NOTICES
Implementation of the Telecommunications Act of 1996; Doc. No. M-00960799
[26 Pa.B. 1456] Public meeting held
March 14, 1996Commissioners Present: John M. Quain, Chairperson--Statement follows; Lisa Crutchfield, Vice Chairperson--Statement follows; John Hanger; David W. Rolka--Statement follows; Robert K. Bloom
Tentative Decision By the Commission:
A. General Background
On February 8, 1996, President Clinton signed the Telecommunications Act of 1996 (act) into law. The act is a landmark piece of legislation which for the first time in 62 years comprehensively amends the Federal law which governs the provision of telephone service throughout the Nation. The far-reaching nature of the act and its profound effects on the future regulation of telecommunications services at both the State and Federal levels are best summarized in the Congressional Conference Report which states that the purpose of the act is:
. . . To provide for a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information technologies and services to all Americans by opening all telecommunications markets to competition, and for other purposes. . . .
As reflected in the stated purpose, the act sets forth a National policy framework to be implemented and coordinated in cooperative fashion by the Federal Communications Commission (FCC) and the various State commissions. The primary themes of this National telecommunications policy framework, as reflected in the stated purpose, are as follows: (1) to move away from a fully regulated telecommunications business environment towards a deregulated fully competitive business environment in all markets and submarkets; (2) to accelerate advanced deployment of the Nation's telecommunications infrastructure and (3) to assure universal service to all Americans through equal access to the Nation's telecommunications infrastructure.
In this regard, the underlying themes of the act are consistent with the Commonwealth's telecommunications policy framework as set forth in Chapter 30 of the Public Utility Code (66 Pa.C.S. §§ 3001 et seq.). Because of the parallel courses established by the act and Chapter 30, it is clear that through its efforts to implement Chapter 30, Pennsylvania has already made substantial progress in the direction now required by the National policy framework, as established in the act.
This is not to say that the act will not have a significant effect on the Commission's future regulation of the telecommunications industry. It certainly will. However, the act will not require a fundamental change in direction or focus, but instead will require the Commission to take a number of steps, both internally and externally, to assure the level of cooperation and coordination between the Commission and the FCC envisioned, and indeed required, by the act in implementing the National policy framework. However, as long as the Commission continues on its course as directed under its State legislative mandate, the required implementation steps will be more in the form of adjustments rather than overhaul or preemption.
Within this scenario, there are many provisions of the act which raise questions as to what steps, if any, the Commission must take to assure that its regulation of the telecommunications industry is fully consistent with Federal law. These provisions of the act can be divided into two categories for purposes of discussion. First, there are preemptive provisions which appear to eliminate or restrict the ability of the Commission to regulate or act in a certain manner. Second, there are enabling provisions of the act which assign new areas of activity to the states and appear to assign new responsibilities to the Commission in participating in the implementation of the National policy framework.
In this regard, although the ultimate goal of the act is to move toward a deregulated, competitive environment, the transition process envisioned by the act is clearly one involving very complex and far reaching regulatory activity by both the FCC and various State commissions--regulatory activity which appears, at least on its face, to be more complex and resource and time consuming than previously encountered by the Commission in some areas. While ultimately, through development of a fully competitive business environment in all telecommunications markets, the Commission's and FCC's regulatory roles should start to significantly decrease, the period of transition involves a quickly changing but extremely active role by the Commission in participating in the implementation of both State and Federal law.
Through issuance of this Tentative Decision, we will briefly discuss the provisions of the act which we have identified as requiring potential substantive modification or restriction of past or future Commission action or otherwise affect the manner in which the Commission conducts its business in its day-to-day regulation of the telecommunications industry. This decision is issued in tentative form in order to solicit and consider the comments of all interested parties before the Commission takes any final steps in furtherance of implementation of the act. In this regard, the issues discussed are not intended to represent an exhaustive list and we welcome comment on any issue pertaining to any provision of the act which we may have overlooked and which parties believe to require further Commission action or scrutiny.
B. Discussion of Issues
1. Entry a. Certificates of Public Convenience
The most apparent, immediately significant, express preemption in the act is found in section 253(a) of the act which provides as follows:
(a) IN GENERAL.-No state or local statute or regulation, or other state or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.
