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Section 272

Released:  November 8, 2000
CC DOCKET NO. 96-149		 Comments due 11/29/2000 
Reply due 12/11/2000		 P FCC Decision was remanded by Circuit Court and resulted in the current inquiry.

Non-Accounting Safeguards Order: Remand

 E

In this Order on Remand, we examine the scope of the term "interlata services" and reaffirm the Commission's conclusion in the Non-accounting safeguards order that the term "interlata services" as used in Section 271 encompasses interlata information services as well as interlata telecommunications services.  As explained below, we find this conclusion the most reasonable given the statutory language, structure, and history.  We also find that the Commission's Universal Service Report to Congress is not inconsistent with this conclusion.  A BOC therefore may provide Interlata information services only in accordance with the provisions of Section 271.  Order 4/23/2001

"In the Non-Accounting Safeguards Order, the Commission concluded that the term "interLATA services" as used in section 271 of the Communications Act of 1934, as amended, encompasses not only interLATA telecommunications services, but also interLATA information services.   The Commission reasoned that interLATA information services are "interLATA services" because they include a bundled, interLATA telecommunications component.   Although several parties petitioned for reconsideration of various aspects of the Non-Accounting Safeguards Order, no party asked the Commission to reconsider its ruling that the term "interLATA services" includes information services. 

"Following the Commission's adoption of the Third Reconsideration Order,  the Bell Atlantic telephone companies (a/k/a the Verizon telephone companies) and US WEST, Inc. (aka Qwest Communications International Inc.) petitioned for judicial review of the Non-Accounting Safeguards Order in the United States Court of Appeals for the District of Columbia Circuit, seeking reversal of the Commission's holding that the term "interLATA services" extends to both telecommunications and information services.  In their joint appellate brief, the petitioners contend that the agency's statutory interpretation conflicts with the statute's plain meaning.  In support of their argument, the petitioners rely on a 1998 Commission Report to Congress in which, they claim, the Commission declared "that `telecommunications' and `information services' are 
mutually exclusive categories and that a provider of `information services' does not provide `telecommunications' but rather uses `telecommunications.'"   Petitioners argue that if a provider of information services does not provide telecommunications, then it does not provide "interLATA service," which the statute defines as a form of "telecommunications."  Thus, petitioners contend, the restrictions established by section 271 do not apply when a Bell operating company or its affiliate provides an information service.

"In response to the petitioners' appellate brief, the Commission moved for a voluntary remand to consider further the issues raised by the petitioners.  The Commission explained that a remand was necessary because the arguments advanced by the petitioners in their appellate brief had not been presented in the administrative proceeding.  The petitioners' appellate brief relied heavily on a Report to Congress that the Commission issued more than a year after release of the Non-Accounting Safeguards Order.  The Commission further noted that, in comments filed during reconsideration of other aspects of the Non-Accounting Safeguards Order, the petitioners appeared to advocate the very same statutory interpretation that they now challenge on appeal.   In light of these factors, the Commission asked that the court grant it the opportunity to consider the threshold question of statutory interpretation - the proper scope of the term "interLATA services" - based on a more complete administrative record.  On October 27, 2000, the court granted the Commission's motion and remanded the matter to the Commission. 

"We have placed a copy of the petitioners' appellate brief in the above-captioned docket.  To aid the Commission in meeting its commitment to the court to consider and address within 180 days the issues raised by the petitioners, the Common Carrier Bureau issues this Public Notice seeking comment on the arguments raised by the petitioners before the D.C. Circuit.  We ask that the parties address the following issues, as well as any additional issues previously raised before the Commission or the court that are relevant to this inquiry. 

        1.  Does the provision of an "information service" necessarily include a bundled telecommunications component that falls within the Act's definition of an "interLATA service"? To the extent that it is using telecommunications, can the provider of an information service also be deemed to be providing telecommunications?  Does the analysis of this issue change if the information service provider is transmitting services over its own telecommunications facilities rather than using facilities obtained from other carriers? 

