CAM filing requirements. Accordingly, in this Order, we approve Bell Atlantic's CEI plan to offer enhanced 101 Id. at 4. 102 See Bureau Interim Remand Order at ¶¶ 14, 20. 103 Id. at ¶ 31. 104 Computer III Remand Notice of Proposed Rulemaking at ¶¶ 35- 40. 105 The Commission specifically declined to impose comprehensive, video dialtone- specific accounting and cost allocation rules before authorizing video dialtone service. Video Dialtone Reconsideration Order, 10 FCC Rcd at 322, ¶ 162. 21 22 services in conjunction with its provision of regulated video dialtone service, upon the condition that Bell Atlantic comply with all applicable CAM filing requirements before it provides service pursuant to this CEI plan. 22 23 V. ORDERING CLAUSES 48. IT IS HEREBY ORDERED, that pursuant to Sections 1, 4( i) and (j), 201, 202, 203, 205, and 218 of the Communications Act of 1934, as amended, 47 U. S. C. ¶¶ 151, 154( i) and (j), 201, 202, 203, 205, and 218, and authority delegated thereunder pursuant to Sections 0.91 and 0.291 of the Commission's rules, 47 C. F. R. ¶¶ 0.91 and 0.291, Bell Atlantic's Offer of Comparably Efficient Interconnection for enhanced services it plans to offer in conjunction with its provision of regulated video dialtone service IS APPROVED UPON THE CONDITION that Bell Atlantic comply with all applicable Cost Allocation Manual filing requirements before it provides service pursuant to this order. Federal Communications Commission Kathleen M. H. Wallman Chief, Common Carrier Bureau 23