Under Pennsylvania law, the Commission regulates entry through issuance of certificates of public convenience under 66 Pa.C.S. §§ 1101 and 1103. Under section 1103, the Commission may only approve the entry of a carrier ''if the commission shall find or determine that the granting of such certificate is necessary or proper for the service, accommodation, convenience or safety of the public'' (public interest finding). Under the broad language of section 253(a) of the act, it appears that the Commission is prohibited from restricting the entry or preventing the continued operations of a telecommunications service provider whether or not the Commission finds the provision of services by the carrier to be in the public interest. Accordingly, it appears that the legal basis underlying the issuance and maintenance of all telecommunications certificates of public convenience, the public interest finding, has been preempted by the act, with one possible exception discussed hereafter.1 Given the language of section 253(a), it appears that the requirements of 66 Pa.C.S. §§ 1101 and 1103, at least as they pertain to Commission-approved operating authority, have generally been preempted2 and that it may no longer be legally permissible for the Commission to adjudicate entry applications or issue or maintain entry certificates of public convenience.3
Presuming entry preemption, Commission implementation of the preemption could take a variety of forms. Certificates could be converted to Registrations Statements with the Commission's ''A'' file becoming the repository for carrier specific information regarding the nature and scope of a given carrier's intrastate business. Procedures would be developed by the Commission for registering new entrants. Alternatively, the Commission could cancel all existing telecommunications certificates, as it did for radio carriers in implementing the OBRA, and require each existing carrier and new entrant to file a Registration Statement to be developed by the Commission which would provide the Commission and the public with necessary information regarding the conduct of the carrier's business in Pennsylvania. Market specific registration forms could be developed by the Commission which would reflect the varying levels of information required of different types of carriers.4 One possible advantage of this alternative would be that it would allow for more centralized record keeping for telecommunications carriers and more easily accessible information for the Commission and the public since the vital information on each carrier would be contained in the Registration Statement itself.
The Commission requests interested parties to comment on these and other possible alternatives and to include in their comments proposals regarding the content of registration information the Commission should require of providers in various markets. Comments should also address whether the Commission should require that registration forms be annually or periodically updated or whether the Commission should impose an ongoing obligation on carriers to file an amended Registration Statement if any of the information in the original Statement changes or becomes inaccurate. Commentators should also address whether it is feasible or desirable for Registration Statements to be filed in electronic format.
Parties should comment on whether removal of entry barriers and potential Commission implementation alternatives would have any tax or accounting repercussions as a result of possible loss in value of the certificate as a book asset or other financial ramifications resulting from potential Commission implementation.5 Finally, we also seek comment on any interim procedures parties believe may be appropriate for the Commission to employ pending issuance of its final order in this matter.
b. Terms and Conditions of Service
Although the language of section 253(a) is relatively broad, section 253(b) of the act continues to permit states to impose operating terms and conditions on a ''competitively neutral'' basis. Section 253(b) of the Act provides as follows:
(b) STATE REGULATORY AUTHORITY-Nothing in this section shall affect the ability of a State to impose, on a competitively neutral basis and consistent with Section 254, requirements necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services and safeguard the rights of consumers.
While the entry preemption under section 253(a) is broadly expressed, the qualification to application of subsection (a) by subsection (b) appears to be equally broad. Although the State commission may not preclude new carriers from entering into any or all service markets, the State commission may continue to impose requirements pertaining to the terms and conditions under which services are provided to the consuming public as long as the requirements are competitively neutral.
Commission requirements governing the terms and conditions of service provided by telecommunications carriers are contained in Chapters 63 and 64 of the Pennsylvania Code and in some cases by Commission orders.6 At least initially, it does not appear that there are any existing regulatory provisions (other than entry) which are subject to preemption since, to our knowledge, all existing regulatory provisions are applied equally to all similarly situated carriers providing services in various markets and fall within the broad language of section 253(b). However, we request interested parties to identify and provide explanation as to any regulatory requirements which a party believes are not covered by section 253(b) and are thus subject to Federal preemption.7
c. Equity Transfers and Other Financial Transactions
In addition to certificates of public convenience issued under 66 Pa.C.S. § 1101, Pennsylvania also requires regulatory approval of a wide variety of financial transactions involving existing utilities under 66 Pa.C.S. § 1102, including equity and asset transfers. Within certain contexts, Commission approval of equity and asset transfers has been viewed as an entry barrier particularly when the transaction involves transfers of control of the utility.8 However here, the express language of section 253(a) only precludes State actions which have the effect of precluding a carrier's entry into various service markets. The language of section 253(a) thus does not appear to lend itself easily to an interpretation that the preemptive effect extends to required State regulatory approval of utility transfers of control. However, we request interested parties to comment on this issue.