        2.  Considering the Act's text, structure, purpose, and history, what effect, if any, should the Commission give to section 271(g)'s reference to "incidental interLATA services," which the Commission has interpreted as applying to both incidental telecommunications and information services? 

        3.  Considering the Act's text, structure, purpose, and history, what effect, if any, should the Commission give to section 272(a)(2)(B)'s reference to "interLATA telecommunications services"?  Does use of this term imply that interLATA telecommunications service is a subset of a more general category of "interLATA services" that could include interLATA information services, or did Congress mean simply to distinguish common-carrier transmission services from non-common carrier transmission services, as the petitioners contend? 

        4.  Considering the Act's text, structure, purpose, and history, what effect, if any, should the Commission give to section 272(a)(2)(C)'s reference to "interLATA information services"?  For purposes of interpreting the term "interLATA services" in section 271, is there any significance to the fact that section 272 treats "interLATA telecommunications services" differently from "interLATA information services"?

        5.  The petitioners' appellate brief quotes several passages from the Commission's 1998 Report to Congress.  Do those passages support the conclusion that information services fall outside of the scope of the statutory definition of "interLATA service"?  If so, why?  If not, why not?

 IN THE MATTER OF IMPLEMENTATION OF THE NON-ACCOUNTING SAFEGUARDS OF SECTION 271 AND 272 OF THE COMMUNICATIONS ACT OF 1934, AS AMENDED. Affirmed the FCC's conclusion in the Non-Accounting Safeguards Order that the term "interLATA service" used in section 271 encompasses interLATA information services as well as interLATA telecommunications services. (Dkt
No. 96-149). Action by: The Commission. Adopted: 04/23/2001 by ORDER. (FCC No. 01-140). CCB FCC-01-140A1.pdfFCC-01-140A1.docFCC-01-140A1.txt

POC:  Johanna Mikes, Policy and Program Planning Division, Common Carrier Bureau at 1535 jmikes

Copies of Comments can be viewed on the FCC's Electronic Comment Filing System (remember the docket number)

Public Notice 11/8/2000 Text | Word | PDF

Bell Atlantic Telephone Companies v. Federal Communications Commission, No. 99-1479 (D.C. Cir. Oct. 27, 2000) (order granting motion for remand)
  • Non-Accounting Safeguards of Sections 271 and 272 of the Communications Act
  • Docket 96-150
  • FCC Press Release:  COMMISSION IMPLEMENTS ACCOUNTING SAFEGUARDS PROVISIONS OF THE TELECOMMUNICATIONS ACT OF 1996 (CC Docket No. 96-150).
  • Accounting Safeguards Order Docket No. 96-150 (Dec 24, 1996). | Text | Wordperfect|

    • "In this Report and Order ("Order") we address the accounting safeguards necessary to satisfy the requirements of sections 260 and 271 through 276 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996.  This Order prescribes the way incumbent local exchange carriers, including the Bell Operating Companies ("BOCs"), must account for transactions with affiliates involving, and allocate costs incurred in the provision of, both regulated telecommunications services and nonregulated services, including telemessaging, interLATA telecommunications, information, manufacturing, electronic publishing, alarm monitoring and payphone services, to ensure compliance with the Act.  In particular, the Order adopts the tentative conclusion in the Notice of Proposed Rulemaking ("NPRM") in this proceeding that our current cost allocation rules generally satisfy the Act's accounting safeguards requirements when incumbent local exchange carriers, including the BOCs, provide services permitted under sections 260 and 271 through 276 on an integrated basis (i.e., within the telephone operating companies).  The Order also adopts the tentative conclusion in the NPRM that our current affiliate transactions rules generally satisfy the Act's accounting safeguards requirements when incumbent local exchange carriers, including the BOCs, are required to, or choose to, use an affiliate to provide services permitted under sections 260 and 271 through 276.  The Order adopts most of the NPRM's proposed modifications to the affiliate transactions rules to provide greater protection against subsidization of competitive activities by subscribers to regulated telecommunications services." Para. 1.