Furthermore, section 103 of the act amends section 34(b) of the Public Utility Holding Act of 1935 ( 15 U.S.C. §§ 79 et seq.), to expressly recognize State commission authority to review proposed asset transfers by natural gas and electric registered public utility commission holding companies or their affiliates to a telecommunications affiliate in the holding company structure designated by the FCC as an exempt telecommunications company. This provision appears to reinforce the Commission's section 1102 authority in the public utility holding company context as gas and electric holding companies move into the telecommunications area. This provision should likewise be included as a subject for comment by interested parties.
d. Exception for Rural Telephone Companies
Another important exception to the removal of intrastate entry barriers by section 253(a) is found at section 253(f) of the act. Section 253(f) appears to establish a limited exception to the preemptive provisions of section 253(a) applicable only to rural telephone companies as defined in the act. Section 253(f) provides in relevant part as follows:
(f) RURAL MARKETS-It shall not be a violation of this section for a state to require a telecommunications carrier that seeks to provide telephone exchange service or exchange access in a service area served by a rural telephone company to meet the requirements of section 214(e)(1) for designation as an eligible telecommunications carrier for that area being permitted to provide such service . . .
Section 214(e)(1), referenced in section 253(f), establishes a designation of eligibility process for universal service funding purposes, as will be discussed in more detail hereafter, which requires carriers to offer basic universal service throughout a given service area and advertise the availability of such service offerings to the consuming public in the service area.9 Subsection (e)(1) expressly incorporates by reference the requirements contained in subsections (e)(2) and (e)(3). Section 214(e)(2) provides as follows:
(2) DESIGNATION OF ELIGIBLE TELECOMMUNICATIONS CARRIERS-A State commission shall upon its own motion or upon request designate a common carrier that meets the requirements of paragraph (1) as an eligible telecommunications carrier for a service area designated by the State commission. Upon request and consistent with the public interest, a State commission may, in the case of an area served by a rural telephone company, and shall, in the case of all other areas, designate more than one common carrier as an eligible telecommunications carrier for a service area designated by the State commission, so long as each additional carrier meets the requirements of paragraph (1). Before designating an additional telecommunications carrier for an area served by a rural telephone carrier, the State commission shall find that the designation is in the public interest.
Accordingly, in addition to the obligation to serve commitment required as a prerequisite to universal service support eligibility under subsection (e)(1), subsection (e)(2) requires the State commission to find, for rural telephone companies, that designation is in the public interest.
Finally, section 251(f) exempts rural telephone companies10 from interconnection requirements and procedures, the details of which will be discussed hereafter, until such time as the rural telephone company receives a bona fide request for interconnection, at which time the State commission is apparently directed to conduct an inquiry to determine whether to require the rural telephone company's compliance with general interconnection requirements. In reaching its determination, the State commission is to consider whether the request for interconnection is unduly economically burdensome, technically feasible and consistent with universal service principles--a public interest type standard.11 The Commission, at least with regard to the interconnection determination under section 251(b), is required to act upon the request within 120 days.
While for nonrural telephone companies universal service funding eligibility is considered independently from entry, for rural telephone companies it appears that universal service eligibility and interconnection requirements may be merged into consideration of the appropriateness of entry into a rural telephone company's local service and access service markets as an exception to the entry preemption.12 Under the provisions of the act cited above, it appears a State commission could consider competitive entry into a rural telephone company's local and access markets at the same time and under the same standard (a public interest finding) as interconnection and universal service funding eligibility for the competitive local exchange carrier seeking to serve the rural area.13 Under this scenario, in applying the public interest standard, the Commission would include in its consideration the ''economically burdensome,'' ''technically feasible'' and universal service criteria expressed in section 251(f)(1)(B).