    Released:  December 9, 1999
    CC Docket No. 96-149    		 Comments Due Dec 17, 1999
    Oppositions Due Dec 28, 1999    		 . FCC 
    In Re Extension of the Sunset Date of the Structural, Non-Discrimination, and Other Behavior Safeguards Governing BOCS Provision of In-Region InterLata Information Services Order (Feb 8, 2000) (denying petition) | Text | Word |
    The Sec. 272 restriction on the ability of BOCs to enter into Interlata information services sunsetted Feb 2000.  Petition of the Commercial Internet eXchange to extent the restriction period was denied. 

    Nevertheless, BOC's without 271 approval are still not permitted to provide Interlata inregion service for their Internet services.  In order to get across these lata lines, BOCs typically use Global Service Providers (GSPs).  See Verizon statement on GSPs  that talks about the issue, Qwest statement on the bottom of the page, SBC's statement, BellSouth's statement. 

    See Bell Atlantic Telephone Cos. v. FCC, 131 F.3d 1044 (D.C. Cir. 1997) (section 272(e)(4); separate affiliate requirements for Bell Operating Companies)

    		 Public Notice | Text | Word |

    CORRECTION - PLEADING CYCLE ESTABLISHED FOR COMMENTS ON CIX AND ITAA REQUEST FOR EXTENSION OF THE SUNSET DATE OF SAFEGUARDS GOVERNING BELL OPERATING COMPANY PROVISION OF IN-REGION, INTERLATA INFORMATION SERVICES - Public Notice. Released: 12/09/1999. | Text | Word |

    ITAA / CIX Petition
    These notes are not complete and there is no guarantee that they are accurate. They are presented simply as notes. Feel free to use them but as with all material on the Internet Telecom Project, you should consider them a beginning to your research and not an end.2 The Telecommunications Act * 2.1 Section 272 of the Comm Act as Amended * 2.1.1 Unbundling *
    2.1.2 Discrimination *
    2.1.3 Timely Provisioning *
    2.1.4 Accounting Safeguards *
    1.1.5 Cross Subsidization *
    1.1.6 Joint Marketing *
    1.1.7 Bundling Interlata services *    1.2 Accounting Safeguards *

    1. The Telecommunications Act


      2. Congress recognized, in passing the 1996 Act, that competition will not immediately supplant monopolies and therefore imposed a series of safeguards to prevent the BOCs from using their existing market power to engage in improper cost allocation and discrimination in their provision of interLATA information services, among other things. These statutory safeguards seek to address many of the same anticompetitive concerns as, but do not explicitly displace, the safeguards established by the Commission in the Computer II, Computer III, and ONA proceedings. -- In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶ 5 (January 30, 1998)

      We also concluded in the Non-Accounting Safeguards Order that the Commission's Computer II, Computer III, and ONA requirements are consistent with section 272 of the Act, and continue to govern the BOCs' provision of intraLATA information services, since section 272 only addresses BOC provision of interLATA services.

      -- In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶ 20 (January 30, 1998)

      1. Section 272 of the Comm Act as Amended
    47 U.S.C. § 272(a)(2)(C)
    1. Separate Affiliate Required for Competitive Activities-
    1. In General - A Bell operating company (including any affiliate) which is a local exchange carrier that is subject to the requirements of section 251(c) may not provide any service described in paragraph (2) unless it provides that service through one or more affiliates that -
      1. are separate from any operating company entity that is subject to the requirements of section 251(c); and
      2. meet the requirements of subsection (b).
    1. Services for which a separate affiliate is required by paragraph (1) are:
    . . .
      1. InterLATA information services, other than electronic publishing (as defined in section 274(h)) and alarm monitoring services (as defined in section 275(e)).