While there may be a variety of ways to administer the rural telephone company exception to the removal of entry barriers, one of the simplest and most logical ways would be to maintain the existence of rural telephone certificates of public convenience (assuming other § 1101 certificates are cancelled) and to require new entrants into rural telephone company local and access service markets to file an application under section 1103 which would be reviewed by the Commission within the context of the ''necessary or proper'' or public interest standard as appears to be required by the act. Interconnection and universal service funding eligibility for the new entrant would be evaluated through the same application process.14 The public interest standard employed by the Commission in the consolidated proceeding would be consistent with all express considerations required by the act as discussed above.
While the alternative identified above may be a workable procedure, we request interested parties to comment on this procedure and other possible alternatives to implementation of the rural telephone company exception to the removal of entry barriers. We also request the Pennsylvania Telephone Association (PTA) to closely review the definition of a rural telephone company contained in section 3 of the act and identify in its comments the member companies which presently qualify for the rural telephone company exception and indicate the section 3 criteria under which each identified member qualifies.
2. Interconnection The act assigns far reaching responsibilities to State commissions to assure that interconnection arrangements between incumbent local exchange carriers and entrants seeking to compete with the incumbent are implemented through the development of interconnection parameters and procedures and through participation in the development and approval of interconnection agreements. The State commission's participation involves a combination of different roles including that of mediator, arbitrator and adjudicator. Such a mixed role, however it is implemented, involves a new type of responsibility for our Commission and will present a challenge in the development of appropriate internal and external procedures.
Section 251 of the act provides the general standards governing interconnection arrangements which standards will be further defined by the FCC and may be further defined by State commissions.15 While the MFS, Phase II proceeding was initiated to address unbundling and general interconnection pricing standards for Bell, in Investigation to Establish Standards and Safeguards for Competitive Safeguards, M-00940587, the Commission has expressed its intention to determine whether the safeguards developed for Bell should be applied to other local exchange carriers. It appears that such a determination to extend Bell standards to other local exchange carriers may also be appropriate for standards developed in the MFS, Phase II proceeding. In this regard, we expect active parties to address the requirements of the act in litigating the MFS, Phase II proceeding, for example, the wholesale-retail requirement of section 252(d)(3) and the specific standards for interconnection under section 251(c)(2).
Section 252 of the act sets forth very specific procedures and time restrictions governing State commission participation in development and approval of individual interconnection agreements. It is implementation of these procedures which requires our timely attention.
Under section 252, the act sets forth a schedule of events which commences on the date an entrant makes a request to the incumbent local exchange carrier for interconnection.16 The schedule is summarized as follows:
Day 1 Request for interconnection. Day 1-Day 135 Parties are required to negotiate and attempt in good faith to reach an agreement without state commission participation. However, if they choose, any party(s) may ask the Commission to ''mediate any differences arising in the course of the negotiation.'' Day 135-160 Parties may continue to negotiate. However, if they choose, any party(s) may petition the Commission to act as an arbitrator to resolve any open issues (not necessarily all issues). Opposing parties may respond to the petition. Petition date-
Day 270Section 252(b)(4)(C) requires the Commission to resolve all open issues by no later than 9 months from the original date the entrant made a request to the incumbent local exchange carrier for an interconnection arrangement (Day 1). Accordingly, the Commission will have between 110 days and 135 days to arbitrate the dispute, the exact amount of time depending on when during the day 135 to day 160 window a party petitions the Commission for arbitration. Execution of
AgreementUnder Section 252(e), following execution of an interconnection agreement, either through negotiations, mediation, arbitration, or a combination thereof, the agreement must be submitted to the Commission for approval. The Commission must either approve or reject the agreement within 90 days from submission for agreements reached through negotiations, and within 30 days for agreements reached through arbitration. Although the chronology of the process is made very clear by the act, the procedural and substantive nature of the process, particularly the arbitration process, is not. Sections 252(c) and (d) require that the Commission's resolution of disputes within the arbitration process be consistent with the act and FCC regulations and that cost-based and reciprocal interconnection and network element charges and an interconnection implementation schedule should be established by the Commission.17 Once an agreement is executed and filed with the Commission, whether reached through negotiation or arbitration, the Commission is to determine whether to approve or reject the agreement through application of a public interest standard. The Commission must also determine whether arbitrated agreements meet the generic interconnection standards under section 251 and the pricing standards under section 252--negotiated agreements are not required to meet the section 251 standards.