     
     

    47 U.S.C. § 272(f) Sunset

    . . . . .

    (2) InterLATA information services

    The provisions of this section (other than subsection (e) of

    this section) shall cease to apply with respect to the interLATA

    information services of a Bell operating company 4 years after

    February 8, 1996, unless the Commission extends such 4-year

    period by rule or order.
     
     
     
     

    Sec. 272. Separate affiliate; safeguards

    (a) Separate affiliate required for competitive activities

    (1) In general

    A Bell operating company (including any affiliate) which is a

    local exchange carrier that is subject to the requirements of

    section 251(c) of this title may not provide any service

    described in paragraph (2) unless it provides that service

    through one or more affiliates that -

    (A) are separate from any operating company entity that is

    subject to the requirements of section 251(c) of this title;

    and

    (B) meet the requirements of subsection (b) of this section.

    (2) Services for which a separate affiliate is required

    The services for which a separate affiliate is required by

    paragraph (1) are:

    (A) Manufacturing activities (as defined in section 273(h) of

    this title).

    (B) Origination of interLATA telecommunications services,

    other than -

    (i) incidental interLATA services described in paragraphs

    (1), (2), (3), (5), and (6) of section 271(g) of this title;

    (ii) out-of-region services described in section 271(b)(2)

    of this title; or

    (iii) previously authorized activities described in section

    271(f) of this title.

    (C) InterLATA information services, other than electronic

    publishing (as defined in section 274(h) of this title) and

    alarm monitoring services (as defined in section 275(e) of this

    title).

    (b) Structural and transactional requirements

    The separate affiliate required by this section -

    (1) shall operate independently from the Bell operating

    company;

    (2) shall maintain books, records, and accounts in the manner

    prescribed by the Commission which shall be separate from the

    books, records, and accounts maintained by the Bell operating

    company of which it is an affiliate;

    (3) shall have separate officers, directors, and employees from

    the Bell operating company of which it is an affiliate;

    (4) may not obtain credit under any arrangement that would

    permit a creditor, upon default, to have recourse to the assets

    of the Bell operating company; and

    (5) shall conduct all transactions with the Bell operating

    company of which it is an affiliate on an arm's length basis with

    any such transactions reduced to writing and available for public

    inspection.
     
     

    47 CFR § 53.201

    "We do not find convincing the arguments put forth in the CIX/ITAA Petition. Rather, based on the record before us, we find that there are several safeguards that will limit adequately BOCs' ability to discriminate against nonaffiliated information service providers even after section 272(f)(2) takes effect. For example, there are nonstructural safeguards that will limit the BOCs' ability to discriminate against nonaffiliated information service providers. Accordingly, we conclude that the CIX/ITAA Petition does not provide a basis for the Commission to extend beyond February 8, 2000, pursuant to section 272(f)(2) of the Act, the structural, nondiscrimination, and other behavioral safeguards contained in section 272 of the Act as they pertain to BOC provision of in-region, interLATA information services. We therefore deny the CIX/ITAA petition. Thus, by operation of section 272(f)(2) of the Act, the safeguards contained in section 272 of the Act, as they apply to BOC provision of interLATA information services, expire on February 8, 2000." -- In the Matter of Request for Extension of the Sunset Date of the Structural, Nondiscrimination, and Other Behavioral Safeguards Governing Bell Operating Company Provision of In-Region, InterLATA Information Services, CC Docket No. 96-149, Order, ¶ 3 (February 8, 2000).

    See In The Matter Of Computer III Further Remand Proceedings: Bell Operating Company Provision Of Enhanced Services, CC Docket No. 95-20, 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, CC Docket No. 98-10, FCC 98-8, Further Notice of Proposed Rulemaking, ¶ 66 et seq. (January 30, 1998) (discussing 272 and future of Computer III).
     
     

    121. Remote Databases/Network Efficiency. BOCs may not provide interLATA services in their own regions, either over their own facilities or through resale, before receiving authorization from the Commission under section 271(d). Therefore, we conclude that BOCs may not provide interLATA information services, except for those designated as incidental interLATA services under section 271(g), in any of their in-region states prior to obtaining section 271 authorization. Section 271(g)(4) designates as an incidental interLATA service the interLATA provision by a BOC or its affiliate of "a service that permits a customer that is located in one LATA to retrieve stored information from, or file information for storage in, information storage facilities of such company that are located in another LATA." Because BOCs were able to provide incidental interLATA services immediately upon enactment of the 1996 Act, they may provide interLATA information services that fall within the scope of section 271(g)(4) without receiving section 271(d) authorization from the Commission. Since section 271(g)(4) services are not among the incidental interLATA services exempted from section 272 separate affiliate requirements, however, they must be provided in compliance with those requirements. To the extent that parties have argued in the record that centralized data storage and retrieval services that fall within section 271(g)(4) either are not interLATA information services, or are not subject to the section 272 separate affiliate requirements, we specifically reject these arguments.

    -In the Matter of the Implementation of the Non-Accounting Safeguards of Sections 271 and 272 of the Communications Act of 1934, as Amended, Order on Reconsideration, Docket 96-149, 1997 WL 71143 (FCC), 12 FCCR. 2297, 12 FCC Rcd. 2297, 6 Communications Reg. (P&F) 972, ¶ 3 (Feb 19, 1997) (revising para 121).

    In the Matter of the Implementation of the Non-Accounting Safeguards of Sections 271 and 272 of the Communications Act of 1934, as Amended, Order on Reconsideration, Docket 96-149, 1996 WL 734160 (FCC), 11 FCCR. 21,905, 13 FCCR. 11,230, 11 FCC Rcd. 21,905, 13 FCC Rcd. 11,230, 5 Communications Reg. (P&F) 696, ¶ 51 (Dec 24, 1996) (stating "We further stated that, where the 1996 Act draws distinctions between in-region and out-of-region 'interLATA services,' these distinctions do not apply to interLATA information services.").

    Based on the record before us and our own statutory analysis, we hereby adopt our tentative conclusion that BOCs must provide out-of-region interLATA information services through a section 272 separate affiliate. Although we concluded above that "interLATA information services" are included within the term "interLATA services" as used in section 271(b), that determination does not alter the conclusion that BOCs must provide out-of-region interLATA information services through a section 272 separate affiliate. [FN184] Section 271(b)(2) permits a BOC or its affiliate to provide interLATA services, including interLATA information services, that originate outside its in-region states, immediately upon enactment of the 1996 Act. Section 271, however, does not address whether such services must be provided through a separate affiliate; that issue is addressed in section 272(a). -- In the Matter of the Implementation of the Non-Accounting Safeguards of Sections 271 and 272 of the Communications Act of 1934, as Amended, Order on Reconsideration, Docket 96-149, 1997 WL 71143 (FCC), 12 FCCR. 2297, 12 FCC Rcd. 2297, 6 Communications Reg. (P&F) 972, ¶ 85 (Feb 19, 1997).

    "7. On February 8, 1996, the Telecommunications Act of 1996 (1996 Act) became law. Section 272 of the 1996 Act addresses the provision by BOCs of, inter alia, interLATA information services. On December 24, 1996, the Commission adopted rules to implement the non-accounting separate affiliate and nondiscrimination safeguards of sectifons 271 and 272. In the Non-Accounting Safeguards Order, the Commission concluded that the Computer II, Computer III, and ONA requirements are consistent with the 1996 Act and continue to govern BOC provision of intraLATA information services. The Commission also concluded that, as used in section 272, the term "interLATA information service" refers to an information service that incorporates as a necessary, bundled element an interLATA telecommunications transmission component, provided to a customer for a single charge." -- In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service CCBPol 97-03 Order ¶ 7 (December 31, 1997)

    In the Matter of the Implementation of the Non-Accounting Safeguards of Sections 271 and 272 of the Communications Act of 1934, as Amended, Third Order on Reconsideration, Docket 96-149 ¶ 8 (October 1, 1999) (stating "We affirm the conclusion in the Non-Accounting Safeguards Order that section 272(a)(2)(C) does not exclude out-of-region interLATA information services from the separate affiliate requirement.")
     