Under section 252(b), the arbitration process before the Commission is compulsory. Under section 252(b)(5), the refusal of any party to continue to negotiate throughout the process or to cooperate with the Commission in its role as arbitrator is considered a failure to negotiate in good faith and apparently viewed as a violation of the act. Furthermore, once issues are arbitrated by the Commission, the parties apparently must prepare and execute an agreement which includes the terms and conditions arbitrated by the Commission. Accordingly, it appears relatively clear that the Commission's role of arbitrator and its determinations within that role are binding on the participating parties.18 Furthermore, it appears that the Commission's actions in approving or disapproving arbitration determinations should not be considered adjudications and are interlocutory in nature, since the entire interconnection agreement, including arbitrated issues, is subject to subsequent Commission review under section 252(e)(2).
As to participants in the process, there is language throughout section 252 which seems to envision a process involving multiple parties and which could be read to permit interested parties other than the entrant and the incumbent local exchange carrier to participate in the process. If other parties are permitted to participate, it is unclear whether this participation should be permitted in all phases of the negotiations and/or arbitration, or whether such participation should be restricted to the review process before the Commission once the final interconnection agreement is formally submitted.
Section 252(a)(1) requires that all interconnection agreements be approved by the State commission, including those which were executed prior to enactment. It appears clear that this requirement would extend to areas like traditional extended area service (EAS) interconnection agreements between incumbent local exchange carriers, and to wireless interconnection agreements, arguably including those involving market sectors historically not regulated by the Commission, and possibly even to the IntraLATA Toll Originating Responsibility Plan (ITORP) arrangement.
Under section 252(f), Bell may file a statement of generally available terms with the Commission which sets forth Bell's offer of interconnection terms and conditions to entrants within the Commonwealth. The filing and review of this statement appears to be completely separate and apart from development and approval of individual interconnection agreements. Within 60 days of the filing of a terms statement by Bell, the Commission must either complete its review of the statement or allow the statement to go into effect subject to continuing review under subsection (f)(4), unless the filing carrier agrees to an extension of time. In reviewing a terms statement filed by Bell, the Commission must determine whether the statement is consistent with general interconnection standards under section 251 and otherwise consistent with the public interest. Although the act does not expressly identify a terms statement as a tariff filing, in coordinating administration of the act with State law procedures, it appears that tariff filing and approval procedures as provided by 66 Pa.C.S. §§ 1308(a) and (b) may be the best suited procedural platform for carrying out this function. However, if section 1308 procedures are utilized, application of the act would preclude the Commission from suspending the effectiveness of the terms statement but would permit the Commission to allow the terms statement to become effective, subject to litigation of interested party complaints.
Under section 252(h), the Commission must make all interconnection agreements available for public inspection within 10 days following Commission approval of a given agreement. The Commission is permitted to assess a reasonable and nondiscriminatory fee on participants to interconnection agreement procedures and on Bell for filing of a terms statement to cover the Commission's administrative costs. Of course, at the present time no such fees have been established and it is uncertain what level of fees is justified. In particular, the arbitration and mediation process in particular appear to be a relatively costly process for the Commission to administer, although it appears that the same individuals could serve both roles.
Because of the significant allocation of administrative time and resources required by the various regulatory functions assigned in the interconnection area by the act, it will be beneficial for the Commission to have advance notice, to the extent possible, when pleadings, requests or statements are going to be filed with the agency. While because of the various time deadlines and somewhat unpredictable circumstances which may arise it may be impossible to establish a strict prefiling notice requirement, it appears that some system should be developed to make the Commission aware of what is coming so it can plan accordingly.
Finally, section 251(c)(4) of the act enables State commissions to, ''consistent with regulations prescribed by the Commission under this section, prohibit a reseller that obtains at wholesale rates a telecommunications service that is available at retail only to a category of subscribers from offering such services to a different category of subscribers.'' This prohibition appears to apply to situations where a carrier attempts to cross customer classes and resell services to a customer class different than the class the reseller purchased the underlying service for. However, in what context this situation may arise and in what manner the Commission should address such a situation is not readily apparent.
As is readily apparent, administration of the Commission's far-reaching role pertaining to regulation of interconnection arrangements as defined by the act will require development and implementation of new regulatory parameters and procedures in areas and for functions previously unknown to this Commission. Although section 252 is very detailed and specific, the practical application of the section at the State level is somewhat complicated and unclear. To assist the Commission in the implementation process, interested parties should provide comment on all issues addressed in the previous discussion and any other issues which may have been overlooked. The Commission requests that the comments be expansive and explanatory so as to allow the Commission to develop a process which is fair to all interests.
3. Collocation Policy Statement Commission policy statements and guidelines at 52 Pa. Code § 69.311 establish the Commission's current policy governing expanded interconnection for intrastate special access. Section 69.331 provides as follows:
(c) It is the Commission's policy to permit Tier 1 Local Exchange Carriers to offer, on a nondiscriminatory basis, expanded interconnection for intrastate special access, either on a physical or virtual collocation basis. The expanded interconnection for intrastate special access that is offered on virtual collocation basis shall be technically, economically and operationally comparable to the physical collocation that is being offered. The Tier 1 Local Exchange Carriers and interconnectors may negotiate mutually acceptable arrangements on an individual basis, which will be tariffed to facilitate regulatory review and enforcement of nondiscrimination requirements.
This policy has governed intrastate collocation since 1994. However, section 251(c)(6) of the act provides as follows as one of the duties required of incumbent local exchange carriers:
(6) COLLOCATION-The duty to provide, on rates, terms, and conditions that are just, reasonable, and nondiscriminatory, for physical collocation of equipment necessary for interconnection or access to unbundled network elements at the premises of the local exchange carrier, except that the carrier may provide for virtual collocation if the local exchange carrier demonstrates to the State commission that physical collocation is not practical for technical reasons or because of space limitations.
While it has been the Commission's policy to allow the local exchange carrier to choose whether it offers collocation on a physical basis, subsection (c)(6) establishes the general rule that collocation must be made available on a physical basis unless it is infeasible in a given situation. The subsection also assigns the Commission the role of ascertaining when physical collocation is infeasible for both intrastate and interstate interconnection and access. While the subsection goes beyond the special access interconnection arrangement addressed in the Commission's policy statement, the subsection appears to be inconsistent with the policy statement and would appear to have preemptive effect on the policy statement. Interested parties should comment on whether 52 Pa. Code § 69.311 has been preempted and whether the policy statement should be rescinded or modified. Parties should also comment on what procedures should be utilized by the Commission to determine whether physical collocation is infeasible in a given instance.
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1 As to one sector of the telecommunications industry, radio carriers, the Commission's entry regulation was previously preempted through enactment of Section 6002(c)(3) of the Omnibus Budget Reconciliation Act of 1993 (OBRA), 47 U.S.C. § 332. In this regard, on June 16, 1995 the Commission entered an Order in In Re: Implementation of the Omnibus Budget Reconciliation Act of 1993, L-00950104, M-00950695, 25 Pa.B. 3238, which implemented the entry preemption for radio carriers by canceling all radio carrier certificates of public convenience and requiring radio carriers to file a registration form with the Commission on an annual basis. The June 16, 1995 order also initiated an inquiry as to whether PCS/PCN services should be considered jurisdictional and subject to the same procedural requirements as other radio carriers. Although the preemptive language in the OBRA reads much differently than the preemptive language in Section 253(a), the language of Section 253(a) appears on its face to be even broader than that in the OBRA.
2 66 Pa.C.S. §§ 3008(e) and 3009(a) clarify the application of Section 1101 within the context of Chapter 30. Accordingly, it appears that these subsections are also subject to preemption under the Act.
3 Although administratively difficult to implement, removal of entry barriers does not constitute a significant substantive modification to Commission regulatory policy since the Commission has now opened up all markets, including the local market, to competitive entry.
4 For example, it can be presumed that the Commission would require a lesser volume of information in an interexchange reseller registration form as compared to a local exchange carrier registration form.
5 The Commission encountered these sorts of problems when it attempted to implement an Federal entry preemption in the motor carrier area. However, on its face, the telecommunications industry appears to be distinguishable from the motor carrier industry since, because of major differences in traditional forms of regulation of the two industries, telecommunications certificates were never as negotiable as motor carrier certificates and accordingly never accrued an identifiable market value as was associated with motor carrier certificates.