     

        1. Unbundling

          2.  

           
           
           

          [The Commisions has offered guidance on what constitutes "bundling." Non-Accounting Safeguards of Sections 271 and 272 of the Communications Act, First Report and Order, 11 FCC Rcd. 21905, n. 276 (1996) ("special discounts or incentives to take both services . . . would constitute sufficient evidence of bundling" ("Non-Accounting Safeguards Order")' id., at ¶ 277 ("We define 'bundling' to mean offering BOC resold local exchange services and interLATA services as a package under an integrated pricing schedule." FNPRM, at ¶ 1 ("Bundling means selling different goods and/or services together in a single package.").]
           
           

        2. Discrimination

          3.  

           
           
           

          47 U.S.C. § 272

          (c) Nondiscrimination safeguards

          In its dealings with its affiliate described in subsection (a) of

          this section, a Bell operating company -

          (1) may not discriminate between that company or affiliate and

          any other entity in the provision or procurement of goods,

          services, facilities, and information, or in the establishment of

          standards; and

          (2) shall account for all transactions with an affiliate

          described in subsection (a) of this section in accordance with

          accounting principles designated or approved by the Commission.

          . . . . .

          (e) Fulfillment of certain requests

          A Bell operating company and an affiliate that is subject to the

          requirements of section 251(c) of this title -

          . . . . .

          (2) shall not provide any facilities, services, or information

          concerning its provision of exchange access to the affiliate

          described in subsection (a) of this section unless such

          facilities, services, or information are made available to other

          providers of interLATA services in that market on the same terms

          and conditions;
           
           

        3. Timely Provisioning

          4.  

           
           
           

          47 USC § 272(e) Fulfillment of certain requests

          A Bell operating company and an affiliate that is subject to the

          requirements of section 251(c) of this title -

          (1) shall fulfill any requests from an unaffiliated entity for

          telephone exchange service and exchange access within a period no

          longer than the period in which it provides such telephone

          exchange service and exchange access to itself or to its

          affiliates;
           
           

        4. Accounting Safeguards

          5.  

           
           
           

          47 U.S.C. § 272(d) Biennial Audit

          (d) Biennial audit

          (1) General requirement

          A company required to operate a separate affiliate under this

          section shall obtain and pay for a joint Federal/State audit

          every 2 years conducted by an independent auditor to determine

          whether such company has complied with this section and the

          regulations promulgated under this section, and particularly

          whether such company has complied with the separate accounting

          requirements under subsection (b) of this section.

          (2) Results submitted to Commission; State commissions

          The auditor described in paragraph (1) shall submit the results

          of the audit to the Commission and to the State commission of

          each State in which the company audited provides service, which

          shall make such results available for public inspection. Any

          party may submit comments on the final audit report.

          (3) Access to documents

          For purposes of conducting audits and reviews under this

          subsection -

          (A) the independent auditor, the Commission, and the State

          commission shall have access to the financial accounts and

          records of each company and of its affiliates necessary to

          verify transactions conducted with that company that are

          relevant to the specific activities permitted under this

          section and that are necessary for the regulation of rates;

          (B) the Commission and the State commission shall have access

          to the working papers and supporting materials of any auditor

          who performs an audit under this section; and

          (C) the State commission shall implement appropriate

          procedures to ensure the protection of any proprietary

          information submitted to it under this section.
           