6 For example, in its Proposed Rulemaking to Establish a Universal Service Funding Mechanism, the Commission has proposed regulations to establish a state universal service fund and to require that all jurisdictional telecommunications carriers contribute to the fund on a pro rata, competitively neutral basis. It appears clear that the Commission's authority to require carrier contribution for all carriers, including carriers entering Pennsylvania markets, is preserved by Section 253(b). Another example pertains to the Commission's October 4, 1995 order approving entry applications for MFS Intelenet of Pennsylvania, Inc., TCG Pittsburgh, MCI Metro Access Transmission Services, Inc., and Eastern Telelogic Corporation at A-310203F0002, et al. In the Commission's order, the Commission imposed marketing restrictions on the new entrants applicable to the ''Joint Package'' marketing of their telecommunications services. It appears that the Commission's exercise of authority to impose these restrictions would also be preserved by Section 253(b).
7 For instance, the Commission currently requires a filing fee of $350 to be paid by all telecommunications carriers applying to do business in Pennsylvania. Some parties may argue that maintenance of this fee, in and of itself, constitutes an entry barrier even if the Commission continued to require it of all applicants or registrants on a competitively neutral basis.
8 In implementing OBRA, the Commission viewed regulatory approval of transfers of control under Section 1102 to be subject to the OBRA entry preemption. However, as indicated previously, the language of the entry preemption in the OBRA is significantly different than the language of the entry preemption in Section 253(a). The OBRA language in question provides that ''no state or local government shall have any authority to regulate the entry or the rates charged by any commercial mobile service or any private mobile service.'' 47 U.S.C. § 332. In contrast, the language of Section 253(a) is far more limited in scope, providing in relevant part that ''no state or local statute or regulation may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.''
9 Section 253(f) is a permissive provision, not a mandatory provision. However, the Act appears to envision a potential situation in which entry to a rural service market would be linked to a readiness to serve throughout the service area.
10 Under the definitions section of the Act (Section 3), a rural telephone company is defined as a local exchange carrier which meets one of the four criteria listed in the definition. One of the criteria includes local exchange carriers whic provide telephone exchange service, including exchange access, to fewer than 50,000 access lines. This criteria appears to be the same criteria which qualifies a local exchange carrier for a streamlined form of regulation under Pennsylvania law. 66 Pa.C.S. § 3006. Accordingly, it appears that, at a minimum, all of the streamlined regulation carriers under Pennsylvania law qualify as rural telephone companies under the Federal standard.
11 Section 251(f)(2) also provides local exchange carriers with fewer than 2436000f the Nation's subscriber lines the opportunity to petition the Commission for suspension or modification of interconnection requirements, once interconnection requirements become effective. The Commission must evaluate such petitions under a public interest standard and must issue its decision within 180 days.
12 It appears the interrelationship of these various provisions is designed to protect rural telephone companies from ''cream skimming'' practices by competing carriers. Because of their small size and limited number of commercial customers, potential ''cream skimming'' practices create greater exposure for rural telephone companies.
13 This view is supported by Section 252(g) of the Act which expressly authorizes state commissions to consolidate entry, interconnection and universal service funding eligibility proceedings for rural telephone companies, ''to reduce administrative burdens on telecommunications carriers, other parties to the proceedings, and the State Commission in carrying out its responsibilities under this Act.''
14 It appears that the 120-day time limitation of Section 251(b) would not be applicable to a consolidated proceeding. Parties should comment on this issue.
15 The Commission has already commenced the process of establishing and defining interconnection standards in Application of MFS Intelenet of Pennsylvania, Phase II, A-310213F0002. From our review, it appears that the general direction in which the Commission is headed in these dockets is fully consistent with the general standards governing interconnection arrangements under Section 251.
16 Section 252 procedures only applies to an entrant's request to interconnect with an incumbent local exchange carrier. However, Section 251(a) of the Act requires all carriers to interconnect with each other. The Act does not address what procedures should be utilized, for example, if a local exchange carrier requires interconnection to an interexchange carrier's network and the parties are unable to reach a voluntary interconnection agreement. At the state level, it appears that complaint procedures would be best suited for this purpose. Interested parties should comment on this issue.
17 What constitutes cost-based and reciprocal pricing of terminating access is presently being litigated in the Commission's Universal Service docket. What constitutes cost-based and nondiscriminatory pricing of basic service elements is currently being litigated in the MFS, Phase II docket.
18 Despite the fact that arbitrator determinations appear to be binding on the parties, if the Commission subsequently approves the arbitrated agreement, aggrieved parties are given the opportunity by Section 252(e)(6) to challenge the Commission's action in Federal district court.
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