           

          "The Commission has adopted a comprehensive system of accounting safeguards now found in Parts 32 and 64 of our rules. Computer III Remand Proceedings: Bell Operating Company Safeguards and Tier 1 Local Exchange Company Safeguards, CC Docket No. 90-623, 6 FCC Rcd 7571,7591-7605 paras. 46-74 (1991) ("Computer III Remand"). See 47 C.F.R. '' 64.901-903. These requirements apply not only to the BOCs, but to all incumbent local exchange carriers with annual operating revenue greater than the applicable interim revenue threshold. Id." -- In the matter of Accounting Safeguards Under the Telecommunications Act, Docket 96-150, ¶ 1 n. 8 (December 24, 1996)
           
           

        5. Cross Subsidization

          6.  

           
           
           

          "A subsidy occurs when the reasonable costs associated with a service are not covered by the revenues generated by that service, but are instead covered by revenues generated by one or more other services." -- In the matter of Accounting Safeguards Under the Telecommunications Act, Docket 96-150, ¶ 1 n. 10 (December 24, 1996).
           
           

        6. Joint Marketing

          7.  

           
           
           

          47 USC § 272(g).
           
           

        7. Bundling Interlata services
    As we noted above, the Commission found that BOC section 272 affiliates would be classified as nondominant interexchange carriers. We note that, in the Non-Accounting Safeguards Order, the Commission allowed the BOCs' section 272 affiliates to bundle interLATA telecommunications service with interLATA information services, as long as the affiliate provided interLATA telecommunications services on a resale basis. The Commission noted that if "a BOC's section 272 affiliate were classified as a facilities-based telecommunications carrier (i.e., it did not provide interLATA telecommunications services solely through resale), the affiliate would be subject to a Computer II obligation to unbundle and tariff the underlying telecommunications services used to furnish any bundled service offering." In its discussion of this issue in the Non-Accounting Safeguards Order, the Commission noted that the market for interLATA information services "is fully competitive" and the market for interLATA telecommunications services is "substantially competitive." Because of these market conditions, the Commission stated that there was "no basis for concern that a section 272 affiliate providing an information service bundled with an interLATA telecommunications service would be able to exercise market power." We seek comment on the effect on this proceeding of the decision in the Non-Accounting Safeguards Order to permit BOC section 272 affiliates that provide interLATA telecommunications services solely on a resale basis to bundle such telecommunications services and interLATA information services. Specifically, we seek comment on whether the enhanced services market and the interstate, domestic, interexchange services market are sufficiently competitive so that it is unlikely that nondominant interexchange carriers could engage in anticompetitive behavior should the Commission eliminate the restrictions on bundling of enhanced services with interstate, domestic, interexchange services. Commenters should provide empirical data on the level of competition in the interexchange and enhanced services markets to support their comments on these issues. We also seek comment on whether, as claimed by ITAA, AT&T or any other nondominant interexchange carriers have the ability, to discriminate in favor of their own enhanced service offerings.

    -- In the matter of 1998 Biennial Regulatory Review -- Review of Customer Premises Equipment and Enhanced Services Unbundling Rules in the Interexchange, Exchange Access and Local Exchange Markets, CC Docket No. 98-183, Further Notice of Proposed Rulemaking, para 36 (October 9, 1998) (footnote numbering off)
     
     

      1. Accounting Safeguards
    "46. The BOCs must adhere to certain accounting procedures to protect ratepayers from bearing misallocated costs. These procedures consist of five principal elements: (1) the Commission's Part 32 Uniform System of Accounts requirements and cost allocation standards; (2) the requirement that BOCs file cost allocation manuals reflecting their accounting rules and cost allocation standards; (3) mandatory audits of carrier cost allocations by independent auditors, who must state affirmatively whether the audited carriers' allocations comply with its cost allocation manual; (4) development of an automated system to store and analyze data necessary to respond to the Commission's detailed reporting requirements; and (5) on-site audits by Commission staff." -- In the Matter of Ameritech's Comparably Efficient Interconnection Plan for Electronic Vaulting Service, CCBPol 97-03, Order ¶ 46 (December 31, 1997)